IMC Strategic ProcessIMC460

Pangbo Xu, Naomi Cao, Brandon Duran, Rina Lin

Outline

Introduction Cluster Analysis Objectives

Introduction - Competition Landscape

- Positioning Statement

- Revenue Contribution

CH’s Business Model

The Wine Club• One of the largest wine clubs in the

nation. • 12-15 specialty blends developed

each year exclusively for members. • Each member purchases at least

one unique bottle per month. • Wine can be picked up at any CH

location or it can be delivered to them for a small fee.

Wine• Philosophy is to produce the best

wines they possibly can. • Done by buying grapes from the

best vineyards in the country • Receive shipments by the ton from

vineyards in Oregon, California, and Washington.

• Produce wine year round.

Dining• Moto: “Handcrafted Wine. Modern

Casual Dining.”• 19 restaurant locations currently • Each item on the menu is paired

with a unique bin number which serves as a guide for guests to choose a wine that goes with the food item.

Perceptual Map

Specific Holistic

Upscale

Causal

Cooper’s Hawk serves sophisticated customers with Upscale wines and holistic wine/dining experiences(Wine tasting events, food-pairings, etc.) its key competitors are City Winery, ERA, and Nirvana

Competitors

Vera CityWinery NIRVANA

Country wine experience

• Events: Live music, wine

pairing/tasting, fine dining and

private events

• Benefits: Concert ticket benefits;

Wine and dessert benefits;

Special member only events

• Pricing: Higher pricing- double

what CH offers

Restaurant and Wine Bar

• Events: Live music, wine

pairing/tasting, fine dining and

different special wine offerings

everyday

• Benefits: Heavy discount(40% off)

to member

• Pricing: Price comparable to

Cooper Hawk

Spanish restaurant that feels like

a pub

• Events: Classes on cooking

and wine picking

• Benefits : Spanish plates, a

wide variety of wine offerings,

seasonal offering

• Pricing: Higher pricing-

double what CH offers

Positioning Statement

To wine lovers who are looking to experience wine

through different lenses,

Cooper’s Hawk is the premium winery & dining brand

that provides the most holistic wine experience

because only Cooper’s Hawk hrestaurantd a community-

based ecosystem of wine through its production of quality

food and wine that is offered via its restaurants and club.

Revenue Contribution

This is the revenue generated by member club and restaurant throughout

the whole dataset.

One Bottle

31.3%

Two Bottles

29.6%

Banquet

2.9%

Bar

8.2%

Patio

0.7%

Server

18.6%

Tasting Room

8.7%

Restaurant

39.1%

N=4331 Total Revenue=11033515

Revenue Contribution

We extracted wine club revenue based on 2-year scale in accordance with restaurant

revenue time span to see the revenue-generating ability of each source.

Restaurant is still the major revenue-generator while two membership types contribute almost

equally in terms of absolute revenue amount.

One Bottle

17.9%

Two Bottles

16.8%

Banquet

4.8%

Bar

13.7%

Patio

1.2%

Server

31.0%

Tasting Room

14.5%

Restaurant

65.3%

N=4331 Total Revenue=6607416

Problem: revenue decline in

restaurant

Overall revenue

declines -7.13%.

Tasting Room (12.12%),

Server (8.02%) and Bar (4.86%) are the major

revenue center

experiencing severe

plummet.

0.00

200000.00

400000.00

600000.00

800000.00

1000000.00

1200000.00

Banquet Bar Patio Server Tasting Room

Year 1 Year 2

-8.02%

-12.12%

% Growth Rate

7.01%

-4.86%

-0.28%

N=4331 Revenue

Year 1 2235896

Year 2 2076239

Total 4312135

Restaurant – revenue center

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

Bar Server Tasting Room Patio Banquet

Re

ve

nu

e (

Ba

r)

Revenue Center

Bar Server Tasting Room Patio BanquetBar Server Tasting

room

Patio Banquet

Mean

Spend

54.8 77.0 46.66 51.49 1131.45

Server are the biggest contributor to

restaurant revenue,

followed by Tasting

room and bar;

Banquet has the highest mean spend,

followed by server.

Restaurant – seasonal trend

● December is the revenue peak for

restaurant business

● Effects of festive dining

$600

$700

$800

$900

$1,000

$1,100

$1,200

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

1 2 3 4 5 6 7 8 9 10 11 12

Me

an

Sp

en

din

g (

Lin

e)

Re

ve

nu

e (

Ba

r)

Month

Revenue Mean SpendingWeekly Trend

$55

$60

$65

$70

$75

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

Sun Mon Tue Wed Thu Fri Sat

Me

an

Sp

en

d (

Lin

e)

Re

ve

nu

e

Revenue Mean Spends

Monthly Trend

● People spend more

on Weekends,

Mondays and Fridays

Wine Club – wine types

Red and Variety are the most popular wine types

Implications: There seems to be a positive correlation between red/variety wine type subscription and Two bottle per month subscription.

We assume the more sophisticated drinkers tend to favor red and variety types of wines and to receive two bottles per month. To validate this finding, We suggest further

research.

925

218

1474

284

474

60

734

96

0

500

1000

1500

2000

2500

Red Sweet Variety White

one bottle two bottles

Wine club anniversary

● People tend sign up

on Mondays

0

200

400

600

800

1000

1200

1400

1600

1800

Sun Mon Tue Wed Thu Fri Sat

0

100

200

300

400

500

600

700

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly Subscription trends

Weekly Subscription trends

● People sign up on

February

Cluster

Overview- Outliers

- Cluster Criteria

- Cluster Results

Outliers

●Outliers are excluded before clusters are

generated● outliers are customers whose mean spending

>$200, total restaurant spending >$5000

OutliersMean Spending >$200 OR

Total Spending >$5000

Mean Spending

Total Restaurant Spending

Fre

qu

en

cy

NormalityMean Spending <$200 AND

Total Spending <$5000

Cluster Criteria

●Segmentations must be strategic relevant

●Each segmentation should has enough cases so that it is

economically feasible to be targeted at

●Homogeneity within each segment, and heterogeneity across

segments

●Criteria variables must be important for the marketing situation

●Criteria variables should not be correlated to each other

Re

sta

ura

nt

Variables Chosen*W

ine

Clu

b Length

determine the customer’s buying

power

determine how frequent the

customer makes a purchase

determine whether the customer has

made recent purchases

a categorical variable that helps segment customers based on their monthly subscription choice

determine whether the customer has established a long relationship with the company

* Correlation test was performed to ensure there is not correlation between variables

Bottles of

WineLength Frequency Mean Spend Recency Revenue

One

N=340One 74.1 3.0 39.4 10.0 469099

Two

N=597One 82.3 13.7 66.2 1.0 1364127

Three

N=634One 66.9 5.4 92.6 6.6 1030585

Four

N=1260One 65.0 15.8 65.6 0.8 2703660

Five

N=292Two 68.9 6.5 65.6 5.3 814584

Six

N=696Two 64.8 22.4 65.3 0.6 2525212

Seven

N=334One 83.8 24.8 59.3 0.4 1434480

Cluster Result

Cluster ResultBottles of

WineLength Frequency Mean Spend Recency Revenue

One

N=340

Two

N=597

Three

N=634

Four

N=1260

Five

N=292

Six

N=696

Seven

N=3341434480

Two -0.51 0.75 0.02 -0.62 2525212

One 1.24 0.85 -0.18 -0.68

814584

One -0.49 0.33 -0.01 -0.49 2703660

Two -0.12 -0.67 -0.19 0.86

1030585

One 1.11 0.17 0.04 -0.38 1364127

One -0.31 -0.86 0.71 1.12

469099One 0.35 -1.52 -1.17 1.53

We choose cluster three and cluster six

Cluster

Profiling - Cluster selection criteria

- Dining frequency

- Cluster personas

Cluster selection

Cluster 3 (N=634)

◼Newly acquired

◼Inactive

◼Low purchase frequency

◼High mean spend

Cluster 6 (N=696)

◼Newly acquired

◼Active

◼High purchase frequency

◼Medium mean spend

One bottle Z-score

Length -0.31

Frequency -0.86

Mean Spend 0.71

Recency 1.12

Revenue 1030585

Two bottles Z-score

Length -0.51

Frequency 0.75

Mean Spend 0.02

Recency -0.62

Revenue 2525212

Cluster 3

Declining revenue of

Cluster 3

Cluster 3 Frequency

Year 1 3.48

Year 2 2.37

0.00

20000.00

40000.00

60000.00

80000.00

100000.00

120000.00

Banquet Bar Patio Server Tasting Room

Revenue

Year1 Year2

-27.26%

-22.61%

-50.68%

-29.39%

-42.24%

A overall revenue decline of 45.27%, accompanied by decline in frequency: CH is losing their biggest revenue contributors.

Cluster 3 Persona

●David is a 45-year-old busy businessman who is

a newly acquired customer. He did not spend

much recently and has low purchase

frequency since the start of his relationship with

CH. However, his average amount spent is

high. This customer values quality over quantity

and is not a regular wine drinker. He only

consumes wine based on special occasions.

Cluster 3

Bar

17%

Patio

1%

Server

63%

Tasting

Room

19%

Revenue Center

0.0%

5.0%

10.0%

15.0%

20.0%

Fe

b

Ma

r

Ap

ril

Ma

y

Ju

n

Ju

ly

Au

g

Se

p

Oc

t

No

v

De

c

Action Month

0.0%

5.0%

10.0%

15.0%

20.0%

Mon Tu Wed Thurs Fri Sat

Action Day

Red

33%

Sweet

6%

Variety

52%

White

9%

Wine Type

0.00%

5.00%

10.00%

15.00%

Month Joined Club

Wine Club Revenue

Restaurant Revenue

Mean 1138.5 1427.875

Sum 4218124.29 2483839.22

% of Total Rev 62.76% 57.6%

Cluster 6

Dining Frequencies

Cluster 6

Cluster 3 Frequency

Year 1 11.97

Year 2 11.59

0.00

50000.00

100000.00

150000.00

200000.00

250000.00

300000.00

Banquet Bar Patio Server Tasting Room

Revenue

Year1 Year2

-40.05%

-0.48%

-15.05%

-5.34%

-9.3%

A overall revenue decline of -7.2%, frequency slightly slides downwards. Banquet and Patio session experience the biggest plummet.

Cluster 6 Persona

●Emily is a 35-year-old digital content

producer who is a newly acquired customer.

She made a lot of purchases recently and

has high purchase frequency since the start

of her relationship with CH. Her love for wine

makes it an obvious choice for her to receive

two bottles of wine every month. She want to

be able to enjoy good quality food and wine

without breaking her wallet, so she spends an

average amount when making purchases.

Cluster 6

Tasting

Room

46%Bar

44%

Banquet

6%

Patio

4%

Revenue Center

0.00%

5.00%

10.00%

15.00%

20.00%

Action Day

Red

34%

Sweet

5%

Variety

53%

White

8%

Wine Type

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Month Joined Club

Wine Club Revenue

Restaurant Revenue

Mean 1138.5 1427.875

Sum 4218124.29 993800.98

% of Total Rev 0.2278 0.2305

0

50000

100000

150000

Jan Mar May July Sep Nov

Action Month

Objectives- Marketing objectives

- Behavioral objectives

- Mental objectives

- Objective summary

Marketing Objective

• To increase Cooper’s Hawk revenues by 3% (roughly

$100,000) over the next year.

– We used revenue generated from the wine club

on a two year-scale to align it with data from the

restaurant that spanned two years.

$32,770,000

Marketing Efforts

$32,870,000

Cluster 3 Behavioral

Objectives

• Behavioral

– Up-sell 25% of the cluster to purchase 2 bottles of

wine a month.

– Increase the frequency of visits to CH restaurants of

half of the cluster by 20%

• Results in an approximate overall increase in revenue of

$42,329 for the cluster.

𝟔𝟑𝟒 ×𝟏

𝟐×

𝟏

𝟐× 𝟓. 𝟑𝟗 × 𝟐𝟎% × $𝟗𝟐. 𝟓𝟔 ≅ $𝟏𝟗, 𝟕𝟔𝟗 𝒊𝒏𝒄𝒓𝒆𝒂𝒔𝒆 𝒊𝒏 𝒓𝒆𝒗𝒆𝒏𝒖𝒆

Cluster 3 Mental Objective

• Let them believe that wine is a friendship building tool.

Drinking wine at Cooper’s

Hawk Events gives you the

chance to meet new

people and the try great

tasting wines.

• Message: best wine for your

best friends

Cluster 6 Behavioral

Objective

• Increase the Mean Spend of 75% of

the cluster by 20%

– Results in an approximate overall

increase in revenue of $76,367 for the

cluster.

Cluster 6 Mental Objective

• Let them believe that our

wine is developed to be

paired perfectly with the

wine served at our

restaurants.

• Message: best wine for your

favorite food

Objectives Summary

– By up-selling 25% of cluster 3 for the membership program and increasing half of the cluster’s frequency of dining visits by 25%, it will result in an approximate overall increase in revenue of $42,329 for the cluster.

$42,329

$76,367

$118,696

– By increasing the Mean Spend of 75% of cluster 6 by 20%, it will result in an increase of $76,367 in spending by the cluster.

– Together, it will produce a total increase of $118,696, surpassing our objective by over $18,000.

Tactics

Tactic Purpose Reasoning Source

Create discounted

dinner/wine tasting events

on less popular weekday

nights.

To boost sales on days with

low sales (i.e. Tuesday) and

increase camaraderie

among businessmen and

women.

In terms of revenue,

Tuesday nights are the least

popular nights at CH

restaurants, having

discounted events will

attract business people that

work from 9 to 5.

Slide 26&30: The graphs

show us that Tuesday and

Wednesday are the least

popular action days.

Run more marketing efforts

that highlight specific dishes

and the Cooper’s Hawk

wines that perfectly pair

with them.

To increase awareness (and

improve sales) of unique

feature offered by CH.

CH has a unique menu in

that it pairs its wines with the

food offered, this should be

a more prominent selling

point.

Slide 4: CH menu’s

strategically employ both of

CH strengths, its food and

wine.

Create more awareness

surrounding the Cooper’s

Hawk “Wine Club Trip”

To increase number of

members in wine club.

The wine club information

page on the CH website

lacks promotion of the wine

trip experience. Survey result

suggested that customers

want more special events.

Survey question number 4:

The Wine Trip was not even

an option on the primary

reasoning for joining the

club.

Offer free shipping to

specific target customer

that go from purchasing

one to two bottles per

month

An incentive to single-bottle

purchasers to purchase two

bottles.

As we are attempting to

upsell cluster 3, this is an

incentive to purchase

another bottle every month.

Slide 32: Our behavioral

objective for Cluster 3 is to

up-sell them, therefore we

must add incentives.

Offer a $10 restaurant gift

card to people who sign up

for the wine club

An incentive increase

number of members in wine

club.

An incentive to sign up for

the club, this investment will

be returned after a month

of membership.

Survey question number 8:

People are most satisfied

with the gift cards offered

by CH.

Thank you!