midterm environmental scan - DoCuRi

midterm environmental scan - DoCuRi

MIDTERM ENVIRONMENTAL SCAN MATT LEAP AND RYAN TERRY Digital Marketing (MKT 350) Dr. Elaine Young October 16, 2013 TABLE OF CONTENTS Current Situatio...

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MIDTERM ENVIRONMENTAL SCAN MATT LEAP AND RYAN TERRY Digital Marketing (MKT 350) Dr. Elaine Young October 16, 2013

TABLE OF CONTENTS Current Situation ……………………………………………………………………………………………… 2 Problem Definition ………………………………………………………………………………………….. 4 Website Analysis ……………………………………………………………………………………………… 5 Online Presence/Social Media Audit ……………………………………………………………..... 6 Facebook ……....……………………………………………………………………………………… 6 Twitter …………………………………………………………………….…………………………….. 7 Instagram ……………………………………………………………………………………………… 8 YouTube ………………………………………………………………………………………………… 9 Untappd ………………………………………………………………………………………………… 10 Search Engine Optimization …………………………………………………………………… 11 Industry Trends ……………………………………………………………………………………………….. 12 Competitor Analysis ………………………………………………………………………………………… 15 Sierra Nevada ………………………………………………………………………………………… 15 Harpoon ………………………………………………………………………………………………… 17 Long Trail ………………………………………………………………………………………………. 19 SWOT Analysis …………………………………………………………………………………………………. 21 Target Market …………………………………………………………………………………………………. 25 Goals for Magic Hat …………………………………………………………………………………………. 27 Bibliography …………………………………………………………………………………………………….. 29

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CURRENT SITUATION Magic Hat Brewing Company was founded in 1994 in South Burlington, VT. It is currently owned by North American Breweries, which is owned by Florida Farm & Ice Co. As such, Magic Hat has access to a good deal of resources through its parent corporate conglomerate. Currently, the Magic Hat marketing department consists of two brand managers, twelve graphic artists, four web team members (designers/developers), and one social network manager. The brand mangers work at the North American Breweries offices in Buffalo, NY, while the rest of the department works out of Burlington, VT. It is worth noting that they do not currently have a position dedicated to SEO or analytics. Analytics monitoring duties are split between the social media manager and the web team. As for financial resources, Magic hat has a sizable quarterly marketing budget, as well as a dedicated quarterly social media budget. Budget amounts are adjusted based on the current campaign and focus of the season (ie. a new beer, a seasonal beer, a seasonal variety back, an upcoming event, etc.). Though the exact amount of the budget is not publically disclosed, it gives the Magic Hat team room to work. If need be, the marketing team could campaign for additional funds. The budget number is projected to grow in the coming years, following efforts to show company higher-ups the value of social media. Overall, funding is a strength of Magic Hat. Magic Hat's current marketing combines traditional and digital marketing efforts. Its traditional efforts center around the hosting of concerts and other events, as well as festival and band sponsorship. Many of Magic Hat's events are held at their brewery and are put on to benefit local charities; for example, the annual Oktoberfeäst event benefits the Vermont Foodbank. As for concerts, Magic Hat hosts concerts with a direct connection to its beers. The Halloween Night of the Living Dead at Echo Lake Aquarium show, for example, promotes their seasonal Night of the Living Dead variety pack. In terms of sponsorship, Magic Hat's most notable festival sponsorships are Bonnaroo, Gathering Of The Vibes, and Heavyfest. On the digital side, Magic Hat has a website, an email newsletter through MailChimp, Facebook, Twitter, Instagram, Ontappd, Youtube, and has dabbled in Vine, Myspace, Tumblr, and Foursquare. As for analytics, Magic Hat uses only free products. They use Google Analytics, Facebook Insights, Twitter Analytics (for Twitter Ads), and MailChimp's built-in email analytics. These items will be covered further in the online presence/social media audit. The marketing goals of Magic Hat are identified as growing business in distribution and volume, while maintaining core beliefs in quality, creativity, and fun. Currently, Magic Hat is available across the United States and sells 154,236 barrels per year. Its goals center around improving availability and barrel sales, while maintaining its distinct brand identity and personality. Despite its size, Magic Hat is careful to maintain its small “craft brewery” feel.

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The brewing company identifies its target customer as “younger” – ages 25 to 39. Magic Hat targets beer drinkers of either gender. The company targets individuals located across its distribution area, though its popularity is highest in the Northeast. Its target market has a creative side and a love of arts and music. The company also targets those who are proactive toward social change and enjoy to benefit a good cause. Magic Hat identified that its target are individuals and have a strong sense of personal identity.

Source: Uptake.com

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PROBLEM DEFINITION Magic Hat’s main problem is being able to produce product and packaging that is different enough to stand out among 2,500 other craft brews, both on the shelves and at bars. In a market where there are so many companies fighting for the same thing, one can imagine the pressures related to maintaining a profitable position in the industry. With so much competition, Magic Hat struggles to produce a product that is unique, both in appearance and taste, from any other beer. At the same time, Magic Hat must stay true to the creative, fun brand image and personality that it has established. Its communications must be uniformed and cohesive in order to cultivate the brand’s persona and the culture around the brand. Magic Hat has a developed voice and presence on many social media sites, including Facebook, Twitter, and Instagram. It also has its hand in many other networks, such as YouTube, Untappd, Vine, Myspace, Tumblr, and Foursquare. The challenge for Magic Hat is to create a uniformed presence across all these networks and to connect these networks in a meaningful way. As a national company, Magic Hat must also balance these issues with a desire to expand its presence in key markets. The company has identified these markets as: the Pacific Northwest, specifically California and Colorado, as well as the Southwest, Nevada and New Mexico in particular. Further expansion into these areas must contend with State and Federal laws, in addition to established local competitors.

Source: Mindomo Blog

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WEBSITE ANALYSIS Overall the Magic Hat website acts as a detailed, informative face for the brand. The colors are bright and aesthetically pleasing. The brand image is very evident throughout every page to which the visitor is connected, through hot tabs. Every bit of imagery fits perfectly with the theme of the page. A visitor of the site will find it very easy to navigate; finding what they are looking for with little effort. There are plenty of promotional pieces for new seasonal brews, events, and offerings. Magic Hat’s page is beautifully intertwined with their Instagram, Twitter, Facebook, and Flickr media. Being a very artsy brand, it is great to see special pieces featured throughout Magic Hat’s content. One interesting feature is the "Tunes on Tap" section. It offers what some would call a "straight from the roots" experience. This includes some of the company’s favorite tunes for the visitor’s listening pleasure. Many of the songs chosen reflect the Magic Hat roots, with tracks including Phish, Grateful Dead, and Papadosio. This increases the size of Magic Hat’s reach as fans of the music will make a connection to the brand. Magic Hat offers up some really cool products other than their popular beers. Navigating their ecommerce site is a breeze and definitely does a great job of highlighting their branded memorabilia. They do a great job of branding practical items that no other brewery has thought to use. An example being the branding of condoms; playing off the name “Magic Hat”. This creative thinking is a great (cheap) way to reach the tens of thousands of college students in Burlington that are already coming in contact with the brand in every bar, restaurant, and convenience store they visit around town.

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ONLINE PRESENCE/SOCIAL MEDIA AUDIT As mentioned above, Magic Hat uses Facebook, Twitter, Instagram, YouTube, and Untappd. Magic Hat currently has general social media rules. Across all outlets, they shoot for at least one post per brand per day. Facebook is a special exception where the company will rarely post more than once a day – in order to avoid clogging newsfeeds. On Twitter, Magic Hat makes it a rule to reply and engage as much as possible. As a rule, posts to Twitter and Instagram become much more frequent during special events, concerts, and festivals. In general, the company abides very closely to these rules. FACEBOOK: On Facebook, Magic Hat has 249,605 likes, 3,230 “talking about this”, and 18,450 “were here”. The company has a large selection of photos, mostly showing the beer, brewery, and art and music associated with the brand. There are albums for every major Magic Hat festival and event (ie. Heavyfest, Bonaroo, Mardi Gras, Summer Sessions, etc.). Additionally, Magic Hat creates individual event pages for its upcoming events. The company page also has a “Sipcode Locator” function where visitors can locate places to buy Magic Hat locally. The top bar of the page has a “Shop” option that links to featured items in the shop, which are updated to match the website. Magic Hat's page also has a link to enter a contest for a Magic Hat prize pack and trip. Magic Hat posts once every day or two and does a good job of including pictures and videos. It also does a good job of replying to comments on its posts. Magic Hat's user ratings on Facebook are highly favorable and almost entirely four or five stars. Compared to competitors, Magic Hat's Facebook page vastly outshines competitors like Switchback and Sierra Nevada in both page numbers (likes, talking about this, were here) and quality/frequency of posts, though it falls behind brands like Samuel Adams, especially in the page numbers.

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TWITTER: As for Twitter, Magic Hat has a main account, a contest account, and separate accounts for its major markets – Burlington, New York City, Philadelphia, DC, and Baltimore. Each of the pages generates its own unique and location-relevant posts. The main account has 7,605 tweets and 53, 104 followers. Twitter activity is a combination of sharing pictures, updates, retweets, and conversations. It is worth noting that the majority of Magic Hat posts are replies or interaction with followers. Magic Hat's informational posts do a good job of using relevant hashtags, such as #craftbeer, #vtbeer, and event specific hashtags. The bio for the main page does a good job of capturing the quirky creative side, while the other accounts give a more straight-forward description of the type of content they share. Overall, Magic Hat is in a strong position on Twitter. Many of its local competitors do not have a Twitter account, while Magic Hat outshines larger competitors like Samuel Adams and Harpoon in number of followers and fan interaction.

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INSTAGRAM: Magic Hat's Instagram account has 515 posts and 10,224 followers. The company has a pretty basic bio with a link to the Magic Hat website. The pictures and videos on Instagram are almost entirely the same a those on Facebook. As such, they center around the beer, the brewery, and Magic Hat art and music. The pictures range from about 100 to 500 likes. Comments range from a handful to an upwards of thirty or so. As in the case of Twitter, many of Magic Hat's local competitors do not have Instagram. As for the larger competitors, Magic Hat has nearly double the followers of Sam Adams and Harpoon, but about the same amount of likes and comments.

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YOUTUBE: Magic Hat also has a presence on YouTube. Their channel has 252 Subscribers and 86,454 total views, a relatively small following compared to some of their more developed social media presences. The About section has a short bio and a link to the company website, however the YouTube channel is not linked from the website. Magic Hat has its logo as a profile image, but no background photo. Though Magic Hat has posted a significant number of videos, the company’s most recent video was posted over seven months ago. The discussion posts about the channel are similarly dated. The channel was primarily used to review and discuss new beer offerings, but the most popular video was a former Magic Hat commercial with a fun take on their brewing process set to circus music. Competitors Harpoon and Sierra Nevada both have a YouTube presence. Harpoon is found through a channel called “friendofharpoon”, which posts Harpoon interviews and links to the Harpoon website. Sierra Nevada has the most developed presence on YouTube with about twice as many Subscribers as Magic Hat. YouTube remains a huge opportunity as neither Magic Hat nor its direct competition have taken a firm hold of this outlet.

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UNTAPPD: Untappd is another social network on which Magic Hat is present. Its numbers on the website are: 288,607 beers consumed, 84,547 unique consumers, 2,742 consumed this week, and 18,886 consumed this month. Magic Hat has taken ownership of its company page and set the profile photo to the company logo. The Untappd page has links to the Magic Hat website, Twitter, Facebook, and RSS feed. In terms of page numbers, Magic Hat beats local competitors, like Switchback and Long Trail. It is almost exactly on par with Harpoon, while it falls short of the numbers of Sierra Nevada and Boston Brewing Company. Magic Hat’s and just about all of its competitors are ranked at a 3.5 out of 5 stars. Magic Hat has made use of what is available on Untappd and its page is on par with the competition.

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SEARCH ENGINE OPTIMIZATION: As for SEO, Magic Hat does fairly well across Google, Yahoo, and Bing. On Google, the website is the top result, followed by a link to their “Visit the Artifactory” page, and a link to their #9 page. The fifth and sixth results were Wikipedia and an unrelated page. Their Twitter comes in as the seventh link, followed by reviews from RateBeer and Yelp. On the side, Google's Magic Hat Brewing Co. entry appears with an address, phone number, and map. On Yahoo, the first result is the company website, followed by the Wikipedia page and the #9 page. The BeerAdvocate review and Magic Hat Artifactory page come in later on the top page, while the rest of the results are unrelated. Bing features the company website as the top result, followed by the Wikipedia entry and BeerAdvocate reviews. The only other related results in Bing's top page was a link to Magic Hat's Blackmagic page. On the side, Bing features a map, address, hours, Yelp reviews, and photos of the brewery. Overall, Magic Hat's SEO is decent. Their listings in Google are solid, but leave room for improvement. On Bing and Yahoo, Magic Hat could work to achieve more relevant top page results. Across all three, their social media pages did not reach top page.

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INDUSTRY TRENDS As of 2012, the United States beer industry is worth over $99 billion and serves 200,028,520 barrels annually (Brewers Association). The industry is dominated by giants, Anheuser-Busch InBev and Miller Coors, together accounting for 75% of the United States beer industry (Demeter Group). As a whole, the beer industry is losing traction to wine and spirits. Beer had a 55% alcohol market share in 2000, compared to only 49% in 2011 (Demeter Group). The beer industry had seen a steady decline in production since 2008, until 2012 brought the industry a slight 1% increase (Brewers Association). The massive beer industry is broken into several segments based on the quality, price, and origin of the beer. These categories are: Premium Beers, like Budweiser and Coors Light; Sub Premium Beers, like Natural Light and Busch; Super Premium Beers, like Blue Moon and Michelob Ultra; Imports, like Corona and Heineken; and Craft Beers, like Sam Adams and Lagunitas (Demeter Group). Magic Hat's beers fit into the Craft Beer segment. Magic Hat as a company fits the Brewing Association standard for a craft brewer based on its production, ownership, and beer portfolio. Conversely to the industry as a whole, the craft beer industry has enjoyed vast and sustained growth. In 2012, the industry grew 15% by volume and 17% by dollars (Brewers Association), while in 2011, it grew 13% by volume and 15% by dollars (Brewers Association). As of 2012, craft beer was a $10.2 billion industry and produced 13,235,917 barrels (Brewers Association). This boom in craft beer has led to a rapid increase in competition. As of March 2012, 409 craft breweries opened, contributing to a total of 2,347 craft breweries operating for some or all of 2012 (Brewers Association).

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Credit: Demeter Group

To capitalize on popularity of craft beer, industry players are taking several approaches. The industry heavyweights are turning to craft beer incubators (Demeter Group). These incubators, Craft Brew Alliance in the case of AB Inbev and Tenth and Blake Beer Company for MillerCoors, are companies within a company (Demeter Group). They buy select craft beer brands and act as the distributor, but otherwise leave the beers more or less unchanged. Large, established craft brewers are approaching the situation in a different way. These companies are expanding their geographic footprints by opening additional breweries in strategic locations (Demeter Group).

Credit: Demeter Group

For example, Sierra Nevada built a brewery across the country in Mills River, North Carolina. Yuengling did the same, expanding to include a second brewery and Southern headquarters in Tampa, Florida (Demeter Group). In addition to domestic expansion, many companies are looking internationally. Currently, Europe has seen steady growth in beer demand, while South American, Africa, and Asia are projected to grow 4% to 5% each through 2016 (Business Insights, Demeter Group). Possibly the most critical industry trend in craft beer is a shift from brand to style. In other words, consumers are looking for specific styles (ie. Pale Ale, IPA, Lager, etc.) and then choosing the brand within the style (Demeter Group). This trend has proven particularly true among Generation Y/Millennials (Demeter Group). This trend makes keeping up with desired types of beer highly important. For example, Light beer fell below 50% consumption for the first time in years, leading to significant revenue hits for brands like AB Inbev's Bud Light (ResearchMoz). 13

Right now, consumers are looking for varied, flavorful, and unique beer offerings (Business Insights). This has led to the appearance of many stronger, high ABV beers and change of pace beers like sours. AB Inbev capitalized on the higher ABV trend with Bud Light Platinum, capturing 1% of all beer sales in its debut year (St. Louis Post- Dispatch). Another trend in terms of beer offerings is food pairing (Business Insights). Consumers are looking for beers designed to complement specific flavors of food. The current beer industry situation couples growing demand with increased competition. Consumers are looking for specific beers and companies who differentiate themselves. If properly managed, these trends represent significant opportunity for a growing company, like Magic Hat. On the other hand, there is also significant risk of being lost in the shuffle. The craft beer industry is open for established brands like Magic Hat to achieve a larger market share and greater national recognition through calculated planning and production.

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COMPETITOR ANALYSIS Among Magic Hat’s competitors, Sierra Nevada, Harpoon, and Long Trail pose the greatest threat. Like Magic Hat, all four of these companies are popular craft- beer brands that are growing in popularity. Sierra Nevada is the largest of the competitors, followed by Harpoon, and then Long Trail. All of these brands are very popular in the Northeast, which is more of the concentration when evaluating Magic Hat’s competitors. For the most part Magic Hat is locked to this region, but they are beginning to gain a wider reach. Something to note is Magic Hat’s parent company North American Breweries owns many other brands and has the most “power” of any competitor’s parent companies listed above. SIERRA NEVADA: Sierra Nevada’s site is attractive and simple. A visitor is greeted with a clip showing the ingredients and brewery, while the only hot keys are four tabs at the top of the page. Navigating the page is very easy and offers great information on news and events on every page. The page feels very organic while offering up anything you’d ever want to know about the brand. The e-commerce site is also a breeze and does a great job of featuring the products. The best aspect of the web page is the “beer locator” search bar at the bottom of the home page. This is a great idea in helping to promote the accessibility of the product. Clean-cut and refreshing, this page does a wonderful job of depicting the brand image while getting straight to the point.

The Sierra Nevada Facebook Page has 189,089 likes and gains a good amount of daily attention. Not only is the page manager posting repeatedly throughout the day, followers of the page are very vocal; constantly commending the brand. Everything from events, news, pictures, and 15

even recipes are being posted daily. A valuable piece is how there are daily photos of the brew masters hard at work. This makes a closer connection between brand and customer. Sierra Nevada has their Instagram feed embedded into the Facebook page, which is where all of the photos are coming from. The “About/Info” page seems to be the only part that is lacking in material. Otherwise, the company is doing a great job at managing their Facebook page.

The only other areas of social media that Sierra Nevada is involved with, is Instagram and Twitter. On Instagram, just under 13,000 followers exist that are very active in Sierra Nevada’s feed. The company is constantly uploading photos of brews, events, and the staff, while users often are hash-tagging Sierra Nevada in their related photos. The company holds a festival every year, which is another reason they are so active through this media outlet. Much like the web page, the Instagram account is very earthy and organic feeling; doing a great job of depicting that brand image. The Twitter page has just over 76,000 followers who are very vocal. The best aspect of the account is how responsive the Twitter page manager is with the followers. There are multiple conversations daily between the Sierra Nevada Twitter account and all of the brands followers. Much like the Instagram there is frequent posts regarding the festival; including links and updated information.

Sierra Nevada is certainly the strongest brand, across the board, of any of Magic Hat’s competitors. They really have an excellent handle on their brand image and certainly do a great job of showing this through their web page and social media outlets. 16

HARPOON: Much like Sierra Nevada, Harpoon has an attractive web page with a lot of bright imagery and text. The home page is slightly overwhelming when attempting to navigate however. Below the main images is a breakdown of Harpoons slogan, “Love Beer, Love Life, Harpoon.” Below the heading “Love Beer” is an interactive scrolling selection of all brews currently in production. Upon choosing one, the visitor is provided with a detailed facts page, much like a beer baseball card, of each brew. This is the fullest/cleanest presentation of a craft-brewery’s selection of any of the competitor’s web page. Under the heading “Love Life” is news on special events and activities featured in a similar style to the beer selection. The ecommerce page is lacking the appeal/feel of the home page entirely. Navigating to the page is a bit difficult and confusing. The product category tabs are very small and bland. The Harpoon web page does have a beer locator, but doesn’t seem to work nearly as well as the Sierra Nevada tool. All in all, the home page is aesthetically pleasing; featuring some great information on the beers and events; while including badges to the company’s social media pages. However, the home page is where the splendor ends as the rest of the site seems to be lacking the brand image/energy.

Harpoon Brewery has over 61,000 likes on their Facebook page. The page manager posts about once a day and receives a few comments from fans per post. Each post is in regards to the events Harpoon Brewery is a part of. Only a handful of likes are gained on each post. Instagram is embedded into the brewery’s Facebook, however only a few photos seem to come from it. The “About/Info” page is chockfull of useful information including history and two maps showing the locations of the breweries. Links are included to Harpoon’s write-ups on Tripadvisor, Foursquare, and Yelp.

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Harpoon’s Instagram account is certainly lacking. The account has 5,654 but the manager is only following six users! There is no replies to follower’s posts; not that there are that many follower posts in the first place. All photographs are in regards to Harpoon events. The Twitter page looks better with just over 41,000 followers. The page manager makes a few posts a day and encourages follower conversation. Many posts include links to feature events and images of Harpoon employees enjoying the brand’s brews.

Harpoon Brewery actually has a Youtube channel, which is a necessary outlet for such a business. The channel is rather new so there are only a few videos featured. The videos showoff a few special brew series, as well as the men who made them. They discuss what went into the distribution of the highlighted product and the ingredients and steps taken; even talking about the roles of each master brewer.

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LONG TRAIL: The Long Trail web page is very interesting. It encompasses the brands colors and patterns in a basic layout. All of the brews are featured on the side of the page, but look to be somewhat cut-off. Four different images are cycled through at a very quick pace in the center of the page. These images don’t do much considering they are lacking in subject matter. Generic tabs line the top of the page reading “About Us”, “Family of Ales”, and “Gift Shop”. The tabs bring the visitor to basic information on very bland pages. Heading towards the bottom of the home page the visitor will see two bold headings. The first reads, “See what’s brewing”, and offers up a video of the brew process, and an introduction to a new brew soon to be released. The second heading reads, “What’s New?”, and features two new beers currently available; one only being available at the brewery. At the very bottom of the home page are badges to Long Trail’s Facebook, Twitter, and Youtube profiles. There is also a “beer compass” that fits as a nice brand touch for a product locator tool. Long Trail’s ecommerce page is the most basic out of all the competitors. There are very few offerings, and the product images are incredibly small making it difficult to see what the visitor is even purchasing. The descriptions of the products increase the positioning however, as they match up perfectly with Longtrail’s brand image.

20,619 likes exist on the Long Trail Facebook page. The moderator of the page posts usually once a day; multiple days between posts did exist in some cases. Each post on the page pertains to the events Long Trail Brewery is taking part in. Surprisingly enough close to 100 likes are gained on each post, and even a minimum of ten comments per post. Users are very interested in the brand, and what they have to say/post. This is the one Facebook page that lacks an Instagram feed embedded into it. However, the photos that are posted by the moderator most definitely gain great attention anyway. This shows that the brand could definitely have a strong 19

Instagram following if they decided to use that medium. The “About/Info” page lacks a lot of information. Only a link to the website exists and the Twitter user name. There is no link to the Twitter page.

Long Trail has the best Twitter account of any of the craft breweries discussed above. They have 6,269 followers that are incredibly vocal; tagging Long Trail frequently. The best aspect of the Long Trail Twitter account is the fact that the moderator has followed back to about every user following the brewery. This makes for great responsive interactions between brand and consumer; as the moderator often reaches out to “hash-taggers”. Posts range from event promotion, to just general interactions with the brand. Twitter is certainly Long Trail’s strongest social media outlet.

Long Trail also has a good amount of material on their Youtube channel; more than any of the other breweries listed above. Each video highlights special, seasonal brews with commentaries from the brew masters themselves. They also did a great job at drumming up publicity around their Irene relief brew produced after the damage brought on by Hurricane Irene. This did a great job of attracting even more consumers to the brand, and even improving the feel of the company with its established fans.

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SWOT ANALYSIS

Strengths

Weaknesses

1. Established Brand Image and Position

1. Digital Presence

2. Events, Concerts and Sponsorship

2. Connection of Digital Content

3. Digital Presence

3. Mobile Presence

4. Unique Offerings

4. Underperforming Brews

5. Accessibility

5. Region-locked

Opportunities

Threats

1. Craft Beer Industry Booming

1. Influx of Craft Breweries

2. Craft Beer Food Pairing

2. Shift in Purchase Decisions from Brand to Style

3. Growing Popularity of Music Festivals

3. More Craft Breweries Sponsoring Festivals

4. Craft Brewery Bubble

4. Competitors Expanding Geographic Footprints 5. Pseudo-craft Breweries

STRENGTHS: 1. Established Brand Image and Position: Magic Hat is all about “fun”, which is incredibly evident in everything that they do. From the unique names/styles of brews, to their brand alignment with the music and art scene, Magic Hat has established an image that their target market can/want to relate to. 2. Events, Concerts, and Sponsorship: The music scene is an important aspect of Magic Hat’s image. The brand has established excellent relationships with popular bands and music festivals across the country through sponsorships. Not only does Magic Hat sponsor bands and festivals, they also host their own events several times a year. Through these connections Magic Hat gains a ton of publicity on a yearly basis, and strengthens the brand even further as a result. 3. Digital Presence: Magic Hat has already established a large following of consumers. Facebook, Twitter and Instagram are chock full of fans, likes, and followers thanks to the brands consistent involvement in their social media profiles. Magic Hat is very 21

conversational with their fans though these social outlets. This is important in keeping a good relationship/image as well as a good voice/identity across platforms. 4. Unique Offerings: Unlike many craft breweries currently, Magic Hat stays away from overwhelming beer styles. None of the brands brews are so hoppy that one cannot taste it, or so dark it’s nearly impossible to drink; like the 1000 IBU IPAs, or sour beers currently competing for retail shelf space. Rather, Magic Hat focuses on putting their own spin on traditional recipes; like the Magic Hat #9 “Not Quite Pale Ale.” The brand uses this brews name to attract the majority of beer drinkers who enjoy pale-ales, and adds a light fruity taste to establish their uniqueness. 5. Accessibility: Magic Hat has quite a large reach for a craft brewery; a much larger reach in fact than the majority of craft breweries. Not only is the brand well established and accessible in the Northeast, they are beginning to reach out across the nation; establishing themselves as one of the more accessible craft beers around. Often times not one, but multiple brews can be found in retailers up and down the East, as well as a brew on tap at many bars and restaurants. WEAKNESSES: 1. Digital Presence: Although “digital presence” is previously listed as a strength, there is still plenty of room for Magic Hat to improve in the digital world. Outlets such as Pinterest, Youtube, and a mobile application should definitely be utilized by a company that has established such a strong Facebook, Twitter, and Instagram presence already, not to mention the importance of art and music in the brand. Many Pinterest users, particularly women, are already hash-tagging Magic Hat images all over the site. The brand should capitalize on this outlet; mainly to connect with their female market. Magic Hat has a Youtube channel, but only three out-of-date videos exist. Magic Hat has so much music, art, and general information to share, not to mention a beer locator on their website; why not create a mobile application for easy access to these wonderful offerings. Competitors have already done so with less material than Magic Hat. 2. Connection of Digital Content: Magic Hat already has some great digital presence online but lacks solid connections between outlets. The brand’s Facebook page has no link to the Twitter page and vice-versa. The Youtube channel is nonexistent from any social media, as well as their Myspace page; which is actually very impressive. It takes some digging to even find the Myspace page in fact. Nowhere on the Magic Hat website is there any information on the account. 3. Mobile Presence: Competing craft breweries have already established mobile applications for easy interaction between company and consumer. This easy access is something Magic Hat needs to use to their advantage to keep up with competing./expanding breweries. The brand has so much to showcase, why not have all content accessible from a smart-phone? 4. Unique Offerings: Although unique offerings often times work to Magic Hat’s benefit, occasionally this approach can backfire. About once a season, the brand produces a 22

brew that really falls short of their reputation. Not only can this hurt Magic Hat’s image, but the unfavorable brew is now taking up space in seasonal packages and on retail shelves; hurting the brands distribution. 5. Region-Locked: Considering the fact that Magic Hat has only one brewery in South Burlington, Vermont, production and distribution are majorily limited to the Northeast. Not to say that the brand doesn't distribute nationally, just that they focus their efforts in this region of the country. Even Magic Hat's metropolitan city specific Twitter accounts only highlight cities in the Northeast. The farthest Western Twitter account is Philadelphia while the most Southern is Baltimore. OPPORTUNITIES: 1. Craft Beer Industry Booming: The Brewers Association reported that approximately 7.3 million barrels of craft beer were sold in the first half of 2013. That represents a 13% increase in volume sales from the first half of 2012 (Brewers Association). Dating back to 2010, growth rates of 10% to 15% were continual posted (Brewers Association). By merely maintaining its existing market share in the craft brew industry, Magic Hat stands to make comparable profit increases through increased volume of sales. Any expansion within the industry is icing on the cake. 2. Craft Beer Food Pairing: An evolving trend in the beer industry is beer incorporated in cooking and paired with food. Magic Hat’s willingness to create unique beers and tweak traditional recipes lends itself well to food pairing. Some of the non-traditional brewing ingredients – like apricot, papaya, and chocolate – help Magic Hat to pair well with specific dishes and work well as an ingredient. Magic Hat’s passion for tweaking the classics recipes gives them an opportunity to make beer specifically designed to be combined with food. 3. Growing Popularity of Music Festivals: There was a 27.3% increase in average music festival attendance from 2010 to 2012 (Walker). Festivals recently overtook recorded music as the top revenue generator (Shoup). There are major and minor festivals across the United States. Magic Hat already has a strong presence at festivals and in festival sponsorship. The company can leverage the increased popularity and availability of music festivals to maintain current customers and expand in key areas. 4. Craft Brewing Bubble: Though the craft brewing industry is growing rapidly, it cannot support the influx of recently opened breweries jumping into the industry to cash-in (Peterman). Even with highly optimistic demand projections, the industry will produce far more beer than the market can absorb (Peterman). There will be plenty of qualified and hardworking craft breweries who will be unable to meet their financial obligations. Magic Hat has both an established market share and the financial resources to absorb short-term hits. This means that Magic Hat could find a number of talented, emerging breweries who face the prospect of closing or being bought out. Depending on geographic location of the brewery, these small companies could prove to be springboards for expansion or regional headquarters. 23

THREATS: 1. Influx of Craft Breweries: In 2012, there were 2,347 craft breweries operating – with 409 opening by March of that year (Brewers Association). It becomes difficult to produce a beer that looks and tastes different from thousands of competitors. It also becomes difficult to be noticed on store shelves and at bars. The high degree of competition means Magic Hat must take further steps to differentiate and gain attention. 2. Shift in Purchase Decisions from Brand to Style: Consumers are coming to stores and bars looking for a particular type of beer and then selecting a brand from within their desired type (Demeter Group). For example, a customer might go to the store looking for an IPA and select Magic Hat’s hIPA, after considering Harpoon IPA and Sierra Nevada’s Torpedo Extra IPA. Previously brand played a primary role in consideration with type as the secondary element. Because many of Magic Hat’s beers do not fit typical styles, they risk being passed over in the search process. Moreover, Magic Hat chooses to stay away from overwhelming beers like very intense IPAs and sour beers, which are two the styles that currently in vogue. 3. More Craft Breweries Sponsoring Festivals: With the growing popularity of music festivals, many craft breweries are following Magic Hat in festival sponsorship. For example, Dogfish Head recently sponsored the Firefly Music Festival, while Switchback recently sponsored The Precipice: A Vermont Music Festival. At some of the major festivals, competitors are even sponsoring alongside Magic Hat. For example, Sierra Navada is also a sponsor for Bonnaroo. Some companies are brokering exclusive beer sponsorship deals, like AB Inbev’s Goose Island did with Pitchform Music Festival (O’Loughlin). With current trends, Magic Hat now has to contend with more competition for festival sponsorships, festivals crowded with competitors/co-sponsors, and less festival sponsorship opportunities from which to choose. 4. Competitors Expanding Geographic Footprints: Many of Magic Hat’s key competitors as large craft brewers are expanding facilities in strategic geographic positions (Demeter Group). These breweries are expanding their reach buy buying and developing breweries on the opposite side of the country. For example, California-based Sierra Nevada and Lagunitas established breweries in North Carolina and Illinois, respectively. These secondary locations give the companies an edge in distribution and customer accessibility. They also provide Magic Hat with new, stiffer direct competition. 5. Pseudo Craft Breweries: As mentioned previously, industry giants AB Inbev and MillerCoors are taking advantage of the craft beer boom with their incubator organizations. These organizations make every attempt to appear as craft beer, but they have the funding, production process, and distribution of their parent company (Demeter Group). For these reasons, their beer can be offered at a lower price point and with a higher profitability. Due to their ownership and production, these beers are not technically craft beer, but many consumers are unaware and unable to tell the difference. This creates a potential for Magic Hat to be undercut. 24

TARGET MARKET DEMOGRAPHICS: Magic Hat’s target market consists mostly of males, ranging in age from 25 to 39. They are a part of the middle to middle-upper class with a steady midscale to upper mid income. For the most part they are single; if married they are without children. The target has a college degree and holds a white-collar occupation. The majority is Caucasian, owns a car, and primarily lives in a rental setting.

PSYCHOGRAPHICS: Individuals targeted by the Magic Hat brand have a creative side and love the arts; especially music. They are very proactive toward social change much like the brand. This stems mostly from the strong sense of personal identity the target holds, as well as understanding that they are the ones that must take the first step towards achieving the change they want to see. Considering the age range, the target is focused on having a good time; often enjoying the camaraderie that goes along with beer drinking. They look forward to public events like art hops, concerts, and festivals. Also price is not a major concern when shopping for beer, as quality is more important to the target market.

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PRIZM: Based off of the demographics and behavior of the target market, the segment groups that make up Magic Hat customers are a combination of the Up-and-Comers and the Bohemian Mix. This combination of segments is made up of a collection of mobile urbanites. They are a progressive mix of young singles, couples, and families ranging from students to professionals. Living in apartments and rental homes, the consumers are the early adopters who are quick to check out the latest movie, nightclub, laptop, and microbrew. Found in second-tier cities, these mobile adults, mostly age 25 to 44, include a disproportionate number of recent college graduates who are into athletic activities, the latest technology, and nightlife entertainment. The segment has a middle to upper-middle income; holding a white-collar occupation. TECHNOGRAPHICS: In terms of technographics, Magic Hat’s target customers are Creators. They are some of the most active users on the internet. They enjoy both consuming and creating online content. Many are artists and musicians, who use the internet as a showcase for their creative work. They enjoy sharing their content through pictures, text, video, and audio files. Many are active website owners and bloggers. These Creators are also active users of social media; they enjoy sharing their own content on social media, while also posting their opinions and consuming content. This group attends events, like those at the Artifactory, and later posts their pictures, video, and perspective. They enjoy interacting with Magic Hat through label design contests, artist showcases, and creative sponsorship opportunities.

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GOALS FOR MAGIC HAT MAINTAIN A LOYAL CUSTOMER BASE: Magic Hat currently has a strong market share as a large craft brewery, particularly in the North East. It is key for Magic Hat to remain true to its roots and maintain its strong base audience before moving toward expansion. With the recent influx of craft beer drinkers, Magic Hat stands to increase sales by maintaining its current market share.

ENGAGE CUSTOMERS IN MAGIC HAT CULTURE: A huge part of what sets Magic Hat apart is the creativity and social responsibility aspects of the company. Magic Hat stays true to these ideas with artist showcases, contests, and benefit events, to name a few. It is important for Magic Hat customers to view the brand beyond the beer. Customers who understand Magic Hat, consumer its content, and respect its values will have a deeper and longerlasting connection with the brand.

EXPAND PRESENCE IN KEY MARKETS: Though Magic Hat is a national company, its performance is strongest in its home region, the Northeast. From its start in Burlington, Magic Hat has made strategic efforts to establish itself in cities like Boston, New York City, Philadelphia, and Baltimore. Now Magic Hat has identified the Pacific Northwest and Southwest as potentially receptive areas. They must target cities beyond their established network and build awareness and interest in these areas.

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BIBLIOGRAPHY Brewers Association. "Craft Brewing Statistics." Brewers Association. Brewers Association, 2013. Web. 30 Sept. 2013. . Business Insights. "Future Trends in Beer and Wine." Business Insights. Business Insights Ltd., 2011. Web. 30 Sept. 2013. . Demeter Group. "State of the Craft Beer Industry 2013." Demeter Group Investment Bank. Demeter Group, 2013. Web. 30 Sept. 2013. . Logan, Tim. "Beer Sales Up, but Big Beer down." St. Louis Post-Dispatch. Stltoday.com, 09 Apr. 2012. Web. 30 Sept. 2013. . O'Loughlin, Sandra. "Goose Island Crafts a Three-Year Music Festival Sponsorship." Event Marketer. Red 7 Media, 30 July 2013. Web. 07 Oct. 2013. Peterman, Derrick. "Are We Headed towards a Craft Beer Bubble? Back of the Envelope Calculations Are Troubling." Ramblings of a Beer Runner. Blogger, 20 Aug. 2013. Web. 07 Oct. 2013. ResearchMoz. "USA Beer Market Insights 2013." Market, Trends, Share, Size Research Report. ResearchMoz, 19 July 2013. Web. 30 Sept. 2013. . Shoup, Brad. "Deconstructing: Coachella And The Music Festival Industry - Stereogum." Stereogum RSS. SpinMedia, 28 Jan. 2013. Web. 07 Oct. 2013. 28

Walker, Lindsey. "Music Festivals Increase in Popularity." HiLite Online. Www.HiLite.Org, 19 Aug. 2013. Web. 07 Oct. 2013.

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