Savanna Bolin-Hayley Renneker-Chelsea Ritter-Jessica Seitz

SITUATION ANALYSIS SUMMARY

Fairlife is a company that has positioned themselves as a premium milk provider. With the added benefits that Fairlife is able to provide with their milk, comes a higher price point than their competitors which they must overcome. Fairlife is in competition with products that have been on the market for a while and are well known by con-sumers. Due to the changes in the milk industry and the soft drink industry alike, Fairlife has an opportunity to be the providers of a healthy alternative to the sugary drinks on the market. Their sustain-able and responsible farming practices that they use will allow Fairlife to be a company that flourishes based on the environmentally friendly trend. The decreased amount that consumers drink milk and spend on milk will be challenges that Fairlife must overcome. The target market for Fairlife will be those who are in search for a product with the additional nutrition benefits that Fairlife offers and a product that is produced using environmentally friendly practices.

A. INDUSTRY ANALYSIS: PESTLE

Political Factors

The government regulates non-alcoholic beverages with the Food and Drug Administration (FDA). The FDA regulates the manufactur-ing of these products, and if companies fail to meet these standards established by the FDA, they could be subject to fines. Some of these factors can influence the operations of soft drink companies. Changes in laws and regulations such as taxation requirements, FDA changes, and environmental laws can affect the industry. Political conditions in foreign countries such as conflicts, governmental changes and border restrictions also have the possibility of altering the soft drink

industry. There are also human rights issues with possibly different policies and regulations when a company has operations in a foreign country. Along with regulations form the FDA, the increased aware-ness of the environmental problems have influenced legislation as well. This includes waste management like the quantity of packaging going through the system and the increase of recyclable materials. The ability to enter emerging and developing markets is also a factor to consider.

Economic Factors

The tough economic times have led to some challenges in most indus-tries, including the soft drink and milk industry. With the recession back in 2008, customers were less likely to spend money on unneces-sary products such as soft drinks. The price of imports, exports, and the exchange rates are also something that the soft drink industry has to consider. The larger companies operating in a global environment can watch this and make adjustments during the times of economic struggle. Commodity prices also introduce a risk into the soft drink industry. The cost of raw materials can fluctuate, which can be chal-lenging. The soft drink companies are in a very competitive field, meaning that they can’t afford to change their prices drastically. They will have to be prepared for the raising costs of raw goods and adjust accordingly. In addition, the milk industry has been declining for the past 4 years, while the prices have been rising.

Social Factors

A huge social factor influencing the soft drink industry is that there is an increased interest in a healthy lifestyle in the United States. This in strongly influencing sales, and causing people to search for alternative

drinks such as bottled water and diet soft drinks and teas. Along with the increased desire for a healthy lifestyle, people are concerned with nutrition. The largest section of the US population is baby boomers, and as they age they are more aware of their health. The demand for healthier drink options is at large. Consumers are also trying out new diets like things with higher protein and less sugar. Another social factor affecting the industry is the lack of brand loyalty people are ex-hibiting. It is much easier now for people to switch between products then it has been in the past. Consumers do not necessarily care about what brand they are trying, but rather what benefits they can get from that brand. This is a challenge that faces the soft drink industry as they try out new ways and benefits to attract people to their products.

Technological Factors

Technological factors can range from things such as advertising and marketing to package design and new equipment. The different mediums through which a company can advertise are changing now more than ever. Between social media and the web, many options have opened up. The ability to effectively use these various mediums to advertise their products can greatly impact sales. The packaging de-sign has become important not only for the company, but for people as well. There was in an increase in sales once cans and plastic bottles were first introduced due to the portability of the product. Now how-ever, people are becoming aware of the impact of these items on the planet and want easily recyclable packaging. Both new equipment and new factories has led to an increase in production, making it easier to get these items out on the shelf faster. The new technology also helps to introduce new product lines, like new flavors, healthier options, and caffeine free goods.

Legal Factors

The legal factors surrounding the soft drink industry overlap with both the political and environmental factors. With the politics, some new laws are enforced depending on the current situations. The same is true for environmental factors. The increased awareness of envi-ronmental problems has caused new legislature to pass in some areas, which can pose the threat of fines and other legal problems if the laws are not followed.

Environmental Factors

As mentioned previously, the concern for environmental issues is increasing. There is a push to recycle and be conscious of the environ-ment. For example, companies are encouraged to decrease the quan-tity of packaging that goes through the waste management system, lessen the consumption of natural resources, and increase the recy-cling packaging materials. As this continues to become a bigger issue, there may be more laws put into effect regarding controlling packag-ing and other elements that affect the environment. This is something to pay attention to when companies go to package their products. While they like to keep these products portable, they also have to ac-count for the packaging that they use and try to make it as recyclable and environmentally friendly as possible.

B. COMPANY ANALYSIS

The Coca-Cola Company states that their mission is “to refresh the world, to inspire moments of optimism and happiness, and to create value and make a difference.” This mission statement is reinforced

through a focused company vision that is split into seven distinct parts: 1. People2. Portfolio3. Partners4. Planet5. Profit and 6. Productivity.

People is representative of their effort to create a workplace where employees are inspired to become the best that they can be. Portfolio addresses their work to present the world with a host of quality bever-age that satisfies consumer wants and needs. Partners refers to the mutually beneficial relationship that Coca-Cola has created with their customers and suppliers. Planet represents Coca-Cola’s goal of build-ing and supporting sustainable communities. Profit is the company’s obvious, overall goal of maximizing its return to shareholders. Lastly, productivity addresses the company’s work to be highly effective and fast moving. They also boast many company values that align with their mission to create both a successful product and a brand that inspires creativity, passion, and fun. These values include leadership, collaboration, integrity, accountability, diversity, and quality.Coca-Cola boasts highly impressive sales and profits. During the fiscal year of 2014, the company made $45.93 billion in sales revenue and $7.1 billion in net income. Those high numbers are, however, consis-tent with a downward trend in growth. From 2012 to 2013, sales rev-enue growth was down 2.85%. From 2013 to 2014, revenue dropped another 1.64%. The same is true for overall profit growth. From 2012 to 2013, net income growth was down 4.82%. From 2013 to 2014, growth was down a staggering 17.31%. The company markets on a huge, global scale. Their marketing activi-

ties seek to drive sales growth of Coca-Cola in emerging markets, in-crease brand value in developing markets, and grow profit in already developed markets. Furthermore, they utilize marketing to achieve long-term growth in per capita Coca-Cola consumption and to ul-timately hold a larger share of the worldwide nonalcoholic beverage market. Coca-Cola claims to develop their marketing plans via prod-uct and packaging research, brand positioning attempts, precise cus-tomer communications, and solicitation of customer feedback. Once developed, their marketing plans tend to include 3 basic elements: advertising, point-of-sales merchandising, and sales promotions.As a result of declining sales both within the company and the entire soft drink industry, Coca Cola is putting an increased focus on mar-keting its new, reduced-calorie, naturally sweetened Coke Life, tea products, and – of course – Fairlife Milk.

C. PRODUCT ANALYSIS

Fairlife Milk is a premium milk product. They are “committed to improving the health and vitality of the planet and its people” through providing a “purely nutritious milk.” Their mission is “to improve the health and vitality of the world.” The ultra-filtration process creates a nutrient enhanced product. Fairlife Milk has 30% more calcium 50% more protein and half the sugar in other milks; that includes lactose free milk and organic milk. Fairlife is lactose free. In order to come up with a product with such properties, the milk is ultra-filtered. This means that it is put through five different filters designed to divide up the water, minerals, lactose, protein and fat in the milk. The different properties are then put back together in an alternative amount. Fairlife is also processed in such a way that leaves it with a longer shelf life prior to being opened for the first time. Once it has been opened it has the same life as regular milk. Fairlife is not an organic product,

but the 92 different family owned farms that the milk comes from are focused on sustainability and responsible farming practices. The cofounder, Mike McCloskey, was a veterinarian prior to starting the Fairlife, and he specialized in dairy cows. His respect for the cows and understanding of what is best for them has transpired over to the dairy cows used on the farms where the milk comes from for the Fairlife product. Fairlife practices a closed system of production. “We grow our own crops; We make our cows feed; We fill our own trucks; We ultra-filter our own milk; We put it in our own bottles.” They pride themselves are keeping their product within their company from “grass to glass.”Fairlife Milk comes in four options: Reduced fat, Chocolate, Fat Free and Whole milk. It is available in half gallon and single serve sizes and is substantially more expensive than regular milk. Fairlife is avail-able in many retail store including Target, Kroger, Walmart and other smaller retail stores. They are present on Facebook, Pinterest, Instagram, and Twitter. They use the hashtags “believeinbetter and #fairlife. Fairlife partnered with the Coca Cola Company in 2012 for distribu-tion.

D. COMPETITIONFairlife will be in direct competition with regular milk product as well as almond, soy and organic milk. Besides the other milk options, the competition includes alternative drink options to milk; this includes, but is not limited to juices, sodas, teas, lemonades, alcohol, energy drinks, and coffee. With the health benefits of Fairlife, the nutritional supplement drinks are also competition. Products such as Carna-tion Instant Breakfast, Odwalla, Nestle, Yoo-Hoo and Ensure are also competition. With the association with Coca Cola, Pepsi becomes a competitor too.

Regular milk is not a highly competitive market due to the fact that there are not a lot of brands of milk. Dean’s milk, Borden milk, Nestle and store brand milk are the most commonly found. These milk brands are relatively close in price. Fairlife is not only a milk product; it is a health, protein and nutritional supplement drink product. This leads them into the competitive market of nutrition drinks which includes protein drinks and powders, and drinks like PowerAde and Gatorade. The competitive strengths Fairlife has are that it has partnered with Coca Cola in order to be able to distribute their product across the nation. Fairlife is also a brand that cares for their consumers, their employees (both human and cow) and their product. Fairlife will have to overcome the strong, well asserted companies and persuade con-sumers that the extra cost is worth the extra benefits.

E. TARGET CONSUMER ANALYSIS

According to Mediamark Research and Intelligence’s report on milk in general, women use milk more often than men. This aligns with the social trend of women being the shoppers for the household. The age group statistics are relatively evenly divided. Likewise, the aver-age household income of the users are evenly distributed. Overall, the results provide insight to the fact that milk users are very diverse and encompass a wide variety of characteristics. Another source stated that the Fairlife target market was women ages 25-39 who “aspire to wholesome mindful living.” The anticipated target consumer would be someone who is health conscious due to the enhanced nutrient benefits of the Fairlife Milk product. These people would also be aware of the impact that the products they use have on the environment from start to end or from “grass to glass.” These consumers are those individuals who like to

know where there product comes from and how the processes affect the environment as a whole. They also care about their wellbeing and what they put inside their bodies. They would be moderate to heavy users of milk in general. The target consumer would also be someone who has the financial ability to spend more on a milk product then they currently do.

F. SWOT ANALYSISStrengths Coke’s distribution channels More Protein More Calcium Less Sugar No Lactose Shelf Life of 90 days prior to opening Environmentally friendly and responsible farming practices Weaknesses New to the milk market More expensive than competition Not organic People do not associate milk with Coca Cola Confusion about Coca Cola’s role Opportunities Brand loyalty from Coke drinkers Decrease in soda drinkers Lactose intolerant market Current healthy actions trend Increase in Nutrition supplement use Premium Milk product Regular milk is already increasing in price Environmental awareness

Threats Possible negative effects from association with Coke brand Consumers misunderstanding how the product is made If the product takes off then the demand will exceed supply Milk sales have declined in the past 4 years Competition

II. RESEARCH OBJECTIVES

Based on the research that was completed the following questions have become evident:Who is going to buy this product?Are consumers willing to buy a more expensive milk product?Do consumers care about the said benefits of the Fairlife Milk prod-uct? If so which ones?Are consumers drinking milk regularly?Does the fact that the Coca Cola Company is associated with the Fair-life Milk product bother consumers?

III. RESEARCH PROCEDURES

The objectives for the primary research that was conducted were: Determine who the target consumers should be Determine the important aspects of Fairlife Milk Product to the Consumers Learn about the Consumers behavior in correspondence to Milk.The research strategy in which the objectives were sought after was through an online survey. The survey consisted of strategic ques-tions whose answers aid in resolving the research objectives. The survey was distributed to the Facebook accounts that we each have.

This method reached a diverse audience based on the fact that we are friends with different people on Facebook and are from different areas. The survey was as follows:

What is your gender?MaleFemale

What is your age?

18-24 25-3435-4445-5455-6465 and up

What is your family profile?

SingleSingle with KidsMarriedMarried with Kids

What is your approximate average household income?

$0-$24,999$25,000-$49,999$50,000-$74,999$75,000-$99,999$100,000-$124,999$125,000-$149,999$150,000-$174,999

$175,000-$199,999$200,000 and up

Where do you live?

UrbanRural

What do you drink on a weekly basis? (Please check all that apply.)

WaterMilkSodaJuiceAlcoholCoffeeEnergy Drinks

Other

How often do you drink Milk?

NeverLess than Once a MonthOnce a Month2-3 Times a MonthOnce a Week2-3 Times a WeekDaily

How satisfied are you with your milk product? 1 2 3 4 5 6 7

Have you heard about Fairlife Milk product?

YesNo

If you have heard about Fairlife, what do you know about it?

If you have heard about Fairlife, how did you hear about it?

If you have heard about Fairlife, have you tried it? What are your opinions on the product?

Would you be willing to pay more for milk if it has these qualities: less sugar, more protein and calcium, no lactose, and farming practices that are sustainable and responsible.

YesMaybeNo

Please rank the benefits in order of importance to you. Less Sugar More Protein More Calcium Sustainable and Responsible Farming Practices No Lactose

Would Coca Cola Company name on a Milk product deter you from buying it?

YesMaybeNo

What are your opinions on a milk product being associated with the Coca Cola Company?

How do you spend your time? (hobbies, work, interests)

IV. FINDINGS

From our primary research, we learned what a sample of 79 people think about milk in general, as well as their awareness and attitudes toward Fairlife Milk as a product of the Coca-Cola Company.

The respondents to our survey were predominantly female (78%), most fell into the age range of 18-24 (46%), and an overwhelming amount were single without kids (54%).

We gathered further information about our survey respondents by asking them how they spend their time. The most common responses to this question were work, school, church, reading, and various out-door activities including fishing and hiking.

One goal of the survey was the find the attitudes that respondents held toward milk in general. We sought to find how often they drink milk, if they are satisfied with their milk product, and what bever-ages they commonly chose to drink instead of milk. We found that most respondents were heavy users of milk, and a significant amount of respondents were extremely light users, but there weren’t many moderate drinkers. To break it down into numbers: 29% of respon-dents said they drink milk “never” or “less than once a month”, while 43% of respondents said they drink milk “two to three times a week” or “daily”.

Only 61 of the 79 respondents chose to share their satisfaction with their current milk product. Of those who did respond on a scale of

one (extremely unsatisfied) to seven (extremely satisfied), the average number was 5.25. While this informed us that most people are mod-erately satisfied with their current milk product, it did not provide us with any insight into what respondents are or are not satisfied with.

How satisfied are you with your milk product?Min. Value Max. Value Avg. Value Standard Deviation Reponses 1.00 7.00 5.25 1.87 61 To discover what respondents were choosing to drink instead of milk, we provided them a list of beverages and asked them to choose which ones they drink over the course of a normal week. While 51% of re-spondents listed milk as one of their choices, the other most popular choices were water (95%), coffee (53%), and soda (52%). Those who listed an ‘other’ option listed tea.

Another goal of our survey was the measure the awareness and at-titudes that respondents had toward Fairlife Milk. When asked if they had ever heard of the Fairlife Milk product, 95% answered “no”.

Of the 5% who answered “yes”, they attributed their awareness of the product to a commercial on TV, a coupon in the mail, and a setup in Earth Fare grocery store. When these particular respondents were asked what they knew about Fairlife, their answers were:

“High quality milk from sustainable farming” “A healthy milk option” “That it’s made by Coca-Cola” “Not a lot”

From this data, it was apparent that the overall awareness of Fairlife is very low. Even those who had heard of Fairlife Milk did not have much knowledge about the product. Of the 79 survey respondents, only one individual had actually tried Fairlife.

To gauge which Fairlife benefits would be most appealing to consum-ers, we asked respondents to rank a list of five benefits (less sugar, more protein, more calcium, sustainable and responsible farming practices, and no lactose) in order of importance, one being most important and five being least important. The most popular benefits among respondents were sustainable and responsible farming, more

calcium, and less sugar. The least important benefit to respondents ap-peared to be no lactose; 47 people ranked this option with a five.

When respondents were asked if they would pay more for premium milk with the aforementioned benefits, the results weren’t heavily swayed in one direction or the other: 25 respondents answered “yes”, 16 answered “no”, and 37 answered “maybe”. Without having tried the product or having heard much about it prior to this survey, it seemed to be difficult for respondents to decide if they would purchase or not.

The last general goal of our survey was to determine whether or not having the Coca-Cola Company associated with Fairlife milk would have any effect on a respondent’s likelihood to purchase. The respondents were asked if seeing the Coca-Cola Company name on a milk product would deter them from buying it. The results were relatively close: 41% of respondents said it would not deter them, 28% said it would deter them, and 32% answered “maybe”.

The survey also asked respondents to elaborate on their opinions about a milk product being associated with the Coca-Cola Company. While a few respondents answered that they were indifferent, or that an association wouldn’t matter one way or another, the majority of respondents felt strongly. Some respondents had positive opinions:

“I would want to buy it more. I love coke!!!” “It is nice to see a company try something new” “Wouldn’t bother me. FDA approval isn’t a short term process, nor do I think Coca-Cola would jeopardize their name in any way. They must believe in the product”

But the majority of comments were from those with highly negative opinions:

“With a company that is so associated with something that is not good for you I would hesitate to believe that they would

produce something that would be Farm Fresh” “Doesn’t convince me that anything about it could be healthy since Coke dissolves nails...” “Coca-Cola is bad for your teeth and all around health. Milk is supposed to be good for the body” “I’ve heard some rumors about what coke can do. I don’t know if I trust then to make nutritious enough milk.” “It associates it more with capitalism which makes it less ap pealing”

Overall, it was apparent that seeing Fairlife Milk associated with Coca-Cola would lead a consumer to believe that the milk isn’t as nutritious as it claims to me.

V. RECOMMENDATIONS

Based on the secondary research and the primary research that that was conducted the following personas were developed. Sydney Miller is a hard working professional who cares about herself and others. The products she uses are those that will benefit her and not hurt her. She is successful in what she does and has the expend-able income to spend on a premium milk product that provides the benefits that Fairlife has. The environmental friendliness of the Fairlife company ensures Sydney that the product she is getting is good for her. The association with the Coca Cola Company does not bother Sydney because she believes that the FDA would find anything that would potentially cause a negative side to the Fairlife product.Keith Brown is a college student who is an avid Coca Cola fan. He is interested in Fairlife Milk due to the fact that the Coca Cola Company is involved in its brand. He is single and enjoys being able to spend his

money on himself. Keith Brown is studious and enjoys study breaks that are productive. Fairlife Milk provides an alternative to Coke and provides him the nutrition he needs. He has an expensive taste and the premium spin on the Fairlife Milk product comes with the status he enjoys. His spare time is comprised of cooking, jogging and listen-ing to music.Charlotte Woods is a married mother who teaches elementary school. She is devoted to her family and her job alike. Her schedule is kept busy with the activities of her three children and husband. Charlotte is a strong believer in healthy diets and exercise along with a good edu-cation which she works hard to communicate in the classroom and at home. Hiking and biking are a few of the activities she enjoys with her family. The great ideas for her classroom and home originate from her time spent on Pinterest.

V. RECOMMENDATIONS

Keeping the three personas in mind, the advertising campaign for Fairlife should be molded around the idea of the small farm origin be-ing at the forefront. With this being said, the current advertisements being used by Fairlife do this in a roundabout way. The T.V. advertise-ment discusses the ultra-filtration that the milk undergoes and how that leads to more calcium and protein. The visual aspect is the farm-ers and families with the product.

Our proposition is to build on the “Believe in Better” tagline that they currently have in use. We want to employ multiple advertising tactics to communicate the brand and what it is to our consumers. First we want to increase awareness of the product. In order to do so we will create in store promotional pieces. These will provide an image of a farmer on location holding the product with the key benefits of the product listed. The hashtag #believeinbetter will also be visible. The current website is strong therefore the store promotional piece will also feature the website address in addition to a QR codes that con-sumers can scan on site to drive the consumers there so they can learn more about Fairlife.

Social media is a prime outlet to use to promote such a product as this one. Coca Cola has a substantial following across all social media plat-forms. Coca Cola could release content to their social media accounts regarding the Fairlife product and pushing their large group of fol-lowers to connect with Fairlife’s social media accounts. Alongside this action by Coca Cola, Fairlife would need to increase their presence on their accounts. They would need to ensure that they are interacting with their followers and providing materials that they want to see on their feeds.

The information that we suggest Fairlife should publish would be about the farms where the milk comes from. The stories about the farmers themselves and their families in addition to the occurrences on the farm with day to day activities would provide the consum-ers / followers a story to become interested in. Consumers tend to be drawn toward stories in general but also stories they can relate to. Those farmers who have children could bring forth their children’s view point on the farm from which the Fairlife Milk comes from. A child’s point of view will be taken with more sincerity than an adult who could be saying anything.

In addition to just publishing these stories to the social media ac-counts, we believe a blog where the farmers can provide more expan-sive stories would be beneficial since social media restricts the length of the posts. A blog would be a medium that the pictures from Insta-gram, recipes from Pinterest, teasers from Twitter and much more can be woven together to create the story of Fairlife Milk.

An app would also be made available to reach the stories of the farm-ers. In addition, a feature that would tell someone where Fairlife products are available would be included in the app design. Links to the various social media accounts would be accessible through the app, too.

The television advertisements that we would want to create would mirror the same themes that the social media accounts and the blog would present. The stories of the farmers and their families on the farms where the Fairlife product comes from would be the selling point. The benefits of the Fairlife Milk product would be equally, if not more important than the stories, but the stories would bring consum-ers into where they can learn about the benefits.

Multiple versions of the television ads would be ran, each version focusing on a different aspect of the Fairlife product and the benefits. The versions would be based around the following:

#Believeinbetter Milk;#Believeinbetter Farming;#Believeinbetter Nutrition;#Believeinbetter Lives.

This proposition would be successful due to the fact that the key ben-efits of Fairlife would be exploited. Each target consumer would pull out the most important aspect of Fairlife to them based on these ideas. Between the social media, blog, and television advertisements the target consumers are reached through one if not more of these outlets. The key to Fairlife’s success is using Coca Cola’s social media presence to jump start Fairlife’s own presence as well as the persuasion that the benefits of the product outweigh the extra costs.

The overall feeling of these advertisements would maintain the same clean and simple design that the website currently has. Images would be those that could be found on the farms like the images currently used on the website. The advertisements must refrain from becoming cartoony or juvenile since Fairlife is positioned as a premium milk product based on the price.

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