MKTG301University of Washington Battle of the Bubbles Case Discussion The primary reading for this exam is “Battle of the Bubbles.” ((((NO OUTSIDE RESOURCE

MKTG301University of Washington Battle of the Bubbles Case Discussion The primary reading for this exam is “Battle of the Bubbles.” ((((NO OUTSIDE RESOURCES EXCEPT THE Battle of the Bubbles))))) ~1~
The early darling of fizzy water is losing ground to big soda, and
shareholders are questioning its management.
By Lauren Etter and Craig Giammona
When the value of Nick Caporella’s company, National Beverage Corp., reached $2 billion in the spring
of 2016, its top executives raised a congratulatory toast not with Champagne, but with cans of LaCroix,
its bestselling brand of flavored sparkling water. That summer, Caporella wrote a press release
attributing the recent success to “Genius innovation!” By April 2017,
the company was worth $4.1 billion.
It’s been a thrilling ride for LaCroix, which for more than two decades languished in obscurity on the
bottom shelf of the water aisle, in the shadows of Perrier’s and San Pellegrino’s green glass bottles.
Around 2013 the brand began to gain recognition and market share, as consumers collectively shunned
sugary sodas. Over the next five years, LaCroix’s sales jumped almost eightfold. “They were really the
first large brand to go after millennials that way and target their health and wellness concerns,” says
Alexander Esposito, a research analyst at Euromonitor International.
LaCroix is still the king of the sparkling water aisle, but the competition is crowding in. Last year,
PepsiCo Inc. released bubly, a sparkling water backed by a marketing arsenal that LaCroix has struggled
to match. In 2017, Coca-Cola Co. paid $220 million for Topo Chico, a Mexican mineral water with a
very strong, loyal following. Meanwhile, a large number of startups have rolled out “craft” sparkling
water brands that promote artisanal ingredients, antioxidant boosts, and water infused with cannabis
(marijuana). LaCroix’s sales for the four weeks ended July 14, 2019 fell more than 15% from the prioryear period, even as its main competitor, bubly, saw sales surge 96%, according to Bloomberg
Intelligence.
~2~
Things for Caporella and National Beverage are
now getting worse. National Beverage is being
sued by shareholders and former employees, and
reports of internal strife and personality clashes
suggest deeper problems. Interviews with a dozen
current and former employees, executives, and
business associates describe Caporella as a harddriving, idiosyncratic boss. Even though National
Beverage is publicly traded (its ticker is FIZZ), he
retains ultimate control. He’s chairman and chief
executive officer, owns almost 74% of the
company’s shares, and even pilots his own
corporate jet. As the stock has plummeted, his
net worth has fallen from $4.7 billion to about
$1.9 billion.
Over 35 years, Caporella turned a family
construction business into a sparkling water
dynasty. Born in the western Pennsylvania town of
Connellsville to Italian immigrant parents, he
earned money by selling scrap metal and coal
pieces he’d collected alongside
the railroad tracks. His father, a miner, later moved the family to South Florida and began working in
construction. In the 1960s, Nick founded his own construction company, Caporella
& Sons.
Caporella got into the soda industry in 1978, when he sought to diversify his business by purchasing a
chain of drive-in movie theaters and a soft-drink bottling plant. In 1985, Caporella created National
Beverage, headquartered in Fort Lauderdale, to purchase Sara Lee’s Shasta soda brand. In 1992,
WinterBrook Beverage Group in Seattle purchased a sparkling water called LaCroix from G. Heileman
Brewing Co., a bankrupt beermaker in La Crosse, Wis. When WinterBrook too filed for bankruptcy
four years later, National Beverage acquired the company’s assets, including LaCroix, which at the time
was sold in bottles and came in three flavors—pure, lemon, and lime.
Caporella became entirely devoted to his beverage business. In the early 2000s, the company expanded
distribution of LaCroix in cans. It also unveiled a new logo with a calligraphic font and brush-stroked
waves. He also boosted the carbonation so the fizz would retain its “bite.” This served to contrast
LaCroix with the more lightly carbonated mineral waters on the market.
In 2006, Beverage Digest released a report showing that soda sales in the U.S. had declined for the first
time in two decades, as consumers grew concerned about obesity and Type 2 diabetes. That year,
LaCroix staked out an early position as a health-conscious alternative to soda, and became a sponsor of
the Susan G. Komen Breast Cancer Foundation. However, sales did not increase a lot.
~3~
Inside the company, a small team of executives quietly began working to revitalize LaCroix. They
decided to market it as different from both elegant mineral waters and sugary sodas, aiming squarely at
diet soda drinkers. The company expanded LaCroix’s distribution outside its
traditional regional markets and into major retailers such as
Target and upscale national grocers like Whole Foods that
would prominently feature the product. By 2013, National
Beverage had “double-digit volume gains” for LaCroix.
The LaCroix brand continued to evolve. New flavors, such as
“pamplemousse,” (French for grapefruit) were introduced. The
brand relied on Instagram, Twitter, and recipe blogs instead of
traditional advertising. Brides posted pictures of themselves with
LaCroix on Instagram, and hashtags such #LaCroixLove and
#LiveLaCroix started trending. Fans posted locations of where to buy
the newest flavor, sending consumers on treasure hunts. Whole
Foods bakeries made cakes shaped like LaCroix boxes. A turning
point was 2015, when the New York Times Magazine published
a “Letter of Recommendation” for LaCroix. “Aside from the
can, everything about LaCroix is gentle,” it read. “Even the
bubbles are small and frothy rather than spiky making it easy to
put away a couple in one sitting, totally guiltfree.”
However, for all the success of LaCroix, it turns out that just about anyone can inject carbon dioxide
into water, flavor it, and package it. By 2017, Coca-Cola had introduced its sparkling varieties of Dasani
and Smartwater. PepsiCo’s bubly generated serious social media buzz, and was featured in a Super Bowl
ad with Michael Bublé. (Get it?) A little more than a year in, bubly has surpassed $170 million in sales,
and its share of the sparkling water market has jumped about 3 percentage points, to 7.7%.
PepsiCo introduced bubly as a new sparkling water line that “combines refreshing and delicious flavors
with an upbeat and playful sense of humor to shake up the sparkling water category while keeping it real
with no artificial flavors, no sweeteners, and no calories.” The brand began as a new Instagram feed: “0
calories. 0 sweeteners. 7394.62 bubbles. approximately. introducing new bubly sparkling water in 8
flavors.”
Each bubly flavor features bright, bold packaging, unique smiles for every flavor, and comes with its own
witty greeting on the tab (like “Hey u,” “hiii,” “oh hi” and “yo”) and personal messages on the can
(such as “I feel like I can be open around u,” “hold cans with me,” and “love at first phssst”), for
maximum enjoyment and smiles.
A big challenge for any new product in a crowded, competitive sparkling water space is how to
distinguish itself among all other brands in the category. In creating bubly, PepsiCo created a
~4~
vibrant brand, connecting with consumers through humor and positive—dare it be said “bubly”
—exuberance. Available in a dozen flavored varieties, each drink is represented by a unique color;
but they all sport a smile along with an effervescent personality.
Todd Kaplan, Vice President for PepsiCo’s
Water said, “When we looked at the
sparkling water category, we saw an
opportunity to innovate from within by
building a new brand and product from
the ground up to meet consumer needs.
We created bubly to provide consumers
with a great-tasting, flavorful, unsweetened
sparkling water in a fun, playful, and
relevant manner that is unlike anything
we’ve seen in the sparkling water category today.”
One of the newest challengers in the market is Waterloo Sparkling Water Corp., from Texas.
Waterloo promises “a bigger, brighter bubble.” Waterloo now has 10 favors, and is catching up to
bubly (12) and La Croix (21). Sean Cusack, co-founder of Waterloo, said “People have come to trust
that we will always deliver on taste with every single new produce we add.” Although, the Waterloo
brand is less than two years old, it has already seen massive growth. Waterloo reported that by January
2019 more than 100 million Waterloo cans were sold in the US.
“There’s more share to be taken from LaCroix because they’ve had the top spot for the longest
time,” said Brandon Cason, Waterloo’s co-founder and chief marketing officer. “If
you’re drinking a LaCroix, there’s a hint of a flavor, but it’s very tinny, it’s very thin. There’s not a lot
there,” Cason says.
Beyond taste and favor profile, Waterloo tries to differentiate itself from other sparkling water brands
with its packaging. The cans break from modern designs by using traditional fonts for the brand name and
colors with fruit illustrations and details. “When you look at the branding on our product, it’s almost
instantly classic, like a brand that you already know. There’s always a first step to someone picking up
your
product, you have to be interesting,” Jason
Shiver, CEO of Waterloo, said.
Shiver summarizes things by saying, “We saw
that consumers were seeking, but not finding,
healthy, authentic, transparent and better-foryou beverage choices, that tasted great. So, we
dared to challenge that expectation and
launched Waterloo Sparkling Water.
Waterloo is a rebel at heart, and Waterloo has
been breaking the
~5~
mold since day one. Waterloo is a bold take on sparkling water, making its mark by focusing on fruitinspired flavor and aroma and delivering a much richer, more authentic taste”.
And just last year, one more company entered the
market: Spindrift, a Boston-area startup that touts “farm
to bubble” flavors extracted from real fruit juices.
Spindrift claims that it is the first sparkling water made with
only real fruit, and highlights this fact in it print
advertisements that focus on celebrating the simplicity of
real-squeezed fruit.
With all this competition, LaCroix’s market share in the
four weeks ended June 16, 2019, had dropped by almost 4
percentage points from the same period in 2018, to
14.5%, while bubly, Spindrift, and Waterloo saw their
market share increase, according to data from Bloomberg
Intelligence.
Kenneth Shea, a senior food and beverage analyst at
Bloomberg Intelligence, says he doesn’t see a “quick fix”
for LaCroix, largely because the company’s competitors
are “tougher” than they’ve ever been in
this category and appear to be in it for the long term. It isn’t enough to roll out another flavor or a
different-shaped can. The company needs to think about how it can “disrupt the market.” For LaCroix,
another liquid miracle can’t come soon enough.
TO
BUY.
~7~
Exam 2
MKTG 301
Here is our second exam. The same principles that applied in the first exam
apply to this exam too.
The primary reading for this exam is “Battle of the Bubbles.”
To recap:
(1) Read all the exam questions. Make sure you understand them. If you do
NOT, then email me. It is your responsibility to make sure you understand
what I am looking for in each question. Try not to ask your friends. The best
person to ask is me.
(2) Read carefully, the article. It is somewhat long. As you are reading,
highlight parts of the article that relate to the different questions asked in the
exam. Make sure you see the larger version of the two ads on the last two
pages of the exam.
(3) Draft an answer to each question. If you find yourself repeating the same
things over and over, then something is wrong. I might have written a bad
question. My intent was to write questions that limit the overlap. Email me if
you are confused.
(4) Make sure you cite your sources. Your answers should use words that are
totally your own – not someone else’s. If you are using words that are not your
own, such as lines from our textbook that I asked you to copy OR my words
that I used in class, then you MUST cite your sources.
(5) Remind yourself: You should NOT do any outside research. Your grade
will be lowered if your answer is found to have guided by anything you found
online.
(6) Review the textbook AND your notes. Ask yourself: What additional points
should I add?
(7) Reread the article and add things to your answer.
(8) Take your exam to the Academic Enrichment Center for them to review
grammar and punctuation. Poor writing, grammar, and punctuation will lower
your grade. See the section below on writing.
(9) Post your completed exam to Canvas by the exam due date: November 22,
2019 2:00M.
Please follow this exam format;




Use a cover page that has your name on it
Do NOT put your name on any page after the first page.
Double space your answers. No single space answers.
Please left justify your paper. Your paper should look like this exam:
Left justified only
Answers that will get the maximum marks:
• Answer the question as asked.
• Are complete.
• Exceed The Intelligent-Thirteen-Year-Old Test – that is, that the answer
is much, much better than an intelligent thirteen-year-old could give.
• Demonstrate depth of understanding of the appropriate marketing
concepts, terms or ideas
• Show that the student has spent time and energy thinking about and
writing up her/his response
• Are written in clear, easy-to-understand language.
• Are professional presented
Further clarification of the above is as follows:
A answers are great answers to the question asked. An A answer is complete,
intelligent, shows depth of understanding, is creative and is expressed in
clear, easy-to-understand language that is free of grammatical mistakes. An A
answer shows that the writer spent time and effort thinking beyond the
obvious.
B answers are good answers: they show a good level of understanding, have
many key points and are generally well written, but may have some
grammatical problems.
C’s represent okay answers; these are just ordinary answers; the response is
nothing special, mimics lecture notes or text narratives in its response, lacks
any great insight and may have serious grammatical mistakes.
D answers are just barely passable. They are short, brief, and simple in
their observations. D answers parrot back textbook information and lecture
notes without further interpretation and are superficial. D answers can have
serious grammatical errors that significantly interfere with reader
understanding.
F. Answers that do not answer the question asked, no matter how long and
detailed, are F answers.
Writing
Writing is an essential business skill. Clear writing means clear
communication. Clear communication means that the reader can easily
understand the points you are trying to make. Clear communication, then, is
the foundation for any intelligent, meaningful discussion/conversation. Your
own clear writing can be used as a competitive advantage to differentiate you
from other college graduates. Please consider the following two options in
light of this.
Option 1: Submit your exam for grammatical review before final
submission. I would strongly suggest that you use the Academic
Writing Center. The Writing Center is the designated place, here at
Dominican, dedicated solely to helping students with their writing. If
you use the Writing Center, have the person who reviewed your exam
email me saying that she/he saw you.
Option 2: Don’t submit your exam for grammatical review before final
submission. I will read the exam until the fifth, major, grammatical
mistake. I will then stop reading the rest of your exam and your
total exam score will be based on what I have read up to that point
Plagiarism
Plagiarism is using the ideas and/or writings of another and claiming them as
one’s own. Plagiarism is most often thought of copying, word for word, what
someone else has written and passing it off as one’s own. Plagiarism is also the
very similar copying of someone else’s words and/or ideas without giving that
person credit. It is still plagiarism if two sentences, two paragraphs, or two
papers appear to be almost similar even though there are some differences.
Plagiarism is best avoided by carefully acknowledging the sources of one’s
words and/or ideas. Student work found to be plagiarized will be given an
F.
Exam 2 Questions
The first four questions are related to the BusinessWeek article, “Battle of the Bubbles.”
Q1a. Explain the relationship between levels of involvement and consumer decision
making. As part of your answer, explain why it is important for marketers to understand this
relationship.
Q1b. The article tells us that LaCroix was the first flavored sparkling water in the market,
and because of this, they have a significant number of very loyal consumers. Jason Shiver,
Waterloo CEO, says in the article, “There’s always a first step to someone picking up your
product,…” Now compare the decision-making process for LaCroix’s loyal consumers with
first-time buyers of Waterloo Sparking Water. Please state explicitly any assumptions you
make about LaCroix and/or Waterloo consumers. As part of your answer explain why
marketers need to understand System 1 and System 2 thinking. Incorporate those insights
into your answer as well.
Q2. There are two print advertisements (LaCroix and Spindrift) included in the article. (A
large version of each is at the exam’s end.) Compare the two ads in terms of each ad’s
ability to gain consumers’ attention. Make the strongest case you can for which of the two
ads is more effective in gaining consumers’ attention. Note: The strongest answers will
apply design principles studied in class.
Q3a. Explain the importance of positioning to successful marketing and its relationship to
segmentation and targeting.
Q3b. Now describe and evaluate the positioning strategies for each of the brands in the
article: LaCroix, bubly, Waterloo, and Spindrift. Make the strongest case you can for
whether any of the brands are “successfully positioned” in the market. Note: Do not discuss
positioning statements in this question.
Q4a. All successful marketing involves developing a positioning statement for the
company’s brands. Explain why this is true.
Q4b. Write a positioning statement for two of the brands discussed in the article. Please
explain “the logic” for why you included the points that you did in each positioning
statement. Note: Just don’t write the positioning statement and expect it to be selfexplanatory. Make sure you explain why you wrote what you wrote.
This last question is not related to the article.
Q5. Look at this commercial for the no-longer-produced Hummer:
http://vimeo.com/6783307. After viewing the commercial, answer this question:
Q5a. Explain the importance of Maslow’s Hierarchy of Needs to marketers.
Q5b. Now, explain which levels of Maslow this commercial illustrates. Support your answer
from what you saw and heard in the commercial.

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