I am interested in evidence of what drives sales of a new beverage
product - distribution, or marketing?  I know that it's a bit of a
chicken-or-egg question - that they go hand in hand.  My research
focuses on a new, funky beverage.  It's a beverage that is not
self-explanatory when seen on the shelf, nor does it have a big-brand
name behind it - it's the first product of a new company.  Therefore,
I would deduce that marketing/advertising is imperative to increased
sales - that increased distribution alone will not drive up sales. 
However, I could be wrong.

I think that what I am after is: in the beverage category (or any
category, for that matter), how have new products that have enjoyed
successful sales gone about distributing limited dollars toward the
launch - is it weighted more heavily toward marketing so that vendors
can see the effors being made to push the product (and people will
know what it is/that it exists), or is it weighted more heavily toward
distribution efforts, so that it's simply there for more people to see
and try?

Any information would be helpful.  If you need to cite examples from
outside the beverage category, that would be OK too. Thanks very much.

---

Request for Question Clarification by sgtcory-ga on 25 Oct 2002 11:16 PDT

Hello Rex,

I have collected a comprehensive analysis, using two rivals in a
particular field as the basis for study of distribution vs marketing.

Is this the type of information you are seeking, or am I off track?

Thanks for the clarification -
SgtCory

---

Clarification of Question by rex8-ga on 25 Oct 2002 12:03 PDT

Yes - I think that would be a valid way to go about answering my
question - go for it.  Thanks!

Rex,

As requested, I will use my comments, as an 'official' answer. I will
post it below. I'll go one up on posting the information that I gave
below, and offer some more insight with concern to sites that offer
Distribution and Marketing tips as well. I found a few more sites that
will lend a hand in your research.
Here they are:

Test Marketing and Pricing
http://www.entrepreneur.com/Your_Business/YB_Node/0,4507,678,00.html
Description : Has a few links that offer advice on pricing to sell,
and offers a few low cost marketing strategies. Well worth the read.

Beverage Digest Online *My Choice*
http://www.beverage-digest.com/
Description : I discovered this one late today. This is a 'defacto'
site that you should probably take note of. I'm ashamed I missed it
the first time around.

Alcoholic Drink Marketing
http://www.bev-alcohol-expert.com/leikindhome.htm
Description : Just in case your product is geared toward this area. If
not, they still have some valuable information

Beverage Marketing
http://www.beveragemarketing.com/
Description : Has reports for a hefty price. Still may be of use once
you get your product up and rolling out the door.

To find the answer I found in the comments below I searched the web
for:
limited distribution marketing
://www.google.com/search?q=limited+distribution+marketing

coke versus pepsi
://www.google.com/search?q=coke+versus+pepsi


To find the sites I listed above I searched for:
distribution and marketing
://www.google.com/search?q=distribution+and+marketing

distribution and marketing drink
://www.google.com/search?q=distribution+and+marketing+drink


I sincerely hope this answers your questions. If you feel like there
are any open ends, I would be happy to get you more information.

Thanks for the tough question and good luck with your drink!
SgtCory




Original Answer
--------------------------------------------------------------------

We can narrow down where both approaches will get a product, and you
can decide what you feel is important after reading this answer.
 
Why not take a classic approach to this marketing concept? That is
exactly what I found myself doing when I started fishing for ways I
could tackle your question, and come up with a satisfactory answer. I
am going out on a limb a little with this approach, so if you need
clarification, please ask for it before giving this answer a rating,
and I would love to dig up more statistics.
 
Pepsi has had a superior challenge in the overseas markets, so I want
to take you back to 1972, and use this as a basis for your study of
distribution versus marketing. It was in 1972 when Pepsi first
introduced it's popular soft drink into the Russian market, and there
were many decisions to be made as to which approach to take in
tackling this new geographic hurdle.
 
Q. What drives sales of a new beverage product - distribution, or
marketing?

While Pepsi was not a new product at the time, it certainly was new to
this foreign market. As far as the top level executives were
concerned, they were indeed marketing a new product, with little
knowledge of the potential success or failure.

"Pepsi was the first 'western product' to be sold to consumers in
Russia."
http://www.termpapers4u.com/business/cokepepsi.htm

Pepsi was able to grab 'first-to-market time', and we can analyze the
factors that Coke had to deal with, using this data as a platform to
address your question. Coke later introduced their beverage to the
same market, and was faced with the big dilemma :

"Do we market our product as heavily as we can, or do we distibute as
much as we can and hope for our brand recognition to simply catch on?"

According to the referenced report, it is easy to infer that Coke
opted to simply count on brand recognition to market their product.
They only built two plants, at a total cost of $85 million dollars, in
hopes of success. Simply put, this approach left Coke out in the cold.
They were unable to gain market share, and unable to deliver
'credible' brand recognition. Over the years since 1994, Coke was
however able to market themselves as a brand. Here is a more current
reference to confirm this data:

Coke takes over
http://www.iconex.net/pepsi349/articles/fortune.htm 
 
Data Compiled from:
http://www.termpapers4u.com/business/cokepepsi.htm ( about 1994 ) 

Now we just need to analyze what we just read - 

Q. Which was first to market? What method of product awareness does
this fall under?

Pepsi was the first to market. This can cleary be seen as a move to
market their product first, saving distribution for how the market
reacts. If they had decided to distribute Pepsi in mass quantity, with
no concern for the marketing, it would probably not be seen as the
'brand name' soda that is today, and see far fewer numbers with repect
to sales.
 
Q. What did Coke do in response, and what method of approach did they
take?

Coke saw Pepsi gaining market share, and decided to hastily get their
product out the door as quickly as they could. They put themselves in
the position of chasing Pepsi, leaving them with little options other
than set up a small scale distribution of their product. They
distributed their product, and later tried to market it with 'brand
building' campaigns, with little to no success until years later.

Q. What about spending? Where should I push?
 
I am a firm believer that you need a loyal customer base that likes
your product before you can distribute it very heavily. But how are
people going to hear about your product if you don't market it? I
believe one can tell the relative success or failure of products by
marketing it to a demographically targeted crowd first, and then
analyzing the results. If the results are in your favor, then comes
the time to disrtibute your product in some form of mass quantity.
 
This is not to say however that you should not distribute on a smaller
scale while you are marketing. Spend a major portion of dollars on the
first 'test' marketing, all the while offering easy access to your
product by high label consumer agencies and the like.
 
This page below outlines the introduction of soda 'cans' as a vehicle
for soft drinks. I am offering this as a means to clarify the very
subtle way that Coke was dropping hints about it's marketing strategy
and distribution. Here is an excerpt:

"Some of our bottlers don't want cans and we have no intention of
forcing anybody to take them"
http://www.gono.com/history/softdrink.htm 

I think that was a perfect example of testing the market response of a
marketing effort. Coke had spent the dollars to test cans on Airlines
and Railways with great success. Since this was such a success, the
limited distribution proved an effective route, and a great addition
to the 'brand building' campaigns that were ever present in the 50's
and 60's.
 
 
So in summary - while Pepsi was not a 'new' product, it was new to the
market in the sense that Russians had never heard of it. Pepsi opened
a small distribution channel, leveraging this with high level
marketing. The success was to be the first brand name 'soda pop' in
the Russian market. This can translate into your drink, running
limited distribution and gaining loyalty. All the while you would put
an emphasis on branding what you can - even if it is a little at a
time. It's better to have 10 loyal customers that love your drink,
than spread yourself heavily, and have 100 customers that dislike your
product, and associate it with a cheap name brand - like Coke did in
the first phase of it's market run.

Very good answer.  Thanks, SgtCory!

Rex6 --

Treating distribution vs. visibility as a chicken-and-egg situation
applies ONLY if you don't have a researched and well-planned strategy.

There have been more than 500 microbreweries started in North America
since 1995.  About 40 fail every year, yet more than 50 start each
year.  While they compete in a highly-regulated business, there are
lots of experiences from which to learn.  They each had different
levels of skills and funding at start-up.  But they faced what you
will face, whether your beverage is alcoholic or not -- highly
efficient, well-funded companies with national images backed by local
representatives furnishing the product through a wide range of
outlets.

I'm fascinated by the topic of distribution, especially for start-up
businesses.  In the inevitable consolidation phase of a business, one
or two channels of distribution survive.  Indeed, the reason you pay
so little for a personal computer today is largely due to Dell and
Gateway proving that PCs could be sold effectively with half the
profit margin required by Computerland.

But covering this topic in less than a book would be unfair.

Let me suggest using Google to read the thousands of articles on
microbreweries to help gather information that you can use in talking
to potential distributors and resellers.  These Google searches will
provide some interesting articles:
microbreweries + distribution
microbreweries + promotion
microbreweries + advertising

Best regards,

Omnivorous-GA

Thank you, Omnivorous.  I will certainly look into the microbrewery
examples.  I would also be very interested in SgtCory's analysis
(mentioned a few days ago) if you're out there, SgtCory.  Thanks.

Hello again Rex,

Thanks for your patience while waiting for me to get back with you. I
chose to actually use the beverage market, to offer insight on
possible similar challenges you could face in the future. I offer this
as a comment, because of the opinion based nature of the question.
(This is just my opinion, so I can't really justify it as an answer to
your question)

Here is what I originally came up with:

We can narrow down where both approaches will get a product, and you
can decide what you feel is important after reading this answer.

Why not take a classic approach to this marketing concept? That is
exactly what I found myself doing when I started fishing for ways I
could tackle your question, and come up with a satisfactory answer. I
am going out on a limb a little with this approach, so if you need
clarification, please ask for it before giving this answer a rating,
and I would love to dig up more statistics.

Pepsi has had a superior challenge in the overseas markets, so I want
to take you back to 1972, and use this as a basis for your study of
distribution versus marketing. It was in 1972 when Pepsi first
introduced it's popular soft drink into the Russian market, and there
were many decisions to be made as to which approach to take in
tackling this new geographic hurdle.

Q. What drives sales of a new beverage product - distribution, or
marketing?

While Pepsi was not a new product at the time, it certainly was new to
this foreign market. As far as the top level executives were
concerned, they were indeed marketing a new product, with little
knowledge of the potential success or failure.

"Pepsi was the first 'western product' to be sold to consumers in
Russia."
http://www.termpapers4u.com/business/cokepepsi.htm

Pepsi was able to grab 'first-to-market time', and we can analyze the
factors that Coke had to deal with, using this data as a platform to
address your question. Coke later introduced their beverage to the
same market, and was faced with the big dilemma :

"Do we market our product as heavily as we can, or do we distibute as
much as we can and hope for our brand recognition to simply catch on?"

According to the referenced report, it is easy to infer that Coke
opted to simply count on brand recognition to market their product.
They only built two plants, at a total cost of $85 million dollars, in
hopes of success. Simply put, this approach left Coke out in the cold.
They were unable to gain market share, and unable to deliver
'credible' brand recognition. Over the years since 1994, Coke was
however able to market themselves as a brand. Here is a more current
reference to confirm this data:

Coke takes over
http://www.iconex.net/pepsi349/articles/fortune.htm

Data Compiled from:
http://www.termpapers4u.com/business/cokepepsi.htm ( about 1994 )

Now we just need to analyze what we just read -

Q. Which was first to market? What method of product awareness does
this fall under?

Pepsi was the first to market. This can cleary be seen as a move to
market their product first, saving distribution for how the market
reacts. If they had decided to distribute Pepsi in mass quantity, with
no concern for the marketing, it would probably not be seen as the
'brand name' soda that is today, and see far fewer numbers with repect
to sales.

Q. What did Coke do in response, and what method of approach did they
take?

Coke saw Pepsi gaining market share, and decided to hastily get their
product out the door as quickly as they could. They put themselves in
the position of chasing Pepsi, leaving them with little options other
than set up a small scale distribution of their product. They
distributed their product, and later tried to market it with 'brand
building' campaigns, with little to no success until years later.

Q. What about spending? Where should I push?

I am a firm believer that you need a loyal customer base that likes
your product before you can distribute it very heavily. But how are
people going to hear about your product if you don't market it? I
believe one can tell the relative success or failure of products by
marketing it to a demographically targeted crowd first, and then
analyzing the results. If the results are in your favor, then comes
the time to disrtibute your product in some form of mass quantity.

This is not to say however that you should not distribute on a smaller
scale while you are marketing. Spend a major portion of dollars on the
first 'test' marketing, all the while offering easy access to your
product by high label consumer agencies and the like.

This page below outlines the introduction of soda 'cans' as a vehicle
for soft drinks. I am offering this as a means to clarify the very
subtle way that Coke was dropping hints about it's marketing strategy
and distribution. Here is an excerpt:

"Some of our bottlers don't want cans and we have no intention of
forcing anybody to take them"
http://www.gono.com/history/softdrink.htm

I think that was a perfect example of testing the market response of a
marketing effort. Coke had spent the dollars to test cans on Airlines
and Railways with great success. Since this was such a success, the
limited distribution proved an effective route, and a great addition
to the 'brand building' campaigns that were ever present in the 50's
and 60's.


So in summary - while Pepsi was not a 'new' product, it was new to the
market in the sense that Russians had never heard of it. Pepsi opened
a small distribution channel, leveraging this with high level
marketing. The success was to be the first brand name 'soda pop' in
the Russian market. This can translate into your drink, running
limited distribution and gaining loyalty. All the while you would put
an emphasis on branding what you can - even if it is a little at a
time. It's better to have 10 loyal customers that love your drink,
than spread yourself heavily, and have 100 customers that dislike your
product, and associate it with a cheap name brand - like Coke did in
the first phase of it's market run.

That was a big chunk of data to swallow, and I hope it touches on the
questions and concerns you addressed in your question.

Thanks for the great question!
SgtCory

Rex,

The above states:

"so if you need clarification, please ask for it before giving this
answer a rating"

This was posted as a comment, so it does not count as an answer. I
forgot to remove that part after weeding it out of such verbage. It's
just a comment and you are not charged for it.

Thanks again-
SgtCory

Sarge --

Looks like an answer (and a darn good one) to me!

Best regards,

Omnivorous-GA

SgtCory,
That's a very good answer.  I know it was a difficult question, with
many possible answers - yours was a good way of approaching it, and
I'm happy with your analysis.  Therefore, go ahead and post it as the
answer (if that's the best thing to do) and then I will rate it. 
Thanks again!

-rex8