Foodservice sales of tea in the U.S. are currently increasing at about 8% annually (Sundale, 2010). Within this sector, there is an increasing demand for loose leaf teas over traditionally low-quality tea bags. The Tea Spot has developed a patent pending tea filter, trademarked Brewlux, for the preparation and delivery of loose tea to-go in the mass foodservice market. Phase I USDA-NIFA sponsored research enabled The Tea Spot to make the optimal material selection for manufacture of the Brewlux filters - a compostable, U.S. corn-based resin. With the Phase II SBIR grant, The Tea Spot will develop a marketing and distribution strategy that makes the compostable Brewlux tea filter accessible and widely distributed in mass foodservice. The primary goal of the research is to refine the marketing strategy by optimizing product messaging for both types of end-users, shop owners and consumers. OBJECTIVES: The primary research objective is to refine the marketing strategy for a compostable corn-based to-go tea filter by optimizing product messaging for both types of potential end-users, shop owners and consumers, while addressing potential regional differences in receptivity through tests in select trial markets. A refined marketing strategy as well as a rollout and distribution strategy for the product will be developed based on trial market results. APPROACH: Initial messaging will be developed through one-on-one interviews with tea drinking consumers. Themes in consumer priorities and language preference will be used to create taglines, positioning statements, environmental statements, and will guide the creation of logo options. Variations on these will be used as inputs to choice based conjoint (CBC) analyses. Optimal messaging will be achieved through a series of stated and realized CBC statistical tests that hone messaging based on consumer choice. Messaging will be assessed in niche regions as well as across the U.S. Blind taste tests that address both discrimination and preference will thoroughly address a premium positioning of ecosteep against current competitors. Establishing a preference could aid in positive comparative advertising (Buchanan, 1985) and positioning against filter bag competitors. This type of experimental design is addressed by a modification to the Pick-j-of-k test, where respondents are asked to rank the products after tasting (Givon, 1989). We will evaluate in-field use, receptivity, and effectiveness of product messaging in two types of markets - target regions with municipal composting infrastructure and traditional test market regions representative of average U.S. demographics. We will evaluate behind-the-counter usability and feedback through observations and personal interviews with coffee shop employees. We will also evaluate in-store consumer product-use through feedback at each coffee shop as well as ethnographic observations. Qualitative results will instruct potential refinement of product design, consumer messaging, POS signs, and ultimately inform a marketing strategy update. Success in a trial store will be gauged by tea sales during the Brewlux trial period and by qualitative feedback from personal interviews with shop owners, baristas, and their customers. Variations in success may be linked to varying degrees of compost infrastructure and premium tea culture at a regional level, or by consumer demographic. Potential variations in success will inform a more focused regional strategy, a more wide-spread approach targeting certain types of coffee shops, or a combination of the two. PROGRESS: 2011/09 TO 2012/08 OUTPUTS: Activities: Throughout the first half of Phase II, we conducted 4 different types of marketing research surveys to optimize Brewlux attributes and messaging. This included one-on-one consumer interviews (40 participants), in-person comparative taste tests (200 participants), in-person choice based surveys (200 participants), and online choice based surveys (1500 participants). The in-person choice based survey project also involved mentoring a marketing student intern from the University of Colorado, Boulder, where he participated in administrating the surveys. Events: Our grant administrator, Maria Uspenski, participated in the CATP commercialization workshop conducted by Larta Institute in March, 2012. At the workshop, she presented a timed elevator pitch to a panel of experts and received feedback to assist in the commercialization of the product. Throughout this year, Uspenski has also participated in roughly 20 webinar conferences facilitated by Larta Institute related to the commercialization of the product. Products: Brewlux is US patent-pending and the name is a registered trademark in the US. We have also filed for a Patent Cooperation Treaty (PCT) which will allow us to patent the product in other countries as well. Our Phase II research to-date has also allowed us to create product demand models with variable inputs based on product attributes. We have also developed an informational website which features some preliminary results in preferred product messaging that resulted from our research. The updated webpage can be found at http://brewlux.com. In addition, roughly 40 audio and video recordings resulted from our one-on-one consumer interviews. However, these remain in-house recordings used for data analysis within the scope of this grant to gain deeper insight into consumers' general tea drinking habits, unmet needs, as well as specific product and messaging feedback. From this research we have developed concise product-use instructions and illustrations for to-go tea preparation using Brewlux. Dissemination: Discussions of collaboration with a leading global paper tea filter company are currently in-progress. These proposals include potential international distribution, international trade show collaboration, and co-branding opportunities between the two companies. In addition, potential international export opportunities are being explored through the Western United States Agricultural Trade Association (WUSATA) as well as the Colorado Office of Economic Development and International Trade. PARTICIPANTS: Jessica Burtenshaw, Principal Investigator: CMO of The Tea Spot, Inc., Burtenshaw performed overall project management throughout this study and guided the iterative research results that fed into each of the subsequent components. She helped develop the one-on-one interview guides (Objective 1, Task 2). She administered and analyzed the taste tests and one-on-one consumer interviews (Obj. 1 Task1, Obj. 1 Task 2) and supported the administration of the in-person and online Choice Based Conjoint surveys (Obj. 1 Task 3). She secured the in-person survey locations and negotiated compensation with coffee shop owners and also negotiated the online survey contract and required panel specs with Qualtrics (Obj. 1 Task 3). Burtenshaw honed the research focus throughout this iterative study and synthesized the interim report. Maria Uspenski, Collaborator: CEO of The Tea Spot, Inc., Uspenski spearheaded the commercialization plan development and write-up. She participated in the CATP commercialization workshop conducted by Larta Institute in March, 2012. At the workshop, she presented a timed elevator pitch to a panel of experts and received feedback to assist in the commercialization of the product. Throughout this year, Uspenski has also participated in roughly 20 webinar conferences facilitated by Larta Institute related to the commercialization of the product. She was also integral in guiding the research focus throughout the study and in editing the interim report. Collin El-Hossari, Collaborator: Contract Employee of The Tea Spot, Inc., El-Hossari helped develop the taste test experimental design and data analysis (Obj. 1 Task 1). He also helped develop the one-on-one interview guide and participated in administering the interviews (Obj. 1 Task 2). El-Hossari programmed the online survey in Qualtrics and was responsible for its data management (Obj. 1 Task 3). He also contributed to Task 1 and Task 2 data analysis and write-up. Stephen Beville, Ph.D., Consultant: As an individual consultant, Beville was the primary researcher guiding the Choice Based Conjoin surveys (Obj. 1 Task 3). He developed the experimental design for Task 3 using the outputs of Task 2, with guidance of Burtenshaw and Uspenski. He designed, administered, and analyzed data from the pilot study, in-person survey, and subsequent national online survey. The models of the iterative surveys built upon each other, refining the final econometric models of consumer preference. These models also addressed consumers' willingness to pay, and market share forecasting. Beville contributed to a large portion of the interim report write-up, relating to Task 3. Michel Valois, Consultant: Owner of Chez Valois Branding & Design, Inc., Valois and his team helped develop branding materials, including logo and packaging options for Brewlux, as well as product use illustrations at the onset of our study. They then developed revised versions of each based on our Objective 1 research results. TARGET AUDIENCES: Not relevant to this project. PROJECT MODIFICATIONS: We plan to make minor adjustments in the target regions chosen for our remaining research due to implications from our econometric models. Based on our research results to-date, including consumer preference for recyclability over compostability, we plan to refocus three of our trial markets from regions having city-wide composting infrastructure to metropolitan regions, where people consume more to-go beverages. Our econometric model results suggest that consumer preferences are surprisingly uniform at the regional level. All regions were quite uniform in preference to Brewlux compared to conventional paper filters once attributes were controlled for. This in and of itself is extremely positive for Brewlux, suggesting that there is a strong market opportunity for a structured loose-leaf to-go tea filter to replace existing paper filters, and that the potential market size is large. However, where an individual lives has a strong relationship with amount of to-go tea consumed, with people living in metropolitan and urban regions consuming considerably more than individuals living in suburban areas. While willingness to pay (WTP) for Brewlux appears to be slightly higher in metropolitan and urban areas as well, compared to the suburbs, the research did not find that the differences in WTP are statistically significant. This result occurs after controlling for to-go tea purchasing behavior. However, people who purchase to-go tea have higher WTP for Brewlux compared to people who do not regularly purchase to-go tea. Given that metropolitan and urban residents consume more to-go tea suggests that it's likely that Brewlux will have greater uptake and success in urban and metropolitan areas. The results from this study also indicate that Brewlux will have greater success with younger individuals. Finally, model forecasts suggests that demand for Brewlux is elastic, responding sharply to price. The models suggest that excessive prices have the potential to dramatically reduce market share over base levels. Reusability, improved infusion rates, and made in Colorado/USA attributes appear to be key in gaining greater market share. These attributes will be highlighted in the test market trials remaining to be studied in the second half of our Phase II research. IMPACT: 2011/09 TO 2012/08 The results from our research to-date have prompted us to make updates to the product, the marketing messaging, and our marketing plan. The series of econometric models created from our research indicate that consumers have a strong preference for Brewlux over conventional paper filters - this finding is nearly unanimous across all regions and individuals. At the attribute level, an increased infusion rate of tea compounds positively influences choice; recyclability is preferred to compostability; construction in Colorado and the USA are preferred to overseas; reusability is preferred to non-reusability. Tests of willingness-to-pay (WTP) for Brewlux suggest that values do not differ across regions. At the individual level, clear differences in WTP are present. Younger people and those who regularly purchase to-go tea are willing to pay more for Brewlux compared to older people and those who do not regularly purchase to-go tea. Individuals who prefer the lack of caffeine in herbal teas and drink tea for health benefits attach higher values to Brewlux than those who do not. Income, gender, per week tea consumption, or recycling and composting habits, are not found to significantly influence WTP. Change in market share is forecasted under different Brewlux configurations, suggesting demand for Brewlux is elastic and highly affected by price. Reusability, improved infusion rate, and made in Colorado/USA attributes appear to be key in gaining greater market share. After we launch the product at the conclusion of the grant study, we can assess potential changes in conditions such as increased domestic sales and export sales. In the long term, we hope to positively influence the hot drink culture in the US as well as internationally by making zero-calorie premium loose tea, a natural source of antioxidants, more widely available to the general public while maintaining target pricing.
