Cheers to Online Beer

IESE EMBAs Step up to Carlsberg Challenge

20/03/2015 Barcelona

IESE Business School
(From left to right) Pau Llardén, Francesc Busquets, Guillermo Coll, Marta González, Marcos Pérez and Leticia Pelizán, members of the winning group in Carlsberg’s challenge / Photo: Olga Sedano

Imagine a gourmet beer that your local supermarket doesn’t carry. You can personalize the label and purchase it online with 48-hour delivery to your doorstep. And then enjoy follow-up bottle collection service.

This is the proposal that has won a challenge posed by beer-maker Carlsberg to the second-year students of IESE’s Executive MBA (EMBA).

Each year Professor of Production, Technology and Operations Management Marc Sachon joins forces with a renowned international company to design a project for the Operations Management course. The idea is to give students a chance to “apply the knowledge they have acquired to a real-life, specific challenge that a company is facing,” he says.

Refreshing the Customers Other Beers (or Channels) Can’t Reach

Carlsberg’s challenge to EMBAs this year stems from the company’s goal of opening a new line of business in the United Kingdom consisting of direct online sales. Two requirements were stipulated: the proposal had to be consistent with the brand and with company strategy and it had to be feasible.

Carlsberg already has 500 brands, 16 of which it sells in the UK through traditional channels—supermarkets, bars and restaurants. The EMBA teams had a clear directive: proposals could not cannibalize Carslberg’s existing market by offering the same product online. Instead, Carlsberg wants to reach new customers – people who are not already buying Carlsberg beer through traditional means.

Knowing What the Customer Wants … Probably

“We did market research on the reasons why each customer segment buys beer online. This was the key when it came down to choosing from among the wide range of value propositions that we were considering. And we learned a valuable lesson: it’s better to ask what the customer wants instead of making assumptions,” says group member Leticia Pelizán.

Once they set aside their preconceived notions and listened to the needs of real people in the UK, the group discovered that the age 30+ market sector was most interested in the idea.

In terms of logistics, the group proposed using only part of Carlsberg’s infrastructure in the UK, which would be decided based on the country’s population and the number of people likely to buy the product today, according to survey results.

This would mean a very low initial fixed capital investment and few operational expenses. A flexible way to develop a new line of business, because if it didn’t work, the financial risk would be low.

The project not only contemplated the launch of this new line, but also two other stages if the business grew. In the second phase, existing Carlsberg warehouses would be incorporated, but with in-house couriers to make the final stretch from the warehouse to the customer’s home. In the third phrase, warehouses would be built to handle online orders. The warehouses would collaborate with couriers for the final delivery to customers.

According to group members, what tipped the balance in favor of the winning proposal was its realism, its easy implementation, and the low risk that Carlsberg would face. The value proposition fits perfectly with the strategic plan of the brand: to offer ‘something more than beer,’ and do so in a sustainable way.”

Standing Out From the Rest

The ability to monitor what takes place on the online sales platform and the inclusion of a user comment area were other distinctive features of the winning proposal.

Another aspect that made this group stand out with respect to the competing groups was their analysis of the tax implications of importing the beer to the UK. This factor was on Carlsberg’s radar due to the high import taxes that the company pays in the UK.

“It was a real-world project that Carlsberg was working on. This added the pressure of being able to contribute something tangible to the company,” says Pau Llardén. And not only that: none of the group members had experience in the food and beverage industry.

The Dream Team

“With this project, participants fine tune their teamwork skills and learn about a timely and relevant topic, like multichannel business,” notes Marc Sachon.

This group fit together like pieces of a puzzle. Team members Francesc Busquets, Guillermo Coll, Marta González, Pau Llardén, Leticia Pelizán and Marcos Pérez all come from different industries. “We distributed tasks according to the skills and motivations of each member while also building a coherent overall plan. We worked together to define our commercial and operations strategies and from that point each person contributed his or her expertise in concrete terms,” explains Leticia.

“We respect each other as people and we always tried to bring out the best in each other,” adds Marta.

Prof. Sachon is proud of the students who participate in the class each year and of the projects they develop. “All of the companies that have participated in the challenge year after year have been very satisfied with the ideas the students have presented. These are companies like BMW, Escada, Hugo Boss, Media Markt, SEAT, or Swarovski.”

One sign of satisfaction is the invitation that the winning group received from Carlsberg. They will travel to Copenhagen in April to present their proposal to the company’s senior management team.