Case Study

Case Study

Cow Wow Cereal Milk

Cow Wow Cereal Milk is a two-year-old company that makes milk in breakfast cereal flavors. Founded by Christopher Pouy, a former advertising copywriter seeking to capitalize on a childhood love, it is based in Los Angeles and employs 10. By putting a child-friendly cow on the package and giving his flavors names like Fruity Trudy and Chocolate Chip Cathy, Mr. Pouy branded his product for 5- to 12-year-olds.

THE CHALLENGE: Targeting the right customers

Following unexpected publicity from media outlets and promising sales on a college campus, Mr. Pouy found himself second-guessing his audience — even though he knew that to sell to high schoolers and college students, he would have to rethink his whole brand. Is he targeting the right market?

THE BACKGROUND

Schooled in the advertising business at Secret Weapon Marketing, the company that linked a pink bunny to Energizer batteries, Mr. Pouy, 38, worked at big ad agencies and ran his own shop called Chicken Pox — “to spread ideas virally” — for more than a decade. Then his enthusiasm dwindled. “I’d done the same kind of projects so long, I was no longer getting the gratification,” he said. “I wanted to create something I had a stake in and reignite the passion and excitement.”

Mr. Pouy asked himself: “What can I make that’s not already out there? What would I like?” Those questions led him back to his childhood breakfast table, where the best part of his morning cereal came when he put down his spoon, lifted the bowl to his lips and gulped the remaining milk infused with the flavor of Froot Loops or Cocoa Puffs.

Why not give children a more exciting, vibrant range of flavored milk than the Neapolitan palate of chocolate, vanilla and strawberry? Knowing he’d be selling to parents and wanting to “do it in a responsible way,” Mr. Pouy insisted on 1 percent organic milk, no artificial flavors or colors, and organic cocoa powder and cinnamon. With six grams of added cane sugar, each 8.5-ounce serving had 150 calories. For packaging, he chose Tetra Paks that did not need refrigeration and had a shelf life of up to a year.

With $175,000 of his own money, he made his first 9,000 cases in late 2012. A distributor landed some of his milk in convenience stores and gas stations in Southern California, and Mr. Pouy got Cow Wow into Legoland and the Los Angeles Zoo. Then, in April 2013, with the product still in limited local distribution, Cow Wow went viral, much to Mr. Pouy’s surprise and joy — at least initially.

Proclaiming that Cow Wow “tastes like heaven,” the late-night TV host Jimmy Kimmel riffed on the product for nearly a minute. “Just when the Twinkie dies, we come up with cereal-flavored milk. I’ve never been prouder to be an American,” he said. In June 2013, Cosmopolitan magazine displayed the Fruity Trudy package and hailed Cow Wow as the lead “fun item” in a list of fun stuff. And in September 2013, BuzzFeed included Cow Wow in its list “27 Reasons It’s the Greatest Time to Be Alive.”

It was great publicity. But there was one problem: the age of the viewers and readers. Mr. Pouy said he quickly realized “these are not the people I’m trying to sell my product to.” That disconnect nagged at him as he began talks with an investor, the owner of an incubator, who would ultimately acquire a majority stake in Cow Wow and become a silent partner, leaving Mr. Pouy as president.

By November 2013, still aimed at children, Cow Wow was being put on shelves in the first of 900 Kroger supermarkets. Because Mr. Pouy lacked the resources to offer discounts and coupons, his milk was priced about 20 cents higher than flavored milks in Tetra Paks offered by Organic Valley and Horizon Organic. His sales did not meet expectations. “I was groomed on the more conceptual, marketing side of things, not on pricing or how to enter a market,” Mr. Pouy said. “What I found out was, Mom is the most frugal shopper of them all, and price made more of a difference than I thought it would.”

Then in May his local distributor, who happened to serve Santa Monica College as well, got Cow Wow into the school’s food court. Fifteen cases sold in the first week. The next week, Mr. Pouy stood near his product and watched. “Pretending to be a teacher, I saw people taking all three flavors,” including the new Cinny Minny, he said, “and that’s all they bought.”

THE OPTIONS: Two days later, he met with his partner to discuss three possible paths

■ Stay the course. Stick with young children, who are, by far, the biggest consumers of milk. This option was appealing because high schoolers and college students are notoriously fickle. What if Cow Wow was a fad? To pursue this option, Mr. Pouy’s next step would be to target private and charter schools and expand national sales in Kroger and other grocery stores with a marketing push to educate mothers about the benefits of flavored milk and alert children to Cow Wow’s flavors. The expected cost: $100,000.

■ Change course. Follow the buzz and the sales and pitch the product to millennials. To pursue this option, Mr. Pouy would rebrand, redesign, repackage and reformulate. He would try to hook 18- to 35-year-olds with hipper cows and a larger package with a resealable cap instead of a straw. To cut costs, he would switch to a nonorganic formula, “since millennials are less concerned about nutrition than mothers.” He would focus on selling to colleges and convenience stores. Cost: $100,000.

■ Adopt a hybrid strategy. Try to market to both age groups simultaneously. To pursue this option, Mr. Pouy would need to create two distinct marketing campaigns, one targeting mothers, the other millennials. With little overlap, the cost would double to $200,000.

Your task: Summarize the key considerations in the case.  Evaluate the potential of each option and then select the option you believe is best for his business to focus on for long term success.  Why did you choose that option?

Submit as a word doc in roughly 2-3 pages double spaced.