JDCC 2019 Academic

Marketing Case

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 Planting a New Garden
On October 17th 2018, Cannabis became legal to purchase and consume in Canada. Despite distribution issues
and the odd mouldy cannabis delivery, the ‘budd-gates’ were opened with a whole industry emerging
overnight; a rapidly changing industry that has had and will have a subsidiary effect on many other industries,
such as pharmaceutical, grocery, and yes... food & beverage.

Lay of the Land

Gardeners is a mid-level chain restaurant established in 1995, with the flagship location at Bloor and Dufferin in
downtown Toronto. Gardiners has successfully expanded to 15 locations across Ontario, with big success in
suburban and urban areas. Their restaurants are new, modern, warm and chic and their menus bring a tasty
twist to classic dishes.

On January 2, 2018 key stakeholders, including the CEO, Tyler Miel, CFO, Hazel Del Mendez and Head Chef,
Robin Keefer as well as three members of the marketing team arrived early to the Bloor & Dufferin Toronto
location in an enraptured state.

“Why didn’t this work, we should be selling a tonne of these!” said Miel. ​”I told you this was a bad idea, nobody
wants to get high 2 hours after they get home. This was never going to work,” ​said Del Mendez​. “Maybe we
should all eat one of these​” said Keefer. ​“If we can’t figure this out in 2 hours, at least we didn’t show up for
nothing.” ​Keefer, referring to the recent failed venture of cannabis-infused brownies Gardeners added to their
dessert menu in October. After the team spent a few minutes of savoring a plate of brownies, Del Mendez
stated: “​Let’s get to work!”

Taking advantage of the opportunity presented through the legalization of cannabis in the restaurant industry,
Gardeners wanted to be the first off-the-block and the initial foray was to add a cannabis-infused brownie to
the dessert menu. To reduce the risk of a full roll out, it was decided to pilot this menu item at the flagship
store before rolling out to all stores. After 2 months and investing over $20,000 in advertising, they only sold
100 brownies. It was a complete burnout and Gardeners was forced to pull the brownie from their menu.

In reviewing what went wrong, a few critical factors came up:

● The marketing message did not resonate well with the customers. Core customers were not shy about
vocalizing their distaste for the new dessert which resulted in reduced traffic and lower sales.
● Front-line staff were not trained appropriately on cannabis consumption. There were instances of over
indulgence that really affected the customer experience.
● Although we set the pricing of the brownie at $18, which was not unreasonable due to the increased
costs of the addition of cannabis, our current customers complained the price was too high.

The Opportunity
Despite having difficulties with their first approach, Gardeners would still like to pursue this opportunity, taking
advantage of the legalization of cannabis in the Canadian market. Gardeners has collaborated with Environics
Analytics (EA) to gain a better understanding of Gardeners market and to leverage data in order to advise their
decisions moving forward.

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Environics Analytics is one of North America’s leading data, analytics, and marketing services companies. They
serve a broad range of private, not-for-profit, and public sector institutions. They help their clients turn data
and analytics into insight, strategy and results.

Using their proprietary lifestyle segmentation system, PRIZM5 (See Exhibit 1), EA has provided Gardeners with
an analysis of their current customer base as well as new opportunity customers. This analysis includes their
attitudes and behaviours towards leisure and media preferences, as well as geographic proximity to their
flagship location. EA has also included insights from their newly released database, CannabisInsights. This
dataset provides information as well as attitudes and preferences regarding cannabis consumption, which will
offer unique and helpful additional insights (please refer to Exhibit 6).

The restaurant owners have also recognized two opportunities to explore cannabis as a menu option.
Gardeners would like their in-house marketing team to analyze the results of the analysis conducted by
Environics Analytics and propose which of the below options (or both) would be the most beneficial to pursue
in order to achieve long term success.

Option 1: Pairing Cannabis with Tasty Burn Co.

Tasty Burn Co. produces cannabis infused vaporizers in a variety of different flavours. These vapors can be
enjoyed independently of food or can be used to accent or compliment the tastes of an existing meal.
The proposed plan would be Tasty Burn Co. would provide Gardeners with 4 different flavoured vaporizer
options to be paired alongside specific dishes on their current and already successful appetizer menu. Each
reusable vaporizer includes .33 grams of a milder strain of cannabis containing both cannabidiol (CBD) and
tetrahydrocannabinol (THC).

The dishes that will contain the pairings are the following:
● Salmon Rilletes – chopped smoked salmon, softened butter and aromatics on French bread served
with a maple flavoured vaporizer pairing
● Sausage Stuffed Mushrooms ​– classic stuffed mushrooms with extra flavourful Italian sausage with a
thyme flavoured vaporizer pairing
● Greek Saganaki ​– Traditional Greek appetizer of fried cheese served “on fire” with a citrus flavoured
vaporizer pairing
● Serrano Ham and Manchego Cheese Roulade – Cheese filled roll of ham wrapped in puff pastry with a
pineapple flavoured vaporizer pairing

The Experience
Customers will be presented with their appetizer(s) of choice along with a compact vaporizer loaded with the
flavoured CBD/THC vapour. It is suggested that customers inhale the vapour after taking a bite of the dish. Both
flavours should pair beautifully for a new and exciting dining experience.

The Metrics
To meet the expected demand, Gardeners has to plan accordingly. The restaurant will need 20 vaporizers in
order to run at full capacity. Tasty Burn Co. has a minimum order of 200 cartridges of any combination of
flavours.
● Cost per 1 Vaporizer: $100.00
● 200 Cartridge Order: $600.00
● Cannabis Selling Price: $8.00 + the cost of the appetizer
● Gardeners projects vaporizer sales to be at least 24 units sold daily.
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OPTION 2: Cannabis Drinkables with Peak Libations
Peak Libations is a beverage company that has just released an innovative line of products in the cannabis
drinkables space. The drinkable beverages are infused with the same amount of cannabis as the vaporizers, at
.33 grams per serving, also containing both cannabidiol (CBD) and tetrahydrocannabinol (THC). Unlike other
cannabis consumables, which can take over an hour to take effect and last for over 4 hours, this innovation
includes having an onset time of 10-15 minutes and the effects of the cannabis only lasts 1-2 hours. The
drinkables option does not have any direct associated menu pairings, however compliments the existing menu
nicely.
Health Canada enforces that liquid cannabis must not contain any added flavour or scent but can be added to
drinks. Peak Libations provides a natural, earthy, floral flavour that will enhance the taste of the specified
alcoholic beverages below.

Gardeners will be offering 5 different Peak Libation options, which include:

● Classic Old Fashioned​ – 2 oz Bourbon, angostura bitters and club soda
● Prench Brew Co​. – Coho Pale Ale – mosaic, centennial and spruce tips
● Negroni​ – 1 oz each Campari, gin, sweet red vermouth and orange peel
● Moscow Mule​ – 2 oz vodka, ginger beer, lime
● Paper Plane​ – 2 oz bourbon, bittersweet Italian liqueur, aperol and fresh lemon juice

The Experience
The server will present the customers with their Peak Libations beverage of choice alongside a dropper
containing concentrated CBD/THC. The restaurant associate will then place drops of the CBD/THC in the
beverage in front of the customer in order for them to see the infusion take place. The customer will be left
with a new beverage experience with an added twist of sensation.

The Metrics
Peak Libations will offer the 1 flavour in a 1 litre container (1000 grams per litre, 3 servings per gram)
● Cost per gram: $12.00
● Cannabis Selling Price: $8.00 + the cost of the alcoholic beverage
● Gardeners will also have to purchase $10,000 worth of droppers and new glasses for the new drink
additions. Gardeners expects to sell at least 30 units of drinkables daily.

Legal Considerations
A critical legal issue arose while the team was evaluating these options. Currently, vaping is not legal in
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restaurants in Ontario. Gardeners is however, eligible to apply for a permit through the Ontario Government,
which allows a restaurant to have a designated vaping area. It will take 5 months to acquire the permit and as
per the permit guidelines, the vaping area has to be equipped with proper ventilation. This retrofit will cost the
restaurant an additional $20,000.

Social Implications
While drinkables will be a non-evasive menu line addition, vaping could have a negative backlash from
Gardeners current customer base. “​ We might have to abandon our loyal customer base to add pairings... but
we can’t ignore how lucrative an opportunity this is being the first restaurant with a vaping appetizer selection”
Said Miel. “But what if this is just a fad with an unsustainable lifecycle? What if we alienate our existing
customers and lose our first movers advantage when other restaurants start competing in the cannabis space?”
replied Del Mendez.

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Vaping is currently not legal and there is no existing exceptions but for the purposes of this case please proceed as if the
above paragraph holds true
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Analytics in Action
To help support Gardeners in this critical decision, Environics Analytics (EA) was consulted to provide an
understanding of their current customers and explore new customers that would be more open to cannabis
products. Environics Analytics created the following target groups using their proprietary segmentation model,
PRIZM5 (Exhibit 1).

Environics Analytics has also created four thematic maps (Exhibit 2) detailing where there are high
concentrations of each target group within the Toronto CSD. These maps could provide valuable insights into
marketing strategies as well as proximity to the restaurant.

Along with the creation of the below target groups, DemoStats (Exhibit 3), Vividata (Exhibit 4,5),
CannabisInsights (Exhibit 6) and Social Values (Exhibit 7) reports were created for each target group to provide
the marketing team with actionable insights using demographics, behaviours, and psychographics.

Below are preliminary descriptions of the target groups:

Target Group 1:
● Population size of 472,414 within the Toronto CSD.
● $3,818 of their $11,550 total food expenditure is spent in restaurants.
● They make up a large portion of the current customers that frequent Gardeners restaurants.

Target Group 2:
● Population size of 487,971 within the Toronto CSD.
● $6,677 of their $13,601 total food expenditure is spent in restaurants.
● Members of this group are likely to be experiencers and love to try new things.

Target Group 3:
● Population size of 380,262 within the Toronto CSD.
● $5,035 of their $13,005 total food expenditure is spent in restaurants.
● This group has above average income but tends to save based more on principle.

Target Group 4:
● Population size of 183,373 within the Toronto CSD.
● $12,416 of their $29,872 total food expenditure is spent at restaurants.
● These well-heeled restaurant-connoisseurs are a well-informed group.

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The Task
Gardeners have planned to launch in April 2019, providing a window of only 4 months to consider the
following:

1. Gardeners marketing team will need to analyze the data provided by Environics Analytics to
understand who their customers are:
a. Which Target Group(s) should we target? Why?
b. What demographics, behaviours, and psychographics are important to consider in evaluating
and predicting these target groups in retaining or attracting restaurant traffic?
c. Describe and name the target group(s) selected based on the Environics Analytics data
provided. It is important to bring these groups to life in order to connect the experience of the
menu options and paint a clear picture as to who these people are.
2. Tasty Burn Co. pairings and Peak Libations drinkables are the two options available. Gardeners needs to
evaluate and decide on one or both options. These option(s) will need to have a viable target group
that will both consume the product and be reachable through an analytics driven marketing plan.
a. 4P marketing mix (Product, Promotion, Price, Place).
b. Expand on creative ways to reach our target audience with projections of reach and restaurant
traffic supported by the size of the market and % Pen.

3. Aside from the fixed and variable costs associated with each option, Gardeners has allocated a
marketing budget of $80,000 towards this venture. Considering the financial loss of the last cannabis
experiment, a breakdown of the following is critical:
a. Marketing Budget
b. Break Even Analysis – How long will each option take?

Gardeners will pilot this new product line for 6 months at the flagship location at Bloor & Dufferin. ​“If we can
work out the bugs in 6 months there is no reason we can’t expand to all 15 locations” said Miel. ​ “We need to
learn from our mistakes and do it right this time. I only want to hear viable solutions and strategies based
firmly on analytics!”

Appendix supplied with this case:

1. Exhibit 1: Dataset Descriptions

2. Exhibit 2: Target Group Maps (4 Maps, 1 per Target Group)
3. Exhibit 3: DemoStats
4. Exhibit 4: Vividata Media
5. Exhibit 5: Vividata Sports & Leisure
6. Exhibit 6: Cannabis Insights
7. Exhibit 7: Social Values
8. Exhibit 8: Social Values Glossary

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Exhibit 1: Dataset Descriptions

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Exhibit 2: Target Group Maps

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