Case 1: Snapple Steals Share

1. Point of View

The point of view taken from the case analysis of Snapple is the Chief Operating
Officer’s (COO’s) point of view. This is due to the fact that the COO’s main goal is to secure
the functionality of business to drive extensive and sustainable growth. Moreover, the COO is
one of the persons most knowledgeable of the situation and has the responsibility to design
and implement business strategies and marketing decisions.

2. Statement of the Problem

What strategic plans would help Snapple withstand the rising competition against big
beverage companies, and as well as increase its profitability?

3. Presentation of Case Facts

Strengths

 Company’s innovation of a new product

- First company to sell ready-to-drink iced tea in 11 different flavours which
promotes originality and creativity.
 Company promote the health benefits of their products
- Snapple promotes a preservative-free ecological image of iced tea which
captured the health consciousness of people in 1990s.
 Captured the increasing percent of households serving iced tea
- The introduction of the ready-to-drink iced tea was a big hit because of the
large portion of the United States households serving iced tea, and still
growing.

Weaknesses

 Company has no production facilities

- The failure of having production facilities of their own resulted to the
inability to distribute products in the market and high price cost of the
product.
 Lack of national recognition of the product
- The product was not well-known all over the place because of lack of
advertisements and inability to distribute products in different supermarket
chains.
  Inability to break in the vending-machine market
- The only size of bottle of Snapple available was 16 ounce, which was not
possible to be in the vending machine market which requires a smaller size
of packaging.

Opportunities

 Big market for iced tea drinks

- Increased in the demands of iced tea in the United States households.
 Favourable response of costumers to ready-to-drink iced tea
- The fast acceptance of customers to the ready-to-drink ice tea products.
 Preference of customers to a healthier options of drinks
- The promotion of Snapple of a preservative-free ready-to-drink iced tea.

Threats

Increasing players (competitors) in the industry

- Increases the competition between Snapple and the other beverage
companies such as Pepsi and Coca-Cola.
 Joint ventures of soft drink companies with companies offering iced tea brands
- Sift drink companies alarmed in the sudden success of Snapple in the
market, acquired access through the joint alliances with companies with
iced tea brands to pull a competition.
 Distribution and marketing power of competitors
- The wide distribution of competitors’ products in the supermarkets and
vending machines, and the big advertisements put Snapple to the corner.
 Competition from different organic beverages who promote healthy living as well.

Table: SWOT Analysis

OPPORTUNITIES THREATS
External
 Big market for iced tea  Increasing players
Environment drinks (competitors) in the industry
 Favorable response of  Joint ventures of soft drink
Analysis costumers to ready-to-drink companies with companies
Internal iced tea offering iced tea brands
Environment  Preference of customers to  Distribution and marketing
Analysis a healthier options of power of competitors
drinks
 STRENGTHS SO Strategies ST Strategies

 Company’s innovation of  Perform product phase-out  Production of quality

a new product and introduce new product products in a low price
 Company promote the  Introduce products that  Increase promotion and
health benefits of their promotes health benefits advertisements of products
products
 Captured the increasing
percent of households
serving iced tea
 Originality & creativity
since it is the first brand

WEAKNESSES WO Strategies WT Strategies

 Company has no  Investment in purchasing  Joint alliance with

production facilities production facilities companies which will
 Lack of national  Promotion of products in a support their production
recognition of the product new packaging  Introduction of products in
 Inability to produce market areas
products in different
package
 Poor brand image

4. Alternative Courses of Action

Alternative 1

Company expansion

- Place investments on purchasing production facilities.

- Partnership or alliance with companies which will support their
production.
- Partnership with vending companies that would enable extra profit.

Alternative 2

Aggressive advertisementand promotion of products

- Perform product phase-out and introduce new product that promotes health
benefits.
- Promotion of products in a new packaging.
- Introduction of products in targeted potential market areas.
- Creation of a new logo that could appease the customers
 - Social media pages for information dissemination that would lead to
awareness

Alternative 3

Product improvement

- Production of quality products in a low price.

- Perform product phase-out and introduce new product. that promotes
health benefits that cater consumers especially the ones who are health
conscious.
- Budget allocation on new production facilities in order for a better quality
outcome

5. Decision

Rationale

a) Decision Criteria

- Profitability 40%
The ability of the decision/solution to earn a profit for the company

- Cost- Effectiveness 20%

The degree to which the decision/solution is in line with the company’s
goals

- Market share 30%

The degree to which customer base shall be increased

- Ease of implementation 10%

The degree to which the decision/solution is executed in a simple and
uncomplicated manner

Table 2. Decision matrix of the alternative courses of action

Criteria % Alternative 1 Alternative 2 Alternative 3

Profitability 0.40 2 0.80 1 0.40 2 0.80
Cost-
0.20 3 0.60 2 0.40 3 0.60
effectiveness
Market Share 0.30 1 0.30 1 0.30 1 0.30
 Ease of
0.10 2 0.20 1 0.10 2 0.20
Implementation
TOTAL 1.00 1.90 1.20 1.90

Legend

Cost- Ease of
Profitability Market Share
effectiveness Implementation
1- highest
1- most cost 1- easiest to
1- most profitable potential of a large
effective implement
market share
2- moderate 2- moderately
2- profitable 2- cost effective
potential easy
3- least potential
3- least cost 3- most difficult to
3- least profitable of a large market
effective implement
share

Conclusion

a) Implementation

Snapple must boost their income generating profits, they should focus their budget
allocation on their marketing too boost their income. They must utilize their
resources as much as possible, especially on Snapple vending machines. They
could also utilize the caps as promos to boost their marketing like information
dissemination on social media, radio,TV and etc. To promote and make the
consumers aware that Snapple still exists, or better yet create an application
for the customers to cater the needs of the customers since it is now trending.
Also the redesigning of the old logo to create a first impression that would
appease the customers. Snapple should promote iced tea as a healthier
alternative to soft drinks that would cater everyone especially health conscious
consumers that would also solidify their brand.

b) Contingency

In order to compete with other major companies, Snapple must have several
contingency plans in the years to come, and in order to do that they should have
foresight and to be able to identify the preferences of the consumers in the future,
since every generation builds new taste preferences, they should come up with
multiple production facilities that would boost their supplies in order for the brand
to be spread out across different countries of the world.