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In 1989 they had worldwide sales of $4.6 billion, produced from 110 countries. Their headquarters is located in London, England and their worldwide headquarters are located in Stamford, Connecticut. Schweppes the world’s first soft-drink maker and was started by a Swiss national Jacob Schweppes in 1789, producing artificial mineral water. In 1960 they diversified into food products. Cadbury was a major British candy maker started by John Cadbury who started by making coca in Birmingham, England in the 1830’s. In half a century they expanded their presence all over England and eventually all over the world. In 1969 Schweppes merged with Cadbury in the year 1989 and Cadbury Schweppes was one of the world’s largest multinational firms and was ranked 457 th in the business week’s global1000. Beverages accounted for 60%of their worldwide sales and confectionery items accounted for 40% of their worldwide sales. In Jan 1990 the marketing executives at Cadbury Beverages, began the challenging task of re launching the Crush brands which was purchased from Procter & Gamble in Oct 1989. INDUSTRY ANALYSIS Soft drinks are gradually overtaking hot drinks as the biggest beverage sector in the world, with consumption rising by around 5% a year according to a recent report from Zenith International. But while the US remains the biggest market for now, Asia is likely to be the main driver of sales growth in the future. To understand the soft drink industry, one must first look at the beverage industry as a whole. In recent years, the beverage industry has been
faced with new opportunities and challenges. Changing consumer demands and preferences require new ways of maintaining current customers and attracting new ones. Amid everincreasing competition, beverage companies must intensely court customers, offer highCase Study Report on: Cadbury Beverages |
The S&P Industry Survey has shown the soft drink industry profit margin to be on a steady incline over in 1980’s were near 14%. while as of year-end 1995 the projected growth would be over 20% and expected to flatten a bit. or even a duopoly between Coke and Pepsi. Pepper. success depends on a company’s ability to quickly capitalize on emerging opportunities. In this environment. Continually increasing retailer strength Fierce competition Complex distribution system composed of multiple sales channels Beverage safety concerns and more-stringent regulations • • Case Study Report on: Cadbury Beverages | . To be sure. Revenues are extremely concentrated in this industry. This flattening effect may be an indication that fixed costs are on the rise due to expansion of the industry. there was tough competition between Coke and Pepsi for market share. featuring a shift toward health-oriented wellness drinks. one could characterize the soft drink market as an oligopoly. Cadbury Beverages is in the monopolistic market in soft drink industry. Pepsi. Market trends for the soft drink industry can be summarized by six fundamental themes: • Changing consumer beverage preferences. and keep prices low – all while staying nimble enough to exploit new markets by launching new products. In order to survive in this environment.quality products. and Dr. In fact. ensure safety. efficiently distribute them. and this occasionally hampered profitability. resulting in positive economic profits. with Coke and Pepsi. • • • 6 Growing friction between bottlers and manufacturers in the distribution system. together with their associated bottlers. The major competitors for the soft drink industry are Coke. companies must consider the market trends that will likely shape the industry over the next few years.
life style changes. PepsiCo. vending machines. but only three of them (Coca-Cola. and Mississippi was highest in the US in 1989. in-store displays Eg: End-of-aisle displays and other promotions in the place of sale Eg: shelf tags. 1980s was a decade of 6 inflation and unemployment was rising. INTERNAL ANALYSIS Case Study Report on: Cadbury Beverages | . accounting for 40% of carbonated soft drink industry sales) is often unplanned. Alabama. etc. buying pattern. or franchised.Three main actors participate in manufacturing and distribution of carbonated soft drinks in the United States: concentrate producers. Pepper/7Up) account for 82% of industry sales. The concentrate producers’ and bottlers’ roles and margins of are different for regular and diet drinks. The environmental trend that is consumption behavior.000 bottlers they may be either owned by concentrate producers. the soft drink buyers seem to be very responsive to different advertising and promotion techniques especially to coupon promotions. it appears that the purchase of soft drinks (mostly in supermarkets.7 gallons of carbonated soft drinks per year (in 1989 compared to the 23 gallons in 1969). Franchised bottlers are usually given the exclusivity rights for a certain territory. and retailers. Tennessee. and fountain service. In the United States there are around 1. There are approximately 40 concentrate manufacturers in the US. bottlers. The US customers drink more soft drinks than tap water. Consumption behavior: Concerning consumption behavior. the average American consumes 46. The typical customer purchasing soft drinks is a married woman with children under 18 years of age living at home. but they cannot sell a directly competitive brand. Also. It was a common culture in US to drink soft drinks instead of water. and Dr. convenience stores and small retail outlets. And supermarkets are claimed to be crucial in the company’s distribution net. Concerning retailers. The Per capita consumption in the East South Central states of Kentucky. those are supermarkets (40 percent of carbonated soft drink industry sales).
soft drink sales almost fivefold and improved its financial situation significantly.S. Cadbury Beverages controlled a 3.The company’s financial performance was exceptional even during the stock market crash during October 1987 and continued to go about its business and continued its pursuit of the U.S. which means that if the market coverage increases. the takeover speculation surrounding Cadbury Beverages was a tribute to its success over the last decade.4% market share in the United States. Chart showing correlation between Market coverage and Market share Exhibit 1 From the above we can see that it appears to be a positive correlation between marketing coverage and marketing share. In a sense. the 6 corresponding market share increases too. But perhaps the most interesting aspect of Cadbury Beverages was the fact that it remained a family-run business even though it had also become a major corporation. SWOT ANALYSIS OF CRUSH BRAND Case Study Report on: Cadbury Beverages | . Cadbury Beverages increased its share of U. soft drink market by acquiring Crush International from Procter & Gamble for $220 million.
including setting objectives. 2. we employed the SWOT analysis scheme. opportunities and threats are presented below: ♦ ♦ ♦ ♦ STRENGTHS Financial performance Established Customer Franchises Crush brand has high name awareness with consumers 4th largest marketer in the US ♦ ♦ ♦ ♦ ♦ ♦ Leading positioning in orange category OPPORTUNITIES ♦ International development in long term ♦ Increase in sales for diet soft drink ♦ Increase of consumption WEAKNESSES Low market share and low market coverage Limited bottler networks Under developed diet segment Limitative advertising Risky positioning: Cannibalization with Sunkist THREATS ♦ Huge competition ♦ Competitors heavy advertising expenses ♦ Unplanned soft drink purchase ANALYSIS OF STRATEGIC ISSUES/PROBLEMS The Strategic issues in the case are: 1. The major strengths. 3. developing strategies and preliminary budgets. Immediate efforts were needed to rejuvenate the bottling network for the crush soft drink brand. 6 New advertising and promotion program for crush had to be developed. Case Study Report on: Cadbury Beverages | .To complete the analysis of a Crush competitive position in the orange soft drink category as well as within the soft drink industry. Had to sought out through and figure out what the crush brand equity is how the brand was built and develop a base positioning. weaknesses.
The bottlers were the main reason for promotion. questions arose concerning the likely cannibalization of Sunkist sales if a clearly differentiated position for Orange Crush in the market place was not developed successfully. An outgrowth of this action was that Crush had the lowest market coverage of orange category sales potential among major competitors. The third positioning issue was that viable positions had to be considered that did not run contrary to previous positioning and would build on the customer franchise currently held by Orange Crush. had let many in the crush bottler network to question their future role with Crush. The second positioning issue were relative emphasis on regular and diet Crush with respect to Mandarin Orange. P&G’s decision to test the distribution system for selling crush through warehouses rather than bottlers. since the company already marketed Sunkist. But the sales came 6 Case Study Report on: Cadbury Beverages | . There were some positioning issues and the effect of the first positioning issue were.The wrong distribution system adopted by Proctor & Gamble in 1980’s (when had the possession of the Crush soft drink brand) let to the fall of sales of Crush. acquired the Crush brand from P & G they had to first set right the bottling network to capture back the market. This action. which centralized bottling in the hands of a limited no of bottlers that shipped product to warehouses for subsequent delivery to supermarkets and other retail outlets. Therefore when Cadbury Beverages Inc.
down because of the breakdown of bottlers’ network. Thus the promotional strategy adopted by should give them which give them a competitive advantage and pave way for them to become a market leader in the extremely competitive market for the specific product line. The impact of adopting wrong distribution strategy by P&G led to lowering the market coverage of the Crush Brand compared to its major competitors in its orange category i. The types of trade and communication had to be determined. from the year 1985 – 1989. Sunkist. 1985-1989 6 Table 1 BRAND CRUSH 1985 81% YEAR 1986 81% 1987 78% 1988 78% 1989 62% Case Study Report on: Cadbury Beverages | .e. Madarin Orange Slice and Minute Maid. Table showing market coverage of orange category by major competitors. Analyze the brand and brand equity which it had when it was the product of P&G and develop a base positioning.. Their preliminary budget had to be prepared. Cadbury beverages had to think of advertising and promotion program for the successful and effective re launch of the crush brand. Therefore they needed to set objectives for advertising and promotion and also communicate that to the advertising agency that would represent the Crush Brand.
the market share of the Crush Brand gradually decreased over the years compared to its competitors as illustrated below: Table showing Orange carbonated soft drink brand market shares.SUNKIST MANDRAIN ORANGE SLICE MINUTE MAID ORANGE 95% 10% 10% 83% 68% 60% 70% 87% 87% 86% 88% 88% 91% 88% 88% Chart showing market coverage of orange category Exhibit 2 Due to lack of effective and efficient advertising and promotion. 1985-1989(rounded) Table 3 BRAND SUNKIST MANDARIN ORANGE SLICE MINUTE MAID ORANGE CRUSH TOTAL TOP FOUR BRANDS OTHERS 1985 32% NA NA 22 54 46 1986 20% 16 8 18 62 38 YEAR 1987 13% 22 14 14 63 37 1988 13% 21 13 11 58 42 1989 14% 21 14 8 57 43 6 Case Study Report on: Cadbury Beverages | .
1985 to 1989 and the market coverage also reduced by 19%.In order to restore the brand name and also to maintain and enhance the firm’s reputation the marketing department of the firm had to find ways to resolve the issues as its impact was clearly felt by the company as sales volume went down. Thus if one product of the firm ( Cadbury Beverages Inc. The short term ramification for the issue is that the sales of the Crush brand of soft drink will trim down and the long term consequence is that the product will go out of market and which would surely affect the firm’s reputation and goodwill. Sunkist had 14% market share in the 1989 and 91% market coverage in the same year. And so they should spent more in promotional activities and advertisement. Demise in any of the marketing activities will result in the competitors’ quick response to the fall by taking over the market position enjoyed by the product. Hires sales will also be affected.) in this case the Crush acquired by the firm. the brand image of Cadbury beverages will be affected. The market share was showing decreasing trend because of less promotions and advertisements given by Cadbury beverages. even though the orange flavour was one of the most preferred flavours by the US consumers. If this exceeds. fails it will affect the reputation of the firm and ultimately the sales of the firm’s other products. The reason for it was that the issues the product faced. The effect of the issue was so influential that. So. whereas Crush had only 8% market share and 62% market coverage in the year 1989 (much lower than that of its competitors) till it was acquired by the Cadbury firm. the other products like Sunkist. STRATEGIC ISSUES & KEY PROBLEMS: 6 Definition: Case Study Report on: Cadbury Beverages | .e. the market share of Crush had reduced by 14% within a period of just five years i.
In the beginning. They are also responsible for selling and servicing retail accounts. RECOMMENDATIONS: REBUILDING A COOPERATIVE RELATIONSHIP WITH BOTTLERS: In soft drink industry bottlers. the main issue need to be tackled is to rebuild a cooperative relationship with bottlers. usually take the lead in developing trade promotions to retail outlets and local consumer promotion. So it might affect the sales and brand image of other soft drink products owned by Cadbury beverages. As a result. the marketing executives intended to focus on re launching the Crush brand on the soft drinks market. including the placement and 6 maintenance of in-store displays and the restocking of supermarkets and convenience store shelves with their brands. SERIOUSNESS OF THE PROBLEM The re launch of crush brand soft drink was the most serious issue in this case as the sales of crush brand soft drinks were declining due to the removal of bottler network. This is reason why P & G’s test of a new distribution system for selling Crush through warehouses rather than through bottlers failed. one among three participants in the production and distribution of carbonated soft drinks in the US. So re Case Study Report on: Cadbury Beverages | . The following recommendations will help to successfully re launch the crush soft drinks in the market.
000 would be paid by brand’s bottlers. More over the major competitors Mandarin Orange slice and Minute Maid Orange had attracted the diet segment of orange 6 drinkers.establishing the trade relation with bottlers is an important step. Establishment of trade relation with 136 new bottlers will increase the potential market coverage of orange category from 62% to 75% Crush can give additional advertising and promotional support to bottlers as expected by them. Now at the phase of re launch the concentrate producers can take the major share of the advertising and promotion expenses and reduce the burden of these expenses for bottler network. Crush has to enter into a deal with big bottler group of Pepsi which will help to double up the market penetration. REGULAR VERSUS DIET Table 4 Brand Regular Diet Case Study Report on: Cadbury Beverages | . if 1 million dollar were spent for television brand advertising $700. Usually the concentrate producers and bottlers will split the advertising costs 50-50. This will increase in pre tax cash profit per case by app 20%. They should make the case volume as 50% . For example.50% for regular Vs diet crush as Industry trend data indicate that sales of diets drinks accounted for a large portion of the overall growth of carbonated soft during sales in the 1980s.000 would be paid by the concentrate producers and $300. It will enhance the trade relations between the concentrate producers and the bottlers. DEVELOPING A BASE BRAND POSITIONING CONSISTENT WITH THE BRAND EQUITY: The firm has to give relative emphasis on regular and diet Crush.
95 $51.7% 17. This represents the largest single opportunity to drive profitable growth.Crush 71.52 $61.1% Table showing estimated profit Table 5 Crush Type Pre-tax cash profit/Case Old Percentage Profit (in millions) Total Orange Case Volume 315 315 Recommended percentage Projected profit (in millions) $18.42 Regular Diet Increase $0. and it must be accomplished via the introduction of new products and formats that are successfully planned and executed.7% $29.12 $0.27 71.9% Sunkist 82.9% 51% 46.3% 28. So Crush can introduce new flavours such Tropical Punch and Peach Case Study Report on: Cadbury Beverages | .9 $42.95 $24.35 50% 50% in profit Effective innovation and new product introduction: 6 The ability to respond with agility to changing customer and consumer demands is essential.1 MOS MMO 49% 53.3% 28.
selling and promotion to and through bottlers to retail outlets. The product has 46% of brand loyalty therefore there is no risk in achieving the sales target. “Return five empty cans of Crush and take a T-shirt back home” To prove as an eco friendly company. asking the consumers to fill and submit the coupons through mails. This will result in saving 95% energy consumption and will also reduce the emissions by 95%. But crush had not spent a lot in advertisement and promotional activities compared to that of spent by minute maid orange and mandarin orange slice (i. crush will recycle these cans to produce new ones.) it accounted for 84 % of all advertising expenditures in the orange category. It would be a convenient method for both the consumers and producers.e. 6 STRATEGIES FOR ADVERTISING AND PROMOTION Concentrate Producers’ Advertising Expenditures for Broadcast and Print Media for Major Soft Drink Brands. Soft drink marketing is characterized by heavy investment in advertising.Table 6 Case Study Report on: Cadbury Beverages | . (in thousands of Dollars) .which would give them a competitive advantage over the big players of the market.e. Crush can go for graphic and digital print on their labels which have a strategic advantage to attract more customers as effective packaging in an important component of communication mix Promote crush as an eco-friendly product through appropriate offers. DEVELOPING PROGRAM: The crush consumer promotion has to be changed. Buy two get one free offer should be given at point of purchase rather than the present strategy adopted by them i.
As the market in question is very responsive to advertising and promotion. magazines and newspapers) and broadcast media (network.3 $ 1986 % 62. women with 6 children and teens.0 15.e.7 $ 1987 % 67. The advertising trend also favors our recommendation because the total expenditure for print(outdoor.8 0.38 8 Sunkist Crush MMO 7.176 4.00 1 11.8 17.00 7 100.371 174 24.8 14.20 0 100. we need to take it into consideration and implement in parallel to the push strategy the pull strategy Promotional activities have to be concentrated in supermarkets as it contributes 40% of the total carbonated soft drink sales.297 9.6 1.2 $ 1989 % 43.8 35.952 7.79 0 100. 0 26.3 2.841 12.46 3 8.Brand $ MOS 1985 % 60.6 4. Case Study Report on: Cadbury Beverages | .027 2.155 7.0 Therefore in order to compete with soft drink manufacturing giants like Pepsi and Coke. 0 36.08 0 29.8 39.013 7.55 6 15.53 1 100.8 20.302 2. 0 51. they need to spend more on advertising and promotions.719 6.81 1 4. 0 43.020 10.7 18. syndicated.9 7.3 14.5 911 4.5 Total 29.37 3 100.5 $ 1988 % 41. Crush should use magazines and television as the major advertising media as to ensure its widespread reach among the product’s target market i.80 9 32. and cable TV and network radio) declined each year. spot.1 9.
we have no choice but to increase advertising & promotion expenditures in order to re launch Crush brand successfully in the market. and associating its consumption with healthy. dynamic lifestyle). living in big cities (where Crush is wellknown). The promotional messages should be such that it can be more health concerned in case of promoting diet crush and regular crush can promoted as an energizer and as a “crusher of thirst”. natural. CONCLUSION We should avoid direct competition with Coca-Cola & Pepsi Co. To position Crush Diet in a different way: by focusing on young singles and couples (above 24 years old). it could bring on a price war. As far as diet Crush is concerned. energetic drink for young people living in big cities. we reposition it as a healthy and rich in vitamins. No frontal attack means that Cadbury remains a niche marketer. Finally. 6 Case Study Report on: Cadbury Beverages | . We avoid cannibalization with Sunkist in positioning the Crush brand name on the family with children at home segment. We also adopted an ecofriendly strategy in promoting the product. This would enable a strategy that would be more consistent with the consumption profile of diet drinks’ consumers.
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