Snapple

Case Analysis
Submitted by:
MEEMANSA VAJPAYEE PUNYATA TULI ARJUN RAO PGP/14/095 PGP/14/167 PGP/14/267 AYUSHI AGRAWAL PGP/14/141 MANGESH PATIL PGP/14/217 MAHTAAB KAJLA PGP/14/280

Page  1

Product Policy & Brand Management| Snapple

Introduction
Snapple History

Founded by Arnie Greenberg, Leonard Marsh, Hyman Golden for selling natural apple juice

Developed a network of independent distributors

Increased advertising expenditure and focused on expansion in west coast

Mantra “everything should and would be natural and real.”

Sold to a Thomas H. Lee Company – a leveraged Buyout

1972

1992

1994

Outsourced production and product development

Focus on growth of business via professional management than getting acquired

Relied on offbeat advertising and public relations

Led the growth in alternative beverage category with a share of 30%-40%

Lee sold the company to Quaker Oats for $1.7 billion

Page  2

Product Policy & Brand Management| Snapple

4 Ps for Snapple
Product  Started as bottled apple drink  Extended into carbonated drink, fruit flavored iced teas, diet juices, sports drink, Vitamin Supreme  Premium pricing on successful products made up for the losses  Independent distribution system  Network of 300 small, family owned distributors  Convenience chains, pizza stores, food service vendors, gasoline stations, mom-and-pop stores  Primarily concentrated on Cold Channel  Warm channel – supermarkets accounted for only 20% of the sales nationally     Promoted as 100% natural Initial advertisement with tennis star Ivan Lendl was poorly received Later a mix of public relations and advertising Wendy Kaufman – a real person became the spokesmodel  Eccentric personality and brash New York attitude  Sponsorship of radio programs of Howard Stern and Rush Limbaugh  Snapple convention in Long Island – Snapple themed fun and games

Price Place

4 Ps Promotion
Page  3

Product Policy & Brand Management| Snapple

Quaker and Snapple – Synergies & Differences
• Synergies
– Utilize Snapple’s cold channel for Gatorade in which it was weak – Snapple to benefit from Quaker’s packaging, supply chain expertise and information system abilities – Snapple to gain more exposure in the warm channel – Gatorade strong in U.S south while Snapple in Northeast and west coast – Quaker wanted to establish itself strongly in the beverage industry

• Differences in imagery
Gatorade Lifestyle brand Snapple Fashion brand

Beverage for those Fashion sensitive, who worked out quirky or played vigorous sports Stable lifestyle On the edge

Page  4

Product Policy & Brand Management| Snapple

Steps taken by Quaker
• Association with controversial people like Howard Stern and Rush Limbaugh was terminated • Wendy Kaufman’s role also terminated • 300 distributors offered to relinquish their Snapple supermarket account in exchange for distribution of Gatorade to rest of the accounts • Quaker earned distributors’ ire due to this policy and no channel rationalization was achieved • Snapple introduced in large pack sizes and in greater assortments • Limitations in terms of retail display space in cold channel and distributor trucks
– Snapple more of a fashion brand than a utilitarian brand like Gatorade. Best consumed in 16-ounce single serve containers

Page  5

Product Policy & Brand Management| Snapple

Issues with Quaker Tactics

Reproducing Gatorade’s strategy for Snapple

Brand dilution of Snapple

Change of Package size

Conflict between Quaker's management and the entrepreneurial spirit of Snapple

Page  6

Product Policy & Brand Management| Snapple

Problem Statement and Issues

Acquisition by Quaker and subsequent changes made consumers feeling betrayed

Dismaying distributors which were responsible for growth in cold market impacted overall business

Replacement of spokesperson "Wendy” produced bad press and was still haunting the company

Sales
800 700 600 500 400 300 200 100 0 1980 1985 1990 Years 1995 2000 Sales

To devise a plan so as to revitalize the Snapple brand after 3 long years of declining sales. (Overall declining sales upto 35% i.e. $674mn (‘94) to $440mn (’97))

Page  7

Product Policy & Brand Management| Snapple

Sales ($millions)

Exhibit 6 Analysis

 Snapple having strong connect with the consumers  Doing things differently by being real and human  Seen as quirky, offbeat, authentic, fun, personal  Strong individualistic ethos  Means a lot of things to a lot of different people  Used by average people but the brand makes them to think themselves as offbeat  Perceived as “reaction to modernity”  Seen in experiential terms – more variety and combinations than competitors  For people who are neither too serious about health nor careless about what they eat/drink – “in-betweenity”

Page  8

Product Policy & Brand Management| Snapple

Exhibit 6 Analysis

 Reasons for decreased consumption  Natural attrition due to inefficient distribution  More health conscious users  Doubts about authenticity  Loss of fashionability - Weak product differentiation - More like a “fashion water” than an established brand - Lack of compelling reason for use - Absence from daily rituals and routines  Negative publicity

Page  9

Product Policy & Brand Management| Snapple

Modus Operandi

Increasing customer base  Acquiring new customers  Retaining vulnerable customers  Recapturing lost customers

Increasing product consumption  Expanding brand awareness: Communication about appropriateness & advantages of consuming Snapple

Entering new markets  Diversifying into new beverage categories such as sports drinks, chocolate beverages etc.

Short Term

Long Term

Page  10

Product Policy & Brand Management| Snapple

Recommended Marketing Mix
Product  16 ounce single serve container size for existing and loyal customers (Bolster Fading Associations) & 10 ounce containers for new/potential users Attractive new packaging to reflect fun element (Exhibit 6)  Gradually phase out the flavors that are low in demand  Must maintain same pricing in the premium segment  Try to retain the cold distribution channels & gradually build upon relationship with warm channels i.e. supermarkets  Wide availability & maintaining variety at retail locations (Exhibit 6)  Better links to distributors for proper understanding of reorder volume & consumer preferences  Promotion should focus on “100% Natural & Healthy” message & fun & quirky aspect of Snapple (Exhibit 6) (Bolster Fading Associations)  Create a popular character that reflects brand’s personality (Create New Associations)  Increase advertising expenses to revitalize the brand  Run a campaign aimed at countering the rumors (Neutralize negative associations)

Price Place 4 Ps Promotion
Page  11

Product Policy & Brand Management| Snapple

Q&A

Page  12

Product Policy & Brand Management| Snapple

Sign up to vote on this title
UsefulNot useful