Crush

Outline

I- INTRODUCTION

II- THE CARBONATED SOFT DRINK INDUSTRY

A) The industry structure

B) Brand competition & consumer behavior

III- ORANGE CATEGORY

A) Competition analysis

B) Competitor Positioning and Advertising

C) Competitor Pricing & Promotions

IV- CADBURY’S COMPETITIVE POSITION IN THE US SOFT DRINK MARKET AND ORANGE CATEGORY

A) SWOT Analysis

B) Key Success Factors

V- MEDIA ADVERTISING $ PER CASE FOR MAJOR BRANDS

VI- PRO FORMA INCOME STATEMENT FOR ORANGE CRUSH

A) Forecast of $ sales

B) Pro Forma Income Statement

VII- CRUSH’S OBJECTIVE AND STRATEGIES IN TERMS OF ADVERTISING AND PROMOTION

VIII- CONCLUSION: CRUSH ORANGE POSITIONING RECOMMENDATIONS

A) Target:

B) Segment:

C) Advertising:

I- Introduction

Cadbury Schweppes PLC is the world’s first soft-drink maker going back to year 1783 where it marketed the artificial mineral water in London. Then they expanded all over the world, especially in the British Commonwealth. In 1969, Schweppes decided to diversify into food products and merged with Cadbury, a major British candy maker who began its business in 1830, thus the company became a major global soft drink and confectionery marketer.

In 1989, Cadbury Schweppes had total turnover of $4.6 billion and was present in 110 countries. They were also ranked 457th in Business Global 1000. During this year its beverages accounted for 60% of company’s worldwide sales and 53% of operating incomes. Confectionery items accounted for 40% of worldwide sales and represented 40% of operating incomes.

Note: Cadbury Schweppes beverage sales=60%*$4.6billion=$2.76 billion

Cadbury Beverages Inc. is the beverage division of Cadbury Schweppes PLC, the world’s third largest soft drink marketer behind Coca Cola and PepsiCo. The company has acquired numerous brands from across the globe such as Crush, Hires and Sun-Drop that had been acquired from Procter & Gamble in 1989. At that time, Cadbury Schweppes PLC was the 4th largest soft drink marketer after Coca Cola, PepsiCo & Dr Pepper and with a market share of 3.4%.

The company’s brands were market leaders in their specific categories. These product categories were:

• Carbonates: such as Canada Dry, Schweppes, Sunkist, Crush, etc …

• Waters: such as Schweppes, Canada Dry, etc …

• Still Drinks/Juices: such as Oasis, Vida, Trina, Mott’s, Holland House, etc …

In January 1990, Cadbury Beverages was trying to re-launch the Crush, Hires and Sun-Drop brands. The senior marketing executives decided to focus on the Crush brand of fruit-flavored carbonated beverages.

The main issues were:

1. Immediate efforts needed to rejuvenate the bottling network for the Crush brand

2. No clear brand positioning and the brand equity unknown

3. Lacks good advertising and promotion program

In able for us to develop a re-launching marketing strategy for Crush, we will start by analyzing the soft drink industry and specifically the developments in the orange category, and then identify the best alternatives for Cadbury Schweppes and finally make recommendations.

II- The carbonated soft drink industry

A) The industry structure

There are three major participants in the production and distribution of carbonated soft drinks. They are concentrate producers, bottlers and retail outlets and they mainly operate as follows:

Manufacture basic flavors Add Sweeter

Concentrate Producers Bottlers Retail

Include artificial sweetener for diet drinks Package

• Concentrate Producers: There are over than 40 concentrate producers in the United-States even if 82% of sales are accounted by Coca-Cola, PepsiCo and Dr. Pepper/7UP.

• Bottlers are more numerous: 1000 bottling plants are present in the United-States. The bottlers are owned by concentrate producers or franchised to sell the brands of concentrate producers.

• The distribution and the sale of carbonated soft drinks is done across supermarkets (which accounted for 40% of industry sales), convenience stores, vending machines, fountain service (McDonald’s) and thousands of retail outlets

Soft drink industry is characterized by heavy investment in advertising, selling and promotion. Concentrate producers develop usually the national consumer advertising and promotion programs, product development & planning and marketing research. Bottlers develop trade promotions to retail outlets and local consumer promotions. They are responsible for selling and servicing retail accounts.

The cost structure in the orange category below highlights the differences between Regular and Diet soft drinks and between concentrate producers and bottlers.

Concentrate Producers

Regular Diet

$/Case Percentage $/Case Percentage

Net selling price $0.76 100 % $0.92 100 %

Cost of goods sold 0.11 14 0.12 13

Gross profit $0.65 86 % $0.80 87 %

Selling and