cadbury beverages case study

Cadbury Beverages’ Strategic Issues Case Study

Strategic problem and issue identification, analysis and evaluation, recommendations, works cited.

Cadbury Beverages has been a successful marketer of different carbonated drinks. The company wanted to “re-launch its brands acquired from Procter & Gamble” (Kerin and Peterson 316). The Senior Marketing Executives (SMEs) focused on the Crush brand in order to emerge successful.

To begin with, it was mandatory to rejuvenate the brand’s bottling network. The company also analyzed the facts associated with its leading brands. It was also mandatory for the firm to establish a powerful advertising program for its Crush brand.

This advertising program “required the best strategies, objectives, and preliminary budgets” (Kerin and Peterson 316).

From 1985 to 1989, the Crush orange flavor had become less competitive. The company was using ineffective advertising strategies thus affecting its goals. In 1989, most of “the competitors were using a wider spectrum of avenues to advertise their superior brands” (Kerin and Peterson 324).

Many players in the industry were using similar promotional strategies for their products. It is agreeable that many consumers admired the Crush brand. However, new strategies were required in order to re-launch the product in the targeted markets. This approach would make it easier for Cadbury Beverages Incorporation to achieve its potentials.

The problems affecting Cadbury Beverages forced the Marketing Executives (MEs) to make new changes in 1990. To begin with, the MEs decided to focus on the Crush brand. The marketers wanted to make the brand successful. This approach was critical because the flavor accounted for two-thirds of the total sales.

A new bottling network for the brand was also established (Kerin and Peterson 319). The positioning strategy only focused on the existing customer base. New bottling agreements “were created in order to make the orange flavor available to more consumers” (Kerin and Peterson 320).

The level of competition also affected the performance of the Crush brand.

However, the above positioning strategy presented numerous threats to the other brands such as Sunkist. The strategy was also ineffective because the company was making little profits. The “existing competitors were also attracting more customers using their diet segments” (Kerin and Peterson 324).

There was also the need to establish new positions in order to make the brand successful. That being the case, it was appropriate to have a powerful advertising program that could make the brand successful.

It is notable that “the Crush brand boasted of high-awareness in different regions such as Boston, Miami, Seattle, San Francisco, New York, and Miami” (Kerin and Peterson 329). However, it was appropriate to create a powerful promotion program for the brand. Cadbury Beverages Incorporation should therefore have a proper budget for every promotional strategy. That being the case, the firm should use its resources to support the Crush brand. The firm should use appropriate marketing strategies in order to emerge successful because more customers are aware of this brand. A proper knowledge of the existing market conditions will produce the best strategies.

The firm should also identify new distribution channels. It should also collaborate with different restaurants and Gas Stations (GSs) in order to increase its market share. The use of modern technologies such as social media networks will inform more people about the targeted brand.

The firm should also use a powerful marketing mix. This approach will “ensure the firm uses competitive prices, strategic positions, and effective promotional practices” (Kerin and Peterson 18). The strategy will ensure the firm achieves its marketing goals.

Kerin, Roger, and Robert Peterson. Strategic Marketing Problems: Cases and Comments. Upper-Saddle River, NJ: Prentice Hall, 2009. Print.

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Cadbury Crisis Management Case Study: Preserving Trust in Times of Crisis

In the realm of beloved chocolate brands, Cadbury has long held a cherished place in the hearts and taste buds of consumers worldwide.

However, even the most esteemed companies are not immune to crises that can pose significant threats to their reputation.

Effective crisis management becomes paramount in such moments, serving as the linchpin in preserving brand equity and consumer trust.

In this blog post, we delve into the realm of Cadbury’s crisis management, exploring a notable incident that tested the brand’s resilience and examining the strategies they employed to navigate the storm.

By understanding Cadbury’s response and the lessons gleaned from their experience, we can gain valuable insights into crisis management in the food industry and the critical importance of safeguarding brand reputation.

The Cadbury crisis: an overview 

In October 2003, just a month before the festive season of Diwali, customers in Mumbai reported the discovery of worms in Cadbury Dairy Milk chocolates. Responding promptly, the Maharashtra Food and Drug Administration (FDA) took action by seizing chocolate stocks produced at Cadbury’s Pune plant.

Cadbury defended itself by stating that the infestation could not have occurred during the manufacturing process and suggested that poor storage at retailers might have been the cause of the reported worm cases.

However, the FDA remained unconvinced. Uttam Khobragade, the FDA commissioner, expressed doubts, stating, “While it was presumed that worms entered the chocolates during storage, what about the packaging? If the packaging was not proper or airtight, it could be considered a manufacturing defect due to unhygienic conditions or improper packaging.”

This exchange of allegations and counter-allegations between Cadbury and the FDA led to negative publicity that significantly impacted Cadbury’s sales. During a time when Cadbury typically experiences a 15% sales boost due to festive season demand, their sales dropped by 30%. As a result, Cadbury’s advertising went off air for a month and a half following Diwali, as consumers seemed to lose interest in their chocolate cravings.

Facing intense scrutiny, Cadbury took action by launching an education initiative called “Vishwa’s” in October itself. This initiative aimed to educate 190,000 retailers in key states. However, it was what Cadbury did in January 2004 that truly helped restore the brand’s reputation.

Investing around Rs 15 crore (Rs 150 million), Cadbury revamped the packaging of Dairy Milk by introducing imported machinery. The new metallic poly-flow packaging, despite being costlier by 10-15%, did not lead to a price increase for the product.

Bharat Puri, managing director of Cadbury’s India, stated, “Although we are addressing a few bars out of the 30 million we sell every month, we believe that as a responsible company, consumers should have complete faith in our products. So, even if it requires significant investment and change, we must not let consumer confidence erode.”

Simultaneously, Cadbury enlisted the support of brand ambassador Amitabh Bachchan for extensive endorsement, with the actor risking his personal reputation for the brand.

Cadbury also increased advertising spending for the January to March quarter by more than 15%. The brand’s recovery began in May 2004, and by June, Cadbury claimed that consumer confidence had been restored. Experts believe that Cadbury’s success was due to their proactive and direct approach in addressing the crisis. Moreover, consumers were more forgiving because of the emotional connection they had with the brand in India.

Explanation of the potential impact on Cadbury’s reputation and consumer trust

The potential impact of the crisis on Cadbury’s reputation and consumer trust cannot be overstated. Cadbury had spent years cultivating a strong brand image built on trust, quality, and indulgence.

Consumers who had long associated Cadbury with delightful moments and safe indulgence were suddenly confronted with doubts and concerns about the integrity of the brand.

The presence of foreign objects in their beloved chocolate bars not only raised immediate health and safety worries but also shook the trust that consumers had placed in Cadbury’s manufacturing processes.

The crisis threatened to erode the emotional connection between Cadbury and its customers, potentially leading to long-lasting damage to the brand’s reputation and a loss of consumer loyalty. The way Cadbury handled the crisis would be critical in determining whether they could restore faith in their products and reassure customers that their commitment to quality and safety remained unwavering.

Cadbury’s Response: Swift and Transparent Action 

Here are three points that explain the response of Cadbury to the crisis:

A. Immediate actions taken by Cadbury to address the crisis

Recognizing the urgency of the situation, Cadbury swiftly sprang into action to address the crisis and mitigate its impact on consumer trust. Their response was marked by a combination of transparency, accountability, and proactive measures. First and foremost, Cadbury initiated an immediate recall of the affected products from the market, demonstrating their commitment to ensuring consumer safety.

This recall was accompanied by clear and concise public announcements, both through traditional media channels and online platforms, informing consumers about the issue and advising them to refrain from consuming the affected products.

Cadbury launched an internal investigation in collaboration with independent third-party experts. This step aimed to determine how the foreign objects had made their way into the production process and identify any potential lapses in quality control.

In addition to the recall and investigation, Cadbury established a dedicated consumer helpline and email contact to address any concerns or inquiries from customers. This direct line of communication allowed affected individuals to seek information and assistance, demonstrating Cadbury’s commitment to maintaining open dialogue with their consumer base.

Moreover, Cadbury proactively engaged with regulatory bodies, such as food safety authorities and government agencies, to ensure compliance with relevant regulations and collaborate on resolving the crisis. This collaboration helped in conducting thorough investigations, sharing information, and implementing corrective measures.

Throughout their response, Cadbury remained transparent, providing regular updates to the public and stakeholders on the progress made in resolving the crisis. By openly acknowledging the issue and taking swift action, Cadbury aimed to rebuild consumer trust and demonstrate their commitment to the highest standards of product safety and quality.

B. Emphasis on transparency, open communication, and acknowledgement of the issue

Cadbury recognized the critical role of transparency, open communication, and sincere acknowledgement in their crisis management strategy. Understanding that silence or evasion could further erode consumer trust, they chose a different path.

From the onset, Cadbury openly acknowledged the issue, taking full responsibility for the presence of foreign objects in their products. They did not attempt to downplay or minimize the severity of the situation, but rather acknowledged the potential risks and concerns that consumers may have.

To ensure transparent communication, Cadbury provided regular updates to the public and stakeholders about the progress of their investigations, steps taken to address the issue, and any findings or developments. This transparency helped to build confidence among consumers that Cadbury was actively working to rectify the situation and prevent similar incidents in the future.

Moreover, Cadbury prioritized open communication channels with their consumers. They promptly established a dedicated helpline and email contact to address individual inquiries and concerns. By providing accessible means for consumers to voice their questions or fears, Cadbury demonstrated a commitment to engaging in two-way communication and actively listening to their customers.

Engagement with customers, media, and regulatory bodies

Cadbury demonstrated proactive engagement with various stakeholders throughout the crisis, including customers, media, and regulatory bodies. Here are some examples of their efforts:

• Customers: Cadbury promptly set up a dedicated helpline and email contact to address customer inquiries, concerns, and feedback. This direct line of communication allowed affected individuals to seek information, share their experiences, and receive assistance from Cadbury’s customer service team.
• Media: Cadbury issued press releases and media statements to communicate their response to the crisis, including the immediate recall, investigation, and measures being implemented to ensure product safety. These official statements aimed to provide accurate information and address media inquiries promptly.
• Regulatory bodies: Cadbury collaborated closely with relevant food safety authorities and regulatory bodies to ensure compliance with regulations and to share information regarding the crisis. This collaboration helped in conducting thorough investigations and implementing appropriate corrective actions.

Evaluation of Cadbury’s crisis management approach and its effectiveness

Cadbury’s crisis management approach can be evaluated as highly effective based on several key factors:

• Swift and proactive response: Cadbury’s immediate actions, including the recall of affected products and launching an internal investigation, demonstrated a sense of urgency and a commitment to addressing the crisis promptly. This swift response helped contain the situation and prevent further harm to consumers.
• Transparency and open communication: Cadbury’s emphasis on transparency and open communication was commendable. They openly acknowledged the issue, took responsibility, and provided regular updates to the public, customers, media, and regulatory bodies. This transparency fostered trust and allowed stakeholders to stay informed throughout the crisis.
• Stakeholder engagement: Cadbury actively engaged with stakeholders such as customers, media, and regulatory bodies. They established a dedicated helpline and email contact for customers, responded to media inquiries, and collaborated with regulatory authorities. This proactive engagement demonstrated a commitment to listening, addressing concerns, and working collaboratively to resolve the crisis.
• Accountability and commitment to quality: By taking responsibility for the contamination incident, Cadbury showed accountability for the lapse in their manufacturing processes. They acknowledged the potential harm caused to consumers and reassured them of their commitment to maintaining the highest standards of quality and safety.
• Learning and improvement: Cadbury’s crisis management approach also involved conducting internal investigations, collaborating with third-party experts, and implementing corrective measures. This commitment to learning from the incident and making necessary improvements indicated a proactive approach to preventing future occurrences and continuously enhancing product safety.

Identification of key lessons and best practices for crisis management in the food industry

Identification of key lessons and best practices for crisis management in the food industry:

• Prioritize consumer safety: The primary focus during a crisis in the food industry should be on ensuring consumer safety. Swift actions, such as recalls and investigations, must be taken to address any potential risks and protect consumers from harm.
• Transparency and open communication: Transparency is crucial in maintaining trust during a crisis. Companies should openly acknowledge the issue, provide timely and accurate information to stakeholders, and communicate updates regularly. This includes engaging with customers, media, and regulatory bodies to address concerns and share progress.
• Swift response and proactive measures: Time is of the essence in crisis management. Acting swiftly to contain the issue, launching investigations, and implementing corrective actions demonstrate a commitment to resolving the crisis effectively and minimizing its impact.
• Establish a dedicated crisis management team: Having a designated crisis management team with clear roles and responsibilities is essential. This team should be equipped to handle crisis situations, make quick decisions, and coordinate communication across various channels.
• Collaborate with stakeholders: Engage with relevant stakeholders, including customers, media, and regulatory bodies. Collaborating with regulatory authorities ensures compliance and regulatory support, while open communication with customers and media helps address concerns, provide accurate information, and rebuild trust.
• Learn from the crisis: Conduct thorough investigations to identify the root cause of the crisis. This allows for improvements in manufacturing processes, quality control measures, and overall safety protocols to prevent similar incidents in the future. Continuously learning and adapting based on the crisis experience is vital.
• Preparedness through crisis simulations: Conducting crisis simulations and drills in advance can help organizations prepare for potential crises. These simulations allow teams to practice their response strategies, identify gaps, and refine their crisis management plans.
• Monitor and respond to social media : Social media plays a significant role in crisis communication. Monitor social media platforms to gauge public sentiment, address customer concerns, and promptly respond to queries or complaints.
• Maintain brand consistency: During a crisis, it is essential to maintain consistency in messaging and actions across all communication channels. This consistency helps in building trust and avoiding confusion among stakeholders.
• Rebuild trust through actions: Regaining consumer trust takes time. Implement measures to enhance product safety, quality control, and quality assurance processes. Launch consumer-centric initiatives and communicate these actions to demonstrate the brand’s commitment to customer satisfaction and safety.

Final Words 

Cadbury’s crisis management approach serves as an excellent example of effective strategies and best practices in the food industry. By swiftly addressing the crisis, prioritizing consumer safety, and embracing transparency, Cadbury demonstrated their commitment to their customers and their brand integrity.

The lessons learned from Cadbury’s crisis management are applicable to any organization in the food industry. Prioritizing consumer safety should always be the guiding principle, followed by open communication with stakeholders and a proactive approach to resolving the issue.

Remember, a crisis can be an opportunity to showcase a company’s resilience and commitment to its customers. By implementing these best practices and being prepared, organizations can navigate crises with greater confidence, protect their brand reputation, and rebuild trust even in the face of adversity.

About The Author

Tahir Abbas

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Cadbury Marketing Strategy: A Case Study

• February 1, 2024

Cadbury marketing strategy – Cadbury , the renowned multinational confectionery brand, has been delighting chocolate lovers for nearly two centuries with its wide range of delectable treats. From the iconic Dairy Milk chocolate bars to biscuits, cakes, and beverages, Cadbury has established itself as a global leader in the confectionery industry. 

But what sets Cadbury apart from its competitors? It’s their carefully crafted and successful marketing strategy. In this article, we will explore the key ingredients that make up Cadbury marketing strategy recipe for sweet success.

Read More : 7 Coca Cola Marketing Strategy 2024 – A Case Study

The Origins of Cadbury: A Chocolate Revolution

Cadbury’s journey began in 1824 when Quaker John Cadbury started selling tea, coffee, and drinking chocolate in Birmingham, England. His passion for chocolate led him to create a heavenly chocolate drink that soon gained popularity. 

As the business grew, Cadbury expanded its offerings and started producing chocolate bars. With the introduction of their first chocolate bar in 1849, Cadbury began its chocolate revolution.

Building a Strong Brand Identity

Cadbury marketing strategy – One of the essential elements of Cadbury marketing strategy is its strong brand identity. The Cadbury logo, with its vibrant purple background and bold typography, represents the brand’s simplicity, accessibility, and timelessness. 

It instantly captures the attention of consumers and creates a sense of familiarity and trust. Cadbury has also introduced a limited-edition golden logo, symbolizing exclusivity and elegance for their premium products.

Product Mix: Catering to Every Sweet Tooth

Cadbury marketing strategy – Cadbury’s product mix is diverse, offering something for every sweet tooth. From their classic Dairy Milk bars to a wide range of candies, gums, biscuits, and beverages, Cadbury has a treat for everyone. 

They continuously innovate and develop new flavors and products to cater to different market segments and meet the rising tastes and preferences of consumers. Cadbury’s product range includes iconic brands like Bournville, Eclairs, Oreo, Perk, and Dairy Milk Silk.

Pricing Strategy: Balancing Affordability and Luxury

Cadbury’s pricing strategy is carefully balanced to cater to a wide range of consumers. They offer products at various price points, ensuring affordability for cost-conscious consumers while also providing luxury experiences for those willing to indulge. 

Cadbury employs different pricing strategies, including skimming pricing for premium products like Cadbury Silk and economy pricing for mass-market favorites like Dairy Milk. Bundle pricing is also utilized during holiday seasons to offer value packs and attract more customers.

Extensive Distribution Network: Reaching Every Corner

Cadbury marketing strategy – Cadbury’s extensive distribution network plays a vital role in its global success. With production facilities in multiple countries and sales offices in major cities, Cadbury ensures its products are available in urban and rural areas alike. 

Their chocolates can be found in supermarkets, corner shops, and grocers worldwide. Additionally, Cadbury embraces e-commerce, making its products easily accessible through online platforms. Wholesalers, distributors, and vending machines also contribute to Cadbury’s wide reach.

Promotion: Creating a Sweet Connection

Cadbury marketing strategy revolves around creating an emotional connection with consumers. They employ various advertising techniques to showcase their products, using print and television advertisements to capture the attention of chocolate lovers. 

Cadbury also leverages social media platforms to engage with their audience, sharing enticing images and videos of their chocolates. They run campaigns that evoke nostalgia, celebrate festivals, and promote sharing sweet moments with loved ones.

Public Relations and Sponsorships: Supporting Causes and Celebrations

In addition to traditional advertising, Cadbury utilizes public relations and sponsorships to build its brand reputation and connect with its target audience. They sponsor events like music festivals and sporting competitions, associating their brand with joyful experiences.

Cadbury has also partnered with NGOs to support social causes and recognize unsung heroes. By aligning with these initiatives, Cadbury reinforces its commitment to corporate social responsibility and strengthens its bond with consumers.

Sales Promotion: Tempting Customers with Sweet Deals

Cadbury marketing strategy – Cadbury employs various sales promotion strategies to entice customers and boost sales. They offer discounts, coupons, and competitions to create excitement and incentivize purchases. 

Special promotions like “buy one, get one free” and seasonal offers during holidays attract customers and encourage them to indulge in Cadbury’s delicious treats. These sales promotions not only drive sales but also create a sense of urgency and exclusivity.

Innovation and Research: Sweet Surprises for Every Occasion

Cadbury’s dedication to innovation and research ensures that they constantly surprise their customers with new products and flavors. Their research and development team is constantly experimenting with new ingredients and packaging to create unique and exciting chocolate experiences. 

Cadbury introduces limited-edition products to celebrate festivals and occasions, catering to the evolving tastes and preferences of their consumers.

Building Strong Partnerships: Collaborations for Success

Cadbury marketing strategy – Cadbury understands that success is not achieved alone. They forge partnerships with other businesses to expand their market reach and create unique offerings. 

Collaborations with celebrities, sports teams, and other brands help Cadbury tap into new audiences and create buzz around their products. 

By leveraging the reputation and influence of their partners, Cadbury strengthens its brand presence and builds stronger relationships with consumers.

Digital Marketing Strategy

In the digital age, Cadbury recognizes the importance of a strong online presence. They harness the power of social media platforms to engage with their audience and foster a sense of community. 

Cadbury’s social media accounts feature mouthwatering images, interactive campaigns, and behind-the-scenes glimpses, keeping their followers eagerly anticipating new releases and promotions. 

By actively responding to comments and messages, Cadbury ensures that their customers feel valued and connected.

International Expansion: Spreading Sweetness Worldwide

Cadbury marketing strategy – Cadbury’s global success can be attributed to its expansion into international markets. With production operations in multiple countries and products available in over 50 nations, Cadbury has become a household name worldwide. 

They adapt their marketing strategies to suit different cultural preferences and consumer behaviors, ensuring that their products resonate with local audiences. 

Cadbury’s international presence has helped them gain a diverse customer base and establish themselves as a leader in the confectionery industry.

Read More : 9 Burger King Marketing Strategy – Case Study

Cadbury marketing strategy is a carefully crafted recipe that has contributed to its enduring success. From building a strong brand identity to offering a diverse product mix, employing effective pricing strategies, and leveraging extensive distribution networks, Cadbury has created a sweet connection with consumers worldwide. 

Their promotional efforts, partnerships, and commitment to innovation further differentiate them from their competitors. With a strong online presence and international expansion, Cadbury continues to satisfy sweet tooths everywhere, spreading joy and sweetness one chocolate at a time.

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Cadbury Beverages, Inc. Crush Brand Case Study

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Marketing Case Study - Cadbury beverages: Relaunching Crush Brand

Christelle Monteillet – Cemiyle Parlak – Antoni Yalap

CPE 702 – INTERNATIONAL MARKETING

Mr. Pierre-François Jeandet

March 22, 2003

Marketing Case Study

CADBURY BEVERAGES

Relaunching Crush Brand

                                                                                         Page

Introduction                                                                        3

I – The carbonated soft drink industry                                        4

• An introduction                                                4        
• The industry structure                                        4
• The industry economics                                        5
• Product and brand categories                                6
• Soft drink purchase and buyer behavior                        6

II – Changes in the orange category between (1985-1989)                7

• The situation                                                        7
• Market shares and market coverage                        7
• Advertising and positioning                                8
• Brand positioning map                                        10

III - Cadbury’s competitive position in the US soft

Drinks’ market and orange category                                         11

A)  Introduction                                                        11

        B)  SWOT Analysis                                                11

        C)  Key Success Factors                                                12

IV – Media Advertising for the major brands                                13

V – Pro Forma Income Statement for Orange Crush                        14

        A)  Forecast of $ sales                                                14

        B)  Pro forma income statement                                14

VI - Crush’s objective and strategies in terms of

advertising and promotion                                                        15

Conclusion: Crush orange positioning recommendations                16

• Introduction

Cadbury is the beverage division of Cadbury Schweppes PLC, a major global soft drink and confectionery marketer. The turnover of the company was, in 1989, $4.6 billion and the company was present in 110 countries. Cadbury Beverages’ headquarters are in Stamford, Connecticut.

Cadbury Schweppes PLC was the world’s first soft-drink maker. The first product was an artificial mineral water marketed in 1783, in London. There is an important point to set the brand image.

Cadbury Schweppes PLC 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.

In 1989, Cadbury Schweppes was one of the world’s largest multinational firms and was ranked 457 th  in Business Global 1000 .

Beverages accounted, in 1989, 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.

Cadbury Beverages was present in three beverages categories with a huge quantity of brands:

• Carbonates:  Canada Dry, Schweppes, Sunkist, Crush, Hires, Sun-Drop, Gini, etc …
• Waters:  Schweppes, Canada Dry, Malvern, etc …
• Still Drinks/Juices:  Oasis, Vida, Trina, Mott’s, Holland House, Red Cheek, etc …

These brands and beverages were differentiated in several categories like Regular or Diet and Crush and some other brands were differentiated by the flavor (orange, cherry, pineapple, etc …).

This is a preview of the whole essay

Cadbury Beverages is trying to re-launch Crush, Hires and Sun-Drop, brands that had been acquired from Procter & Gamble in 1989. Managers decided to focus on the Crush brand of fruit-flavored carbonated beverages. The aims are:

• Rejuvenate the bottling network for the brand,
• Develop a base positioning,
• Create a new advertising and promotion program.

We will try to develop a re-launching marketing strategy for Crush, analyzing the industry, defining the competition advantages of Cadbury Schweppes and making some recommendations for the success of this brand.

I – The carbonated soft drink industry

• An introduction

Cadbury Schweppes is the world’s third largest soft drink marketer. The leaders are Coca-Cola and PepsiCo. Cadbury acquired this position by a heavy marketing investment in the Schweppes brand name and extensions to different beverage products.

The company acquired other brands like Canada Dry or Sunkist with an established customer franchise for each one. The acquisitions continued with brands in Spain and Portugal. Cadbury acquired the leading bitter lemon brand, Gini, famous in France and Belgium.

Crush was acquired in 1989 for $220 million from Procter & Gamble. In the United-States, Cadbury Schweppes was the fourth largest soft drink marketer with a 3.4% market share of carbonated soft drink market. The three leaders were (and are):

• Dr. Pepper/7UP (Cadbury acquired this company)

The point is that the company’s brands were market leader in their specific categories like, for example, Canada Dry or Schweppes.

• The industry structure

American consumers’ soft drinks consumption doubled between 1969 and 1989, from 23 to 46.7 gallons. The estimated turnover in retail sales in 1989 was $43 billion.

There are three major participants in the production and distribution of carbonated soft drinks:

• Concentrate producers
• Retail outlets

Below, we see the mechanism for regular drinks:

                                Manufacture basic flavors                  Add Sweeter

Concentrate Producers                                     Bottlers                          Retail

                                                                           Package

For diet drinks, the concentrate producers include an artificial sweetener.

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.

One-half of Pepsi-Cola’s sales are through company-owned bottlers. Franchised bottlers distribute a concentrate producer’s branded line in a defined territory. They can represent also noncompetitive brands and decline concentrate producer’s secondary lines. A franchised bottler of Pepsi-Cola cannot sell Royal Crown Cola but can bottle and market Orange Crush, for example.

The distribution and the sale of carbonated soft drinks is done across:

• Supermarkets
• Convenience stores
• Vending machines
• Fountain service (McDonald’s)
• Thousands of retail outlets

Soft drinks are sold in bottles and cans except the fountain service. Supermarkets accounted for 40% of industry sales. Supermarkets are considered by analysts as the key of successful soft drink marketing.

• The industry economics

Soft drink industry is characterized by a 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 pricing is difficult to evaluate. Differences exist between Regular and Diet soft drinks and between concentrate producers and bottlers. Below, we can see the cost structure in the Orange category:

As we can see, the advertising and promotion costs are too high (almost 50% of net selling price) for concentrate producers. For bottlers, this is the cost of goods sold which is too high. Pretax cash profit/case is relatively the same for regular concentrate producers and bottlers (16% and 15%). Differences are to note for diet soft drinks (30% for concentrate producers and 12% for bottlers).

• Product and brands categories

The leader of flavors is Cola with two-thirds of total carbonated soft drink sales. Other flavors (orange, lemon, cherry, root beer) represent one-third of sales. Below, market share of different flavors:

• Cola:  65.7%
• Lemon:  12.9%
• Others:  21.4%

Diet soft drinks represented 31% and regular 69% of sales in 1989. The share of diet drinks was important in 1980’s.

Concerning brands, there are more than 900 registered brand names for soft drinks in the United-States. Most of them are sold regionally. Below, we can see soft drink brands market shares in the United-States, in 1989:

• Soft drink purchase and buyer behavior

The purchase of soft drinks in supermarkets is often unplanned. Buyers respond favorably to price promotions, in-store displays and other promotions. The supermarket has a key function in the sales.

The classic supermarket buyer is a married woman with children under 18 years living at home. Soft drinks’ buying is seasonal: the consumption is a little bit higher during summer months. The consumption depends also on regions.

Per capita consumption in the East South Central states was highest in 1989. This region consumed 54.9 gallons whereas the national per capita average was 46.7 gallons (a gallon equals almost 4 liters). The lowest consumption was in the mountain states (37.1 gallons). Consumption of diet beverages was more important among consumers over 25 years. Teenagers and younger consumers preferred regular soft drinks.

II – Changes in the orange category between 1985 and 1989

• The Situation

The orange flavored drinks’ sales increased between 1984 and 1989. Thanks to heavy investment made by Coca-Cola (Minute Maid) and PepsiCo (Mandarin Orange Slice), the number of cases raised rapidly.

126 000 000 cases of orange-flavored soft drinks were sold in the supermarkets in 1989. So, the total is (with fountain service and retailers) is:

126 000 000 * 2.5 = 315 000 000 cases

In 1989, four brands were leaders on the market:

• Mandarin Orange Slice (PepsiCo)
• Sunkist (Cadbury Beverages)
• Minute Maid Orange (Coca-Cola)
• Orange Crush (Cadbury Beverages)
• Market shares and market coverage

Below, we can see the graphics of the relationship between market share and market coverage for four brands.

This is the graphic of the evolution of market shares for different competitors:

As we can see, the market share of Crush is decreasing. But, the cumulated market share for Cadbury was, in 1989, 22% (Sunkist and Crush). So, its market share is higher than PepsiCo and Coca-Cola. The market coverage differs from one to another company.

The competitors sold both regular and diet drinks. The importance of regular was great except for Minute Maid which splits between regular (53%) and diet (47%).

• Advertising and Positioning

The targets of the brands were different. The positioning was also different. Some insisted on orange flavor, others on young lifestyle, etc…

The advertising budget for the four leaders was $26 million in 1989. PepsiCo and Coca-Cola represented 84% of all advertising expenditures. So, their positioning was well done. The leaders used the television, the radio network, newspapers and billboards to promote their orange brands. Cadbury spent less money to advertise its brands.

Below, the graphic of relationship between brands advertising share and total advertising budget:

To compare their advertising budget with their market share, we present, below, the graphic of the evolution of different brands’ market share.

Minute Maid invested a huge amount of money to reach 14% of market share. Inversely, Sunkist has reduced this investment.

We know that expenditures for print and broadcast media declined each year after 1986. That was the year of the national launching of Minute Maid through United-States. The variety of media used enlarged.

The pricing was almost the same. Differences existed between regular and diet drinks’ gross profit margin but the differences between markets shares were due to promotions. The cost of advertising and promotion programs was supported by the concentrate producers and bottlers.

• Brand positioning map

The targets of competitors are teens, young adults and they defend a brand image. This image is different from a brand to another. Our Crush brand’s household size is between 3 and 5. Our customers are teens and adults between 13 and 29. The graphic below represents the loyalty percentage of customers to the brand giving the household size.

III - Cadbury’s competitive position in the US soft drink market and orange category

After having defined the characteristics of the soft drink industry and especially the orange category, we will now examine Cadbury’s competitive position within this market thanks to a SWOT analysis.

SWOT Analysis

• Key Success Factors

We can now determine the three key success factors of the company in the orange category:

• Crush’s brand image toward consumers and bottlers
• Underdevelopment of the diet segment
• Possibility to use Cola’s bottlers channel for distribution

IV - Media advertising $ per case for major brands

We will now estimate the advertising budget of each brand on the 1989 basis.

Total number of cases: 315 000 000

• Mandarin Orange Slice (21% market share):

3 150 000*21% = 66 150 000 cases

Media advertising per case: 11 388 100 / 66 150 000 = 0.17 $  per case

• Minute Maid (14%):

3 150 000*14% = 44 100 000 cases

Media advertising per case: 10 463 100 / 44 100 000 = 0.24 $  per case

• Sunkist (14%):

Media advertising per case: 2 301 900 / 44 100 000 = 0.05 $  per case

• Crush (8%):

3 150 000 * 8% = 25 200 000 cases

Media advertising per case: 1 853 600 / 25 200 000 = 0.07 $  per case

Total Cadbury advertising budget:

44 100 000 + 25 200 000 = 69 300 000 cases

Advertising budget: 2 301 900 + 1 853 600 = 4 155 500

Media advertising budget: 4 155 500 / 69 300 000 = 0.6 $  per case

V - Pro forma income statement for Orange Crush

• Forecast of $ sales

With 15% market share, we would obtain: 315 000 000*15% = 47 250 500 cases sold per year.

Total value:  47 250 500 * 5.85 $ = 276 412 500 $ sales  (138 206 250 $ sales per segment).

• Pro Forma Income Statement

VI - Crush’s objective and strategies in terms of advertising and promotion

First of all, Crush should forecast an advertising budget of 10 Million dollars in order to be able to reach a high market coverage rate of nearly 85% and to increase our market share from 8 to 15%.

To this purpose and as we previously said, we will focus on both national and local media:

As far as the national campaign is concerned, we will use TV cable and network, syndicated TV, radio, and magazines, sponsorship, games and competitions.

Concerning the local campaign, we will use TV commercials, radio, flyers, outdoor billboards, newspapers. We will also use incentive bonuses on sales with bottlers (for example we will allow them 15 to 25 cents per case sold).

Conclusion:  Crush orange positioning recommendations

There are different possibilities concerning Crush’s positioning such as:

• Focus on the young adults segment (18-34 years) with a household purchasing size of 1-2 persons
• Focus on the teens segment (12-24 years) with 3-4 persons
• Development of the diet segment
• Focus on the regular
• Advertising:
• Theme campaign:
• Natural flavour
• Contemporary youth culture
• Media campaign:
• National campaign
• Local campaign

We will define a new positioning for orange Crush that is to say we will first focus on the young adults segment in order to prevent Sunkist’s cannibalization and to establish Cadbury’s presence on the two age categories segment.

Secondly, we will develop the diet segment (50%) because it has a great potential unexploited with a higher gross profit margin than the regular segment and a high growth; besides, as Sunkist is present on the regular segment, this tactic could enable again the brand to evolve on both diet and regular segments.

Thus, as we decided to develop the diet segment, we will insist, through our advertising campaign, on the sugar free and natural flavour, and keep Sunkist focusing on the youth culture campaign.

Finally, concerning the type of media that we will use, we will operate on both national and local market thanks to a higher variety of ways.

* Regular, Diet & Caffeine-free

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Case Study 10: A Sweet Deal: Cadbury Leads Kraft into Emerging Markets

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February 2010 saw the acquisition of Cadbury, one of the two major confectionary players in the world, by USA-based Kraft Foods Inc.. Analysts believe that the acquisition of Cadbury was the final step in a strategy designed to enable Kraft to be restructured and split into two companies by the end of 2012: a grocery business worth around $16bn; and a global snacks business worth approximately $32bn global. Cadbury was pivotal in providing the scale that Kraft needed to strengthen its snacks business, providing it with the sought-after foothold in emerging markets, defined here as Latin America, Middle East, Africa, Eastern Europe and Asia Pacific. But how was Cadbury able to do this?

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Euromonitor (2011). How can Packaged Food Companies Grow their Presence in Emerging Markets?

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Spiteri-Cornish, L. (2014). Case Study 10: A Sweet Deal: Cadbury Leads Kraft into Emerging Markets. In: Mutum, D., Roy, S., Kipnis, E. (eds) Marketing Cases from Emerging Markets. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-36861-5_14

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Case study: Kraft’s takeover of Cadbury

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The story In 2009, US food company Kraft Foods launched a hostile bid for Cadbury , the UK-listed chocolate maker. As became clear almost exactly two years later in August 2011, Cadbury was the final acquisition necessary to allow Kraft to be restructured and indeed split into two companies by the end of 2012: a grocery business worth approximately $16bn; and a $32bn global snacks business. Kraft needed Cadbury to provide scale for the snacks business, especially in emerging markets such as India. The challenge for Kraft was how to buy Cadbury when it was not for sale.

The history Kraft itself was the product of acquisitions that started in 1916 with the purchase of a Canadian cheese company. By the time of the offer for Cadbury, it was the world’s second-largest food conglomerate, with seven brands that each generated annual revenues of more than $1bn.

Cadbury, founded by John Cadbury in 1824 in Birmingham, England, had also grown through mergers and demergers. It too had recently embarked on a strategy that was just beginning to show results. Ownership of the company was 49 per cent from the US, despite its UK listing and headquarters. Only 5 per cent of its shares were owned by short-term traders at the time of the Kraft bid.

The challenge Not only was Cadbury not for sale, but it actively resisted the Kraft takeover.

Sir Roger Carr, the chairman of Cadbury, was experienced in takeover defences and immediately put together a strong defensive advisory team. Its first act was to brand the 745 pence-per-share offer “unattractive”, saying that it “fundamentally undervalued the company”. The team made clear that even if the company had to succumb to an unwanted takeover, almost any other confectionery company (Nestlé, Ferrero and Hershey were all mentioned) would be preferred as the buyer. In addition, Lord Mandelson, then the UK’s business secretary, publicly declared that the government would oppose any buyer who failed to “respect” the historic confectioner.

The response Cadbury’s own defence documents stated that shareholders should reject Kraft’s offer because the chocolate company would be “absorbed into Kraft’s low growth conglomerate business model – an unappealing prospect that sharply contrasts with the Cadbury strategy of a pure play confectionery company”.

Little did Cadbury’s management know that Kraft’s plan was to split in two to eliminate its conglomerate nature and become two more focused businesses, thereby creating more value for its shareholders.

The result The Cadbury team determined that a majority of shareholders would sell at a price of roughly 830 pence a share. A deal was struck between the two chairmen on January 18 2010 at 840 pence per share plus a special 10 pence per share dividend. This was approved by 72 per cent of Cadbury shareholders two weeks later.

The key lessons In any takeover, especially a cross-border deal in which the acquired company is as well known as Cadbury was in the UK, the transaction will be front-page news. In this case, it was the lead business story for at least four months. Fortunately, this deal had no monopoly or competition issues, otherwise those regulators could also have been involved.

But aside from any regulators, most other commentators will largely be distractions. It is important for the acquiring company’s management and advisers to stay focused on the deal itself and the real decision-makers – the shareholders of the target company.

As this deal demonstrates, these shareholders may not (and often will not) be the long-term traditional owners of the target company stock, but rather very rational hedge funds and other arbitrageurs (in Cadbury’s case, owning 31 per cent of the shares at the end), who are swayed only by the offer price and how quickly the deal can be completed.

Other stakeholders may have legitimate concerns that need to be addressed but this can usually be done after the deal is completed, as Kraft did.

The writer is a professor in the practice of finance at Cass Business School, where he is also the director of the M&A research centre.

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A Case Study of Cadbury Beverages

Company Overview Cadbury is a multinational company now owned by Kraft Foods but headquartered in London. It operates in more than 50 countries globally, and was known as Cadbury Schweppes PLC until 2008, at which time the global confectionery business separated from the US beverage unit, now called the Dr Pepper Snapple Group. It became part of Kraft in 2010, and employees about 80,000 people worldwide with revenues approaching $9 billion (History of Cadbury, 2010). In 1989, Cadbury acquired the Crush soft drink brand from Proctor and Gamble for $220 million and about $4.6 billion in sales. During the late 1980s and 1990s beverages accounted for about 60 percent of global sales, the confectionary the other 40 percent. Except for fountain service (e.g. Fast Food and convenience stores), most of the Crush brands are sold in bottles and cans: the carbonates (Canada Dry, Sunkist and Crush); Waters (Schweppes, Canada Dry, Pure Spring); and Still Drinks (Oasis, Mott's Clamato). Over the last few decades, Cadbury Beverages has established quite a diverse portfolio of waters, juices, and carbonates and varies between the third and fourth largest soft drink producer globally, trailing only PepsiCo, Dr. Pepper Group, and Coca-Cola (Coca-Cola Guzzles, 1998). The soft drink industry, though, is rather complex. In the United States, Canada, and the EU, most soft drinks are sold through concentrate producers and bottlers or those franchised to sell their brands. These marketing

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Globalization Of Cadbury, A British Multinational Confectionery Company

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Student Essay

(1) History: Cadbury Beverages, Inc. is the beverage division of Cadbury Schweppes PLC, a major global soft drink and confectionery marketer, located in London, England; worldwide headquarters are in Stamford, Connecticut. Company is the world’s first soft drink maker and 4th largest soft drink marketer. Its history can be traced to 1783 in London. The first major product of the Schweppes was artificial mineral water. After the development of 80 years, in 1960s, the company had

While Coke and Pepsi are the major players in the soft drink competition and by far have seen the most success, both have struggled in competition with each other. Recently both companies have introduced

Essay about Cadbury Beverages Case Analysis

There are more than 900 registered brand names in the US. The top 10 brands are marketed by the 3 leading US soft drinks companies which are Coca-Cola, PepsiCo and Dr. Pepper/7up. The cola flavor is the most popular of carbonated soft drinks in the US with 65.7% of the market share. The orange flavor comes in 3rd with only 3.9% of the market share. As far as market segments are concerned there are only two segments; the regular carbonated soft drink and the diet carbonated soft drink (Kerin & Peterson, 2007).

Case Analysis: Cola Wars

The case explains the economics of the soft drink industry. There activities that add value to consumer at nearly every stage of the value chain of the soft drink industry. The war is primarily fought between Coca-Cola and PepsiCo as market leaders in this industry; who combined have roughly a ninety percent market share in their industry. The impact of globalization on competition has allowed both of these major players to find new markets to tap which has allowed each continued growth potential.

The Distribution Channels Of Cadbury

Cadbury is going to tap the rural market of nine states where the village population is around 5,000 – 10,000 in each state. The company is set to establish the distribution channels in these states by 2015. In the recent years, Cadbury’s distributors have increased from 1990 to 2100, and has tapped more than 4,50,000 retailers in the country, reaching out to about 0.6 million

Essay on Industry Analysis Csd

The industry of Carbonated Soft Drinks (CSD) is highly concentrated. The three major companies, Coca Cola, PepsiCo, and Cadbury Schweppes accounted in 1998 for more than 90% of market share by case volume –Exhibit 1-.

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Cadbury Beverages, Inc. CRUSH Brands Case Study Analysis

• Post author: Jhon Smith
• Post published: January 4, 2022
• Post category: MBA Case Studies
• Post comments: 0 Comments

Question 1: Based on your————————————————————————–issues raised in case.

Cadbury Beverages Inc. is already providing the high-quality diet orange soda and the Sunkist orange soda to its customers. It is important for the company to clear the difference between in both drinks in the marketplace. According to the same, the target market for both drinks is the same the company has to produce the products and consider the wide range of target audience. I recommend that the company should change its target market to promote its products. The Sunkist is one of the products that can make for the youngsters as well as for the teens. For this, the company should target the market within the age of 12 to 18.  The company is after introducing the diet orange soda, but the target market for this drink is not appropriate. According to me, the company should change its target market because the teens and the young are not using the diet drinks. The perfect target for this drink is the age of 24 to 34.

Nowadays the people are more health conscious they do not prefer the carbonated drinks. The orange crush has to appeal to the customers who are health conscious. The company is using the web-based application to sell its products all over the world. The use of the technology is important for the company for the growth. The company should widen their product line as well through which they can easily achieve the competitive advantage.  Cadbury operates in the monopolistic competitive market structure as well as in this market structure they have been able to control over the inflated prices. Cadbury differentiate their brand form the competitors through their various trademarks, logo and quality.  The target market of the Cadbury is 18 to 24 year olds.

Question 2: what objectives should be set for the ————————–should be pursued?

The company should use the different marketing strategies for CRUSH that helps them to promote their products in the market easily. The company should use the different marketing strategies to grab the attention for their users.  Re-position the crush as a soft drink so that the family can easily choose this drink, as well as the company, should use the less amount of sugar in manufacturing so that the health conscious people can easily use this drink. Now the target market of the Cadbury is children as well as the young parents.

The premium pricing strategy is adopted by the company, and such prices help the company to develop its perception about the high-quality products, and for this reason, the company maintains its higher prices than the competitors, and it has conveyed the message that products are of high quality. The generic strategy of the company is associated with the premium pricing it has enabled the company to achieve sustainable competitive advantage. Cadbury differentiate their brand form the competitors through their various trademarks, logo and quality.

The company should invest in high advertising strategies, and the advertising is done by the integrating TV ads, newspaper ads, social media, and other marketing techniques through which the company can communicate about its products through electronic and print media.   The company should widen their product line as well through which they can easily achieve the competitive advantage.  The company should held the school campaign and the road campaign through which they can provide the sample of their drinks to the customers. The company is providing the wide range of quality products to its customers.

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• Advertisement,
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• Supermarket
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• Customer Satisfaction
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Cadbury Beverages Inc. Case Study

Executive summary.

In October 1989 Cadbury Beverages (CB) Inc. has acquired soft drink brands from Procter & Gamble. Then in January 1990, the Cadbury marketing team decided to take up a challenge of relaunching the Crush soft drink brands. A marketing plan is strategically developed to achieve the target of the organization. The primary objective of this marketing plan is to relaunch the Crush brand through improved market coverage.

With the effort to relaunch the Crush Brand, Cadbury Beverages (CB) had identified three issues that were immediately noticeable which are affecting the current coverage and sales of the Crush brand in the market. These issues which subsequently became the secondary objective of this marketing plan will be further discussed in this paper. A strategy was developed based on these issues in order to achieve the primary objective of relaunching the brand through improved market coverage. The issues/secondary objectives are stated as follow:

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• The need to revive the cooperation and bottling network for the Crush brand.
• The need to establish and build base brand positioning which is in-line with the brand equity.
• The need to develop a new advertising and promotion program.

By having the issues arranged in such a manner, it gives an easier understanding of the current situation that is affecting the company’s brand. It started with the primary objective of improving market coverage. With wider market coverage, the brand is able to broaden its horizons and reach for more customers in the market. The strategy to achieving this is through an improved network and cooperates with the bottler of Crush brand.

Through a better networking with these bottlers, CB is able to increase its output capacity in order to supply to a wider market. Moreover, improving bottler network also gives an opportunity for the company’s product to reach a broader area due to the exclusive right of the bottlers to distribute in a defined territory. The annual supermarket case volume of orange-flavored soft drinks is believed to decrease over the years due to market saturation. From the year 1985 to 1989, the market has been feeding on the same soft-drink brands with no new product being launched into the market.

Thus, it is critical for CB to revive its Crush brand and give it a new “image” in the market or it will continue to suffer as the trend continue to decrease. The new positioning of the brand in the market has to be consistent with previous positioning and this will require an approach that is integrated into the organization’s overall business objectives where one of it is to avoid the cannibalization of Sunkist while at the same time allows the Crush brand to stay distinctively unique. To further enhance this marketing plan, a new promotion concept is introduced through advertisement activities.

The new promotion concept is developed with aim to build awareness and to stimulate demand for the product. Having a broad market coverage means nothing if the market is unable to absorb these supply. A contingency plan is also developed to handle any uncertainties.

The challenges/Issues/Problem Statement

Following the acquisition of Procter & Gambler in 1989, Cadbury Beverages attempt to relaunch the Crush brand of fruit-flavored carbonated beverages on the following year. There are three prominent issues that require the attention and focus by the company.

The issues are as follows:

• Rejuvenate a cooperative network relationship with bottlers. The decision of distribution system for selling Crush through warehouses rather than through bottlers has eroded the bottling network; causing Crush to record the poorest market coverage of orange category sales among major competitors. Besides poor market coverage and sales, the decision made by the former company has consequently caused a sense of ambiguity among the existing bottlers who are doubtful of their future position with the existing company (Cadbury Beverages) because this has prevented the bottler from selling Crush Beverages. Although the recruitment of more bottlers by CB in the mid-1990 has improved the output capacity to cover 75% of total orange sales in the market, more has to be done to rejuvenate a cooperative network relationship with these bottlers.
• Develop a base brand positioning consistent with the brand equity. Developing a base positioning for the brand is important because it gives the brand an ‘image’ and thus distinguish it from other similar product. Furthermore, an undeveloped and unexecuted of a clear differentiated position for Orange Crush in the marketplace will likely to cannibalize the Sunkist Sales. The sales of the two main competitors’ brands which are Mandarin Orange Slice and Minute Maid Orange had outpaced Crush and Sunkist especially in attracting the diet segment of orange drinkers. As much as there is a need to build a base position for the regular varieties, the same effort should be given to the diet segment in maintain the ‘image’ and the ‘uniqueness’ of the diet varieties. In order to keep the brand ‘image’ relevant in the market, the new positioning have to run in line with earlier positioning to uphold existing customers as well as attracting new and potential customers. A clear positioning statement is important because it serves as a guideline to creative development underlying the advertising program which could not be initiated if it is not well developed.
• Advertise and promote the Crush program which includes determining objectives, developing strategies, and preparing preliminary budgets. It is learned that the Crush brand have high name awareness in the existing and new bottlers markets in some areas. Hence, the objectives for the advertising and promotion had to be established and communicated to the advertising agency.

Also, there was a need to set the budget for advertising expenditures and amounts to be spent on a per case basis for promotion. In addition, a pro forma statement of projected revenues and expenses had to be prepared in order to realistically portray market and competitive conditions.

Situation analysis

Consumers are often very responsive to price promotion, in-store display and point-of-sale promotion. Secondly, the most common purchaser of soft drinks is married woman with children under the age of 18 living at home. Seasonally, the market record higher sales during summer months compared to winter. Based on a study in 1989, an average individual consumes 46. 7 gallons of soft drink in the nation with the highest per capital consumption recorded in the East South Central with 54. 9 gallons whereas the lowest per capita consumption was 37. 1 gallons in the Northern Mountain States. Consumption of diet beverages was more significant among consumers over 25 years. Teenagers and younger consumers preferred regular soft drinks.

The two major competing external brands in the orange flavored soft drink categories are PepsiCo’s Mandarin Orange Slice and Coca-Cola’s Minute Maid Orange. Besides Crush, CB also sells Sunkist in the market which becomes an internal brand competitor. The introduction of Mandarin Orange Slice and Minute Maid Orange has taken a chunk of the market shares which leaves very little shares for CD’s product combined.

Orange Carbonated Soft Drink Brand Market Shares, 1985-1989 The chart above shows the market shares for all competing brands from 1985-1989 which shows that Crush having the lowest market share percentage. The market is mainly dominated by Mandarin Orange Slice with Sunkist and Minute Maid Orange having quite balanced shares. This is a worrying situation for CB because both of its products are declining over the years which slowly replaced by Mandarin Orange Slice. The declining trend of Crush is worrying because in 1989 it has only 8% of the market shares.

One of the reasons that contribute to this declining of market share was due to low advertisement activities carried out by the company. Record shows that CB has the lowest investment in advertizing compared to other companies with only 10% of the total advertisement investments spent by the highest competitors; MOS. This has prompted the company to reinvest into advertising activities to stimulate consumers’ awareness and demand for the Crush brand in general.

The case volume saw an increasing trend from 1984-1987 and then decreased from the year 1988 to 1989 while in 1988 the case volume remains the same as the previous year. The unchanged volume shown between 1987 and 1988 should be treated as an indicator of possible reduction in sales which happened to be true in the following year. This could due to market saturation because the market has been feeding on the same soft-drink brands with no new product being launched into the market.

The growing of health conscious among consumer has leveraged the sales of diet category especially among consumer over 25 years of age. The sales of diet variety for Crush based on 1989 is very low compared to the sale of the regular form. This has causes a lower profit generation to the company as diet has a higher profit margin compared to the regular. Comparatively, Mandarin Orange Slice and Minute Maid Orange both have fairly equal sales among the two varieties.

The current target consumers for the Crush brand are aged between 13-29 years old which falls in the category of teenagers. Thus, the new positioning must stay consistence within this range of age category. The carbonated soft drink market is divided into two varieties which consist of the regular and diet soft drinks. The consumption of diet soft drinks accounts for 31. 1% of total soft drink consumption in the market and is higher among consumers over 25 years of age.

The table above shows the sales volume according to brand accounting for regular and diet varieties. In the diet segment, Mandarin Orange Slice (MOS) and Minute Maid Orange (MMO) recorded a case volume at 51% and 49% respectively which are significantly higher than both the Cadbury orange-flavor brands. Crush recorded a 29% share while Sunkist stands at only 18% of the market shares. Both MOS and MMO recorded a high case volume due to its consistent positioning in the market targeting young singles and young couples which are the major consumer of the diet soft drink.

This may present an opportunity for Crush, of which orange diet version could be repositioned to attract teenager consumers either single or couple living in big cities giving the brand a new positioning as opposed to previous “family-based” positioning.

Alternatives Marketing Strategies

There are many marketing alternatives that are considered before arriving at the recommended strategies. The alternatives are addressed according to the issues.

Rejuvenating Bottling Network

One of these strategies is to focus immediate attention and effort on reestablishing the bottling network for the Crush line, particularly Orange Crush.

Approximately there are 1,000 bottling plants in U. S that most of them work as franchised bottlers. Franchised bottlers are usually granted the right to package and distribute a concentrate producer’s branded line of soft drinks in a defined territory and not allowed to market a directly competitive major brand. But franchised bottlers can represent noncompetitive brands and decline to bottle a concentrate producer’s secondary lines. This means that a franchised bottler of Pepsi-Cola cannot sell Royal Crown (RC) Cola but can bottle and market Orange Crush rather than PepsiCo’s Mandarin Orange Slice.

Also principal retail channels for carbonated soft drinks are supermarkets, convenience stores, vending machines, fountain service and thousands of small retail outlets. Among them supermarkets solely account for 40% of carbonated soft drink industry sales. Industry analysts consider supermarket sales as the key to a successful soft drink marketing effort. From all said above we can conclude some alternatives to this strategy as follows:

• To expand the bottlers network through contracts with those franchised bottlers whom their primary product is of those for Cola and Pepsi. Crush is not considered as a direct competitor for them.
• To enter into a dealership with those bottlers who have a strong relationship with dominant supermarkets. As a result of the important part of supermarket in industry sales from where these bottlers are responsible for distribution of final products into supermarket networks hopefully this will finally leads to better sales figures.
• To encourage bottlers to enter into a dealership, the Cadbury Beverages marketing executives can take up another aggressive strategy such as paying a bigger proportion in advertising and merchandising promotions. As far as it is dealt, advertising and promotions programs are jointly implemented and financed by both the firm and bottlers. The usually split the costs 50-50 among them. To strengthen the bridge between the firm and their bottlers, the firm can propose to make a new deal to split these costs as for example 60 percent of the cost will be borne by the firm and the remaining 40 percent of the cost will be borne by the franchisor.
• The firm may also outsource/seek for other bottlers within the same region instead of relying on the current bottlers. Furthermore, there might be some other potential bottlers that are not known of but would be willing to bottle for a much lower price given their low reputation in the market.

Developing a Base Positioning

The right positioning incorporates strong values and differentiators that are important to locate the brand in the minds of consumers to maximize the potential benefit to the firm. Besides that, a good brand positioning helps guide marketing strategy by clarifying the brand’s essence, identifying the goals it helps the consumer achieve, and showing how it does so in a unique way.

Some of the positioning alternatives are as below:

• The brand is targeted at consumer with age between 12-28 for teenagers or 18-30 for young adults. These categories of ages usually have an active lifestyle and are mainly college or high school students depending on the targeted age category of customer.
• A brand that provides healthy drink. This would be the positioning strategy for the diet category which mainly focuses on orange flavored. A suggestion to include Vitamin C into the drink is being considered.
• Improve the sales of diet category with a 50:50 sales between regular and diet because the diet category offer a higher profit margin compared to the regular.
• Gender segmentation is widely used in consumer marketing. Generally men and women have different attitudes and behavior, so we can design the product with difference packing or extra ingredient to suit their need. Through demographic segmentation, it will be easier to estimate the size of the market and the media we should use to reach it efficiently.

Advertising and Promotion

There are several alternatives that the company may pursue in advertising and promotion strategies. The alternatives are discussed as follows:

• Build awareness: Building awareness is a very important when the product is new in the market. Initial promotional effort has to be established on building an identity of the product. This can be achieved through advertisement. Advertisement is a very powerful marketing tool to deliver and bring message across to consumers. Product information is so effectively channeled to consumer through advertisement in mass media such as newspaper and TV network.
• Creating interest: Consumers usually buy a product because they are interested with the product. To build interest for the product, the product has to offer something that can fulfill the wants and needs of consumers.
• Provide information: This is one of the strategies that are used by the company in assisting consumer in the search stage of the purchasing process. One of the deciding factors that influence a consumer’s purchasing decision is their knowledge about the product. Consumers tend to buy a product if the information of the product is clear to them.
• Stimulate demand: Unless the product sells itself and the consumers/customers are lining up to buy it, there will need to be a program to stimulate demand for it in the market. Thus, the need for the right promotion is needed to drive consumer’s purchasing decision.
• Brand reinforcement: Brand reinforcement usually becomes important in building consumer’s loyalty toward a certain products. One of the approaches in building brand reassurance is sales-after-service. This will maintain consumer-company relationship even after a sale is committed.

Recommendations

Here are some of the recommendations that we think are suitable to be applied in this case. These recommendations are selected based on the best alternatives for each issue highlighted in this case and are discussed as follows i. Bottling We would recommend that the firm should take the initiative to strengthen the relationship between their franchised bottlers and the firm. There were some disagreements on plans and actions practiced previously by P&G. A good and aggressive way to achieve a stronger bond with the bottlers is to pay a bigger proportion in the advertising and promotion costs.

The common practice of this proportion of cost is to split evenly between the firm and the bottlers. By agreeing to pay a bigger chunk of the said cost, for example 60% – 40% with the former percentage borne by the firm, it will lessen the bottler’s cost and in turn would be an invaluable economic advantage to them. Hopefully by doing so, the firm would once again be able to have a good tie with the bottlers. In the medium to long run, we would recommend the firm to seek for ways to decrease the reliance of the bottling network.

This is crucial to ensure that the process flow of the company’s production line would not be disrupted by an external factor which is out of their mean to solve it. By erecting a plant of their own, the firm could not only gain an edge in economic advantage, by decreasing the production cost and cutting down the middle-man cost completely, but they will also be freed of dependence on an external factor. The bottling process is a complicated process. Therefore, we would also urge the firm to start doing the research and develop the needed knowledge in the soonest time possible.

While in the long term, the firm could come up with own franchise/bottling plant. This way, they do not have to rely on sourcing out the bottling process to other franchisors. The reduction of the ‘middle-man’ or franchisor cost will greatly decrease the production costs. Savings from these costs would then be used to invest in the marketing or advertising division. Although a huge sum of investment has to be inducted in erecting a plant, the firm will be looking at handsome yields, in terms of capital and positioning growth, in the long run. By having their own bottling plant, the firm would have a much stable production flow and this in turn ensures the smoothness and consistency of the bottling processes.

Positioning Due to increasing market for healthier drinks as oppose to soft drinks with high amount of sugar, thus, it is necessary to expand the diet Crush category. New formulation of diet Crush with Vitamin, Magnesium, Niacin, and Zinc, and marketed as “Diet Crush”. The new Crush healthy soda drinks are targeted young adult in the 18 to 28-year-old demographic.

Gym regulars, outdoor professionals, college students, sport persons and enthusiasts are potential targeted group of consumer. Generally, the consumers under this category are energetic, fresh, and active. Their attitude and behavior are always related to adventure sports, the love for challenges, essence of not giving up and winning. Thus, the brand image for this product is sports centric and gradually developed to beyond the sporty image. In addition, due to existence of colleague student, the price should be in the mid-category range. The brand positioning is focus on “active” lifestyle and enhances their performance.

Promotions and advertisement In order to successfully relaunch Crush into the market the company must set a very clear objective for its promotional activities which will be the guiding force for the marketing team and the advertising agency in their effort to reintroduce the brand and gain a better market coverage and improving sales. The company’s research report shows that one of the factor that lead to poor acceptance of the product was due to poor promotion of the product.

Generally the main objective of marketing promotion activities is o build awareness among the customers on what the product has to offer. Promoting information for the product can be delivered through mass media advertisement. This is especially important in region where the awareness of the brand is still low. In the region where this product is widely known, the company shall focus on stimulate demand among its customers. One of the factors that affect customers’ purchasing decision is their interest toward the brand. Hence, it is important to create interest within the target customer in order to stimulate demand for the brand.

Promotion in terms of pricing and free gift has evidently been successful in attracting more customer buying a product or services. With strong competitions in the market, a price promotion is required to put the business back on track

Development of the new brand position has to be consistence with its previous image to increase the chances of acceptance by consumers. “Diet, healthy and active” is the new positioning for Crush. Crush has added a new “active” element into its image which remains consistence with its previous position of “healthy” as portrayed by its diet category and “thirst-quenching’ beverages.

Brand familiarity refers to how well the customer recognized the product. Strong association and awareness about brand increased the brand familiarity. Thus, bottle design, availability in market and customers’ access to product’s information would be an ideal plan to determine the brand position. Sport events and theme campaigns are essential to impress customer with the “active” image of Crush. Perceived fit with regards to similarities between Crush and Sunkist due to product features such as taste and ingredients is believed to have a smooth transition due to existence of loyal customers.

The effort of publishing the new image of Crush will strengthen brand fit between Crush and Sunkist in customers’ perceptions. It is necessary to minimize the cannibalization of Sunkist by clear differentiation between both brands. Consumer innovativeness is related to consumer attitude such as how frequently consumer use and buy the product and loyalty. Crush has 46% of loyal consumer and this gives a positive effect on extending product brand image, as well as favorable outcome such as enhanced market share and increased revenue and profit.

A theme for the marketing promotion activities is conveyed to consumers through advertising agency. The main theme for this product is to portray an “Active Lifestyle”. One of the approaches is to increase and improve advertising activities on top of what is being done currently. Advertisement should include a wider media network to reach a greater customer network. Since the target customers are active teenagers, media which is closely related to the intended customer becomes the target media. The brand will be advertised in teens and sports magazine.

It is important that the design of the advertisement convey a message of “active lifestyle”. Besides printed media, the company should also focus on electronic media such as local TV network. The advertisement should be aired in sports channel especially during big and live matches because this is the time with the higher number of viewers. Conservatively, the company should also consider of promoting the brand in both schools and colleges through sponsorship of school team or sporting events. A few strategies are laid out to stimulate demand of the product.

While most of the brand will be sold in the supermarket, product placement in the aisle will be very crucial. Research has shown that people do not look beyond items at eye level much, therefore the products has to be placed at eye-level on the shelf. Besides that, creating the right environment is also an important factor. Playing fast and upbeat music will create an active environment which will influence customer’s decision. This will help to promote the theme of the brand which is to build an “active” lifestyle brand image.

It is hard to tell how good a product is unless it can be proven hence it is hard to attract customers to buy the product unless they can try it. By this approach, the company should give free trial and samples on supermarket floor at a place near to the shelf where the product is placed. Record shows that there were 315 million cases of orange flavour soft drink were sold in 1989, the table below shows the amount in cases of orange flavour soft drink being sold by the four main brands.

The average market shares among the four competitors give an average of 14% whereas Crush was only capable of securing 8% of the market shares. Hence, a new target was set for Crush to penetrate at least 14% of market share in the following year. Therefore, the sale of Crush in orange flavour soft drink has to increase from 25,200,000 cases to 44,100,000 cases. This is sales target involves an equal sales percentage of both the regular and diet categories at 50% each.

Thus, a forecast on advertising budget would be 10 million dollar where 4. 5M dollar will be spent on regular soft drink and 5. 5M dollar on diet soft drink. We allocate more expenditure on diet soft drink than regular soft drink to boost the awareness of this product due to the reasons of poor sales record for this category and to stimulate awareness on the “healthy” image of our product. This is consistence with the current target position on “active” and “healthy” consumers. A pro forma statement is shown follow: Pro Forma Statement

At the pre-targeted sales of 44,100,000 cases and allocating 10 million dollar budget on the advertisement, the advertisement spent on regular soft drink is 20 cents per case and 25 cents per case for diet soft drink. Hence, the profit on regular soft drink will improve from 15% to 19% and the profit on diet soft drink will increase from 12% to 15%. 7. Contingency Plan Once the product has been established with its key target consumer, there is the opportunity to develop the product to target different demographics such as vary packaging design for diverge groups. Products are mixed with specific ingredients customized for women and men.

The men’s drink contains additional mineral while the women’s drink contains added folio acid, zinc and selenium to meet women’s needs. For men, the products stresses on muscle size, muscle loading, boosts metabolism, enhance stimulation and others. The product design is in “gripping” size which appeal to men. For women, the product is emphasized on weight reduction and energy booster. The shape of bottle is softer or softens package drinks color such as pink, green or blue in order to attract female consumers. Most of the products in market are gender neutral and lack of specific targeted directly at men or women ndividually.

Once the product has been established with its key target audience, there is the opportunity to develop the product to target different demographics such as vary packaging design for diverge groups. Products are mixed with specific ingredients customized for women and men. For men, the products is stresses muscle size, muscle loading, boosts metabolism, enhance stimulation and others. The product design is in “gripping” size which appeal to men. The bottle is larger and chunky appeal more to the male desire to use drinks to satisfy thirsty. Berry, lemon lime and others are considered as men’s favour preference.

The men’s drink contains additional mineral such as taurine, caffeine and other booster ingredients that claim to increase energy and alertness. The other ingredients like guarana, ginseng and ginkgo biloba are catered for health conscious male customers. For women’s market, it is necessary to emphasize on their preference which is vary taste, decoration labels, lighter colour and weight, natural, more details pattern, nice look and perfect image. The shape of Diet Crush bottle is softer or softens package drinks color such as pink, green or blue in order to attract female consumers.

Each bottle features women’s silhouettes and small size which appealed to women. The drink favoured with exotic fruits such as lychee, dragon fruits, green tea and passion fruits are considered as their preference. Diet Crush is also emphasized on improved digestion, weight reduction and energy booster, as well as with products clearly marked “low calories”, “healthy” or “light” that generally perceived as aimed at women market. In addition, any suggestion of a health expert’s endorsement or nutritionist’s advice is creates female appeal.

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Training and Development at Cadbury India Ltd, Delhi

Development

SYNOPSIS Topic of study: A comprehensive study of Training & Development programs that has been carried out by Cadbury India Ltd. , Delhi. Rational behind the study: Training plays a vital role in effective functioning of any company. The efficiency and productivity of worker working in an organization not only depends upon the skills they possesses or

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