Case Analysis - Cadbury Beverages, Inc. Crush® Brand
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Transcript of Case Analysis - Cadbury Beverages, Inc. Crush® Brand
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Running head: Cadbury Beverages, Inc.: Crush® Brand
Cadbury Beverages, Inc.: Crush® Brand
Shih Ming Chang
Grand Canyon University
MKT 450
July 24, 2011
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1.) Three main participate in manufacturing and distribution of carbonated soft drinks in the
United States: concentrated producers, bottlers, and retailers. The concentrated producers’ and
bottlers’ responsibilities differ for regular and diet drinks. Bottlers are responsible of serving
retail outlets, such as placing in-store displays, local advertising, and restocking, whereas
concentrated producers are responsible of developing new products, national consumer
advertising, promotion programs, and marketing research. There are approximately 40
concentrated producers in United States, but only top three (Coca-Cola, PepsiCo, and Dr.
Pepper/7Up) account for 82% of industry sales. Whereas approximate 1000 bottlers in United
States and they are either owned by concentrated manufactures or franchised. Franchised bottlers
are usually given the exclusively rights for a certain territory, but they cannot sell a directly
competitive brand. As far as retailers concerned, the main retail channels are supermarkets,
vending machines, and fountain services. In fact, over 40% of the soft drink sales are sold in
supermarkets which are claimed to be crucial in the company’s distribution net.
2.) During the period of 1985 to 1989, the total sales in the orange carbonated rinks’ category
increased by 23.5%, from 102 million cases to 126 million cases. This change was due to the
launch of Mandarin Orange Slice (MOS) and Minute Maid Orange (MMO) by PepsiCo and
Coca-Cola, respectively, in 1986. Both companies introduced products with intensive
advertising, promotion and distribution-rejuvenating efforts. As a result of the above change,
market shares of main competitors, Sunkist and the Cadbury’s Crush brands, had gone down
dramatically while PepsiCo and Coca-Cola’s newly created brands gained market share
successfully. This indicates clearly that here is some positive correlation between the company’s
market share in the carbonated orange soft drink category and its market coverage. In practice it
means if the company’s market coverage increases, then its market share will also increase.
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3.) To identify the Cadbury Beverage’s competitive position in the orange soft drink category as
well as in the soft drink industry, I’ll use SWOT analysis method.
Internal Factors
Strengths Weaknesses
Historical brand
4th largest soft drink manufactures in
US
High brand awareness in big cities
Low market share and coverage
Limited bottlers network
Low advertising and promotion
expenditures
External Factors
Opportunities Threats
Increase of consumption
Increase in sales for diet soft drinks
Variety of media vehicles
High advertising expenses
Unplanned soft drink purchase
High competition
4.) Avoiding direct competition with Coca-Cola and PepsiCo would be the best strategy for
Cadbury Beverages which means that the company remains a niche marketer. A direct frontal
attack means brings on a price war in Cadbury Beverages couldn’t win. Also, avoid
cannibalization with Sunkist in positioning the Crush brand name on the family with children at
home segment. As far as diet Crush is concerned, the company should reposition its branding as
a healthy and rich in vitamin drink for young people living in big cities. Finally, increasing
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advertising and promotion budget is a must in order to reach out market share and repositioning
objectives.
5.) Cadbury Beverages need to set up an efficient distribution network (bottlers, retail outlets)
which is one of the key aspects in the soft drink industry. Therefore, the first objective is to
broadening the company’ cooperation with bottlers in order to relaunch the Crush brand and
increase its market share in the orange soft drink category successfully. Specifically the
company needs to recruit new bottlers as new distribution channels in order to obtain the largest
market share. In addition, the company needs to consider and implement push and pull
strategies. This will require using an increased portfolio of medias, as well as developing
sponsoring and merchandising activities, such as coupons, contests, and special volume offers.
By performing these strategies will increase Crush brand’s market share in the orange drink
category from 8% in 1989 to 10% in 1990.
6.)
Budget General: $12,000,000
Diet: $4,200,500
Regular: $7,800,500
Therefore, we have $0.40 per case which is $0.20 for retailers and $0.20 for promotion which is
divided as bellow: $0.1 for in-store and outdoor displays, $0.05 for TV spots and $0.05 for
magazines and newspapers.
7.) Pro Forma Income Statement for Orange Crush
Regular (65%) Diet (35%) Regular & Diet
Total sales 15561000 10143000 25704000
Cost of goods sold 2252250 1323000 3575250
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Gross profit ($) 13308750 8820000 22128750
Gross profit (%) 85,53 85,95 86,09
Selling and Delivery 409500 220500 630000
Advertising & Promotion 7780500 4189500 11970000
General & administrative expenses 2661750 1433250 4095000
Pretax cash profit ($) 2457000 2976750 5433750
Pretax cash profit (%) 15,79 29,35 21,14
8.) I am not sure how successful the Orange Crush has become in the United States since 1992
but it would be a huge hit in Taiwan because of climate condition. It is not seen here. Its
introduction in Taiwan means reach out more people that know Orange Crush, but do not have
access to it. I think Orange Crush should be introduced to other location with similar climate
conditions to gain market share.
References
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Dr Pepper Snapple Group (n.d.). Our Brands: Crush. Retrieved July 24, 2011, from
http://www.drpeppersnapplegroup.com/brands/crush/
Hometown Favorites LLC. (n.d.). Orange Crush Soda. Retrieved July 24, 2011, from
http://www.hometownfavorites.com/orange-crush-soda.asp
Kerin, R. A., & Peterson, R. A. (2009). Strategic Marketing Problems: Cases and Comments
(11th ed.). Upper Saddle River, NJ: Prentice Hall.
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