Snapple Case Group5

CONFIDENTIAL – DO NOT DISTRIBUTE

Snapple

October 21, 2012

Group –Gaurav Mandore-PGP1013Abishek Kamble-PGP1017Kaif Siddiqui-PGP1031

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Contents

Case Background

Synopsis of Snapple

Rise of Snapple:1973-92

Fall of Snapple:1993-97

Q1, Q2, Q3, Q4

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Case Background ?

Overview

• Many soft-drink brands flourished in the 1980s serving New York's Yuppies

• Only Snapple could transition from local to national success .

• It was poised to go international when the founders sold out to Quaker.

• The brand proved harder to manage than Quaker anticipated and in 1997 was sold for a fraction of its acquisition price.

• The case presents factors accounting for the growth and decline and provides a qualitative study of the brand. What action should the new owners take?

Topics Covered

• Distribution

• Entrepreneurship

• Market planning strategy

• Market Positioning

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Synopsis of Snapple

• In 1972, Snapple was created which was formally known as Unadulterated Food Production.

• The initial product offered was solely apple soda, which was named Snapple.

• It targeted at the young, health conscious market segment.

• Subsequently, the company became more successful, a variety of non-carbonated beverages were then introduced and it began expanding its distribution.

• In 1994, the company was sold to Quaker Oats for $1.7 billion.

• However, Quaker was unsuccessful in building Snapple’s brand value as evidenced by the decline in sales.

• Later in 1997, Quaker sold the Snapple to Triarc Beverages for $300 million

The case delves into rise and fall of Snapple and reasons behind it

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The rise of Snapple:1972-1993

Snapple focused mainly on brand recognition and brand image;

Broadened product line to provide a variety of flavors

Extended product line with an established brand name to enter different market segments- resulted in reduced introductory marketing expenses.

Resulted in Snapples brand to be synonymous with the image of natural, fun and quirky, in the eyes of consumers

Product

Promotion

Price

Threats

A premium pricing strategy was employed as Snapple targeted at the niche, premium beverage market

It had price as an indicator of quality which was consistent with its positioning strategy

Although not all products succeed, the loyalty of customers assisted Snapple in driving marketshare in targeted market

The success of the entrepreneurial founders often resulted in Snapple being reported by several medias.

Secondary associations -Wendy:Spokesmodel. Wendy possessed personality attribute & product-related associations that were linked to the product & reinforced its “quirky” positioning

Enlisted the support of offbeat personalities, including Howard and Rush to create an individualist image that helped achieve cult status

Reinforcement of Snapple’s brand image and brand’s mantra: “100% Natural” can be seen through the use of natural and real set up .

Indirect channel distribution marketing strategy was exploited

Snapple had a very little supermarket coverage

The small distributors weresmall as individuals but became a mighty marketing force when aggregated

Aggressive distribution was a mainstay in Snapples success

These distributors generate high margins carrying Snapple, they also had the option of delivering other beverages to chain stores, further boosting profitability

Snapple also undertook the opportunity to increase its distribution volume significantly by investing incoolers and vending machines for convenience stores

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The Fall of Snapple:1993-97

Gatorade(lifestyle) & Snapple(Fashion) -Created confusion in the minds of the consumers since brand portfolio was not properly managed

It lacked compelling reason for use Mainly due to the discontinuance of Wendy and Stern, brand loyalty was lost which impacted Snapple’s financial performance

The failure of large pack of Snapple drinks illustrated Quaker’s low understanding and lack of consumers’ and distributors’ communication.

The main weakness of Quaker was the failure of Snapple’s brand consistency and the transformation of its brand.

The lack of understanding of brand also led to wrong implementation of marketing tactic

Internal Factors Extrenal Factors

Snapple’s rumors had an impact on brand image, consumers’ brand loyalty and brand equity.

Due to the success of Snapple, increase in competition was seen and consumers became more price conscious. Consumers will switch for the lower price product when there is no large differentiation between the products

The youth market, with a lower disposable income, may thus be lost.

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Personnel Channel Image

Indirect channel distribution marketing strategy was exploited

Snapple was sold primarily though cold channels such as street vendors, delicatessens, restaurants, and recreations areas

It had a very little supermarket coverage

The small distributors were small individually but became a mighty marketing force when aggregated

Aggressive distribution was a mainstay in Snapples success

These distributors generate high margins carrying Snapple, they also had the option of delivering other beverages to chain stores, further boosting profitability

Snapple was very successful in conveying its identity as a sort of counter culture and non-mainstream beverage

It was perceived as honest, Was consideres100% natural,

Had a somewhat edgy, independent image

And was considered not to be a part of corporate America

Wendy Kaufman was a spokesperson, who was seen as quirky, likable, and honest

Enlisted the support of offbeat personalities, including Howard and Rush to create an individualist image that helped achieve cult status

Reinforcement of Snapple’s brand image and brand’s mantra: “100% Natural” can be seen through the use of natural and real set up

In the period 1972 to 1993, why do you think that Snapple flourished when so many small startup premium fruit drinks stayed small or

disappeared? Explore each of the Four Ps, to decide where to give credit.

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Did Quaker (the 1994-1997 phase) make an error in buying Snapple or did they just manage it badly? Briefly support your answer.

Quaker attempted to “fix what wasn’t broken.”

Quaker assumed that successful marketing & distribution of Gatorade could be applied to Snapple.

No differentiation: While the earlier success of Snapple resulted from differentiation. Snapple became unsuccessful under Quaker’s management because it started to lack the personnel, channel, and image differentiation that it was known for.

Brand Ambassdors:Under Quaker’s management, the relationships with Wendy Kaufman, Rush Limbaugh, and Howard Stern were severed because the company felt that these individuals were either too eccentric or too controversial, when in reality, getting rid of these people was a nail in the coffin for Snapple.

Ditribution:Snapple was sold primarily though cold channels when it was successful. Quaker attempted to apply the Gatorade model to Snapple’s distribution and use primarily warm channels, which made Snapple look like a sell-out and really destroyed the edgy non-mainstream identity that had made it successful..

Snapple became unsuccessful under Quaker because

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Identify the three highest priority initiatives you would start tomorrow if you were in Mike Weinstein’s shoes. Justify them

Bring back the zaniness of the brand by-

Reinstate Wendy Kaufman or the likes as a spokesperson

Re-enlist the support of offbeat personalities, including Howard and Rush to recreate the individualist image that helped achieve cult status

Reinforce Snapple’s brand image and brand’s mantra through marketing

Personnel Channel Image

Put in place an extensive and dependable network of independent distributors as was the case before

Offer new short term lucrative incentives so as to empanel them again .

Possible expansion of the independent distributors so as to penetrate the market even further.

Understand the product differentiation of Snapple from its own product and its competitors and employ strategies to heavily market the brand values of Snapple.

The marketing strategy should always focus on its core brand value.

Both qualitative and quantitative consumer researches, and brand tracking should be engaged to enhance the understandingof their product and consumers’ requirements

Possibly going back to the “Natural advertising” is a

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Roll forward to 1998. What can Triarc’s managers learn from Quaker’s experience? What can they apply from their own experience? Is the Snapple target market “anyone with lips”? Is it OK that Snapple “ends up meaning lots of different things to lots of people?” What are the risks and rewards of leaving “what the brand stands for” open to consumers’ interpretations rather than a strong positioning on it? And what does it mean to say that Snapple is a fashion brand?

• No, it is inappropriate to position the brand as different to different consumers.

• A strong positioning helps the brand segment and target the market accordingly.

• Specific strategies in distribution and promotion pertaining to the positioning can be adopted.

• Interpretation of the positioning to the consumer can lead to confusion amongst potential users also.

• From their own experiences Triac manager can do the following

1. Eliminate Unsuccessful Flavors

2. Vintage Line

Change Packaging

Recyclable Material (Green Movement)

3. Pull Strategy -establish on the East Coast

4. Consumer Contest

5. Bring back “Wendy” personality

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Thank You

Snapple Case Group5

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