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Cadbury Beverages Case

MKT - 4333 10/2/2012
by

Blake Owen

on 3 October 2012

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Transcript of Cadbury Beverages Case

Crush Brand Relaunch Cadbury Beverages, Inc. Changing Costs Increase advertising to $7 million
$3.5 of that budget they would be responsible as concentrate producers

-$0.20/case for end aisle displays
-$0.15/case for consumer price promotions
-$0.15/case for distribution incentives Advertising and Promotion Recommendation Target young adults 18-34 years old
-Similarity in psychological, communication media, needs and wants
Narrower range

Increase focus on diet segment
-Growing market
-Higher gross profit margin Positioning Recommendation Orange flavor accounted for almost two-thirds of total Crush case volume

Marketing executives decided to focus immediate attention and effort on re-establishing the bottling network for the Crush line, particularly Orange Crush.

Careful consideration of Crush positioning Crush Marketing Keys Pricing among the four major competitors differed very little (no more than one-cent difference existed)

As noted in Exhibit 3, the gross profit margin differs between regular and diet soft drink concentrate. Competitor Pricing Purchase of soft drinks is often unplanned.
Consumers respond to price promotions, in-store displays, and shelf tag “deals”.

Typical purchaser: Married woman w/ children under age 18 living at home.

Consumption is slightly seasonal. (more in summer months)

Consumption varies regionally.

Typically, diet beverage consumption is more pronounced among consumers over 25 years of age.

Teenagers and younger consumers typically drink regular soft drinks. Soft Drink Purchasing Behavior
Concentrate producers – manufacture the basic flavors.

Bottlers – Add sweetener, package the beverage, market and sell the product.

Retail outlets – provide opportunity for consumers to make purchase for consumption. Carbonated Soft Drink (CSD) Industry I) Rejuvenate bottling network for Crush brands

II) …According to executive, “…Sort through and figure out what the Crush brand equity is, how brand was built, and then ultimately develop a base positioning.

III) New advertising and promotion program: setting objectives, developing strategies, and budgets. 3 Prominent Issues Cannibalization of Sunkist sales.

Relative emphasis on regular and diet Crush with respect to Mandarin Orange Slice and Minute Maid Orange.

Viable position had to be considered that did not run contrary to previous positioning and would build on the customer franchise currently held by Orange Crush. Positioning Issues Early 1990, recruitment efforts broadened the bottler network.

Mid 1990, trade relations with 136 bottlers were established. Bottler Network Development Advertising and promotion programs were jointly implemented and financed by concentrate producers and bottlers.

Bottlers and concentrate producers split the cost of retail-oriented merchandise promotions and consumer promotion

Types of promotion:
+ dealer loader + display loader
+ sponsorship + coupons
+ event marketing Competitor Promotions Total orange-flavored soft drink advertising expenditures decreased from $52.2 mil to $26.1 mil from 1986-1989.
-Minute Maid Orange and Mandarin Orange Slice introduced in 1986.

Competitors increased the variety of media used.
1986: Solely spot television and outdoor billboards
1989: All broadcast media and print media. Advertising Trends Minute Maid Orange: Position emphasizes its orange flavor. Targeted at young adults and households without children.

Sunkist: Position emphasizes the teen lifestyle.

Mandarin Orange Slice: “Better for you” idea. Targeted at young adults and households without children.

Crush: TBD Competitor Positioning From 1984 to 1989 the annual supermarket case volume of orange-flavored soft drinks increased from 102 million to 126 million.

-Peak of 131 million in 1987. Orange flavored category Concentrate Producers: National consumer advertising, product development, and market research.

Bottlers: Develop trade promotions to retail outlets and local consumer promotions.
-Also responsible for selling and servicing retail accounts.

Retailers: Provide shelf space for end consumer. Soft Drink Marketing The beverage division of Cadbury Schweppes PLC (London, England)
A major global soft drink and confectionery marketer.

1st soft drink maker ○ 3rd behind coke and pepsi

Achieved status through consistent marketing investment in the Schweppes brand name, through brand extension, and strategic acquisitions worldwide.

Worldwide sales = $4.6 billion in 110+ countries Company Background – January 1990 Cadbury Beverages, Inc. decides to relaunch the Crush, Hires, and Sundrop soft drink brands following October 1989 acquisition from Proctor & Gamble for $220 Million Case Overview Tuesday Group 5 October 2, 2012 Sarah Van Shoubrouek Blake Owen Anh Tran Cadbury Beverages U.S. Sales Post-Acquisition Crush Brand Industry Structure ***Americans drink more soft drinks than tap water. In ’89 the average American consumed 46.7 gallons of CSD. ’89 produced $43 billion dollar retail sales in the industry as a whole. Worldwide Presence Orange Soda Sales Orange Competitors Market Share Orange Market Reach ***Increasing steadily from 1984 due to heavy advertising and promotion from orange-flavored soft drinks collectively. Orange Flavored Advertising $ 1780 1969 1835 1783 Current News + "Demerger" of Cadbury Schwepes into two separate entities.
1. Cadbury's chocolate and confectionery. (CBY)
2. Dr. Pepper Snapple Group. Formerly Cadbury Schweppes Beverages America. Plano, TX. (DPS) Current Stock Status Dr. Pepper snapple Group (DPS) - NYSE = $44.63

Kraft Foods takes over Cadbury for $19.6 billion in 2010. https://www.google.com/finance?client=ob&q=NYSE:DPS Questions/Comments Thank You. Schweppes began in London.
First sold artificial mineral water. introduced lemonade 1870 introduced tonic water and ginger ale diversified into food products

Cadbury merge 1990 457th in BusinessWeek's Global 1000
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