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Launch of Orange Crush

Essay by   •  April 6, 2011  •  Case Study  •  2,479 Words (10 Pages)  •  2,095 Views

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Crush company has been offered a great opportunity for expansion of sales, increased net income and increased sales. However in order to make this decision to accept or deny the proposal has opportunity costs and benefits. It will also help maintain a high level of customer service, awareness, and loyalty to everyone.

While Cadbury Beverages, Inc generates much service Orange Crush has done a productive job providing the best taste for not only regular soft drinks, but diet soft drinks as well in many different flavors across the company. In order for this to continue, some slight changes need to be made in order to insure a successful lifelong career for Orange Crush.

The report attached gives a detailed presentation as to how I believe Orange Crush should be repositioned in order to insure the best possibilities for the company. Many parts of the market need to be changed. Starting with the distribution of the bottling network where Orange Crush needs to make them more involved. Followed by the positioning of the company that will make Orange Crush stick out more than its competitors. Lastly, having a better advertising system that will make Orange Crush more desirable and likely for high and positive sales.

In addition to this memo a report is attached to state the possibilities of the Orange Crush re-launch proposal. Also, towards the end of the report I have included multiple graphs, charts, and a pro forma income statement in order to demonstrate the various possibilities that have been presented and their demonstrated information.

Overview of the Industry

Cadbury beverages Inc is a beverage-manufacturing division of Cadbury Schweppes PLC that have recently acquired Crush, Hires, and Sun-drop soft drink brands from Proctor and Gamble for $220 million which was created in 1969 by a merger of Schweppes PLC and Cadbury. In 1989 Cadbury Schweppes PLC was one of the world's largest multinational companies in the world as well as the world's third largest soft drink marketer having sales of $4.6 billion. These sales were generated from product sales of more than 110 countries. Beverages accounted for 60 percent of company sales and 53 percent of operating income in 1989. Behind Coca-Cola and Pepsi Co, Cadbury Schweppes PLC achieved the status of being the world's third largest soft drink marketer. The company has been so successful through exceptional marketing investment in the brand name, as well as extensions to different beverage products. With the establishment of more customer franchises, Cadbury Schweppes decided to acquire other soft drink brand privileges including Canada Dry and Sunkist. Having added Crush into the soft drink group, sales in the United States show that Canada Dry accounts for 39 percent, Sunkist for 22 percent, Schweppes 17 percent, and Crush for 20 percent are taken from many other soft drink brands. With a combined soft drink market share of 3.4 perfect from the three leading soft drink companies, Coca-Cola, PepsiCo, and Dr Pepper/Seven Up, Cadbury Beverages, Inc. has been the fourth largest drink maker since 1989.

Problem/Decision Statement

After taking the time and putting in thorough research and long and serious discussion, the consensus was that the senior marketing executives at Cadbury Beverages, Inc. need to begin the creation of a new and improved re-launch of Orange Crush soda. Having gone through the recent charts, data, and graphs it is obvious that there has been a huge declined in Orange Crush's market share as well as their percentage of sales. With that being said, it is time to focus their attention on creating a new and improved campaign for their product. With that being said it is necessary to close efforts were made to readjust the bottling network, the development of a new and improved base position of the overall brand, and lastly to diligently implement a new launch on advertising and promotion programs for the company.

Soft Drink Market Structure

In 1989 data was provided by industry analyses about the consumption of carbonated soft drinks of Americans in the United States. The average consumption rate was 46.7 gallons in one year alone. With the gallons being at a average high rate, so was the amount of sales. As the demand and amount of carbonated soda consumed increased, the estimated retail sales were to be an estimated $43 billion within the population growth. While looking at the breakdown market segments for the beverage industry, manufacturing and distribution are broken down into three different categories: concentrate producers, bottlers, and retail outlets. Concentrate producers manufactures package beverages in bottles and cans as well as add a sweetener to carbonated water for the basic flavors. Bottlers however are either owned or franchised out by concentrate producers. With over 40 concentrate producers in the United States, the three main producers are Coca-Cola, PepsiCo, and Dr. Pepper/Seven Up which account for 82 percent of industry sales as a whole. There are approximately 1,000 bottling plants in the United States that tend to convert flavor concentrates into carbonated soft drinks. Bottlers are either owner or franchised bottlers they are not able to directly market to a major competitive brand, but they often have the right to distribute a concentrate producer's branded line and decline secondary lines as well as having the right to package. While the competition is very intense, the prices to the bottlers were similar among all of the flavor categories. There are three major distribution segments in the soft drink market. They consist of supermarkets, convenience store vending machines and fountain services for the main retail channels. Supermarket sales account for 40 percent of industry sales at supermarkets which is the key to successful soft drink marketing efforts. With the high percentage of sales in supermarkets, it is suggested that purchases are often unplanned and typically a married woman with children under the age of 18 living at home. In addition, these purchasers typically respond heavily to price promotions, such a coupons, in store displays, particularly at the end of the isles, as well as other forms of point of sale promotions, such as self tags. Heavy investment is often placed on advertising and promotions through bottlers to retail outlets, along with consumer price discounting. While there are bottlers and concentrate producers, concentrate producers tend to be in charge and responsible for developing national advertising programs and product planning and development. Where bottlers tend to focus more on trade promotions with trade promotions to retail outlets and local customer promotions. Segmenting tends to be based on distribution it is also possible for companies



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