Cadbury Beverages Inc. - Crush

Cadbury Beverages Inc. - Crush Brand

Cadbury Beverages Inc. -- Crush Brand

Cadbury Beverages Inc. is one of the more reputable providers of soft drink beverages, but despite their reputation and strong market position, the organization finds itself in the place where it needs to reaffirm itself. It strives to do so through the relaunch of three of its most powerful brands -- the Crush, Hires and Sundrop soft beverage brands. In the relaunching of these brands, Cadbury Beverages Inc. faces three primary challenges, as revealed below:

"First, immediate efforts were needed to rejuvenate the bottling network for the Crush soft drink brand. Second, according to one executive, "[we had] to sort through and figure out what the Crush brand equity is, how the brand was built… and develop a base positioning." Third, a new advertising and promotion program for Crush had to be developed, including setting objectives, developing strategies, and preparing preliminary budgets" (Kerin, 1995).

The relaunch of each of these brands would be completed separately, as they are distinctive products, addressing diverse markets and needing as such different relaunch strategies. The current project focuses on the relaunch strategies in the case of the Crush brand, and strives to attain the desired purpose through a critical approach of four specific issues:

The features of the carbonated soft drinks in the United States

The competitive relative position of Cadbury in the American soft beverage industry, with emphasis on the orange segment and the desirable future strategy in the orange segment

The recommendations for the positioning of the Crush brand, including the objectives of a marketing communications plan for Crush; and last

The design of a marketing communications program for the Crush brand.

2. Carbonated soft drinks industry

The soft drinks industry in the United States is quite mature and concentrated. It is dominated by three major players -- the Coca Cola Company, PepsiCo and Dr. Pepper / Seven Up. Cadbury Schweppes PLC. -- parent company of Cadbury Beverages Inc. -- occupies the fourth position in terms of most powerful beverage companies in the United States. At a global level however, Cadbury Schweppes is the third largest company, managing to dethrone Dr. Pepper, and being preceded only by the Coca Cola Company and PepsiCo.

There are three categories of players in the soft beverage industry, each with their precisely defined role:

The concentrate producers

The bottlers, and The retailers.

The concentrate producers are firms such as the Coca Cola Company, PepsiCo or Cadbury Schweppes. They have the recipe to the soft beverages and they create the concentrate at the basis of the beverage. They then send this concentrate to bottlers, who add the carbonated water into the mix, create the beverage and then place it in containers, such as bottles or cans. Most of these bottlers are owned by the concentrate producing companies, or are partially controlled by them through franchise agreements.

The company owned bottlers will only bottle the beverages as owned by the company. Still, the franchise bottlers are able to also bottle other beverages, as long as these do not pose direct competition to the franchisor. More specifically:

"Franchised bottlers are typically granted a 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. However, franchised bottlers can represent noncompetitive brands and decline to bottle a concentrate producer's secondary lines. These arrangements mean 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" (Kerin, 1995).

The third category of players in the soft beverage industry is represented by the retailers. These include all economic agents from restaurants, small corner street stores, independent vendors or supermarkets and hypermarkets. These vendors purchase the beverages from the bottlers and then resell it to the final consumers.

An exception is represented by fast food vendors, restaurants and other such players, who use the fountain system. Through this system, they do not sell bottled beverages, but they sell them in cups, for immediate consumption. These companies purchase the concentrate directly from the producer and then mix it with the carbonated water to create the beverage.

The soft beverage industry is generally dominated by cola type drinks, which account for over 65 per cent of all soft beverage sales. The second most preferred flavor is that of lemon-lime, with a total percentage of 3.9, followed closely by orange flavored beverages, with 3.6 per cent in total sales. The table below reveals the composition of the industry by preferred flavors:

Flavor

Market share

Cola

65.7%

Lemon-lime

12.9%

Orange

Root beer

Ginger ale

Grape

Others

10.0%

Orange flavored beverages had been increasing in popularity throughout the recent years, and this is due to the fact that both PepsiCo as well as the Coca Cola Company had introduced new orange flavored beverages.

The strong marketing campaigns which accompanied these launches generated consumer demand and materialized in an increase in sales. Prior to these campaigns, annual sales of orange flavored beverages had ranged between 100 and 102 million cases; after the launches of the new products and the new marketing campaigns, sales of orange flavored beverages increased to an annual of 126 million cases. This situation reveals a market setting in which the consumers would be likely to purchase the Crush brands from Cadbury. The table below reveals the sales volumes of orange flavored soft beverages and the market shares of the top four brands from 1985 through 1988:

1985

1986

1987

1988

1989

Market share

Sunkist

32%

20%

13%

13%

14%

Mandarin Orange Slice

NA

16%

22%

21%

21%

Minute Maid Orange

NA

8%

14%

13%

14%

Crush

22%

18%

14%

11%

8%

Sales volumes in supermarkets

100,000,000

126,000,000

131,000,000

131,000,000

126,000,000

Overall, the soft beverages industry in the United States is highly competitive. Economic agents succeed as a result of a combination of strong managerial models, operational efficiency and well developed marketing campaigns. The number one vendor pursued by the concentrate producers and the bottlers are represented by the supermarkets, as these have a wide access to consumers and appeal to them through various channels.

The demand for the soft beverages is generated by consumer preferences, as well as the state of the economy, which influences the purchase power of buyers. In such a context then, the players in the soft beverage industry succeed by efficiently combining their resources to serve the needs of the consumers, and also to attain their financial objectives.

3. Competitive position and orange strategy

Cadbury Beverage is in itself a notable soft beverages company, yet it is not a leading one. Nonetheless, as part of its parent company Cadbury Schweppes PLC., it is one of the leading beverage organizations in the world. At a global level for instance -- as has been mentioned throughout the previous section -- the company occupies the third position, after the Coca Cola Company and PepsiCo.

Cadbury has consolidated its competitive position through a combination of efficient operations, solid managerial model and sustained investments in marketing. Emphasis has been placed on brand strengthening and promotion, as well as the sustained growth through continued mergers and acquisitions.

"The company has achieved this status through consistent marketing investment in the Schweppes brand name and extensions to different beverage products such as tonic, ginger ale, club soda, and seltzer in various flavors. In addition, the company has acquired numerous other brands throughout the world, each with an established customer franchise" (Kerin, 1995).

Cadbury Schweppes faces intense competition in both national as well as international arenas. Still, the organization managed to preserve its competitive power with the use of one additional strategic strength -- it emphasized on products which were not created and sold by the competition. This specifically refers to the tonic waters, market in which Cadbury is the unbeatable leader and possesses the ultimate competitive advantage.

But aside from the tonic water, the Cadbury beverages are also competitive in terms of other brands. When two or three brands of Cadbury are combined and assessed together as part of the same organizational products, they in fact represent market leaders.

"The company's brands were often the market leader in their specific categories. For example, Dry Canada is the top selling ginger ale in the United States, Schweppes is the leading tonic water. And Canada Dry seltzers top the club soda / seltzer category. The combined sales of Sunkist and Crush brand orange drinks lead the orange-flavored carbonated soft drink category" (Kerin, 1995).

In the specific orange category, Cadbury enjoys the external opportunity of increased consumer demand, generated by the intense marketing campaigns of PepsiCo and the Coca Cola Company. The company as such owns the second largest market share, after PepsiCo, but slightly ahead of the Coca Cola Company. It markets its products to teenagers and households with children and it has selected simple marketing methods. The Crush brand has as such most frequently used television spots, newspapers and outdoor signage.

Based on this situation of the Crush brand, the recommendation for the future strategy in the orange segment is that of investing more in the products and in their marketing in order to attract more customers. Still, this course of action would be expected to generate only a slight increase in sales, and this is due to the fact that the soft beverage market is already mature and consolidated, and major shifts are improbable.

Still, the orange sector represents a stable one, which would bring sustainable revenues. In a more specific formulation, Cadbury Beverages should recognize its orange segment as one retailing cash cow products. These products are able to generate suitable revenues, for investments which only maintain, rather then reinvent the product line. The profits generated from this segment are as such secure and the costs are lower, indicating as such, that even if the market for them does not increase, the profits would still be high.

4. Positioning of Orange Crush

Orange Crush is a stable brand, one which is trusted by both the company, as well as the consumers. It is a brand which has existed for several years within the market and has gained the approval of the customers. It is able to retain its older customers, but also to attract new ones. It is based on a combination of loyalty, as well as novelty. The children that once used to drink it within their parents' households now purchase it for their own households, for their own children.

Orange Crush is a brand for the entire family, deeply rooted in the consciousness of the American consumer. It reveals survival in time, stability and strength. It is part of the life style and part of the every day activities. People celebrate with their bottles of Orange Crush on the table and they get through their routine activities with a bottle of Orange Crush in their hands. This is the image and the statement which should be made by the marketing communications campaign and this is the position which should be created for the Orange Crush brand.

This outcome would be completed with the aid of multifaceted marketing communications campaign, which aims to attain the following objectives:

Position the Orange Crush brand in the mind of the consumers

Create awareness of the company, the brand and the products

Stimulate the desire to purchase the Orange Crush beverages

Generate an increase in the demand for the Orange Crush beverages

Attract customer trust and stimulate loyalty

Increase the popularity of the brand, as well as the popularity of the Cadbury company

Increase sales of the Orange Crush products and boost the company's financial results.

5. Marketing communications program

In order to attain the objectives mentioned above, the marketing communications program has to be complex and address as many issues as possible. As has been mentioned in section 4, the recommended strategy is that of treating the Orange Crush brand as one of cash cow products. This in turn means that the marketing communications program would not be allocated massive investments to reposition the product, but that the efforts made would focus more on the further consolidation of the current position. Still, in order to avoid redundancy and to ensure that the allocated resources are not spent without a positive result, the marketing communications program would introduce some welcomed changes in Cadbury's marketing approach.

In this order of ideas, the designed marketing communications program would include the following elements:

Advertisements created in a way to promote the position of the company and the brand, as a preferred consumer choice and a part of the American culture

The advertisement ought to be promoted on more than the three traditional channels used by the company. It is as such recommended that the company began to engage in more proactive internet communications. The website should be developed to become more appealing, more user-friendly and more interactive. Online advertisements should be placed on other websites as well.

Direct and indirect communications with the consumer base and the public. In this instance, the organizational leaders, marketing specialists or other company representatives should participate in open discussions, in media interviews and other such meetings in order to promote the product, but also the brand and the company's values and commitments.