In addition, it would appeal to the same customers who are currently buying the 1-gallon jugs, Moms (no need for the smaller and more-expensive packaging aimed at teens, nor is there a need to market to under-8-year-olds. This author does not favor an immediate pull-out of the DSD division: it still accounts for nearly 50% of the contribution margin. In order to support advertising and a simpler sales message, HP may want to reduce the number of lines of syrup that it sells to DSD customers; their capacity and lot-size constraints make it difficult for them to support more than a few flavors anyway.

Innovation

This division has suffered from too much innovation and too little follow-through. Now that HP will have better control over its distribution channel, it needs to focus on a few innovations that support the basic message for HP, and for the new thrust into the fruit juice market.

Rather, HP needs to cut flavors and packaging,...

Innovation should support novel health claims instead.
Allowances vs. marketing

HP now spends about 1.5% of its gross revenues on marketing other than sales-controlled marketing. That is significantly less than the industry. If one assumes that the allowances are fixed, the focus should be on fewer introductions (which reduce allowances) and higher advertising spending.

This author would recommend reviving the cartoon character and giving him a "health" repositioning. This should be the symbol for the new 100% fruit juice as well as for the existing HP brand.

Source for case: Chapter 7, Marketing Channel Strategy and Management, "Hawaiian Punch."

Hawaiian Punch