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Page Header Running head: Cadbury Beverages, Inc.

: Crush Brand

Cadbury Beverages, Inc.: Crush Brand Shih Ming Chang Grand Canyon University MKT 450 July 24, 2011

Page Header 1.) Three main participate in manufacturing and distribution of carbonated soft drinks in the United States: concentrated producers, bottlers, and retailers. The concentrated producers and bottlers responsibilities differ for regular and diet drinks. Bottlers are responsible of serving retail outlets, such as placing in-store displays, local advertising, and restocking, whereas concentrated producers are responsible of developing new products, national consumer advertising, promotion programs, and marketing research. There are approximately 40 concentrated producers in United States, but only top three (Coca-Cola, PepsiCo, and Dr. Pepper/7Up) account for 82% of industry sales. Whereas approximate 1000 bottlers in United

States and they are either owned by concentrated manufactures or franchised. Franchised bottlers are usually given the exclusively rights for a certain territory, but they cannot sell a directly competitive brand. As far as retailers concerned, the main retail channels are supermarkets, vending machines, and fountain services. In fact, over 40% of the soft drink sales are sold in supermarkets which are claimed to be crucial in the companys distribution net. 2.) During the period of 1985 to 1989, the total sales in the orange carbonated rinks category increased by 23.5%, from 102 million cases to 126 million cases. This change was due to the launch of Mandarin Orange Slice (MOS) and Minute Maid Orange (MMO) by PepsiCo and Coca-Cola, respectively, in 1986. Both companies introduced products with intensive advertising, promotion and distribution-rejuvenating efforts. As a result of the above change, market shares of main competitors, Sunkist and the Cadburys Crush brands, had gone down dramatically while PepsiCo and Coca-Colas newly created brands gained market share successfully. This indicates clearly that here is some positive correlation between the companys market share in the carbonated orange soft drink category and its market coverage. In practice it means if the companys market coverage increases, then its market share will also increase.

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3.) To identify the Cadbury Beverages competitive position in the orange soft drink category as well as in the soft drink industry, Ill use SWOT analysis method. Internal Factors Strengths Historical brand 4th largest soft drink manufactures in US High brand awareness in big cities Weaknesses Low market share and coverage Limited bottlers network Low advertising and promotion expenditures External Factors Opportunities Increase of consumption Increase in sales for diet soft drinks Variety of media vehicles Threats High advertising expenses Unplanned soft drink purchase High competition

4.) Avoiding direct competition with Coca-Cola and PepsiCo would be the best strategy for Cadbury Beverages which means that the company remains a niche marketer. A direct frontal attack means brings on a price war in Cadbury Beverages couldnt win. Also, avoid cannibalization with Sunkist in positioning the Crush brand name on the family with children at home segment. As far as diet Crush is concerned, the company should reposition its branding as a healthy and rich in vitamin drink for young people living in big cities. Finally, increasing advertising and promotion budget is a must in order to reach out market share and repositioning objectives. 5.) Cadbury Beverages need to set up an efficient distribution network (bottlers, retail outlets) which is one of the key aspects in the soft drink industry. Therefore, the first objective is to broadening the company cooperation with bottlers in order to relaunch the Crush brand and

Page Header increase its market share in the orange soft drink category successfully. Specifically the

company needs to recruit new bottlers as new distribution channels in order to obtain the largest market share. In addition, the company needs to consider and implement push and pull strategies. This will require using an increased portfolio of medias, as well as developing sponsoring and merchandising activities, such as coupons, contests, and special volume offers. By performing these strategies will increase Crush brands market share in the orange drink category from 8% in 1989 to 10% in 1990. 6.) Budget General: $12,000,000 Diet: $4,200,500

Regular: $7,800,500 Therefore, we have $0.40 per case which is $0.20 for retailers and $0.20 for promotion which is divided as bellow: $0.1 for in-store and outdoor displays, $0.05 for TV spots and $0.05 for magazines and newspapers. 7.) Pro Forma Income Statement for Orange Crush Total sales Cost of goods sold Gross profit ($) Gross profit (%) Selling and Delivery Advertising & Promotion General & administrative expenses Pretax cash profit ($) Pretax cash profit (%) Regular (65%) 15561000 2252250 13308750 85,53 409500 7780500 2661750 2457000 15,79 Diet (35%) 10143000 1323000 8820000 85,95 220500 4189500 1433250 2976750 29,35 Regular & Diet 25704000 3575250 22128750 86,09 630000 11970000 4095000 5433750 21,14

8.) I am not sure how successful the Orange Crush has become in the United States since 1992 but it would be a huge hit in Taiwan because of climate condition. It is not seen here. Its introduction in Taiwan means reach out more people that know Orange Crush, but do not have

Page Header access to it. I think Orange Crush should be introduced to other location with similar climate conditions to gain market share.

References Dr Pepper Snapple Group (n.d.). Our Brands: Crush. Retrieved July 24, 2011, from Hometown Favorites LLC. (n.d.). Orange Crush Soda. Retrieved July 24, 2011, from Kerin, R. A., & Peterson, R. A. (2009). Strategic Marketing Problems: Cases and Comments (11th ed.). Upper Saddle River, NJ: Prentice Hall.