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Running head: Cadbury Beverages, Inc.: Crush® Brand

Cadbury Beverages, Inc.: Crush® Brand

Shih Ming Chang

Grand Canyon University

MKT 450

July 24, 2011

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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 company’s 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 Cadbury’s Crush brands, had gone down

dramatically while PepsiCo and Coca-Cola’s newly created brands gained market share

successfully. This indicates clearly that here is some positive correlation between the company’s

market share in the carbonated orange soft drink category and its market coverage. In practice it

means if the company’s market coverage increases, then its market share will also increase.

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3.) To identify the Cadbury Beverage’s competitive position in the orange soft drink category as

well as in the soft drink industry, I’ll use SWOT analysis method.

Internal Factors

Strengths Weaknesses

Historical brand

4th largest soft drink manufactures in

US

High brand awareness in big cities

Low market share and coverage

Limited bottlers network

Low advertising and promotion

expenditures

External Factors

Opportunities Threats

Increase of consumption

Increase in sales for diet soft drinks

Variety of media vehicles

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 couldn’t 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

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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

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 brand’s 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

Regular (65%) Diet (35%) Regular & Diet

Total sales 15561000 10143000 25704000

Cost of goods sold 2252250 1323000 3575250

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Gross profit ($) 13308750 8820000 22128750

Gross profit (%) 85,53 85,95 86,09

Selling and Delivery 409500 220500 630000

Advertising & Promotion 7780500 4189500 11970000

General & administrative expenses 2661750 1433250 4095000

Pretax cash profit ($) 2457000 2976750 5433750

Pretax cash profit (%) 15,79 29,35 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

access to it. I think Orange Crush should be introduced to other location with similar climate

conditions to gain market share.

References

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Dr Pepper Snapple Group (n.d.). Our Brands: Crush. Retrieved July 24, 2011, from

http://www.drpeppersnapplegroup.com/brands/crush/

Hometown Favorites LLC. (n.d.). Orange Crush Soda. Retrieved July 24, 2011, from

http://www.hometownfavorites.com/orange-crush-soda.asp

Kerin, R. A., & Peterson, R. A. (2009). Strategic Marketing Problems: Cases and Comments

(11th ed.). Upper Saddle River, NJ: Prentice Hall.

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