Outline Crush

Problem Statement:

Sub-Problems:

Situational Analysis-External Environment (Uncontrollable)

Legal/Political

o Price ceilings and price floors

o The Clayton Act

o Franchise restrictions, acquisition limits, and distribution laws/restrictions

o Possibility of being held responsible for increase in health related ailments such as diabetes

o Territorial restrictions within franchised bottlers

Social/Cultural (Institutional/Buyer Behavior)

o Americans consume, on average, 46.7 gallons of carbonated soft drinks

o Estimated retail sales for 1989 were $43 billion

o Distinction of being the world’s first soft drink maker

o Cadbury Schweppes is the world’s third largest soft drink maker behind Coca-Cola and PepsiCo.

o Consumers favored cola flavored soft drinks to any other flavor (65.7%)

o Diet soft drinks were a growing industry accounting for 31% of industry sales in 1989

o In top 10 soft drinks in US for 1989 none were orange flavored and all were marketed by Coca-Cola, PepsiCo or Dr. Pepper/7Up

o Soft drink buying is somewhat seasonal, consumption is higher in summer months

o Typical purchaser of soft drinks is a married woman with children under 18yo living at home in supermarkets

o Consumers respond favorably to price promotions, in-store displays, and other point of sale promotions.

o A brand is locked out of 60% of sales in supermarkets if it can’t get end-aisle displays

o Consumption of soft drink varied by region with highest consumption in East South Central states of KY, TN, AL, Miss. (54.9 gallons)

o Consumption of diet beverages was more pronounced among consumers over 25yo

o Teens and younger consumers were heavier consumers of regular soft drinks

o Product is in between introductory and growth stages of PLC

o Consumer is price elastic particularly if there is a substitute available for almost same price

o The product is a low involvement product with high volume purchase that requires little learning on behalf of the consumer

Market Demand (Industry/Company Sales, Market Shares)

o Cadbury Schweppes PLC was the fourth largest soft drink marketer in the with market share of 3.4 per cent

o Combined sales of Sunkist and Crush brand oranges drinks lead the orange-flavored category

o Crush accounted for 20 per cent of US sales, Sunkist for 22 per cent

o Colas account for slightly less than two thirds (65.7%) of total carbonated soft drink sales

o Orange flavors accounted for 3.9 per cent

o Diet soft drinks accounted for 31 per cent of industry sales with increased potential for future growth

o Market share of four leading orange flavored soft drink marketers were Mandarin Orange Slice (20.8), Sunkist (14.4), Minute Maid (14), Orange Crush (7.5)

o Major competitors sold both regular and diet varieties of orange flavored soft drink

o Orange Crush was only available in markets that represented 63 per cent of orange category sales

o Market share for Crush has decreased from 22-8 per cent between 1985 and 1989

o Crush is currently positioned as a thirst quenching drink, with bold user imagery, targeted at teens (13-29) with children at home

o Sunkist is also positioned toward the teen market with an emphasis on the freedom of youth

o Mandarin Orange Slice and Minute Maid Orange are both directed toward young adults and contemporary youth culture

o Possibility of cannibalism between Crush orange and Sunkist even though Crush is positioned as a soft drink