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This is a short case analysis of a supermarket (under a dummy name) and how my group and I feel they could improve their sales penetration and overall profitability.
Case study report submitted as a part of the Strategy Management course.
Founded by Arnie Greenberg, Leonard Marsh, Hyman Golden for selling natural apple juice
Developed a network of independent distributors
Increased advertising expenditure and focused on expansion in west coast
Mantra “everything
should and would be natural and real.”
Sold to a Thomas H. Lee Company – a leveraged Buyout
1972
1992
Outsourced production and product development
Page 2
Focus on growth of business via professional management than getting acquired
Relied on offbeat advertising and public relations
Led the growth in alternative beverage category with a share of 30%-40%
1994
Lee sold the company to Quaker Oats for $1.7 billion
Product Policy & Brand Management| Snapple
4 Ps for Snapple
Started as bottled apple drink Extended into carbonated drink, fruit flavored iced teas, diet juices, sports drink, Vitamin Supreme
Price
Premium pricing on successful products made up for the losses
Place
Independent distribution system Network of 300 small, family owned distributors Convenience Convenience chains, pizza stores, food service vendors, gasoline stations, mom-and-pop stores Primarily concentrated concentrated on Cold Channel Warm channel – supermarkets supermarkets accounted for only 20% of the sales nationally
Product
s P 4
Promotion
Page 3
Promoted as 100% natural Initial advertisement with tennis star Ivan Lendl was poorly received Later a mix of public relations and advertising Wendy Kaufman – a real person became the spokesmodel Eccentric personality and brash New York attitude Sponsorship of radio programs of Howard Stern and Rush Limbaugh Snapple convention convention in Long Island – Snapple themed fun and games
Product Policy & Brand Management| Snapple
Quaker and Snapple – Synergies & Differences
•
Synergies –
–
–
–
–
Utilize Snapple’s cold channel for
Gatorade in which it was weak Snapple to benefit from Quaker’s packaging, supply chain expertise and information system abilities Snapple to gain more exposure in the warm channel Gatorade strong in U.S south while Snapple in Northeast and west coast Quaker wanted to establish itself strongly in the beverage industry
Page 4
•
Differences Differ ences in imagery Gatorade
Snapple
Lifestyle brand
Fashion brand
Beverage for those Fashion sensitive, who worked out quirky or played vigorous sports Stable lifestyle
On the edge
Product Policy & Brand Management| Snapple
Steps taken by Quaker •
•
•
•
•
•
Association with controversial people like Howard Stern and Rush Limbaugh was terminated Wendy Kaufman’s role also terminated
300 distributors offered offered to relinquish their Snapple supermarket supermarket account in exchange for distribution of Gatorade to rest of the accounts Quaker earned distributors’ distributors’ ire due to this policy and no channel
rationalization was achieved Snapple introduced in large pack sizes and in greater assortments assortments Limitations in terms of retail display space in cold channel and distributor trucks –
Snapple more of a fashion brand than a utilitarian brand like Gatorade. Best consumed in 16-ounce single serve containers
Page 5
Product Policy & Brand Management| Snapple
Issues with Quaker Tactics
Reproducing Gatorade’s
strategy for Snapple
Change of Package size
Page 6
Brand dilution of Snapple
Conflict between Quaker's management and the entrepreneurial entrepr eneurial spirit of Snapple
Product Policy & Brand Management| Snapple
Problem Statement and Issues
Acquisition by Quaker and subsequent changes made consumers feeling betrayed
Replacement of spokesperson "Wendy” produced bad press and was still haunting the company
Dismaying distributors which were responsible for growth in cold market impacted overall business
Sales 800 700
To devise a plan so as to revitalize the Snapple brand after 3 long years of declining sales. (Overall (Overall declining sales upto 35% i.e. $674mn (‘94) to $440mn (’97))
) 600 s n o 500 i l l i m400 $ ( s 300 e l a S 200
Sales
100 0 1980
1985
1990
1995
Years
Page 7
Product Policy & Brand Management| Snapple
2000
Exhibit 6 Analysis
Snapple
having strong connect with the consumers Doing things differently differently by being real and human Seen as quirky qu irky,, offbeat, authentic, fun, personal Strong individualistic ethos Means a lot of things to a lot of different different people Used by average people but the brand makes them to think themselves as offbeat Perceived Perceived as “reaction to modernity” Seen in experiential terms – more variety and combinations than
competitors For people who are neither too serious about health nor careless about what they eat/drink – “in-betweenity”
Page 8
Product Policy & Brand Management| Snapple
Exhibit 6 Analysis
Reasons
for decreased consumption Natural attrition due to inefficient distribution More health conscious users Doubts about authenticity Loss of fashionability - Weak eak prod produc uctt di diff ffer eren enti tia ation tion - More like a “fashion water” water” than an established brand - Lack Lack of co comp mpel elli ling ng reaso eason n for for use use - Abse Absenc nce e from from dai daily ly rit ritua uals ls and and routi outine ness Negative Negative publicity
Page 9
Product Policy & Brand Management| Snapple
Modus Operandi
Increasing customer base Acquiring new customers Retaining vulnerable customers Recapturing lost customers
Increasing product consumption Expanding brand awareness: Communication about appropriateness & advantages of consuming Snapple
Short Term
Page 10
Entering new markets Diversifying into new beverage categories such as sports drinks, chocolate beverages etc.
Long Term
Product Policy & Brand Management| Snapple
Recommended Marketing Mix
16 ounce single singl e serve container size for existing and loyal customers (Bolster Fading Associations) & 10 ounce containers for new/potential users Attractive new packaging to reflect fun element (Exhibit 6) Gradually phase out the flavors that are low in demand
Price
Must maintain same pricing in the premium segment
Place
Try to retain the cold distribution channels & gradually build upon relationship with warm channels i.e. supermarkets supermarkets Wide availability & maintaining variety at retail locations (Exhibit 6) Better links to distributors for proper understanding of reorder volume & consumer preferences
Product
s P 4
Promotion
Promotion should focus on “100% Natural & Healthy” message & fun & quirky aspect of Snapple (Exhibit 6) (Bolster Fading Associations) Create a popular character that reflects brand’s personality (Create New Associations)
Increase advertising expenses to revitalize the brand Run a campaign aimed at countering the rumors (Neutralize negative associations)