Cadbury Case Analysis

Case Recap

The marketing executives of Cadbury Beverages, Inc. want to re-launch Crush but there are several challenges at head amongst the eve of their next attempt to lead the market. The decision is to focus on the Crush brand of fruit flavored carbonated beverages. With the re-launching of the Crush brand, the executives anticipated that there must be a restructuring of the product through the bottling network, figuring out brand equity, and develop new positioning. There are many opportunities available for Crush to take advantage of and great possibilities to put them back on the forefront with the orange flavored soft drink market. This case will deal with new positioning towards a different segment and a much needed rejuvenation of the bottling network.

Problem Identification

The executives of Cadbury Beverages Inc, must find a strategy to revitalize the Crush Brand and to restructure the market of the soft drink. There are 3 main issues with the re-launching of the Crush brand. There must be a strategic plan in place to develop a base positioning. The second issue is find methods where the company can build a cooperative relationship with bottlers and the last issue is to create methods and programs that will focus on budget advertising and promotions.

Case Analysis

Cadbury Beverages Inc, is apart of Cadbury Schweppes, which is an important player in the American soft drink market. In the US, it is shown that Americans drink more soft drinks per year than water. With the increase in population, the consumption of soft drinks has directly risen to an estimated $43 billion in retail sales in 1989. Besides the increase in soft drinks consumed, the trend has also moved towards diet soft drinks due to the more health conscious society. Despite being the fourth largest soft drink marketer in the United States, 71.4% of the total market was produced by Coca Cola, PepsiCo or Dr. Pepper/7up (Grace, 2006). In 1989, Cadbury Schweppes PLC generated $4.6 billion from worldwide sales. Cadbury is considered the leader in the non-cola segment of the soft drink industry. Their brands were often the market leader in their specific categories. In 1989, Cadbury Beverages Inc acquired Crush and controlled 22% of the orange category of the soft drink market through both Crush and Sunkist; the orange category has the third largest share of the market, with a market share of 3.9%. After the purchase of Crush, Cadbury executives had to revamp the brand to generate a higher market share without contradicting the brand image or jeopardizing Sunkist soda sales. Ways to restructure are revitalize the bottling network, developing a brand position, and developing a new advertising and promotion program.

Strengths

Cadbury Beverages, Inc. is the 4th largest marketer in the United States. The company has strong brand awareness for orange soda. Cadbury Beverages is apart of the Cadbury Schweppes and because of this, they have consistent marketing through Scheweppes. The company focuses on orange flavor because it consists of 2/3 of the crush volume.

Weaknesses

There exist low market shares, which is only 8% share of the orange soft drink market. Low market coverage of only 75% also exists (Kerin, 2010). The limited bottlers network poses a big weakness for the company. The company also has a problem with low ad and promotional expenditures. The other main weakness is the competition of Crush is another brand of Cadbury, Sunkist. Therefore, there is risky positioning leading to a possible cannibalization with Sunkist. Crush also has not utilized marketing strategies for the Diet Crush to improve on diet soda sales. With the economy heading towards health eating and consumption, more soda sales are in the diet category which leads to revenue loss for Cadbury as they don't promote their Diet Crush.

Opportunities

The opportunities for the company exist in the areas of expanding the number of bottlers in market area. The other factor that is beneficial to the company is the rise in soft drink consumption. The population has grown in the US and with this there is a greater predicted increase in soda consumption. The company should explore methods to market their diet Crush to increase sales.

Threats

The main threat that this company has is the competition. Being the 4th largest mareketer of soft drinks, their main competition is Orange Slice by Pepsi. They are also plagued with the heavy advertising expenses as well as the population trend moving away from soda consumption due to health issues.

Alternatives

After acquisition of Crush in 1989, Cadbury realized that Crush was available in markets that represented 62% of the orange category sales and this was because Proctor and Gamble's decided to distribute the product through warehouses instead of bottlers. The decision made by Proctor and Gamble caused many bottlers to go elsewhere for business so the number of bottlers that distributed the brand, drastically decreased the loss in market shares and market coverage of orange carbonated drinks from 1985 to 1989 correlates with the impact of Proctor and Gambles decision. Other