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CPE 702 - INTERNATIONAL MARKETING

CPE 702 - INTERNATIONAL MARKETING. M. JEANDET. presented by. Christelle Monteillet Cemiyle Parlak & Antoni Yalap. presentation of Cadbury Schweppes plc. Cadbury Beverages: a division of Cadbury Schweppes PLC, a major soft drink and confectionery marketer

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CPE 702 - INTERNATIONAL MARKETING

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  1. CPE 702 - INTERNATIONAL MARKETING M. JEANDET presented by Christelle Monteillet Cemiyle Parlak & Antoni Yalap

  2. presentation of Cadbury Schweppes plc • Cadbury Beverages: a division of Cadbury Schweppes PLC, a major soft drink and confectionery marketer • First product: an artificial mineral water marketed in 1783 • 1969: Schweppes merged with Cadbury, a candy maker, created in 1830 • 1989: a turnover of $4.6 billion, present in 110 countries • Beverages accounted, in 1989, 60% of company’s sales • Cadbury Beverages is present in three categories: Carbonates (Canada Dry, Crush), Waters (Schweppes) & Still Drinks/Juices (Oasis, Vida) in Regular and Diet • Aim: Relaunch Crush, an orange-flavored soft drink acquired from Procter & Gamble for $220 million Cadbury Schweppes

  3. the carbonated soft drink industry • The industry structure • 3 Leaders: Coca-Cola, PepsiCo & Dr. Pepper/7UP • Consumption: doubled between 1969-1989 (46.7 gallons), estimated turnover of $43 billion in retail sales • 3 participants: Concentrate producers, Bottlers & Retailers • 40 concentrate producers, 1000 bottlers • 82% of sales: the 3 leaders • Distribution network: Supermarkets, Convenience stores, Vending machines, Fountain service and Retail outlets • Bottlers owned by concentrate producers Cadbury Schweppes

  4. the carbonated soft drink industry • The industry economics • The industry is characterized by a heavy investment in advertising, selling and promotion • Concentrate Producers (per case) • Regular: • Net Selling Price = $0.76 • Gross Profit = $0.65 • Pretax Cash Profit = $0.12. Advertising = $0.38 • Diet: • Net Selling Price = $0.92, Gross Profit = $0.80 & Pretax Cash Profit = $0.27. Advertising = $0.38 (50%) Cadbury Schweppes

  5. the carbonated soft drink industry • The industry economics • Some differences exist between gross profit of concentrate producers and bottlers & between pretax cash profit/case of regular and diet • Bottlers (per case) • Regular: • Net Selling Price = $5.85 • Gross Profit = $2.69 • Pretax Cash Profit = $0.89 • Selling & Advertising = $1.75 (30%) • Diet: • Net Selling Price = $5.85, Gross Profit = $2.50 & Pretax Cash Profit = $0.71. Selling & Advertising = $1.75 Cadbury Schweppes

  6. the carbonated soft drink industry • Products, Brands & Buyer Behavior • Flavors: the leader is Cola (65.7% of sales), Lemon (12.9%) and Others (21.4%) • Diet soft drinks represented 31% of sales, Regular: 69% • More than 900 brands in the US, often sold regionally • Leaders: Coca-Cola (31.2%), PepsiCo (25.2%), Dr. Pepper/7UP (15%) • The purchase is unplanned and the supermarket is the first sale point. • Typical supermarket buyer: married woman with children • Soft drinks’ buying is seasonal. Teens prefer Regular drinks Cadbury Schweppes

  7. changes in the orange category • Sales increased between 1984 and 1989. In 1989, the volume sold was 126000000 * 2.5 = 315000000 cases • Leaders are : Mandarin Orange Slice (PepsiCo), Minute Maid Orange (Coca-Cola), Sunkist and Crush (Cadbury) Cadbury Schweppes

  8. changes in the orange category 29.7 51 43.4 37 26.5 Cadbury Beverages’ advertising budget is very limited. Market shares of Sunkist and Crush are declining because Cadbury has not a promotion program. Cadbury Schweppes

  9. Sunkist 36% Crush 46% Household size 3 - 5 Mandarin Orange Slice 55% Minute Maid Orange 48% 1 - 2 Loyalty (percentage) low high changes in the orange category Brand Positioning map (1989): The positioning of Crush and Sunkist is very blurred. We must reposition our Brands and try to increase the loyalty percentage of our customers. Cadbury Schweppes

  10. a swot analysis of cadbury • Strengths: A brand image (1783), Established Customer Franchises, Cadbury’s brands leader in their category, Crush brand has high name awareness with consumers, Agreements with 136 bottlers • Weaknesses: Positioning problems (unadapted and large target, cannibalization risk with Sunkist), Limitative advertising (Insufficient promotion budget, Insufficient of used media), Underdeveloped Diet segment • Opportunities: International development in the long term • Threats: Dr. Pepper/7UP could enter the market seeing our weakness Cadbury Schweppes

  11. key success factors • Key Success Factors • Crush’s brand image toward consumers and bottlers • Underdevelopment of the diet segment • Possibility to use Cola’s bottlers channel for distribution Cadbury Schweppes

  12. media advertising $ Media advertising $ per case for major brands in 1989 Mandarin Orange Slice (21% market share): media advertising per case: 0.17 $ Minute Maid (14%): media advertising per case: 0.24 $ Sunkist (14%): media advertising per case: 0.05 $ Crush (8%): media advertising per case: 0.07 $ Total Cadbury advertising budget: 0.6 $ Cadbury Schweppes

  13. pro forma income statement Cadbury Schweppes

  14. Crush advertising recommendations • Objectives: • 15% market share • 85% market coverage • 10 Million $ advertising budget • Media meanings: • National campaign: • TV cable and network, syndicated TV, radio, and magazines, sponsorship, games and competitions • Local campaign: • TV commercials, radio, flyers, outdoor billboards, • newspapers, incentive bonuses on sales with bottlers (15 to 25 cents per case sold) Cadbury Schweppes

  15. our final recommendations • Target the young adults segment (18 – 34 years) with purchasing household size of 1 – 2 persons • Focus on the diet segment (50%) • Make advertising campaign oriented towards sugar free and natural flavor taste • Use of both National and Local media campaigns Orange Crush Cadbury Schweppes

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