Published on March 13, 2014
CRUSH MARKET & COMPETITIVE SPACE P R E S E N T E D BY FRISCA LISTYA FERRY CAHYADI DEWI SAGITA DWI HERMIYATI CADBURRY BEVERAGES, INC MAGISTER MANAGEMENT UNIVERSITY OF INDONESIA 2014
CRUSH BACKGROUND CADBURRY BEVERAGES, INC Cadburry Schweppes PLC is the world’s largest soft drink marketer. 1989. Acquired Crush for $220 million. Market Share Flavor  1. Cola [65,7%] 2. Lemon-Lime [12,9%] 3. Orange [3,9%] Market Share Company  1. Coca Cola 2. Pepsi Co. 3. Dr. Pepper MAGISTER MANAJEMEN UNIVERSITAS INDONESIA 2014
FRAMEWORK FOR 1 Determine the Boundaries & Structure of the Product Market DEFINING & ANALYZING PRODUCT-MARKETS 2 Form the Product-Market 3 Describe & Analyze End Users 4 Analyze Competition 5 Forecast Market Size & Rate of Change
FRAMEWORK FOR 1 Define the competitive area ANALYZING COMPETITION 2 Identify key competitors. 3 Evaluate key competitors. 4 Anticipate actions by competitors. 5 Identify & evaluate potential competitors.
- - . - Crush Minute Maid Mandarin Orange Slice Sunkist Regular Cola Diet Cola Fruit Flavour Cola Lemon Lime / SodaWine Bottled Water Juices Coffee Beer Milk Tea Ice Cream Yogurt Fast Food Games Movies Product form competition : ORANGE SOFT DRINK Product category competition: SOFT DRINK Generic competition : BEVERAGE Budget competition : FOOD & ENTERTAIMENT Define the competitive area1 LEVELS OF COMPETITION
Define the competitive area1 #MARKET SHARE & COVERAGE Mandarin Orange Slice 21% Sunkist 14% Minute Maid 14% Crush 8% Other Brands 43% 1989 |Sales
Mandarin Orange Slice 21212216 10 68 87 88 88 0 20 40 60 80 100 1985 1986 1987 1988 1989 Market share Market coverage Minute Maid Orange 8 14 13 14 10 60 87 88 88 0 20 40 60 80 100 1985 1986 1987 1988 1989 Market share Market coverage Crush 22 18 14 11 8 62 78788181 0 20 40 60 80 100 1985 1986 1987 1988 1989 Market share Market coverage Sunkist 32 20 141313 91867983 95 0 20 40 60 80 100 1985 1986 1987 1988 1989 Market share Market coverage Define the competitive area1 PROBLEM IDENTIFICATION Crush is decreasing in Market Share and Market Coverage
Define the competitive area1 PROBLEM IDENTIFICATION Diet Market isn’ fully developed. Type Total Soft Drinks Total Orange Crush Sunkist Mandarin Orange Slice Minute Maid Orange Regular 69 73 71 82 49 53 Diet 31 27 29 18 51 47 100 % 100 % 100 % 100 % 100 % 100 %
Define the competitive area1 #VALUE CHAIN Concentrate Producer Bottler • National consumer ads & promotion program • Product development & planning • Marketing research • Trade promotion to retail outlets & consumer promotion Retail Channel • Sell the product Consumers
Define the competitive area1 INDUSTRY RIVALRY Exit barriers very low Pricing very competitive Promotion and advertising very attractive NEW ENTRANTS Strong distribution network Loyalty to existing brand Entry barriers are high Strong brand name are important BUYERS Low dependency on distributors Product is important to customer Large number of customer SUBSTITUTES Limited number of substitute Substitute product are low quality Intensity of existing rivalry SUPPLIER Diverse distribution channel Lower cost impact #PORTER 5 FORCES
Identify Key Competitor2 Coca Cola Pepsi Co Cadbury • World’s largest beverage manufacturer. • Offers 400 brands in 200 countries. • Manages Minute Maid Orange brand • Emphasized “orange” flavor. (positioning) • Targeted young adults (18-34) and households without any children. • Loyalty : 48% • Also manages Frito-Lay, Quaker Oats, Tropicana, Gatorade, and SoBe. • Formed partnerships with Starbucks, Ben & Jerry’s, Dole, and Lipton Original Iced Tea. • Manages Mandarin Orange Slice • Targeted young adults (18-24) and households without any children. • Tagline : “Who’s Got the Juice?” contempory youth culture • Loyalty : 55% • Along with owning Crush, the company is also the successor to Dr.Pepper/7up, Mott, and Snapple. • Manages Sunkist. • Targeted teens and focused on their lifestyle. • Positioning : “Dont just quench it, crush it/ bold user imagery eith thirsty quenching benefit” • Crush : 46% (Loyalty), Teens, 13-29 • Loyalty Sunkist : 36% (Loyalty), Teens, 12-24 #COMPETITOR ANALYSIS PROBLEM IDENTIFICATION Canibalization with Sunkist, unclear positioning
• Promotion & Advertising financed by Producers & Bottler • ATL (TVC, Radio, Prind Ad, Print Media) and BTL (Event, Sponsorship), Trade Promo for retailer, & consumer; merchandising program Evaluate key competitors.3
INTERNAL FACTORS STRENGTHS WEAKNESSES Cadbury is the world’s first soft drink marketer Each Cadbury’s brand has been acquired with an established customer franchise. Cadbury’s orange products are not in competition with leaders on the market (Cola): • Leader in our category • We can use franchised bottlers who are not in competition on our segment Crush brand has high name awareness with consumers (in big cities) and bottlers Agreements with 136 bottlers in the mid 90’s Positioning problem: • Our target is too large and un-adapted • Cannibalization risk of Sunkist • Advertising campaign un-targeted clearly and not innovative enough • Amount of the advertising budget insufficient • Variety of media used insufficient The Diet segment is underdeveloped EXTERNAL FACTORS OPPORTUNITIES THREATS International development in the long term on the orange segment Dr Pepper could appear on the orange segment SWOT ANALYSIS
Crush is decreasing in Market Share and Market Coverage • Invest more money in advertising. Since Cadbury spent less money to advertise its brands compare to competitors. TV cable and network Syndicated TV, radio, and magazines Sponsorship, games and competitions • Crush should forecast an advertising budget of 10 Million dollars in order to be able to reach a high market coverage rate of nearly 85% and to increase market share from 8 to 15%. • Focus on both national and local media ads. TV commercials Outdoor billboards Newspapers Radio Flyers • Possibility to use Cola’s bottlers channel for distribution (bottle network development) • Give incentive bonuses on sales with bottlers RECOMMENDATION
Diet Market isn’t fully developed Develop and Enhance The Diet Segment (50%) • Emphasize sugar free and natural flavour on campaign. • It has a great potential unexploited with a higher gross profit margin than the regular segment and a high growth. • Besides, as Sunkist is present on the regular segment, this tactic could enable again the brand to evolve on both diet and regular segments. RECOMMENDATION
Cannibalization with Sunkist, unclear positioning Define a new positioning for orange Crush First focus on the young adults segment in order to prevent Sunkist’s cannibalization and to establish Cadbury’s presence on the two age categories segment. Crush will be positioned above its sister brand Sunkist. Crush has a premium brand name, therefore; it is wise to position Crush as a product quality leader rather than a market leader. Sunkist, Crush’s sister brand will take the role of competing through market share. Targeting Product Segment Categories Focus on the young adults segment (18-34 years) with a household purchasing size of 1-2 persons. Focus on the teens segment (12-24 years) with 3-4 persons. Development of the diet segment. Focus on the regular. Customer Segment Achievers Experiencers Strivers Focus on family and often choose premium products. Compared to other orange soft drinks, Crush is of better quality and is extremely family-friendly. Young and adventurous who seek excitement in life. With its edgy and fun branding, Crush will definitely appeal to the Experiencers Trendy and likes to emulate the purchases of those who are wealthier than them. Because Crush is re-launching their brand, the Strivers will be the first to jump onto the “new trend” of drinking Crush. RECOMMENDATION
PRO FORMA INVESTMENT Regular Diet $ % $ % Number of cases 23 625 250 23 625 250 Sales 138 207 712,50 100% 138 207 712,50 100 % Cost of goods sold 74 655 790,00 54% 79 144 587,50 57% Gross profit 63 551 922,50 46% 59 063 125,00 43% Gross profit/case 2,69 2,50 Selling and delivery 31 894 087,50 23% 31 894 087,50 23% Advertising and promotion 5 000 000,00 4% 5 000 000,00 4% General and administrative expenses 1 181 262,50 1% 1 181 262,50 1% Pretax cash profit 25 476 572,50 18% 20 987 775,00 15% Pretax cash profit/case 1,08 0,89 Pro forma income statement for Orange Crush 1.Forecast of $ sales With 15% market share, we would obtain: 315 000 000*15% = 47 250 500 cases sold per year. Total value: 47 250 500 * 5.85 $ = 276 412 500 $ sales (138 206 250 $ sales per segment) 2. Pro Forma Income Statement
THANKYOU Hey, YOU! FOR YOUR ATTENTION FGD | FGD| FGD | FGD | FGD | FGD FRISCA LISTYA FERRY CAHYADI DEWI SAGITA DWI HERMIYATI
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