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 [1989] 1. Cola [65,7%] 2. Lemon-Lime [12,9%] 3. Orange [3,9%]

Market Share Company [1989] 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.

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Crush Minute Maid

Mandarin Orange Slice

Sunkist

Regular Cola

Diet Cola

Fruit Flavour Cola Lemon

Lime / Soda Wine

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 area

1

LEVELS OF COMPETITION

Define the competitive area

1

#MARKET SHARE &

COVERAGE

Mandarin Orange

Slice 21%

Sunkist 14%

Minute Maid 14%

Crush 8%

Other Brands

43%

1989 |Sales

Mandarin Orange Slice

2121221610

6887 88 88

0

20

40

60

80

100

1985 1986 1987 1988 1989

Market share Market coverage

Minute Maid Orange

8 14 13 1410

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

6278788181

0

20

40

60

80

100

1985 1986 1987 1988 1989

Market share Market coverage

Sunkist

3220 141313

9186798395

0

20

40

60

80

100

1985 1986 1987 1988 1989

Market share Market coverage

Define the competitive area

1

PROBLEM IDENTIFICATION Crush is decreasing in

Market Share and Market Coverage

Define the competitive area

1

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 area

1

#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 area

1

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 Competitor 2

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

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FRISCA LISTYA

FERRY CAHYADI

DEWI SAGITA

DWI HERMIYATI