PPBM Case Analysis: Snapple [PDF]

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Snapple Case Analysis Submitted by:



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MEEMANSA VAJPAYEE PUNYATA TULI ARJUN RAO



PGP/14/095 PGP/14/167 PGP/14/267



AYUSHI AGRAWAL PGP/14/141 MANGESH PATIL PGP/14/217 MAHTAAB KAJLA PGP/14/280



Product Policy & Brand Management| Snapple



Introduction Snapple History



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



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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 chains, pizza stores, food service vendors, gasoline stations, mom-and-pop stores  Primarily concentrated on Cold Channel  Warm channel – supermarkets accounted for only 20% of the sales nationally



Promotion



   



4 Ps



Product



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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 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



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• Differences 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 to relinquish their Snapple supermarket account in exchange for distribution of Gatorade to rest of the accounts • Quaker earned distributors’ ire due to this policy and no channel rationalization was achieved • Snapple introduced in large pack sizes and in greater 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



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Product Policy & Brand Management| Snapple



Issues with Quaker Tactics



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Reproducing Gatorade’s strategy for Snapple



Brand dilution of Snapple



Change of Package size



Conflict between Quaker's management and the entrepreneurial 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



To devise a plan so as to revitalize the Snapple brand after 3 long years of declining sales. (Overall declining sales upto 35% i.e. $674mn (‘94) to $440mn (’97))



Sales ($millions)



700 600 500 400 300



Sales



200 100 0 1980



1985



1990



1995



Years



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Product Policy & Brand Management| Snapple



2000



Exhibit 6 Analysis



 Snapple having strong connect with the consumers  Doing things differently by being real and human  Seen as quirky, offbeat, authentic, fun, personal  Strong individualistic ethos  Means a lot of things to a lot of different people  Used by average people but the brand makes them to think themselves as offbeat  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”



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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 product differentiation - More like a “fashion water” than an established brand - Lack of compelling reason for use - Absence from daily rituals and routines  Negative publicity



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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



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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 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  Wide availability & maintaining variety at retail locations (Exhibit 6)  Better links to distributors for proper understanding of reorder volume & consumer preferences



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)



4 Ps



Product



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Product Policy & Brand Management| Snapple



Q&A



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Product Policy & Brand Management| Snapple