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Tuesday, May 8, 2012

Marketing Case Study-Cadbury Schweppes Oasis

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INTRODUCTION


Oasis � The Product


Sales successes in the UK included the relaunch of Schweppes with new graphics, new


Advertising and the new Schweppes Sparkling range (a mixture of fruit juice and spring water), together with an 84% increase in Dr Pepper volumes and 0% growth from Oasis. Trading profit in the UK included only one month’s bottling profits from CCSB (sold in February), which continues as our bottler under new long term licensing arrangements.


Cheap Custom Essays on Marketing Case Study-Cadbury Schweppes Oasis




Cadbury Schweppes � The Company


Cadbury Schweppes is a global business, which manufactures, markets and distributes branded products in over 00 countries. It aims to provide pleasure, taste and enjoyment through the manufacture and marketing of a wide range of beverage and confectionery brands sold to consumers of all ages.


Cadbury Schweppes employs over 40,000 people worldwide. The Groups strategy is to increase profitability, brand strength and volume on a global basis in its two business streams, beverages and confectionery, through a combination of internal growth, targeted acquisitions and joint ventures. In the beverages business, Cadbury Schweppes is currently No in global soft drinks, where it licenses its brands to bottling partners in countries and has its own or joint venture bottling operations in a further 14 countries.





NEW PRODUCTS DEVELOPMENT


Cadbury Schweppes objective for the development of Oasis was


1. To grow the market of ‘New Age’ soft drinks in the UK;


. To increase Cadbury Schweppes share of the non-alcoholic beverages industry in the UK.


The concept of ‘New age soft drinks was developed after market research identified the growth of soft drinks and a definite gap in the market for something non alcoholic but not ‘Fizzy’ example iced tea, herbal drinks, flavoured waters and sparkling juices.


IDEA GENERATION


Monitoring international trends


The trend in the US soft drink industry was a significant shift towards the ‘New age’ soft drinks, a growth of $6 billion. Observations of the similar products launched in the UK gave the Marketing manager, Andrew Mann reason to believe that ‘New age’ drinks would be a major success in UK.


The diagram below show the actual figure for the years 16 and 17 on a global scale


Studied demographic trends in the UK


The aging population in the UK may be health conscious and there preference for a beverage would be that of a non-alcoholic, less sweet, no fizz and more natural drink.


There was a distinct shift in the soft drink culture that was bringing significant changes to the soft drink market. There was a likelihood of adults who have grown up with a soft drinks culture to continue drinking soft drinks as adults. However, their tastes are for something less sweet- and fizzy.


SCREENING


Cadbury Schweppes being a socially responsible company found thru


Comparative studies other successful premium products.


There had been an increase in growth of the premium area of other segments in the UK such as premium crisps, such as Doritos and Phileas Fogg, and for premium ice creams


IDEA EVALUATION


Concept testing reactions from customers and rough estimates of costs, sales and profits. With Oasis, both qualitative and quantitative market research was carried out. CADBURY SCHWEPPES focused both in an out of London with regard to qualitative market research. A survey was


Carried out of Snapple a product owned by Quaker Oats and Fruitopia a product owned by Coca-Cola Beverages. UK respondents felt that Snapple was boring whilst Fruitopia flavours were too weird. The advertising was also considered bizarre and psychedelic. Consumers had reservations about the two competitive brands and this suggested the gap in the market for a product between these two extremes.


Concept testing was limited to the lemon, orange and red fruit drinks combination as these formed the base for all juices and the ones most frequently consumed.


DEVELOPMENT


The new product development process took nine months in a consumer market where launch may take up to two years.


Marketing Mix


Product


The product contains still spring water and 10% real fruit juice.


It has a healthy image based on use of only natural colors and flavorings


Free from preservatives and additives


The bottle is made of glass to suit the adult target market


The 75ml wide mouth bottle is resalable for ease.


Price


Consumers are price insensitive and are impulsive buyers.


Place


Oasis is strongest in the ‘impulse’ purchase sector.


Promotion


Ø Cadbury Schweppes has a massive sales force that sells their products.


Ø 500 students are employed every summer to make product drops


Ø Promotional Budget


.5 million � Television and Poster advertising.


Ø Recall figures for oasis are 80 % whereas for the competitors it was 75% for Fruitopia and Snapple 0%.


Ø Aside from television and poster advertising radio, magazines and promotional support which includes sponsorships of capital radio show “hall of fame’.


Ø Pull factors such as refreshment guarantees to encourage initial purchases.


COMMERCIALIZATION


The final commercialization phase involved the finalization of the marketing plan. The product was launched in three flavors because of preference in the UK market and also because retailers would be more likely to carry all three flavors, which would improve the product launch. The propriety bottle design centered on a reseal able glass bottle and based on a 75ml quantity and packaged in cases of 1 units. The pricing of the product indicated its premium position and impulse buyers would be price insensitive. Also the smaller unit packaging enabled independent retailers to be able to stock the product. The availability of the product was through outlets where impulse purchases was encouraged � garage forecourts, cooler cabinets and newsagents. A plan-o-gram was provided to assist retailers to encourage them in stocking the core OASIS range and display it to the best advantage.


Market introduction stage, sales are low as a new idea is first introduced to a market. Customers arent looking for the product. Even if the product offers superior value, customers dont even know about it. Informative promotion is needed to tell potential customers about the advantages and uses of the new-product concept.


As in the case of oasis the introductory stage was quite rapid, the original idea was developed in 14 and the product was launches in a matter of months.


Growth stage � The market has accepted the product and a very rapid increase in market size is likely. The competition usually gets quite intense at this stage.


Oasis has reached this stage and will probably start to experience a slight decline from here because of the growing compettion.


Market Maturity � market maturity stage occurs when industry sales level off--and competition gets tougher.


Sales decline stage, new products replace the old. Price competition from dying products becomes more vigorous--but firms with strong brands may make profits until the end. The market introduction stage, sales are low as a new idea is first introduced to a market. Customers arent looking for the product. Even if the product offers superior value, customers dont even know about it. Informative promotion is needed to tell potential customers about the advantages and uses of the new-product concept.


Fruitopia, which was the product that withdrew from the UK market because of the introduction of oasis, was at this stage in the life cycle.


Oasis would be in the Growth stage of the product life cycle.





KEY SUCCESS FACTORS OF OASIS


Ø The cross-functional launch team gave new and fresh innovation to creation of a new product;


Ø CADBURY SCHWEPPES properly researched the market and correctly (skill) identified the gap in the soft drinks market between the UK and the US;


Ø The new product development stages were maximized;


Ø The advertising campaign was based on a down to earth approach in keeping with the stereotype approach;


Ø The “awareness” campaign was well propagated;


Ø The withdrawal of competitors was not seen as a measure of success but as a stepping stone to more product innovation;


Ø The brand extensions gave more durability to the product;


Ø Top management support for the launch of Oasis and support in the success of the product;


Ø The outsourcing of the bottling function to Coca-Cola and the franchising of the brands to CCSB which also distributes competitive products created a strategic and clever alliance to have Oasis on the same shelf as other competitive products reaching more target markets; and


Ø The adoption of the product by other target markets, not just the premium sector.





Cadbury Schweppes Strategies


Present product/Present market- was the decision of the company to partially withdraw from the beverage market by selling its non-US soft drinks business to Coca-Cola in 1 for £0.7m since its market share in the beverage industry outside the US was low. Similarly, Cadbury Schweppes has been consolidating in the chocolate block sector because this has shown the fastest growth of late. In 18, it increased its marketing expenditures in this sector by 6 per cent and used promotional tools such as limited editions of 50 per cent extra free Cadburys Dairy Milk to counteract similar strategies that Mars had introduced on its Galaxy range.


Present products/New markets - that the appropriate strategy would be one of market development. This was apparent when Cadbury Schweppes moved into Poland as a result of the 17 per cent per annum growth in the Polish chocolate market during the 10s. In 15, Cadburys Picnic bar was targeted at Polish consumers in the 15-4 age group with the slogan Cadburys Picnic, bite it. Three years later, in 18, sales of Cadbury’s Snack were aimed at the Polish 16-44 year olds with the advertising line of sweet, light, snackotomy.


New products/New markets- involves a more complicated strategy, which companies can pursue. The general strategy of Cadbury Schweppes has been to limit its diversification strategy and not to stray too much from its core competencies. However, a useful example of this strategic cell in operation was the companys acquisition in 10 of Basset and Trebor, which were in the sugar confectionery market (sweets, toffees, gums, etc.) as distinct from the chocolate confectionery market, where the strength of the Cadbury Schweppes is well known. This related diversification into new products and markets continued in 15 with the companys acquisition of Allan Candy of Canada. In the beverage section, the acquisition in 17 of Jaret International Inc., a leading US sugar confectionery distributor, provides an example of forward diversification towards the market for its new sugar confectionery products.


Niche market Oasis is a brand totally adapted to the UK market young adults between 0-5(this is one of the key reasons for its success).


Yet, strategic emphasis is currently being placed on the development of global brands, Schweppes, Dr Pepper and Seven-Up.


It is important to future innovation within the company that a top management policy is developed for subsidiary-led innovation within the new structure.


The focus was for oasis penetrates a niche market that would satisfy the tastes of young UK customers.


Cadbury Schweppes followed a niche market penetration with the primary objective to maximize the number of triers and adopters in the target segment (adult over 0 years old in the soft drinks market). The market characteristics were such that customers were likely to adopt the product relatively quickly with a short adoption process. The product characteristics involved relatively a simple production process, with little development or additional investment required (packaging). The competitor characteristics indicated some competitors (Snapple and Fruitopia).


Mass Market Penetration


With the growth of oasis in the UK the number of customers increased not only from the initial target market but also from a different age groups.


The initial target market was young people between 0 � 5 years but due to the product and marketing sophistication the product it appealed to 16 � 0 years olds who want to be seen consuming premium products in the hope of attaining a sophisticated, mature image.


The another reason for mass penetration is the replacement of lower selling oasis flavours by new ones identified through consumer research; and brand extensions with the release of oasis light and oasis revitaliser. This latter move can be seen as creating a niche market within a mass market to cater for the needs of a different segment of still juice market.


The strategy however the company characteristic typified a mass-market situational variable in that Cadbury Schweppes possessed sufficient financial and organizational resources to build capacity in advance of growth in demand. This is illustrated by the move into mass-market penetration where oasis was able to capture 70% of the market within 18 months of launch.








STRATEGY FOR OASIS - SOUTH AFRICAN CONTEXT


Evaluation of the Beverage Industry in South Africa


( Facts taken from Euromonitor.com and Distell.co.za)


Alcoholic Drinks


As new consumer spending patterns emerged in response to muted growth in


Disposable income, spending on alcoholic beverages is also declining.


The increase of 10% in excise duty has also played a role in this regard. The market as


A whole has declined by 1,5% over the past 1 months, with consumption of


Spirits down by 1% and that of beer by 6%. Although growth in fortified wines has been marginal, sales of natural wines have grown by % and of alcoholic fruit


Beverages by 0%.


The Alcoholic beverage decline is a positive sign for the soft drink industry this is due to the fact that people are becoming more health conscious and aware of the negative effects of alcohol.


Non�Alcoholic / Soft Drinks


Research shows soft drinks continue to show positive growth in the review period to reach a forecast total market volume of more than


. billion litres in 00


Up % on the 17 figure


Carbonates and concentrates were still the largest sectors in the South African soft drinks market in value terms at the end of the review period.


The sustained position of these two sectors can be attributed to the fact that they are well established in the South African market.


Both of these sectors remained fairly stable in their growth rates over the review period.


Sectors show varying degrees of dynamism


The sectors with most dynamic growth in 001/00 are


Bottled water,


Functional drinks,


Driven predominantly by growth in the sports drinks sub sector,


and RTD tea.


All three of these sectors are driven by increased health consciousness among consumers as well as the fact that these drinks are perceived as being trendy. Consumers supporting these sectors tend to come predominantly from the middle and upper income groupings.


At the other end of the scale, some market sectors were seen to have remained fairly stable in their growth rates in the review period, with some subsectors growing while others declined.


Carbonates and fruit/vegetable juice tended to remain fairly stable although some categories within the various sectors displayed significant growth, bucking the overall trend. For example, growth in 100% juice was substantial during the review period, when compared with that seen


The review period, a fact not mirrored by areas like nectars and juice drinks.


Gambling and mobile phones hit potential for growth as a less disposable income to buy soft drinks


South African manufacturers have continued to note the importance of the growing trends towards gambling and mobile phones throughout the population, a trend that has reduced consumers’ available disposable income to be spent on items like soft drinks.


However, there has been a growing recognition of the difference in purchases between various economic groups within South Africa.


Sectors like bottled water, functional drinks and RTD tea have become increasingly dominated by purchases from middle and upper income groups.


Lower income consumers, those most affected by the shrinking amounts of disposable income, are thought to form the majority of the consumer base for the comparatively cheap products found in concentrates and carbonates.


Economic instability inhibited sector’s development


The rand depreciated by approximately 4% towards the end of 001 and continued to depreciate over the first six months of 00.


Fuel prices increased, followed shortly by retailers dramatically marking up their prices of everyday foodstuffs.


The day-to-day living expenses of consumers therefore increased tremendously at the end of 001 and over 00.


This, in turn, had a substantial effect on the amount of disposable income available to purchase soft drinks.


This caused volume growth rates in some areas to slow in the final year of the review period.


Emerging sectors likely to lead the charge up to 007


Predicts that the average annual volume growth in the forecast period will be around 5%.


This growth is expected to be driven by the emerging sectors of 001/00, such as functional drinks, bottled water and RTD tea.


The comparatively high rates of growth in these sectors is expected to be driven by high income consumers purchasing drinks the market perceives as being healthy and cutting edge.


It is thought, in the longer term, that as middle income consumers become wealthier many will join in this purchasing practice, continuing the growth in these areas.


WILL THE LAUNCH OF OASIS IN SOUTH AFRICA WORK?


YES,


There are many positive factors that would make South Africa a favourable market for the oasis product.


The reasons as mentioned above are


(ii) The decline in Alcoholic beverage’s is a positive sign for the soft drink industry this means that more the exixting alcohol consumers will be in the market for alternative drinks.


(iii) soft drinks continue to show positive growth in the review period to reach a forecast total market volume of more than . billion litres in 00 up % on the 17 figure.


(iv) The sectors with the most dynamic growth in 001 and 00 was the bottled water, functional drinks and RTD tea have become increasingly dominated by purchases from middle and upper income groups. Oasis is targeted at this sector in the UK and US.


(v) Emerging sectors likely to lead the charge up to 007 are the functional drinks, bottled water and RTD tea sectors. The comparatively high rates of growth in these sectors is expected to be driven by high income consumers purchasing drinks the market perceives as being healthy and cutting edge.


The strategy of niche marketing should be exercised in South Africa as it was in the UK. Niche penetration would be most appropriate because of the high income consumers with disposable income.


(vi) It is thought, in the longer term, that as middle income consumers become wealthier many will join in this purchasing practice, continuing the growth in these areas.


This may result in a mass marketing strategy as in the UK market where the initially targeted age group become bigger.


However there are negative factors as well, such as


(ii) Gambling and mobile phones hit potential for growth as a result people are left with less disposable income to buy items such as soft drinks.


(iii) Economic instability inhibited sector’s development





CONCLUSION


After weighing the pro’s and con‘s I am of the opinion that launching Oasis in South Africa will be a good business move for Cadbury Schweppes.


Cadbury Schweppes as a company has a strategy of developing and expanding markets


with a range of brands using the most efficient and value creating route to market focusing on key international brands and new products, innovating � in flavor extensions, packaging and routes to market therefore for these reasons and the reasons mention in the previous topic market penetration into South Africa will be favourable.





REFERENCES


1. Cadburyschweppes.com


. Paloalto.com


. Distell.co.za


4. Euromonitor.com


5. Beveragemarketing.com


6. Perreault WD, McCarthy EJ, BASIC MARKETING � A GLOBAL MANAGERIAL APPROACH, 14th edition, McGraw-Hill Irwin, 00.


7. Walker jr OC, Boyd jr HW, Mullins J, Larreche JC, MARKETING STRATEGY � A DECISION FOCUSED APPROACH, 00.


8. Strydom J W et al, INTRODUCTION TO MARKETING, 16.





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