SNAPPLE CASE STUDY ANALYSIS

Hooria AdnanMariyam ShahidMeher NawazSumbla TayyabYasir HakimMBA-II (B)

Date: May 11, 2015Submitted to: Dr. Shehla ArifeenTable of Contents

Case Overview3SWOT Analysis4Quantitative Case Facts4Qualitative Information5Brand Attributes6Problems Snapple faced after Quakers acquisition6Recommended Marketing Plan for 2 years8

Case OverviewSnapple was founded by three acquaintances; Hyman Golden, Arnold Greenburg and Leonard Marsh. Their ability to see more possibilities in fruit launched the start of non-carbonated beverages within the United States. Unadulterated Food Corporation eventually changed names to Snapple Beverage Corporation. The Snapple Beverage Corporation conducted business well, grew fast and the brand name Snapple became well known to many beverage drinkers by the early 1990's. Most of Snapple's sales were made within a network of smaller independent distributors. The Snapple Beverage Corporation chose to allow sales in only a small portion of supermarket channels and stayed out of outlets that primarily sold top selling brands such as, Coke and Pepsi. The market soon became aware of the Snapple brand and in 1992 a private based investment firm from Boston purchased Snapple. A year later the Snapple brand became public and went national.Two years later Snapple Beverage Corporation was purchased by Quaker Oats. Quaker Oats management and strategy of the Snapple brand differed greatly and many changes were made including the distribution of the brand. This change of ownership and strategy caused a great deal of damage to the Snapple brand. The brand's image and reputation were hurt and sales faced a large decline. In 1997, Quaker sold Snapple to Triarc Beverages for $300 million because it proved difficult to manage Snapple.SWOT Analysis

STRENGTHSWEAKNESSES

First to market non-carbonated drinks Strong brand resonance High quality, 100% natural Celebrity endorsements and strong PR. Large variety of products Initially enjoyed a strong brand image Frequent changes in ownerships diluted the brand positioning Firing Wendy and RJs led to negative publicity Distribution issues Packaging Issues Brand image deteriorated over time

OPPORTUNITIESTHREATS

Expansion into more markets Introduction of easy to go single drink bottles Product Line extensions Large number of competitors Threat of acquisition Possibility of losing distributors agreements

Quantitative Case Facts In 1994, Quaker bought Snapple for $1.7 billion. In 1997, Quaker sold the brand to Triarc Beverages for $300 million. In 1984 annual turnover was $4 million and it doubled by 1986 to $8 million. During 1987 to 1993 the vision of many entrepreneurial firms was to exit via acquisition. The founders of SoHo, Connie Best and Sophia Collier took sales to $25 million and then sold the company to liquor giant Seagram in 1989 for $15 million. Carl Gilman increased the advertising budget to $1 million when he was hired. Supermarkets accounted for 20% of Snapple sales nationally. Growth in alternative beverage industry was explosive with Snapple leading the way. Snapple sales grew from $80 million in 1989 to $231 million in 1992 and $516 million in 1993. In 1992 the three Snapple founders sold the business to Boston private investment bank, the Thomas H Lee Company in a leveraged buyout and subsequent public offering. 1n 1994 with sales running at $674 million, Lee sold to Quaker Oats for $1.7 billion in cash. Annual sales started to decline in 1996. Qualitative Information The study mentioned in Exhibit 6 had uncovered consumer perceptions about the brand. It showed enough evidence to show that the brand had connected strongly with its consumers in its early years because it had done things differently by being real, human and avoided the marketing slickness consumers had grown suspicious of. They also showed that many changes Quaker had instituted went directly against these principles. Consumers had felt betrayed because Snapple had sold out. Consumers thought of Snapple as a treat. Snapple may substitute for Cola but it is by no mean conceptually equivalent. Snapple use is driven in large part by a reaction against Colas. Snapple was thought of as natural, real, personal whereas Colas were thought of as artificial, impersonal and unnatural. Water was thought of as tasteless and dull, but Snapple was thought of as fun. Snapple is full of variety, full of imagination, full of flavor, more variety than any competitor, more new combinations. The packaging plays out the taste experience. The amount of Snapple consumed is highly correlated with the intensity of Snapple use in the respondent immediate social environment. A high percentage of purchases are single bottles for immediate consumption. There was no Great Attacker sucking consumers away from the brand rather a drift away in all directions, towards water, back to sodas, to other competitors like Arizona etc.Brand Attributes

Problems Snapple faced after Quakers acquisitionFrom their 1994 peak, sales declined every year, falling to $440 million in 1997. The brand lost $1.4 billion in value under Quakers stewardship in just four years. There were several factors that led to decreased consumption and popularity of Snapple: Packaging wasnt suited for individualistic consumption: Just as it had done with Gatorade, Quaker introduced Snapple in larger sizes; in 32- and 64-ounce bottles. Consumers didnt want the 32 and 64 ounce bottles since it was seen as an individualistic indulgence and not a social beverage. Instead, they still preferred the 16 ounce bottle which they could consume in one sitting. Exhibit 6 mentions that people consumed Snapple when they went on walks, long drives, morning strolls, while doing cross word in the morning newspaper, after getting back home from work. Hence, it was an individualistic, atomistic experience and not social or familial in nature.The larger bottles were suitable for Gatorade because people tended to drink it during or after team practice or other exercise, when they were thirsty and needed to be rehydrated. But Snapple was a lunchtime beverage, people werent looking for anything larger than a 16-ounce bottle. Dilution of Snapples positioning: Pairing the established Gatorade brand with Snapple damaged Snapples positioning. Gatorade gave an achievement oriented message. But Snapple wasnt about accomplishing an objective; it was about adding a little whimsy to the humdrum and the everyday. There was a difference between the two brand identities. Bad publicity: Snapple fired the RJs Stern and Limbaug and the Snapple lady, Wendy Kaufman. Stern took his revenge by subjecting Quaker to months of on-air diatribes that urged listeners to stay away from Crapple. Poor advertising efforts: Quaker started running ads whose mainstream blandness and slick production values were antithetical to Snapples image. Weak product differentiation: Snapple wasweak on its utilitarian factor and was seen more as some fashion water rather than as an established brand. Snapples image was of a superficial product. Exhibit 6 mentions that it lacked a compelling reason for use and was not embedded in daily routines and rituals. Hybrid Distribution system led to mistrust amongst distributors: Quaker offered Snapple distributors the right to deliver cold, single serve Gatorade via its Direct Store Delivery system if they turned over part of their unrefrigerated Snapple business to Gatorades warehouse distribution system. They wanted to increase the sale of Gatorade in the cold channel and increase the distribution of Snapple in the warm channel (in which Gatorade did well). They felt the two products would complement each other and help Quaker to become a large beverage company. However, distributors countered that Snapples $4-per-case margins are roughly double what they could make on Gatorade. Snapples independent-minded distributors grew to mistrust Quaker management, convinced that they would have to compromise their more lucrative supermarket accounts to be able to deliver Gatorade to mom-and-pop stores. In the end, distributors simply did not want to trade their Snapple for Gatorades since Gatorade didnt carry the same margin as Snapple. Authenticity Issues: Authenticity was a concern especially among the 18-29 age group who were very sensitive to being tricked. They had doubts because Snapple had a higher price as compared to real juice. Rumors about Snapple: Rumors suggested that Snapple was anti-abortion, anti-gay and donating money to Jesse helms, and that Rush Limbaugh had major investment with Snapple. The rumors varied but the themes were consistent and developed a sense of betrayal amongst the customers. Negative Social Pressures: Implicit and explicit references were made about decreasing the consumption of Snapple due to fashionability and negative social pressures. Consumers liked consuming newer drinks such as Arizona. Lack of Availability of flavors: Exhibit 6 mentions that consumers couldnt find their favorite flavors anymore and got tired of the limited flavors that were available. Respondent said I cant find my flavor anymore or My grocery store has only peach diet tea and kiwi strawberry and Im getting tired of kiwi strawberry. Intense competition: Increased competition in ready to drink teas and fruit drink category. Strong competitors included Lipton, Ocean Spray, Nestea.Recommended Marketing Plan for 2 years

THIS NEEDS TO BE EXPLAINED IN DETAIL Product: Packaging should be as such that single bottles should be available instead of bulk packaging. Exhibit 6 suggests that Snapple experience is individualistic and a high percentage of purchases are single bottles for immediate consumption. As the usage fluctuates seasonally, diurnally and cyclically, Snapple moments tends to be on the go. The variety amongst the flavors make Snapple a perfect model for multicultural society. As exhibit 6 suggests that the pivotal characteristics of the brand are Personal, the variety aids the consumers to find themselves in the brand. They should portray themselves as individualistic rather than bulk as thats the level at which the consumer relates itself to the brand. By packaging the product as a single bottle it outlays a very creative dimension that enhances itself. Its an individual drink not a family drink and that being the true essence of the brand it should be portrayed that way too. Promotion: Snapple should bring Wendy Kaufman back as the spokesperson. Her eccentric personality will attract unpaid media attention and will try to create a positive brand image as it had before. People can relate to Wendy and she is seen as fun, friendly, energetic, full of life and lively, just like the brand personality itself. Snapple should focus on reintroducing the brand back into mainstream entertainment by finding new figures, radio shows and television programs to promote the product. The results fromthe study also suggested that most of the Snapple consumers still associate Snapple withWendy Kaufman. Incase Wendy is not willing to reestablish this relationship then a similar personality could be considered as an association. Secondly it is unlikely toreestablish relationship with relations with Stern and Limbaugh because of the way therelationship was ended. However there are certainly other radioprograms and TV showsthat can help in promoting the brand. Place: Sell through small distributors as was done before the acquisition of Quaker. Snapple should also focus on delis, sandwich shops, supermarkets, convenience stores and mom and pop shops. Most importantly must focus on taking an initiative to increase Snapples warm channel availability. In order to do that Snapplemust reestablish relations with distributorsbecause Quaker has been able to undercut the distributors and forced them into a partnership with Gatorade. Snapple can take advantage of areas where sales have always beenweak. Additionally should increase the availability of Snapple in the supermarkets. Increased sales in the supermarkets and other warm channels will make theproduct more abundant to consumers in greater varieties and will also allow them tobuy the product in bulk packaging.

Price: Pricing should match the price of real fruit juices since consumers have doubts that its selling at a premium price but claims of being a real fruit juice. As in the case it has been pointed out that the Brand perception does not match the consumers perception, it should re-think the pricing strategy in such a way that clears the doubts in the minds of the consumers. It should re-vitalize the authenticity as suggested in Exhibit 6 which is as follows:Snap Active, HealthyApple HealthyThis conception signifies the term Real needs to be redefined in the minds of the consumers so that Snapple can be seen as a real natural juice.

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