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Snapple Case Study

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A group case study project as part of the Marketing Management Post-Graduate course work exploring the acquisition of Snapple by Quaker and then Triarc.

A group case study project as part of the Marketing Management Post-Graduate course work exploring the acquisition of Snapple by Quaker and then Triarc.

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  • 1. 1CASESTUDYPresented By:Alex MacArthurChantelle JewkesHeather OsbourneOliver IfurungSara BlumensteinSarah TurnerTracy JiangMichelle HamiltonPrepared For: Mike DoverCourse Code: MKPD 507Due Date: March 26, 2013
  • 2. 2
  • 3. 3Table of contentsSWOT Analysis....................................................................... Key Implications Strengths........................................................................ Weaknesses................................................................... Opportunities................................................................. Threats...........................................................................PEST Analysis.........................................................................Snapple: The Golden Years..................................................... Entrepreneurial Beginnings........................................... Standout Promotional Strategy..................................... A New Age Niche..........................................................The Quaker Debacle A Mergers & Acquisitions Disaster................................ Quaker’s Lagging Growth.............................................. Intensity of Rivalry......................................................... Problems with Promotion.............................................. Mishandling of Distribution & Packaging.......................The Triarc Acquisition Valuable Lessons Learned............................................. Leveraging Triarc’s Core Competencies........................Snapple Brand Positioning Risks............................................................................... Rewards.........................................................................Snapple: A Fashion Brand......................................................Triarc: Recommended Initiatives............................................Works Cited............................................................................66778910111112131315151618192021212426.....................................
  • 4. 4SWOT Analysis...............................................................................PEST Analysis.................................................................................Quaker’s Stock Price Exhibit 1, Exhibit 2.................................................................Supermarket Brand Shares Strategic Group Map.........................Brand Resonance............................................................................Lovemarks.......................................................................................Table of EXHIBITS61014152022
  • 5. 5ExecutiveSummaryBeginning in 1972 as an all-natural apple juice, Snapple was a small business that took 15 years tobecome an overnight success. The Snapple brand provided an offbeat product to satisfy the needsof young adults in the health conscious, alternative beverage category. Offering “100% Natural”products in many different flavours, Snapple was able to maintain premium pricing across the brandto achieve success.During the late 1980’s and early 1990’s, through an increase in their advertising budget, Snapplegained a near-cult following across the United States. Sales skyrocketed to a peak of $674 million in1994, when Snapple was sold to Quaker Oats for $1.7 billion. Mistakes in advertising and adisconnect with consumers led to sales falling $234 million in the next three years. Quaker wasforced to sell the troubled company to Triarc Companies for $300 million.This report examines the success and subsequent downfall of the Snapple brand by utilizingmultiple models including a SWOT, PEST, and 4 P’s analysis. We will examine these implications forthe Snapple brand, and why their brand took a turn for the worst after its sale to Quaker Oats in1994. Through additional analysis, we will provide recommendations to the Triarc Company.
  • 6. 6SWOTAnalysisWeaknesses• Snapple’s brand lacks clearly establishedpoints-of-difference.• As a “fashion” brand Snappleconsumption needs to be socially reinforced• lacks “conceptual coherence” to driveusage outside of above social factors• Weak in “warm channels” includingsupermarket sales• Vulnerabilities in their relationship withcontroversial public figuresThreats•Intensely competitive nature of market•Emerging markets• Healthy lifestyle and eating trends•Volatile consumer preferences•Potential government regulation in softdrink industryOpportunities•Grow their brand as a fashion beverage• Innovate their product continuously based oncustomer interpretations•Capitalize on health-conscious social patterns• Focus on their “real” personality and quirkyedge•Establish nutritional education programs anddraw on corporate social responsibility• Increase their product differentiation andestablish a clearer brand image• Produce other “alternative” beverages i.e.bottled water and non-premium•Combine with another company to improvesupply chain and management capabilitiesStrengths• Wide product line• Strong brand image / heritage / meaning• Strong and meaningful spokesperson• Well established distribution network
  • 7. 7SWOTAnalysis:ImplicationsKey ImplicationsStrengthsWide Product Line: Snapple’s product line offers consumers a large variety of all natural flavors to choosefrom. The use of all natural ingredients is in line with industry health trends, presenting consumers with ahealthier option. This in turn has provided them with a major competitive advantage in the segment.Strong Brand Image / Heritage / Meaning: Snapple is classified as a strong, authentic, premium beveragethat is both personal and fun. The Snapple brand reflects a fun and quirky image that stands out in the mindof their consumers. This key differentiating factor and USP has undoubtedly pushed the company tosucceed and should not be ignored by acquiring companies.Strong and Meaningful Spokesperson: Snapple has been able to create a significant amount of equitythrough past offbeat promotional and marketing efforts. Wendy the “Snapple Lady” is a strong, well-likedspokesperson, with a relatable persona that represents the brand’s values and encapsulates the‘authenticity’ of the brand. The ability to connect with their consumers in meaningful and lasting waysthrough promotional characters such as Wendy underlines one of their core competencies, and has helpedbuild out a strong image and high levels of awareness.Well-Established Distribution Network: these relationships have been injured through the acquisition of thebrand through Quaker. However the strong relationships with the independent distributors have played alarge part to Snapple’s growth, value, and overall success. These key relationships have provided Snapplewith a competitive foothold in the cold channel, and must be carefully fostered.WeaknessesMany of Snapple’s weaknesses stem from the brand’s poor product differentiation under Quaker’sstewardship. The brand lacks clearly established points-of-difference from its competitors within thesegment and by extension; a weakness lies in the ability to define distinctive, appealing consumer benefitsthat effectively drive increased consumption and growth in sales.A related weakness is Snapple’s difficulty establishing clear, actionable associations for the brand that driveindependent usage. As a “fashion” brand, Snapple use typically requires social reinforcement, and thedesirability of the product relies on perceived popularity. Consumption is directly correlated with theintensity of Snapple use by others in the immediate social environment. This consumer behaviour meansthat Snapple can easily fall out of fashion; brand perception and usage is more difficult to control than ifthere was more conceptual coherence of the brand. That would provide clear points of difference andconsumer benefits driving consumer behaviour.Where entrepreneurial spirit and authenticity was an integral factor of early success, under Quaker,management that did not understand the brand became a detrimental weakness. One of Snapple’s keystrengths prior to acquisition by Quaker was its oddball promotion and niche positioning. These factorsendeared Snapple with consumers, and even developed fans and followers of the brand. This essentialstrength quickly turned into a weakness under new management that did not recognize the importance ofthese factors to the brand’s success. The diluted brand personality under new management resulted in poorbrand perception from consumers who felt betrayed by the brand that they felt had “sold-out”.
  • 8. 8A strong and loyal network of independent distributors is another strength that became a weakness underQuaker’s ownership. Quaker mismanaged the relationships with the distributors permanently damagingSnapple’s distinct advantage in the cold channel distribution system turning it into a weakness for thecompany.In a similar vein, throughout Snapple’s existence it has performed poorly in the warm channels withgrocery stores making up only 20% of Snapple’s sales in 1994. Headway into warm channels did notimprove under Quaker management despite very strong efforts. The inability to make inroads intoultimately limits the sales potential of the product.Snapple’s off-the-wall promotional techniques included relationships with controversial radio personalities,Howard Stern and Rush Limbaugh. This strategic association, despite clear benefits, put the Snapple brandin a very vulnerable position. These outspoken public figures made their names walking the line ofacceptability. With the close brand association with these figures if one of them did cross a line in publicperception it could result in serious consequences for the brand’s image and public perception. WhenQuaker severed these relationships due to the inherent risk, this vulnerability was demonstrated whenStern very publicly turned against the Snapple harming the brand’s image.OpportunitiesThere are a number of opportunities that Snapple may wish to capitalize on. Firstly, Snapple may growtheir brand as a fashion beverage. Snapple’s “alternative” drink category is largely represented by what iscurrent and trending. Therefore, an opportunity may lie in dedicating resources to market research andspotting trends. They may then use this research to innovate their product and maintain their image as afashion brand. This may also entail revamped and innovative packaging with higher impact. They arecurrently perceived as quirky, edgy and real. It is opportunistic to preserve this image.Snapple prides itself in being a natural and real fruit beverage. Society has a growing health-consciousattitude that Snapple may capitalize on. They may wish to solidify this image and post facts regarding theirbeverages true content. This may also deter people from the ambiguity of the health content.Historically this also aligns with their “real” personality. An opportunity also lies in their corporate socialresponsibility. They can educate youth about nutrition and health in general. This may help them gainaccess to schools and relates to their natural and real product. Consumers desire beverages that they canfeel good about drinking. Snapple can provide them with the reasons they should feel good drinking theirproduct.An opportunity for Snapple may also be to increase their product differentiation by establishing a clearerbrand image. This would help to encourage daily use and establish Snapple as part of a routine. Currently,consumers drink Snapple in an individualistic and inconsistent manner. They can use advertising andpromotional tactics such as Wendy and public relations campaigns to maintain their clear “real” productdifferentiation. It is more likely that when someone truly understands and favours the brand it will beconsumed more often.Snapple may pursue other popular “alternative” beverage segments such as bottled water, sports drinks,juice and non-premium. The non-premium, and bottled water, segment of “alternative” beveragesrepresent 24 and 19 percent of the category respectively. If Snapple can introduce another product thataligns with their “alternative” image there may be an opportunity for increased profits. This may also helpto solidify their brand.SWOTAnalysis:Implications
  • 9. 9Snapple may pursue merging with another company in order to leverage supply chain capabilities andmanagement expertise. Collaborating resources with the right company may lead to cost savings andimproved supply chain processes. They may also gain access to newer technologies that may allow forimproved packaging and research and development. However, they must ensure that their brand aligns withthe company. With greater capabilities and resources there should be a better chance for increased marketshare and profits.ThreatsSnapple faces a number of threats in the beverage market. First is the intensely competitive nature of thebusiness. There are hundreds of different beverages in the market for consumers to choose from. Water,flavoured water, soft drinks, juices, teas, coffees, energy drinks, and any hybrid exist. Other substitutes existas well, such as wine, beer, ciders, coolers, and spirits. There are many beverage options for consumers tochoose from which presents a threat to beverage producers. Companies must ensure that their brand andtheir product stand out, are differentiated and can make it through the clutter. Consumers need to feel acompulsion to buy a company’s specific product.In addition, beverage markets are developing and new markets are emerging that did not exist before.As companies innovate, new markets are beginning to form around new beverages. Diet juices, flavouredwaters, as well as tea and coffee based beverages are some examples of new products that are changingmarkets. Hybrid products, such as beverages that combine juices and tea, are also changing the structure ofthe beverage market. This presents threats to beverage producers in two different ways. If the producer isthe leader of change, then they face the threat of increased competition. On the other hand, if the produceris lagging behind and not innovating, then these new markets present increased threats to existing business.Furthermore, the beverage market faces a threat from the move towards more healthy lifestyles and eatingtrends. In the past, beverages such as juices and soft drinks were successful in having full flavour and highsugar content. Now, as consumers are becoming more informed, and are reading labels more carefully, theyare demanding more healthy alternatives to the products that they love. Consumers are moving away fromthe traditional sugary beverages, to low calorie and low sugar options. Pressure exists now for beverageproducers to change recipes to suit these evolving consumer preferences. If beverage producers do notinnovate and develop new products to meet these changing needs, they might get left behind.Changing consumer preferences also present a threat to beverage companies. Consumer preferences arevolatile and often unpredictable. With consumers holding an increasing amount of power in thebusiness-consumer relationship, companies must ensure that they are meeting their needs. This isthreatening because companies are losing some of their power. In the past, companies made all thedecisions based on what worked for the corporation. However, this power dynamic is changing, andcompanies need to meet the demanding wants and needs of consumers. If not, companies stand to lose.Lastly, potential government regulation in the soft drink industry presents a threat to beverage producers.Over the years, soft drinks have received widespread criticism for their high sugar content and unhealthynature. Soft drinks have been banned from school cafeterias, vending machines, and in public areas as wellin the hopes of improving public health. Talks of imposing a tax on soft drinks have also occurred, with theidea that the added tax will be a deterrent to buying unhealthy products. This presents a threat to beverageproducers, because soft drink manufacturers will likely turn to producing alternative beverages tocompensate for declining soft drink sales. Soft drink conglomerates will likely increase efforts in other areasof their beverage portfolios to offset the shrinking soft drink market. This could lead to increasedcompetition, or new products entering markets.SWOTAnalysis:Implications
  • 10. 10pestAnalysisTechnical•Innovations in bottling techniques for hotteas. Snapple pioneered this newtechnology which later became standardpractice within thecategory.•Innovations in vending machine design.Snapple proved to be innovative again indeveloping glass-front vending machinesand coolers that doubled as promotionaltools effectively displaying its uniquelypackaged products (Winer).Social•Prominence of influential and entertainmenticons holding social importance e.g.,HowardStern, Rush Limbaugh celebrity endorsers•More relatability with brands and theirpositioning through use of new and innovativemarketing tactics such as spokespeoplee.g., Wendy Kaufman•Growing health-consciousness and care fornutrition•Consumers are now more aware of whatingredients and nutritional facts are relevant tothe products they consume•More social awareness and public expressionof sensitive topics. This leads to very vocal andinformed (or misinformed) consumers that arequick to judge or praise companies. Thus, thereis an increased importance for Corporate SocialResponsibility•Increase in teenagers with disposable incomethat have influenced marketers to discover newand upcoming trends and fashions(The Merchants of Cool)Political•In the early 1990’s, Americans viewedtheir health care system in a negativelight - nine in ten Americans felt the U.S.health care system needed fundamentalchanges or to be completely rebuilt. (CBSNews)•Clinton’s proposed health care reformsled to government endorsed health wakeup calls within 30-44 age group, whichmay affect Snapple consumption.Economic•In 1997 growth in the alternative beveragecategory was explosive, with premium making up24%, bottled water 19%, 100% juice 17%, sportsdrink 16% and Non-Premium 24% (Deighton).•1997 financial crises in Asia, making it a poortime for Snapple to expand into Asian markets.However, most developed countries wererelatively unharmed, including the United States•Based on the statistics, the US economy was atthe stage of rapid sustainable growth around 1997.Personal and household incomes were increasing.These factors created robust consumer spendingand increased market demand, providing a verygood opportunity for Snapple to develop itsbusiness. On the other hand, because of increasingdemand, more competitors were entering thesegment. In addition, with more jobs created, thecost of labor can rise, increasing Snapple’sfixed costs.
  • 11. 11SNAPPLE:THEGOLDENYEARSEntrepreneurial BeginningsGreenberg, Marsh, Golden began in a business partnership selling brand name Snapple all natural applejuice to health food stores in 1972. Health implications derived from the initial business led Snapple topopularity in the 90’s. The mantra “100% Natural” was adopted into Snapple’s marketing. Snapple’s almostcult status achieved in 1980 catapulted the business into success above its competitors.As business grew product and product development was outsourced, allowing for a network of distributorsto be built across New York City. Wider distribution network alerted the company to a need for largervariety in its product line. Fortunately products were priced at premium, allowing for new flavours andvarieties to be tested without negatively impacting the business if a specific product failed. Marketing wastargeted towards aspiring young, health conscious, urban professionals. Snapple becomes part of the NewAge / Alternative beverage industry, competitors included; Napa Naturals, Natural Quencher, SoHo, Afterthe Fall, Ginseng Rush, Elliot’s Amazing, Old Tyme Soft Drink, Manly Sodas, Syfo, and Original New YorkSeltzer.The Snapple founders decided to go against the normal entrepreneurial goal of exit via acquisition. In orderto facilitate the next stage of growth, Snapple hired professional management to run sales and marketing.Advertising budget was increased to $1 million by Gilman who implemented focus groups while alsointensifying the independent distribution system from coast to coast. This distribution system grew to anetwork of 300 small, family-owned distributors, highlighted with a press story calling this network,“salesman, truck loader, driver, heavy lifter and bill collector, all in one”. Nationally, supermarketsaccounted for about 20% of Snapple’s sales.Standout PromotionalStrategyThe real success was in Snapple’spromotion, an “offbeat blend ofpublic relations and advertising.”The advertising agencyKirshenbaum, Bond & Partnerscreated a spokesperson forSnapple, Wendy Kaufman, aformer truck dispatcher with abrash New York attitude. Hereccentric personality attractedunpaid media attention, and shealso appeared on Oprah andLetterman. From Wendy’ssuccess, Snapple sponsored theradio shows of Howard Stern and Rush Limbaugh. The brand received on-air endorsement and was oftenthe topic of the two radio hosts’ banter. Snapple’s sales grew from $80 million in 1989 to $231 million in1992 and $516 million in 1993. Even with the growth of competition in the “Alternative beverage”category, Snapple remained steady at 30-40% of market share.
  • 12. 12A New Age NicheSnapple’s growth from 1972-1993 can be attributed to its initial success as a health food beverage.As Mike Weinstein said, the key drivers in the beverage business are distribution and promotion. Theimplicit health benefits attached to Snapple’s brand image allowed for the beverage to be widelydistributed. Consumers associated fruit with health and Snapple with fruit, this led them to theconclusion that Snapple was healthy.This strategy was extremely effective from 1972-1993 allowing Snapple thrive within the new age /alternative beverage category, while at the same time allowing the beverage to be widely and costeffectively distributed. 1992’s $516 million and 1994’s $674 million in sales are evidence of asuccessful advertising campaign operated by the Kirshenbaum, Bond & Partners. Quaker’s $1.7 billionpurchase in 1994 that included the discontinuation of the Kirshenbaum advertising strategy, wasfollowed by a $234 million drop in sales from 1994-1997. This drop in sales shows correlation betweenthe advertising tactics and Snapple’s successful promotional strategy from 1972-1993.Thus, we can see that from 1972-1993 Snapple flourished in a sea of failed beverage startupcompanies because they decided against exit via acquisition, allowing them to successfully employpromotional and distribution strategies. The focus on two of the 4 P’s, the “100% Natural” product andpromotion, drove Snapple to success.Snapple:TheGoldenYears
  • 13. 13THEQUAKERDEBACLE:ANM&ADISASTERA Mergers & Acquisitions DisasterQuaker’s problems with Snapple were primarily a managerial failure that was compounded by the fact thatthe purchase was not an ideal due to the misalignment between the Snapple brand and Quaker’s corporateculture, and the external competitive environment. These errors caused the brand to lose $1.4 billion invalue in just four years of Quaker’s stewardship.Research shows that approximately 70% of mergers and acquisition deals that take place globally result infailures. Most of these failures can be attributed to non-alignment of objectives, lack of cultural integration,and incomplete due diligence. Despite the degree of risk taken in a merger, accurate planning andknowledge can result in major success. In the case of the Quaker acquisition in Snapple, there was a majorfailure in achieving synergy between the two companies (Turner).Quaker did not understand Snapple’s key demographics, the importance of its unique/quirky brand identityand failed to realize that it required different promotional, distributional and other considerations thanGatorade to be successful.On a superficial level, the probability of failure with Snapple was very low given their marketing know-how,and success in the beverage category with Gatorade. However, there were several key, avoidable factorsthat led to such a devastating loss for the company.Quaker’s Lagging GrowthIn 1994, Quaker was looking to diversify their beverage portfolio to stave off acquisition by largercompeting firms. Quaker bought Snapple for what is often considered an overvalued price tag for a brandthat is unproven in the national markets, still being primarily a regional brand, of $1.7 billion in the hopesthey could make lightening strike twice (Deighton 47).One of the discernible motives behind the acquisition was to reinvigorate both growth and financialperformance. Quaker’s growth had been lagging due to holding several mature businesses, and share priceshad remained largely unchanged since 1991 (Optimum Capital). However, Quaker failed to note thatSnapple was a declining brand in a growing market, and a lack of due diligence caused the company toseverely overestimate Snapple’s growth potential which had been impressive prior to the acquisition.Lack of Due DiligenceSmithburg had already successfully acquired Gatorade, quickly turning it into a market dominator,and was hoping to do the same with Snapple. However, the brands were completely different inregards to culture, marketing etc. and would not be able to achieve the desired synergies due to thislack of compatibility.Quaker had also made the mistake of selling off their bean based and pet food businesses (positive butlow-growth cash flows for the firm) to raise $90 million of the $1.7 billion acquisition cost - which had theybeen kept, would have sustained much higher level of performance for the firm (Optimum Capital).
  • 14. 14Exhibits 1 and 2 summarize financial and stock price performance for Quaker prior to the acquisition, andduring the period which it operated Snapple. It is apparent that such a purchase was not appropriate forQuaker, and with proper due diligence (properly assessing whether or not Snapple’s growth was in factsustainable) the company could have avoided such a huge loss.Exhibit 1Exhibit 2(Source: Optimum Capital)THEQUAKERDEBACLE:LaggingGrowth
  • 15. 15Intensity of RivalryAt the time of acquisition in late 1994 competition was intensifying in the RTD tea segment from both deeppocketed competitors and smaller niche brands slowly eroding Snapple’s market share. In 1993 Pepsi/Liptonhad begun dedicating significant resources to the category in the form of national advertising campaigns,even briefly surpassing Snapple’s market share in the supermarket channel. During this period there wereseveral new entrants in the category including; Arizona Iced Teas, Nantucket Nectars, and Mystic that wereall eating into Snapple’s market share with innovative, niche strategies (Winer 3).Simultaneous to the intensifying competition, by 1994 year-end, the overall growth of the segment wasshowing signs of slowdown, for the first time below the 50-100% range (Winer 2).Supermarket Brand Shares, 1997 (Case pg. 246)*Market share is indicated by circle size*Note that Snapple is the market leader however their position is threatened by competitors with similarly branded teasand fruit juicesTHEQUAKERDEBACLE:intensityofrivalryProblems with PromotionAs illustrated in the previous section, Snapple owed its early success in large part to eccentric, oddballbranding and unique promotional tactics. Quaker made the fatal error of abandoning Snapple’sunconventional strategy in favour of a more traditional approach. This began with the high-profile firing ofthe much-loved spokes model Wendy Kaufman, and severing ties with radio personalities Howard Stern andRush Limbaugh at once robbing Snapple of the cultural cache that it had previously carried and creating asevere public relations backlash.
  • 16. 16When Quaker cut ties with Snapple’s public faces they the fallout exceeded the loss of the spokespeoplethemselves as assets to the brand. The decision generated a public relations crisis as loyal fans of Wendythe Snapple Lady were upset by the treatment of the beloved spokeswoman. Even worse, Howard Stern, anoutspoken radio personality that had once represented Snapple, turned against the brand. He was relentlessin his on-air diatribes creating a months long battle Quaker now had to fight to stop Stern from continuallyreferring to “Crapple” to his vast audience (Deighton 50).Quaker then faltered in its new promotional strategy, making moves to normalize the brand identity strippingit of the “oddball”, “kitschy” image differentiation that audiences connected with. The “Threedom isFreedom” television campaign was the most obvious shift in focus. This corporate campaign revolved aroundSnapple angling to be the third largest beverage brand behind Coca Cola and Pepsi, an approach that rancounter to the brand’s quirky sensibilities.The new mainstream positioning aimed to remove Snapple from a niche segment where the brand wasmarket leader and position the brand as third choice in the mainstream beverage category behind Coca Colaand Pepsi where at this point, the brand had no hopes of being a viable competitor. (Jackson 225)Mishandling of Distribution & PackagingQuaker purchased Snapple in order to complement, and boost sales of their successful Gatorade brand.Quaker understood Snapple’s success selling single servings in the cold channels and aimed to capitalizeon that strength to push Gatorade through those channels. Conversely, Quaker aimed to increase Snapple’ssales through warm channels where Gatorade had been successful.Quaker’s mistake was attempting to transform Snapple’s successful ‘fashion brand’ into a mainstreamproduct like Gatorade, by changing its distribution, packaging, and other important relationships.Quaker mistakenly implemented the textbook mass market strategy used with Gatorade in an attempt toaccelerate Snapple’s growth - completely ignoring the distribution system that had made Snapple sosuccessful in the first place. Snapple had created a successful niche for itself, and a transition to massdistribution was an inappropriate move for the brand.THEQUAKERDEBACLE
  • 17. 17Quaker’s attempts to push Gatorade onto Snapple’s distribution partners created problematic relationshipswith Snapple’s cold channel distributors. Quaker’s proposal to Snapple’s distributors would create aninequitable arrangement with the distributors on the losing end. By initiating this, Quaker fostered distrustand ill-will towards Snapple’s new parent company. Snapple provided almost double the margins and soldbetter - asking distributors to take a deal that would hurt their business (Winer 4) quickly turned this vastand loyal network of distributors from a key strength to a weakness.Unfortunately, from the start, improper treatment of channel issues doomed Quaker’s Snapple strategy.While Quaker’s Gatorade strategy centered on achieving strength in the warm channel, Snapple’s strengthhad developed in the cold channel, something Quaker hoped to reverse. Quaker’s disregard for Snapple’sestablished channel structure certainly injured the brand, causing channel conflict that resulted inplummeting Snapple sales (with the distributors now relegating Snapple to secondary status). In order tosuccessfully transition the Snapple brand to the Quaker infrastructure, the company needed to bettermanage and retain the strong relationships that had been established with the distributors.Another fatal mistake was Quaker’s introduction of larger sized Snapple bottles, a packaging strategy thatwas found to be quite profitable with Gatorade. This demonstrates Quaker’s evident lack of understandingand appreciation for the Snapple brand as the drink was seen as a ‘lunchtime beverage’, and was most oftenconsumed in single servings. Thus, 32 and 64 ounce bottles were a mismatch with the purchasing andconsumption behaviour of Snapple’s customers.Had Quaker’s marketing executives been more scrupulous and less biased, they might have devised a moreeffective and appropriate channel strategy for Snapple. Unfortunately, from the start, improper treatment ofchannel and packaging issues doomed Quaker’s Snapple strategy. Quaker’s disregard for Snapple’sestablished channel structure certainly injured the brand, causing channel conflict that resulted inplummeting Snapple sales. In order to successfully transition the Snapple brand to the Quakerinfrastructure, the company would have needed to better manage and retain the strong relationships thathad been established with the distributors.Despite the superficial probability of success there were a myriad of managerial missteps thatplagued Quaker’s handling of the Snapple brand. Perhaps most significantly, Quaker failed to realizethe obvious cultural differences between Snapple’s brand and their corporate positioning goals, andthe importance of Snapple’s offbeat brand image to its success. This directly impacted the decisionsthat followed including correcting non-existing problems in promotion and distribution, wronglyapplying a mass marketing operating style to Snapple, destroying Snapple’s offbeat brand image,and thereby undermining Snapple’s competitive advantage. It is unlikely that Quaker could havemade a success of Snapple unless it somehow distanced the parent company from the Snapplesubsidiary and conducted business in an entirely different manner.THEQUAKERDEBACLE
  • 18. 18THETRIARCACQUISITION:VALUABLELESSONSTriarc successfully recovered the Snapple brand within just three years of stewardship, demonstrating aclear passion and understanding for the quirky spirit of the brand, having already competed against Snapplewith Mistic. Triarc was able to capture and overcome several of Quaker’s challenges and failures with thebrand, which enabled the company to sell Snapple for a mass profit in 2000 at the price of $1 billion.Blending the Brand with Corporate CultureThe Snapple brand was clearly incongruous with Quaker’s mainstream corporate culture. Triarc learned toembrace the original vision of Snapple which Quaker had failed to do, and the brand quickly returned to ahighly profitable state. Quaker’s attempts to mold Snapple to fit its corporate image diminished the brand’sunique features and value. Peltz, Weinstein and Gilbert at Triarc took a different approach, recognizing thatSnapple meant different things to different people (e.g. fun, fashionable, regular, quirky) - none of whichQuaker cultivated.The key to success was in remaining true to the brand’s culture. Triarc’s managerial team rehired WendyKaufman to be the “Snapple lady,” bringing back their authentic, endearing advertisement style. In addition,Triarc ensured the product’s niche, quirky positioning was consistent in all aspects of the brand, this includedreturning to the style and tone of advertisements, as well as reverting to the kitschy, cluttered style of thepackaging.Triarc executives remained true to Snapple’s core values ensuring its eventual success.Due DiligenceQuaker approached the Snapple acquisition with a level of overconfidence, miscalculating the potentialgrowth of the brand. Given their success with Gatorade, Quaker believed they had the formula for successin the beverage category without considering brand specific factors and the emerging competitiveenvironment. Quaker needed another “win” product and erroneously thought that Snapple was the perfectmatch, however the two beverages were dynamically different.Triarc can learn from Quaker’s mismanagement of Snapple’s strong network of independent distributors.From this mistake, Triarc can better understand how to build successful distribution partnerships that will bemutually beneficial to both the Snapple brand, and the partners involved. This will not only improve theeffectiveness of the distribution process, but also contributes to the image of the company as caring andgood corporate citizens.Quaker tried to fit Snapple into a textbook growth and marketing strategy which severely clashed with thecore values and attributes of the brand. There are several takeaways from Quaker’s strategic failures inpromotion, distribution and packaging, which Triarc can apply whilst developing a renewed growth plan forSnapple.
  • 19. 19LEVERAGINGTRIARC’SCORECOMPETENCIESTriarc Companies is an investment company with a long history of buying and selling troubled assets. Likeother companies Triarc had taken over, Snapple was a company in distress when Triarc management tookcontrol of the once powerful brand (Funding Universe). Nelson Peltz, chairman and chief executive officer ofTriarc, said in a statement “Our Strategy at Triarc revolves around our ability to acquire brands andcombine them under talented management to deliver value to our shareholders. The acquisition of Snapplefits very well into that overall objective” (Turcsik).Leveraging Rich Experience in Beverage IndustryBefore acquiring Snapple, other beverage brands such as Royal Crown and Mistic were under the operationof Triarc. Experience with these brands gave Triarc a deep understanding of the beverage industry. Triarcturned Mistic into a strong, direct competitor to Snapple; the brand was also a leader in the new agebeverage segment (Funding Universe). All this experience had enabled Triarc to know the new agebeverage segment well.In addition, the experience Triarc had from recovering Mistic applies to Snapple. “In August 1995, we boughtMistic,” said Martin M. Shea, Senior Vice President of Corporate Communications at Triarc. “We introducednew graphics, and through our marketing organization, with new marketing plans, we turned it around. Wehope to use the same template for Snapple.” After acquiring the brand Mistic, which was suffering from asomewhat tarnished image, Triarc restored profitability soon after gaining control of the company. In doingso, the company demonstrated its talent for improving relations with distributors, its flair for marketing, andits shrewdness in developing new products for an established brand (Turcsik).Using Previously Acquired Knowledge in DistributionTriarc had used a similar distribution strategy as pre-acquisition Snapple for Mistic, gaining experience andrelationships in the niche, independent network of distributors that had served Snapple well pre-acquisition.Triarc knew Snapple had conflicts with the distributors and took advantage of this to gain a foothold in thechannels. Many of these distributors said they were so unsure of their future with the troubled Snapple thatthey were refocusing their efforts onto competitors, including Mistic (Businessweek).Triarc can apply this knowledge of the cold channel distribution system and relationships with distributorswhere Snapple first found success, to relaunching the brand under their stewardship.Management ExperienceCEO of Triarc Mike Weinstein had strong experience in managing beverage brands such as A&W and Mistic,both of which eventually turned into great profits. He had very good relationships with distributors. Whendistributors were unsure about Snapple’s future and began to sell other brands, Mistic became popular asMistic had a strong promoter in Michael Weinstein. He was a popular figure among distributors(Businessweek).
  • 20. 20OWNIDENTIFYWITHVALUEUNDERSTANDBrand Positioning Risks & RewardsA strong brand positioning allows a company to create a clear and concise image of what a brand standsfor. This also allows a company to strategically determine their target audience and provide a standardfor their product. On the contrary, with customer demands and expectations constantly changing perhapsthere is less risk to allowing customers to identify the brand themselves. Snapple must clearly examine therisks and rewards involved with branding versus allowing their customer’s interpretations determine whothey are.If Snapple chooses to leave their brand positioning up to interpretation there are a number of risks theyface. Firstly, this may establish ambiguity and a lack of clarity as to what the brand stands for. Withoutthis clear view of what they represent, unfavourable definitions may surface. “Positioning is the mentalspace that we want to occupy in the customer’s mind about the brand” (Joseph). By clearlyunderstanding what your brand stands for it can then transfer to how you are perceived. This can help toavoid any negative connotations or unfavourable opinions customers create on their own. Consumers liketo know what they are purchasing and purchase products that they can understand. They also are oftenunsure of exactly what they want until they are presented with it. It becomes easier to simply be told. IfSnapple does not show evidence of understanding who they are themselves, then how can consumerstruly grasp it on their own.SNAPPLE’SBRANDPOSITIONING:RisksBrand positioning helps consumers tounderstand, value, identify with, and ultimatelyown their product. A brand positioning modelhas been established indicating its importance.(Gram) This model indicates the possible risksthat would coincide with allowing customers toestablish their own meanings of Snapple.As previously mentioned, if a consumer doesnot understand the product they are less likelyto follow the chain and value, identify with orfrequently purchase it.Establishing a clear brand positioning can resultin brand loyalty and brand advocates.If what Snapple stands for is up to continuousinterpretation it may discourage loyal Snappleusers. This may pose a serious risk. Withouta doubt, creating loyal brand users is desirablefor continuous sales and predictable profits.If a customer consistently knows what toexpect then they will feel trust and loyaltytowards the brand. They know their brandrepresents a promise. Allowing the image andpositioning to consistently change poses a threat that Snapple consumers will beconfused.A risk also lies in an unclear and ever-changing target market. This relates back to brand loyalty. Havinga clear understanding of what your brand stands for assists in clearly identifying who you are targeting.This prevents wasted funds attracting the wrong people and should ultimately lead to higher profits.
  • 21. 21There are also potential rewards for Snapple if they allow customers to make their owninterpretations of what they stand for. This may allow them to stay hip and trendy with theever-changing world of what is fashionable. This could potentially solidify them as a fashion brand.This could also save resources that would be used on establishing themselves as a clear and concisebrand. In the fashion business, if what is popular is likely to change then it could become costly tocontinuously use funds to confirm this.This alternative allows the customer to ultimately decide who they are. If consumers are determiningwho you are it saves the expenses of research and seeking to find who it is they want you to be. Whatbetter way to reach your consumers than to allow them to identify you as they please. Although ofcourse this runs the risk of them viewing you in a negative manner. However, the nature of thisalternative allows Snapple to remain very adaptable. They can respond almost immediately to what thecustomer is saying and how they are being viewed.The alternative beverage category, and Snapple itself, represents an ambiguous category. They areidentified as in-between in regards to health, taste and category. If the category is quite ambiguousthen perhaps it is fair for people to view their brand as what it means to them. This in itself may actas a brand position. It coincides with what their brand represents as well as their varying flavours forvarying palettes.Snapple: A Fashion BrandMike Weinstein, CEO of Triarc Beverage Group explains that when it comes to Snapple, “we’re in afashion business here, and when your imagery isn’t fashionable, often that’s the end. (Deighton 1)”Consumers are constantly searching for products and services that will help to create their ideal self.They strive to find products that are cool, edgy, and will increase their social standing. Snapple is abrand that consumers can turn to: it provides an alternative beverage that consumers feel fashionabledrinking. The all natural quality and quirky personality of the brand makes consumers feel like theyembody some of that spirit by drinking Snapple. Like fashion brands, Snapple also faces immensepressure to innovate and stay ahead of trends. Consumer preferences are volatile and unpredictable;therefore the brand must stay ahead to meet those changing needs. While it may be a beverage brand,it possesses qualities of a fashion brand.The Snapple brand is quirky and on the edge. It is fashion sensitive and authentic. The brand’s mantraof “100% Natural” applies more to than just the product’s ingredients. Snapple is natural, real, personaland encourages diversity and individualism. The Snapple community is inclusive and irreverent. KenGilbert admits in the case that “Snapple users are very average, normal people but the brand helpsthem to think of themselves as offbeat” (Deighton 8). This brand has a clear and distinct personality andhas established brand associations. The core values of the brand are relatable and shared by the loyalcustomer base of Snapple.Fashion brands are characterized by trends, hype and perceived quality. The face an immense amountof scrutiny and criticism, much like Snapple does. Three core components of fashion brands are alsoheld by the Snapple brand. These include a strong brand personality, brand resonance, and anemotional connection with Lovemark status. Consumer preferences change frequently andunpredictably, therefore strength in these key areas ensures that fashion brands and Snapple can stillremain at the top of consumers’ minds.SNAPPLE’SBRANDPOSITIONING:Rewards
  • 22. 22SNAPPLE:AFashionBRANDA strong brand personality increases the value of a brand. It can be a way to create a competitiveadvantage over other companies. By developing an essence, characteristics, and psychographic elementsto a brand, it creates a persona that can be relatable. Consumers find it easier to connect to a personalitythan to a generic product. If a brand has personality, then consumers can start to build a relationship withthat brand and emulate that personality. Consumers are able to express themselves through the brand’sofferings. Fashion brands are often aspirational in nature. They create a personality and lifestyle to whichtheir customers aspire to achieve. For example, famed fashion house Chanel has developed a personalityover the years that its customers desire to embody. The Chanel woman is classic, elegant, timeless andfeminine. She is wealthy and carries herself with style and grace. She has a luxurious lifestyle and enjoysthe finer things in life. The Chanel woman is fictional, however she is figure that women can aspire tobe. Snapple has also been successful in creating a brand personality and community around its brand. Itsconsumers can relate to the quirky and offbeat nature of brand, and connect with the diverse andirreverent community. Snapple is edgy, unique, and outspoken. Wendy Kaufman as the spokespersonembodied the characteristics of the Snapple brand. She gave strength to the Snapple brand and put aface to the name. Wendy was relatable, inspirational and personable. This strong personality increasesthe value of the Snapple brand in the same way it does for fashion brands.Additionally, brand resonance with fashion brands is similar to brand resonance with Snapple. For both,salience is not good enough. A general knowledge of a brand will maybe stimulate recall, but that is notgood enough. Feelings and judgements about the brand are perhaps one step higher. However,companies aim for the top, desiring to build relationships with their consumers. They want to establishdeep and long-lasting loyalty with their customers. When a company is able to establish a relationshipbetween brand and customer, they are building trust anda meaningful connection. Fashion brands resonate withconsumers at all levels of the brand resonance pyramid(refer to brand resonance exhibit/page #) However thestrong brands lie at the top of the pyramid, establishingloyal relationships. Snapple holds a loyal customer baseand has been successful in establishing these meaningfulrelationships. However, the brand has lost some of impactand popularity is declining. Snapple needs to find a wayto stay at the top of the pyramid, strengthen ties to thebrand, and provide value and meaning to consumers.Finally, the emotional connection that fashion brandscreate with their consumers can sometimes reachLovemark levels. Marketing agency Saatchi & Saatchideveloped the concept of the Lovemark: brands thatdeliver beyond the expectations of consumers. Theyinspire, they reach the heart, and they are irreplaceable to the consumer. These brands establish deepemotional connections to their consumers and become an important part of their lives (Saachi & Saachi2013). Fashion brands become Lovemarks when consumers will go out of their way to shop in their store.They wear them and feel like they fit in with the brand. These consumers can’t see their lives being thesame without their favourite brand of jeans or shoes in their life.
  • 23. 23Snapple should aspire to have their brand reach this Lovemark status. Snapple can be a brandthat breaks through clutter, and be the first in mind in the alternative beverage market.However they need to reach the high love and high respect quadrant on the axis (see exhibit).Snapple lost respect when Quaker changed its branding and what the brand stood for. The brandneeds to reconnect with the consumers they lost and strengthen their image. The brand isbeloved by many, and has potential to have high love, but it needs some more work to reach theLovemark status.Overall, Snapple exhibits similar characteristics to fashion brands in the ways that they bothpossess strong brand personalities, brand resonance, and potential for Lovemark status.Snapple is a fashion brand, as it demonstrates volatility in relation to consumer behaviour.Snapple needs to leverage their strengths in order to meet these changing needs and bring valueto their consumers. There must be something for consumers to connect with and a reason forthem to choose Snapple over any other beverage in the market. Consumers often do not knowwhat they want. Therefore Snapple needs to anticipate needs and shape what consumers wantin their minds.SNAPPLE:AFashionBRAND
  • 24. 24Refocus Efforts on Recovering Snapple’s Previous Brand ImageTriarc has already taken the right initial first steps ordering the Cultural Logic of the Snapple Brandreport from Deutsch, Inc. This report allows Triarc to begin planning with a thorough understandingof the brand, consumers, and surrounding environment which is essential for finding success with theSnapple brand. We recommend restoring the key success factors with a sharp focus on the “100%Natural” mantra that had guided the company prior to its acquisition.Niche brands have unique associations which need to be preserved in order to foster loyalty andgrowth. The diluted brand image and eroded loyalty is a consequence of Quaker’s mainstreammarketing and positioning strategy, and will need to be reversed in order to restore equity to thebrand. Triarc should focus on reinstating the unique, quirky aspects of the brand in order to increasesales, rebuild profits and its consumer base.Reinstate Independent Distribution NetworkAcknowledge Quaker’s mistakes of pushing Snapple into the warm channel at the expense of coldchannel distribution. Snapple is a product that is most often sold cold in single servings, in small retailchannels rather than supermarkets. Triarc should focus efforts on rebuilding relationships for Snapplewith cold channel distributors by creating synergies with Mistic’s distribution.That being said, in 1997, Triarc estimates placed Snapple at 35% of the total supermarket alternativebeverage category. With a $0.3 billion wholesale value the warm channel is not a distribution channelthat should be ignored, but should be tackled with a more measured approach that is appropriate forthe brand, the company and the distributors.Define & Communicate100% Natural PositioningIn order for Snapple to improve its branding, the company should return to it roots and revive its100% Natural brand. Over the years of management, the Snapple brand has seen many changes,some for good and some with negative implications. The image of the brand has been damaged andhas resulted in less trust and respect for the company. Triarc has the ability to revive the Snapplebrand, through honest and transparent marketing initiatives. Going back to the authentic, real, andquirky edge that the brand started with will give Snapple the best chance of getting back to its roots.Snapple needs to clearly define what the brand represents and clearly communicate what its valuesare. The brand should not be left open for interpretation. This would present a risk of skewedperceptions and misrepresentation. Snapple has a charming story, rich history, and strong identity.Triarc needs to put these strengths at centre stage and showcase the great brand that it is. Snapplewill only be successful if it leverages its strengths and explores some of the opportunities it has forexpansion.TRIARC:RECOMMENDEDINITIATIVES
  • 25. 25Wendy Kaufman proved to be a strong spokesperson and personality for the Snapple brand. She wasas sassy and outspoken as the brand itself. It is recommended that Snapple find a newspokesperson that is as authentic, real, and edgy as the original Wendy. Find someone that willconnect with the target audience of Snapple and bring character back to the brand. A spokespersonwill also give Snapple the ability to address the Quaker years. Instead of avoiding the marketingblunders of those years, a spokesperson could be used to talk about those years with atongue-in-cheek attitude, and how Snapple is back and better than ever.Since Snapple is seen as a fashion brand, Triarc needs to keep up with consumers, and listen towhat they want. It is essential that the brand reconnects with its consumers, and tries new methodsof communication to stay ahead. Keeping a finger on the pulse of consumers will ensure that theirwants and needs are met in a timely matter. Creating multi sensory experiences that go further thantheir expectations will help to make Snapple a Lovemark brand.Overall, Snapple should go back to the original branding that made it successful. Innovate the originalpersonality that Snapple started with. The brand can come back with an edgy, offbeat, and quirkysplash that their consumers will love.TRIARC:RECOMMENDEDINITIATIVES
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