The Best Stuff on Earth

Role of VP of Marketing

The president of Quaker Oats’ Snapple division strongly believes in worker empowerment and Total
Quality Management. As a result, the president places a lot of trust in the task force to come up with
a strategic product mix and marketing plan to establish Snapple as the leader in the “New Age Drink”
beverage market. The president will rely heavily on your task force’s recommendations. Therefore,
you do not want to let the president down by being unable to come to an agreement. Nevertheless,
you have some specific interests in the outcome of the task force’s deliberations.

Your general mission, as VP of Marketing, is to differentiate Snapple from the crowd of non-alcohol
beverage in the market. Image is everything in the beverage industry, and taste considerations are
secondary in importance at best. Marketing research has shown that image is the basic motive for
buying any type of beverage. The research on consumer psychology identifies this market segment
as “peer conscious consumer” whose basic purchasing motive is to boost their self-esteem by trying
to be part of the “in crowd”.

You have been with Snapple since the Quaker Oats buy out and before that you were the marketing
director for Gatorade. Gatorade is where you made your mark as a rising star in the organization and
why they promoted you to VP. You have worked with the VP of finance at Quaker in the past and
you hope to get his support during this meeting. You are confident that if you can bring some fresh
ideas to Snapple you can turn the brand around. In order to meet stockholder expectations you
believe Snapple has to increase its distribution. Europe should be a good market to get into because
you have read some articles recently that have described the success of some smaller iced tea
companies. You think that most people in the group are probably against the idea because of the
increased costs, and you are not sure if you should bring up the idea with so many other important
topics to discuss.

Given the absolute primacy of image in product mix and marketing decisions, your position on each
of the issues the Task Force must address is as follows:

1. Product Mix

For the next year, you would like to add at least three exotic new flavors to the fruit juice line and a
sport drink. Your market research indicates that there is steady consumer demand for non-
caffeinated drinks especially in the west. Seven of the top ten drinks currently are fruit juices.
According to your research, exotic flavors should appeal to the peer conscious consumers, Kiwi-
Strawberry is a top seller. The more recently released Mango Madness and Guava Passion Fruit also
seem to be in strong demand. Market data on these three flavors show a 25% increase in sales over
past staples such as Lemonade and Grapeade. Although, you still don’t have market data on your
most recently launched exotic flavors such as Passion Fruit Tea and Peach Lemonade, you feel
certain that a constant supply of new exotic flaovrs is one of the main points that differentiate
Snapple from the rest of the market. The Production and Corporate Planning people have resisted
developing new exotic flavors because market data (provided by the old management team) show
that only a small proportion of buyers (no more than 20%) like exotic flavors. These objections are
annoying because making the decision on the basis of expected sales volume alone misses the point.
The exotic flavors help set the image of Snapple apart from the competition and las year when you
introduced eight new flavors the stock price jumped up $2.561. 1

Unfortunately, the recent drop-off in new age beverage sales as a product group has prompted an
investigation by some taste researchers. They found that “people get tired of the taste of distinctive
juices and unusual teas. Colas, however, have more neutral flavors that are harder for consumer to
recall.”2 While you don’t like to believe everything you read, you think that if there is any validity to
this research you can avoid having customer with tired taste buds by switching the exotic flavors
regularly.

Introducing a sports drink would help Snapple diversity away from being just a juice and tea brand
and you know that some customers have been asking for one. Unfortunately your marketing team
just conducted a study that products sales of only 7,000 to 10,000 shipments per year, which is
lower than you had expected. However, you believe that the changes you are introducing should
improve Snapple’s image and that will carry sales to a level that will be higher than the last study
predicts. When overall Snapple sales were higher last year a study was done that predicted sports
drink sales of between 10,000 and 15,000 shipments per year. You believe that the latter sales figure
should make the sports drink profitable.

2. Price

Snapple isn’t just another tea, it is a cutting edge beverage in the new age drink market and because
of this it deserves a higher price. You also believe that it will probably be more expensive to produce
some the flavors that you are recommending and think the price will need to be raised to cover
increased costs. You know that the VP of finance has been working on these numbers, but your
meeting with him was cancelled yesterday and you were not able to get them. He should have them
done by now. The increase price should be spread out over the entire mix so that all of the Snapple
beverages are the same price. This will keep the consumer from becoming confused.

3. Image

If Snapple is to be viewed by consumers as a premium beverage, as you desire, the entire marketing
approach must say “premium”. This includes touting the healthy, natural image Snapple portrays,
but also must represent Snapple consumers as upscale people who can appreciate a quality product.
On this second objective, you thing Wendy, as a spokesperson, is no longer effective. At first, she
was a novelty and helped to increase Snapple sales because people wanted to know “who is the
person?” and “what is Snapple?” Now that Snapple has caught the consumers’ attention, it is time to
change the campaign. Your research indicates that keeping Wendy as your spokesperson will not hut
sales, it just won’t increase sales. Wendy’s image, although “natural” and “down-home” to a certain
extent, does not suggest “premium” or “quality” to most people. You think a well-regarded actor or
actress could represent both the healthy, natural image while signalling quality. Someone like Val
Kilmer (“Batman”) or Demi Moore (“Disclosure”), for example, would be great. Your research
indicates that they have outstanding name recognition and are admired for their healthy physique.
1
Flavors please Wall St. Wall Street Journal. April 25, 1994
2
Fruity Teas and Mystical Sodas are Boring Consumers. Wall Street Journal. October 9, 1995
While some in the company are concerned about a few vocal consumers who are seeing things in
the Snapple label, you are not. It would be crazy and reactionary to alter something as traditional as
the Snapple label, all the company needs to do is put forth a small advertising campaign that
explains to these people what the drawing and ‘K’ really represent. Additionally, there is a segment
of the population that will only buy products that are certified to be kosher. Changing the label will
impose an unnecessary cost and removing these components of the label design would be
tantamount to admitting guilt.

4. Ingredients

The FDA has been evaluating Snapple to determine if you can continue to advertise Snapple as all
natural. You believe the ingredients are all natural but, with all of the recent regulations covering
truth in advertising and more accurate ingredient labelling you think it is likely that the FDA will rule
against you. This could be a real problem for Snapple because the “peer conscious consumer” has
become increasingly concerned with the ingredients that go into products (because it is cool to be
natural). You would like to be able to continue to advertise Snapple as being all natural, after all the
slogan for Snapple is “made from the best stuff on earth”. If you wait until the FDA forces you to
change to their specification, there could be a lot of bad press, which you want to avoid. You would
like to change the ingredients now so that you can avoid the risk. You also know that some of your
competitor’s products are all natural and you don’t want to let them have an advantage. Your main
concern is to make sure Snapple will have “all natural” on the label and that there is no negative
press.