2. INDUSTRY INFORMATION Average U.S. consumer drinks 182.5 gallons of beverages annually (Fruit juice and juice drinks account for about 4.7%). Carbonated soft drinks remain the most popular consumer beverage Fruit Juice and Juice Drink Category 100% Percent Juice Nectars Juice Drinks Fruit-Flavored Drinks Major Competitors The Coca-Cola Company PepsiCo, Inc. Kraft Food, Inc. Ocean Spray Cranberries, Inc. Sunny Delight Beverage Company Welch’s, Inc. Nestle USA On average, competitors spend about 24 cents per case sold on consumer media advertising.
5. HAWAIIAN PUNCH Hawaiian Punch is the top-selling fruit punch drink in the United States. 94% brand awareness among U.S. consumers. Cadbury Schweppes Americas Beverages fourth largest brand. 1946 1963 1981 1999 2011 1934 1990 Pacific Hawaiian Products Company RJ Reynolds Del Monte Procter & Gamble Co. Cadbury Schweppes Leo’s Hawaiian Punch
6. HAWAIIAN PUNCH Flavors 1. Fruit Juicy Red 7. Bodacious Berry2. Mazin’ Melon Mix 8. Wild Purple Smash3. Tropical Vibe 9. Grape Geyser4. Orange Ocean 10. Strawberry Surfin’5. Berry Blue Typhoon 11. Lemonade6. Green Berry Rush 12. Fruit Juicy Red Light Packaging Sizes 1. 1 Gallon 4. 20-ounce bottle2. ½ Gallon 5. 12-ounce can3. 2-Liter Bottle 6. 6.75-ounce standup pouch
7. DISTRIBUTION NETWORKS FINISHED GOODS DIRECT-STORE DELIVERY Manufacturer(Ready-To-Serve) Warehouses or Distribution Centers Retail Outlets/Institutional Customers Manufacturer(Concentrate) Bottlers Retail Outlets Products located in the soft drink aisle Products located in the juice aisle
8. DISTRIBUTION NETWORKS FINISHED GOODS DIRECT-STORE DELIVERY SALESIndependent brokers and company sales reps.PACKAGES1 Gallon ½ Gallon 6.75 oz. standup pouch* I Gallon Hawaiian Punch Light Fruit Juicy Red sold exclusively. TARGETMoms - African American - Hispanic SALESResponsibility on the independent, licensed bottlers. PACKAGES2 Liter Bottle 20 oz. Bottle 12 oz. Can* Single Serve packages most prominent in this network (75% of sales volume). OTHER CUSTOMERSVending Machines, fountain customers, etc.TARGETUrban, Multicultural Teens - Flavor variety - Action-oriented
10. HAWAIIAN PUNCH BUYING PRACTICES IN SUPERMARKETS 14.2% - SHOP BOTH AISLES PERCENT OF HAWAIIAN PUNCH BUYERS 25.2% - SHOP BOTH AISLES PERCENT OF HAWAIIAN PUNCH VOLUME
11. FACTUAL SUMMARY The U.S. fruit juice and juice drink category seems to be a very mature market. Finished Goods: 82.4% total gross sales volume 63.7% total case volume Direct-Store Delivery: 17.6% total gross sales volume 36.3% total case volume The average total of media expenditures for other major brands competing in the juice and juice drink market is around $24,041,000 per year.
12. FACTUAL SUMMARY Hawaiian Punch spent an average of $0.03 per case sold during the fiscal year 2004 of media advertising. DSD Network --- 70.3% Gross Contribution Margin after Marketing (~$0.96 per unit)Finished Goods --- 21.3% Gross Contribution Margin after Marketing (~$0.80 per unit) Hawaiian Punch juice drink aisle buyers are more likely to repurchase the same serving size package than Hawaiian Punch soft drink buyers.
13. CASE PROBLEM The company needs to develop a strategy that will enable them to increase Hawaiian Punch brand sales, continue the brand margins, as well as maintain the high level of brand equity that it currently holds. 1. Positioning 2. Innovation 3. Product Allowances and Advertising
14. FEASIBLE SOLUTIONS Option One: Status Quo (Do Nothing) Continue dual distribution network with finished goods and direct-store-delivery. Maintain media advertising at $2.2 million annually or 3 cents per case sale. New flavors primarily through finished goods network with little or no media advertising. Separate target markets for each distribution network
15. FEASIBLE SOLUTIONS Positioning Strategy : Option One Dual Distribution Network Target market children under the age of 15 and families Inclusive of many cultures Emphasize fun childhood experiences Health benefits
16. FEASIBLE SOLUTIONS Positioning Strategy: Option Two Dual distribution network Target Market children and young adults 13-21 years old Urban and Rural focus Action-oriented advertising Positioned as an energy drink with “take no prisoners” appeal
17. FEASIBLE SOLUTIONS Positioning Strategy: Option Three Dual Distribution networks with separate target markets for each network. Direct-store delivery network targets individuals 13-21 years old Finished goods network targets children 8 to 15 Individual offerings per target market. Healthy offerings for the finished goods network Energy drink for the direct-store delivery network
18. FEASIBLE SOLUTIONS Innovation Strategy: Option One Direct-Store Delivery network innovative flavors & packaging Single serve packaging Media advertising to support new flavors
19. FEASIBLE SOLUTIONS Innovation Strategy: Option Two Innovative flavors and packaging through the finished goods network Stronger brand recognition Hawaiian Punch juice drink aisle buyers are more likely to repurchase the same serving size package.
20. FEASIBLE SOLUTIONS Allowances & Advertising Strategy: Option One Increase advertising & product promotional spending in the amount of 13 cents per case based on fiscal year 2004 sales. $10.05 million in total allowances & media advertising $5.05 million in product allowances National media advertising split 80% with the direct-store delivery network and 20% to the finished goods network Internet 60% of advertising dollars Television 30% of advertising dollars Magazine 10% of advertising dollars
21. FEASIBLE SOLUTIONS Allowances & Advertising Strategy: Option Two Product placement allowances for all flavors and sizes within the finished goods network. Advertising expenses 24 cents per case sale in the direct-store delivery network for a total of 80% of the advertising budget.
22. Selected Solutions Market segmentation Separation of relevant market and identification of selective customer segments: Households with 8-15 years old (finished goods) 13-21 years old (DSD) Individual offerings per target market Positioning Innovation Advertising
23. Positioning Finished Goods network FG Household with kids 6-12 years old Mom buyer oriented 8-15 years old Family punchy (logo) Family buyer oriented (mom, dad, grandparents) Direct Store Delivery network DSD Household with kids 6-17 years old Urban multicultural action 13-21 years old Action punchy (logo) Expending into rural/urban
24. Innovation Move flavors without awareness to small packaging Keep two flavors common for the dual network (Fruit Juicy Red/light and Green Berry Rush) move the flavors without awareness from big packaging to small packaging; from Finished Goods network to DSD network Hawaiian Punch sells 11 flavors Only fruit juicy red has 95% awareness
25. Innovation Light Hawaiian Punch Focus on health benefits Emphasize more the health benefits of the Light Hawaiian Punch; Make Light Hawaiian Punch available in ½ gallon package size 6.75 oz. package size Create connections between healthy food suggestions and Light Hawaiian Punch Is available only in 1 gallon package in the finished goods network
26. Advertising Flavor extension lacked awareness Extend brand use through cross-selling Create connection between Fruit Juicy Red and other flavors Bundle products Fruit Juicy Red 95% awareness
27. Advertising Increase advertising & product promotional spending in the amount of 13 cents per case based on fiscal year 2004 sales National media advertising split 80% with DSD network and 20% to the finished goods network Internet 60% Television 30% Magazine 10%
28. AdvertisingAction PunchyDSD Network Active punchy Illustrate Punchy doing physical activities (e.g. bicycling, playing tennis, jump roping, surfing) to suggest healthy attributes
29. AdvertisingFamily punchy – Finish goods network Party with punchy Promote a “Party with Punchy” sweepstakes where ALL HP flavors could be reintroduced Offer prizes :”Punchy could serve the drinks at your next party”. Link product to the Website Send consumers to the Website to register to receive a coupon for a reduced price HP product to try a new flavor Online fun games for kids with punchy mascot Make Punchy A FRIENDLY Mascot Online fun games, parties, cartoons
30. Plan – Do – Evaluate Monthly reviews for selected solutions and strategies Review revenue, profitability, and market share targets Alternative Strategy such as decreasing/increasing the advertising cost based on sales/profit Lead Hawaiian Punch to higher profits
