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CASE STUDY

Presented By:

Alex MacArthur Chantelle Jewkes Heather Osbourne

Oliver IfurungSara Blumenstein

Sarah Turner Tracy Jiang

Michelle Hamilton

Prepared For: Mike DoverCourse Code: MKPD 507

Due Date: March 26, 2013

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TAblE 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............................................................................

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SWOT Analysis...............................................................................PEST Analysis................................................................................. Quaker’s Stock Price Exhibit 1, Exhibit 2.................................................................Supermarket Brand Shares Strategic Group Map......................... Brand Resonance............................................................................Lovemarks.......................................................................................

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Beginning in 1972 as an all-natural apple juice, Snapple was a small business that took 15 years to become an overnight success. The Snapple brand provided an offbeat product to satisfy the needs of 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 brand to achieve success.

During the late 1980’s and early 1990’s, through an increase in their advertising budget, Snapple gained a near-cult following across the United States. Sales skyrocketed to a peak of $674 million in 1994, when Snapple was sold to Quaker Oats for $1.7 billion. Mistakes in advertising and a disconnect with consumers led to sales falling $234 million in the next three years. Quaker was forced to sell the troubled company to Triarc Companies for $300 million.

This report examines the success and subsequent downfall of the Snapple brand by utilizing multiple models including a SWOT, PEST, and 4 P’s analysis. We will examine these implications for the Snapple brand, and why their brand took a turn for the worst after its sale to Quaker Oats in 1994. Through additional analysis, we will provide recommendations to the Triarc Company.

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• Snapple’s brand lacks clearly established points-of-difference.

• As a “fashion” brand Snapple consumption needs to be socially reinforced

• lacks “conceptual coherence” to drive usage outside of above social factors

• Weak in “warm channels” including supermarket sales

• Vulnerabilities in their relationship with

controversial public figures

Threats

•Intensely competitive nature of market

•Emerging markets

• Healthy lifestyle and eating trends

•Volatile consumer preferences

•Potential government regulation in soft

drink industry

Opportunities

•Grow their brand as a fashion beverage• Innovate their product continuously based on customer interpretations

•Capitalize on health-conscious social patterns• Focus on their “real” personality and quirky edge

•Establish nutritional education programs and draw on corporate social responsibility

• Increase their product differentiation and establish a clearer brand image

• Produce other “alternative” beverages i.e. bottled water and non-premium

•Combine with another company to improve supply chain and management capabilities

Strengths

• Wide product line

• Strong brand image / heritage / meaning

• Strong and meaningful spokesperson

• Well established distribution network

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Key Implications

StrengthsWide Product Line: Snapple’s product line offers consumers a large variety of all natural flavors to choose from. The use of all natural ingredients is in line with industry health trends, presenting consumers with a healthier 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 beverage that is both personal and fun. The Snapple brand reflects a fun and quirky image that stands out in the mind of their consumers. This key differentiating factor and USP has undoubtedly pushed the company to succeed and should not be ignored by acquiring companies.

Strong and Meaningful Spokesperson: Snapple has been able to create a significant amount of equity through past offbeat promotional and marketing efforts. Wendy the “Snapple Lady” is a strong, well-liked spokesperson, 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 ways through promotional characters such as Wendy underlines one of their core competencies, and has helped build out a strong image and high levels of awareness.

Well-Established Distribution Network: these relationships have been injured through the acquisition of the brand through Quaker. However the strong relationships with the independent distributors have played a large part to Snapple’s growth, value, and overall success. These key relationships have provided Snapple with 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’s stewardship. The brand lacks clearly established points-of-difference from its competitors within the segment and by extension; a weakness lies in the ability to define distinctive, appealing consumer benefits that effectively drive increased consumption and growth in sales.

A related weakness is Snapple’s difficulty establishing clear, actionable associations for the brand that drive independent usage. As a “fashion” brand, Snapple use typically requires social reinforcement, and the desirability of the product relies on perceived popularity. Consumption is directly correlated with the intensity of Snapple use by others in the immediate social environment. This consumer behaviour means that Snapple can easily fall out of fashion; brand perception and usage is more difficult to control than if there was more conceptual coherence of the brand. That would provide clear points of difference and consumer 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 key strengths prior to acquisition by Quaker was its oddball promotion and niche positioning. These factors endeared Snapple with consumers, and even developed fans and followers of the brand. This essential strength quickly turned into a weakness under new management that did not recognize the importance of these factors to the brand’s success. The diluted brand personality under new management resulted in poor brand perception from consumers who felt betrayed by the brand that they felt had “sold-out”.

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A strong and loyal network of independent distributors is another strength that became a weakness under Quaker’s ownership. Quaker mismanaged the relationships with the distributors permanently damaging Snapple’s distinct advantage in the cold channel distribution system turning it into a weakness for the company.

In a similar vein, throughout Snapple’s existence it has performed poorly in the warm channels with grocery stores making up only 20% of Snapple’s sales in 1994. Headway into warm channels did not improve under Quaker management despite very strong efforts. The inability to make inroads into ultimately 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 brand in a very vulnerable position. These outspoken public figures made their names walking the line of acceptability. With the close brand association with these figures if one of them did cross a line in public perception it could result in serious consequences for the brand’s image and public perception. When Quaker severed these relationships due to the inherent risk, this vulnerability was demonstrated when Stern 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 grow their brand as a fashion beverage. Snapple’s “alternative” drink category is largely represented by what is current and trending. Therefore, an opportunity may lie in dedicating resources to market research and spotting trends. They may then use this research to innovate their product and maintain their image as a fashion brand. This may also entail revamped and innovative packaging with higher impact. They are currently 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-conscious attitude that Snapple may capitalize on. They may wish to solidify this image and post facts regarding their beverages 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 social responsibility. They can educate youth about nutrition and health in general. This may help them gain access to schools and relates to their natural and real product. Consumers desire beverages that they can feel good about drinking. Snapple can provide them with the reasons they should feel good drinking their product. An opportunity for Snapple may also be to increase their product differentiation by establishing a clearer brand 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 and promotional tactics such as Wendy and public relations campaigns to maintain their clear “real” product differentiation. It is more likely that when someone truly understands and favours the brand it will be consumed 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” beverages represent 24 and 19 percent of the category respectively. If Snapple can introduce another product that aligns with their “alternative” image there may be an opportunity for increased profits. This may also help to solidify their brand.

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Snapple may pursue merging with another company in order to leverage supply chain capabilities and management expertise. Collaborating resources with the right company may lead to cost savings and improved supply chain processes. They may also gain access to newer technologies that may allow for improved packaging and research and development. However, they must ensure that their brand aligns with the company. With greater capabilities and resources there should be a better chance for increased market share and profits.

ThreatsSnapple faces a number of threats in the beverage market. First is the intensely competitive nature of the business. 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 exist as well, such as wine, beer, ciders, coolers, and spirits. There are many beverage options for consumers to choose from which presents a threat to beverage producers. Companies must ensure that their brand and their product stand out, are differentiated and can make it through the clutter. Consumers need to feel a compulsion 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, flavoured waters, as well as tea and coffee based beverages are some examples of new products that are changing markets. Hybrid products, such as beverages that combine juices and tea, are also changing the structure of the beverage market. This presents threats to beverage producers in two different ways. If the producer is the leader of change, then they face the threat of increased competition. On the other hand, if the producer is 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 eating trends. In the past, beverages such as juices and soft drinks were successful in having full flavour and high sugar content. Now, as consumers are becoming more informed, and are reading labels more carefully, they are demanding more healthy alternatives to the products that they love. Consumers are moving away from the traditional sugary beverages, to low calorie and low sugar options. Pressure exists now for beverage producers to change recipes to suit these evolving consumer preferences. If beverage producers do not innovate 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 are volatile and often unpredictable. With consumers holding an increasing amount of power in the business-consumer relationship, companies must ensure that they are meeting their needs. This is threatening because companies are losing some of their power. In the past, companies made all the decisions based on what worked for the corporation. However, this power dynamic is changing, and companies 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 unhealthy nature. Soft drinks have been banned from school cafeterias, vending machines, and in public areas as well in the hopes of improving public health. Talks of imposing a tax on soft drinks have also occurred, with the idea that the added tax will be a deterrent to buying unhealthy products. This presents a threat to beverage producers, because soft drink manufacturers will likely turn to producing alternative beverages to compensate for declining soft drink sales. Soft drink conglomerates will likely increase efforts in other areas of their beverage portfolios to offset the shrinking soft drink market. This could lead to increased competition, or new products entering markets.

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Technical

•Innovations in bottling techniques for hot teas. Snapple pioneered this new technology which later became standard practice within the category.•Innovations in vending machine design. Snapple proved to be innovative again in developing glass-front vending machines and coolers that doubled as promotional tools effectively displaying its uniquely packaged products (Winer).

Social•Prominence of influential and entertainment icons holding social importance e.g.,Howard Stern, Rush Limbaugh celebrity endorsers •More relatability with brands and their positioning through use of new and innovative marketing tactics such as spokespeople e.g., Wendy Kaufman •Growing health-consciousness and care for nutrition •Consumers are now more aware of what ingredients and nutritional facts are relevant to the products they consume •More social awareness and public expression of sensitive topics. This leads to very vocal and informed (or misinformed) consumers that are quick to judge or praise companies. Thus, there is an increased importance for Corporate Social Responsibility•Increase in teenagers with disposable income that have influenced marketers to discover new and upcoming trends and fashions (The Merchants of Cool)

Political

•In the early 1990’s, Americans viewed their health care system in a negative light - nine in ten Americans felt the U.S. health care system needed fundamental changes or to be completely rebuilt. (CBS News)

•Clinton’s proposed health care reforms led to government endorsed health wake up calls within 30-44 age group, which may affect Snapple consumption.

Economic•In 1997 growth in the alternative beverage category was explosive, with premium making up 24%, bottled water 19%, 100% juice 17%, sports drink 16% and Non-Premium 24% (Deighton).

•1997 financial crises in Asia, making it a poor time for Snapple to expand into Asian markets. However, most developed countries were relatively unharmed, including the United States

•Based on the statistics, the US economy was at the stage of rapid sustainable growth around 1997. Personal and household incomes were increasing. These factors created robust consumer spending and increased market demand, providing a very good opportunity for Snapple to develop its business. On the other hand, because of increasing demand, more competitors were entering the segment. In addition, with more jobs created, the cost of labor can rise, increasing Snapple’s fixed costs.

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Entrepreneurial Beginnings

Greenberg, Marsh, Golden began in a business partnership selling brand name Snapple all natural apple juice to health food stores in 1972. Health implications derived from the initial business led Snapple to popularity in the 90’s. The mantra “100% Natural” was adopted into Snapple’s marketing. Snapple’s almost cult 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 distributors to be built across New York City. Wider distribution network alerted the company to a need for larger variety in its product line. Fortunately products were priced at premium, allowing for new flavours and varieties to be tested without negatively impacting the business if a specific product failed. Marketing was targeted towards aspiring young, health conscious, urban professionals. Snapple becomes part of the New Age / Alternative beverage industry, competitors included; Napa Naturals, Natural Quencher, SoHo, After the Fall, Ginseng Rush, Elliot’s Amazing, Old Tyme Soft Drink, Manly Sodas, Syfo, and Original New York Seltzer.

The Snapple founders decided to go against the normal entrepreneurial goal of exit via acquisition. In order to 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 also intensifying the independent distribution system from coast to coast. This distribution system grew to a network 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, supermarkets accounted for about 20% of Snapple’s sales.

Standout Promotional Strategy

The real success was in Snapple’s promotion, an “offbeat blend of public relations and advertising.” The advertising agency Kirshenbaum, Bond & Partners created a spokesperson for Snapple, Wendy Kaufman, a former truck dispatcher with a brash New York attitude. Her eccentric personality attracted unpaid media attention, and she also appeared on Oprah and Letterman. From Wendy’s success, Snapple sponsored the

radio shows of Howard Stern and Rush Limbaugh. The brand received on-air endorsement and was often the topic of the two radio hosts’ banter. Snapple’s sales grew from $80 million in 1989 to $231 million in 1992 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.

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A New Age Niche

Snapple’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. The implicit health benefits attached to Snapple’s brand image allowed for the beverage to be widely distributed. Consumers associated fruit with health and Snapple with fruit, this led them to the conclusion 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 cost effectively distributed. 1992’s $516 million and 1994’s $674 million in sales are evidence of a successful advertising campaign operated by the Kirshenbaum, Bond & Partners. Quaker’s $1.7 billion purchase in 1994 that included the discontinuation of the Kirshenbaum advertising strategy, was followed by a $234 million drop in sales from 1994-1997. This drop in sales shows correlation between the 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 startup companies because they decided against exit via acquisition, allowing them to successfully employ promotional and distribution strategies. The focus on two of the 4 P’s, the “100% Natural” product and promotion, drove Snapple to success.

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Quaker’s problems with Snapple were primarily a managerial failure that was compounded by the fact that the purchase was not an ideal due to the misalignment between the Snapple brand and Quaker’s corporate culture, and the external competitive environment. These errors caused the brand to lose $1.4 billion in value in just four years of Quaker’s stewardship.

Research shows that approximately 70% of mergers and acquisition deals that take place globally result in failures. 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 and knowledge can result in major success. In the case of the Quaker acquisition in Snapple, there was a major failure in achieving synergy between the two companies (Turner).

Quaker did not understand Snapple’s key demographics, the importance of its unique/quirky brand identity and failed to realize that it required different promotional, distributional and other considerations than Gatorade 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 factors that led to such a devastating loss for the company.

Quaker’s Lagging Growth In 1994, Quaker was looking to diversify their beverage portfolio to stave off acquisition by larger competing firms. Quaker bought Snapple for what is often considered an overvalued price tag for a brand that is unproven in the national markets, still being primarily a regional brand, of $1.7 billion in the hopes they could make lightening strike twice (Deighton 47).

One of the discernible motives behind the acquisition was to reinvigorate both growth and financial performance. Quaker’s growth had been lagging due to holding several mature businesses, and share prices had remained largely unchanged since 1991 (Optimum Capital). However, Quaker failed to note that Snapple was a declining brand in a growing market, and a lack of due diligence caused the company to severely 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 in regards to culture, marketing etc. and would not be able to achieve the desired synergies due to this lack of compatibility.

Quaker had also made the mistake of selling off their bean based and pet food businesses (positive but low-growth cash flows for the firm) to raise $90 million of the $1.7 billion acquisition cost - which had they been kept, would have sustained much higher level of performance for the firm (Optimum Capital).

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Exhibits 1 and 2 summarize financial and stock price performance for Quaker prior to the acquisition, and during the period which it operated Snapple. It is apparent that such a purchase was not appropriate for Quaker, and with proper due diligence (properly assessing whether or not Snapple’s growth was in fact sustainable) the company could have avoided such a huge loss.

Exhibit 1

Exhibit 2

(Source: Optimum Capital)

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Intensity of Rivalry

At the time of acquisition in late 1994 competition was intensifying in the RTD tea segment from both deep pocketed competitors and smaller niche brands slowly eroding Snapple’s market share. In 1993 Pepsi/Lipton had 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 were several new entrants in the category including; Arizona Iced Teas, Nantucket Nectars, and Mystic that were all 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 was showing 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 teas and fruit juices

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Problems with Promotion

As illustrated in the previous section, Snapple owed its early success in large part to eccentric, oddball branding and unique promotional tactics. Quaker made the fatal error of abandoning Snapple’s unconventional strategy in favour of a more traditional approach. This began with the high-profile firing of the much-loved spokes model Wendy Kaufman, and severing ties with radio personalities Howard Stern and Rush Limbaugh at once robbing Snapple of the cultural cache that it had previously carried and creating a severe public relations backlash.

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When Quaker cut ties with Snapple’s public faces they the fallout exceeded the loss of the spokespeople themselves as assets to the brand. The decision generated a public relations crisis as loyal fans of Wendy the Snapple Lady were upset by the treatment of the beloved spokeswoman. Even worse, Howard Stern, an outspoken radio personality that had once represented Snapple, turned against the brand. He was relentless in his on-air diatribes creating a months long battle Quaker now had to fight to stop Stern from continually referring to “Crapple” to his vast audience (Deighton 50).

Quaker then faltered in its new promotional strategy, making moves to normalize the brand identity stripping it of the “oddball”, “kitschy” image differentiation that audiences connected with. The “Threedom is Freedom” television campaign was the most obvious shift in focus. This corporate campaign revolved around Snapple angling to be the third largest beverage brand behind Coca Cola and Pepsi, an approach that ran counter to the brand’s quirky sensibilities.

The new mainstream positioning aimed to remove Snapple from a niche segment where the brand was market leader and position the brand as third choice in the mainstream beverage category behind Coca Cola and Pepsi where at this point, the brand had no hopes of being a viable competitor. (Jackson 225)

Mishandling of Distribution & Packaging

Quaker 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 capitalize on that strength to push Gatorade through those channels. Conversely, Quaker aimed to increase Snapple’s sales through warm channels where Gatorade had been successful.

Quaker’s mistake was attempting to transform Snapple’s successful ‘fashion brand’ into a mainstream product 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 to accelerate Snapple’s growth - completely ignoring the distribution system that had made Snapple so successful in the first place. Snapple had created a successful niche for itself, and a transition to mass distribution was an inappropriate move for the brand.

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Quaker’s attempts to push Gatorade onto Snapple’s distribution partners created problematic relationships with Snapple’s cold channel distributors. Quaker’s proposal to Snapple’s distributors would create an inequitable arrangement with the distributors on the losing end. By initiating this, Quaker fostered distrust and ill-will towards Snapple’s new parent company. Snapple provided almost double the margins and sold better - asking distributors to take a deal that would hurt their business (Winer 4) quickly turned this vast and 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 strength had developed in the cold channel, something Quaker hoped to reverse. Quaker’s disregard for Snapple’s established channel structure certainly injured the brand, causing channel conflict that resulted in plummeting Snapple sales (with the distributors now relegating Snapple to secondary status). In order to successfully transition the Snapple brand to the Quaker infrastructure, the company needed to better manage 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 that was found to be quite profitable with Gatorade. This demonstrates Quaker’s evident lack of understanding and appreciation for the Snapple brand as the drink was seen as a ‘lunchtime beverage’, and was most often consumed in single servings. Thus, 32 and 64 ounce bottles were a mismatch with the purchasing and consumption behaviour of Snapple’s customers.

Had Quaker’s marketing executives been more scrupulous and less biased, they might have devised a more effective and appropriate channel strategy for Snapple. Unfortunately, from the start, improper treatment of channel and packaging issues doomed Quaker’s Snapple strategy. Quaker’s disregard for Snapple’s established channel structure certainly injured the brand, causing channel conflict that resulted in plummeting Snapple sales. In order to successfully transition the Snapple brand to the Quaker infrastructure, the company would have needed to better manage and retain the strong relationships that had been established with the distributors.

Despite the superficial probability of success there were a myriad of managerial missteps that plagued Quaker’s handling of the Snapple brand. Perhaps most significantly, Quaker failed to realize the obvious cultural differences between Snapple’s brand and their corporate positioning goals, and the importance of Snapple’s offbeat brand image to its success. This directly impacted the decisions that followed including correcting non-existing problems in promotion and distribution, wrongly applying 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 have made a success of Snapple unless it somehow distanced the parent company from the Snapple subsidiary and conducted business in an entirely different manner.

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nS Triarc successfully recovered the Snapple brand within just three years of stewardship, demonstrating a

clear passion and understanding for the quirky spirit of the brand, having already competed against Snapple with Mistic. Triarc was able to capture and overcome several of Quaker’s challenges and failures with the brand, which enabled the company to sell Snapple for a mass profit in 2000 at the price of $1 billion.

Blending the Brand with Corporate Culture

The Snapple brand was clearly incongruous with Quaker’s mainstream corporate culture. Triarc learned to embrace the original vision of Snapple which Quaker had failed to do, and the brand quickly returned to a highly profitable state. Quaker’s attempts to mold Snapple to fit its corporate image diminished the brand’s unique features and value. Peltz, Weinstein and Gilbert at Triarc took a different approach, recognizing that Snapple meant different things to different people (e.g. fun, fashionable, regular, quirky) - none of which Quaker cultivated.

The key to success was in remaining true to the brand’s culture. Triarc’s managerial team rehired Wendy Kaufman 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 included returning to the style and tone of advertisements, as well as reverting to the kitschy, cluttered style of the packaging.

Triarc executives remained true to Snapple’s core values ensuring its eventual success.

Due Diligence

Quaker approached the Snapple acquisition with a level of overconfidence, miscalculating the potential growth of the brand. Given their success with Gatorade, Quaker believed they had the formula for success in the beverage category without considering brand specific factors and the emerging competitive environment. Quaker needed another “win” product and erroneously thought that Snapple was the perfect match, 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 be mutually beneficial to both the Snapple brand, and the partners involved. This will not only improve the effectiveness of the distribution process, but also contributes to the image of the company as caring and good corporate citizens.

Quaker tried to fit Snapple into a textbook growth and marketing strategy which severely clashed with the core values and attributes of the brand. There are several takeaways from Quaker’s strategic failures in promotion, distribution and packaging, which Triarc can apply whilst developing a renewed growth plan for Snapple.

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Triarc Companies is an investment company with a long history of buying and selling troubled assets. Like other companies Triarc had taken over, Snapple was a company in distress when Triarc management took control of the once powerful brand (Funding Universe). Nelson Peltz, chairman and chief executive officer of Triarc, said in a statement “Our Strategy at Triarc revolves around our ability to acquire brands and combine them under talented management to deliver value to our shareholders. The acquisition of Snapple fits very well into that overall objective” (Turcsik).

Leveraging Rich Experience in Beverage Industry

Before acquiring Snapple, other beverage brands such as Royal Crown and Mistic were under the operation of Triarc. Experience with these brands gave Triarc a deep understanding of the beverage industry. Triarc turned Mistic into a strong, direct competitor to Snapple; the brand was also a leader in the new age beverage segment (Funding Universe). All this experience had enabled Triarc to know the new age beverage segment well.

In addition, the experience Triarc had from recovering Mistic applies to Snapple. “In August 1995, we bought Mistic,” said Martin M. Shea, Senior Vice President of Corporate Communications at Triarc. “We introduced new graphics, and through our marketing organization, with new marketing plans, we turned it around. We hope to use the same template for Snapple.” After acquiring the brand Mistic, which was suffering from a somewhat tarnished image, Triarc restored profitability soon after gaining control of the company. In doing so, the company demonstrated its talent for improving relations with distributors, its flair for marketing, and its shrewdness in developing new products for an established brand (Turcsik).

Using Previously Acquired Knowledge in Distribution

Triarc had used a similar distribution strategy as pre-acquisition Snapple for Mistic, gaining experience and relationships 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 the channels. Many of these distributors said they were so unsure of their future with the troubled Snapple that they were refocusing their efforts onto competitors, including Mistic (Businessweek).

Triarc can apply this knowledge of the cold channel distribution system and relationships with distributors where Snapple first found success, to relaunching the brand under their stewardship.

Management Experience

CEO 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. When distributors were unsure about Snapple’s future and began to sell other brands, Mistic became popular as Mistic had a strong promoter in Michael Weinstein. He was a popular figure among distributors (Businessweek).

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Brand Positioning Risks & Rewards

A strong brand positioning allows a company to create a clear and concise image of what a brand stands for. This also allows a company to strategically determine their target audience and provide a standard for their product. On the contrary, with customer demands and expectations constantly changing perhaps there is less risk to allowing customers to identify the brand themselves. Snapple must clearly examine the risks and rewards involved with branding versus allowing their customer’s interpretations determine who they are.

If Snapple chooses to leave their brand positioning up to interpretation there are a number of risks they face. Firstly, this may establish ambiguity and a lack of clarity as to what the brand stands for. Without this clear view of what they represent, unfavourable definitions may surface. “Positioning is the mental space that we want to occupy in the customer’s mind about the brand” (Joseph). By clearly understanding what your brand stands for it can then transfer to how you are perceived. This can help to avoid any negative connotations or unfavourable opinions customers create on their own. Consumers like to know what they are purchasing and purchase products that they can understand. They also are often unsure of exactly what they want until they are presented with it. It becomes easier to simply be told. If Snapple does not show evidence of understanding who they are themselves, then how can consumers truly grasp it on their own.

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Brand positioning helps consumers to understand, value, identify with, and ultimately own their product. A brand positioning model has been established indicating its importance. (Gram) This model indicates the possible risks that would coincide with allowing customers to establish their own meanings of Snapple. As previously mentioned, if a consumer does not understand the product they are less likely to follow the chain and value, identify with or frequently purchase it.

Establishing a clear brand positioning can result in brand loyalty and brand advocates. If what Snapple stands for is up to continuous interpretation it may discourage loyal Snapple users. This may pose a serious risk. Without a doubt, creating loyal brand users is desirable for continuous sales and predictable profits. If a customer consistently knows what to expect then they will feel trust and loyalty towards the brand. They know their brand represents a promise. Allowing the image and positioning to consistently change poses a threat that Snapple consumers will be confused.

A risk also lies in an unclear and ever-changing target market. This relates back to brand loyalty. Having a 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.

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There are also potential rewards for Snapple if they allow customers to make their own interpretations of what they stand for. This may allow them to stay hip and trendy with the ever-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 concise brand. In the fashion business, if what is popular is likely to change then it could become costly to continuously use funds to confirm this.

This alternative allows the customer to ultimately decide who they are. If consumers are determining who you are it saves the expenses of research and seeking to find who it is they want you to be. What better way to reach your consumers than to allow them to identify you as they please. Although of course this runs the risk of them viewing you in a negative manner. However, the nature of this alternative allows Snapple to remain very adaptable. They can respond almost immediately to what the customer is saying and how they are being viewed.

The alternative beverage category, and Snapple itself, represents an ambiguous category. They are identified as in-between in regards to health, taste and category. If the category is quite ambiguous then perhaps it is fair for people to view their brand as what it means to them. This in itself may act as a brand position. It coincides with what their brand represents as well as their varying flavours for varying palettes.

Snapple: A Fashion Brand

Mike Weinstein, CEO of Triarc Beverage Group explains that when it comes to Snapple, “we’re in a fashion 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 a brand that consumers can turn to: it provides an alternative beverage that consumers feel fashionable drinking. The all natural quality and quirky personality of the brand makes consumers feel like they embody some of that spirit by drinking Snapple. Like fashion brands, Snapple also faces immense pressure 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 mantra of “100% Natural” applies more to than just the product’s ingredients. Snapple is natural, real, personal and encourages diversity and individualism. The Snapple community is inclusive and irreverent. Ken Gilbert admits in the case that “Snapple users are very average, normal people but the brand helps them to think of themselves as offbeat” (Deighton 8). This brand has a clear and distinct personality and has established brand associations. The core values of the brand are relatable and shared by the loyal customer base of Snapple.

Fashion brands are characterized by trends, hype and perceived quality. The face an immense amount of scrutiny and criticism, much like Snapple does. Three core components of fashion brands are also held by the Snapple brand. These include a strong brand personality, brand resonance, and an emotional connection with Lovemark status. Consumer preferences change frequently and unpredictably, therefore strength in these key areas ensures that fashion brands and Snapple can still remain at the top of consumers’ minds.

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A strong brand personality increases the value of a brand. It can be a way to create a competitive advantage over other companies. By developing an essence, characteristics, and psychographic elements to a brand, it creates a persona that can be relatable. Consumers find it easier to connect to a personality than to a generic product. If a brand has personality, then consumers can start to build a relationship with that brand and emulate that personality. Consumers are able to express themselves through the brand’s offerings. Fashion brands are often aspirational in nature. They create a personality and lifestyle to which their customers aspire to achieve. For example, famed fashion house Chanel has developed a personality over the years that its customers desire to embody. The Chanel woman is classic, elegant, timeless and feminine. She is wealthy and carries herself with style and grace. She has a luxurious lifestyle and enjoys the finer things in life. The Chanel woman is fictional, however she is figure that women can aspire to be. Snapple has also been successful in creating a brand personality and community around its brand. Its consumers can relate to the quirky and offbeat nature of brand, and connect with the diverse and irreverent community. Snapple is edgy, unique, and outspoken. Wendy Kaufman as the spokesperson embodied the characteristics of the Snapple brand. She gave strength to the Snapple brand and put a face to the name. Wendy was relatable, inspirational and personable. This strong personality increases the 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 not good 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 establish deep and long-lasting loyalty with their customers. When a company is able to establish a relationship

between brand and customer, they are building trust and a meaningful connection. Fashion brands resonate with consumers at all levels of the brand resonance pyramid (refer to brand resonance exhibit/page #) However the strong brands lie at the top of the pyramid, establishing loyal relationships. Snapple holds a loyal customer base and has been successful in establishing these meaningful relationships. However, the brand has lost some of impact and popularity is declining. Snapple needs to find a way to stay at the top of the pyramid, strengthen ties to the brand, and provide value and meaning to consumers.

Finally, the emotional connection that fashion brands create with their consumers can sometimes reach Lovemark levels. Marketing agency Saatchi & Saatchi developed the concept of the Lovemark: brands that deliver beyond the expectations of consumers. They inspire, they reach the heart, and they are irreplaceable to the consumer. These brands establish deep emotional connections to their consumers and become an important part of their lives (Saachi & Saachi 2013). 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 the same without their favourite brand of jeans or shoes in their life.

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Snapple should aspire to have their brand reach this Lovemark status. Snapple can be a brand that 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 brand needs to reconnect with the consumers they lost and strengthen their image. The brand is beloved by many, and has potential to have high love, but it needs some more work to reach the Lovemark status.

Overall, Snapple exhibits similar characteristics to fashion brands in the ways that they both possess 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 value to their consumers. There must be something for consumers to connect with and a reason for them to choose Snapple over any other beverage in the market. Consumers often do not know what they want. Therefore Snapple needs to anticipate needs and shape what consumers want

in their minds.

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Refocus Efforts on Recovering Snapple’s Previous Brand Image

Triarc has already taken the right initial first steps ordering the Cultural Logic of the Snapple Brand report from Deutsch, Inc. This report allows Triarc to begin planning with a thorough understanding of the brand, consumers, and surrounding environment which is essential for finding success with the Snapple 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 and growth. The diluted brand image and eroded loyalty is a consequence of Quaker’s mainstream marketing and positioning strategy, and will need to be reversed in order to restore equity to the brand. Triarc should focus on reinstating the unique, quirky aspects of the brand in order to increase sales, rebuild profits and its consumer base.

Reinstate Independent Distribution Network

Acknowledge Quaker’s mistakes of pushing Snapple into the warm channel at the expense of cold channel distribution. Snapple is a product that is most often sold cold in single servings, in small retail channels rather than supermarkets. Triarc should focus efforts on rebuilding relationships for Snapple with 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 alternative beverage category. With a $0.3 billion wholesale value the warm channel is not a distribution channel that should be ignored, but should be tackled with a more measured approach that is appropriate for the brand, the company and the distributors.

Define & Communicate100% Natural Positioning

In order for Snapple to improve its branding, the company should return to it roots and revive its 100% 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 and has resulted in less trust and respect for the company. Triarc has the ability to revive the Snapple brand, through honest and transparent marketing initiatives. Going back to the authentic, real, and quirky 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 values are. The brand should not be left open for interpretation. This would present a risk of skewed perceptions 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. Snapple will only be successful if it leverages its strengths and explores some of the opportunities it has for expansion.

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Wendy Kaufman proved to be a strong spokesperson and personality for the Snapple brand. She was as sassy and outspoken as the brand itself. It is recommended that Snapple find a new spokesperson that is as authentic, real, and edgy as the original Wendy. Find someone that will connect with the target audience of Snapple and bring character back to the brand. A spokesperson will also give Snapple the ability to address the Quaker years. Instead of avoiding the marketing blunders of those years, a spokesperson could be used to talk about those years with a tongue-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 to what they want. It is essential that the brand reconnects with its consumers, and tries new methods of communication to stay ahead. Keeping a finger on the pulse of consumers will ensure that their wants and needs are met in a timely matter. Creating multi sensory experiences that go further than their expectations will help to make Snapple a Lovemark brand.

Overall, Snapple should go back to the original branding that made it successful. Innovate the original personality that Snapple started with. The brand can come back with an edgy, offbeat, and quirky splash that their consumers will love.

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