Snapple Beverage Corporation

Snapple Beverage Corporation was established in 1972 by Lenny Marsh, Hymie Golden and Arnie Greenberg. Initially, it was called Unadulterated Food Products, Inc and dealt with the production and distribution of non-carbonated apple juice. It was renamed in 1992 after being acquired by Thomas H. Lee Company. The company has since mainly concentrated in the production of iced teas since the 1987. This paper will strive to investigate the desirability of the market of the company as well as isolate methods in which the firm can advance its strategies (Farris and Friberg, n.d.).

Market Attractiveness/Industry Attractiveness

The attractiveness of the beverage industry is exemplary. It is also a universal market and despite the fact that the industry has numerous competitors, it still has reaped a lot of benefits from its business. The main challenge met in this industry is the tide of health that opposes products that are argued to be unhealthy (Carnevale, 2013).

Target market and sustained competitive advantage

The one competitive advantage that Snapple has maintained is the production of non-carbonated beverages. In this regard, the company has been an option for those customers who prefer such products. These customers have been increasing for one reason. This is the statistic that most customers have altered their shopping behaviors to accommodate brands that are healthier. In this case, carbonated drinks have failed. Snapple has also ensured that all their raw materials are naturally derived hence producing more health friendly products (Farris and Friberg, n.d.). Based on its competitive advantage, the company’s target market is mainly the health conscious consumer of beverages. This is the main reason the corporation has been promoting its products as the healthy option.

Changes in the market

The Beverage industry has seen a lot of changes in the recent past. The most important (and obvious) changes have been the requirement for shelf life management, low-profit margins, product traceability, government quality regulation, improvement and demand for diversity. With this in mind, it has been impossible for the company to maintain a steady and selection of products. On the contrary, the company has been on the forefront in ensuring that each of the consumer requirements are mets (Metzler, 2014).

Trends in the beverage industry

There have been major trends in the beverage industry. Consumers have been noted to be looking for more expensive products. In every sector of the beverage industry, the more expensive brands have been increasing their sales while those of the less expensive ones are falling. Second, consumers tend to be spending more on healthier options.

Segmentation

At Snapple, customer groups are grouped on the basis of their age, economic capabilities and health. The company has had intentions of developing products for the young people and to ensure that such products will help to build on these customers to become stronger. The company has also developed various products that are very health conscious (Farris and Friberg, n.d.). These products are created for those customers who are health conscious.

Market research

Market research has served positively at Snapple. As consumers’ needs have been noted to be changing, so have the products of the company. The company has also been noted to alter the price of their products in consistency with the rest of the industry. This step is necessary to ensure that company can compete profitably in the market.

Beverage positioning

Notably, the company exists in a large and growing market. The company has therefore registered positive growth throughout its period of growth. With the changing trends, the company has become a favorite among many consumers. It however competes with many competitors who limit its productivity.

Porter’s Five Forces

Internal industry rivalry – high

There is heated competition within the industry. It would be very challenging for a new company to enter into the industry and immediately start making profits. All competitors must invest heavily in their systems to create a strong customer impression (Carnevale, 2013).

Entry – high

Entry into the industry is difficult. While there are no restrictions for joining the industry, the competition is forbidding (Carnevale, 2013). Moreover, existing companies are able to produce products at lower prices due to their economies of scale. This makes it challenging for fresh entrants to join the industry.

Supplier Power – low

The power of suppliers is not very forbidding. There are many suppliers that are eager to get new manufacturers to join the industry.

Buyer power – medium

The presence of many consumers in the industry places the consumer in an advantageous position. He can push for better prices by getting access to variety from which to select if his expectations of price and quality are not met (Crown, 1994).

Substitutes – high

The company’s products have many substitutes in the market.Consumers may opt to consume milk, carbonated drinks and unflavored drinks like water. All these goods are offered in the market (Carnevale, 2013).

SWOT Analysis

Strengths

Strong brand recognition  – The company is widely recognized especially in the local market

Management is experienced in the matters of the industry

A good relation with primary customers – the capability to meet customer needs has created a strong relationship between the company and the consumers.

Weaknesses

The company is considerably small compared to the main competitors, Coca-Cola and Pepsi

Lacks international exposure

Opportunities

Increased focus on health products is a promising market for the company

Recovering economy implies the promise of more disposable income and subsequent ability to purchase

Threats

The volatility of commodity prices could hurt the profit margins of the company. As companies compete, they create a need to lower the profit margins to become appear more attractive and customer friendly.

Consumer preferences are majorly unforeseen (Carnevale, 2013)

Recommendations

The company has been well advised to focus more on the healthy conscious product line. There is a lot of hope in this line of products. The company should also attempt to serve a wider market by expanding to more countries. If the company is able to get access to the more markets, its profits could rise. Moreover, the company should exploit its research teams to further ensure that customer needs are always met.

Conclusion

In conclusion, the company has been in existence long enough to compete with major competitors like Coca-Cola and PepsiCo. However, the presence of the company in the industry remains to be seen in the industry. The company has a lot of capacity in the future. If properly advertised, this capacity could be exploited even in the short-run. Most of the customers who exist in its line of products have moved to the company. There is, however, still room for improvement.

References

Carnevale, C. (2013). In The Beverage Industry, Don’t Overlook Dr. Pepper Snapple Group. Forbes. Retrieved 23 November 2014, from http://www.forbes.com/sites/chuckcarnevale/2013/10/25/dr-pepper-snapple-dont-overlook-this-beverage-contender/

Crown, J. (1994). Quaker’s big gulp snapple buy ultimate test for Smithburg. Crain’s Chicago Business. Retrieved 23 November 2014, from http://www.chicagobusiness.com/article/19941105/ISSUE01/100010848/quakers-big-gulp-snapple-buy-ultimate-test-for-smithburg

Farris, P., & Friberg, K. (n.d.). Snapple Beverage Corporation.

Metzler, K. (2014). Dr. Pepper Snapple Group Builds A Sustainable Distribution Center. Food Logistics. Retrieved 23 November 2014, from http://www.foodlogistics.com/article/10255602/drinking-up-the-competition