Examine Cadburys Schweppes plc.

University Degree Business and Administrative studies

Introduction

The organisation chosen to be examined in this report is Cadburys Schweppes plc. Cadburys Schweppes came into being in the late 90’s when the well known confectionary maker Cadburys merged with the high flying Schweppes Company who were the producers of many major brands of soft drink. This report will examine the channels of distribution and why they are so important to the organisation. The second section of this report will recommend a series of pricing strategies for certain products that come under the Cadburys Schweppes brand. The third and final task will then be to target two specific markets. The first of these two targets is the female market and the second being the senior customers.

Distribution channels and their role

The Cadburys Schweppes distribution channel comprises of bottlers, food distributors, retailers and finally the consumer depending on what product is in production. Dr. Pepper is a well established brand under the organisation with sales of 500 million cases each year. In order to achieve such sales the company must push their product through the distribution channels as quick as possible. One tactic employed to achieve this is what is known as intensive distribution. Intensive distribution aims to provide saturation coverage of the entire market by using all available outlets. Many product sales are directly linked to the number of outlets used. Intensive distribution is common in the food market with many goods being perishable, in the confectionary/soft drinks markets many sales are generated on impulse; that is to say that if the product is not there then the consumer will simply pick another.

Maintaining good relationships with the distributors is an important factor when it comes to distribution. Channel marketing is an important factor when creating relationships. Cadburys Schweppes make sure relationships are formed by arranging meetings between the senior level bottlers and bringing push and pull players together. This has been done in the form of a corporate sponsored event by inviting the bottlers, distributors and consumers. Another method used in maintaining these relationships are incentive programmes i.e. top performer programmes.

Another brand this organisation owns is Cadburys dairy milk. In recent times Cadburys has decided to re-band their chocolate, such that it all comes under the dairy milk brand, whilst also making the packaging a deeper shade of purple. Sales teams are then sent round to stores which sell Cadburys dairy milk so that they may arrange the product accordingly to give a large purple area on the shelves of the outlet, in the hope of dazzling the consumer into purchasing.

Pricing Strategies

Product, place, price and promotion are the four elements of the marketing mix. However, ...

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Pricing Strategies

Product, place, price and promotion are the four elements of the marketing mix. However, the only element that generates turnover is price. The other three elements all incur costs; therefore it is crucial for the survival of the organisation that the correct pricing strategies are implemented on their products to avoid problems. The most important factor to remember when pricing a product is the relationship between supply and demand; this must be at the forefront of the mind of anyone concerned with pricing strategies.

Cadburys Schweppes have many well established brands out there in the market place. The brands to be taken into consideration are Dr. Pepper, Cadburys dairy milk and finally Cadburys mini eggs. The first step to be taken when deciding what pricing strategy to adopt is to identify the competitors. In the case of Cadburys Schweppes the main competition comes in the form of Coca – Cola, the well known American soft drinks producer; Nestle, who also produce confectionary, and lastly another American company in the form of Pepsi Co. who again is another soft drinks manufacturer.

The next point to be made is the seasonal variations that take place with these products. This would result in each of these products having differing pricing strategies in different countries, or whether the product would be there at all i.e. in the case of Easter eggs there would possibly be a lower demand in an Islamic country. All pricing strategies are based upon two deciding factors, namely quality and price. Below is the pricing strategies matrix.

(Source: marketingteacher.com)

Of the three products that have been selected for analysis, the first is Dr.Pepper, which is a soft drink. Value pricing would be the preferred strategy for this particular product, as it allows the customers expectations to be met accordingly. For example, a person purchasing a Tesco own brand cola will expect less quality than if they were spending more on Dr.Pepper. It is important to remember that the correct price is the one which meets the customers’ expectations and provides value.

The second product selected is Cadburys dairy milk. The pricing strategy for this product would again be value pricing, along with some promotional pricing. It is my belief that this would allow consumers to experience a sense of value, whilst having added value from time to time from the promotional pricing aspect i.e. buy one get one free offers or fifty percent free etc. This would be ideal for the dairy milk product due to the fact that it is the main brand under Cadburys and is an ever aging product. Also this product would have much less of a seasonal variation than the other products but Christmas will be a peak time. New customers may also be attracted to the offers.

Cadburys Schweppes, Mini Eggs is the final product to be selected. This product differs from the previous two in the fact that it is specifically produced for Easter. When considering a pricing strategy for this product seasonal variations will have to be taken into consideration. Target pricing would be ideal in this situation because it allows for specific profit levels to be set, resulting in forecasts being produced to judge the revenue at differing prices. This means a break even analysis would have to be produced to calculate the preferred mark up. This strategy could be used in the weeks leading up to Easter. After the holiday, promotional pricing could be used to remove the product from the stores relatively quickly, which would then cut down on storage costs.

Capturing the female market

This campaign should also be based around the diet version of Dr.Pepper concentrating on the fact that it tastes just as good as the original. This would then give the consumer the idea that this product can be used within diets. To prove that it does taste as good as the original, it would be an idea to provide samples at supermarkets and shopping malls in all major cities. In addition to this there would be coupons in national newspapers to claim a discount on a two litre bottle. High profile displays in stores will attract the attention of the consumer. Television commercials featuring real life situations coupled with a sex symbol and the slogan “Just what the Dr. ordered”. This campaign would be aimed at females’ aged between 15 and 50 with separate commercials to target the As, Bs, C1s and C2s, Ds and Es. This would then allow the consumer to identify with situations that they would face in reality.

Capturing the senior market

In the UK senior citizens make up a large proportion of the population and with the country aging generally this market will become ever larger. In order for Dr.Pepper to succeed in this market the entire image of the product must be changed starting with the packaging to make it more appealing to the senior citizens. Again in this campaign there should be a situation to which the target market can identify. The actual advertisement should consist of one male and one female aged between 60 and 75, taking part in an activity such as golf on a hot sunny day. This then demonstrates the fact that they are both retired. The male and the female reach for the bottle of Dr.Pepper at the same point whilst at the driving range and start chatting and again the slogan “just what the Dr. ordered” appears at the bottom of the screen. This advert should then be screened at prime time in between soaps for maximum effect. This then coupled with adverts in the national press. Again displays should then be arranged accordingly in suitable outlets throughout the country, in order to capture the minds and imagination of the older customers. These displays should also remind the older generations of the “good old days” with the product suitably placed in the photograph. The target market for this campaign would be for anyone over the age of 55. A poster campaign could also be run to help with the message of Dr.Pepper; this would then result in a greater reach.

Conclusion

Cadburys Schweppes’ channels of distribution are important to the company due to the fact that a lot of the sales generated are directly linked to the number of the outlets they are sold in. This then bombards the customer with such products and, linked with the marketing strategy, this will generally induce sales. What is also important to Cadburys is their channel marketing, this means keeping good relations with the various channels of their product range.

The pricing strategy decided for Dr.Pepper was value pricing because it allows the customers ‘expectations to be met in accordance with the product. The second product to be taken into consideration was Cadburys dairy milk and the strategy decided was a combination of value pricing and promotional pricing. This then allows the consumer to have the value of the promotional pricing and hopefully appeal to new customers. The final product taken from the Cadburys Schweppes organisation is the Mini Eggs. The first thing considered had to be the seasonal variations involved with sales when devising a pricing plan. Target pricing was chosen along with promotional pricing, due to the fact that after a set profit level had been achieved, the promotional pricing aspects would allow the company to dispose of stocks and maintain sales. The “Just what the Dr. ordered” campaign would then hopefully communicate the message to the set target audiences of Dr.Pepper.

Bibliography and References