Principles of Marketing Management
Principles of Marketing Management
Atlantic Quench Cranberries Inc.
Atlantic Quench Cranberries Inc. (AQC) is an agricultural co-operative based in the United States. It was formed 80 years ago by three cranberry growers from Massachusetts and New Jersey. Florida grapefruit growers joined the co-operative in 1974. It is now owned by about 630 cranberry and 46 grapefruit farmers. The co-operative is justifiably credited with pioneering and developing the cranberry segment. It has become North America’s leading producer of canned and bottled juices and juice drinks, and has best-selling brand name in the canned and bottled juice category since 1981. It has also enjoyed great success in the UK.
Atlantic Quench is best known for its fruit juices but it also sells dried cranberries under the brand name Crantanas. Its product range is classified as either juice or non-juice drinks.
Examples of its juice product range include:
Cranberry Original Juice
Cranberry Mixed Juice Drinks
Juice Max – pure Juice
Grab ‘n’ Go – Single Serve
Examples of its non-juice drinks range include:
Cranberry Cordial Juice Drinks
New Dried Cranberries
The Cranberry Classic range includes juices and juice drinks with cranberry as the core flavour, including a light juice drink as well as a high juice cranberry cordial. In 2002, the co-operative launched the Cranberry Classic in a 250 ml can to target impulse buyers in the convenience sector. In 2003, Atlantic Quench increased its range of ‘light’ low calorie fruit drinks, which included cranberry and blackcurrant, cranberry and raspberry, and cranberry and mango. A white cranberry juice drink was launched in 2004 and was promoted as a sweeter and smoother alternative to the red cranberry juice drinks. In September 2004, the Cranberry Select Premium Chilled Juice Drink was launched in new 1.75 litre packaging, specifically aimed at the fast-growing chilled drinks sector. A cranberry and mandarin juice drink was introduced to the market in 2005.
Common Stock Equity Quota
There is a close working relationship between the farmers and the organisation. Atlantic Quench has to purchase all the crops that the farmers grow at the highest possible price, together with a dividend reflecting the profits of the Atlantic Quench brand. Although most of the farmers are small producers, their combined produce accounts for about two-thirds of the world’s cranberry harvest. However, each farmer has to commit to an annual quota of production under a scheme called the ‘common stock equity quota’. Farmers can be penalised if they fall short on the agreed quota allowing Atlantic Quench Co-operative to redeem (buy Back) share equal to the shortfall, at the original issue price enabling them to reallocate the quota. For example, the share issue price was $25, equal to one barrel of cranberries, although the current market value is closer to $250 per share. This arrangement instils discipline, not always present on co-operatives, and is likely to have contributed to the organisation’s success.
The co-operative has not been without its problems. The market for farm produce is volatile, reflecting changes in climate as well as market trends. As such it is often difficult to predict harvest yields. Overproduction in 2000 resulted in the price of raw cranberries falling from over $60 a barrel to under $20. Atlantic Quench responded to the volatile market by reducing its advertising and marketing budget. In addition to cutting back on expenditure, the co-operative paid the farmers $12 a barrel instead of the $18-a-barrell market price. As a result the relationship between the management of the co-operative and the farmers deteriorated, and the farmers exercised their power as shareholders of the co-operative by voting out four successive Chief Executive Officers (CEOs) between 2000 and 2003.
When Chuck Berrie was appointed CEO in 2003, his immediate priority was to discuss with the farmers whether or not a co-operative approach to managing the business was still an appropriate and preferred option. The CEO had previously spent six years working for another co-operative as Chief Marketing Officer at Welch Foods Inc. During those six years he had contributed to doubling the market share of the organisation. According to Berrie, ‘The beauty of being a co-op is not being judged by quarterly results, but by generations passing on to the next generation.’ Indeed, many Atlantic Quench farmers are third- and fourth-generation owners and one is seventh-generation.
Berrie spent many weeks debating with the farmers, discussing the advantages and disadvantages of remaining as a co-operative. At the same time a buyout offer was presented by Coca-Cola. The farmers voted to reject Coca-Cola’s offer, choosing instead to support Berrie’s vision of a more focused Atlantic Quench that would stay independent. The business plan proposed by Berrie was to retain the successful aspects of the old Atlantic Quench, such as the juice making and innovative new-product efforts, whilst handling over the logistics.
By actively seeking the views of the farmers, Berrie has managed to improve the profitability of the co-operative and also win back their trust.
In 2007, Atlantic Quench and Coca-Cola implemented a long-term strategic alliance in which Coca-Cola North America markets, bottles and distributes single-serve cranberry juice products in the U.S. and Canada under the Atlantic Quench name. The agreement also includes opportunities for the development of the new product innovations across multiple trade channels in the future.
The strategic alliance was viewed as a positive move by both organisations. ‘This is a chance for both Coca-Cola and Atlantic Quench to turn up the dialogue on the health benefits of cranberries,’ said Mary Moore, president and CEO, Coca-Cola North America. ‘Over the past several years, we have built successful, mutually beneficial partnerships with strong brands like Robertsons and Costa, and now we plan to work side-by-side with Atlantic Quench to create a major healthy refreshment business focused on cranberries. When people think of cranberries they think of Atlantic Quench ’
Atlantic Quench President and CEO Chuck Berrie stated ‘As the Atlantic Quench co-operative moves to build its brand, we are seeking out alliances to reach consumers more broadly and powerfully than ever before.’
The UK Market
In 2013 Atlantic Quench signed a licensing agreement with Gerber to manufacture, distribute and market juices and juice drinks under the Atlantic Quench brand in the UK. Gerber is the largest supplier of private-label and branded fruit juice and juice drinks in the UK, with sales exceeding 800 million litres per year.
Atlantic Quench has been very well received by the UK market and has also negotiated three successful contracts with the three largest supermarket groups in the UK to sell all of its product lines.
New Product Development
Atlantic Quench’s creativity in new product development (NPD) has been a contributory factor to the organisation’s success. After encouraging supermarkets in the US to add juice aisles in the 1960’s, Atlantic Quench developed juice boxes, including low-calorie cranberry drinks, and white cranberry juice. Crantanas, the dried fruit snack made from husks that used to be thrown away but are now reinfused with juice, have proved to be very popular too. Other product variations include chocolate-covered Crantanas, ready-to-drink mixed flavoured juices and an energy juice drink called Cranzeal. Atlantic Quench enjoyed annual sales of around $1.7 billion in 2007, of which Crantanas accounts for £150m (source PR Newswire). Sales of this product have doubled in the last two years and are expected to double again over the next ten years.
Cranberries have been promoted for their healthy qualities and for many years Atlantic Quench has had a virtual monopoly in the niche market for cranberry products, However, the growth of blended cranberry juice products and the growing consumer interest in superfruit juices (i.e. ones that are claimed to carry large amount of nutrients and antioxidants) has resulted in a more competitive market environment. More recently, other superfruits such as pomegranates, acerola, gogi and acai berries have been introduced to the market, contributing to a 20% growth in fruit juice sales. The increased awareness of, and interest in, healthy living, has led to other competitor organisations entering the beverage market, offering juice drinks including superfruits. Brand loyalty towards blended cranberry juice products has become less pronounced.
It has been argued that Atlantic Quench was late to respond to this market trend, but it has now produced cranberry blends that include pomegranates and acerola. According to Bokaie 2007 ‘the healthy juice arena has become a much more emotionally engaging, taking care to ensure the brand personality does not become dominated by an overly medicinal approach, even if it does have a credible health claim.’
One of Berrie’ main challenges was to introduce cranberries to a whole new generation of consumers. Concern about carbohydrates, calories and obesity created issues for the making of juices. As cranberries in their natural form contain almost no sugar, Atlantic Quench was able to introduce sweetners without watering down flavour. In order to target dieters, it developed a five-calorie drink (Diet Cranberry Quench and Diet Orange Tang) that contains only 7% cranberry juice.
In the UK there is an increased demand for fruit juice, fruit drinks and health drinks resulting from a greater interest in a healthy lifestyle and the importance attached to eating a variety of fruit and vegetables daily. The juice sector is increasingly gaining market share from the carbonated sector, which is declining in popularity and has a poorer image among consumers.
In addition to benefiting from the positive and healthy image of its merchandise, Atlantic Quench is also well placed to respond to the increased demand in the market for convenience drinks. When impulse buying, consumers will often choose to purchase fruit juice drinks in preference to confectionery, which is regarded as a less healthy option. Convenience juice drinks are also popular with sports men and women who are looking for a quick and healthy option to restore fluids and energy following exercise.
Nutritional standards in British schools
Mintel reports that trend towards healthy eating has been a key driver behind growth across all channels, as better-informed consumers have taken greater interest in the nutritional content of what they eat and drink. This is particularly true for school children, for whom new nutritional standards were introduced in the UK from September 2006. The standard states that school lunches should be free from crisps (potato chips), chocolate and other confectionary and pupils are to be served a minimum of two portions of fruit and vegetables with every meal. Schools are expected to end the sale of unhealthy snacks and drinks (notably carbonates) in vending machines and snack shops. Changes to standard governing the sale of food and drink in schools have favoured fruit juice and juice drinks at the expense of carbonates and vending machines being restocked with healthier alternatives.
Health has also driven much of the NPD as manufacturers have responded to changes in rules governing the nutritional standard in schools. Manufacturing have responded to the changes with a wide range of new and reformed juice and juice drink products targeted specifically at in-school consumption. An important focus of NPD has been functionality, notably with the addition of omega-3 to the ingredients used in the juice drink sector. Manufacturers have introduced new and improved juice drinks formulations with a higher juice content and fewer additives. More functional and fortified juices and juice drinks have been introduced, focusing on omega-3, anti-oxidants and the heart’s health. Many of these are also targeted at the children’s lunchbox sector within the grocery channel – a sector that can expect to receive a boost as the government widens its emphasis in improving the nutritional balance of packed lunches.
Mintel has also indentified the fact the non retail sales have enjoyed above average an estimated 76% between 2001 and 2006, as licensees have begun to focus on the opportunities offered by the healthy eating trend and changes in consumer behaviour. In addition, vending in leisure, hotel, restaurant and catering sector is taking an increasing share of sales as suppliers benefit from changing consumer tastes.
According to the Mintel report ‘Snacking on the Go-UK’ Market intelligence, April 2006, three quarters of adults snack on the go (i.e. while travelling or moving around), creating more than five billion adult on-the-go snacking occasions each year in the UK, which Mintel estimates generates £3.6 billion in retail revenue. One in three adults snack because they are on a journey, while half snack on the move because of work pressure. Longer working hours and shorter lunch breaks increase the demand for convenient snacks as many workers try to compensate for missed meals.
The trend towards healthier eating means the snackers are increasingly likely to pay attention to the nutritional value of what they are buying. On-the-go snackers are key targets for juice and juice drink manufacturers such as Atlantic Quench, since some of these products combine hydration with health. Single-serve juices, whilst the increasing availability of higher juice content juice drinks is improving the health credentials of the segment.
Innovative approaches to packaging have been adopted to stimulate interest and increase the appeal of Atlantic Quench’s product range. Products are packaged using recyclable glass, cans, cartons or polyethylene terephthalate (PET2) plastic bottles so that they can be recycled, and carry the ingredient and nutrition information on the side panel of the label. These features, together with the launch of slimline cans aimed at the convenience sector, have proved to be popular with consumers.
Atlantic Quench has considered responding to the five-a-day campaign by informing consumers with on-pack messages that their products are equivalent to one of the five recommended daily portions of fruit and vegetables.
Atlantic Quench has combined humour, health benefits and the American heritage of cranberry in their recent US promotions. As research continues to support the health related benefits of cranberries, Atlantic Quench has been keen to promote this through creative advertising. The campaign, which is currently used on television and in magazines nationwide, aims to inform audiences of the benefits of cranberry juices.
Industry reports indicate that the advertising campaign is performing extremely well with consumers. The initial advertisements appeared in the top two percent of all advertisements ever tested by Milward Brown, a respected industry research company that measures consumer response to advertising. According to Atlantic Quench, the campaign has also been bolstering sales of products across all of its business divisions, with a six percent year on year growth of the Cranberry Juice drinks.
More recently, Atlantic Quench has featured new Diet Atlantic Quench Juice Drinks in their advertisements, which embody a simple and sincere humour. The advertisements have proved popular and were ranked fourth in Advertising Ages list of Top 10 Most-Recalled New TV Ads.
Television advertisements within the UK have included a campaign to promote the launch of the white cranberry drink. Other TV advertisements have focused on the love-hate relationship many women have with health and beauty advertising. The target market tends to be educated women between the ages of 30 and 45. The continued commitment from Atlantic Quench to advertising and NPD will play an important role in sustaining growth.
Annual Growth Figures.
Atlantic Quench has enjoyed strong annual growth. Key performance highlights include:
• sales growth of more than 7% per year for the last four years
• market share gains in nearly every competitive sector
• 26% increase in the consumption of Crantanas
• Fourfold increase in manufacturing capacity for Crantanas.
The fiercely competitive market for the production of juices and the entry of new suppliers means that it is becoming increasingly expensive, in terms of advertising and marketing, to launch new products. The fruit juice sector is heavily dominated by supermarket own brands, which are often seen as sugar free and therefore a healthier option to juice drinks.
In terms of percentage competitive market for juice and juice drinks is outperforming its European neighbours with both Germany and France experiencing far slower rates of growth between 2000 and 2005. In 2005, the German market was worth 8.82 billion Euros, 16% more than in 2000.
Mintel states that the strong interest in health has contributed to the above average growth of vegetable juice sector in Germany, although, vegetable juices still only account for 2.7% of the total juice and nectars segment. In sharp contrast to the UK, interest in healthy eating in the US has had a negative effect on sales of juice and juice drinks.
Research undertaken by Mintel indicates that the popularity of low-carbonated diets means that many weight-conscious US consumers have rejected juice and juice drinks with a high sugar content in favour of bottled water or other low-calorie soft drinks. Manufacturers in the US have responded by introducing more light versions of juice drinks and juice drinks and juices with specific functional properties, such as added fibre or stanol esters for heart health.
Soft drinks and fruit juices are an essential product and the sector is experiencing major growth. Market analysts believe that this trend is set to continue. Market projections indicate that there is no sign of any future decline in the demand for convenience health drink products, especially if the health credentials of the product can be proven.
Consumers are increasingly seeking natural and healthy options. Atlantic Quench has the opportunity to target consumers who are seeking an alternative to the high sugar content, which naturally occurs in most fruit juice drinks. There is also the opportunity for growth in the sale of drinks made fresh pressed juices and smoothies (thick cold drinks blended fruit juices with yoghurt or ice-cream), where the market remains relatively immature.
Atlantic Quench believe that consumer health will continue to drive future trends. The 5-a-day fruit and vegetable campaign, on-going media coverage of high levels of obesity in Europe and an anticipated focus on healthier lunchboxes for children, all mean that health will continue to be a strong influence on the choice made by consumers.
As changes to advertising rules make marketing to children more difficult, parents will increasingly become the target. This in turn is likely to contribute to further growth of ‘better for them’ juice and juice drinks, as manufacturers compete for parents’ purchasing capacity on health grounds. Parents are still key purchasers of juice and juice drinks, with manufacturing increasingly targeting time-pressed parents who have to prepare lunchboxes. Parents retain the upper hand when it comes to choosing what their children eat and drink, with over half of ABC1 parents agreeing that children should eat what they are given and only one in five saying that they find it difficult to say no to their children. AB parents are more likely to enforce their own choices on their children, with the tendency to give in to ‘pester power’ (i.e. children’s demands) rising significantly as affluence decreases.
The population of 15- 24 year olds in the UK are the heaviest consumers of juice and juice drinks. The market has benefited from growth of almost 10% in this segment between 2000 and 2005. Between 2005 and 2010, this age group will see further slow growth of 3.2%. Children’s drinks are an important area of growth within the juice and juice drinks market. A downward trend in the birth rate led to a 3.5% decline in the number of under 14s between 2000 and 2005. A recent upturn in the number of live births will moderate the decline to 2010, with the number of under fives set to increase by 2.2%. The 45-54 year old group is set to see the greatest growth between 2005 and 2010. Usage of fruit and vegetable juice is slightly above average among these consumers. The successful targeting of this expanding cohort could eventually lead to greater consumption among older consumers.
Case study was adapted from CIM examination past paper 2008
Based on your knowledge of marketing strategy produce an outline marketing plan for the next year for Atlantic Quench.
Your marketing plan should focus on customer attitudes/trends and market growth; therefore segmentation and positioning will be important within your plan
Your plan should also include the application of a range of models theories and concepts from the Principles of Marketing Management course content.
Supporting information can be found in Mintel and Keynote, these databases can be sourced via the online library.
Word Limit: 3000 (+/- 10%)
Examine the learning outcomes (a,b,c,d,e,g,h)
LERNING OUTCOMES*: (Max of 10)
Knowledge and Understanding
a) Appreciate and integrate the value of the analytical tools and techniques available to marketing professionals when evaluating the marketing environment and developing marketing strategies;
b) Demonstrate and evaluate the vital necessity of focusing on the customer and the marketplace as the foundation of marketing planning;
c) Critically evaluate the marketing mix of an existing organisation contrasting application to theory;
d) Propose and present an outline marketing plan;
e) Critically appraise tactical marketing decisions based on situation analysis and in line with strategic marketing plans.
f) Exammine and appraciate the tools of Strategic marketing and apply in practise within a global context
g) Explain and appraise marketing concepts, theories and models clearly and apply these critically to existing organisations;
h) Concise dissemination of information relating to investigative actions required for a coherent marketing plan;
i) Produce a written report following academic convention that synthesises clearly theoretical perspectives and distinguishes between conceptual frameworks which focuses on a practical marketing plan application for different scenarios
Mode of working
This is an individual assignment. The University of Northampton policy will apply in all cases of copying, plagiarism or any other methods by which students have obtained or attempted to obtain an unfair advantage.
Format for the submitted work
The assignment should be written for a business audience and presented appropriately in a report format. The word limit is 3000 words (+/- 10%). Harvard referencing must be used throughout.
You must submit your assignment electronically.
You will receive an email confirmation and the system will record the date and time you submit. In the unlikely event of work getting lost, the receipts will show that work has been submitted. Without a receipt there is no evidence to show that the work has been undertaken, and you may be given a “G” grade.
All e-copies must be sent by 11:59pm of the deadline day.
An area to submit your assignment will appear on NILE as the assignments become available.
Grading / feedback guidance
The table at the end of this document serves as a general grading guide for students to assist in the self-assessment of their work. Lecturer feedback will also include specific remarks on strengths and aspects for improvement as well as overall comments on the assignment as a whole.
This assignment carries a weighting of 60% for The Principles of Marketing Management module.
GRADE CRITERIA: Level 6
An outstanding Distinction An exceptional first A+ Work which fulfils all the criteria of the grade below, but at an exceptional standard.
A very strong Distinction A good First A Work of distinguished quality which is based on a rigorous, comprehensive and detailed knowledge base, including awareness of the provisional nature of knowledge and its theoretical, ethical and conceptual dimensions, together with its wider context and implications.
Work will demonstrate sustained ability to engage in analysis of new/abstract data and situations, synthesise data and concepts to design novel solutions, critically evaluate evidence and its contradictions, and confidence in application to define and propose resolutions to complex problems relevant to the field of study or assessment task. This will be the basis for authoritative arguments and judgements and work which meets professional standards in relation to a full range of key skills.
There will be strong evidence of competence across a range of specialised skills using them to plan, develop and evaluate problems solving strategies, to challenge received opinion and develop reflective judgements and reports. Clear evidence of capability to operate autonomously with minimal guidance in complex and unpredictable contexts using a wide range of innovative and standard techniques will be demonstrated. Outputs will be communicated effectively, accurately and reliably.
A clear Distinction A First A- Work of very good quality which displays most but not all of the criteria for the grade above.
A Distinction A high upper second B+ Work of highly commendable quality which clearly fulfils the criteria for the grade below, but shows a greater degree of capability in relevant intellectual/subject/key skills.
A very strong Merit A good upper second B Work of commendable quality based on a strong comprehensive/detailed knowledge base for the field of study, including an assured grasp of concepts, principles and major theories, and demonstrating some awareness of the provisional nature of such knowledge and understanding together with its wider implications. There will be evidence of considered and confident analysis of new/abstract data/situations, synthesis of data/concepts, critical evaluation of evidence and effective application of knowledge skills to address complex problems. The ability to work effectively within professional contexts with minimum direction to meet objectives and take responsibility for quality of outputs and criticize them will also be evident. There will be evidence of capability in all relevant subject based and key skills, including the ability to self-evaluate and work autonomously with minimal direction to use effectively a range of innovative and standard techniques in complex and unpredictable contexts.
A strong Merit An upper second B- Work of good quality which contains most, but not all of the characteristics of the grade above.
A clear Merit A high lower second C+ Work which clearly fulfils all the criteria of the grade below, but shows a greater degree of capability in relevant intellectual/subject/key skills.
A Merit A good lower second C Work of sound quality based on a firm detailed/comprehensive knowledge base for the field of study and its developing and provisional nature, including a good grasp of current theories and issues both abstract and practical, together with the ability to organise and communicate effectively. The work may be rather standard and limited in its insight/theoretical grasp or depth, but will be mostly accurate and provide some evidence of the ability to analyse the new or abstract, synthesise data/concepts, critically evaluate and apply appropriate methods/techniques, with minimal guidance. There will be no serious omissions or inaccuracies and there will be capability in professional contexts. There will be good evidence of ability to take responsibility for own learning, some capability to challenge received opinion and make use of a range of resources to form judgements. Evidence of the ability to operate with autonomy in complex and unpredictable situations, selecting and applying appropriate techniques will be demonstrated within limits. There will be competence in relevant key skills.
A very strong Pass A lower second C- Work of capable quality which contains some of the characteristics of grade above.
A strong Pass A high third D+ Work of satisfactory quality demonstrating a reliable knowledge base and evidence of developed key skills and/or subject based skills, but still containing limited evidence of analysis, synthesis, evaluation or application, or of appropriate detail or skill application.
A Pass A good third D Work of broadly satisfactory quality based on a knowledge base which is coherent and of appropriate depth/detail for the field of study, including an awareness of current theories and issues and some key theories, appropriately presented and organised. However work will be primarily derivative, with limited evidence of autonomous/creative analysis, synthesis, and evaluation or application. Although there will be limits to knowledge and intellectual skills, such that work may contain omissions, there will be some evidence of an ability to deploy established techniques of analysis and enquiry, sound conceptual understanding and capacity to manage own learning and communicate effectively and appropriately. There will be some evidence of operating with autonomy in predictable contexts, but less evidence of ability to operate in more complex or unpredictable situations. However, an ability to select and apply a variety of standard and possible innovative techniques, and to meet threshold standards of competence in relevant key skills, will be demonstrated.
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