Snapple Beverage Corporation - PowerPoint PPT Presentation

1 / 39
About This Presentation
Title:

Snapple Beverage Corporation

Description:

Long run and short run decision-making processes (Grimm) ... it up: Snapple commercial encourages fruits to get naughty, blend and experiment. ... – PowerPoint PPT presentation

Number of Views:1180
Avg rating:3.0/5.0
Slides: 40
Provided by: unkn498
Category:

less

Transcript and Presenter's Notes

Title: Snapple Beverage Corporation


1

Snapple Beverage Corporation

Hoover, Martin, Baloney, Benham and Grimm
2
Outline
  • Ceteris Paribus Factors of Demand and Supply
    (Martin)
  • Price Elasticity (Martin)
  • Income and Substitution Effects (Baloney)
  • Implicit and Explicit Costs of Production
    (Baloney)
  • Opportunity Cost (Hoover)
  • Goals and Constraints of the Firm. (Hoover)
  • Snapple facts (Benham)
  • Resources land, labor and capital (Benham)
  • Advertising Strategies (Benham)
  • Perfectly Competitive Markets (Grimm)
  • Long run and short run decision-making processes
    (Grimm)

3
Snapple Facts
  • Originated in 1972 as the Unadulterated Food
    Corporation.
  • Marsh, Golden, and Greenberg.
  • Pure fruit drinks were the first products sold in
    Greenwich Village, New York.
  • Currently there are over 30 different flavors.
  • Named after a carbonated apple soda.

4
Did you know?
  • Consumers drank over a hundred fifty million
    gallons of Snapple in 2000.
  • If all the Snapple bottles consumed in a year
    were laid end to end they would circle the world
    four times.
  • Snapple trademark was purchased for 500 from a
    farmer in Texas. Today that trademark accounts
    for over 1 billion in retail sales.
  • The Snapple trademark is currently owned by
    Cadbury Schweppes.
  • Top five selling flavors 1) Lemon Tea 2) Peach
    Tea 3) Diet Peach Tea 4) Kiwi Strawberry 5) Diet
    Lemon Tea

5
Resources of the Snapple Corporation
Resources The land, labor and Capital used to
produce goods and services Land The physical
space on which production occurs Labor The time
human beings spend on producing goods and
services Capital long lasting tools used in
producing goods and services Human Capital The
skills and training of the labor force
6
Labor
  • Snapple employs over 54,000 people
  • The average worker spends from 845-445pm Monday
    through Friday

7
Land
  • Snapples Physical Plant is located in White
    Plains, NY
  • Snapples conglomerate, Cadbury has
  • locations all over the
  • globe.

8
Physical Capital/Human Capital
  • Physical Capital consists of the actual buildings
    in which Snapple is produced, bottled and
    distributed from.
  • Human Capital consists of the training and skills
    workers have.

9
Advertising Strategies
  • New Ad campaign costs Cadbury 33 million
  • Sex Sells Snapples goal to be more appealing
    in the 18-24 age range
  • Introduction of new products
  • Concert series

10
Advertisements
  • Mix it up Snapple commercial encourages fruits
    to get naughty, blend and experiment.
  • New sports theme appeals to
  • pre-teens and make the whole
  • family laugh

11
The Elements
  • all-natural, herbally enhanced fruit drinks
  • fruit flavors to help consumers refresh their
    natural resources
  • "The success of the Elements line has topped even
    our highest projections, with sales for the first
    twelve months expected to exceed five million
    cases, it is the most successful new product
    launch in the history of premium beverages" Ken
    Gilbert, senior vice president, Snapple
    marketing.
  • Newest Additions
  • Sky For Stamina
  • Attitude Passion Fruit Drink, packed with
  • Endurance

12
Liquid Action
  • Snapple is introducing a new line of 20-ounce
    beverages
  • The line of all-natural juice drinks, fruit
    drinks and teas target on-the-go consumers and
    will launch in the spring, a peak period for
    outdoor activity.
  • "Putting the best stuff' in plastic opens the
    door to new usage occasions for Snapple," said
    Neil Kimberley, brand director, Snapple.

13
Area 2 Concert Series
  • Xtreme sports, mountain biking
  • Artists Help to Endorse Snapple
  • David Bowie (Heathen in stores now)-
  • Moby (18 in stores now)-
  • Busta Rhymes (Genesis in stores now)-
  • Blue Man Group (Blue Man Group in stores now)-
  • Ash (Theres a star 2 (X4) in stores now)

Sells Snapple to the more xtreme Crowd
14
Is Snapple part of a perfectly competitive market?
  • Questions
  • How many buyers and sellers are there in the
    beverage market?
  • Does Snapple offer standardized products compared
    to the rest of the beverage market?
  • Are there barriers to entry or exit? Can
    outsiders easily enter and leave the market?

15
Buyers and Sellers
  • In a perfectly competitive market, the number of
    buyers and sellers is so large that no individual
    decision maker can significantly affect the price
    of the product by changing the quantity it buys
    or sells (pg. 216)

16
Buyers and Sellers (contd)
  • Snapple makes up 15 of the market (Snapple
    Website)
  • A change in output would only make a small
    difference in the total market output

17
  • Lipton (Pepsi-Cola)
  • Nestea (Coca-Cola)
  • Arizona Teas
  • Gatorade
  • SoBe
  • Mad River
  • Local
  • Turners
  • Schneiders

18
Standardized Product
  • Do buyers perceive a difference between Snapple
    products and other beverages in the market?
  • YES!
  • Snapple fails this test
  • Most consumers do notice a significant difference
    between brands of beverages

19
The Beverage Market Easy Entry
  • Can businesses enter on the same terms as firms
    already present?
  • No government restrictions
  • One of the fastest growing segments and many
    companies want a stake in this market
  • Snapple is part of a market that is easily
    duplicated

20
The Beverage MarketEasy Exit
  • Plant equipment is not highly specialized
  • However, problems may occur since the market
    employs a large amount of labor

21
  • Finally, remember that perfect competition is
    only a model that economists use to make
    predictions about consumer tastes, technology,
    and government policies.
  • Many economists believe that some markets come
    reasonably close to perfect competition. (pg. 217)

22
Short Run Decision Making
  • Firm has fixed costs
  • Q is when MRMC
  • Then, in the short run
  • If Total Revenue Total Variable Costs, the firm
    should keep producing
  • If TR
  • If TR TVC, the firm should be indifferent

23
Long Run Decision Making
  • Shutdown rule applies only in short run
  • In the long run, it exits the industry
  • Now there are NO fixed costs
  • If the firm shuts down, its costs will be zero
  • So...in the long run, a firm should exit the
    industry if it has ANY loss at all.

24
Price Elasticity
  • Elasticity is a measure of responsiveness.
  • It is how responsive a dependent variable is to
    changes in a independent variable.
  • Ex. Quantity Demanded vs. Price
  • ? Quantity Demanded? Price

25
Estimates of Elasticity
  • The Number and Closeness of Substitutes.
  • The Fraction of the Budget.
  • The Time Period.

26
In a perfectly competitive Market
  • There are a large number of substitutes.
  • The market would be perfectly elastic.
  • If you raised the price a penny, no would buy it
  • Snapple would not want to raise prices because
    consumers will choose a cheaper substitute.
  • Snapple would not want to lower prices because
    they would not be able to cover their operating
    expenses.
  • Snapple must take the price as given.

27
Snapple as a Price Taker
  • Snapples demand curve would be the same as the
    market demand curve.
  • Snapple would be a price taker.

28
What Snapple really is
  • Relatively competitive product.
  • Relatively elastic.
  • Absolute value of E is greater than one.

29
Ceteris Paribus Factors of Supply and Demand
  • Factors for Demand
  • Income
  • Prices of related goods
  • Tastes
  • Number of consumers in market
  • Expectations of consumers
  • Factors for Supply
  • Input prices
  • Prices of alternative goods
  • Technology
  • Number of suppliers in the market
  • Expectation of sellers

30
Income and Substitution Effects
  • When the price of a good changes two things can
    happen


31
The Substitution Effect a normal good
Substitution Effect
P
Q d
  • The Substitution Effect
    when the
    consumer substitutes towards a good which has had
    a price decrease and away from goods in which the
    price hasnt changed.

Q d
Purchasing Power
Leads to Increased Q d
32
Income effect
  • As the price of a good decreases, the consumers
    purchasing power increases, causing a change in
    quantity demanded for the good
  • Therefore, if the price of Snapple were to
    decrease then people would be more willing and
    able to purchase more Snapple.

P
Q d
Q d
Purchasing Power
Leads to greater purchasing power
33
The Explicit and Implicit cost of production
  • Explicit
  • Interest on loans
  • Rent paid out
  • Managers Salaries
  • Hourly Wages of Workers
  • Cost of raw materials
  • Implicit
  • Opportunity cost of production
  • Owners land
  • Owners money
  • Owners time

34

Oppurtunity Cost
The opportunity cost for buying Snapple is higher
than the cost for its substitutes.
35
Even though the opportunity cost is higher
people still choose Snapple

36
Goals and Constraints
  • 1 goal MAXIMIZE PROFIT
  • Constraints
  • Because of a relatively perfectly elastic demand
    curve
  • 1. If price increases goals wouldnt be met
  • 2. If price decreases operating costs wouldnt
    be covered

37

Constraints
  • Because of a relatively elastic demand curve
  • 1. If price increases goals wouldnt be met
  • 2. If price decreases operating costs wouldnt
    be covered

38
Win A Snapple!!!!
  • What conglomerate is the Snapple corporation a
    part of?
  • Where is Snapples production plant located?
  • Name a constraint to the Snapple corporation
  • Who are the men in
  • the picture drinking
  • Snapple?
  • (this is a free bee)

39
Questions
? ? ? ? ? ?
Write a Comment
User Comments (0)
About PowerShow.com