- Executive Summary
Quench is a brand leader in the soft drinks industry. It was formed in 1998 and has steadily expanded its operations to become a global multi-million pound company. Over the years, its main marketing strengths have been competitive pricing, strong advertising campaigns and positive brand image. Its main market sector consists primarily of customers with sporty, healthy and clean living style aspirations. Quench sponsors several sporting events not only in Britain but worldwide. The Quench brand is associated with trust and reliability.
This case study provides an informed evaluation and analysis of the problems that faced the company in the financial year 2012-2013, and advices on possible solutions on how to deal with the crisis. Increased competition, recession and links with obesity are the main problems facing the company at the moment. Quench is trying to find solutions to correct the situation in order to regain customer confidence and profitability. Some of the proposed solutions include the creation and the institutionalizing of a quality and safety department that would monitor the sugar levels in the drinks and the carrying out of effective and improved marketing strategies.
- Problem Identification and Analysis
The decline in demand for the Quench soft drinks dropped not only as a result of increased competition and recession, but mainly because Quench was linked to obesity. A media investigation into the soft drinks companies and the use of sugar revealed that Quench soft drinks had one of the highest sugar levels in the industry. Obesity is now an issue of global concern and hence this finding was disastrous for Quench particularly given the profile of their customer base. The reduced demand and low sales can be attributed to the following factors:
2.1 Consumer awareness on the link between soft drink and obesity
The issue of obesity is now an issue of global concern and has had a detrimental effect on the soft drinks companies. A number of non-governmental organizations, civil societies and lobby groups are now spreading information with regards to the health risks of soft drinks (Blanding, 2010). These lobby groups have taken note of the fact that soft drinks have been found to be a major contributor to obesity among individuals and their consumption is on the rise (Appleton & Jacobs, 2011). These groups have also cited the fact that the children are the most vulnerable to obesity from the consumption of these sugary drinks (liquid candy). Groups such as the Action on Sugar in Britain have carried out campaigns to educate the public on the danger of soft drinks on their health.This is a challenge to the company given that many consumers will avoid purchasing their products. This will have a detrimental effect on their sales volume and their profit margins.
2.2 Increased number of studies on obesity
A number of studies have found out that soft drinks contain a high number of calories which are responsible for the weight gain among people. Studies have found out that people who increased their intake of sugary drinks gained more weight than those who did not. There is a significant link between sugary foods and weight gain among both children and adults (Appleton & Jacobs, 2011). These studies have also revealed that people who increase their consumption of soft drinks stand a higher risk of developing type 2 diabetes, heart attack and gout. With such findings, people are now becoming more informed of the risks posed by these drinks to their health and as a result keep away from them. Such studies would have a negative effect on the company’s sales.
2.3 Campaigns on cutting back on sugary drinks to help people control their weight
Concerted efforts of government agencies and lobby groups are pushing for people to cut their consumption of soft drinks so as to have a better weight control. Current research has revealed that the reduction of consumption of these sugary drinks can lead to a better weight control among those who were initially overweight (Fantuzzi, 2008, 4). For example, Public Health England has found out that most people are consuming sugary foods which lead to obesity. The agency is coming up with measures such as a sugar tax and a crackdown on advertising to tackle the problem of obesity (Press Association, 2014, 1). Such campaigns would have detrimental effects on the sales volume of Quench.
2.4 Increased competition in the soft drinks industry
Quench’s customer base mainly comprises individuals with the aspirations of sporty, healthy and clean lifestyles. The key companies in the market have made the competition for these customers much stiffer. Companies such as Coca Cola and Pepsi are the main competitors to Quench. The switching costs are relatively low given that a consumer can switch from one player to another without incurring costs (Marketline, 2014, 36). The entry of new players in the market would mean a reduced customer base for the company which would ultimately affect the sales volumes.
- Generation and Evaluation of Alternative Solutions
3.1 Investment in a quality and safety department
The media finding may have some truth in them and hence it would be an obligation for the company to invest in a quality and safety department to ensure that the products they churn to the market meet the required standards. Newer technologies should be incorporated to ensure that the products are thoroughly screened to ensure the permitted sugar-levels are not exceeded. The advantage of this solution is that it provides an assurance that the products would be of the accepted quality and safe for consumption. The disadvantage is that it is a very expensive venture and may result to lossesfor the company.
3.2 Carrying out consumer awareness on the current situation
It would be necessary for Quench to carry out consumer awareness campaign on the problem so that they know of the current situation. Information should be conveyed through all forms of media including the social media. Such a campaign would inform the consumers of the real problems to avoid instances of exaggeration by the media. The advantage of this solution is that consumers will get to know the facts of the issue rather than false information. The disadvantage is that a delay in the passage of this information would lead to loss of confidence in the company’s products.
3.3 Issuance of a public apology
Given that Quench’s customer base is mainly comprised of people wanting to lead healthy lifestyles, these revelations would make them lose confidence in the company’s products. Quench should admit to the manufacturing mistakes publicly and promise to continue producing quality. Such an apology would win back the trust of their consumers. A delay in the issuance of such an apology would result in lack of confidence in the products by the consumers.
3.4 Improved marketing to regain consumer confidence
Effective marketing strategies can include advertising and promotions, and positive brand imaging. Research has revealed that effective marketing strategies can be used to counter negative campaigns (Reynolds, 2014, 1). Effective marketing campaigns can go a long way in the growth and profitability of soft drink companies (Mullins & Walker, 2014, 5). Through effective strategies, the company would be able to regain the confidence and trust of the consumers on Quench’s products. The disadvantage of this solution is that it is time consuming and expensive.
- Recommendations
It is highly recommended that the company invests heavily in the quality and safety department to avoid a similar situation of bad publicity. The company’s management should set aside funds to aid in the employment of newer technologies to promote the quality of the products. Quench’s CEO should then spearhead a campaign to inform the public of the current situation and issue a public apology. He should also reassure the consumers that a similar situation would not be experienced again. Lastly, Quench should engage in improved marketing that would counter the negative publicity and regain the consumer’s confidence in their products. This would ensure a high demand for the products and also aid in the stemming of the growing competition in the market.
Works Cited
APPLETON, N., & JACOBS, G. N. (2011).Killer colas: the hard truth about soft drinks.Garden City Park, Square One Publishers.
BLANDING, M. (2010).The Coke machine: the dirty truth behind the world's favorite soft drink. New York, Avery.
FANTUZZI, K. (2008). Carbonated soft drink consumption: implications for obesity policy. Thesis (Ph. D.)--University of Connecticut, 2008.
JONATHAN LOWELL. (2004). The food industry and its impact upon increasing global obesity: a case study. British Food Journal.106, 238-248.
MARKETLINE.Marketline Industry Profile: Global Soft Drinks. September 2014. Marketline.
MULLINS, J. W., & WALKER, O. C. (2013).Marketing management: a strategic decision-making approach.New York, McGraw-Hill.
PRESS ASSOCIATION. "Sugar Tax' Needed to Curb Childhood Obesity, Say Experts." The Guardian.N.p., 22 June 2014. Web. 29 Nov. 2014. Retrieved from http://www.theguardian.com/society/2014/jun/22/sugar-tax-childhood-obesity-soft-drinks-junk-food
REYNOLDS, JOHN. "Soft Drinks Industry to Fight Obesity Accusations with Marketing Campaign."Marketing.N.p., 19 Feb. 2013. Web. 29 Nov. 2014. Retrieved from http://www.marketingmagazine.co.uk/article/1171273/soft-drinks-industry-fight-obesity-accusations-marketing-campaign
Reflective Statement
I have written a number of case studies before, but this one offered an exciting challenge. This case study was about the Quench that had lost its market position as a result of increased competition, recession and links of its products with obesity. At first I thought it was just like any other case study but I was mistaken. It was not a normal case study. The case entailed highlighting the problems, devising solutions and coming up with expert recommendations. Devising solutions was quite challenging given that they had to be evaluated in terms of their advantages and disadvantages.This demanded the use of my critical and creative thinking skills together with my research skills. I had to refer to previous cases on the same topic so as to have a bold idea of what was required. The case has greatly enhanced my research skills which I vow to use in my future cases.
