Tropicana Orange Juice Case

PROBLEM

Tropicana is the market leader of the orange juice (OJ) market. They offer a variety of juices, the most prominent of which is their Pure Premium OJ. Tropicana's primary issue is that in recent years, it has seen a decline in its market share due to the entrance of two competitors: Simply Orange and Oasis. An issue Tropicana faces in the introduction of new products is that they may cannibalize their existing products due to the variety seeking buying behavior of some OJ consumers. Current consumers have become increasingly health conscious, preferring less sugar and calories in their OJ. Tropicana's response to this trend was Trop50, a new product with 50% less sugar and calories than the Pure Premium line, however since Trop50 is in the introduction stage of the product life cycle, consumers may be unaware of these benefits. Tropicana has been the market leader for many years, and only recently have the promotional campaigns of its competitors hurt Tropicana's market share. The decision criteria Tropicana must consider while devising a marketing plan is its goal of increasing its market share by 1%.

ANALYSIS

A PEST analysis is great tool for analyzing the current market environment. From our PEST analysis in Appendix A, we have identified that social trend and economic conditions are key factors for Tropicana. For example, consumers have become attached to the Tropicana logo of the straw in the orange. A recent change in packaging, including a new logo, resulted in consumer complaints and forced Tropicana to reinstate their original packaging. Tropicana's operations may be severely affected by irregularities in the climate of the regions from which it imports its oranges. As Matt Schnarr discussed in the live case, the crop freezes in Florida that occurred within the past 5 years have lead to a reduction in the supply of oranges which have lead to increased production costs. He also said that in order to achieve a more consistent blend, 5% of the oranges that Tropicana uses are now from Brazil.

From the perceptual map presented in Appendix B, it is evident that Tropicana has the best tasting product in the market. Tropicana research has concluded that consumer taste preference is 60:40, meaning 60% of customers will prefer the taste of Tropicana compared to any other OJ on the market. This implies that the Simply Orange product does not taste as good, yet they still use a premium pricing tactic. Oasis on the other hand uses a market penetration pricing strategy to gain their market share. Oasis' marketing budget has been 20% more than that of Tropicana and has been successful in increasing its market share.

The ‘current' column of Appendix C presents the current division of the OJ market in Canada. The total Canadian OJ market size is $500million, of which Tropicana has a 56.5% share. The ‘current' column