Innovation Innovation is important to both distribution channels, but more important to the finished goods model since the juice category has seen a decrease on both volume and market share. At the same time the carbonated soft drinks market has grown in both volume and market share. In order to increase the volume sold in the juice aisle a brand extension should be developed. By adding more SKU’s and promoting to the eight to twelve year old group, sales should increase and market share taken from both other juices and beverage categories should increase as well.
While increasing sales volume in the juice market is important to the brand, the real growth area is in the direct store distribution since the current market share is low, which leaves much room for growth, and the profit is much higher at 52.
7% versus just 16. 6% for finished goods. A major effort should be made to increase direct to store sales promoting the brand to teens, which is an expanding category and has the most room to increase sales volumes. Allowances and Advertising
Each distribution network has its own cost associated with brand innovation and must be able to support additional SKU by either paying additional cost of product placement fees or additional cost of media advertising. The finished goods network has additional cost of product placement fees displaying a pull marketing plan, while the direct to store has the need for additional media advertising, which represents a pull marketing strategy.
Both of these complement each other and work together to increase and already high brand awareness within the consumer.
The important question is how much of each. Currently, the Hawaiian Punch brand spends only six cents per case in advertising compared to its competition, which on average spends twenty-four cents per case. An increase in the advertising should be directed towards the direct to store model because of its high gross margins (52. 7%) and overall brand margin (41%). The additional focus and funds should be concentrated to the direct to store network advertising since the breakeven point is much lower than at $6.
M in sales to reach the same level of advertising spending (24 cents per case) as the competition