Situation Analysis- Tropicana Orange Juice

Nicole Kathman
MKT 309-07
I: Brief History of PepsiCo Inc. and Tropicana
The focus of this situational analysis is going to be on Tropicana Orange Juice. Tropicana Orange
Juice is owned by PepsiCo Inc., a publicly traded company that specializes in convenient foods and
beverages (Pepsi Co Inc.). The company was founded in 1965 with the merging of Pepsi-Cola and
Frito-Lay (Pepsi Co Inc.). This was the first of many expansions. In 1998, the largest of PepsiCos
acquisitions occurred with the purchase of Tropicana products from Seagram Company Ltd (1998
Milestones). In 2001, PepsiCo then merged with The Quaker Oats Company (Pepsi Co Inc.). The firms
products are available in more than 200 countries and territories and the company owns 22 brands that
have over $1000 million in retail sales annually (Pepsi Co Inc.; PepsiCo, Inc., 2013).
In the Annual Report for the Fiscal Year 2011, a statement made by current CEO Indra K. Nooyi
summarizes the companys current goals which comply very well with its mission. PepsiCo in its own
words strives to be the world's premier consumer products company focused on convenient foods and
beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and
enrichment to our employees, our business partners and the communities in which we operate. And in
everything we do, we strive for honesty, fairness and integrity (Our Mission and Vision).
As growth is a part of the mission, its also included as a company goal as stated by Nooyi. She
would like to see global expansion in the snack and beverage business which includes increasing
availability and sustainability (PepsiCo, Inc., 2013). Additionally, Nooyi sees a need to take advantage of
the high coincidence of snack and beverage consumption by grouping the two categories together
through presence and marketing (PepsiCo, Inc., 2013). The next area of focus she identified was the
development and expansion of nutrition products. Finally, as important for any firm, Nooyi mentioned
that well managed finances are a key to their future (PepsiCo, Inc., 2013).
II: Orange Juice and Tropicana Pure Premium
In the marketplace there are a large number of orange juice producers with Tropicana simply
being one of them. For many years, the Tropicana name has filled the shelves of grocery stores and has
done so with much success at the top of the market. In time period of year, ending September 2008, 279
million units of Tropicana Pure Premium were sold (Lazich & Burton, 2010).
III: Competitive Analysis
As PepsiCo Inc. holds an extensive product mix they also have an extensive list of competitors.
The focus of this completive analysis is going to be on orange as the product of focus is Tropicana Orange

Juice. There are three main players in in the world of orange juice: PepsiCo, the Coca-Cola Company and
Citrus World Inc. Coca-Cola has two major brands of orange juice: Minute Maid and Simply Orange.
Citrus World Inc. owns the famous brand called Floridas Natural (Co-Op History; Brands). In the
year 2010, PepsiCo with Tropicana held around 29.8 percent of the market share; Coca-Cola with Minute
Maid held 24.2 percent and Citrus World Inc. controlled 10.3 percent. The rest of the firms producing
orange juice were below one percent (Lazich & Burton, 2012).
To the common person, PepsiCo and the Coca-Cola Company are often thought of as identical
and essentially selling variations of similar products. However, that is not the case. A major strength of
PepsiCo is its extensive product breadth. Unlike the Coca-Cola Company, which is fully reliant upon the
beverage industry, PepsiCo produces snacks. When comparing which company has advantage in the
orange juice product category, Coca-Cola takes the space. Having two distinct orange juice brands Coca
Cola is able to reach a wider variety of orange juice consumers. For example, Coca Colas Simply Orange
reaches those consumers looking for a more premium product while their Minute Maid brand targets the
ordinary, everyday consumer. Despite PepsiCos efforts to differentiate Tropicana, without separate
brands, they might not have as prominent associations.
IV: Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis:
The Tropicana brand and its orange juice products have several strengths and weaknesses or
internal factors. Looking at strengths, Tropicana is a well known household name. The brand has been
around for a number of years, a characteristic often associated with quality or expertise. Another strength
is their extensive list of flavors and flavor combinations available despite ones initial association of
Tropicana with orange juice. A weakness of the Tropicana brand is that its stuck in the middle of the
pack in terms of perceived quality and price. This simply means that, although still at the top of the
market, Simply Orange is creeping in on the premium side while Minute Made is offering lower priced
products. Additionally, it is hard to distinguish Tropicana from other brands in terms of the products
themselves, which is a disadvantage.
The same opportunities and threats that influence the fruit juice industry, also impact Tropicana.
Right now, an increasing growth stage in the fruit juice industry has led to increased regulation by the
government especially in the areas of production and labeling (Kaczanowska, 2012). As a result of
increased regulations, firms and companies have to be cautious and comply to regulations in order to
avoid lawsuits (Kaczanowska, 2012). Another threat to this industry is that the taxability of beverages
varies from state to state as some states tax on beverages based on a measure of sugar content
(Kaczanowska, 2012). This method by some states is likely to turn customers away.
An economic factor having a high influence on the juice industry is per capita disposable income.
As one would expect consumers with a high budget on average are more likely to spend money on

extras such as juice (Kaczanowska, 2012). This creates an opportunity for the fruit juice industry being
that per capita disposable income is expected to slowly grow in the future. From 2012-2017, the expected
compounded growth is two percent (Per Capita Disposable Income). With the increase of healthconscious consumers, many are switching from soda to substitutes such as juices with more natural
ingredients and beverages with stimulants (Kaczanowska, 2012). This increase has provided huge
opportunities for the industry which resulted in a rapid growth over the past five years (Kaczanowska,
2012).
The year 2012 was filled with severe drought throughout the entire country. As expected, this
drought negatively affected fruit cultivation with decreasing output and fruit of lower quality (Maurer,
2012). Outside of the drought, orange growers in Florida have experienced an even greater obstacle:
disease infected orange trees. Not only do the disease infected trees result in manufacturers having to pay
more for the fruit, they also are the reason for consumers switching to less expensive substitutes.
V: Target Market
Consumers are the number one priority and establishing a target market allows for a producer to
focus its efforts efficiently and effectively. Demographics are often used to assess and identify the target
market. While investigating the population of Tropicana Orange Juice consumers, many patterns are
noticeable among categories such as gender, race, and education.
To begin, the target market for Tropicana Pure Premium Orange juice primarily consists of
African American women. Next, in terms of education, a likely candidate to consume Tropicana orange
juice is those individuals who have graduated college or have continued on even further. Other prominent
factors that are important to note include: age of 35-44 years, significantly high household incomes of
$150,000 plus, and a marital status of married. Additionally, although one might not think of occupation
when considering demographics, there is an identifiable dominant group of Sales and Office Occupations
for this product. All of the demographic information was obtained from MRI, which is a survey of 26,000
individuals (Fall 2011 Product). See appendix for table.
In addition to demographics, market researchers use psychographic profiles to find consumers to
market to. These characteristics are a challenge to research directly but one can infer user personality,
values, and lifestyles, by referring to preferences in TV programing and magazines. Patterns of favorites
found can be interpreted to conclude that consumers are plant friendly/outdoorsy, value business and
work, family oriented, like to travel, and are active, among many other characteristics (Fall 2011
Product). For example, magazines such as Fitness can signify being active or watching Animal Plant
shows appreciation of nature. See Appendix for a full chart of preferences and their significance.
In addition to the demographics and psychographics of Tropicana orange juice consumers,
another route worth investigating is the buying behavior profile or purchasing patterns. In August 2003, a

research report was published that summarizes trends of orange juice consumers in general. Although the
research was not specifically Tropicana, the research is still viable. The research was able to confirm that
as one would expect, when consumers buy orange juice, usually its for the occasion of breakfast
(Characteristics of U.S. Orange Consumption). Next, consumers seek the same benefits as oranges
themselves such as containing vitamin c and folic acid, but with the added gain of convenience and year
round availability (Characteristics of U.S. Orange Consumption). On a per capita basis, more orange
juice is consumed by residents of the Northeast region of the country and those living in urban and
suburban areas (Characteristics of U.S. Orange Consumption). To conclude, the majority of orange
juice is bought in retail stores and consumed at home (Characteristics of U.S. Orange Consumption).
VI: Marketing Mix
A.) Product Analysis
To Tropicana orange juice is more than just orange juice. The brand has a countless number of
varieties that differ based on factors from pulp content, calcium, and acidity. In 2009, Tropicana launched
a new orange juice variety with half the calories and sugar under product line called Trop50 (White-Sax,
2009). This addition initiated the expanded the orange juice industry and has been one of the many recent
undergoing changes of the Tropicana brand.
Competitive advantage in a market of such similar products determines success. Tropicana Pure
Premium has one particular edge over the competitor product of Simply Orange. Beginning in February
of 2012, Tropicana began to strictly use only Florida oranges. Unlike Simply Orange that contains the
juice of imported oranges as well (Zmuda, 2012). It seems that various individuals prefer to consume
United States products and those who are not as passionate are indifferent. Essentially, using 100 percent
Florida oranges can draw in the United States product users but will not turn indifferent consumers off.
In order to effectively grade or determine the quality of orange juice, the USDA in 1983
established standards. Determining the grade of orange juice takes into consideration a variety of factors.
According the system of the USDA, quality orange juice consists of a good appearance, no curdling,
standard meeting color, no defects, very good flavor, and no separation (United States Standard for
Grades of Orange Juice). According to these standards, it could be concluded that the Tropicana brand is
of high quality.
Tropicana Orange Juice is currently at the maturity stage in the product life cycle. Competition is
intense with the entrance of other public companies and private labels as well. For a mature brand and
product such as Tropicana Pure Premium Orange Juice, it is crucial to maintain brand reputation,
associations and recognition. Tropicana is managing at this stage by communicating the benefits and
positive aspects of the product that have always been there (Squeeze Play, 2009).

The brand offers a variety of sizes in order to meet the consumption needs of its consumers. The
Tropicana Pure Premium brand container sizes range from an 8-ounce carton to a 128-ounce pitcher
(Tropicana Pure Premium). In September 2012, a new family sized 89-ounce pitcher was introduced.
The container includes a handle, a flip cap, and is also clear in order to easily monitor the level of juice
left (Packaging News, 2012). Another special feature that is used to effectively market the product is
the classic Tropicana logo- the orange with the straw in it. This is truly a valuable asset to the company. In
2009, the company attempted to rebrand Tropicana by introducing packaging with a new design. It was a
complete failure, resulting in a 20 percent sales decrease compared to the same time period the year
before (Lee, Gao, & Brown, 2010).
B.) Distribution
The Tropicana website includes a video that summarizes the distribution process. An overview of
the process is as follows: First, Tropicana contracts with hundreds of groves in Florida. Then, trucks then
deliver thousands of oranges to Tropicanas two processing plants, located in Bradenton and Fort Pierce,
Florida. At the processing plants the oranges are weighed and then go through the juice making process.
At the plant, the oranges are also visually inspected and extracted. The juice is then pasteurized and
chilled. Finally, the packaging occurs at the plants where containers of various sizes are prepared for
shipping. From the processing plants, the juice is delivered either by refrigerated trucks or rail cars to the
three distribution centers across the country. The rail cars are fuel efficient and equipped with satellite
technology that allows for the monitoring of location and temperature inside. The three centers are located
in New Jersey, Ohio, and California. Regional distribution is practiced, but the facilities are not spread out
across areas equally. From there, the product is distributed to local retailers where customers come to
purchase the orange juice in an intensive fashion (How Tropicana Makes Juice).
In an industry of perishable products, its nearly impossible to perfect distribution. It is difficult to
keep the demand of the retailers in accordance with the availability of products or supply. There is one
main logistical problem with the process. The firm only manages a small percentage of inventory orders,
in fact only 10-20% of the orders at the New Jersey distribution center (Bladikas & Sengupta). Having a
program such as this in place means that Tropicana is knowledgeable of orders in advance and is able to
plan accordingly. Having retailers manage their own ordering can lead to unpredictability and random
orders. This can cause waste of product or untimely delivery.
C.) Promotional analysis.
Throughout the years, Tropicana has advertised and promoted its products in a variety of ways
and different Medias. Ranging from sponsoring the Broadway Tour of The Lion King by partnering in
TV, radio, and print advertisements in 2002 to a more recent campaign called Tap into Nature which
focused on communicating to consumers, the relationship between Tropicana and the growers and

highlighting that the juice is made from 100 percent Florida oranges (Zmuda, 2012; Reyes, 2002).
Tropicanas core brand emphasis and focus is in regards to forming associations from its brand from
family fun, to product purity and simplicity, and finally brand maturity
Tropicana focuses heavily on TV and print media. For example in 2005, $50 million was spent on
a mix of TV and print advertisement for its orange juice varieties alone (Thompson, 2006). Even though a
lot is spent in these two areas, PepsiCo realizes the importance of using other methods. These methods
include Public Relations and Internet and Interactive Media. For any organization Public Relations is
essential in order to establish a connection between consumers and the company. Tropicanas media and
Public Relations efforts are largely tied in with the other brands of PepsiCo. A portion of PepsiCos
website is dedicated to Media. On this section of the website consumers and the media can find press
releases, fact sheets, upcoming events, media relations contacts and more for all of PepsiCos brands
(Media).
In our ever increasing technology age, the internet and interactive media has started to have a
prominent role in promotion and advertising. The brand name is featured on many forms of social media.
There is a Facebook page in which the marketers do a great job of not only posting but interacting with
consumers especially their target market. There is a separate portion of the Facebook page called
TropiMomma which is a blog in which mothers can share advice. The brand also has Twitter and an
Instagram account. Finally, to interact with smartphone users, there is an ISO app called Tropicana
Breakfast Inspirations. The app includes a number of breakfast recipe ideas.
D). Price Analysis:

Size
12 ounce
59 ounce
89 ounce

Orange Juice Prices

Price
Simply
Tropicana
Orange
$1.25
$1.48
$3.48
$3.58
$4.98
$5.28

Price per Ounce

Simply
Tropicana
Orange
$.104
$.123
$.058
$.061
$.056
$.059

Competition and costs both affect the setting of my products price. PepsiCo is a company that
strives in looking for ways to cut costs in order to maintain competitive prices and raising prices to
consumers is not a decision easily made (US: PepsiCo to Increase Tropicana Prices, 2011). So in a
sense, competition lowers prices, as the case for many products. In terms of cost, higher costs can lead to
higher prices, but it is not always the solution. In 2011, Tropicana made the choice to increase prices by
between 4-8 percent due to the continuance of expensive oranges due to the small crop for a second year
in a row (Us: PepsiCo to Increase Tropicana Prices, 2011). It could be inferred that from the delay to

raise prices, unless increased costs are long term, prices are not affected. Finally, in terms of demand,
orange juice is a normal good. When demand decreases, prices fall. In fact, a 11 percent decrease in
consumption of orange juice from last season and an increase in supply has led to orange juice futures
being priced at a two and half year all-time low last May (Wexler, 2012).
VII. International Ramifications
The product of Tropicana orange juice is marketed and sold across the globe. It does not seem
that product itself goes through changes but rather the price and promotion. It seems that more physical
structures are used to advertise internationally. For example, in London in the year 2007, Tropicana
installed 3-metre high orange trees inside of a clear carton in London train stations (Orange Tree Offers
Juice to Travelers, 2007). Also, in London in the year 2012, Tropicana placed a giant sun in Trafalgar
Square with the light equivalent to 60,000 light bulbs to launch a campaign (Hit or Miss? Giant
Tropicana Sun Rises Over Trafalgar Square, 2012). Perhaps, this difference in promotion and
advertisement is due to the differences in advertisement customs and norms or difference in response to
various types of advertisement.
VIII. Comparison
Brand Comparisons

Tropicana
100% Florida Oranges
County Size A consumers
Census Region: Northeast
African American Target Market
Graduated College Plus Target Market
Mature Brand

Simply Orange
Imported Oranges
Higher Price
County Size B consumers (Fall 2011 Product
Census Region: West
White Target Market
Attended College and Graduated College Plus

Target Market
Existence since 2001 (Our Story)

APPENDIX
Target Market- Tropicana Orange Juice
Demographic Category
Dominant/Most Relevant Characteristic
Sex
Women
Education
Graduated College Plus
Age
35-44
Occupation
Sales and Office Occupations
Household Income
$150,000+
Race
Black/African American
Marital Status
Now Married

This chart below summarizes the inferred characteristic and what popular TV channels and
magazines of Tropicana Orange Juice consumers lead to that conclusion.
Characteristics

Heavy User Psychographic Profile

Examples of Favorite TV channels and

Planet Friendly, Appreciates Nature

Magazines that demonstrate this

Animal Planet, Discovery Channel, National
Geographic, Audubon magazine, National Wildlife

Value Business and Work

magazine, Planet Green

Bloomberg Television, Consumer News and
Business Channel (CNBC), Fox Business Network,

Family Oriented

The Economist magazine, Inc. Forbes, Fortune

Cartoon Network, Disney Channel, FamilyNet

Gardener

Television Network, Family Handyman magazine

Garden Design magazine, Gardening How-To

Likes Fitness/Active

magazine, Birds and Blooms magazine

Fitness magazine, Bicycling magazine, Muscle

Sports Fans

and Fitness magazine, Runner's World Magazine,

Sports Illustrated, Sporting News magazine, Golf

Traveler

Channel, ESPNU, The Tennis Channel

Travel Channel, Arthur Frommers Budget Travel
magazine, Conde Nast Traveler magazine, US

Enjoys Art/Contemporary Culture

Airways Magazine
Ovation channel, Elle magazine, Esquire magazine,
Smithsonian magazine, Life & Style Weekly,

Likes to be informed/Intellectual

Vanity Fair
Popular Mechanics magazine, Psychology Today
magazine, Reader's Digest, Scientific American

Gamer

magazine, Time, Popular Science,

Official Xbox Magazine, Game Informer

Movie Watchers

magazine, PC Gamer magazine

Hallmark Movie Channel, Flix channel, Lifetime
Movie Network (LMN), IFC (Independent Film
Channel)

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