MANAGEMENT DECISION MAKING

Honest Tea is classified as a ready to drink (RTD) tea, which is apart of the liquid refreshment beverage (LRB) industry. Honest Tea is also owned by the Coca-Cola brand. While Honest Tea is a part of Coca-Cola, the two drinks are in separate industry segments as Coke is a (CSD) carbonated soft drink. Currently the CSD large market share is in decline in the LRB industry, as it has been in recent years due to health concerns and, more recently, the Soft Drink Tax. The Soft Drink Tax is a controversial tax that is being considered in numerous U.S. states. It would require consumers to pay an additional fee for beverages with sweeteners (The Case). The Soft Drink Tax has received a large backlash from big soda companies, including Coca-Cola. Coca-Cola’s involvement has incited a public backlash- consumers feel that the lobbying efforts are self-serving. With Coca-Cola publicly advocating against the tax, our brand is placed in the spotlight. Although Honest Tea is in the RTD tea market and not CSD like Coke, Honest Tea is categorized as a sweetened beverage under this tax (Philly). With Honest Tea’s main value proposition being that it’s much healthier than other LRB’s, this tax positions us as equal to unhealthy soft drinks, and threatens our brand’s image.

IDENTIFY THE MANAGEMENT DECISION PROBLEM*
? How can Honest Tea position itself within the industry as separate from other Coca-Cola products (our brand owner) in regards to the attention brought about by Soft Drink Taxes?
? With the increased media surrounding the Soft Drink Tax, and our affiliation with Coca-Cola, Honest Tea needs to ensure that as a brand we are perceived by our values of “great tasting, healthy, organic beverages.” (Our Mission) The soft drink taxes circulating legislation are threatening to add tax to any drink with sweeteners in it, which includes Honest Tea. This could cause the public to perceive our product as less healthy, and less wholesome. Therefore, we should consider creating advertisements that focus on our position as simple and healthy. Even when we use some sweeteners, it’s lighter than other products, and its organic and fair trade (How). We should capitalize on these facts in a timely manner.

IDENTIFY A MARKET RESEARCH PROBLEM?
? In order to solve the Management Decision problem, we need to obtain information regarding our target market, and their perceptions of our product and the soft drink tax. We can collect this information by creating a survey of questions that address how our brand is positioned within the consumer’s mind, and how the possible tax affects that.
? Key Questions:
? How do you feel about the Soft Drink Tax being implemented in your state of residence?
? How do you feel about soft drink companies lobbying against these taxes?
? Do you feel that a tax would reduce your usage of these beverages?
? How do you perceive the brands that would be subject to this tax?
? How do you currently perceive the Honest Tea brand?

 

Sample Solution

ACED ESSAYS