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Case Study – Chaser Cola Co. BOH4M Ethics and Corporate Social…
Case Study – Chaser Cola Co. BOH4M
Ethics and Corporate Social Responsibility
Overview
Chaser Cola Co. is an established player in the Canadian soft drink industry. It is currently the 5 th largest seller of soft drinks in Canada, but is well behind Coca-Cola, Pepsi-Cola and Cadbury Beverages (the “Big Three”). While continuing to grow its overall revenue, Chaser has lost market share to its larger competitors. Combined, the Big Three now control over 90% of the market. Chaser has 3.5% of the total market.
You are the President of Chaser Cola and have just been presented with an idea that can launch your product to the next level. The value of Chaser’s stock will most certainly soar, revenue will skyrocket and the company will receive millions of dollars worth of free press coverage. However, should you decide to implement this idea, you will surely be faced with a backlash from concerned citizens. How can you possibly balance the needs of your company with the social demands of the public?
Shareholders are demanding a higher return on their investment. The public in general is calling for more social responsibility from its corporate citizens. Your job is on the line. What are you going to do?
Chaser Cola Co.
Chaser Cola was established in 1982 by two entrepreneurial college sweethearts, Brett Clair and Brianne
Van Gemeren. The company was named after their beloved Golden Retriever, Chaser. Brianne and Brett both studied Business at the University of Western Ontario and were able to secure a student venture loan from the Royal Bank. Chaser Cola established its roots in Southern Ontario.
Originally started as a summer venture, Chaser Cola quickly took on a life of its own. Chaser’s founders were actively involved in the environmental movement, donating 3% of company revenue to a national organization. Because of its social advocacy, Chaser Cola became the cola of choice amongst high
school, college and university students. The company capitalized on this image by featuring endangered
species on its cola cans.
By 1990, Chaser Cola Co. had gone through some significant changes. As part of their bitter divorce settlement, Brett Clair and Brianne Van Gemeren sold Chaser to another mid-sized player in the industry. The merger helped Chaser become a Top 10 soft drink company in Canada, with state-of-the- art manufacturing facilities throughout the country.
In an effort to appeal to a wider audience, the new owners of Chaser decided to abandon the brand’s image as an environmental product. The company adopted a standard grey can and the product
became known as “Chaser Silver”. In addition to the new packaging, Chaser Cola creating a much bolder
image. Advertisements and other promotions took on an alternative, sometimes controversial look. The change in image was a hit and produced excellent results for the company. By the end of 2010, “Chaser Silver” was the #5 soft drink in Canada, producing sales of $100,000,000 per year.
While the company was pleased with its sales figures, shareholders were demanding a better rate of return on their investments. Coca-Cola, Pepsi and Cadbury Beverages had recently increased their advertising spending in an effort to increase their market share, possibly having a negative effect on Chaser.
To combat this, Chaser Cola Co. was set to introduce “Chaser Wild”, a new brand of cherry-flavoured cola. An advertising budget of $10 million was allocated for the new product launch.
The Canadian Soft Drink Industry
Canadian retail sales of soft drinks total $5 billion per year. The industry directly employs more than
12,000 Canadians, paying $500 million annually in salaries and wages. The industry indirectly employs
an additional 30,000 people in support industries. 1 Canada represents the 6th highest consumers of soft drinks per capita, in the world. Canadians on average, drink 115 litres of pop every year (roughly half of the U.S. average).2
Three players dominate the industry: Coca-Cola, Pepsi and Cadbury Beverages (makers of Dr. Pepper and Schweppes Ginger Ale). Together, these three companies control over 90% of the Canadian market.3 Combined, Coke, Pepsi and Cadbury Beverages spent more than $200,000,000 in advertising and promotions in 2010.4
The Proposed Advertising Campaign
As the President, you have challenged your marketing team to create an innovative campaign that will attract the imagination of consumers. They have responded with a proposed campaign that could ignite Chaser.
The marketing team has suggested that rap artist Lil Wayne be utilized for the upcoming Chaser Cola campaign. They feel that he is a significant cultural phenomenon that appeals to the company’s target market (15-25 year olds).
On the surface, this seems to be a perfect fit. Lil Wayne will be featured on Chaser Cola’s website, Facebook and other social media sites, along with magazine ads, billboards and television commercials, as the official spokesperson for the product. In return, his upcoming tour will be sponsored by Chaser, giving the company an opportunity to sample its products to adoring crowds. Your marketing team feels that there will be a tremendous response from Lil Wayne’s fans (and your target market).
His management has been contacted and are willing to sign on. Your marketing team believes the total campaign can easily be executed within budget. In addition, they feel the press coverage Chaser will receive will be enormous (both positive and negative).
Lil Wayne
However, this campaign will most certainly be met with a great deal of controversy. Lil Wayne is a music phenomenon with a guaranteed string of #1 hit songs. He is one of the most influential rap artists in the world an is adored by legions of fans. His most recent release “Tha Carter IV” burned to the top of the charts in virtually every country in the world.
In 2007, Lil Wayne was arrested for smoking marijuana near his tour bus in New York City. A further search by police uncovered a .40 calibre pistol in his bag. Later in the tour, Wayne was arrested for possession of drugs (marijuana, cocaine). In 2009, not surprisingly, he was once again arrested for possession and use of illegal drugs. Wayne eventually served an 8-month prison term.
Lil Wayne’s profanity-laden lyrics have angered politicians and parents throughout his career. His lyrics contain numerous references to violence, drug use and partying, and are derogatory towards women. While a very influential individual, there is concern that he is sending the wrong message to his fans.
Decision Time
It is now decision time. As the President, you will make the final decision on this campaign. Do you bring Lil Wayne on board or do you tell your marketing team to head back to the drawing board? If you decide to use Lil Wayne, how will you deal with the public backlash? If you decide against the idea, how will you justify your decision to a very disappointed marketing team ?
Your Task
You will develop a Report. Be sure to include the following information in the appropriate sections:
Briefly summarize the current situation, including information on Chaser Cola, the competition, and the soft drink industry (bullet points)
Provide details of 3-4 other controversial celebrity endorsements
List 3 pros of hiring Lil Wayne and discuss why hiring him is an excellent strategic move for Chaser.
List 3 cons of hiring Lil Wayne and discuss why hiring him is not in Chaser’s best interests.
As the President of for Chaser, what decision will you make? Be sure to include reasons for your decision (using ethical/corporate social responsibility terminology).
If you support hiring Lil Wayne, how will you deal with the backlash from consumers?
If you choose not to hire Lil Wayne, what are some ideas for an alternative campaign?
Assessments and Evaluations:
Student product: Report
