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Marketing Plan for the Next Year for Atlantic Quench Cranberries - Essay Example

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This essay "Marketing Plan for the Next Year for Atlantic Quench Cranberries" discusses the marketing plan for AQC cranberry blend juice that is to act as a guide for AQC. As it is being implemented, various areas will be monitored to gauge performance (Kitchen, 2010: p34)…
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Marketing Plan for the Next Year for Atlantic Quench Cranberries
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An Outline Marketing Plan for the Next Year for Atlantic Quench Cranberries Atlantic Quench Cranberries Inc. is a US-based agricultural cooperative owned by grapefruit and cranberry farmers and has played a critical role in the development of the cranberry sector, holding a market leader’s position in the US for bottled and canned juice drinks and juice. In response to increased competition from super-juices and, especially, blended cranberry juices, AQC has created a cranberry juice blend that they want to introduce into the UK market. In order to take advantage of the health-conscious trend in the UK fruit juice market, AQC launched blended juice products. This paper will present an outline marketing plan report that suggests a marketing strategy for AQC cranberry juice for the next one year. It will highlight the positioning, marketing mix, and marketing communication strategy for the company, which will based on a provisional budget that seeks to attain 20% growth in the next one year. Table of Contents 1. Introduction..........................................................................................................................4 2. Current marketing situation.................................................................................................5 2.1 Internal Analysis............................................................................................................5 2.1.1 Market Description............................................................................................6 2.1.2 Product Review..................................................................................................6 2.1.3 Competitive Review...........................................................................................7 2.1.4 Distribution Review...........................................................................................8 2.2 Macro-Environment Analysis (Porter’s Five Forces Analysis) ....................................9 2.2.1 Bargaining Power of Buyers..............................................................................9 2.2.2 Bargaining Power of Suppliers..........................................................................9 2.2.3 Threat from Substitutes......................................................................................9 2.2.4 Entry Barriers...................................................................................................10 2.2.5 Rivalry..............................................................................................................10 3. SWOT Analysis.................................................................................................................11 3.1 Strengths......................................................................................................................11 3.2 Weaknesses..................................................................................................................12 3.3 Opportunities................................................................................................................12 3.4 Threats..........................................................................................................................12 4. Objectives and Issues.........................................................................................................13 4.1 Objectives....................................................................................................................13 4.2 Issues............................................................................................................................13 5. Marketing Strategy.............................................................................................................14 5.1 Positioning...................................................................................................................14 5.2 Product Strategy...........................................................................................................15 5.3 Pricing Strategy............................................................................................................15 5.4 Distribution Strategy....................................................................................................16 5.5 Promotion Strategy......................................................................................................17 5.6 Marketing Communication Strategy............................................................................17 5.7 Marketing Research.....................................................................................................18 5.8 Marketing Organization...............................................................................................19 6. Marketing Implementation.................................................................................................19 7. Budget................................................................................................................................20 8. Control...............................................................................................................................20 1.0 Introduction In the UK and across the world, juice is consumed in numerous households. However, in the past decade, the juice market has suffered the adverse effects as the popularity of diets that are low-carb in nature has increased. The constant price sales between 2008 and 2014 have declined by up to 15%, although sales are expected to increase slightly by the end of 2015 (Falguera & Ibarz, 2014: p47). Still, there has been growth in the functional and healthy juice product line with consumers presently looking for natural and healthy juices. A recent survey by Mintell (2012: p33) concluded that approximately 90% of the juice consumer market are now actively looking for products that are 100% juice, while nutrient of vitamin enhancement was essential for ~65% of consumers and 25% and 50% of consumers look for low-carb and low-sugar juice products respectively. Mintel (2012: p33) identifies relatively high consumption of juice fruit in households with high income and children, along with households with younger adults as the heads. Households with children, overall, show increased rates of juice consumption, which emphasizes the importance of young families to the fruit juice market. This paper will present a report on AQC’s marketing plan for the next year between January and December 2015. The marketing plan’s aim is to capture at least 20% of the juice industry market share within this period of one year. 2.0 Current Marketing Situation 2.1 Internal Analysis 2.1.1 Market Description The juice market has a high level of segmentation with refrigerated juices holding more than 40% of the segment, while also showing an increase of 4.2% between 2012 and 2013 (statista.com, 2013: p4). These gains have been at the expense of shelf-stable, frozen, and canned juice drinks, which have seen a decrease in market share and sales due to perceptions by consumers that the former has more freshness. Another factor that has influenced this market is convenience with frozen juice drinks, especially as ready-to-drink options have increased in sales making consumers find frozen juice drinks less appealing. Younger consumers find single-serve juice, particularly in plastic containers, more attractive, although carton containers retain their popularity for most households. Less than 20% of the market buys bottled juice, while less than 10% purchase canned juice (White, 2014: p9). Moreover, households are more likely to buy juice packaged in plastic containers. The cranberry juice market has witnessed growth over the past five years with future expectations of growth, which creates an opportunity for AQC to carry out a marketing campaign aimed at increasing their market share in this sector (Bainbridge, 2013: p1). Cranberry juice, due to its less sweet and distinctively dry taste compared to other flavors, is mostly popular among adults, rather than younger consumers who prefer sweeter juices. Thus, cranberry juice is not as dependent on children presence in the family for consumption. The market, however, is under threat from less expensive private label products, especially as marked by preference on shelf space by leading off-trade points of distribution like Sainsbury, Tesco, and ASDA. There is increased demand for health drinks, fruit drinks, and fruit juice in the UK, which has been the result of increased interest from consumers for eating and drinking healthily. The juice sector has continued to gain market share at the expense of carbonated drinks, which have gained a poor image among an increasingly health-conscious public (Datamonitor, 2013: p1). 2.1.2 Product Review Although AQC is mostly renowned for its fruit juices, the company also sells dried cranberries using the Crantanas brand name. The company’s entire product range is divided between non-juice drinks and juice drinks. In the UK, a beverage can only be designated as a juice if it is made up of 100% fruit. In this juice product range, AQC produces and sells Cranberry mixed juice drinks, Cranberry original juice, Juice Max that is a pure juice, and Grab ‘n’ Go that is a single serve juice. AQC also has a non-juice drinks product range that includes Cranberry sauces, Cranberry cordial juice drinks, fresh cranberries, new dried cranberries, and new conserve. AQC also carries the Cranberry Classic range, which includes both juice drinks and juices that are fundamentally flavored using cranberry. This classic range includes the aforementioned cranberry cordial that is high in juice levels and a light juice drink. The Cranberry Classic was launched as a half-liter can in 2002 in order to target convenience customers with impulse buying tendencies. The product range also includes light low-calorie fruit drinks flavored with mango and cranberry, raspberry and cranberry, and blackcurrant and cranberry. Moreover, the product range also includes the white cranberry juice drink that is a smoother and sweeter alternative to red cranberry juice drinks. The Cranberry Select premium Chilled juice drink is also part of the range aimed at the chilled drinks sector, while there is also the cranberry and mandarin juice drink. Atlantic Quench’s products have enjoyed annual sales of approximately $1.7 billion for the year 2007. Out of these sales, the Crantanas brand accounted for at least £150 million, while sales have doubled since and expectations are that sales of the Crantanas brand will double again in the coming ten years (Hucker, 2014: p1). Overall, Atlantic Quench has enjoyed strong growth of sales on an annual basis with overall sales growth of 7% in the last four years, while the company has also gained significant market share in all sectors that it competes in. Consumption of Crantanas has increased by an impressive 26% (Hucker, 2014: p1). Moreover, AQC has increased its manufacturing capacity for the Crantanas brand by four times. 2.1.3 Competitive review Although the Cranberry Classic range is relatively new in the UK market, there are several similar products, which will offer competition for AQC. Basically, vegetable juice, fruit juice, and beverage products will be the major competitors (thegrocer, 2013: p6). Although consumers across the UK are aware of cranberry juice’s health benefits, this is by no means exclusive to AQC and, as a result, cannot be the base strategy for achieving sustainable competitive advantage. The competitors are divided into direct, indirect, product, and implicit competitors. For direct competitors, AQC shares the market with other players in the fruit juice and beverage industry such as Belvoir Fruit Farms, Britvic Soft Drinks, Boots, Cadbury Schweppes, Ella Drinks, Cott Beverages, Tropicana, and Tesco, among other smaller brands. Moreover, Odwalla, Naked, and Pom brands are direct competitors in the premium cranberry, juice sector (Lanschützer, 2013: p5). There are numerous indirect competitors for AQC in the UK market, including iced tea and coffee (Nestle, G Costa, and Novaritis), herbal drinks (T&T Beverages, Bottle Gren Drinks, and Thorncroft), and clear carbonates/flavored water (Tesco, Silverspring, Sainsbury, and Villa soft drinks). Product competitors for AQC include other carbonated drinks with fruit flavor, such as Lilt, 7up, and Tango, which are mainly aimed at the youth market and have decreased fruit concentrate levels (ibisworld, 2014: p6). Finally, implicit competitors are those competitors seeking a similar share of AQC’s market for adult consumers with disposable incomes, including alcoholic drinks, hot drinks, and carbonated drinks like PepsiCo and Coca-Cola. Coca-Cola and PepsiCo, despite not being direct competitors, hold the largest share of the market for beverages. Coca-Cola, for example, controls a substantial portion of the non-carbonated segment through secondary brands like Innocent, Minute Maid, and Dasani, while PepsiCo also has a wide portfolio that includes fruit juices, bottled water, and sports drinks (IBISWorld, 2014: p13). 2.1.4 Distribution review Atlantic Quench recently signed a licensing agreement with Gerber for the latter to manufacture, distribute, and sell juice drinks and juices in the UK using the Atlantic Quench brand name. This company is a market leader in the supply of branded fruit juice, private label juice, and juice drinks across the UK (euromonitor, 2014: p7). Indeed, its annual sales exceed 800 million liters annually. Moreover, AQC has negotiated three contracts with Sainsbury, Tesco, and ASDA to sell all of its product lines. Globally, AQC has well-established distribution channels, including vending machines and store retailers, which mean that launching the Cranberry Classic product line will typically rely on already existing systems of distribution. This will be essential for the company to reach most of its target market without requirements for major delivery and supply developments (aijn.org, 2012: p12). 2.2 Macro Environment Analysis (Porter’s Five Forces analysis) 2.2.1 Bargaining Power of Buyers: Strong The primary buyers of products based on cranberry are retailers, although distributors also play an essential role in availing these products to the retailer. Both retailers and distributors are able to show a substantial amount of leverage, specifically because retailers have control over their placement and space allocation (yahoo.com, 2014: p2). Distributors, on the other hand, are important because they are responsible for availing the product to the retailer and the market in general. Large retailers like Sainsbury, Tesco, and ASDA also have bargaining power because they order fruit juices in large quantities, while there is minimal brand loyalty among consumers. This results in increased leverage for these retailers with regards to allocating shelf space to juice companies like AQC. 2.2.2 Bargaining Power of Suppliers: Weak Growers of cranberry have weak negotiating ability with the cooperative, as well as with other independent buyers of cranberries. Their ability to negotiate, such as in the case of higher prices, is weak because the processors are the ones that pay market prices for cranberries and other fruit products (Saliba et al, 2013: p8). Moreover, cranberry growers have also been held responsible for the dramatic decline in prices starting in 1996 due to their over-production of cranberries above what the market could absorb. 2.2.3 Threat from Substitutes: Strong Other juices containing fruit flavors, water, and beverages without fruit have been considered as strong and capable substitutes for cranberry-based juices, specifically with regards to single serving packages (Parker, 2012: p5). There are also other substitutes for cranberry products, which are sold for consumption seasonally. AQC does not have a flavor that is entirely unique and, in case of a blind taste test, consumers would find it difficult to identify differences between AQC and other cranberry juices. 2.2.4 Entry Barriers: Weak Entry barriers are low because of the already excessive capacity of production, as well as the high competition for shelf space. While some cranberry companies like Northland Cranberries entered the juice industry and is yet to achieve significant success, it has contributed to further price wars among different cranberry producers (MarketLine, 2014: p11). On the other hand, Coca-Cola and PepsiCo have met with more significant success after entering the juice industry, specifically due to their use of acquisition to enter the market. Moreover, they have leveraged their immense distribution capacity, as well as their bargaining power with the distributors and retailers, to achieve success. 2.2.5 Rivalry: Strong Competition for space on retail shelves and distribution access is very high among producers of cranberry juice. Moreover, producers are under more pressure to create promotional programs that ensure their brand attracts more consumers than private label brands and competing brands (keynote, 2014: p8). While consumers do show some level of brand loyalty, there are no switching costs if they seek to move from one brand to another, which makes it unlikely, that consumers will specifically seek a particular brand from retail outlets if it is unavailable. As a result, competition for retail space, in light of consumer willingness to switch brands, is intense. Additionally, because consumers mostly buy cranberry products towards the holidays, brand loyalty is not as strong as they are more concerned about availability, rather than cranberry brand (Shapiro, 2012: p39). 3.0 SWOT Analysis 3.1 Strengths Atlantic Quench Cranberries are of superior quality compared to private label cranberries AQC is a dominant global bran in the cranberry market (Searcy, 2011: p44) The authenticity of the cranberry juice from AQC can be used to justify the price difference The source of AQC’s cranberries can be used as a differentiating factor (Searcy, 2011: p44) AQC is innovative and has a wide array of unique cranberry flavored juices 3.2 Weaknesses AQC is losing sales volumes in the chilled and ambient market, especially to private label juices. Cranberry juice consumers are switching to private label juices, which are cheaper than AQC’s (Johnson et al, 2014: p7). Customer loyalty to AQC’s juices is low because of similar products and low switching costs As a result of low allocation of shelf space, snap purchasing may work against AQC as the consumer is not specifically looking for AQC’s juices (Johnson et al, 2014: p7). Competing in the high and low juice content segment may lead to low perceptions of “freshness” among consumers. 3.3 Opportunities The concept of AQC’s heritage and the heritage of its product has never been exploited fully (Jesse & Rogers, 2012: p10) Private labels, which are AQC’s biggest threat, do not possess potential for emotional values because consumers view them as simple commodities, which AQC could exploit AQC’s pure cranberry juice products can be linked to fitness and health, using online forums and campaigning to reach health-conscious consumers (Jesse & Rogers, 2012: p10) AQC could exploit its 80th anniversary celebrations in its marketing campaign AQC’s successful licensing agreement with Gerber offers the company a vast distribution network in the UK 3.4 Threats Private label juices and super-juices have increased competitive pressure on AQC (Hucker, 2014: p6) Private labels are able to use price offers to AQC’s disadvantage as they have to compete The emergence of super-juices has threatened AQC’s niche market for healthy cranberry products, specifically since super-juices are marketed as having higher levels of anti-oxidants and nutrients and, thus, as being healthier (Hucker, 2014: p6). 4.0 Objectives and issues 4.1 Objectives Given the present trend towards healthier fruit juices with less sugar content across the EU and the UK in particular (Szathvary & Trestini, 2014: p510), the future for AQC in the UK market is promising. The marketing plan’s aim is to capture at least 10% of the cranberry juice, industry market share in the next one year and to achieve revenues of $20 million. While cranberry juice’s health benefits are not an exclusive quality of AQC, the company’s extensive history in production of cranberries should offer a competitive advantage that would be difficult for other cranberry brands to claim. This fact will act as a powerful factor of differentiating that can be used in justifying QQC’s pricing. This will add brand value by balancing emotional/functional ratio, as well as portraying AQC as the original source of fresh and healthy cranberries and cranberry juice. To achieve this, marketing communications will be aimed at inspiring consumers to view AQC as the authentic producer of healthy cranberries, as well as to showcase AQC juices’ nutritional benefits. 4.2 Issues The main issues facing the juice industry and, as a result, the cranberry juice sector, are a combination of both inter-seasonal matters in the long-term and intra-seasonal matters in the short term. The growth of blended cranberry juice products has greatly reduced market share for AQC and other traditional cranberry producers (Feleke, 2013: p51). Moreover, the growth of consumer interest in super-fruit juices that claim to contain additional antioxidants and nutrients has made the competitive environment in the cranberry juice market increasingly intense. In addition, brand loyalty towards cranberry juices has declined as a result of increased competition from companies touting healthy living (Feleke, 2013: p52). Although AQC now produces cranberry blends with fortifications like acerola and pomegranates, introducing these products to a new generation of consumers is also an issue that faces the company. 5.0 Marketing strategy 5.1 Positioning The positioning strategy defines where the product stands related to other similar products in the market, as well as in the consumer’s mind (Ferrell & Hartline, 2011: p29). By identifying good positioning for their product, AQC will ensure that their product is perceived as unique, while making the consumer consider it as beneficial to them. For AQC, the positioning strategy for its cranberry juice line will be as an ultra-premium juice blend made with exotic fruits from the pioneers of cranberry farming and marketing. Together with this healthy and all-natural position, AQC cranberry juice will also attempt to achieve a unique status as a lifestyle brand. Moreover, the AQC cranberry juice blend will also be positioned as a convenience drink that consumers can drink anywhere at any time. Although most consumers view fruit juices as desserts or as morning beverages, AQC will seek to position its product a healthy, refreshing, all-natural, and multi-purpose juice. While focusing on consumption in the home, the company will not limit the situations of its usage. Moreover, AQC will differentiate its blended cranberry juice product line from its competitors using attractive advertising. The marketing communication will be focused on the health and lifestyle benefits of using AQC’s cranberry juices. This positioning strategy is unique as majority of cranberry blend juices and super-juices are mainly focused on the juices’ health benefits. There are very few companies positioning their cranberry juices in the life-style brand sector. AQC will dedicate itself to taking a full-circle approach towards consumers in the AQC cranberry lifestyle. 5.2 Product Strategy According to Hawkins and Mothersbaugh (2013: p61), the product is an item that satisfies the demands of the consumer, whether it is a tangible or intangible product. AQC’s cranberry blend juice is an ultra-premium product produced using only the finest and most exotic cranberries, which are also low-calorie with no additional sugars, from the original producers and marketers of cranberries. The product will be in three major flavors, which are black-currant and cranberry, raspberry and cranberry, and mango and cranberry. These products are made from 100% juice, which is a requirement in the UK for it to be labeled as “juice”, playing to the healthy life-style conscious nature of the niche target market. However, not only is the AQC cranberry blend juice healthy and more delicious than pure cranberry juice, it is also produced from natural, organic cranberries and the flavor will not be altered for the UK market. Since not of these juice ranges are native to the UK, introducing them to the market does not need changing, despite being novel. Using the Ansoff matrix shown below, the existing product is being introduced into an existing market, in which AQC will seek to achieve growth in the next one year using existing products within their current segments of the market, so as to increase their market share. Existing Products New Products Existing Markets Market penetration Product Development New Markets Market Development Diversification (Hawkins & Mothersbaugh, 2013: p70) 5.3 Pricing Strategy Walker and Mullins (2013: p90) defines pricing as the amount paid for products by the consumer, which is very important because it determines the profits and ultimate survival of the company and, therefore, the marketer is required to price the product in a way that complements other components of the marketing mix. The pricing strategy to be used for AQC’s will be similar to other premium juices, including Odwalla, Naked, and Pom. The shelf price for AQC’s cranberry blend juice £9 for each 1.75 liters and £6 for each liter. The direct prices to Gerber distributor and other distributors in the future will be 20% less compared to shelf prices, which will lead to placing direct prices at £7.20 for every 1.75 liters and £4.80 for each liter. Trade discounts will be offered to premium grocery stores, including Whole Foods and Marks & Spencer. 5.4 Distribution Strategies Perreault et al (2011: p44) defines a distribution strategy as the provision of a product to the place where it is convenient to access for the consumer, including exclusive distribution, selective distribution, intensive distribution, or franchising to complement other marketing mix aspects. For AQC cranberry, blend juice products, the best placement will be to target higher end grocery stores, such as Whole Foods, Sainsbury, and Marks & Spencer. AQC will take part in direct distribution with the two stores using Gerber as the main distributor, while also providing trade discounts. Such relationships will be useful in efficiently solidifying AQC’s products as premium, high-end quality products. Furthermore, the products are to be placed alongside the juice section for off-premise consumption premium quality products. It will be crucial for AQC to illustrate to the consumers that the company provides high quality juice products that are worth the higher cost. 5.5 Promotion Strategy The promotion strategy is defined by Hill (2013: p35) as all methods of communication used by a marketer to provide information about their product to different parties. To begin with, AQC will aim to build increased awareness for the product in order to stimulate trial, as well as purchase. AQC’s cranberry blend, juice line faces substantial competition in the product segment, which means that differentiating the product will be critical to the survival and the continued growth of the brand. Various media vehicles will be used in promoting the differentiating factors of AQC’s cranberry blend juice, including monthly lifestyle magazines like Good Housekeeping and Weight Watchers magazines, which were selected for their high readership for people aged between 25 and 45. Radio will offer a more flexible structure of costs, as well as enabling AQC to reach particular demographics at specific times. Classic FM will be the ideal station because of its wide coverage across the London and Southern region. Finally, the product will be promoted via Sunday newspaper magazines like the Mail on Sunday and the Sunday Times due to high readership for the target market, Sainsbury supermarket magazine that targets the market AQC is seeking, and supermarket billboards. 5.6 Market Communication Strategy A marketing communication strategy is important for a company in the development of brand awareness, meaning that the consumer will translate the product information into perceptions concerning the attributes of the product and its position in the wider market (Russell, 2010: p61). This strategy will define ACQ’s plan for disseminating product information and development of brand awareness. Strong awareness of the AQC cranberry, blend juice brand among the target market suggests that reaching the consumer is more of a priority than frequency. The proposed marketing communication strategy will seek to maximize weekly reach, while also influencing weekly purchases by skimming the cranberry juice market for premium juice consumers in as many weeks as is possible. Because the AQC brand awareness is already high, the strategy will assume the concept that single exposure, particularly close to buying, will more likely influence the purchasing behavior of the consumer. The weekly habitual pattern of purchasing indicates that a significant part of the target market will be ready to buy the product every week, which warrants the use of weekly advertising (Peterson, 2011: p50). Moreover, shopping behavior in the target market is high close to and during the weekend, which will influence the placement of the advertisements. Increased reached, furthermore, is more likely to be achieved using a combination of various media. Still, the minimum frequency level is necessary in order for the ads to be effective. Based on the three hit theory by Kurgman (Albrecht et al, 2011: p13), this will be set at an average of three exposures every week with every exposure being less effective compared to the previous one and the saturation point being achieved after five exposures. Finally, market analysis has shown that cranberry juice demand normally hits its peak during the Christmas and summer months. This fact is to be addressed through intensification of media spending during the aforementioned months, therefore enhancing media coverage and exposure (Avery, 2012: p41). In this case, it is expected that the highest frequency will happen in June, July, and August of 2015, which will coincide with the beginning of a yearlong campaign, along with peak demand in the summer. 5.7 Marketing Research In the initial stages of the marketing plan development, focus groups were used in order to gain insight into the potential target market and its customers, while also providing insight into the process of decision making (Aaker, 2011: p32). Another dynamic market research source is a suggestion card system, which will be part of the feedback mechanism. The card will contain statements that consumers will rate on the basis of a specific scale. Several open-ended questions will also enable the customer to praise or constructively criticize the product. Finally, a competitive analysis will be used, where AQC will survey local competitors to gain more information on the product offerings (euromonitor.com, 2013: p5). 5.8 Marketing Organization (Hood, 2013: p27) 6.0 Marketing implementation The total outlay for the marketing budget in the next one year will be approximately £1.9 million with majority of these expenses being spent on promotions and advertising. Moreover, the budget will also allocate funds for R&D in juice innovations for the ACQ cranberry, juice product line at around £27,000, as well as to enable the marketing team react to major moves by the company’s competitors. Essentially, the marketing plan will seek to use marketing personnel to handle the diverse media channels that will be utilized in marketing and promoting the product (Wood, 2010: p55), including radio, magazines, and billboards. The marketing plan will seek to use marketing personnel to handle the different segments, such as magazine promotions, print advertisements, media advertisements, and promotions on radio. Through a concentration of promotional efforts, AQC will seek to reach health-conscious UK fruit juice consumers. 7.0 Budget (Busch et al, 2010: p38) 8.0 Control The purpose of this marketing plan for AQC cranberry blend juice is to act as a guide for AQC. As it is being implemented, various areas will be monitored to gauge performance (Kitchen, 2010: p34). Expenses and revenue will be monitored after every two months. In addition, the company will also gauge repeat business and customer satisfaction. Any deviation from the expected values will be identified early and rectified. References Aaker, D. A. (2011). Marketing research. Hoboken, N.J: Wiley. aijn.org. (2012). European Fruit Juice Association Liquid Fruit. 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