DR. PEPPER CASE STUDY ANALYSISMarketing 359

1

Christina, Chris, Franchesca

Problem & Solution2

◻Would it be a profitable opportunity for the Dr. Pepper Snapple Group, Inc. to produce, market, and distribute a new energy beverage brand in a maturing market?

◻Yes! ⬜Utilize existing customer loyalty

towards their most popular product, Dr. Pepper⬜Focus on the health aspects the

product provides⬜Targeted towards an older segment

of the population.

BRIEF HISTORY3

Dr. Pepper Snapple Group, Inc.4

◻ Major integrated brand owner, bottler, and distributor of non-alcoholic beverages in the U.S., Mexico, and Canada

◻ In 2007, the company posted net sales of $5.7448 billion

◻ Strong Portfolio of Leading, Consumer-Preferred Brands⬜ High levels of consumer awareness, preference, and loyalty⬜ Dr. Pepper is the #2 flavored CSD in the U.S. (ACNielsen)

◻ Strong Customer Relationship

◻ Distribution

.

Key Challenge5

❏Energy beverage market is competitive

❏ 5 competitors dominate the US energy beverage market❏ 94% of dollar sales and unit volume market shares in

the US

CURRENT SITUATIONINDUSTRY ANALYSIS6

The Energy Beverage Market

7

◻4th largest non-alcoholic beverage category in the U.S. in 2006

■$6.2 billion dollar market

◻From 2001-2006, Retail sales grew at an average annual rate of 42.5%

◻Industry analysts projected an average annual growth rate of 10.2 percent from 2007-2011

■Market maturity

■Increasing price and packaging competition

■Entrance of hybrid energy beverages

Dr. Pepper Energy Beverage Financial Performance

8

⬜Dr. Pepper Snapple Group, Inc. does not have a current energy beverage brand in their portfolio

⬜In 2007:■More than 75 percent of Dr Pepper Snapple Group, Inc. volume was generated by brands that hold either the first or second position in their category

■Strength of these key brands has served as a platform for launching innovations and brand extensions

CURRENT SITUATIONCOMPANY ANALYSIS9

Key Success Factors10

CUSTOMERS WANT COMPETITION PROVIDES

KEY SUCCESS FACTORS

Energizer Added significant amounts of caffeine

Ingredients that boost energy

Health Sugar free options Product line extensions

Sleek design Slim and colorful can designs

Manufacturing equipment

SWOT11

Positive Negative

Internal Strengths• Integrated infrastructure• Stable cash flows

Weaknesses• Only one top performing product

within each product category-puts cash flow at risk

• No pre-existing product for energy drink category

External Opportunities• Strong CRM• Extensive manufacturing

and distribution network

Threats• Entering a maturing market• Top 5 competitors account for

94% of sales and consumption

Value Chain12

Firm Infrastructure - Highly integrated business model

Human Resource Management - Experienced exec management team

Technology Development - Broad geographic manufacturing & distribution

VALUE VALUE

Procurement - Strong consumer relationships & distribution expansion plans

Inbound Logistics: Raw materials

Operations: Manufacturing, packaging, quality control, maintenance

Outbound Logistics: Warehousing, distribution, delivery

Marketing & Sales: Advertising, promotion, pricing, channel relations

Service: Recycling, consumer monitoring

Ansoff Matrix

13

ALTERNATIVES (OPTIONS)14

Key Issues / Decision Criteria

15

◻ Key challenge: Is it profitable for Dr. Pepper Snapple Group to develop, market and sell an energy drink?

◻ Decision Criteria: ⬜What should the product be?⬜Who is the target market?⬜Positioning?⬜How should it be advertised?

Option #1: Accelerate16

A pre-workout energy drink targeting athletes and those who want to get the most out of their work out. Pros◻ Accelerade, sister product, has loyal consumer

base that most likely adopt the new productCons◻ Limited target market◻ May be hard to distinguish from current product

Option #2: No Energy Drink17

Energy drink market is entering the mature market stage and there’s a high degree of consumer loyalty to existing brands. Pros◻ Money can be allocated to other products. Cons◻ Energy beverage sales in 2006 were 6.2 billion

dollars.

Option #3: Dr. Pep 18 An energy drink that focuses on the health aspects the

product provides that’s targeted towards an older segment of the population.

Pros◻ Targets different segment of market◻ Taps into growing consumer trend (health)◻ Dr. Pepper name is well known, eases market

penetration

Cons◻ Potentially harmful to Dr. Pepper’s reputation as a

brand◻Could fail to attract desired segment of market

Key Issues and Related Solutions

19

Profitable

Product Developme

nt

Specific Target Market

Distinct Positioni

ngRecognizability

Option #1: Accelerate ✓ ✓ ✓

Option #2: No Energy Drink ✓ ✓

Option #3: Dr. Pep ✓ ✓ ✓ ✓ ✓

Recommendations20

◻Dr. Pep is the profitable option for entering the energy drink market.

◻Dr. Pep solves key issues such as:⬜What product is ⬜Target market⬜Positioning⬜Advertisement and promotion

21

The Dr. Pep Consumer

Ads22

Dr. Pep: So you stop burning both ends of the stick.

IMPLEMENTATION23

Timeline

24

Risks & Mitigation 25

◻Potentially harmful to Dr. Pepper’s reputation as a brand⬜Monitor consumer response to Dr. Pep that is linked to Dr. Pepper⬜ Have plans in place to neutralize negative commentary

◻Could fail to attract desired segment of market⬜Additional consumer research⬜Research on how best to reach target consumers

Measurements26

◻Sales⬜Cross-sales

◻Brand Awareness⬜Connection between Dr. Pepper and Dr. Pep

◻Brand Loyalty⬜Continued sales

Dr. Pep is the energy drink option that will capture an underserved segment of the energy drink market by focusing on the health benefits this energizer brings to the consumer.

Recap27

THANK YOU

28