Students: Ensar Mekić, Lejla Šećerović
Assoc. Prof. Dr. Teoman Duman
Marketing Management
MARKETING PROBLEM: Energy Beverages
Dr. Pepper Snapple Group, Inc.
Note by authors
For analyzing of this case and solving this Marketing Problem, we used steps of Decision Making
Process for a Marketing Problem known as „DECIDE“. In other words, we covered the case through
following sections:
1.
2.
3.
4.
5.
6.
Defining the problem
Enumerating the decision factors
Considering relevant information
Identifying the best alternative
Developing a plan for implementing the chosen alternative
Evaluating the decision and the decision process
1. Defining the problem
Andrew Barker, Marketing Executive of Dr. Pepper Snapple Group, Inc. only major nonalcoholic
beverage company in USA launched Accelerade RTD brand. Launching such a product is not only
creating a new brand, it is entering new segment of market, going from CSD (carbonated soft drinks)
and producing ready to drink tea to new segment, segment of Functional Beverages. The market
segment of Energy Beverages (Functional Beverages) is field of huge battle field of many competitors,
and idea to enter it is under question mark. There are few questions to answer in order to solve this
Marketing Problem:
a) Shall Dr. Pepper Snapple Group, Inc. launch a new brand?
b) If answer on question „a“ is yes, answer on the following questions:
a.
b.
c.
d.
e.
What should be the target market?
How should brand be positioned?
What kind of Marketing Channel should be used?
What should be selling price and channel margins?
What ways of advertising and promotion to do?
c) If answer on question „a“ is no, what should company do in order to enter Functional
Beverages Marketing Segment and:
a. What should be the target market?
b. How should brand be positioned?
c. What kind of Marketing Channel should be used?
d. What should be selling price and channel margins?
e. What ways of advertising and promotion to do?
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Students: Ensar Mekić, Lejla Šećerović
Assoc. Prof. Dr. Teoman Duman
Marketing Management
2. Enumerating the decision factors
After very careful reading the case, we got the following information about controllable and
uncontrollable decision factors that are presented in SWOT analysis we have prepared.
STRENGTHS
WEAKNESSES
- wide scope of company operations,
- Strong portfolio of leading, consumer-preferred
brands,
- Integrated business model,
- Strong customer relationships,
- Attractive positioning within large growing and
profitable market,
- no experience in segment of Functional
drinks market,
- low budgets prevent to promote and
advertise products on high level like Red
Bull and other competitors do.
- Broad geographic and distribution coverage,
- Strong operating margins and stable cash flows,
- Experienced executive management team
SWOT
THREATS
OPPORTUNITIES
- strong competitors,
- traditional position of energy beverages,
- generally energy beverages sales are
growing in USA,
-dependancy on small number of large retailers,
- opportunity for innovation,
- dependancy on third party bottling
companies,
- opportunities for making additional
acquisitions.
- distribution agreements could be terminated,
- people allergic on milk can not use the product
since proteins are milk based.
3. Considering relevant information
In this step, we conclude that company has much very valuable strength which can be strong tools to
realize various decisions.
a) Alternative 1
We can confidentially say that opportunity for a brand RTD Accelerade exists, since it would
differentiate easily from other energy beverages as healthy product, and product that is designed to
satisfy needs of those who wants to regularly do sports which is quite big market consisted of 35 000
000 Americans who exercise regularly. The basic benefits of product are visible in its effects such are:
Extends Endurance, Speeds Muscle Recovery, Reduces Muscle Damage, enhances Recovery.
According to mentioned facts about the market, product and company, introducing RTD Accelerade
seems as an attractive alternative for Dr Pepper Snapple Group, Inc.
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Students: Ensar Mekić, Lejla Šećerović
Assoc. Prof. Dr. Teoman Duman
Marketing Management
b) Alternative 2
It is fact that Energy drinks have become a multibillion-dollar industry in the US. Beverage Digest
reported that retail sales of energy drinks in the US increased by 16 percent in 2011, amounting to
$8.9 billion in sales. 1 This is something that is achieved through very traditional way of producing
energy beverages which means that main ingredient of almost all of them was caffeine. Exclusion of
such ingredient could be dangerous since for most of energy beverage users, caffeine is the reason
they are drinking it. This ingredient actually does psychological effect that we are having more
energy, and this effect is based on faster heart beating caused by caffeine.
In other words, excluding caffeine from energy beverage would be killing its identity.
In conclusion, alternative two would be introducing a new brand that will keep traditional structure
of energy beverage, but promoted as new brand and positioned in a unique way.
4. Identifying the Best Alternative
Market Target and Company's strategy
When it comes to enumerated alternatives, we can say that alternative number one is contradictory
with general strategy of Dr Pepper Snapple Group, Inc. since they are focusing on high growth
and high margin categories. Launching RTD Accelerade would be limiting for the Co since they
would focus only on sportsmen who are loyal and committed to their hobby, and the rest of the market
including so many people at work, students at schools and universities, young and old people at home
would be excluded from the target market.
Positioning of the product in heads of customers
People are having less time nowadays, and they are sometimes trying to find alternative sources of
energy and they are quite often compensating it through using energy beverages and cheating their
own body. RTD Accelerade is something else in this case, since it is energy drink for sportsmen which
gives them more physical power and keeps their muscles in healthy conditions. This is something that
is not in accordance with image of energy beverages in minds of customers.
Financial return
Since alternative number two targets broader market, if succeed it promises more revenues and profits.
Conclusion: According to several criteria mentioned above, we can conclude that it would be quite
risky to select alternative number one. In fact, it would be entering Functional Beverage market, but
not launching the Energy Drink. Selecting alternative two, which means launching new brand with
unique targeting strategy, small modifications, attractive package and affordable price would be much
better option. In we were in a position of Andrew Barker, we would select Second alternative.
1
http://palscience.com/health-medicine/energy-drinks-under-probe/
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Students: Ensar Mekić, Lejla Šećerović
Assoc. Prof. Dr. Teoman Duman
Marketing Management
5. Developing a Plan for Implementing the Chosen Alternative
This is step in which according to model „DECIDE“, we need to answer practically on questions such
are:
a. What should be the target market?
The target market needs to be wide and in accordance with corporate business strategy of focusing on
high margins and high growths. Since the company is operating within USA, according to statistics
that shows U.S. Population Profile and Energy Beverage Users in 2006, the best and most profitable
users were Adult Males, 35-44 years old and belong to Caucasian Race. The company needs to find
statistical data from all years till now and see did the situation changed. If not, we can select this as the
target market for the company's new brand but without neglecting other segments.
b. How should brand be positioned?
Energy drink positioning typically focuses on providing an energy boost, mental alertness,
refreshment, and taste, especially for males 12 to 34. This is tradition that needs to be applied, but on
the other side make step out of tradition in terms of making it more affordable, packaging it in a
completely new way unseen before, modification in a way that it attracts different groups of people
(ex. Different versions of product such are „Light“, „Strong“ and „Ultra Strong“).
c. What kind of Marketing Channel should be used?
Company needs to focus on both off and on-premises, it needs to use many channels such are
supermarkets, mass merchandisers etc. and it should definitely take care of decreasing dependency
upon small number of retailers.
d. What should be selling price and channel margins?
Use the benefits of elasticity of price, lower the price in order to overtake the market. In other words
use Market Penetration strategy to enter the market and overtake valuable market share.
e. What ways of advertising and promotion to do?
Media adverstising and promotion, web communities, sponsorships.
6. Evaluating the decision
When it comes to evaluation of our decision, we analyzed the official website of the company and did
not find RTD Accelerade. After we searched for what happened with launched brand, we found that it
brought costs in terms of millions of $ for the company and it was definitely bad investment.
After that, company launched new brand, real energy drink named Venom Energy. Venom Energy is
an energy drink available in Black Mamba (regular), Mojave Rattler (low calorie), Death Adder (fruit
punch) and Killer Taipan (mango) flavors. Activities that were performed by company give positive
evaluation to our solution for this Marketing Problem since Venom Energy is in accordance with our
solution two selected alternative.
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