MARKETING MANAGEMENT BUS506
Case Study Analysis: Dr. Pepper Snapple Group, Inc.: Energy Beverages
Aida Nusinovic, Aida Bulbul, Alen Husukic
International Burch University, Sarajevo
MARKETING PROBLEM DEFINITION
Dr. Pepper Snapple Group, Inc, encouraged by its long-lasting history, experience, and favorable market conditions has decided to enter a new
market segment, launch energy drink beverage and they are facing several dilemmas. A thorough analysis of company’s internal conditions, industry
facts, market conditions and trends, is needed in order to develop possible alternatives, realize the possible outcomes of those alternatives, and finally
to choose the most convenient options. To be specific, company needs to make decision about the following:
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Choice of Target Market
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Product Line and Positioning Choice
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Marketing Channel Choice
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Advertizing and Promotion
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Pricing and Profitability
COMPANY FACTS
One of North America's leading refreshment beverage companies, DPS, markets more than 50 brands of carbonated soft drinks, juices, teas, mixers,
waters and other premium beverages. The company's strategy, brands and people have made it a strong, sustainable and profitable business
throughout the years.
The company today known as DPS has evolved from a combination of discovery, invention and collaboration. This rich history includes the very
birth of the soft drink in 1783, when Jean Jacob Schweppes perfected the process for carbonating water and created the world's first carbonated
mineral water.
In 2000, Cadbury Schweppes acquired Snapple Beverage Group, which included the namesake brand as well as RC Cola, Diet Rite and Stewart's,
among others.
During the 2007 year management made decision to launch new product, and in late may they lunched ready to drink (RTD) sport drinks. After that,
they were thinking about aggressive strategy and had to make decision about branding new product, energy beverage.
Energy beverage market was growing market, but also there were a few strong companies with the products that were already strong and well known
brands. Examples of that are Red Bull, Monster and Rockstar. It is important to say that Dr. Pepper Snapple Group was major domestic nonalcoholic
beverage company in the US without branded energy drink of its own. Company and its management had to make decision to launch or not new
product, after that it was important to choose best marketing solution, distribution channels and some other important strategies for that product.
INDUSTRY FACTS
Energy beverages were 4th largest nonalcoholic beverage segment in the US in 2006. It was the fastest growing category in the market. Growth in
years 2005 and 2006 is displayed in the chart bellow.
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Ten major competitors at U.S. Market are shown in the chart below.
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2006 Sales – 6,2 billion (71% off premise-supermarkets, merchandises, convenience stores; 29% on premise – restaurants, night clubs)
2001-2006 retail sales grew 42,5% per annum
2007-2011 (prediction) 10,2% per annum
Sport Drinks 2006 sales – 7,5 billion; 13% growth rate
Competitors offer two varieties (regular and sugar-free), and position themselves in a way to emphasize energy. When it comes to price, average is
$2.00 regardless of the package.
Consumer Behavior
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Heavy users – males age 12-34
Consumption period – afternoon & morning
Consumption place – home, car, work/school
Consumers loyal to brands
Buy mostly off premises – supermarkets
Demand products with health and wellness benefits
SWOT ANALYSIS
EXTERNAL
FACTORS
INTERNAL
FACTORS
POSITIVE
NEGATIVE
STRENGTHS
 portfolio of strong brands
 integrated business model
 strong customer relationship
 market position
 stable cash flow
 experienced management
WEAKNESSES
 no branded energy beverage
 weak advertising
 no experience in the energy beverages market
OPPORTUNITIES
 growing market
 loyal consumers
 existing brands have no significant
differentiation
 new segments exploration
THREATS
 consumers loyal to already existing brands
 strong and competitive rivals
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ALTERNATIVES AVAILABLE
As a response to the marketing problem presented, company is faced with few choices and alternatives. It has to make decisions about its target
market, product lines and positioning, marketing channels, advertisement and promotion, and its pricing strategy. It has alternatives as follows:
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Target Market
o All energy drink users (43 mill of USA population)
o Heavy users (males 12-34; 70% of all users)
Product Line and Positioning
o Choice of package size, mix of packaging, line variation, flavors
o Differentiation source
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Packaging – 5L aluminum bottle package)
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Ingredients – ingredients others do not use
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Position as adult energy drink – market segment unexplored by competitors, has potential
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Position same as competitors
Marketing Channel
o Off-premise (supermarkets, convenience stores, etc)
o On-premise (restaurants, night clubs)
Advertizing and Promotion
o Due to modest funds, company does not have many choices, but they need to use their stable cash funds to advertize and create
awareness among customers.
Pricing
o $2.00
o Higher
o Lower
POSSIBLE OUTCOMES
Although faced with many choices and alternatives, company needs to take into consideration industry and market conditions, opportunities it has,
consumer behavior trends, and its own strengths, and choose the most convenient alternatives. It is important to find ways for differentiation, by
offering something new and different, and built competitive advantage upon that differentiation.
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Build differentiation I terms of packaging and ingredients (later on, if launching proves to be successful, they can explore and concentrate
on adult consumer segment, because it is currently unexplored, and seems to have profitability potential.
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Marketing Channel – Taking into consideration popular consumption and buying places, off-premise marketing channel should provide the
highest returns in the launching period.
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Advertizing and Promotion
o Advertizing Goal – Create awareness and stimulate brand trial
o Reasonable expenditure for media advertizing and promotion, without specific details
o Radio advertizing – in periods when people drive to work and back home
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Pricing – The best choice is to set price around the industry average ($2.00), but if the company manages to be different, they can set higher
price.
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