Dr. Pepper Snapple Group Inc. - Energy Beverages

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Contents

Dr. Pepper Snapple Group Inc.: Energy Beverages        1

Introduction:        1

Business Problem:        1

Alternatives:        1

Evaluation of Recommendation:        2

SWOT Analysis        2

Make a Choice:        4

Implementation:        6

Dr. Pepper Snapple Group Inc.: Energy Beverages

Introduction:

Dr. Pepper Snapple Group Inc. is a mature and stable organization with well-integrated business model. The organization owner of many successful brands, bottler and distributors with well-established channels to market. Dr. Pepper Snapple Group Inc. had a diverse portfolio of products in both CSD & Non CSD market segments and exhibited their presence primarily in the US market (89% of sales) and the rest in Canada, Mexico and Caribbean.

Business Problem:

While enjoying the sustained growth the management of Dr. Pepper Snapple Group Inc. management feels ready to take a step further and extend into promising Energy beverage market segment. The business problem is to design a comprehensive marketing strategy for a new energy drink products with goal of identifying -the most profitable target customer segment;

Alternatives:

Based on the available information, Andrew Barker has to make a number of decisions before finalizing the final marketing strategy.

1. Markets: Domestic vs International market

1. Customer Segment: Based on the % of US customers, gender & consumption data, company can focus on teens & young adults between ages 12-35 years while focusing on Hispanic and African Americans. Among these groups, they can further choose from already established male- teen/ adult consumers as a target segment or try to target not-much explored female- teen or young adult consumers.
2. Product Line & Brand Positioning: New energy drink can be packaged either in 8 oz./ 16 oz. packs. Regular energy drinks have 80% market share whereas only 20% market share goes to Sugar-free beverages. Depending on the chosen target segment (male/ female), the brand can be positioned by sending gender appropriate message.

1. Retail Channels: New products can be first introduced in Supermarkets or Convenience stores.

1. Marketing and Promotion Options: Based on the available data, it is evident that spending money on media advertisements is helping brands like Red Bull & Rock Star
2. Price: Dr. Pepper Snapple Inc. Group could actually price the product competitively with other products or keep the price between average of other products and Red Bull. The pricing decisions can be made based on in what quantity the product will be manufactured & the content.

Evaluation of Recommendation:

SWOT Analysis

Tools like SWOT analysis will help us to analyze the entire situation from multiple angles and help to make better decisions.

Strengths:

• Product: Strong Portfolio of leading, Consumer preferred brands in both CSD and non-CSD markets.
• Competencies:

• Well integrated business model with ownership of brands, bottling facilities and distribution services that ensures less dependency on suppliers and offers competitive advantage over competitors like Red Bull that had to depend on third party vendors for availing these services.
• Management team is highly skilled and had maintained good relationship with their strategic partners within industry and customers both.

• Currently Planned Strategic Initiatives: Additionally, other business initiatives like acquiring more facilities and increasing distribution coverage through acquiring less covered area would further boost the chance of success increasing customer reachability. It will also help the company to increase the utilization of existing facilities while achieving economies of scale.
• Customers: Dr. Pepper Snapple Group Inc. has good understanding of its customer behavior and they are continuously optimizing their marketing strategy to keep the customers loyal to their key brands.
• Cash flows: stable cash flows and strong operations allows the company to invest in newer highly profitable growth opportunities with less concerns about the existing debts and minimal capital investment.
• Growing industry: Dr. Pepper Snapple group has very well established their position in the market and market conditions are also very favorable for non-alcoholic beverage industry.

Weaknesses:

• Strong competitors like Red Bull that had majority of the market share. Other competitors were also strong leading brands like Pepsi and Coca Cola. Hansen Natural Corporation has strong presence in the Canada market and strategic partnership with PepsiCo Canada.

Opportunities:

• Growing market.
• Company intends to invest more in higher-margin marketing channels like convenience stores, vending machines and small independent retail outlets by investing in coolers.

Threats:

• Product proliferation was resulting in many newer products in the market with different claims. It is hard to predict how customers will accept the new product and customer loyalty.
• Cannibalization of the existing products due to this product is a possibility.
• Younger population shows decrease in the % of the US population.

Make a Choice:

Overall, Dr. Pepper Snapple Group Inc. can select a safer path with minimal investment and making safer choices or can try new ways.

Market Selection:

As per the available information, Dr. Pepper Snapple Group Inc. has only 11% sales from international markets. So, I believe that they should focus launching the new energy drink in the domestic US market where they have strong presence.

Product Ownership:

Instead of licensing the product they should own the brand.

Target Segment:

While making decision about target customer segment, it is obvious from the available data that teens and young adults appear to enjoy the energy beverages more as compared to other age groups. Also, energy drinks are more popular among men than women