Table of Contents
STRATEGIC ISSUES AND PROBLEMS2
DR. PEPPER SNAPPLE GROUP, INC.2
PLAN OF ACTION3
RECOMMENDED ENERGY BEVERAGES MARKETING STRATEGY3
Goals and Objectives3
Distribution and Sales4
Advertising and Promotion4
STRATEGIC ISSUES AND PROBLEMS
Andrew Barker, brand manager for Snapple beverages at the Dr Pepper Snapple Group, Inc., has been charged with the task of assessing a new market opportunity for the brand. The decision has been made by senior company management to explore a new energy beverage as a part of a corporate business strategy to focus on opportunities in high-growth and high-margin beverage businesses. Barker must determine whether or not a profitable market opportunity exists for a new energy beverage brand to be produced, marketed, and distributed by the company. He must then make a recommendation as to whether or not the company should introduce a new branded product into the energy beverage market. Any proposal to enter into the beverage market requires a marketing strategy for a branded energy drink, including a first-year sales and profit projection. It is important to note that Dr Pepper Snapple Group, Inc. is the only major domestic nonalcoholic beverage company in the United States without a significant branded energy drink of its own. In order to come to an educated conclusion, Barker must assess Dr Pepper Snapple Group, Inc.’s current situational analysis, analyze the energy beverage market in the United States, and consider the market opportunities available to the company. The problem facing the Snapple brand is how to maintain its competitive position given an environmental threat (energy beverages). They must determine whether or not it is strategically effective to enter the energy beverage market, while at the same time preserving profitability and its customer base. DR. PEPPER SNAPPLE GROUP, INC.
In the United States and Canada, Dr Pepper Snapple Group, Inc. participates primarily in the flavored carbonated soft drink (CSD) market segment. Their key brands are Dr. Pepper, 7UP, Sunkist, A&W and Canada Dry. In 2007 the company had an 18.8 percent share of the US CSD market segment (measured by retail sales). In the non-CSD market segment in the US, Dr Pepper Snapple Group, Inc. participates primarily in the ready-to-drink tea, juice, juice drinks, and mixer categories. The key brands in this segment are Snapple, Mott’s, Hawaiian Punch, and Clamato. In Mexico and the Caribbean, Dr Pepper Snapple Group, Inc. participates primarily in the carbonated mineral water, flavored CSD, bottled water, and vegetable juice categories.
Dr Pepper Snapple Group, Inc. senior executives identify the key strengths of the company as: 1. Strong Portfolio of Leading, Consumer-Preferred Brands 2. Integrated Business Model
3. Strong Customer Relationships
4. Attractive Positioning Within a Large, Growing, and Profitable Market 5. Broad Geographic Manufacturing and Distribution Coverage 6. Strong Operating Margins and Significant, Stable Cash Flows 7. Experienced Executive Management Team
Executives also identify the key elements of the company’s business strategy, which each capitalize on company strengths. The key elements are: 1. Build and Enhance Leading Brands
2. Focus on Opportunities in High-Growth and High-Margin Categories 3. Increase Presence in High-Margin Channels and Packages 4. Leverage the Company’s Integrated Business Model
5. Strengthen the Company’s Route-to-Market Through Acquisitions 6. Improve Operating Efficiency
PLAN OF ACTION
There are two primary alternatives open to Dr Pepper Snapple Group, Inc.: to enter into the energy beverage market with a new branded product, or to not enter into the energy beverage market. Based on our analysis of the energy beverage market and considering the...