Dr. Pepper/ 7up Case Analysis
MKTG 610 Online
December 4, 2011
Doctors recommend that to stay healthy one should consume about 8-9 cups of fluid a day but in todays world most of those fluid are consumed in form of soft drinks. According to 2000 census “ Americans consumed 53 gallons of soft drinks per person compared with about 47 gallon in 1990” generating about $60.3 billion in sales (Kerin & Peterson, 2011). Soft drink industry is controlled by three large companies, which include Coca-Cola Company, Pepsi Company, and Dr. Pepper/7Up Inc. controlling about 90% of the market share. Coca-Cola is the largest of three companies and produces 5 of 10 top brands with market share of about 44.1%, followed by Pepsi Co. that owns 31.4% of market shares and produces three of top ten selling brands. Lastly Dr Pepper/7Up (Cadbury Schweppes) own two of top ten selling brands and has 14.7% of market shares. Pepsi Co. and Coco Cola Company spend about 39 cents of every dollar they earn on Advertising and Promotion thus creating aggressive environment for smaller companies. Soft drink industry has three major players, which include concentrate producer, bottlers, and retail outlets. Concentrate producers are responsible for national advertising while expenses are usually shared 50/50 for the local advertising.
Being the third largest beverage company Dr Pepper/7Up Inc. has sufficient advertising budget but not as much as Coca-Cola or Pepsi, thus they have to employ strategies to reach their target audience with limited budget. Squirt has to maintain its current consumers while targeting wider market to compete with the larger companies
Squirt is a grapefruit flavored soft drink brand owned by Dr Pepper/7Up Company, recently company is exploring new ideas to better position their product to expand their product and increase sales. Since its introduction Squirt is promoted as thirst-quenching drink aimed at young adults aged 18-44 year old with the tag line “Squirt your thirst”. Recently company has revisited its positioning of the product few time without any major change. According to recent surveys squirt current positioning is not considered very effective among the users of competitor products. According to Food, Cone and Belding’s (FCB) research squirt new campaign should continue using thirst-quenching benefit as part of its positioning but focus more on their target audience. FCB recommended that company should focus on 21-24 year old consumers appealing to their “ life stage marked by straddling of adult responsibility and more carefree times” ((Kerin & Peterson, 2011). According to FCB’s analysis or US census and Dr Pepper/7Up consumption data FCB recommends that Squirt should be targeted to younger multicultural consumers. Census shows that Hispanic population has increased 57.9 percent form 1990 to 2000; research also shows that there are more young adults of 20-25-age range in Hispanic population than any other ethnic population. Squirt is one of the largest selling brands of soft drink in Mexico, and since 70 percent of Hispanic population is from Mexico brand recognition can be used as leverage to expand its market. Survey shows that Hispanics prefer shopping closer to home and prefer mom and pop types of store over larger supermarkets, Its also shown that more Hispanic prefer speaking in their native language. Given the analysis Squirt has great opportunity to expand its market and sales by creating more targeted advertising campaign, and by targeting growing Hispanic population.
Evaluation of Alternatives:
First in show have few solutions to introduce their product depending on different budget level of marketing. See Table 1 Table 1Item
| Budget Level $ 530,000 $ 730,000
| $ 529,000
| $ 100,500
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