I. Define the Problem
Dr Pepper Snapple faced problems deciding whether the company should enter into the energy drink market. The energy drink market is a high growth and high-margin business. Recent rise in such functional drinks has Dr Pepper wanting to tap into this fast growing market. Dr. Pepper is one of the only major domestic carbonated soft drink companies that have not introduced a line of energy drinks. The challenge Dr Pepper Snapple faces is what would be the best way for it to market a new energy drink product. The company simply does not have the income to compete in advertising against Red Bull.
Dr Pepper is indecisive about what market it wants to target. The energy drink market range from males ages 12 to 34. Dr pepper is trying to decide whether or not it would be good to target the existing market are restructure the drink and make it more segmented to an older group of people. In deciding, it must focus on the flavors and ingredients that will differentiate the product from its competitors.
II. Relevant Information
Characterize the Industry
The energy drink is a consumer product that satisfies the need for consumers to enhance their energy. There are several competitors in the energy drink market. Red Bull being the leader, followed by Monster. The main purpose of this product is to provide the user with energy. Most consumers drink energy drinks in the morning to get them going or in the afternoon. Some users drink energy drinks to help them stay focused and alert throughout their workday. Others use it to boost energy before going to the gym to perform a high intense workout. Some people even add energy drinks to alcohol while out partying, to help them stay alert. Energy drink companies aren’t changing constantly, but there are lots of new companies entering the market, making it extremely competitive. The product line requires new companies like Dr Pepper Snapple to introduce line extensions to separate its products from the competitors.
The energy drink is considered a consumer product. The energy drink is purchased by consumers for personal use. There are several different types of energy drinks. They come in 8-ounce, 16-ounce, or 24-ounce cans. The goal of Dr Pepper Snapple is to introduce an energy drink that is different from the others. Dr Pepper Snapple wants to introduce a drink that is packaged in a unique container that allows the user to re-close the bottle, by adding a screw top. In addition to differentiating the package, the company wants to change the ingredients, by increasing the amount of caffeine, herbs, and vitamin B per serving. Although it has lots of competition, the energy drink market is not a fast changing market.
Identify All Potential Segments and Target Markets
Brand positioning is one of the challenges Dr Pepper Snapple currently face. Although the heavy users are currently males ages 12 to 34, the Dr Pepper Snapple wanted to tap into the untouched market of adult energy drinkers. None of the other major energy drinks positioned their product to target adults ages 35 to 54. Dr Pepper Snapple can target this age group to satisfy the need to boost energy, become more alert, or to make them feel revitalized. They can target women by offering a product to boost energy after a long workday.
Trends in the Market
The energy drink is an item that will be purchased in the same style as a carbonated soft drink. This would be an item that consumers purchase daily. The average consumer would stop into a local gas station, convenient mart, or retail store and purchase this item. The energy drink can be categorized as a convenience product. The energy drink customer will make frequent purchases that will allow little comparison or shopping effort and low customer involvement. It is also a product that is not really affected by a recession....
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