Case Analysis III : Dr. Pepper
I. Case Summary
II. Case Objectives
Is to learn how Dr. Pepper is able to deal with its weaknesses and threats.
And how it can also take advantage of its opportunities using its strength.
III. Key Issues
How to get more foreign bottling companies in other countries to franchise with Dr. Pepper.
IV. External Threats
A threat to Dr. Pepper Co. is that Mr. PiBB, a product of Coca-Cola. The company feels the Coca-Cola product is almost similar to its product. It takes on parts of its characteristics by having the name Mr. PiBB which is close to Dr. Pepper, more like creating a name for an entity. Mr. PiBB flavor was of cherry this Dr. Pepper possessed. And because both products look alike, as in they both had the same color customers might tend to switch products. So this similarities were a threat to them because they felt people might like it better than Dr. Pepper and that the Coca-Cola bottler who are currently on a franchise with them might end up giving up on Dr. Pepper and switching to Mr. PiBB. To them, this will actually means that a big drop in the sales could result, which will affect their company’s profit margin. Management of Dr. Pepper Co. are doing their best to their product into some part of the country and the world, with the competition it might start lagging behind in achieving its goal in pursuit of growth because portion of its market share will have been taken over by Mr. PiBB.
A threat to Dr. Pepper is that the Food and Drug Administration, FDA, might ban the use of Saccharin the sweetener that replaced Cyclamates in diet drinks. If such action takes place Dr. Pepper along with other diet-soda industry will be affected “badly”. Saccharin is said to be irreplaceable by any other sweetener because of its “virtues of acceptable taste, reasonable cost, and legality.” (Pg. 123) Which mean with the ban on the use of Saccharin manufactures will be faced with the burden getting a different type of sweetener which is likely to be more costly than the latter. So they will not just be losing part of their sales of about 10 percent, they will also be incurring additional cost in acquiring a new sweetener to produce their product. At the same time, a change in sweetener may change to taste of their product.
The Federal Trade Commission is a threat to Dr. Pepper because of its plan to abolish the practice of assigning bottlers exclusive territories. If the FTC happens to abolish the practice the bottlers will be affected because a steep competition among bottlers causing outside bottler of a territory to also market their products in areas they aren’t establish. Mr. Clement feels this all comes back creating a burden for the manufacturers because as the bottlers sales reduce theirs also fall too. Because there will be less demand for its concentrates by the bottlers who in turn mix, package distribute, and promote it to its market.
V. External Opportunities
Opportunities to increase production of its domestic market and to expand other markets: Because Dr. Pepper remains concentrated in the areas where it is popular, It has the ability to market its goods in the other US States in which it isn’t yet popular. At the same time, since the consumption demand for Dr. Pepper in the States it has captured appears to look good from statistics. Statistical figures revealed that 95,326 citizens of Waco, Texas consume more Dr. Pepper than 1,512,893 citizens of Detroit. This actually makes Dr. Pepper feel confident of it future. With this fore sight, it plans to double the consumption of its domestic markets with the next fiver years.
It has the ability to explore further into existing markets is great but it choose to get deal with bottling industries of countries that are open to American goods. An example of it is the Japanese...
Please join StudyMode to read the full document