CASE STUDY : DR PEPPER SNAPPLE GROUP.

EXECUTIVE MASTERS IN BUSINESS ADMINISTRATION

MKT 750 MARKETING MANAGEMENT

1. NORAINI BINTI ZAINUDDIN (2013123841)2. NORADAWIYAH BINTI MOKTAR (2013145357)3. FAZLYN DIANNA BINTI MANSOR (2013172647)4. NOOR ZAIDAH BINTI OMAR (2013173969)

INTRODUCTION The company now known as DPS has evolved from a combination of

discovery, invention and collaboration. This rich history includes the very birth of the soft drink in 1783, when Jean Jacob Schweppe perfected the process for carbonating water and created the world's first carbonated mineral water.

The company established its own bottling and distribution network in 2006, when it acquired full ownership of Dr Pepper/Seven Up Bottling Group, the largest independent bottler in the U.S. Subsequently, it acquired several other major independent bottling and distributing businesses, including All-American Bottling Co., 7UP Bottling Co. of San Francisco, and Southeast-Atlantic Beverage Corp., among others.

Dr Pepper Snapple Group is a leading producer of flavoured beverages in North America and the Caribbean. Our success is fuelled by more than 50 brands that are synonymous with refreshment, fun and flavour. We have 6 of the top 10 non-cola soft drinks, and 13 of our 14 leading brands are No. 1 or No. 2 in their flavour categories.

PRODUCTS OF DPS

DEFINE THE PROBLEMNo. Problem Status

1. To decide venturing into new product – protein infused

energy drink

Major

2. Choice of target market Minor

3. Product line and positioning choice Minor

4. Marketing channel choice Minor

5. Advertising and promotion Minor

6. Pricing and profitability Minor

Dr Pepper Snapple having problems deciding whether the company should enter into the energy drink market. The energy drink market is a high growth and high-margin business. 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.

ENUMERATE DECISION FACTOR

1. Horizontal IntegrationPro: Use the advantages of other countries manufacturing facilities to

produce products to help avoid increase in transportation and delivery cost. (S2, S5,S7,T4,T7).

Con: It relates more on the executive and management team. Producing

new product means that the project leaders have high levels of responsibility for achieving results but little real authority over their team members. A resulting lack of control can lead to finger-pointing when things go awry, which can hinder productivity.

ENUMERATE DECISION FACTOR

2. Market PenetrationPro: Advertise with celebrities to help sell product like Snapple, and show

that there products are healthy and good for you. Advertise their other brands more like Snapple, Hawaiian Punch, and

Mott’s. Concentrate marketing efforts on Snapple rather than soft drinks since

Snapple brand is growing and soft drinks are decreasing. Con: Price-conscious consumers may only make purchases based on how

much the product costs. These consumers generally are not loyal to a product or brand unless it continuously offers the lowest price. When the promotional period ends and the product returns to its regular price, the consumer will likely shop around for lower pricing that may be offered by the competition.

An ineffective market penetration policy could result in reduced profitability. If the resulting sales volume during the promotional period does not meet projections, the reduced price may mean the resulting profits are too low.

ENUMERATE DECISION FACTOR

3. Product DevelopmentPro: Develop more non-cola, low calorie drinks. Respond to customer needs as they change.Con: It can get costly because resources are required by the Research and

Development department of the business; a lot of experiments and tests are also performed.

Involves a risk of whether the consumers will like the new features that have been developed/added to the new/existing product.

ENUMERATE DECISION FACTOR

4. Market DevelopmentPro: Enter new market such as India, China or other Asian countries that

has large population. (S5, O8). It expands your consumer exposure and makes your company and

product names recognizable in the marketplace.Con: If products are expensive to create, attempting to have the lowest

prices may not lead to a significant profit. Attention to packaging and image, as part of a strong marketing

campaign, can thus increase company expenses to introduce the company in new market.

OPPORTUNITIES

1. Evolving consumer trends (natural flavours, no preservative)2. Venturing into new beverages categories (RTD, protein enhanced

drink)3. Consumers are looking for nutrient enriched beverages4. Increased selling activity, promotion, distribution, advertisement5. Acquire regional bottling company to broaden geographic coverage6. Owning bottling distribution networks reduces cost and dependence

on other companies7. Strategic alliances with convenience store, restaurants and fast food

chains8. Rapid growth in beverage market

THREATS

1. Highly competitive market.2. High dependency on maintaining good relations with bottlers and

contributors3. Declining price of energy beverages4. Product distribution (placement of merchandize)5. Health issue for market segmentation6. Increasing cost due to additional feature in beverage (protein-enhanced)7. Packaging and positioning

EXTERNAL FACTOR EVALUATIONKey External Factors

Weight

Rating

Weighted score

Opportunity      

1 Evolving consumer trends (natural flavours, no preservative) 0.08 3 0.24

2 Venturing into new beverages categories (RTD, protein enhanced drink) 0.09 4 0.36

3 Consumers are looking for nutrient enriched beverages 0.09 4 0.36

4 Increased selling activitiy, promotion, distribution, advertisement 0.07 4 0.28

5 Acquire regional bottling company to broaden geographic coverage 0.07 4 0.28

6Owning bottling distribution networks reduces cost and dependence on other companies

0.07 3 0.21

7 Strategic alliances with convenience store, restaurants and fast food chains

0.09 4 0.36

8 Rapid growth in beverage market 0.07 3 0.21

Threat      

9 Highly competitive market. 0.06 2 0.12

10High dependancy on maintaining good relations with bottlers and contributors

0.07 2 0.14

11 Declining price of energy beverages 0.05 2 0.1

12 Product distribution (placement of merchandize) 0.05 2 0.1

13 Health issue for market segmentation 0.04 2 0.08

14 Increasing cost due to additional feature in beverage (protein-enhanced) 0.05 2 0.1

15 Packaging and positioning 0.05 2 0.1

  Total 1 43 3.04

STRENGTHS

1.Ranked top for CSD in US2.The Company’s combination (integrated) of brand

ownership, bottling and distribution gives it inherently more control over the value chain and thus a competitive advantage.

3.Strong relationship with bottlers and contributors4.Attractive positioning within large, growing and profitable

market5.Has 21 manufacturing / bottle facilities located in the

United States6.Strong operating margin, significant & strong cash flow7.Experienced executive management team8.Participation in various categories of refreshment and

beverage

WEAKNESSES

1.Does not have mission or vision statement

2.Does not have low calorie or sports drinks

3.Does not have a strong water brand

4.Not a global company like Pepsi and Coca Cola, only

operating in US

5.Poor marketing product (advertising)

6.Not strong advertising campaign

7.Product price is high compared to market

INTERNAL FACTOR EVALUATIONKey Internal Factors

Weight

RatingWeighted score

Strength      

1 Ranked top for CSD in US 0.08 3 0.24

2The Company’s combination (intergrated) of brand ownership, bottling and distribution gives it inherently more control over the value chain and thus a competitive advantage.

0.09 4 0.36

3 Strong relationship with bottlers and contributors 0.08 4 0.32

4 Attractive positioning within large, growing and profitable market 0.08 3 0.24

5 Has 21 manufacturing / bottle facilities located in the United States 0.09 4 0.36

6 Strong operating margin, significant & strong cashflow 0.08 4 0.32

7 Experienced executive management team 0.07 3 0.21

8 Participation in various categories of refreshment and baverage 0.07 4 0.28

Weaknesses      

9 Does not have mission or vision statement 0.03 1 0.03

10 Does not have low calorie or sports drinks 0.05 2 0.1

11 Does not have a strong water brand 0.05 2 0.1

12 Not a global company like Pepsi and Coca Cola, only operating in US 0.05 2 0.1

13 Poor marketing product (advertising) 0.06 2 0.12

14 Not strong advertising campaign 0.07 2 0.14

15 Product price is high compared to market 0.05 2 0.1

  Total 1 42 3.02

THE INTERNAL - EXTERNAL (IE) MATRIXThe Internal - External (IE) Matrix

Strong Average Weak (3.00-4.00) (2.00-2.99) (1.00-1.99)

High (3.00-4.00) I II III

Medium (2.00-2.99) IV V VI

Low (1.00-1.99) VII VIII IX

• Back ward, Forward, Horizontal Integration• Market Penetration• Market Development• Product Development

THE

EFE

TOTA

L W

EIG

HED

SCO

RES

(3.0

4)

THE IFE TOTAL WEIGHED SCORES (3.02)

4.0

3.

2.

1.

3. 2. 1.

SWOT TOWS MATRIX SO Strategies WO Strategies

1.Develop more non-cola, low calorie drinks. (S1, O1)

1. Produce more healthy drink. (W2, O2, O3)

2.

Enter new market such as India, China or other Asian countries that has large population and marketing potential. (S6, O5, O7)

2. Develop sports drink. (W2, O2, O3, O7)

3.Partner with restaurants and fast food chain. (S8,O8)

3. Develop water drink. (W3, O2, O3, O7)

ST Strategies WT Strategies

1.Renew the packaging and product positioning in stores and marketing medium (S6,S7,T7)

1.Invest more in healthier products like a sports drink, or flavoured water.(W2,W3,T2,T7)

2.

Us the advantages of other countries manufacturing facilities to produce products to help avoid increase in transportation and delivery cost. (S2, S5,S7,T4,T7)

2.The company should be more independent and not rely so much on the contributor to sell there products (W4,T2)

3.

Us brand threw advertisement with celebrities to help sell product like Snapple, and show that there products are healthy and good for you. (S1,S7,T5,T7)

3.Advertise there other brands more like Snapple, Hawaiian Punch, and Mott’s (W6,T4, T7)

IDENTIFY THE BEST ALTERNATIVEHorizontal Integration Use the advantages of other countries manufacturing facilities to

produce products to help avoid increase in transportation and delivery cost. (S2, S5,S7,T4,T7)

Market Penetration Advertise with celebrities to help sell product like Snapple, and

show that there products are healthy and good for you. (S1,S6,T7,T9)

Advertise their other brands more like Snapple, Hawaiian Punch, and Mott’s (W6,W7,T8)

Concentrate marketing efforts on Snapple rather than soft drinks since Snapple brand is growing and soft drinks are decreasing. (S3,T2,T7)

 

IDENTIFY THE BEST ALTERNATIVE Product Development Develop more non-cola, low calorie drinks. (S1, S6, O2) Market Development Enter new market such as India, China or other Asian countries

that has large population. (S5, O8)

DEVELOP AND IMPLEMENTATION OF MARKETING PLAN

1. Product Strategy• Use natural approach (herbal) for a natural energy boost rather than

synthetic additives that lead to unnatural energy crashes and taste good.• The package should be convenient, i.e. bottle with a screw cap since no

other brand has such packaging.• Size of the package is very important, since the 8.3-ounze is the most

popular but 16-ounze size represents 50 % sales in convenience stores.

2. Price Strategy• Due to this target market, it is recommended that the product be sold at

$2.00 per package. Even though we want to emphasize the new feature (protein-enhanced) of the drinks, customer may not wish to try this new product due to their brand loyalty and their mind set that refuse to try something new. Especially if this energy drink cost them more than their usual energy drink.

• This price is offered by most of its competitors and is a price consumers are willing to pay for an energy beverage.

DEVELOP AND IMPLEMENTATION OF MARKETING PLAN

3. Distribution and Sales (Placing)• This product will be sold at both supermarkets and convenience stores

in order to reach a large number of customers.• To use their current distribution chain to get the new product to the

consumers as demand increases

4. Advertising and promotion• The usage of social media like Facebook and Instagram will assist the

marketing and advertisement• May sponsor events to gain higher brand recognition• Use spokesperson that our customers can connect to, the easy going,

yet energetic mentality that we are trying to get across

EVALUATION OF DECISION MADE Although faced with many choices and alternatives, company

needs to take into consideration industry and market conditions, opportunities it has, consumer behaviour trends, and its own strengths, and choose the most convenient alternatives. It is important to find ways for differentiation, by offering something new and different, and built competitive advantage upon that differentiation.

The company can enter the energy beverage market by providing a similar product to what is currently on the market. However, their strategy is what will make the difference in whether or not they succeed or fail within the market. Even if the fail, their portfolio is so diversified that it will not strongly affect the the company as a whole. The fact that brand loyalty is a huge factor within this market may hinder their entrance to the market. However, if they find a way to amp up the competition (per say) then they may be able to make a good profit within the energy beverage market.