Dr. Pepper Snapple Group, Inc.: Energy Beverages
1. How would you characterize the energy beverage category, competitors, consumers, channels, and DPSG’s category participation in late 2007? The energy beverage category was the fourth largest nonalcoholic beverage category in America during 2006. While it wasn’t among the top three, it was the fastest growing beverage category. The energy beverage market is primarily led by three big name brands including Red Bull, Monster Energy, and Rockstar. This market also encompasses over a few hundred smaller name brands that position themselves very similarly to the top name brands. All of these brands together proudly boasted estimated retail dollar sales of over $6 billion during 2006. The majority of these sales, 71% to be exact, occur as off-premise sales through convenience stores, supermarkets and mass merchandisers. The remaining sales are obtained through on-premise retailers, including restaurants and nightclubs. For the five years leading up to 2006, the United States total energy beverage retail sales saw a growth at an average annual rate of 42.5%.
The average energy beverage consumer is most probably a male between the ages of 12 and 34, according to data compiled in the Dr. Pepper Snapple Group article. However, adults ages 35-44 and teenagers, both male and female, make up for a large percentage of energy beverage consumers. Hispanics and African Americans also indulge in energy drinks at a higher rate and more regularly than other ethnicities and races. The average energy beverage drinker indulged in approximately 4.32 8-ounce servings per month during 2006. Consumers tend to drink energy beverages in the afternoon and are most likely at home, in the car, and at work/school. Energy beverage drinkers indulge because they enjoy the energy boost, mental alertness, refreshment, and taste from the beverage.
The primary off-premise retail channels for energy beverages are...
DrPepperSnapplegroup, Inc. is a major integrated brand owner, bottler, and distributer of nonalcoholic beverages in the United States. In 2007 they had net sales of $5.748 billion, 21 manufacturing facilities and approximately 200 distribution centers in the United States. They are the number one Company in carbonated soft drink products in the United States.
Their business strategy is to invest most heavily in their key brands to drive profitable and sustainable growth by strengthening consumer awareness, developing innovative products, and brand extensions to take advantage of evolving consumer trends, improving distribution and increasing promotional effectiveness.
DrPepperSnappleGroup, Inc. also wants to focus on driving growth in their business with emerging categories, through brand extensions, new product launches, and selective acquisitions of brands and distribution rights. The company has a future goal of significantly increasing the number of branded coolers and other cold drink equipment over the next few years, which is expected to provide an attractive return on investment. The company also intends to leverage its integrated business model to reduce costs by strategically creating greater geographic manufacturing and distribution coverage and to be more flexible and responsive to the changing needs of large retail customers by...
In early September 2007, Andrew Barker emerged from a lengthy discussion on the energy beverage market in the United States. As a brand manager for Snapple beverages at the DrPepperSnappleGroup, Inc., he was charged with assessing whether or not a profitable market opportunity existed for a new energy beverage brand to be produced, marketed, and distributed by the company in 2008. DrPepperSnappleGroup, Inc. was the only major domestic nonalcoholic beverage company in the United States without a significant branded energy drink of its own. The decision to explore a new energy beverage was made by senior company management as part of a corporate business strategy to focus on opportunities in high-growth and high-margin beverage businesses. After launching a ready-to-drink sports drink, the DrPepperSnappleGroup, Inc. believed they should put into consideration of introducing a new energy drink beverage.
1. Decision problem:
In the decision process, I am going to explain the key decision issues that DrPepperSnappleGroup, Inc. will be faced with when launching their new energy drink “Rush.” The first key thing to ask your self (as the decision maker) is when launching a new energy drink will it be...
...TEXAS A&M UNIVERSITY CORPUS CHRISTI
DrPepper-Snapple Inc: Energy Drinks
In the ever changing world of customer needs and expectations DrPepper-Snapple was faced with an increased customer focus on energy drinks. This area, when exploited correctly, is a high growth and high margin beverage business. In early September 2007, Andrew Baker had his marching orders. He emerged out a long discussion about entering the energy drink business and off he went.
First let’s understand that an energy drink simply does as its title suggest, gives the consumer energy. This is accomplished most of the time with caffeine from a guarana bean. Some of the other players in this market also use taurine, ginseng, carnitine, and B Vitamins
Let’s also take a look at DrPepperSnappleGroup Inc. They are a major integrated brand owner that also performs bottling and operates strong distribution capability in the United States, Mexico, Canada, and the Caribbean. They also have a business model that differs from its competitors. They are a major carbonated soft drink (CSD) business but they put theretheir focus and margins in there ready to drink market (RTD). This investment in the RTD sector gives them a strong leverage point when evaluating entering the energy drink market, which...
...I. Define the Problem
DrPepperSnapple 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 DrPepper 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 DrPepperSnapple 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.
DrPepper is indecisive about what market it wants to target. The energy drink market range from males ages 12 to 34. Drpepper 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...
Case 1: DRPEPPERSNAPPLEGROUP, INC. ENERGY BEVERAGES
The DrPepperSnappleGroup, Inc. (DPS) was incorporate in Delaware in 2007. The company was spun-off from Cadbury Schweppes, the British company and public on May, 2008. Being one of big beverage companies, DPS is major integrated brand owner, bottler, and distribution of nonalcoholic beverage in the United State, Canada and Mexico and the Caribbean
In the United State, the company’s net sales is 89%. The company participates in both the flavored carbonated soft drink (CSD) and non-CSD market segment. The CSD’s key brands are DrPepper, 7UP, Sunkist, A&W. The non-CSD’s key brands are Snapple, Mott’s, Hawaiin Punch, Clamato.
In Canada, the net sales is 4%. The firm participates in both CSD and non-CSD market segment as the United State market.
In Mexico and Caribben, the net sales is 7%. The company participates in carbonated mineral water, flavored CSD, bottled water, and vegetable juice categories. Some key brands include Penafiel, Clamato, and Agufiel.
1. Internal factors:
Strengths: DPS holds the outstanding strengths more than other competitors in the beverage market about management, marketing, manufacturing and finance.
Experienced executive management team: the company is managed by the diverse...
Table of Contents
STRATEGIC ISSUES AND PROBLEMS 2
DR. PEPPERSNAPPLEGROUP, INC. 2
PLAN OF ACTION 3
RECOMMENDED ENERGY BEVERAGES MARKETING STRATEGY 3
Goals and Objectives 3
Target Market 3
Marketing Mix 4
Product Strategy 4
Price Strategy 4
Distribution and Sales 4
Advertising and Promotion 4
STRATEGIC ISSUES AND PROBLEMS
Andrew Barker, brand manager for Snapple beverages at the DrPepperSnappleGroup, 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 DrPepper...
Dr. PepperSnappleGroup, Inc. is a leading intergraded brand owner, manufacturer and distributor for non-alcoholic beverages in the U.S., Canada and Mexico. They have been around since the 1980’s and have expanded throughout the years. They have a range of flavored carbonated drinks. Some significant highlights of the company are their #1 flavored carbonated soft drinks.Dr. PepperSnapple, Group Inc. are rated #3 in North American for their liquid refreshment beverage business. In 2008 they formed with Cadbury. Dr. Pepper & SnappleGroup, Inc. sell brands such as; Dr. Pepper, 7UP, Sunkist, A&W, Canada Dry, Crush, Schweppes, Squirt, RC Cola, Diet Rite, Sundrop, Welch’s, Vernors, Country Time and Hawaiian Punch.
Dr. Pepper & SnappleGroup, Inc. strength is their diverse port-folio of very popular soft drinks. Their portfolio provides their bottlers, distributors and retailers with a wide range of different products and provides the availability for growth and a larger profit margin. They are the #1 carbonated soft drink company in the U.S. and are the only beverage company with year to year market share growth. They have a stable cash flow with a highly...
...1.0 COMPANY BACKGROUND
Dr. PepperSnappleGroup, Inc. is a leading integrated brand owner, bottler, and distributor of non-alcoholic beverages in the US, Mexico, and Canada as well as the Caribbean. It is number 1 flavored carbonated soft drink (CSD) company in the Americas and a leading innovator and marketer of functional/non-carbonated beverages by having more than 50 brands that are synonomous with refreshment, fun and flavor. In the US and Canada, this company primarily participate in the flavored CSD market which consist of finished beverages and manufacture beverage concentrates and fountain syrups. In the non-carbonated beverage (NCB) market in US, Dr. PepperSnappleGroup participate in manufacturing ready-to-drink tea, juice, juice drinks and mixer. In addition, this company participate in carbonated mineral water, flavored CSD, bottled water and vegetable juice categories in Mexico and the Caribbean.
2.0 DECISION-MAKING PROCESS
Andrew Barker, the brand manager for Snapple beverages at the DrPepperSnappleGroup, Inc., was charged with assessing whether or not a profitable market opportunity existed for a new energy beverage brand to be produce, marketed, and distributed by the company. Although no simple formula exists that can ensure a correct solution to this problem, use of...