Case: Dr Pepper/Seven Up, Inc Introduction



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CASE: Dr Pepper/Seven Up, Inc

Introduction

Dr Pepper/Seven Up, Inc is the largest division of Cadbury Schweppes PLC that is the third largest soft drink companies and fourth largest confectionary company that sells its products in over 200 countries. Also, this company is the largest non cola soft drink company in the North America, and the third largest soft drink company in the United States. They are rated among first 10 companies based on their product share. However, some of their products represent a market leader in specific categories.


Market situation

In the United States there are more than 900 registered brand names for carbonated soft drink. Most of these brands are recognized and accepted in the local regions and they mostly represent the taste of the local consumers.

Taste of the locals are changing over time and where there were just colas taste was accepted in the past; in the last decade there is significant growth (30%) in popularity of flavored soft drinks. Flavors such as orange, cherry, grape, lemon lime are much more represented in the market.

For the purpose of soft drink production there are three groups of participants in the chain production. These are: concentrate producers, bottlers, and retail outlets. Three major concentrate producers in the United States are Coca Cola Company, Pepsi Cola Company, and Dr Pepper/Seven Up, Inc. However, there are more than 500 bottlers that also convert flavor concentrate into carbonated soft drinks, but the three biggest concentrate producers also owned companies that provide them with the bottles. Retail channels used for carbonate soft drinks are supermarkets, stores, vending machines, mass merchandisers and thousands of small retailers. Three companies together represent over 90 percent of the carbonate soft drinks in the United States. Coca cola takes more than 44,1% of the market share with its top five products, Pepsi Cola 31,4% with three products and Dr Pepper/Seven Up, Inc 14,7% with only two products.

Soft drink marketing is characterized by large investment in consumer advertising and promotion, selling and trade promotion to and through bottlers to retail outlets and consumers price discounting.

Industry research

Industry research covered aspects of consumer’s behavior (approximate quantity that Americans consumes, age preferences, racial and ethnic behavior).

The findings of the research clearly represents the difference in taste with different racial and age groups. This helps companies in soft drinks to easily decide what they would like to produce and which target population to serve and to design their marketing campaign and to do the marketing advertisement and promotion.

The findings are more than interesting and they do represent factual state and change in the United States but while interpreting results and the change over time (especially in the taste change from cola to other flavors) it is necessary to take into consideration differences in life styles and demographic changes as such.



SQUIRT Brand

Although the brand exists since 1930s, it has been marketed by Dr Pepper/Seven Up, Inc since 1995. Origin of the Squirt comes from Herb Bishop who experimented in 1938 with popular regional non carbonated beverages, and the name comes from the feel of taste. The product represents carbonated soft drink that required less fruit and less sugar. Sale of the product grew during the Second World War. The first change happened in 1977, when the brand were sold and when the new owner decided to position this brand as a mainstream soft drink. Second change happened in 1983, when the Squirt were first soft drink in the United States sweetened with Nutra Sweet.

Final change occurred in 1995 when after the acquisition took the place, Dr Pepper/Seven Up was assigned the responsibilities in manufacturing, marketing and distribution of Squirt.

SQUIRT Marketing

Shortly after the acquisition, Squirt sells grow significantly over the years. There were two major impacts on these. One is definitely approach in bottling and selling. Dr Pepper/Seven Up opted for strategy of using the existing bottlers that already proved themselves in this business. They have cooperated with some 250 bottlers.

One third were independent bottlers and the other two thirds were affiliated with Coca Cola Inc and Pepsi Cola Inc. The two thirds enable Dr Pepper/Seven Up to cover more than 83% of the bottlers market that covers 85% of total soft drink volume.

Squirt is directly competing with the Coca Cola’s products Citra and Fresca that are on the market for a greater time than Squirt is. Also the competitive products are as well Mello Yellow and Surge (Coca Cola), Mountain Dew (Pepsi) and Sundrop (Dr Pepper/Seven Up). All four products are with caffeine and produced in regular and diet version.

Popularity of the brands is strongly connected with the message used in promotional or advertising activities and promotional messages used. Messages linked with the young people and trends that they follow can make strong influence on their attitude and choice in taking soft beverages. Media used for promotional activities are newspapers, spot television, cable television, spot radio. Apart these Squirt also uses retail, consumer and trade promotions and some of them use in cooperation with individual bottlers. Although it is obvious from the data that Coca cola and Pepsi Cola have much higher promotional expenditures we should also take into consideration that these two companies have higher sales rate and generally invest a lot in promotional and marketing activities. However, the promotional activities were conducted in a line with general marketing research findings. Generally speaking, Squirt was targeting the adults with focusing on “hip, cool and experiential nature” with the message “Beyond the ordinary refreshment the great citrus taste is incredibly thirst quenching”. However in 1995, this strategy was revised due to some opinion that the product itself was much associated with the sport. So they migrated to the strategy: “everyday on the go experiences”. In 1999 this was revisited again due to large impact of Citra (CocaCola) in the market.

Change in the strategies over time, make us conclude that Squirt successfully promote its consumers as interesting, unique people that likes music. However, due to limited changes in design and other promotional actives makes their consumers to be attract by Citra users, and Citra users were not attract by anything to Squirt.

Based on the findings of focus groups and interviews with the consumers Management make decision for further analysis of market positioning requesting clear recommendations.

Positioning analysis

Analysis have been performed in order to improve and strengthen Squirt position among the competitors. Findings has shown that Citra was the closest brand to Squirt. However the overall conclusion was that as a urgent matter the creative strategy needs to be developed to increase relevancy with a younger consumers but keeping Squirt’s thirst quenching property.



Recommendations

The following recommendations have been done based on statistical data (public relevant data), Squirt consumption data and internal researches conducted by Dr Pepper/Seven Up.

Recommendations are


  • Continue on emphasizing of Squirt’s thirst quenching benefit

  • Target niche of youth between age 18 to 24

  • To be accepted by different International and racial groups

  • Use words excitement and spontaneity of living up to the max.

Based on these recommendations, consultants recognized five benefits such as: appropriateness for carbonated soft drink category, emphasizing of instant gratification, freedom that different demographic segment strives to maintain, potential to break through the clutter of soft drink advertisement and new positioning with the new product look and feel.

Further researches had been conducted on Hispanic niche based on proposals made by the consultancy firm. The findings has shown a lot of great data based on which it was possible to make a proper decision for developing and adopting Advertisement and Promotional Plan.

The major findings were:


  • Significant growth in Hispanic population in the United States (from 1999 to 2000, for 57,9%, or in 13,1 million)

  • They are generally concentrated in western (43,5%) and southern (32,8%) United States and they are mostly in California and Texas

  • Majority of this population is under the age 18 (35%) and their median age was 35,3 years.

  • They much prefer shopping close to the place of living

  • Mexico is the second largest market in the world and the Squirt is the second most popular brand with 41% share.

Final output

The Squirt will pass over reconsidering the folloeing



  1. Market targeting and positioning – existing, proposed by consultants or developed new one

  2. Multicultural marketing mind set – approach to target niche to be determine


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