Action Plan: Dr Pepper Snapple Group, Inc. Energy Beverages Action Plan: Dr Pepper Snapple Group, Inc. Energy Beverages Inhoud Introduction. 3 Analysis. 3 The Market. 3 Competitors. 4 Customer behaviour. 4 Marketing Mix 4ps. 5 Product. 5 Place. 5 Price. 5 Promotion. 5 Recommendation. 6 Target Market. 6 Product Line and Positioning. 6 Marketing. 6 Advertisements and Promotion. 6 Pricing. 7 Introduction The history of Dr Pepper Snapple Group Inc. is very complex, but all started when Jean Jacob Schweppe invented the world’s very first carbonated mineral water in 1783.
A young pharmacist, Charles Alderton from Waco, Texas made Dr Pepper in 1885. It was only sold in the pharmacy where Alderton worked. In 1970 in the New York -region health food store owners invented a new apple soda, Snapple. The Unadulterated Food Corporation owned Snapple and later it becomes Snapple Beverage Corp. Within the years companies were growing and ownerships have been changed and Dr Pepper Snapple Group Inc. has formed from different beverage companies. Today Dr Pepper Snapple Group Inc. is one of the most known and largest non-alcoholic beverage producers in the U.
S. Dr Pepper Snapple Group Inc. is in both the flavoured carbonated and the non-carbonated soft drink businesses. The most known brands are Dr Pepper, 7UP, A&W and Canada Dry. In 2007 Dr Pepper Snapple had an 18, 8 % share of the U. S. carbonated soft drink market segment. Dr Pepper Snapple was the only big non-alcoholic beverage company without its own energy drink in 2008. Basically Dr Pepper Snapple Group Inc. was struggling with a problem whether it should produce its own energy beverage or not.
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The main issue was would the launch of a new energy beverage be profitable and a wise investment for the future? Moreover, how can the new energy drink compete with other huge brands? There are several difficulties and elements to evaluate before entering the energy beverage market, such as the market itself, competitors, consumer behaviour and marketing. Analysis The Market The energy beverage market is one of the fastest growing and most innovative segments of the current beverage market. Red Bull, Monster Energy, Rockstar and hundreds of similar positioned brands had estimated sales of 6. billion dollars in 2006. From 2001 till 2006 the annual growth rate of the energy beverage market was 42. 5%. However, analysts are now projecting an average annual growth rate of 10. 5% from 2007 till 2010. This, we conclude, is due to market maturity, increased price and increased competition. In addition, one should also note that consumers in this market only choose up to 1. 4 different brands, which tells us the market is very loyal to existing brands. If a brand can build and maintain a sufficient customer base, they will benefit from loyal recurring buyers.
The difficult part however is getting these loyal customers. Due to the above mentioned conditions, we find it a viable statement to describe the energy beverage market as profitable but tough. The market can be segmented through three main attributes; demographic, geographic and psychographic. As for demographic, the most profitable customers are male between the age of 12 and 34. However, we can’t say anything towards the income level, race and ethnicity of the consumers due to lack of information. We further believe that energy beverages are mostly onsumed in urban and suburban areas. If we in turn look at regions, we can state that the main consumption of energy beverages takes place along the west and east coast of the US. Psychographic segmentation shows us that the main parts of the market, the greatest consumers of energy beverages, are gamers, students and athletes. These groups of people look for an energy boost, to improve mental alertness, as refreshment and for the taste. Competitors The main competitor in the energy beverage market is Red Bull.
The brand was introduced in 1997 and was the pioneer of its time. Red Bull has a high brand awareness due to its massive advertising efforts. For example: Red Bull Stratos was a space diving project involving Austrian skydiver Felix Baumgartner. Baumgartner broke the sound barrier on his descent, thus becoming the first human to do so without any form of engine power. Eight million people viewed the Red Bull Stratos project live and hundreds of millions of people heard about it via every kind of media creating a massive publicity flow towards Red Bull.
Currently Red Bull is the market leader, however, due to high prices and the increased competition Red Bull is losing market share and sales. Hansen Natural Corporation (HNC) is another strong competitor. They produce and manufacture a wide variety of non-alcoholic beverages in the U. S. However they are known for their energy drink: Monster, which we see as one of the most promising new energy drink brands. Recently HNC have benefited from distribution agreements. For example: Anheuser-Busch wholesalers distributed the brand to retailers in different territories in the US in 2007.
They also distribute to on-premise retailers. This includes bars, nightclubs and restaurants in territories selected by Hansen Natural Cooperation. Furthermore, Monster Energy focuses on a specific age group. They focus on gamers, Extreme Sports enthusiasts and the hip-hip crowd. This enables them a huge market, mostly with the gaming community. The last prominent competitor is Rockstar Inc. Rockstar was introduced in 2001 and is distributed by the Coca-Cola Company. Rockstar, alike Monster, focuses its efforts on the gaming and extreme sports community.
As of 2008 Rockstar holds a 14% market share in the US and thus, it must be considered to be a competitor. Customer behaviour The heavy user of energy beverages can be described as male between the ages of 12 and 34. According to statistics, the average American would consume about 4. 32 litre of energy drink a month. The beverages are primarily consumed in the late afternoon and early in the morning. Most frequently, consumption takes place at home, in the car and at work/school. We can also state that convenience stores and supermarkets are the most dominant off-premises retail channel for energy beverages.
The major reasons for the use of energy beverages are the need of an energy boost, for improving mental alertness, as refreshment and for taste. As previously stated, customers are loyal towards their brand though we still believe people will be willing to try a new product if it seems interesting and appealing enough. If the potential buyer is then satisfied with the product, through for example interesting brand, product fits their needs, is user-friendly and easy to access, loyal customers can be attained. Marketing Mix - The 4Ps Product
The product is an energy drink which tastes good and gives a boost and refreshment to its users. The main ingredients which give the boost and taste are caffeine, guarana and taurine. Probably stevia could be used as a sweetener; because it differs from competitors sweeteners. The product should be suitable for men who are 12-34 years old. The package should be convenient, for example a bottle with a screw cap since no other brand has such packaging. Also the 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.
Place Dr Pepper Snapple Group Inc. bottling and distribution system supplies both off-premise and on- premise retailers, but off-premise retailers are more potential and efficient to the new energy beverage. Off-premise retailers contain massive part of the whole energy beverage sales. Price 2, 00$ per single-serve package is the normal retail price in the energy beverage industry regardless of package size. Promotion In order to launch the new energy beverage, introductory media advertising and promotion expenditures are essential.
Even though Dr Pepper Snapple Group can’t afford the same kind of expensive marketing and sport sponsorships as their competitor Red Bull does, but by using efficient channels the new energy drink can still reach potential customers. Recommendation Target Market When Dr Pepper Snapple Group Inc. decides to introduce a new energy beverage on the market we recommend them to focus on male consumers between the age of 12 and 34. These consumers are, according to the statistics, the most profitable. They consume about 4. 32 litres of energy drink a month.
The main consumers in this target market would be gamers, students and athletes. Furthermore, we recommend that Dr Pepper Snapple Group Inc. should focus on consumers that consume their energy beverage at home. We believe it is now very difficult to get a stronghold in on-premises as they are very loyal towards Red Bull and Monster energy drinks and therefore advise to focus on off-premises for selling the energy beverage. Product Line and Positioning When it comes down to the product line of Dr Pepper Snapple Group Inc. nergy beverages, we recommend they should firstly offer one flavour of energy beverage. This flavour can come both in a regular and sugar-free version. Furthermore, we recommend they should introduce a single-serve aluminium bottle shape with a resealable screw cap. By introducing this bottle we believe Dr Pepper Snapple Group Inc. can diversify from its competitors as they all have aluminium cans that upon opening can’t be closed. Furthermore, these bottles should be offered as a single serve to the consumers and with a 8-ounce content.
We recommend that the brand should firstly get a stronghold onto the energy beverage market before offering multipacks and maybe even bigger sized bottles to its consumers. This also includes for introducing different kinds of energy beverages. These can be introduced onto the market when they have a build a strong and loyal brand. The current brands offer its consumers “Energy” and “Mental Alertness” as benefits for drinking their energy beverages. As a competitive advantage Dr Pepper Snapple Group Inc. could offer an increased amount of caffeine, herbs and B vitamins per 8-ounce servings.
Marketing Advertisements and Promotion In order to launch the new energy beverage, an introductory media advertising and promotion expenditures are essential. Even though Dr Pepper Snapple Group can’t afford the same kind of expensive marketing and sport sponsorships as their competitor Red Bull does but by using efficient channels the new energy drink can reach the potential customers. We recommend the use of social media like Facebook and Twitter. Dr Pepper Snapple Group Inc. has a free way to communicate with their potential consumers via social media.
They have the opportunity to start contest and create a loyal group of followers. Furthermore, we recommend Dr Pepper Snapple Group Inc. to sponsor events to gain higher brand recognition. Moreover, the bottle is an interesting way of getting the attention by having contest if they buy the bottle they can win tickets to a certain event which they could sponsor. Pricing When it comes down to pricing we recommend to be in the $2. 00 range. This price is offered by most of its competitors and is a price consumers are willing to pay for an energy beverage.
However, we also think there is a possibility to have discounts or: “buy three bottles get one free” pricing to get the attention of the consumer. We also recommend tosee if an agreement can be made with large retailers such as Walmart to offer value packs at lower prices, this of course when the brand is settled in the market. In the end we believe that if Dr Pepper Snapple Group Inc. follows these recommendations here above they have will have an energy beverage that can compete in the current energy beverage market and be one of the main competitors due to its diversified product- and price offering.
References Kerin, R. & Peterson R. (2013). Strategic Marketing Problems: Cases and Comments. Pearson. -------------------------------------------- [ 1 ]. Kerin, R. & Peterson R. (2013). Strategic Marketing Problems: Cases and Comments. Pearson. [ 2 ]. Kerin, R. & Peterson R. (2013). Strategic Marketing Problems: Cases and Comments. Pearson. [ 3 ]. Kerin, R. & Peterson R. (2013). Strategic Marketing Problems: Cases and Comments. Pearson. Exhibit 2. [ 4 ]. Kerin, R. & Peterson R. (2013). Strategic Marketing Problems: Cases and Comments. Pearson. Exhibit 2.
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