1. Dr. Pepper Snapple Group,Inc.
Energy Beverages
Jasmine Shattuck
Hugo Ayala
Nicole Hare
Casey Hynes
Erik Connelly

2. Introduction
● History of success in the Carbonated Soft Drink (CSD) market
● Only company in CSD without an energy drink
● Interest in breaking into the Energy Drink market

3. Problem Definition
● Does a profitable market opportunity exist in the energy drink segment?
● If so, what is the appropriate way to enter the market?
● Dr. Pepper must determine:
○ The appropriate target market
● Positioning
● Product line
● Budget
● Price

4. Situational Analysis - SWOT
INTERNAL Strengths:
● Competitive within the carbonated soft
drink (CSD) industry
○ Customers
○ Market share
● Distribution channels
● Ability to invest in opportunities
● Diverse brand portfolio
● Executive Management Team
Weaknesses:
● Amateur in producing energy drinks
● Unfamiliar Product
● Not the number one brand in the current
beverage market
● The company does not have the
underdog biography to help consumer in
a niche market trust a new product
EXTERNAL Opportunities:
● Energy drink market is increasing at a rate of
10.5% per year
● Consumers developing a new taste
● Bargaining power of suppliers is low due to
the highly competitive market
● There are several untapped niche target
markets
● Dr. Pepper Snapple inc can distribute directly
to convenience stores and take advantage of
these extra profits
Threats:
● Threat of new entrants
● Buyers have high bargaining power
● Suppliers have low bargaining power
● Rivalry of competing firms
○ Price Erosion
● High risk of replacements

5. Situational Analysis - SWOT
Strengths (Internal):
● Competitive within the carbonated soft drink (CSD) industry
○ Customers
○ Market share
● Distribution
● Diverse brand portfolio
● Ability to invest in opportunities
○ Stable cash flows
● Executive Management Team

6. Situational Analysis - SWOT
Weaknesses (Internal):
● Amateur in producing energy drinks
● Unfamiliar Product
● Not the number one brand in the current
beverage market
● The company does not have the underdog
biography to help consumer trust a new
product in a niche market.

7. Situational Analysis - SWOT
INTERNAL Strengths:
● Competitive within the carbonated soft
drink (CSD) industry
○ Customers
○ Market share
● Distribution channels
● Ability to invest in opportunities
● Executive Management Team
Weaknesses:
● Amateur in producing energy drinks
● Unfamiliar Product
● Not the number one brand in the current
beverage market
● The company does not have the
underdog biography to help consumer in
a niche market trust a new product
EXTERNAL Opportunities:
● Energy drink market is increasing at a rate of
10.5% per year
● Consumers developing a new taste
● Bargaining power of suppliers is low due to
the highly competitive market
● There are several untapped niche target
markets
● Dr. Pepper Snapple inc can distribute directly
to convenience stores and take advantage of
these extra profits
Threats:
● Threat of new entrants
● Buyers have high bargaining power
● Suppliers have low bargaining power
● Rivalry of competing firms
○ Price Erosion
● High risk of replacements

8. Situational Analysis - SWOT
Opportunities (External):
● Energy drink consumptions increasing
● Bargaining power of suppliers is low due to the highly competitive market

9. Situational Analysis - SWOT
Threats (External):
● Threat of new entrants
● Buyers have high bargaining power
● Suppliers have low bargaining power
● Rivalry of competing firms
○ Price Erosion
● High risk of replacements

10. Defining Alternatives
● Alternative 1:
○ Target males 12-34 (which account for 70% of consumption)
● Alternative 2:
○ Target women who consume energy drinks

11. Evaluation of Alternatives: Alternative 1
● Target market: 12-34 year old men
● Distribution: convenience stores
● Product line:
○ Flavors: regular (non sugar-free), two flavors
○ Packaging: single serving, 16.9 oz resealable aluminium bottle
● Positioning: Convenient and cheap
● Budget: $13,250,000
● Price: $1.75, penetration strategy

12. Evaluation of Alternatives: Alternative 2
● Target market: women, 12 years old +
● Distribution: convenience stores
● Product line:
○ Flavors: Regular (non sugar-free): fruity flavors (strawberry banana, triple-berry, tropical)
○ Packaging: feminine colors, 16.9 oz resealable aluminum bottle
● Positioning: Convenience for the on-the-go woman, emphasize health benefits,
placed near cold coffee products
● Budget: $15,000,000
● Price: $2.80, premium

13. Selling Price=$1.75 per 16.9 ounce bottle
1.75/16.9=10.36 cents per ounce
10.36 x 288 ounces per case = $29.82/ case selling price
Less 50% of convenience store margin = $29.82 x .50 = $14.91
Our margin is 63% so, 14.91 x .063 = $9.39
Profit per case = $14.91-$9.39=$5.52
DPSG Sales For Alternative 1

14. Breaking Even for Alternative 1
● Advertising promotion budget = $13,250,000
● Break Even:
$13,250,000/ 5.52 = 2,400,362.32 cases to break even
2,400,362.32 cases x $14.91/case = $35,789,402.2 in sales to break even
2,400,362.32 cases(to break even) / 130,771,777.5 cases (Total 12-34 Male Market
Available)
=1.84% of the unit sales of the total targeted market to break even.
● Testing:
$14.91 x 2,400,362.32 = $35,789,402.19 (Revenue)
$9.39 x 2,400,362 = $22,539,402.19 (Variable Costs)
$35,789,402.19 - $22,539,402.19 = $13,250,000 Profit before Advertising
$13,250,000 - $13,250,000(Advertising Budget) = 0
● 2,400,362.32 cases need to be sold in order to break even with a Price of $1.75/ can with a
promotions budget of $13,250,000 (1.28% of the total market)

15. Defining the Market for Alternative 1
186,816,825 cases sold in the total market
Males aged 12-34 is… 70% of the market
Off-Premise share is… 71% of the market
Convenience Store premise is… 74% of off-premise
16 oz package sales % of Convenience Store premise is… 50%
Regular and not sugar-free premise is… 80% of sales percentage
DPSG has a reach and distribution coverage to hit… 80% of the market
186,816,825 x .70 x .71 x .74 x .50 x .80 x .80 = 21,986,397.4 cases can be sold yearly to
our target market through our distribution channels.
*2,400,362.32 cases (Break Even unit sales) / 21,986,397.4 cases (Cases that we have the
capacity/ potential to sell) = we need to sell 10.92% of our potential sales capacity in
order to break even.
*Through our distribution centers we have potential of 21,986,397.4 cases x $5.52 =
$121,364,914 - $13,250,000 = $108,114,914 in profit if we reach our full potential.

16. DPSG Sales For Alternative 2
Selling Price=$2.80 per 16.9 ounce bottle
$2.80/ 16.9=16.9 cents per ounce
16.9 x 288 ounces per case = $47.72/ case selling price
Less 50% of convenience store margin = $47.72 x .50 = $23.86
Our margin is 63% so, $23.86 x .63 = $15.03
Profit per case = $23.86-$15.03=$8.83

17. Breaking Even for Alternative 2
● Advertising promotion budget = $15,000,000
● Break Even:
$15,000,000/ $8.83 = 1,698,754.25 cases to break even
1,698,754.25 cases x $23.86/case = $40,532,276.4 in sales to break even
1,698,754.25 cases(to break even) / 18,121,230.03 cases (Total Female Market Available)
=9.37% of the unit sales of the total female market to break even.
● Testing:
$23.86 x 1,698,754.25= $40,532,276 (Revenue)
$15.03 x 1,698,754.25= $25,532,276.4 (Variable Costs)
$40,532,276-25,532,276= $15,000,000 Profit before Advertising
$15,000,000 - $15,000,000(Advertising Budget) = 0
● 1,698,754.25 cases need to be sold in order to break even with a price of $2.80/ can with a
promotions budget of $15,000,000 (9.37% of the total female market)

18. Defining the Market for Alternative 2
186,816,825 cases sold in the total market
Female are… 9.7% of the market
Off-Premise share is… 71% of the market
Convenience Store premise is… 74% of off-premise
16 oz package sales % of Convenience Store premise is… 50%
Regular and not sugar-free premise is … 80% of sales %
DPSG has a reach and distribution coverage to hit… 80% of the market
186,816,825 x .097 x .71 x .74 x .50 x .80 x .80 = 3,046,686.49 cases can be sold yearly to
our target market through our distribution channels.
*1,698,754.25 cases (Break Even unit sales) / 3,046,686.49 cases (Cases that we have the
capacity/potential to distribute) = We need to distribute 55.76% of our potential
capacity
*Through our distribution centers we have a potential of 3,046,686.49 cases x $8.83 =
$29,902,241.7 - $15,000,000 = $14,902,241.70 in profit if we reach our full potential.

19. Pro Forma Income Statement
Applying our numbers to Market Share targeting 1% of the total market:
Alternative 1: $5.52 (profit per case) x 1,868,168 (1% of total market) = $10,312,287.36
$10,312,287.36 - $13,250,000 (promotion budget) = -$2,937,712.64 (Loss)
Alternative 2: $8.83 (profit per case) x 1,868,168 (1% of total market) = $16,495,923.40
$16,495,923.40 - $15,000,000 (promotion budget) = $1,495,923.44 (Gain)

20. Recommendation & Implementations
● Alternative 2
○ PROS:
■ Less saturated market
● Not as much advertising towards women
■ Increased ability to charge a premium
■ Potential to increase consumption habits
■ Higher reward
○ CONS:
■ 9.6% of the energy drink market
■ Difficult market to succeed in targeting women
■ Higher risk
■ Need to reach 55.76% of our potential to break even

21. Implementation of Targeting Towards Women:
● Budget: $15,000,000
■ TV: $7,000,000
● Product placement on shows
● Ads featuring successful women and their busy lifestyle
■ Print: $3,000,000
● Magazines
● Newspapers
■ Endorsements/sponsorships: $5,000,000
● Olympic athletes, yogis, well-respected female celebrities (e.g. Oprah)
● Projections/goals:
○ 2011
■ DPSG: 3% of the market
■ Revenue nearing $100,000,000
■ If successful, consider moving into male target market or into supermarkets

22. Implementation of Targeting Towards Women:
● Timeline
○ Q4 2007: Product development
■ Test flavors and opinions of target market
○ Q1 2008
■ Develop distribution plan and packaging
○ Q2 2008
■ Secure advertisement placements and at least one endorsement
○ Q3 2008
■ Produce product
■ Create advertisements
○ Q4 2008:
■ Launch product, distribute to convenience stores
■ Launch advertisements