1. Dr. Pepper Snapple-Digging Deep
1. Introduction
Dr. Pepper Snapple is a thriving company who did not know the depths of success
that that they would be involved in today. Starting in 1904, the company was born and
has just prospered ever since. They have proven themselves thanks to their superior
marketing strategies and their management. These capabilities have led them in the right
direction to be in the top three leading beverage companies out there behind Coca-Cola
and Pepsi. They have had above average return as well, despite a few obstacles. This is
why I believe that DPS will continue to be successful and grow even more. I think that
they are capable of getting to that international level where Coca-Cola is.
2. General Environment
2.a Political-Legal Segment: It doesn’t seem that DPA is regulated under very strict
guidelines or associated with any legal ties. 2.b.: Economic Segment: sales of DPS
beverages are influenced by how the economy is going. When the economy is weak,
people will buy less discretionary products. This can hurt DPS. People will turn to other
substitutes that cost less such as water or second brand beverages. During the recession,
commodity prices shot up; making the cost of inputs, such as sugar, aluminum and tin
went up. This is not good because buyers will decrease their spending for DPS products.
2.c. Demographics: DPS sales tend to be higher in summer months and in the holidays.
People spend more during holidays. Gifts are a good example. It is hot during summer
so people want to buy more drinks to cool off. It is a good idea to maximize DPS’s
marketing during these times where they are most popular. However, it would also be a
good idea to increase marketing strategy during the times products aren’t so popular in

2. order to boost sales to a level close summer and holiday sales. Also another factor is age
and ethnicity. It is known that as the Hispanic population has been growing fast, there
has been a correlation between this and increased sales in DPS products. In order to
maximize profits, DPS should cater to this segment by possibly increased advertising on
Hispanic television channels or more availability of DPS soft drinks at Hispanic places.
The baby boomer generation is also buying more DPS products, which makes sense
because they are the largest generation right now. Appealing to them as well will
increase DPS profits. 2.d Socio Cultural: In respect to demographics, society has been
more and more interested in having health benefits labeled on their products. You see it
at Wendy’s or Subway. This portion of the population is the driving force that makes
DPS want to produce healthier types of beverages and provides health benefits on their
packaging. With people trying to watch their weight more due to obesity scares, buyers
are expected to decrease their spending in the more sugary and high calorie drinks. They
will increase their spending on DPS items such as sports energy drinks or ready to go
teas. In a way it is a win-win situation because even though DPS would be losing sales in
sugary drinks like their carbonated soft drinks, sales would go up in the healthier options.
Revenue would be about the same. But at the same time DPS is still at risk because
bottled water sales are expected to go up, which means less DPS products.
3. Industry Environment
3.a. Bargaining Power of Suppliers: DPS’s suppliers are the bottling and distribution
companies that supply their beverages. These include Coca-Cola Enterprises,

3. PepsiAmericas, the Pepsi Bottling Group and Dr. Pepper Snapple Bottling Group. There
are also other bottling companies that act as supplier which are not owned by the
company. These suppliers can be considered powerful because without their business to
DPS, the company simply wouldn’t exist. They are dependent on these beverages. DPS
can be considered the more powerful entity since the majority of their sales volume
generated was because of the strong relationships with some of these Coca-Cola and
PepsiCo affiliated brands due to Dr. Pepper’s solid branding and positioning. 3.b.
Bargaining Power of Buyers: DPS’s buyers include the general public who drinks
carbonated soft drinks, teas, juices and even energy drinks. This is a broad market of
buyers, so DPS has a variety of consumers. Since DPS has made some changes to their
particular drinks, this has drawn in particular consumers. Consumers who like a
lighter/sweeter twist to their drink are buying drinks such as Dr. Pepper Cherry or Green
Tea Ginger. DPS has started adding health benefits on bottles of lemonades and juices
for those who are worried about health such as people with illnesses/conditions or people
that just want to be healthy. DPS is also selling a type of energy drink, this appeals to
consumers such as college students or people who need a boost in stressful environments.
Buyers are the driving force of consumption and profit for DPS. 3.c. Competition
Intensity: Competition is intense because DPS in number three behind two leading
competitors in the same industry. 3.d. Threat of Substitutes: It could be justified that
substitutes are growing. Substitutes would include DPS’s main competitors products,
Coke and Pepsi. Substitutes also include not as popular competitors such as low price
brand companies like Shasta, RC Cola and supermarket brand drinks. These low price
brands appeal to people that especially are trying to be frugal with their money. If they

4. believe that a “Dr. Thunder” tastes the same or better than a Dr. Pepper, they will buy it
for a lower price; it’s as simple as that. 3.e. Threat of New Entrants: I don’t really think
that there is a big threat for new entrants since the market consists of a few dominant
companies in the industry that generate the most profit. It would be difficult to build
such positioning and a brand name against these companies. 3.f. Incumbent Options: If I
were an incumbent for this industry, I would probably try it out but then get out if after a
good amount of time, I was not successful. I could probably make it as a second choice
brand, but it would depend if I wouldn’t mind not being in the top 3 competitors in this
industry.
4. Competition
4.a Identifying a Competitor: One major competitor against DPS is Coca-Cola. 4.b.
Competitor Assumptions: Coca-Cola has been heavily focusing their capital on
technology development. They company probably assumes that they will be able to
advance more in their revenue by improving the way Coca-Cola dispenses their
beverages. 4.c. Competitor Objectives: Coca-Cola is trying to gain even more
recognition, especially globally. They have done well with satisfying their mission
statement. They have created value and inspired people. They would also assume that
being global is something that will increase their value as a company because they have
an international focus. 4.d. Competitor Capabilities: One of Coca-Cola’s capabilities is
that they are innovative with their technology. Since they introduced a beverage machine
which used “micro dosing” technology, it is being used by many fast food restaurants
globally. Another capability they have is their marketing strategies. Coca-Cola focuses
on their marketing and creates very creative ads and commercials for their products that

5. draw attention to consumers. One of their marketing ads that they are most known for is
the polar bears ad.
5. Firm Resources and Capabilities
5.a Company Resources: the company’s resources consist of heir management team and
the skills that are associated with it. DPS’s team leaders have great experience and have
been with the company for a while, so what the ins and outs are. I would have to say that
this intangible asset is their most important resource. Other resources can be described as
the things that make the physical side of the production process possible. These are
DPS’s warehouses, distribution and ingredients. 5.b Capabilities: One of their
capabilities is their marketing and brand positioning. DPS does so well with their
advertising strategies as far as getting messages out to the public with their creative
commercials and ads. One huge thing associated with this is celebrity endorsements.
DPS had Gene Simmons and Dr. Dre endorse DPS’s Dr. Pepper in commercials. This
gained lots of publicity and inspiration. When this happens, people see these celebs and,
therefore, believe it is “cool” to drink Dr. Pepper. This in return raises profits. 5.c. VRIN
Model: I would consider celebrity endorsements as the top one because it is not just
anyone that DPS can be able to bring into promote their products. The fact that these
particular celebs endorsed DPS is a big deal because people will come to know if they
have not already, that Dr. Pepper is associated with Dr. Dre and Gene Simmons. It would
be like if Coca-Cola had Katy Perry endorsing Coke. She is popular and this would boost
sales and gain recognition over time regarding the association between the celeb and the
drink. I think it is rare; no one can copy a particular celeb endorsing a brand because the
public learns that association. It’s engrained in their heads.