2. Problem & Solution
2
◻Would it be a profitable opportunity for the Dr. Pepper
Snapple Group, Inc. to produce, market, and distribute
a new energy beverage brand in a maturing market?
◻Yes!
⬜ Utilize existing customer loyalty
towards their most popular
product, Dr. Pepper
⬜ Focus on the health aspects the
product provides
⬜ Targeted towards an older segment
of the population.
4. Dr. Pepper Snapple Group, Inc.
4
◻ Major integrated brand owner, bottler, and distributor of non-
alcoholic beverages in the U.S., Mexico, and Canada
◻ In 2007, the company posted net sales of $5.7448 billion
◻ Strong Portfolio of Leading, Consumer-Preferred Brands
⬜ High levels of consumer awareness, preference, and loyalty
⬜ Dr. Pepper is the #2 flavored CSD in the U.S. (ACNielsen)
◻ Strong Customer Relationship
◻ Distribution
.
5. Key Challenge
5
❏ Energy beverage market is competitive
❏ 5 competitors dominate the US energy beverage market
❏ 94% of dollar sales and unit volume market shares in the US
7. The Energy Beverage Market
7
◻ 4th largest non-alcoholic beverage category in the U.S. in 2006
■$6.2 billion dollar market
◻ From 2001-2006, Retail sales grew at an average annual rate of
42.5%
◻ Industry analysts projected an average annual growth rate of
10.2 percent from 2007-2011
■Market maturity
■Increasing price and packaging competition
■Entrance of hybrid energy beverages
8. Dr. Pepper Energy Beverage
Financial Performance
8
⬜ Dr. Pepper Snapple Group, Inc. does not have a current
energy beverage brand in their portfolio
⬜ In 2007:
■More than 75 percent of Dr Pepper Snapple Group, Inc.
volume was generated by brands that hold either the first or
second position in their category
■Strength of these key brands has served as a platform for
launching innovations and brand extensions
10. Key Success Factors
10
CUSTOMERS WANT COMPETITION
PROVIDES
KEY SUCCESS
FACTORS
Energizer Added significant
amounts of caffeine
Ingredients that boost
energy
Health Sugar free options Product line extensions
Sleek design Slim and colorful can
designs
Manufacturing
equipment
11. SWOT
11
Positive Negative
Internal Strengths
• Integrated infrastructure
• Stable cash flows
Weaknesses
• Only one top performing product
within each product category-
puts cash flow at risk
• No pre-existing product for
energy drink category
External Opportunities
• Strong CRM
• Extensive manufacturing
and distribution network
Threats
• Entering a maturing market
• Top 5 competitors account for
94% of sales and consumption
12. Value Chain
12
Firm Infrastructure - Highly integrated business model
Human Resource Management - Experienced exec management team
Technology Development - Broad geographic manufacturing & distribution
Procurement - Strong consumer relationships & distribution expansion plans
Inbound
Logistics:
Raw
materials
Operations:
Manufacturing,
packaging,
quality control,
maintenance
Outbound
Logistics:
Warehousing,
distribution,
delivery
Marketing &
Sales:
Advertising,
promotion,
pricing,
channel
relations
Service:
Recycling,
consumer
monitoring
15. Key Issues / Decision Criteria
15
◻ Key challenge: Is it profitable for Dr. Pepper Snapple
Group to develop, market and sell an energy drink?
◻ Decision Criteria:
⬜ What should the product be?
⬜Who is the target market?
⬜Positioning?
⬜How should it be advertised?
16. Option #1: Accelerate
16
A pre-workout energy drink targeting athletes and those
who want to get the most out of their work out.
Pros
◻ Accelerade, sister product, has loyal consumer base
that most likely adopt the new product
Cons
◻ Limited target market
◻ May be hard to distinguish from current product
17. Option #2: No Energy Drink
17
Energy drink market is entering the mature market stage
and there’s a high degree of consumer loyalty to existing
brands.
Pros
◻ Money can be allocated to other products.
Cons
◻ Energy beverage sales in 2006 were 6.2 billion dollars.
18. Option #3: Dr. Pep
18 An energy drink that focuses on the health aspects the product
provides that’s targeted towards an older segment of the
population.
Pros
◻ Targets different segment of market
◻ Taps into growing consumer trend (health)
◻ Dr. Pepper name is well known, eases market penetration
Cons
◻ Potentially harmful to Dr. Pepper’s reputation as a brand
◻ Could fail to attract desired segment of market
19. Key Issues and Related
Solutions19
Profitable
Product
Development
Specific Target
Market
Distinct
Positioning
Recognizability
Option #1:
Accelerate ✓ ✓ ✓
Option #2:
No Energy Drink ✓ ✓
Option #3:
Dr. Pep ✓ ✓ ✓ ✓ ✓
20. Recommendations
20
◻ Dr. Pep is the profitable option for entering the energy
drink market.
◻ Dr. Pep solves key issues such as:
⬜What product is
⬜Target market
⬜Positioning
⬜Advertisement and promotion
25. Risks & Mitigation
25
◻Potentially harmful to Dr. Pepper’s reputation as a brand
⬜Monitor consumer response to Dr. Pep that is linked to Dr.
Pepper
⬜ Have plans in place to neutralize negative commentary
◻Could fail to attract desired segment of market
⬜Additional consumer research
⬜Research on how best to reach target consumers
27. Dr. Pep is the energy drink option that will
capture an underserved segment of the
energy drink market by focusing on the
health benefits this energizer brings to the
consumer.
Recap27
