CASE STUDY DR. PEPPER SNAPPLE GROUP CASE ANALYSIS

Case Study Dr. Pepper Snapple Group Case Analysis



Case Study Dr. Pepper Snapple Group Case Analysis

Strategic Issues

Currently, energy beverages (excluding coffee) in 2006 were the fourth largest nonalcoholic beverage category in the United States after soft drinks, sports drinks, and bottled water. While Dr Pepper Snapple is a major competitor within the flavored carbonated soft drink (CSD) market as well as the non-CSD market, they are only taking part in a small segment of the non-CSD market.

The company currently sells ready-to-drink tea, juice, juice drinks, and mixer categories. However, none of these segments are of the top four categories specified above. Therefore, they are missing out on a huge market/profit opportunity. It would be in Dr Pepper Snapple's best interest to expand their portfolio to energy beverages which are the fourth largest nonalcoholic beverage market.

Analysis and Evaluation of Entering the Energy Beverage Market

Nature of the Industry, Market, and Buyer Behavior

The energy beverage market is expected to grow through 2011. In recent years, growth has slowed due to the maturing of the market as well as new entrants to the market (greater competition) of hybrid energy beverages. The major players in the market are Red Bull North America, Hansen Natural Corporation, Pepsi-Cola, Rockstar Inc., and Coca-Cola. While each player/competitor has their own strengths and weaknesses, one thing is sure about this market: brand loyalty will be a huge obstacle within this market for Dr Pepper Snapple.

Another thing to consider about the energy beverage industry is that (besides Redbull) marketing efforts are modest. Competitors rely on promotional vehicles such as brand Web sites, events, and sponsorship to promote their brand.

Most competitors offer very similar products which provide consumers with and energy boost, mental alertness, refreshment and a great taste. The differences lie in the packaging size, price per single-serve package, target market, and marketing initiatives.

Red Bull North America - The market leader in dollar sales and unit volume. They however have seen a decline in their dollar market share in recent years due to new entrants to the market, aggressive competitors, and lower prices for other brands. Their niche in the industry is the fact that they were the energy beverage pioneers with a high customer loyalty and charge higher prices due to the fact that consumers will generally pay higher prices for their product because of customer loyalty. However, they do only offer two products to consumers: regular Red Bull and sugar free Red Bull.

Hansen Natural Corporation - This company distributes Monster Energy drinks to wholesalers, retailers, and on-premise retailers (bars, nightclubs and restaurants). Their strength within the industry is their distribution agreement with Anheuser-Busch.

Pepsi-Cola - They provide SoBE and Amp products to consumers. Their competitive edge is te fact that they market their products via the Pepsi-Cola distribution system.

Rockstar, Inc - This company is distributed by the Coca-Cola Company.

Coca-Cola - This competitor markets Full Throttle and sugar-free Tab Energy Brands. Their strength has been in acquiring licensing agreements (such ...