Dr. Pepper Case Study

Dr. Pepper/Seven Up, Inc.

I. Squirt is the best selling brand of grapefruit flavored soda in the U.S. market; however, it has recently lost ground to offerings from both Coca-Cola and Pepsi Co. The brand manager, Katie Cox, wants to write a new Marketing and Advertising plan for the brand in order to stimulate growth.

II. Three companies with 90% of the market share control of the carbonated soft drink industry in the United States. These companies include (in order of market share size): Coca-Cola, Pepsi Co, and Dr. Pepper/7Up. These three companies also represent the top ten selling brands in the United States market. In a given year the average American drinks more carbonated soft drinks than tap water. The industry is divided into three major participants; concentrate producers, bottlers, and retail outlets. The concentrate producers design the products and are responsible for national marketing efforts. The retail outlets are where the product is sold to the end consumer. Marketing effects spend heavily on consumer advertising, since the individuals who consume the most soft drinks are US consumers between the ages of 20 and 49.

III. Five Squirt bottlers account for 50% of sales. These bottlers are located in Los Angeles, Chicago, Detroit, San Diego, and Portland. A total of 100 bottlers account for half of the Squirt case volume with these bottlers located predominantly in the Western U.S. California alone is responsible for 38% of the total Squirt Case volume. Squirt is the primary brand with two brand extensions - Diet Squirt and Ruby Red Squirt. These extensions account for about 20% of Squirt Sales, and diet Squirt was the first carbonated drink to be sweetened with Nutri-Sweet. Squirt's direct competition comes from two Coca-Cola brands - Fresca and Citra. Fresca is a caffeine free diet soft drink targeted to adults over age 30, while Citra is sugared caffeine free version of Fresca targeted to teens and young adults. Squirt outsells Citra and Fresca combined by case volume. Squirt's advertising has used a variety of media including newspapers, television, and radio. Overall Squirt spends less on advertising and promotion than its competitors. Squirt also enjoys the highest brand awareness in the carbonated grapefruit drink category. The target market is adults ages 18-34 years old. Foot, Cone & Belding made a full review of positioning strategy and made a few recommendations in mid 2001. They concluded that Squirt was more thirst quenching than refreshing, and that it was not seen as either hip and young or not so cool and hip. A recommendation was made that Squirt also be targeted to a younger demographic, especially the 18-24 year old range. They reasoned that this age group is a large consumer of soft drinks, and that the "thirst-quenching" attribute of the product would appeal to them. Squirt has also been looking into the growing Hispanic population in the U.S. Squirt is one of the larger selling brands of soda in Mexico, and Squirt has large brand recognition there. According to the Squirt census data the Hispanic population is one of the fastest growing groups in the U.S. Within this group 25% were under the age of 18. Cities such as Los Angeles, El Paso, San Diego, San Jose, and San Antonio are over 25% Hispanic.

IV. The U.S. has seen a large growth in the Hispanic population and experts predict that Hispanics will overtake Blacks as the largest minority in