Practice Case 1: Week 2 – Seminar 4
Dr Pepper Snapple Group, Inc: Energy Beverages– Kerin p 105.
Case Questions:
1. How would you characterise the energy beverage category, competitors, consumers, channels, and DPSG’s category participation in late 2007?
Fastest growing beverage category 2001 – 2006, 42% per year in retail sales.
Slower growth predicted 2007 – 2011. 10.2 due to maturity increased price and packaging competition and new functional drinks.
High manufacturer margins 60-66% on sales to wholesalers and bottlers.
5 major competitors command 94% of category sales. Redbull has $mkt share of 43%, unit case share 30% = higher price.
Monster energy $ mkt share 16%, unit case 27% - sell in cheaper, larger volume.
Competes for mkt share through line/flavour…
Consumers – typically younger buyers aged 18-34, purchase behaviour for energy boost, mental alertness, refreshing taste, avg of 1.4 brands -> brand loyalty, convinence is important as C at home car and work/wchool in morning and afternoon; prefer regular not sugar free drink 80%, multipack high
Channels – 71% retail sales, 30% on premise restaurant/nightclubs, 74% off premise sales in convience store (single serves) -> higher profit margins and higher product turnover, brands with limited product lines can do high turnoff
DPSG business strategy focuses on opps in high-growth, high margin cats

2. Does your characterisation bode well for a new energy beverage brand introduction generally and for Dr Pepper Snapple Group, in particular?
High growth/margin for energy drinks
Soft drink sales declining growth of 1-2% annually though 2011
Product line proliferation takes up valuable shelf space, B targeting user groups for women, occasions
3. What target consumer market should be chosen for a new energy beverage brand?
New brand introduction – needs value propistion for chosen target audience, dist cov has strength, marketing expenses and brand trail
New brand depends on targeting/proposition…
4. What product should be introduced and how should it be positioned/differentiated?
Segmented on basis of use: reason of buying/C, boost, mental alertness, taste;
Users: age, gender, race…
Usage: