Dr. Pepper Snapple Group Case Study
Dr. Pepper Snapple Group, Inc.
Problems Statement
The Problem facing Dr. Pepper Snapple Group, Inc. is deciding whether or not a profitable market opportunity existed for a new energy beverage brand to be produced, marketed and distributed by the company. Also the problem with how to position a new energy drink to penetrate the market, such as how to target, price, and promote the new product.
Situational Analysis
By using the SWOT analysis, there are many essential strengths, weakness, opportunities, and threats regarding to whether or not Dr. Pepper should enter a new energy beverage brand.
Strength/Opportunity
Strong portfolio of leading, consumer-preferred brands-The company is the number one flavored CSD company in the United States according to ACNielsen. It has the high consumer preference and awareness. Most of its consumers are very loyalty rooted. Overall, this company has a very strong and diverse portfolio.
Integrated Business Model- Dr. Pepper Snapple Group, Inc. has a competitive advantage because their brand ownership, bottling, and distribution are more integrated than its competitors. Their business model also provides opportunities for net sales and profit growth.
Strong Customer Relationships- the company have a solid long-term relationship with its top customers. They also have a very wide range of customers including retail stores, large foodservice, and convenience stores.
Attracting Positioning- Currently, they hold the number three position in United States, Canada, and Mexico beverage markets. They are in a very strong position to take advantage of growing consumer trends.
Broad Geographic Manufacturing and Distribution Coverage- the company currently has 21 manufacturing facilities and approximately 200 distribution centers in the United States. Their warehouses are located nearby bottling plants and dispersed to ensure that their products are available to meet consumer demand. They are able to reduce transportation expenses, and have better control over timing.
Strong Operating Margins with stable cash flow- The breadth and strength of their diverse portfolio provided the company with strong operating margins that has create stable cash flows which in turn create stockholders value.
The Opportunity for them is that the large manufacturing plants and hundreds of distribution channels allows for an integrated business plan that can aid the development of an energy drink. Also because Dr. Pepper Snapple Group, Inc. already has the existence of loyal customers, they should definitely take advantage of that. Since the existing brands have no significant differentiation, if Dr. Pepper Snapple Group, Inc. develops an unique product, it would have a great opportunity for making profit in energy drink industry.