Dr Pepper / Seven Up, Inc GSM 5200: MARKETING MANAGEMENT

Table of Contents
1.0 INTRODUCTION.......................................................................................................................1
2.0 CASE SUMMARY.....................................................................................................................1
3.0 PROBLEM IDENTIFICATION.................................................................................................2
3.1 Primary........................................................................................................................................2
3.2 Secondary....................................................................................................................................2
4.0 CASE ANALYSIS......................................................................................................................2
4.1 Target Market and Positioning....................................................................................................2
4.2 SWOT – strengths, weaknesses, opportunities, threats...............................................................2
5.0 ALTERNATIVE METHOD.......................................................................................................2
5.1 Reinforcement of marketing strategy by Squirt..........................................................................2
5.2 Strategy planning recommended by Food, Cone & Belding (FCB)...........................................2
5.3 Running bilingual media advertising and bottler promotion campaign for U.S Hispanic
nationalities............................................................................................................................................2
5.4 Food, Cone & Belding estimation of Hispanic Squirt consumption on a Spanish-only program
for selected markets................................................................................................................................2
6.0 RECOMMENDATION..............................................................................................................2
7.0 PLAN OF ACTION....................................................................................................................2
7.1 Promotion....................................................................................................................................2
7.2 Product........................................................................................................................................2
7.3 Price.............................................................................................................................................2
7.4 Place............................................................................................................................................2
8.0 CONTINGENCY........................................................................................................................2
8.0 CONTINGENCY

1.0 INTRODUCTION

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Dr Pepper / Seven Up, Inc GSM 5200: MARKETING MANAGEMENT

Nowadays, marketplace is fundamentally different as a result of major societal forces that

have resulted in many new consumer and organization capabilities. These forces have created new
opportunities and challenges and marketing management has changed significantly in recent years as
organization seeks new ways to achieve marketing excellence. Furthermore, to maintain the
product’s reputation in the market, organization focuses on branding the product internally and
externally through market targeting and product positioning in order to increase organization sales
volume and gaining trust from their respective consumers on their products.

2.0 CASE SUMMARY

The case is about three companies with 90% of the market share control 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 the United States, people consume more carbonated drinks than tap
water. Research has shown that the average American drinks about 53 gallons of soft drinks per year.
However, soft drink consumption has declined over the past few years (Kerin & Peterson, 2004). The
soft drink industry has three major participants in the production and distribution; concentrate
producers, bottlers, and retail outlets. Concentrate producers are responsible for consumer
advertising and promotion programs, product development and planning and market research. The
bottler’s responsibility is to set up local and retail trade promotions. Among this is selling and
servicing retail outlets, placements and maintenance of advertisements, and the restocking of
retailer’s shelves and vending machines. Competition in the soft drink industry is mostly relevant
among the top three companies; Coca-cola, Pepsi-Cola, and Dr. Pepper/Seven Up. Each of these
companies offers a product similar to Squirt, but each has their own variation.

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Dr Pepper / Seven Up, Inc GSM 5200: MARKETING MANAGEMENT

3.0 PROBLEM IDENTIFICATION

3.1 Primary

The market targeting and product positioning require lots of attention for advertising and
promotion plan development, thus, do:
a.) Squirt really has to reinforce their marketing strategy to be able to sustain their existing
reputation of the product and gaining profit? or
b.) Following the strategy planning recommended by Food, Cone & Belding to produce a
competitive soft carbonated drink in the market with comparison towards Coca-Cola
brand and Pepsi-Cola brand? or
c.) Completely develop another market targeting and positioning strategy which may or may
not include the elements of the currents and recommended strategy that able to secure a
reputable and profitable Squirt brand in near future?

3.2 Secondary

The owner of Squirt company plan to spend their budget wisely, thus, the amount of budget
should be allocated correspond to
a.) Running bilingual media advertising and bottler promotion campaign for U.S Hispanic
nationalities? or
b.) Food, Cone & Belding estimation of Hispanic Squirt consumption on a Spanish-only
program for selected markets? or
c.) Taking risky moves by expending their Squirt soft carbonated drink market across other
countries, however with a limited budget spend on it?

4.0 CASE ANALYSIS

4.1 Target Market and Positioning

Food, Cone, & Belding recommended, and brand management agreed, that Squirt’s unique
thirst-quenching attribute should be dominant positioning dimension upon which to build the brand.
Squirt was targeted at adults, 18-44 years old. Squirt is currently positioned as a, "spunky, lively,
everyday, on the go, sociable, colourful, and music driven" beverage. The current tag line is, "Squirt
your thirst." The position has been revisited in 1999 and 2000, however no changes were made.
Food, 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

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Dr Pepper / Seven Up, Inc GSM 5200: MARKETING MANAGEMENT

not seen as either hip and young or not so cool and hip. They recommended 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. Squirt needs to be targeted in a way that does not
cannibalize the current loyal customer base. The Hispanic population does not like hard sell
messages and likes messages that are real and relevant to them. Hispanics prefer to shop closer to
home in mom and pop stores. The majority would prefer ads in Spanish (50%) while 30% prefer
English and the rest have no preference. Taking all of this into account Squirt has a great opportunity
to expand its brand. With the current target market being only adults’ age 18-34 they are leaving out
a large group of the population. The growing Hispanic population also offers great opportunity to
grow sales.

4.2 SWOT – strengths, weaknesses, opportunities, threats

Strengths:
➢ Bellwether in grapefruit soft drink
➢ Premier brand recognition in the
market
➢ Squirt has good power over its
suppliers. If creating syrup
concentrate does not require a
complicated process or exotic
materials. Squirt can easily
substitute one supplier for another.
➢ Owns 2 brands out of top 10,
means almost impossible for new
entrants.
Opportunities:
➢ Expanding Hispanic population
would increase sales of Squirt
➢ Intention to enrolling into a new
market in other countries to
expand market share
Weaknesses:
➢ Smaller advertising budget due
to smaller market share.
➢ Stinging competition either in
same or different category. For
example, Squirt competes with
other soda brands, water and
sport drinks.
Threats:
➢ Competitors’ strategic which
advertises a lot to maintain
market share
➢ Customers have bargain power
in the market since soft drink is
an elastic product which does
not necessary for daily life
➢ The competitors such as
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Dr Pepper / Seven Up, Inc GSM 5200: MARKETING MANAGEMENT

Mellow Yellow and Mountain

Dew are spending large sums of
money on advertising and
trying to gain market share over
Squirt.

5.0 ALTERNATIVE METHOD

5.1 Reinforcement of marketing strategy by Squirt

a.) Consistently advertise Squirt carbonated grapefruit soft drink in United States over an
extended period of time. These moves will eventually capture customer highest brand
awareness.

b.) Media advertising expenditures for Squirt are typically less than competitors as those
budgeted amount can be invested in other more important purpose such as adding more
graphic on billboard commercial, research and development process to achieve higher
quality standard.

c.) The age group was wide as for people who are age in range of 18-44 years old on the
product of Squirt. Whereas, for Ruby Red Squirt product target at teen and young adults
who are age in range of 12-24 years old.

5.2 Strategy planning recommended by Food, Cone & Belding (FCB)

a.) Identify the issues faced by Squirt company, hence, on weaknesses or short coming, FCB
will do Research and Development on it and came out with the most suitable strategy that
are adaptable to the current market, further, able to compete with their competitors which
are Cola-Cola, Pepsi-Cola and others.

b.) Analysis of the perceptual map of Grapefruit and Citrus Brands relative to the positioning
of the seven major Grapefruits and Citrus Brands in advance to help on the grow volume
and maintain Squirt’s leadership as the number one grapefruit carbonated soft drink.

c.) Refinement in Squirt’s target market and positing after surveying on racial/ethnic group
and age relative to carbonated soft drink users, further it also targeted at multicultural who
are in age range of 18 to 24 years old as heavy carbonated soft drink user segment.

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Dr Pepper / Seven Up, Inc GSM 5200: MARKETING MANAGEMENT

d.) Recommending new positioning which have five benefits which are category
appropriateness, instant gratification, emphasizing on freedom, breaking through the
clutter of soft drink advertising and consistence in using Squirt’s product look and feel.

5.3 Running bilingual media advertising and bottler promotion campaign for U.S
Hispanic nationalities

a.) Bilingual media advertising contain international language such as English, German,
French, Chinese and Japanese and other relative native language can be easily understood
by consumers who purchase the products at any country.

b) Instruction written on the label bottle can be short, simple, and able to transmit the
product’s massages, thus grabbing attention from customers.

5.4 Food, Cone & Belding estimation of Hispanic Squirt consumption on a Spanish-
only program for selected markets

a.) Utilizing the Hispanics immigrant’s population in United States to lure Hispanics to buy
the Squirt product, due to the fact that majority of them often prefer to view and listened
the given advertisement in their relative native language.

6.0 RECOMMENDATION

Squirt has its competitive advantage since it was more ‘thirst quenching’ than ‘refreshing’,
which was not seen as either ‘hip and young’ or ‘not so cool and hip’ compare to its competitors.
Thus, Squirt should follow FCB suggestion to focus this thirst quenching property to build up and
increase their reputation. These can done by:

a.) Firstly, FCB recommended that Squirt market target on younger demographic, especially
the 18-24 year old range due to the reasoned that this age group is large and that the
"thirst-quenching" attribute of the product would appeal to them. This is because the youth
in this category always categorized as energetic, active in sport and they always on
demand of drink to slake their thirst.

b.) Secondly, increase the competitive of the product by doing continuous R & D. They are

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Dr Pepper / Seven Up, Inc GSM 5200: MARKETING MANAGEMENT

able to increase the range of product or increase the quality of a product. For example,
Squirt can produce isotonic drink or variety of flavors which more suitable for the 18-24
year old range and their life-style. Besides that, since this age range youth always drink
more soft carbonated drink, their health should be a concerned since the generation now is
moving towards healthy life-style. Thus, drink too much of carbonated soft drink will
cause high blood pressure, high sugar level, stroke and other diseases.

c.) Thirdly, placing more advertising and promotion on Squirt product. In the previous year,
Squirt maintains a low budget and no significant expenditures compared to its direct
competitor. Purpose of this action is to increase the image of the product since customers
are always sensitive to the price and promotion on products. From here, Squirt continues
to emphasize its “thirst-quenching” benefits.

In conclusion, this recommendation is also parallel with the suggested solution for the
secondary problem. Allocate the limited budget on Running bilingual media advertising and bottler
promotion campaign for U.S Hispanic nationalities. With a growing Hispanic population that enjoys
grape fruit soda there is a large area to grow the flat sales of the Squirt brand. Hence, since this is the
new potential market, the advertisement should be in the language which the consumers prefer to,
Hispanic Spanish language, Spanish. According to www.hispaniccallcenter.com, Hispanics have an
increasing amount of disposable income, and the number one thing they spend their money on is
food and beverages at home (Hispanic Affluence, 1996). Knowing this and knowing about the
increasing population, management at Squirt should devise plans to get advertisements into every
Spanish speaking news publication in Texas and California. In these two states alone, more than 50%
of the Hispanic population lives (Kerin & Peterson, 2004). They should also focus their television
and radio advertisements on the interest of the Hispanic community. Besides, the larger advertising
budgets of competitors can be a threat to maintain in the market share with a brand with flat sales.

7.0 PLAN OF ACTION

The plan of action will focused on Marketing Mix (4Ps).

7.1 Promotion
Promotion includes all the weapons in the marketing armoury such as advertising, selling,
sales promotions, Direct Marketing, Public Relations and etc. Squirt should actually increase their
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Dr Pepper / Seven Up, Inc GSM 5200: MARKETING MANAGEMENT

advertising budget so that to make their products are more alerted to the chosen target groups. For
example, Squirt should do promotion such as buy 12 bottles free 1 bottle for the customers to try.

7.2 Product
When placing a product within a market many factors and decisions have to be taken into
consideration. These include:
Product design – Will the design be the selling point for the company? In the squirt product,
the outer design of the drinks can or bottle must be updated designed to match the latest target
market preference.
Product quality: Quality has to consistent with other elements of the marketing mix. A
premium based pricing strategy has to reflect the quality a product offers.
Product features: What features will you add that may increase the benefit offered to your
target market? The Squirts must up to date in terms of innovations. Whenever the competitors have
come out with new product, squirt must find alternative product to compete with the competitors.
Besides, from time to time, new products must be invented to attract new customers or maintain
existing customers. For example, diet soft drink targeted principally adults or older age citizens.
More flavour soft drinks produced to attract customer’s preference.
Branding: One of the most important decisions a marketing manager can make is about
branding. The value of brands in today’s environment is phenomenal. Brands have the power of
instant sales, they convey a message of confidence, quality and reliability to their target market.

7.3 Price
Squirt must realize that forms part of the pricing strategy is conscious. Even though
competing on price is as old as mankind, the consumer is often still sensitive for price discounts and
special offers which will be mentioned in Promotion. To lower the price, Squirt should reduce the
production cost. Production cost can be reduced through several methods. For example, Squirt can
save the cost by eliminating the brand label and replace it by lettering the company on the bottle.
Furthermore the bottles can be recycled and it is environmental friendly. As a result from that, the
company will gain recognition from the environmental organization such as WWF hence through the
recognition given by the organization will gain customers’ trust on the product which is
environmental friendly.

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Dr Pepper / Seven Up, Inc GSM 5200: MARKETING MANAGEMENT

7.4 Place
Market targeted outlet will be focuses on supermarket, convenience stores, vending machine,
fountain service, mass merchandisers, and thousand of small retail outlets. It is because consumers
will normally purchase their glossaries in those outlets, hence selling those products at those outlets
bring more convenience to the customers besides increase the sales volume. Normally, soft drinks
are sold in bottles and cans in those outlet and it is convenience for customers to enjoy the drinks
after purchase it. In all fast-food restaurants, soft drinks are mixes it with syrup for immediate
consumption by customers. Since supermarket and grocery stores account for about 31 percent of
carbonated soft drink industry retail sales, hence choosing right place for business is important in
order to distribute the products more widely and quickly for earning profits.

8.0 CONTINGENCY
If the first alternative does not work, it is quite hard for Squirt to change their strategy simply
since it involves cost. Hence, the Squirt can cooperate with the largest soft drink company, Coca-cola
Company. This is due of the both companies can share their competitive advantage to create win-win
situation. In addition, this two companies able to obtain more than 60% market share which can
reduce the competitive in the market.

For Squirt, it able to achieve cost-based strategy since it may able to employ high technology
and better R&D in its production which used by Coca-cola in the production. Besides, it can
advertise in broader coverage but with lower advertising expenses. People also easier get attention
with the name “Coca-cola”. Reducing in cost causes Squirt able to sell in lower price and affect the
market demand on it. Squirt will able to reduce the effect of its potential competitor. While for Coca-
cola Company, it able to obtain benefit since its product positioning is different, thus there able to
share their specialize. Moreover, both of them may can cooperate and produce a new product with
the combination of both competitive advantages of both parties which enable them to challenge with
the Pepsi subsidiary products.