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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 1
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 products 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 bottlers 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 retailers 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.
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 Squirts 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 3
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. 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. Opportunities: Expanding Hispanic population would increase sales of Squirt Intention to enrolling into a new market in other countries to expand market share 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 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 Squirts leadership as the number one grapefruit carbonated soft drink. c.) Refinement in Squirts 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.

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 Squirts 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 products massages, thus grabbing attention from customers. 5.4 Food, Cone & Belding estimation of Hispanic Squirt consumption on a Spanishonly program for selected markets a.) Utilizing the Hispanics immigrants 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

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
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 customers preference. Branding: One of the most important decisions a marketing manager can make is about branding. The value of brands in todays 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. 8
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, Cocacola 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. 9

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