Assignment 3.4 – Case Study: Dr. Pepper Snapple Group, Inc.: Energy Beverages 1. How would you characterize the energy beverage category and competitors in late 2007?
A slow growing market is a great way to characterize the energy beverage category in late 2007. This industry was increasing in profits still but was not increasing in profits as quickly due to factors such as market maturity, increasing in prices, competition and new hybrid products (Kerin & Peterson, 2010). The market was still very small but was dominated by Red Bull due to it being one of the first energy drinks, which caused it to dictate the market and have more of an advantage than the other energy beverages. So in late 2007 the market for energy drinks was still expanding and coming into its own with such a variety in the products it offered to the consumer.
A disadvantage that can be listed to discuss is the advertisement industry. This seems to be causing a great disadvantage to many of these companies looking to break into the energy drink market further. Red Bull is the only company who has television advertisement, which gives it the competitive advantage over all the others. So you can also characterize the energy beverage market as behind in times compared to these companies other beverage products. Many of these companies outside of Red Bull were still trying to discover what can set them apart from the competition and let them get a competitive advantage in price. There are many different ways each company can make a profit with the off-premises and on premises while also considering the consumer age groups you could market towards. It is hard for each to make a profit like Red Bull, when the each is marketing to the identical group and market. Something to get the competitors out of the characterization that they are all identical would be to diversify your product and find something that allows you to differentiate it from the other energy beverages.
2. Does your characterization bode well for a new energy beverage brand introduction generally and for Dr. Pepper Snapple Group, Inc. in particular? The characterizations that I found can bode well for new energy beverage brands that are introducing themselves especially Dr. Pepper Snapple Group, Inc. It can bode well for Dr. Pepper Snapple Group, Inc. if they can differentiate themselves from the competition in the market, which will lead to more opportunities in such a small market. This is due to the fact that there is a small group of competitors growing at a slow rate so if you can break through the market then you have a very large chance at success. In order to do this though the company will need to consider price, advertisement and what market to correctly advertise to. If the miss calculate and miss the target market or spend too much in the wrong one then there could be a chance you will be unsuccessful or another small market that has minimal profits. At the same time this characterization of the slow growth could bode badly for some companies trying to enter the market for energy drinks. If Dr. Pepper Snapple, Inc. isn’t willing to advertise or spend some money on the target market the slow growth could catch up to it. Causing the company to come to a standstill and not grow its energy drink brand. This would then cause them, like mentioned above, to just become another small market company that doesn’t have the money to differentiate them from the competition. If there were a specific formula for this it would be done by every company in the business and everyone trying to get in the business. Completing a CLV would be beneficial for it and allow them to look deeper into their target market and set limits on what the will spend in a slower growing market. Allowing them to grow slowly without taking a major risk and chance them to lose it all. If they can do this then the characterization will bode successfully and allow them to become profitable and differentiate Dr....
References: Kerin, Roger A. & Peterson, Robert A. (2010). Strategic Marketing Problems Cases and Comments (12th ed.). New Jersey: Pearson Prentice Hall. 80-92.
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