DR PEPPER/SEVEN UP

DR PEPPER/SEVEN UP, INC: SQUIRT BRAND
Case Study

right7762875April 13, 2018
By: Henry Johnson MKTG 450
DR. Parimal Bhagat
1000000April 13, 2018
By: Henry Johnson MKTG 450
DR. Parimal Bhagat

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Table of Contents
Background analysis
a) Industry size and structure………………………………………………….2
b) Brands and product categories………………………………………………2
c) Demographics of soft drink consumption…………………………………..2
2. a) SWOT………………………………………………………………………2-3
b) Dr. Pepper/7 UP and Squirt competitive position…………………………3-4
c) Case volume breakdown of citrus soft drink category and squirt share trend..5
3. a) Squirt’s present target market and positioning approach as well as advertising/message execution……………………………………………………………6-7
b) FCB’s multicultural marketing approach……………………………7
c) New Positioning Statement………………………………………….7-8
d)Estimate the size of the African-American and Hispanic 18-24 year old market………………………………………………………………………………………8
e) Pros and cons of FCB’s approach……………………………………..8
4. a) Analyze Squirt Advertising and Promo spending in 2000…………9
b) b.Regional, Mexican-ethnicity emphasis: population size in Western U.S. and product modifications……………………………………………………………….9-10
1a) Industry size and structure:
The carbonated soft drink industry has over time been able to grow covering a wider market share. This is with the increased young population in relation with disposable income among consumers. The industry therefore is deemed as the most mature sector in the beverage industry. With a comparatively low price point and margin in relation to other consumer goods, the major industry participants focus on innovative presentation to gain market revenue and projected long-term sustainability.

1b) Brands and product categories:
Carbonated beverages market is divided on basis of product types such as carbonated beverage regular, beverages diet, lemon/lime regular, and lemon/lime diet. They, however, do not contain any alcoholic content thus engraving a variety of juices, ready to drink tea and coffee, concentrates, smoothies and energy drinks.

1c) Demographics of soft drink consumption:
According to the Gallup researchers, 32% of adults mostly drink regular soda, 24 % drink diet soda and 24% don’t drink any soda. The demographic group most likely to drink soda included young adults aged 18 to 29 most of which drink regular soda. For diet soda, on the other hand, is consumed by more females than male most of which are aged (50+)
2a) SWOT
Dr. Pepper/7 up has been able to conquer a relatively larger market in comparison to the Squirt. With an in-depth SWOT analysis. They have a foothold through diversified brands in the American market. Until Coca-Cola came up with sprite, 7Up monopolized the non-cola drink in the market. At a time of upheaval on the dangers of consumption of cola-based drinks due to caffeine and other harmful substances, this became the reason for the success of 7Up.
Similarly, a lot of effort has been placed in the marketing and branding with contracts of beverage bottling going to major beverage companies. The use of great color coordination that has so far made it the iconic brand of the beverage. Moreover, its popularity has grown over the younger population due to the hype that appeal to the younger generation. The featuring of celebs and sportsmen and innovative commercials has also spurred the increase in their market.

2 b) Dr. Pepper/7 UP and Squirt competitive position:
Equally, the acquisition of other brands has helped with the establishment of the portfolio over a period of time. The association of 7Up and Pepsi for instance has given it a multinational image and on an equal measure enabled it to oust local competition. The management and distribution have also increased to an extent of even going global thus giving it a stronger brand reputation as well as the awareness thereby created with it. 7Up has an employment estimation of nearly over 30000, this has strengthened and enabled a proper professional base one that would lead to a better service delivery.
However, strong competition from the presence of global product front-runners faces them. For instance, coca cola, for a very long time enjoyed the market monopoly until 7Up came up with the first non-cola drink. An idea which was later adopted at the inception of sprite. They have an equal measure captured a wider market share with a global presence thereby making it a stiff competition.

According to Kavitha et. Al (45).Limited share in most of the brands makes it hard for the mother company to make ultimate decisions thus impeding revenue growth. 7Up being in association with Pepsico means that there are internal substitutes that are also factored in. for example, Pepsico with its Mirinda and Pepsi brand, both internal brands which eat into the market share of 7 Up. Decisions are however made in line with the sales of all drinks and not specifically 7Up.

Advocacy, inadequate finances are placed to facilitate the advertisement of the products. Pepsico has always focused on the flagship of their cola product Pepsi thus channeling a lot of cash to it than branding their non-cola products that is 7Up.

Newer markets are however encroaching; this would be an opportunity for 7Up.the growing preference of aerated drinks amongst kids and children. Reports on childhood obesity have been on the increase over the years, Lime soda is a preferred drink relatively to cola-based drinks due to its freshness, sweetness and preferably healthy benefactors. This would thus spur a new market entrant opportunity.

Expansion of business, and diversifying into new categories. Through tie-up initiatives, for example, the inclusion of eateries and food outlets, restaurants, and bakeries in their distribution channels, ensure that their drinks are complimented with most meals. Thereby increasing their market presence.

A threat projection comes from the health lobbyist with fear of the health complications of these drinks and also the sugar content and caloric ingredient in them .this has, in turn, prompted the migration to healthier drinks like fruit juices. Environmental hazards and claims of eco imbalance by the use of plastic bottles has also raised concerns over time thereby stringent regulations on plastics usage in packaging may emerge as a hindrance and limit the overall market growth
Competitive pricing by rivals are in an equal measure are bound to lower profit margins. Rivals would do anything to beat you to your customers, with the rise in beverage companies; there would be a projection of a market price fall in the next few years. This would, in turn, cause a budget imbalance as well as penetration of substandard products and goods.

2 c) Case volume breakdown of citrus soft drink category and squirt share – trend:
Case volume breakdown of citrus soft drink category and squirt share – trend
Squirt has been by far the lead selling brand in the grapefruit carbonated soda segment. It, however, it is in rivalry in the citrus carbonated soft drink category with the likes of Mountain Dew and Coca-Cola citrus brands. In the view of Davis et al. (101). Flavored soft drinks have grown since the inception of Dr.Pepper/Seven Up, Inc. & Squirt Situational Analysis with Los Angles and California responsible for 30% of case sales volume 38% of case sales volumes respectively. New York is the largest consumer market without a Squirt bottler. Squirt has however been able to outsell both coca cola’s Fresca and Citra which targeted the aged and young completely. From this, it is therefore deduced that squirt covers a wider market trend after mountain dew when it comes to citrus carbonated soft drinks with its presence in 83% of the bottlers.
With the existing market trends, squirt is bound to have a better market trend. This is due to the research findings that citrus soft drinks are the most refreshing soft drinks. Coming second from mountain dew that possess an equal competition, squirt has been able to beat market giants coca cola’ Fresca and Citra.

3a) Squirt’s present target market and positioning approach as well as advertising/message execution:
The market demography is generally focused on the young adults between the ages 18-34 who are believed to be individualistic and sociable young adults. However, there is a balance when it comes to the aged population as well. 58% of the Hispanics in the US are Mexicans; Squirt being a Mexican based company has therefore been able to conquer this market. Moreover, according to FCB research, Hispanics are the most lovers of non-cola products, with a faster-growing population segment.

Consumer research, otherwise, indicated that consumer regarded Squirt’s advertisement to be too “childish” and that it did not catch consumer’s attention thereby giving it a lower media advertising than its competitors. Mountain Dew, for instance, spends over $50 million in advertising. Perceptual map of citrus-flavored carbonated soft drinks on the hand showed that squirt is neither young nor too young.

3b. multicultural marketing approach:
An aspect of multicultural outreach should be in consideration. From the past research, aspects of a target race have been the major target market. Hispanics by far have been the largest consumers with a 12.5% of the US total population. Of the top 9 populous Hispanic cities, 7 are located in the west and south Squirt has the regular Squirt flavored soft drink and a diet version of that.

3c) New Positioning Statement:
With the recommendation by FCB, squirt is to maximize on the geographical positioning and consumer proximity, as most Hispanics don’t like to shop far away from home. It was also recommended that a lot of investments be made in advertising targeting the age of 18-24-year-olds. Moreover, they should position themselves as not a thirst quenching drink but also as a young that will give them a dual market advertising position and the need for increased budgets.

3d) Estimate the size of the African-American and Hispanic 18-24 year old market:
Herein having identified the target market, the establishment of stores and bottler companies in those particular geographical areas, proximity is bound to be realized. From past data, it’s been realized that most of the consumer population do not like to shop far away from their homes. With the proximity factor, accessibility to the products is likely to increase thereby increasing the sales and soda revenues.

3e) Pros and cons of FCB’s approach:
The need for improved advertisement strategy and approach, one that would not be viewed as juvenile, would be of an outreach impact. This would also give them a market presence not only locally but also globally. An input to factor in a certain age group that moves the population is also projected to will have increased the sales of their produce.

FCB approach on Squirt is capital intensive as it will require more capital to be pumped into the advertisement segment so as to reach a wider scope of audience. Similarly, it recommends for the multilingual ad approach with a speculation of 55% effectiveness in English and 30% effectiveness in Spanish. For this to be achieved, more cash has to be pumped into marketing and ad involvement.

With approximately 100 bottlers, the increase and rise of the population segment, and the culture of proximity shopping, it would be hard to acquire market spaces and resources to facilitate the same. This is bound to cause budget imbalance though it would pick up later on after its inception.

In case of an alternative market approach, it would be consumer-centered with a multicultural audience. This would be preferable as it would open up other markets not only to a specific ethnicity. The balance between communication and strategy would also be achieved. Moreover, I believe it would put more focus on the young adults’ age bracket who is notably the top consumers; however, equilibrium should also be met by providing alternatives for the aged. For example, development of diet versions for those are not at ease with the sugar and caloric ingredient balance.
4a) Analyze Squirt Advertising and Promo spending in 2000:
12% of 54,600,000(total case volume for Squirt in 2000) =6,552,000 cases were consumed by the Hispanic population.

15% of 54,600,000(total case volume for Squirt in 2000) =8,190,000 cases were consumed by the African American population73% of 54,600,000(total case volume for Squirt in 2000) =39,858,000 cases were sold to the Caucasian population.

4b) Regional, Mexican-ethnicity emphasis: population size in Western U.S. and product modifications:
Currently, Squirt’s total market by ethnicity shows that 73% of its market is Caucasian, 15% African-American, and the remaining 12% are Hispanic. An approximate of 75% of Hispanics live in the west & south USA; with New York being the most populated Hispanic city in the US with 2.1 million Hispanics. Chicago on the other hand is the 3rd most occupied Hispanic city with 753,000 Hispanics.

Work cited.

Davis, Bernard, et al. Food and beverage management. Routledge, 2018.

Kavitha, N. V., and N. Suma Reddy. “Buzz Marketing-SWOT Analysis.” International Journal of Innovative Research and Development 5.2 (2016).

Xing, Yusong, and Yue Guo. “A Review of the Research on the Competitiveness of China’s Beverage Industry.” (2017).