Transcript Case 1

Chapter 5
Case 1
Dr. Prepper/Seven Up, Inc.
Background
 Kate Cox Brand Manager
 2001 began drafting the brand’s
annual advertising and promotion
plan.
 Squirt is a caffeine-free, low-sodium,
carbonated soft drink brand and
distinctive blend grapefruit Juice.
Background
 Squirt is the best selling carbonated
soft drink brand in the US.
 Cox believed that the market targeting
and product position might require
attention early in Squirt’s advertising
and promotion plan development.
 Both topics were highlighted in June
2001
Positioning Strategies
1) Attribute or benefit
2) Use or application
3) Product or brand user
4) Product or service class
5) Competitors
6) Price or quality
Attribute or benefit
Is the strategy most frequently used.
Toothpaste Benefits
Flavor
Color
children Teens
/
/
Whiteness of teeth
Fresh breath
Decay Prevention
Price
Family Adults
/
/
/
/
Plaque prevention
/
Stain Prevention
Principle Brands for
each segment
/
Aim, Stripe
Ultra Brite,
McClean
Colgate,
Crest
Topol,
Rembrandt
Background
Contract was given Foot Cone &
Blending Brand Agency.
Coca-Cola and Pepsi-Cola was the major
competitors and the company (Foot
Cone) took this into consideration.
Dr Pepper/Seven up are consistently
ranked among the top-ten soft drink
brand in the US.
Carbonated Soft Drink Industry in
the US
 U.S. consumers drink more carbonated
soft drinks than tap water.
 In 2000 Americans consumed 53
gallons of soft drinks per person
compared with 47 gallons in 1990.
 $60.3 billion carbonated soft drinks in
2000.
Industry structure
Three major participants in the
production of CSDs:
1) Concentrate Producers
2) Bottlers
3) Retail Outlets
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The Coca-Cola Company, the Pepsi-Cola
Company & Dr Pepper/Seven up, INC are
the three major concentrate producers in
the U.S.
Industry structure
Three major participants in the
production of CSDs:
1) Concentrate Producers
2) Bottlers
3) Retail Outlets
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Bottlers convert flavor concentrate into
carbonated soft drinks.
There are 500 Bottlers in the US.
Industry structure

1)
2)
3)
Classification of Bottlers:
Own or have an equity
Franchise their brand
Independent bottlers.
Industry structure

1)
2)
3)
4)
5)
6)
Retail Outlets:
supermarkets,
conveniences stores,
vending machines,
fountain services,
mass merchandisers and
thousand of small retail stores
Industry structure

Soft drinks are typically sold in
bottles and cans except McDonalds
which mixes syrup with carbonated
water for immediate consumption by
customers
Competition in the Soft Drink
Industry
The three command 90% CSD sales in
the US.
Coca-Cola Company leads the industry
with 44.1 market share
Pepsi-Cola 31.4%
Dr Pepper/Seven up 14.7%
Competition in the Soft Drink Industry
Top-Ten CSD. Companies and Brand in 2000
Top Ten SDC
Rank Companies
Market
Share %
Share
Change
Volume %
Change
1
Coca-Cola Co.
44.1
flat
+0.1
2
Pepsi-Cola Co.
31.4
flat
+0.1
3
Dr pepper/Seven up
14.7
+0.1
+1.1
4
Cott. Crop
3.3
+0.2
+5.8
5
National Beverage
2.1
flat
+4.2
6
Royal Crown
1.1
-0.1
-1.9
7
Big Red
0.4
flat
+13.4
8
Seagram
0.3
flat
+7.2
9
Monarch Co.
0.1
flat
-35.8
10
Private label/other
2.5
-0.2
-12.2
Total Industry
100.0
+0.2
Competition in the Soft Drink Industry
Top-Ten Brand. Companies and Brand in 2001
Top Ten SDC
Rank
Companies
Brand Owner
Market
share %
Market
share
Volume %
Change
1
Coke Classic
Coca-Cola
20.4
+0.1
+0.5
2
Pepsi-Cola
Pepsi-Cola
13.6
-0.2
-1.0
3
Diet Coke
Coca-Cola
8.7
+0.2
+2.5
4
Mountain Dew
Pepsi-Cola
7.2
+0.1
+1.5
5
Sprite
Coca-Cola
6.6
-0.2
-2.0
6
Dr Prepper
Dr Pepper/7 up
6.3
flat
+0.1
7
Diet Pepsi
Pepsi-Cola
5.3
+0.2
+4.0
8
7up
Dr Pepper/7 up
2.0
-0.1
-0.6
9
CF Deit Coke
Coca-Cola
1.7
-0.1
-1.0
10
Barq’s Root Beer Coca-Cola
1.1
flat
+3.0
Total Top-Ten
72.9
Soft Drink Marketing
Soft drink marketing is characterized by:
 Heavy investment in consumer advertising and
promotion,
 Selling and trade promotion to and through
bottlers to retail outlets
 Consumer price discounting
 Concentrate producers usually assume
responsibility for:
- developing national consumer advertising
and promotion programs
- Product development and planning
- Marketing research
Soft Drink Marketing
Comparative Income Statement for the typical flavored concentrate producer &
soft drink bottler in the us (per standard twenty-four 8-ounce bottle case
Concentrate producer
Soft Drink Bottler
Net sales
100%
100%
Cost of goods sold
-17
-57*
Gross profit 83%
43%
Selling & delivery
2
28
Advertising &
promotion
39
2
General &
13
administration exp
4
Pretax profit 29%
9%
Packaging represent the major element of bottler’s cost of goods sold
Brand and Flavor Competition
 More than 900 registered brand name
for CSD in the US.
 Changing composition of the U.S.
population has been an important
factor in the growing popularity of
flavored CSD.
Demographic of Soft Drink
Consumption
 30% increase in sales from 1990 to 2000.
 849 eight-ounce servings of carbonated soft
drinks annually.
 Consumed by American who are b/w 20 to 49
years.
 20-49 years, It is the largest segment of the
US population.
 Diet soft drinks is more pronounced among
over 25 years.
Demographic of Soft Drink
Consumption
 Conventional wisdom In the soft drink
industry hold that teens are the primary
audience for soft drink marketing, since
the taste and brand preferences are
formed between the age 12-24.
 Higher consumption of soft drinks is
among Hispanic and African American.
 More among teens than adults.
Squirt Brand Heritage & Marketing
 Has been marketed by Dr
prepper/Seven inc. since 1995.
 Brand’s origins are found in the Great
Depression of the 1930s.
Squirt Marketing
 Squirt sales since 1995 have exceeded
reacquisition levels due to a broadened
bottling and distribution network
 Increased marketing attention and
investments.
Squirt Marketing
Squirt Unit Sales Volume (millions of Cases)
60
50
40
30
20
10
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Squirt Marketing
Squirt Product Line and Competitive Brand
Consists of:
1) Regular and diet squirt
2) Regular and diet Ruby Red Squirt
Squirt Advertising & Promotion
Expenditures
Media include:
1) Newspapers
2) Spot of television
3) Cable television
4) Spot radio
5) Retail
6) Consumer
7) Trade promotion
Squirt Advertising & Promotion
Expenditures
Coca-Cola and Pepsi-cola spend more on
media advertising and promotion than
does Dr Prepper/Seven.
Squirt Positioning
Squirt positioning was addressed after
Cadbury PLC acquired the brand.
In 1994, Foote, Cone & Belding
recommended and Brand management
agreed that squirt should be the dominant
positioning dimension.
Target Market & Positioning
Recommendation
1995 Foote, Cone & Belding was asked to revise it is
creative strategy.
The reason was the execution “was a bit too intense
to fit with brand”
The target market was narrowed to adults, 18-34.
Fun relief when you, re dry
Squirt Positioning and Creative execution was
revisited again 1999 following the introduction of
Citra by Coca-Cola
Target Market & Positioning
Recommendation
Based on new research results featured
Squirt’s consumption by racial/ethnic group
and age in 2000, Foote, Cone and Belding
recommended:
Squirt be targeted at multicultural,
18-24 years old.
The Hispanic Market Opportunities
Demographic of Squirt Consumption
Hispanic
12%
AfricanAmerican
15%
Caucasian
73%
The Hispanic Market Opportunities
Demographic of Squirt Consumption
30
Volume Index
25
20
15
10
5
0
<6
6-12
13-19
20-29
30-39
Age
CSD users
Squirt users
40-49
50-59
60+
Target Market & Positioning
The Hispanic
Market Opportunities
Recommendation
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Kate Cox met the brand management.
The meeting concluded with an
assignment given to Jaxi Stollenwerck, the
associate brand manager for Squirt.
The assignment to prepare a profile of
Hispanic and African American consumers
in the United States from recently released
U.S. Census 2000 data and other relevant
sources
Target Market & Positioning
Jaxie’s Report
Recommendation
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Hispanic population increased by 57.9% in
2000.
22.4 million in 1990 to 35 million in 2000.
58% Mexican origins
9.6% Puerto Rican
3.5% Cuban
8.6% central or south American
19% Hispanic Origins not classified
Jaxie’s Report
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Hispanic accounted for 12.5% of the American
population.
African Americans accounted for 12.3% of the
US population
More than 72% of the Hispanic live in the south
35% were under 18 years while in the states
25.7
Median age for Hispanic 25 years while 35.3
55.4% of Hispanic prefer to see & hear ads in
Spanish
Strong brand link with heritage among Hispanic
Hispanics don’t like hard sell approaches
Prefer shopping close to home
Squirt Advertising and Promotion
Plan Development
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In mid-summer 2001 Kate Cox Assembled
the team.
They begin drafting the annual advertising
and promotion plan.
The plan would be formally presented to
senior management for review and
approval.