Case Anaylsis -Dr. Pepper Snapple Inc.

Dr. Pepper Snapple Group, Inc. (DPS) is an integrated beverage brand owner, manufacturer, and distributor of non-alcoholic beverages in the U. S. , Canada, and Mexico and the Caribbean. Their headquarters is in Plano, Texas, and Dr Pepper Snapple Group, Inc. is a leading provider of flavored carbonated soft drinks and non-carbonated beverages. They have built their success through strategically acquiring beverage brands and then building them into leaders in their category. Examples of their notable acquisitions included the Duffy-Mott Company (later known as Mott’s), Canada Dry, Sunkist, Crush and Sun Drop.
According to the text, through focused strategic development the company has sought to continually establish their firm as a leader in the higher margin segments of the non alcoholic beverage industry. Therefore, the company’s corporate level strategy entails building and enhancing their leading brands, as well as focusing on leading opportunities with high growth and high margin. In addition, the company wants to increase their presence in high margin channels and packages. Furthermore, the company wants to strengthen their route-to-market through acquisitions and improve their operating efficiency.
Throughout, the current economic downfall, DPS has maintained growth because a key element of their corporate level strategy is adding others soda brands, and changing emphasis among the different soda brands. By doing this the company is making the right moves to establish their positions in the industry and achieving an appropriate amount and kind of diversification in the soda industry in order to continually grow. Another aspect of the company’s strategy, involves building a uniquely strong and distinctive competencies in their soda brand i. e. he taste and marketing of Dr. Pepper. This is crucial to their success and is used to maintain a competitive edge over their competitors. In order to establish their competitive advantage amongst competitors the company uses the best-cost provider strategy. Their strategy is trying to give customers the best cost/value combination, by incorporating a key good-or-better product characteristics at a lower cost than competitors. In other words, there are numerous types of sodas on the market; but DPS strives at making their soda distinctive but with an affordable price.The company faces several strategic issues within their industry. Within the industry, factors such as economic stability, consumer tastes and preferences, and commodites prices are issues that DPS are facing. Since carbonated soft drinks are a discretionary item, sales are considerably impacted by weakness in the economy; consequently, economic stability is a huge factor that DPS would have to face. Due to the economic downturn discretionary spending as a percentage of total consumer spending dropped below 16 percent, lower than it had been for over 50 years.
As discretionary spending decreased, consumers turned from flavored soft drinks and colas to less expensive alternatives, including tap water. Not only did the economy influence confidence, the recession significantly increased commodity prices. Specific to the beverage industry, the prices for aluminum, natural gas, resins, corn, pulp and all other commodities increased. These types of commodities are used in the production of beverages, exerting a considerable amount of pressure on industry margins. Moreover the most significant issues that DPS will have to face is the increasing market trend in health and wellness.
Consumers are reducing caloric intake and are looking for products richer in vitamins. Therefore the less-healthy sectors of the beverage industry are expected to decline, while demand for healthier alternatives like low or no calorie soft drinks and noncarbonated drinks such as sports drinks, ready-to-drink teas and flavored and regular bottled water are projected to grow. DPS should continue implementing their corporate level strategy and competing in the industry as a best cost provider in order to maintain market growth.
The recession has impacted several companies; but it is important to maintain adequate marketing ploys to appeal to consumers i. e. The Sun Drop Commercial. Regardless, of the recession DPS should focus on delivering a quality product despite the increase in their commodity prices. In addition, their market target shall expand more overseas to reach more consumers. By doing more creative advertising and appealing to consumer; the company shall see more sales growth. Since there is an increase in commodity prices, the company might also consider divesting products that are not doing well.
In addition, DPS needs to be more innovative in their research and development for developing a healthy soft drink that consumer will enjoy. Since, the U. S. which is their biggest market section, is going on a “diet” or in other word becoming more health conscious. DPS might want to jump on the bandwagon of producing a healthier soda but the company should not try to mimic what other companies are doing. Instead try to invest in the R that is focused healthier trend soda to reach more consumers.
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