Dr. Pepper/ 7up Case Analysis

3) Who is Kraft Kool-Aid’s customer, and what trends do we see in that market

The third-largest company in the U.S. is Dr. Pepper/ Seven Up, Inc. (DPSU) which consists of 14.7% market share. It is the most famous brands are Dr. Pepper and Seven Up among the Soft Drink Brands. It has been Squirting the market by this company since 1995. The Unit Sales Volume Squirt is $39 million to $54.6 million from the year 1990 to the year 2000.

The existing concentrate business is largely controlled by Coca-Cola Company (Coca-Cola) and PepsiCo (Pepsi), together claiming a combined 72% of the U.S. carbonated soft drink (CSD) market sales volume in 2009. Refer to Exhibit 1 for an illustration of the CSD industry value chain. For more than a century, Coca-Cola and Pepsi have maintained growth and large market shares through mastering five competitive forces, shown in Exhibit 2, that drive profitability and shape the industry structure.

Since there are many stores, like McDonald’s and Starbucks that are also providing all kinds of healthy smoothies with a price that is similar to Jamba Juice’s, buyers actually will not face high switching costs. Therefore, low switching costs enhance the bargaining power of buyers.

Customers have bargain power in the market since soft drink is an elastic product which is not necessary for daily life.

could be geared towards females in an attempt to capture drinkers of Coca Cola’s Tab. In addition, males’ ages 35 to 54 consume energy beverages at a rate slightly lower than males under age 24. An energy beverage with similar stimulant effects as most energy drinks but has other health benefits (i.e. Vitamin Water, Odwalla, Naked) could also attract the abovementioned consumers.

The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten

The Coca-Cola Company is the world's largest beverage company, refreshing consumers with more than 500 sparkling and still brands.

Also soft drink companies diversify business by offering substitutes themselves to shield themselves from competition. Rivalry:

In contrast, Squirt has many external opportunities which are not currently being sought through the market strategy. One opportunity is to gain market share and percentage of sales in the U.S. by focusing on the correct target audience and their wants and needs as previously discussed. America’s consumption of soft drinks per person is on the rise. Also citrus flavored soft drinks have not been introduced to all of the areas of the country which leaves the opportunity to gain market share. Studies show that consumers want more fruit flavored beverages which are exactly what Squirt products are. This is an opportune time to lay the ground work for a national campaign which will target increased ethnic groups and capture a larger market share.

There are more than 900 registered brand names in the US. The top 10 brands are marketed by the 3 leading US soft drinks companies which are Coca-Cola, PepsiCo and Dr. Pepper/7up. The cola flavor is the most popular of carbonated soft drinks in the US with 65.7% of the market share. The orange flavor comes in 3rd with only 3.9% of the market share. As far as market segments are concerned there are only two segments; the regular carbonated soft drink and the diet carbonated soft drink (Kerin & Peterson, 2007).

FDr Pepper has a great opportunity to penetrate the energy drink market. They could quickly take a major market share and continue to support the ever changing customer needs and ever changing expectations. The only remaining concept is how to do it.

The production and distribution of soft drinks at the retail level is likely to be less profitable than is syrup production for several reasons. First, despite tremendous amounts of advertising designed to create differentiated products, many people view sodas as being relatively similar and switching costs for consumers are very low, which makes it difficult to price one soft drink significantly higher than another. Second, there are a great number of substitutes for soft drinks, such as water, milk, juice, athletic drinks, etc., which consumers could switch to if the price of soda were to increase. Third, because of low switching costs, consumers can be price sensitive and also exercise relative bargaining power over independent bottlers. Finally, as

Since this industry is highly competitive and the price is affordable and the availability is high, it is easy to switch to another brand rather than deviating away from the whole soft drink industry.

Joint marketing operations and tactical partnerships with Monster Beverage Corporation, Dr Pepper Snapple Group, Aujan Industries Company, and Nestlé