Dr Pepper Company Case
Summary: The case study demonstrates the rapid rise of Dr Pepper from a brand that was known to none to a brand that is well known among all Americans. The sales of the company have risen dramatically during ten years starting from 1965. The brand does not believe in varieties of products and specializes in a specific taste.
Dr Pepper is not the leading soda market but still enjoy a huge chunk of the said market. Dr Pepper has to survive in a market where its competitors are Coca Cola. Pepsi and Seven Up. They are all international brands which pose a serious threat to the rapid increase in sale of Dr Pepper.
Case Objectives: The case study revolves around the importance of gaining of market share for Dr Pepper compared to other soda producers. Dr Pepper is trying to hold on to the market with its product differentiation strategy where it wants to sell its Sugar Free Dr Pepper. But due to ban on a substance used in the preparation of sugar free soda, Dr Pepper is facing pressure from its investors.
The case study also shed light on the present aggressive marketing strategies and future to be adopted marketing strategies by Dr Pepper to retain its current customers an also attract new customers to its products.
Key Issues: There are a number of key issues discussed in this case. The main key issue is about the strategy that Dr Pepper needs to adopt in relation to its Sugar Free brand. Dr Pepper wants to reach out to new markets as it is comfortable with its status at the present markets.
Dr Pepper also needs to bring its operations in line to the rules and regulations set by the concerned authorities. Dr Pepper is also thinking about the different strategies which can enable it to have a long term business relation with its distributors who are very important for delivering their product to the market.
External Threats: There are many external threats to Dr Pepper. Its multinational competitors like Coca Cola who have introduce their new flavor called Mr. PiBB which tastes very similar to Dr Pepper. The recent ban on cyclamate, which an essential ingredient of the diet Dr Pepper poses a serious threat as the investors have a psychological negative feeling about it.
There has been an increase in the prices of raw material which is another challenge for Dr. Pepper. Due to an increase in inflation from 4.9 to 13.9 percent, the purchasing power of Dr Pepper’s customers has also been impacted negatively.
External opportunities: Dr Pepper has a flavor that is a blend of pure fruits. Many companies have tried their best but did not make a taste same as Dr Pepper. This fact provides Dr Pepper a special place in the Soda market. It can increase its distribution and spread to new horizons without a fear of a competitor to its taste yet. Dr Pepper has already launched its overseas distribution in 1973 in Tokyo, Japan.
The current chairman and president Woodrow Wilson, has a major background in marketing. He can contribute to a marketing strategy which will enable Dr Pepper to gain ground in the market. Woodrow Wilson has a firsthand experience of salesmanship and is well aware of how to deal with distributors and direct customers.
Internal Weakness: Dr Pepper does not directly employ all of its workers. Instead only 1150 are directly employed. This fact could contribute to less trained work force that indirectly employed at the company and are not direct employers. This could also contribute to the fact that the employs are not able to build effective teams to work in collaboration.
There has been an issue of noise produced by the bottling plants by the clatter of empty cans hitting each other. This hitting also produces nicks in the cover of the cans.
Internal Strength: Dr Pepper produces its own plastic containers at their Dallas headquarters. This results in savings for the company. Dr Pepper has an efficient inventory management system. Its inventory on hold has dropped from 30 days to nearly 20 days.
The company has an internal tasting mechanism that ensures that all its products have the same taste which is a kind of its identity. Also the unique taste of Dr Pepper has not yet been copied by any of its competitor yet.
Alternative Strategies: I would like to address the problem of the drop of sales for the sugar free brand by Dr Pepper. I would like to make two suggestions in the following.
First strategy could be to stop the production of the sugar free brand. This will enable the company to focus on its traditional Dr Pepper.
Second strategy would be to find an alternative to cyclamate, the main ingredient of the sugar free product. They might come up with their traditional Dr Pepper with less added sugar. On the other hand they would need to communicate effectively with their investors who have got scared due to a ban on cyclamate and convince them that Dr Pepper in much more than that.
Choice of Strategy: If I had to make a decision to make, I would go with a Dr Pepper with less added sugar for the time being. Of course it would be a bit different than the traditional Dr Pepper but we can all observe some difference between sugar added and sugar free (with added sugar free sweeteners). I believe that the customers would not be disappointed with it. I would also go for some more experimentation with the taste for less sugar.
Implementation: The strategy above should be implemented from different angles.
First, the major investors have to be taken on board. They should be made aware of what the company is going to do and what are the possible outcomes.
Secondly there has to be extensive research on the taste itself that is going to come to the market with the new less added sugar. Customers should be reached out with a pool of tastes and they should be asked for their opinion about their favorite taste.
Thirdly and lastly, extensive marketing and advertisement would be required for this strategy to work. Customers need to be reached out and told that the new product is soon going to be in the market with less sugar but taste as good as before.