Dr Pepper/7 UP Case
1. Dr Pepper/7 Up has different strengths, weaknesses, opportunities, and threats.
Strengths include the use of several brands and distribution channels, high growth rate (which is above industry average), and focus on advertising and promotion. The company focuses on marketing of leading brands in non-cola segment, namely Dr Pepper and Seven Up. It also differentiates its offers through foodservice and fountain operations and other beverages. Distribution channels include take-home, vending, and convenience channels used by licensed bottlers. Internationally, Dr Pepper is distributed by Pepsi Co. The company uses different promotional campaigns for Dr Pepper while also differentiating the product. As Dr Pepper and 7 Up are mostly bottled by companies bottling Coca-Cola and Pepsi, the “Priority Brand” strategy was introduced to ensure product competiveness. In addition, the company increasingly partners with independent bottlers. Another strength is cautious spending on marketing and promotion. Weaknesses concern narrow consumer focus of 7 Up and its red dots marketing campaign. Focus on 18-25 year olds market segment requires narrow focus which is difficult to maintain.
Seven Up advertising campaign could not target its consumers. Opportunities are connected with stable and non-cyclical soft drink industry involving steady sales growth for the past decade. Another opportunity is growth of non-cola segment which Dr Pepper/7 Up operates in. Its growth is attributable to growth in consumer demand for healthier refreshments which also creates an opportunity. Threats include high competition for customers, shelf space, and marketing focus on bottlers. Dr Pepper/7 Up competes not only with industry giants (Coca-Cola and Pepsi), but also bottled water, juices, and soft drinks from private producers. The second threat is connected with supplier prices. As the NutraSweet Company is the only supplier of aspartame, it can manipulate prices. Bottlers can also create threats. Coca-Cola and Pepsi Co bottlers are unwilling to develop non-owned brands. Hence, development of a network of independent bottlers is important.
2. Based on the company’s SWOT, several strategies can be suggested.
First of all, it is important to note that due to industry growth and its non-cyclical nature, growth strategies should be used. In particular, Dr Pepper/7 Up can use such strategies as growth through increasing presence, growth through promotion, and growth through innovation. The first strategy is connected with a high growth rate of the company. In this regard, Dr Pepper/7 Up’s internal strength can be effectively used within favorable external environment (opportunity). The company can increase its market presence and sales volumes, for example through partnering with more independent bottlers. Secondly, the company can increase its growth through greater focus on promotion and advertising. Dr Pepper/7 Up spends its promotional budget cautiously but does not always develop its campaigns properly. Hence, this strategy should focus on the quality of promotional campaigns including target consumers, product value, price, and distribution convenience. In addition, promotional campaigns should consider competitors’ marketing strategies and actions. Herewith, marketing budget may need to be increased. The strategy of growth …
