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Dr. Pepper Snapple Case Essay

2199 words - 9 pages

Dr. Pepper Snapple Group Inc Case

Problem Identification:
There are several issues related to the Dr. Pepper Snapple Group, Inc.’s introduction of a new branded product into the energy beverage market. The main problem I will be focusing on for the company is looking into which channel will be more profitable. Dr. Pepper Snapple Group Inc. distributors and bottlers can deliver their product into all off -premise retailers where energy beverages are sold. However, I would like to look into whether the convenience stores or supermarkets would be more profitable for the first year. Also, I will be focusing in on who to target using those channels. Due to the breakdown of possible target ...view middle of the document...

40/5.9B=.00019%

2) Convenience Store & Male Adults
Male Adults are 34% of the pop & 17% are Energy drink users and drink 2.04 cans a month

Adults 35-44 are 15% of the pop & 25% are Energy drink users and drink 4.16

Manufacturing price: $3.00 x .50= $1.50; $3.00-$1.50=$.150;
$1.50 x .36= $.54;$1.50- $.54= $.96; $.96x .60= $.58; $.96-$.58=$.38

Potential Profit: $.38x 173,400adult males= $65,892x2.04/month=
$134,419.68x 12 Months= $1,613,036.16

Convenience stores will be decreasing over the next few years as a contributor to the overall market’s sales from 74% in 2006 to 60% in 2010

Based on Appendix 3, Convenience stores overall contribution to the industry’s sales will continue to grow, but at a decreasing pace

Market Share in 2007= $1,613,036.16/$5.9B=.00027%

3) Supermarkets & Female Adults
Female Adults are 39% of the pop & 10% are Energy drink users and drink 2.12 cans a month

Adults 35-44 are 15% of the pop & 25% are Energy drink users and drink 4.16

Manufacturers price: $2.00x.40=.80; $2.00- $.80= $1.20;
$1.20x .36= $.43; $1.20-$.43=$.77; $.77x.60= $.46; $.77-$.46= $.31

Potential Profit: $.31x117,000adult females= $36,270x2.12/month
$76,892.40x12 Months= $922,708.80

Supermarkets will be increasing over the next few years as a contributor to the overall market’s sales from 14% in 2006 to 20% in 2010

Based on Appendix 3, Supermarkets overall contribution to the industry’s sales will continue to grow at a more rapid pace

Market Share in 2007= $922,708.80/$5.9B=.00016%

4) Supermarkets & Male Adults
Male Adults are 34% of the pop & 17% are Energy drink users and drink 2.04 cans a month

Adults 35-44 are 15% of the pop & 25% are Energy drink users and drink 4.16

Manufacturers price: $2.00x.40=.80; $2.00- $.80= $1.20;
$1.20x .36= $.43; $1.20-$.43=$.77; $.77x.60= $.46; $.77-$.46= $.31

Potential Profit: $.31x 173,400adult males= $53,754 x.2.04/month=
$109,658.16 x12 months=$1,315,897.92

Supermarkets will be increasing over the next few years as a contributor to the overall market’s sales from 14% in 2006 to 20% in 2010

Based on Appendix 3, Supermarkets overall contribution to the industry’s sales will continue to grow at a more rapid pace

Market Share in 2007=$1,315,897.92/$5.9B=.00022%

Recommendation:
The overall recommendation I would give is to start by selling through the convenience stores. When selling through the convenience stores, the overall retail prices can and usually are higher. This means the new Dr. Pepper Snapple Group, Inc. can price their drink around $3.00, while in supermarkets, in order to compete, should price around $2.00/can. The overall manufacturers price will be much higher through the convenience store, sitting at about $.38 vs. $.31 going through supermarkets. The only concerning factor about moving into convenience stores is the fact that their contribution to overall sales of all energy beverages...

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