Dr. Pepper/7 up Inc. Squirt brand Case Essay

Introduction and Marketing Issues- Dr Pepper/7Up Inc., is one of the largest soft drinks company in the world. This company has its production in 200 countries. Most popular soft drinks are: Dr Pepper, 7 UP, RC cola, A&W Root Beer, Canada dry, Hawaiian Punch, and Squirt. Squirt, is a drink that was invented in the course of an experiment by Herb Bishop in 1938. It was a new carbonated soft drink that required less fruit and less sugar to produce hence it was quite famous during WWII. Later, in 1977, Squirt was bought by a bottler Holland Michigan. The company updated Squirt’s logo and positioned the brand as a mainstream soft drink. Squirt joined A&W Brands in 1986, which was later purchased by Cadbury Schweppes PLC in 1993. Responsibility for manufacturing, marketing, and distribution of Squirt was assigned to Dr Pepper/Seven Up, Inc, which had been acquired by Cadbury Schweppes PLC in 1995. It still remains under the Dr Pepper/Seven Up, Inc. branch. Nowadays, Squirt is bottled and sold by some 250 Bottlers in the US. Since 1990 Squirt’s unit sale volume has been stable until recently. There is a huge volume of carbonated soft drink consumption in the US. American consumes 849 eight- ounce annually. CSD are popular among individuals aged 20 – 49. Consumption of diet drinks is popular at the age group of 25 and over. Today, Squirt’s product line consists of regular, diet, Ruby Red, and Diet Ruby Red. Diet Squirt and Diet Ruby Red account for 20% of Squirt’s total sales. The study of Squirts sales volume has shown a slow decline in recent years, although squirt remains one of the best selling brands among citrus flavored drinks, still the competition due to better marketing budgets and techniques from the two main competitors Coca cola and Pepsi and changing market trends can bring the market share down for Squirt. The flat sales of Squirt need to be boosted before competing brands begin to erode the market share enjoyed by Squirt, therefore to safeguard against this Kate Cox, brand manager at Dr. Pepper/ seven up inc began to develop plan for market targeting and product positioning as prescribed by Foote, Cone and Belding that is brand’s advertisement agency. In the mid- summer 2001, Squirt Brand management team, had to begin drafting annual advertising and promotion plan for Squirt in the US to chart a right marketing plan the team had to come up with answers for the following questions: Q1: What should be Squirt’s target market? Or what target market to choose? (FCB recommendations) Q2: How should Squirt be positioned according to the target market? Q3. Is it beneficial to follow recommendation of Foote, Cone and Belding of targeting and positioning Squirt or should old methods be followed or there should be some new innovative methods to increase sales and promotion of Squirt? Situational analysis- Squirt has been advertised in all the mediums of media like newspapers, television, and radio. Although squirt remains one of the best selling brands among citrus flavored drinks, still the study of Squirts sales volume has shown a slow decline in recent years. The competition due to better marketing budgets and techniques from the two main competitors Coca cola and Pepsi and changing market trends can bring the market share down for Squirt. Squirts advertising agency Foote, Cone and Belding suggested market targeting and brand positioning as two ways for Squirt to come out of this problem. Following their suggestion and considering that the answers to the questions mentioned above will serve as main decision making tools we analyzed the market situation for Squirt. Competitive market- Carbonated drink industry is highly competitive industry As mentioned previously this industry of carbonated drinks is dominated by three companies, Coca cola, Pepsi and Dr. Pepper/ 7 up inc These three companies also represent the top ten selling brands in the United States market. Squirt brand of Dr. Pepper is the best selling carbonated grapefruit soft drink brand in the United States. It is a caffeine-free, low-sodium carbonated soft drink brand with a distinctive blend of grapefruit juices that gives it a tangy, fresh citrus taste. Hence it has a different market then other caffeinated drinks but it has competitors in form of Fresca, citrus, mellow- yellow and surge from Coca – cola and mountain dew from Pepsi. Consumer research conducted by Dr. Pepper/ 7 up inc. in taste testing of Squirt and Citrus of coca-cola group indicated that Squirt scored higher on the thirst quenching attribute. Compared to Dr. Pepper/7up inc. Coca- Cola and Pepsi show more aggressive for of adv ertising and promotion of products Consumer. Buyer Behavior and customer segmentation- Data suggests that in U.S the consumers drink more carbonated drink then tap water. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. This statistics shows that there is a huge market for carbonated drinks in U.S. It was observed that age and ethnic/racial angle played an important role in growing consumption of soft drinks. Hence changing demographics have been critical factors in the growing popularity of these flavored soft drinks. Age- Previous target market for squirt has been between 18 to 44 yrs old. According to the research by Foote, Cone and Belding, Squirt was more of a thirst quenching product then refreshing. They suggested that youngsters would identify with this â€Å"thirst quenching attribute of Squirt, and the research also suggests that this group is supposed to be the large consumer of soft drinks. Therefore, they recommended targeting youngsters between 18 -24 year old. Ethnic/ racial- In U.S 25% Americans are under 18 years of age and one quarter of U.S population is Hispanic and African- American. By a census in 2000, it was predicted that soon 17% out of youth under the age of 18 will be Hispanic; also they will amount to 45% of all minorities in U.S thus surpassing African Americans to become the largest ethnic group in U.S. It was also observed that per capita consumption of flavored soft drinks is higher in Hispanics and African- American than the other racial groups. This information prompts a wise decision to target these ethnic- racial groups to increase the market share of the squirt flavored carbonated drink. If the census of 2000 is accurate then it is a fact that to target this huge population of Hispanics and African- Americans as future market for Squirt will be very beneficial. Squirt has already been exposed to many Hispanics, primarily those of Mexican decent because of the popularity of the beverage in Mexico. It is one of the largest selling brands of soda in Mexico, and Squirt has large brand recognition there. Competitive market- Carbonated drink industry is highly competitive industry As mentioned previously this industry of carbonated drinks is dominated by three companies, Coca cola, Pepsi and Dr. Pepper/ 7 up inc These three companies also represent the top ten selling brands in the United States market. Squirt brand of Dr. Pepper is the best selling carbonated grapefruit soft drink brand in the United States. It is a caffeine-free, low-sodium carbonated soft drink brand with a distinctive blend of grapefruit juices that gives it a tangy, fresh citrus taste. Hence it has a different market then other caffeinated drinks but it has competitors in form of Fresca, citrus, mellow- yellow and surge from Coca – cola and mountain dew from Pepsi. SWOT analyses – SWOT analyses of the Squirts market potential, is as follows: Strengths- Squirt is the best selling carbonated grapefruit soft drink brand in the United States. It is already has brand name recognition in the Mexican market, hence while targeting the Hispanic population Squirt will have a competitive edge over his competitors who are also targeting the same market fiercely. Weaknesses- Squirt brand has budget restrictions for advertising and promotion, which is not the case with its competitors like Coca- cola and Pepsi. Opportunities- Squirt has a huge opportunity to successfully expand its brand by targeting young because their grape flavor attracts more youngsters because of its unique thirst quenching attribute and. penetrating Hispanic groups and African – American market to target them as guaranteed consumers for future, as it is predicted that Hispanics are going to be the most populous ethnic group with more number of youths as compared to other minority groups in U.S. Threats- There are no threats specifically, but depending too much on particular ethnic group and particular age, in short narrow targeting criteria can prove to be disaster if it backfires due to certain reasons, anchoring the target consumers because they are the main source and they dictate the location to get the soft drink, also dominate taste preferences because soft drinks is an elastic product. Considering the above mentioned information, it is clear that the recommendations of Foote, Cone and Belding for targeting and positioning of Squirt are rational and by targeting Hispanic and African – American, young population of 18 to 24 yrs of age will be beneficial for Squirt in a long run. Problems and Opportunities: Young Hispanics are considered to be the target market for positioning of Squirt for brand promotion. Also, considering the fact that Squirt is already popular among the Mexicans, can be used as a positive sign for this venture. Facts mentioned above in the situational analysis like that Hispanics are fast growing ethnic group in U.S, it is predicted that maximum number of youth is going to belong to the Hispanic community, Hispanics, does not like hard sell messages and likes messages that are real and relevant to them, they like shop closer to home in mom and pop stores, also the majority would prefer ads in Spanish (50%) while 30% prefer English and the rest have no preference. Positioning and specific targeting is the main issue for the Squirt brand. The advertisements are not appealing to the suggested new modified target audience which should include Hispanics (specifically in the states of California and Texas). The advertisements should focus more on real life moments while showing Squirt being consumed by individuals. This will allow the target audience to connect with the Squirt brand. Also, Squirt should show advertisements in Spanish as well as English. Also, budget for advertising should be expanded. Strategy: Using the above information and the research provided by FCB’s presentation, it is clear that Squirt should focus on the age demographic of 18-24 year olds. An effective marketing campaign targeted towards 18-24 year olds has a two potential results: 1) a short term solution of increasing sales of squirt to 18-24 year olds and 2) a long-term solution of positioning squirt as a staple beverage for 18-24 year olds such that as consumers of squirt move out of the targeting age demographic they will continue to be loyal consumers of Squirt, thus increasing squirt sales in the 25+ market within a few years. Kate Cox has a few options in how she markets Squirt to the target audience of 18-24 year olds: †¢ A â€Å"multicultural marketing mind-set† approach †¢ 18-24 year-olds (regardless of race) †¢ A hybrid approach 1) A multicultural marketing approach would appeal to the increasing amount of Hispanics and African Americans in the 18-24 age range. It would also provide for the popularity of Squirt in Mexico to filter in to the U.S.’s Mexican population. The concern with such a strategy, however, is that Caucasian’s are still the largest consumer of Squirt. The risk with a multicultural marketing mind-set is that such a marketing campaign has the potential to isolate Caucasian consumers. The benefit of such a campaign is to increase the consumer base to those who are not Caucasian, trusting that Caucasian’s will continue to consume Squirt, a wider appeal of the beverage to consumers would increase sales. 2) An 18-24 year old marketing campaign would target all consumers in the 18-24 demographic. By identifying Squirt as a popular beverage amongst consumers in this age range, regardless of race, Squirt has the potential to both increase sales within the age demographic as well as within the Hispanic and African-American demographic. Such a campaign would have to be carefully thought out and the recommendation is for Cox to identify a celebrity or fad that is popular amongst 18-24 year olds, regardless of race. Such a campaign could be aligned with an event. For example, a Squirt campaign that is aligned with the Olympics with Olympic athletes as spokespersons could appeal to 18-24 year olds regardless of race. Another strategy that could work is partnering with a popular television program or event. For example, Coca-Cola’s sales increased with it being the official beverage of American Idol judges. Such alignment with a popular TV program is sure to increase sales amongst all races within the targeting age-demographic. 3) A hybrid approach would, perhaps, be the most expensive, however, if nervous about leaving out the Hispanic and African-American populations through an overall marketing campaign targeting towards all 18-24 year olds, Squirt could do a â€Å"spin-off† campaign with commercials and packaging in Spanish. Such a campaign would reach all 18-24 year olds as well as all Hispanics, regardless of age. The initial costs are the initial down-fall, however a successful campaign could re-define Squirt in two needed demographics, all Hispanics and all 18-24 year olds. Recommendation: A Hybrid campaign is the best option for Squirt. As 73% of Squirt consumers are Caucasian, redefining Squirt as a drink popular amongst 18-24 year olds with celebrity or event backing popular amongst the targeting demographic is the best option to create a brand for Squirt that will create consumer loyalty amongst 18-24 year olds, securing a place in the 25+ market within a few years. A smaller, geographic specific side campaign targeting towards Hispanics with Spanish ads and packaging will help Squirt capitalize on its popularity in Mexico and will see an increase in sales in border states, such as California and Texas.