Dr Pepper/Seven Up, Inc.
Squirt® Brand
MKTG 303
CASE STUDY: WRITTEN REPORT
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Presented by:
Catherine Yeung
Tiffany Khor
Kimberly Koo
Lena Poon
Fathmath Nuzhath
Table of Contents
Executive Summary..................................................................................................................3
Industry Overview (Q1)...........................................................................................................3
Company Overview (Q2)..........................................................................................................4
Continuing the Present market targeting and positioning strategy (Q3)............................5
Adopting the FCB Recommendation (Q3).............................................................................6
Conclusion (Q4).........................................................................................................................6
References:.................................................................................................................................8
Appendices:...............................................................................................................................9
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Dr Pepper/Seven Up, Inc
Executive Summary
Cadbury Schweppes PLC is currently the world’s third largest soft-drink company and its
confectionary company currently places fourth in the world. Dr Pepper/Seven Up. Inc is the
largest division of Cadbury Schweppes PLC, and is considering a modification to their market
strategy for the Squirt brand. Report topics covered include an Industry overview
(characterization of the competitive market environment), a company overview, the
advantages and disadvantages of pursuing the present positioning strategy and target market,
the advantages and disadvantages of adopting the strategic marketing recommendations made
by Foote, Cone and Belding (FCB), an alternative market strategy, how it compares with
current recommendations and why it would be preferable.
Industry Overview (Q1)
The industry can be characterized in terms of its structure, competitors/brands, marketing,
advertising and promotion, flavor competition and demographics of soft drink consumption.
Industry Structure
There are three major channel members who control the production and distribution of soft
drinks in the U.S.
Concentrate producers – Coca-Cola, Pepsi-Cola, Dr Pepper/Seven Up
Bottlers
Retail outlets – Supermarkets, convenience stores, vending machines, fountain service mass
merchandisers, and other small retail outlets
Soft drink marketing in the United States is characterized by heavy investment in consumer
advertising and promotion, selling and trade promotion through bottlers to retail outlets, and
consumer price discounting.
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Concentrate producers often assume responsibility for product development, developing
national advertising and promotion programs, as well as planning and market research.
Approximately 39 cents/sales dollar is spent on advertising and sales promotion.
Bottlers usually take the lead in developing local trade promotions to retail outlets and local
consumer promotions. Roughly 28 cents of each sales dollar is expensed on delivery and
advertising.
Demography
An increase in soft drink consumption is observed, from 47 gallons in 1990 to 53 gallons in
2000. However, in recent times, soft drink consumption growth has slowed. The largest
consumers of soft drink are aged between 20-49. Teens and young adults tend to be heavier
consumers, while more consumers over 25 prefer diet soft drinks. Research has shown that
per capita consumption of soft drinks is higher among Hispanics and African Americans than
in other racial and ethnic groups. Hispanics and African Americans contribute to 25 percent
of the United States population, representing a large target market which will require
advertising tailored to differences in language and/or culture.
Company Overview (Q2)
Competitor Analysis
The US carbonated soft drink industry consists of three main competitors; Coca-Cola, Pepsi-
Cola, Dr Pepper/Seven Up, Inc. The three corporations dominate over 90 percent of sales in
the carbonated soft drink sector. At present, Coca-Cola holds a market share of 44.1 percent,
making it the market leader in the carbonated soft drink industry. The lead is followed by
Pepsi-Cola who have a market share of 31.4 percent, and thirdly Dr Pepper/Seven Up, Inc.
who hold a market share of 14.7 percent.
Exhibit 1 shows that Coca-Cola possesses five of the top ten brands; Coke Classic, Diet Coke,
Sprite, CF Diet Coke and Barq’s Root. Pepsi-Cola holds three of the top brands; Pepsi-Cola
Mountain Dew and Diet Pepsi. Dr Pepper/Seven Up, Inc owns only two of the top brands
which consist of Dr Pepper and 7Up. (R. A. Kerin, R. A. Peterson (2007) “Strategic
Marketing Problems Cases and Comments 11th Edition” Pearson Prentice Hall pg 158-159)
See Appendix 1.
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Dr Pepper/Seven Up, Inc.
As observed in the data provided, it can be concluded that Dr Pepper/Seven Up Inc. has the
smallest piece of the pie, owning only 14.7 percent of the market share. In comparison to
Coca-Cola’s 44.1 percent and Pepsi-Cola’s 31.4 percent, Dr Pepper/Seven Up Inc, Inc has a
relatively small percentage. The percentage difference between Dr Pepper/Seven Up Inc and
Coca-Cola (29.4 percent) and Dr Pepper/Seven Up Inc and Pepsi-Cola (16.7 percent) implies
that Dr Pepper/Seven Up Inc’s strategic marketing could stand to be improved. See Appendix
1.
Squirt
In the carbonated grapefruit soft drink market, Squirt’s product line includes regular and diet
Squirt and regular and diet Ruby Red Squirt. In this market, Squirt competes along side with
Coca-Cola’s grapefruit caffeine-free brands consisting of;
Fresca, marketed at those 30 years and over, and;
Citra, aimed at teens and young adults.
Squirt is also up against Coca-Cola’s Mello Yellow and Surge, as well as Pepsi-Cola’s
Mountain Dew and finally Dr Pepper/Seven Up’s Sundrop. Mountain Dew is the biggest
selling citrus-flavoured soft drink in the US, closely followed by Squirt, Mello Yellow,
Sundrop and Surge. As the result of consistent advertising over long periods of time, Squirt
has been able to maintain its brand awareness while spending less on media advertising than
its opponents. Furthermore, it can be justified that Squirt holds a relatively strong position in
the carbonated grapefruit and citrus-flavoured soft drink market indicated by its high sales
volume between 1996 - 2000. See Appendix 1.
Continuing the Present market targeting and positioning
strategy (Q3)
Advantages:
The target market of 18-34 year old adults ensures wide market coverage
Advertising expenditure would have remained relatively lower than competitors – i.e.
consistent advertising over an extended period of time
Thirst-quenching benefit portrayed as spunky, lively, sociable, colourful, and music-
driven
Squirt advertisements portrayed as “interesting, unique...and involving”
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Disadvantages:
Due to wide target market, branding/product may fail to be relevant to all consumers
in the target segment
Neglects older age groups in target segment. Imagery used in advertisements is seen
as “juvenile”
Interviews conducted in with consumers (mostly aged 18-24) showed that this
segment did not view Squirt’s positioning and advertising to be relevant to their
lifestyle
Extremely similar positioning to Coca-Cola’s “Citra”. According to the perceptual map of
grapefruit and citrus brands, “Citra” is considered more “Young, cool and hip” and is
positioned similarly to “Squirt” on the “thirst quenching” scale
Adopting the FCB Recommendation (Q3)
Advantages:
Concentrated age group which would identify easily with Squirt’s products
Differentiates “Squirt” from competitors by heavily emphasizing its “thirst-
quenching” benefit
Relevant to target the 21-24 year old age group
Emphasizes freedom and instant gratification (relevant to targets’ hedonistic lifestyles)
Consistent with Product’s look and feel
Accounts for the large Hispanic population (heavy consumers)
Disadvantages:
Narrow age segment (risk of losing relevance with younger and/or older consumers)
The positioning strategy is very similar to Coca-Cola’s “Citra”
The transition stage into adulthood is a relatively short period of time, there should be
more focus on other age groups.
Conclusion (Q4)
With Citra being the strongest competitor in Squirt’s current segmented market, Dr
Pepper/Seven Up Inc consumer research was held to revise and modify Squirt’s market
targeting and positioning strategy to maintain Squirt’s leadership position and to retain their
customers.
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Although Squirt and Citra and positioned similarly, Squirt has been self-differentiated through
its brand personality, taste, packaging and advertising appeal. The differentiation can be
observed from the tables in appendix 2, indicates that consumers’ purchase intention for Citra
was based on the “product look” not the product features; and, consumers’ purchase
behaviour to Squirt was attracted by its “Taste”- the quality and features of the Squirt. FCB’s
strategy targets similar geographic and demographic markets to Citra which limits the
flexibility of position movement on the perceptual map (see appendix 3). The similarity
makes it even harder for Squirt to retake the market share from Citra.
Comparison of Current & Recommended Strategy with Alternative
Strategy
See appendix 4, 5 and 6.
Alternative targeting and positioning strategy
The alternative strategy integrates current and recommended strategy and base on the Dr
Pepper Seven Up Inc consumer research. It adopts a differentiated marketing approach to not
only target multi-cultural, ethnic market age 21-24 and Hispanic market age 6-19 & 40-49,
but also to account for the New York City metro area which has greatest potential. A front
Squirt has not faced. Squirt is to be positioned as both a symbolic and functional concept.
With the re-designed Squirt, the brand image is to be portrayed as spunky, lively, sociable,
colourful, and music-driven, individualistic young adult and exhilarating taste - "Thirst
quenching".
The brand image has been successfully implanted in consumers’ mind, which matched target
segment's perceived brand image and product quality preference. It is Squirt's uniqueness that
differentiates from its competitors. To better fit the image and the product, the packaging shall
be re-designed; a more contemporary look is suggested.
Advertising and promotion spending will be allocated in consumer, trade and retail
promotions and media advertising. Based on past experience, these are cost effective
promotion channels to gain high levels of brand awareness. As re-positioned product, the
launch requires intensive media exposure, and visual aids have been recognised as the most
effective advertising tool to draw attention. In order to inform and persuade consumers about
the changes and improvements made to Squirt, visual and media advertising have to be
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employed to attract attention towards the product’s symbolic image and evoke the memory of
Squirt’s exhilarating taste. To maintain Dr Pepper/Seven Up Inc’s market share, consistency
of spending on advertising and promotion activities is essential.
References:
1. Kerin, A., Peterson, A., 2007. Strategic marketing problems – cases and comments.
11th ed. Pearson education international.
2. Belch, G., Belch, M., 2007. Advertising and promotion – an intergrated marketing
communications perspective. 7th ed. McGraw-Hill Irwin.
3. Heller, L.,2007. Breaking news on food and beverage development – north America ,
Cadbury Schweppes invests in Hispanics. [online]. Food USA [Link].
Available at: [Link]
schweppes-hispanics-soda [accessed on 17 April 2007].
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Appendixes:
Appendix 1
Top-Ten Soft Drink Companies in 2000
Rank Companies Market Share %
1 Coca-Cola 44.1
2 Pepsi-Cola Co. 31.4
3 Dr Pepper/ 7 Up 14.7
(Cadbury Schweppes)
4 Cott Corp. 3.3
5 National Beverage 2.1
6 Royal Crown 1.1
7 Big Red 0.4
8 Seagram 0.3
9 Monarch Co. 0.1
10 Private label/other 2.5
Top-Ten Soft Drink Brands
Rank Companies Brand Owner Market Share
%
1 Coke Classic Coca-Cola 20.4
2 Pepsi-Cola Pepsi-Cola 13.6
3 Diet Coke Coca-Cola 8.7
4 Mountain Dew Pepsi-Cola 7.2
5 Sprite Coca-Cola 6.6
6 Dr Pepper Dr Pepper/Seven Up 6.3
7 Diet Pepsi Pepsi-Cola 5.3
8 7Up Dr Pepper/Seven Up 2.0
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9 CF Diet Coke Coca-Cola 1.7
10 Barq’s Root Beer Coca-Cola 1.1
Case Volume Trend for Major Carbonated Grapefruit ad Citrus-
Flavoured Brands in the US: 1996-2000
Company/Brand (s) 1996 1997 1998 1999 2000
Coca-Cola
Fresca 28.0 26.2 25.9 25.5 24.1
Citra NA NA 21.0 26.2 15.6
Mello Yellow 59.0 46.6 42.4 41.6 45.7
Surge NA 69.0 51.8 26.7 11.8
Pepsi-Cola
Mountain Dew 605.9 683.2 748.1 793.0 809.8
Regular 535.6 605.2 665.1 705.0 715.6
Diet 70.3 78.0 83.0 88.0 94.2
Dr Pepper/Seven Up
Sundrop 5519.7 20.1 20.4 20.1 20.2
Squirt/Ruby Red 55.8 55.7 54.8 56.0 54.6
Total Case Volume 768.4 900.8 964.4 989.1 981.8
Appendix 2
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Current & Recommended Positioning
Sales driver – Consumer perception
Citra Squirt
Brand Name Fun
Packaging Young, cool & hip
Newness Thirst-quenching (Taste)
Consumption Motive
Symbolic Image Product Quality
Advertising Appeal
Citra Squirt
Multilingual Media Ads Interesting
Adventure Unique
Misadventure Involving
Not speaking to target Ad image – “Juvenile”
audience’s lifestyle
Market Coverage - Regional
Citra Squirt
South-eastern U.S. Los Angeles
South-western U.S. Chicago
Detroit
San Diego
Portland
Oregon
California
North California
South California
Western U.S.
Target Market
Age Group
18 ~ 24 18 ~ 34
Appendix 3
Perceptual Map
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Market Targeting Appendix 4
Recommended strategy Alternative strategy approach Reason
Fits product personality spunky, lively,
Multi-cultural population Multi-cultural population
sociable, colourful, and music-driven
Young individualist adults (work hard,
Age: 21 ~ 24 Age: 21 ~ 24
play even harder)
Heavy consumption of carbonated soft
Hispanic population Hispanic population
drink
Hispanic - Consumption volume vs Age
Age: 21 ~ 24 Age: 6 ~ 19 & 40 ~ 49 group chart indicates the heaviest Squirt
user
Expend market in New York city No Squirt bottler, but large ethnic
metropolitan area population
Young individualist adults (work hard,
Age: 21 ~ 24
play even harder)
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Market Positioning Appendix 5
Recommended strategy Alternative strategy approach Reason
Spunky, lively, sociable, colourful,
Symbolic and music-driven, individualistic
young adult
Positioning Concept Symbolic
Soda drink lover / heavy users
Functional Thirst quenching - High position in
Perceptual map
"Thirst quenching" image has
successfully implanted in consumers
Brand image or "feeling" Brand image or "feeling" to perception, which matched target
Brand Image relevancy to consumer remaining - consumer remaining - "Thirst segment's perceived brand image
"Thirst quenching" quenching" and product quality. It is Squirt's
uniqueness that differentiates from
its competitors
To match product image and brand
Re-design - More
personality and message that
Product Packaging Unchange contemporary designed
marketers wish to communicate
product packaging
through advertising promotions
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Advertising Promotion Appendix 6
Alternative strategy
Advertising --- Recommended strategy Reason
approach
DPSU research result in 2001
Thirst-quenching;
Thirst-quenching; living indicates "Squirt advertising
Fun, up-beat;
Message up to the max; living effectively communicated the
(living up to the max,
loud; exhilarating taste intended fun and thirst-quenching
living loud)
message"
Consumer, trade, retail
Mainly on Consumer, trade, Mainly on Consumer, trade, promotion is lower in cost and
retail promotion with retail promotion with proved in Squirt's case is more
cooperative promotion; cooperative promotion; effective gain awareness from the
Chanel pass experience;
Visual ads has proved to be the
And, Visual advertising And, Visual advertising most effective advertising tool to
draw attention
Re-positioned product launch
required intensive media exposure
Reduced media advertising to communicate message to
Consistent advertising
Spending spending (shown in exh. 7 audiences in order to gain
spending included media ads
table) awareness and the awareness of
the changes of the product (new
look)
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