1) Business Admin Capstone
Review Case Study 8: Dr. Pepper Snapple Group 2011: Fighting to Prosper in Highly
Competitive Market found in attached PDF.
"Dr Pepper Snapple Group 2011: Fighting to Prosper in a Highly Competitive Market"
Please respond to the following:
The case study outlines six specific strategies that the firm has chosen to support its strategic
direction. Determine which strategy is most likely to benefit the firm. Explain your rationale.
Briefly outline at least one other strategy the firm could take to support its strategic direction.
Illustrate why this new strategy would be successful.
Please answer above question here in 120 words or more.
Please use the Attached Case study for this post
2) Business and Society
we look at the role of Technology in Business and Society. We look at Cybersecurity, the
loss of Privacy; we look at the Use of Robotics; we look at Genetically Engineered Food;
we look at Scientific breakthroughs in the Human Genome & Biotechnology...and so
These are such important issues that we are all facing as a society, with so many
awesome benefits and so many very real risks.
I want you to look at these issues and I want YOU to develop questions about these
issues. What questions do you have about these technologies (If you are living in the
current, you must have questions! ).
Please post your question about any of the topics. Then use your book or the Internet to
provide some insight about your question.
As always, posts must be at least 80 words; Please post the URL link of any Internet
sources you use so your peers can review as needed.
Please answer above question here in 80 or more.
3) Solution to global issue
Feeding the World
This week you learned that though there is, in fact, enough food available to feed the entire
world every day, this is not happening for various reasons. Look at the community in which you
live. If food became inaccessible to your community, how would that affect your day-to-day life?
How would it affect the immediate community?
Please answer above question here in 8-10 or more sentences.
University of Richmond
UR Scholarship Repository
Robins Case Network
Robins School of Business
Dr Pepper Snapple Group: Fighting to Prosper In a
Highly Competitive Market
Joseph S. Harrison
University of Richmond
Follow this and additional works at: http://scholarship.richmond.edu/robins-case-network
Part of the Business Administration, Management, and Operations Commons, Economics
Commons, and the Marketing Commons
Harrison, Joseph S. Dr Pepper Snapple Group: Fighting to Prosper In a Highly Competitive Market. Case Study. University of Richmond:
Robins School of Business, 2011.
This Case Study is brought to you for free and open access by the Robins School of Business at UR Scholarship Repository. It has been accepted for
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Dr Pepper Snapple Group:
Fighting to Prosper In a Highly Competitive Market
Written by Joseph S. Harrison under the direction of Jeffrey S. Harrison at the Robins School of Business,
University of Richmond. Copyright © Jeffrey S. Harrison. This case was written for the purpose of
classroom discussion. It is not to be duplicated or cited in any form without the copyright holder’s
express permission. For permission to reproduce or cite this case, contact Jeff Harrison at
RCNcases@richmond.edu. In your message, state your name, affiliation and the intended use of the
case. Permission for classroom use will be granted free of charge. Other cases are available at:
Larry Young, President and CEO of Dr Pepper Snapple Group, Inc. (DPS) seemed to be on a
roll. Named 2010 Beverage Executive of the Year by Beverage Industry Magazine, he led the
company through three very difficult economic years since it separated from the London-based
food and beverage giant Cadbury Schweppes. Reflecting on that time, he chuckled, “There
couldn’t have been a worse year to go public.”1 Triggered by the collapse of mortgage-backed
securities, the recession froze the credit markets and led to unprecedented commodities prices. In
spite of adverse economic conditions and fierce competition, the company managed to obtain
modest growth in sales in 2010.
Perhaps most satisfying of all was the recent turnaround of the Snapple Brand, which had been
struggling for many years.2 Sales volume for the brand grew 10 percent in 2010, fueled by new
products, packages and distribution. In addition, Dr Pepper, Canada Dry, Crush, Mott’s and
Hawaiian Punch all experienced increases in demand. A healthy cash flow allowed the company
to pay down its debt, increase dividends and repurchase shares.
A question remained as to whether the company was simply taking advantage of some fairly
obvious opportunities that it could not pursue when it was under Cadbury Schweppes ownership,
or whether this number three firm could actually begin to prosper in an industry dominated by
two of the strongest brands in the world. After all, although DPS sales were up almost 2 percent
in 2010, profits were lower than in 2009. In comparison, Coca Cola Company experienced
growth in revenues of 13.3 percent in 2010, with operating income increasing by 2.7 percent.
During the same time period, PepsiCo had revenue growth of 33.8 percent and growth in
operating profit of 3.6 percent.
THE DR PEPPER SNAPPLE STORY
The original Dr Pepper soft drink was invented in 1885 by a young pharmacist named Charles
Alderton. At the time, Alderton was working at Morrison’s Old Corner Drug Store in Waco
Texas, which served carbonated soft drinks from a soda fountain. Using that resource, Alderton
began to experiment with his own recipes and soon discovered that one particular drink, referred
to as “the Waco,” was gaining popularity among his customers. As demand grew, Alderton and
Morrison brought in a third partner to help with the manufacture and bottling of the soft drink.
The partner was Robert S Lazenby, owner of the Circle “A” Ginger Ale Company. Alderton left
the business shortly thereafter, but Morrison and Lazenby continued on to form what would
come to be known as the Dr Pepper Company, named after a friend of Morrison. The company
was introduced to the general public in 1904 at the World’s Fair Exposition in St. Louis.3
From its humble beginnings in Morrison’s Old Corner Drug Store, the company Alderton and
Morrison started has become one of the largest beverage manufacturers in North America. The
current product portfolio of DPS is closely tied to the history of mergers and acquisitions of its
one time parent company, Cadbury Schweppes plc (Cadbury Schweppes). Cadbury Schweppes
emerged in 1969 from the merger of Cadbury plc, a British confectionary and soft drink
company, and Schweppes, an international beverage brand. In the three decades that followed,
Cadbury Schweppes gained the third largest share of the beverage market in North America
through strategic acquisitions. Some notable acquisitions included the Duffy-Mott Company
(later known as Mott’s), Canada Dry, Sunkist, Crush and Sun Drop in the 1980s. In 1993 the
company bought the A&W Brands Squirt and Vernors as well as its signature root beer and
cream soda flavors. Cadbury finally purchased Dr Pepper/Seven Up, Inc in 1995, in an
acquisition that brought Dr Pepper, 7UP, IBC Root Beer and the Welch’s soft drink line into the
In 2000, Cadbury Schweppes acquired the Snapple Beverage Group (Snapple). Snapple had
previously been part of a failed acquisition by Quaker in 1994. The acquisition had been
intended to help Quaker strengthen its beverage division, which included Gatorade at the time.
However, after a failure to successfully integrate the contrasting corporate cultures, Snapple was
acquired by Triarc Companies in 1997, an investment company with a history of purchasing
struggling assets.5 It was from Triarc that Cadbury Schweppes ultimately acquired Snapple.
Three years after the acquisition of Snapple, Cadbury Schweppes combined its four North
American beverage companies—Dr Pepper/Seven Up, Snapple, Mott’s, and Bebidas Mexico—
into Cadbury Schweppes Americas Beverages (CSAB). By 2006, CSAB had developed a
common vision, business strategy and management structure, as well as establishing its own
bottling and distribution network. Finally in May 2008, under the direction of Larry Young,
CSAB officially spun-off from Cadbury’s confectionary manufacturing division and became
known as Dr Pepper/Snapple Group, Inc (NYSE=DPS).6
Today, DPS manufactures, markets, and distributes over 50 brands of carbonated soft drinks,
juices, mixers, teas, and other beverages. In addition to Dr Pepper and Snapple brand drinks,
DPS products include Mott’s juices, 7UP, A&W, RC Cola, Squirt, Sunkist soda, Canada Dry,
Schweppes, Hawaiian Punch, Yoo-hoo, and other well-known beverages.7 It has market share of
over 40 percent in the non-cola carbonated soft drink category.
Dr Pepper/Snapple Group, Inc (DPS) is a major beverage company with an integrated business
model including brand ownership, bottling, and distribution of nonalcoholic beverages in the US,
Canada and Mexico. The company’s portfolio includes dozens of brands of flavored (non-cola)
carbonated soft drinks and noncarbonated beverages like mixers, juice drinks, and ready-to-drink
teas and juices. Since the spinoff of Cadbury in May 2008 the company has established itself as
the top non-cola carbonated soft drink company in the US, and has maintained the number three
spot in the broader beverage industry in North America.8
The Management Team
Current DPS management includes seasoned professionals with decades of experience in the
food and beverage industry. Most notable in the organization are president and CEO Larry
Young, chief financial officer Martin Ellen, and President of Packaged Beverages Rodger L.
President and CEO: Larry Young.
Larry Young has been president and CEO of the company since October 2007 and led the
separation of DPS from Cadbury in 2008. Before coming to the company, Young had worked for
more than 25 years in the Pepsi system, where he began as a truck driver and worked his way up
to president and CEO of Pepsi-Cola General Bottlers. In 2005, he joined the Dr Pepper/Seven Up
Bottling Group, again as president and CEO. Young finally joined Cadbury Schweppes in April
2006 when it acquired Dr Pepper/Seven Up.
Chief Financial Officer: Martin Ellen.
Martin Ellen joined DPS in April 2010. He has 25 years of experience as chief financial officer
in companies in manufacturing, franchising, distribution and service industries. His previous
appointment was at Snap-on Inc., a manufacturer and marketer of professional tools, equipment
and software. His beverage-industry experience was obtained at Whitman Corporation, owner of
Pepsi Cola General Bottlers, where he helped realign and expand Pepsi bottling territories in the
U.S. and Europe.
President of Packaged Beverages: Rodger L. Collins.
Rodger Collins has been affiliated with the bottling group of Dr Pepper Snapple or its
predecessors for more than 30 years, having survived numerous acquisitions, restructurings and
the spin off of DPS from Cadbury Schweppes. In his current role, he manages a coast-to-coast
sales force and fleet with responsibility for direct-to-store delivery and warehouse distribution.
Board of Directors
As a publicly traded company, DPS management is directed by a Board of Directors chaired by
Wayne Sanders, who served as Chairman and CEO of Kimberly-Clark Corporation until retiring
in 2003.10 As stated in the company’s Corporate Governance Guidelines, the responsibility of the
board is to manage the business affairs of the company, including regular evaluation of strategic
direction, policies and procedures, and top management. They must ensure that the company’s
managers act in the best interests of the company and its stockholders and maintain a high level
of ethical conduct.11 In addition to Chairman Sanders, the Board of Directors has eight other
directors, including John Adams formerly of Trinity Industries and Texas Commercial Bank,
Terence Martin former senior vice president and CFO of Quaker Oats, and DPS CEO Larry
Young. 12 (For full information on directors, see Exhibit 1).
Since it was spun off from Cadbury Schweppes, DPS management has concentrated a great deal
of time and attention on strategy development and implementation. Through focused strategic
development, management has sought to establish itself as a leader in the higher margin
segments of the nonalcoholic beverage industry.
Consistent with this strategic direction, management has established six specific strategies:
• Build and enhance leading brands.
• Focus on opportunities in high growth and high margin categories.
• Increase presence in high margin channels and packages.
• Leverage its integrated business model.
• Strengthen its distribution channels through acquisitions.
• Improve operating efficiency
While most of the strategies are centered on internal development, management is attempting to
broaden its market through continued acquisition activity and contractual agreements with other
organizations.13 Whether internally or externally focused, however, the key to implementing
each of these strategies has been a focus on marketing. (For a detailed explanation of DPS
strategies, see Exhibit 2).
Shortly after DPS demerged from Cadbury, the economy in the United States began to struggle
and discretionary spending was constricted. As a result, sales in the industry tanked, leading
many companies within the industry to drastically cut marketing budgets. In contrast to the
mainstream reaction, DPS intensified its focus on marketing and advertising. The decision was
based on an analysis of the recession in the early 1980s, performed by Nielson, a major
marketing research company and a partner of DPS. The analysis looked at brands across multiple
consumer categories from 1983 to 1984, and found that the most successful brands all
participated in one common strategy—continued investment in core brands. Consequently, DPS
dramatically increased its marketing budget for its core brands and focused its marketing money
on brand development, availability, and advertising.14
Despite slow sales in the overall non-cola carbonated soft drink market, many top managers
within the company believe that flavored soft drinks show room for growth. As Young put it,
they believe that while consumers are growing tired of colas, flavored soft drinks are the “sweet
spot” in the industry. By developing its flavored brands like Dr Pepper, Sunkist, and A&W, DPS
believes it has the potential to gain market share over its rivals.15
DPS has made a number of changes to its soft drink brands, including the addition of a new
Green Tea Ginger Ale to the Canada Dry line, the extension of a 7UP line with added
antioxidants, an updated recipe for A&W Root Beer that includes aged vanilla, and the
development of Dr Pepper Cherry, for consumers who prefer a lighter tasting Dr Pepper.16 In
addition to soft drink development, the company participates in investment and development to
recover lost distribution in healthier flavored water and energy drinks. For example, it invested in
Hydrive Energy LLC, a small energy drink maker, and created Snapple Antioxidant water to
compensate for the loss of Vitaminwater to Coca-Cola.17 Also, DPS created Venom, a new
energy drink to recover losses from two previous brands. 18
More than just adding and investing in new product line extensions, DPS also refocused its
efforts related to existing products. The most dramatic change occurred within its Snapple Brand,
which had been struggling before the separation from Cadbury. For instance, in the third quarter
of 2008, Snapple sales had fallen 10 percent, contributing greatly to the company’s 31 percent
drop in profits for that quarter. 19 In response to the drop in sales in 2008, DPS changed
everything about the product—from its packaging and look, to its taste, to the marketing thrust
associated with the brand. The new Snapple included new formulations for its teas to increase
consumer interest, and began to focus on the health benefits of the product. DPS also began to
distribute Snapple juices and lemonades in sleek 16-ounce glass bottles with labels indicating
their health benefits.20 These and other changes paid off, as sales of Snapple actually increased in
2010, in spite of a poor economic climate.
Increasing Advertising and Availability
Despite the company’s strong history of brand development, many of its brands, such as Mott's,
A&W and Canada Dry, had not received any serious advertising investment since the end of the
1990s.21 Beyond developing the brands, the company recognized the need to increase its efforts
in advertising and distribution. Marketing Chief Jim Trebilcock explained the strategy:
We have, in our portfolio, a host of brands that are very trusted, high-quality brands and
at times like these, we believe if we invest in them…we can make a pretty significant
impact on our business moving forward and actually strengthen and position ourselves
for consistent growth when we come out of this economic downturn.22
Most notable among the changes in advertising was the use of celebrities, a strategy that had
worked for Snapple in the late 80s and early 90s.23 In connection with Dr Pepper, DPS’s most
heavily supported brand, the company launched a television commercial campaign including
celebrities like the rapper/producer Dr Dre and Gene Simmons of the rock band Kiss. In the
commercials, the celebrities endorse Dr Pepper by referring to its superior taste and flavor and
then simply stating, “Trust me, I’m a doctor.”
In addition to television commercials, DPS also began to target specific demographic segments
through online viral marketing. In 2009, for example, the entire budget for Sunkist was to be
allocated to a viral campaign targeted towards teenagers and 20 percent of the budget for Dr
Pepper was allocated to Internet advertising. Although this was a fairly significant change
compared to earlier DPS marketing strategies, management believed that reaching out through
the Internet would help the company connect to its markets in a more relevant way.24
To supplement the increase in advertising, DPS also focused more attention on distribution. One
of the major methods for increasing distribution was by investing in coolers, vending machines,
and fast-food fountains containing DPS products. In 2008, DPS added 31,000 fountain
placements in fast-food restaurants throughout the US. In 2009, the company announced that it
would add its products to 14,000 McDonald’s franchises in order to increase its availability in
that chain from 60 to 100 percent. In that same year, the company also outlined a strategy that
would add 175,000 coolers and vending machines throughout the country over a five-year
period.25 Again, Trebilcock commented on the strategy:
If you have people drinking your products at work, at play, when they go into the grocery
store, they’re going to buy that pro ...
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