Dr Pepper Case Study

The new manager of Dr. Pepper Snapple Group, Andrew Barker, is considering launching a new beverage product, the energy drink. The first energy drink was created by a Japanese pharmaceutical company in 1960 but it was not until 1997 that the first energy drink was introduced in United States, Red Bull. Monster energy drink by Hansen followed Red bull in 2002. During 2005-2006 a new market for energetic drinks was created. As a leader, Barker is trying to determine if there is a profitable opportunity for growth in this area.

        Dr. Pepper Snapple Group, an established beverage company, reported net sales of $5.7 in 2007. Dr. Pepper products are sold in United States (89% of the total sale), Mexico, Canada and the Caribbean. Dr. Pepper products are mainly flavored carbonated soft drinks but it also includes teas, carbonated mineral water, bottled water, and vegetable juices. All this data indicates that Dr. Pepper Snapple group knows how successfully produce a drink. This group should take into consideration the new demand of energy drinks. As a leader of this company, Dr. Pepper should address customer needs. Adding a new product line will increase market opportunities, it will diversify risk, and it will capitalize the existing reputation. Furthermore, there is an opportunity for profit by increasing the number of sales, keeping the existing customers and capturing new ones and to be more competent in the beverage industry. Since Dr. Pepper already has the infrastructure to manufacture a drink and to deliver it to the customer, adding a new product to their list should be an easy and affordable market strategy. On the other hand, introducing a new product can cannibalize sales of an already existing product. Barker also needs to take into consideration that the market is already saturated with energy drinks and they are already five brand names dominating this market.

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