Dr. Pepper Snapple Essay Example

average. Furthermore, its revenue has only witnessed a modest rise of 3%.

The primary factor behind Dry Pepper's lower sales and global market shares compared to their competitors is their failure to enter new emerging markets and acquire new customers. Coca-Cola, on the other hand, has successfully expanded its presence in over 200 countries and consistently responded to consumer trends towards healthier lifestyles. They have achieved this by offering a wide range of over 500 product choices. Additionally, Coca-Cola has acquired new ventures such as Smart Water and Vitamin Water to counter potential competitors entering the market.

Additionally, you should also check out Flashcard Machine.

Pepsi-Co, present in more than 200 countries globally, has a broader customer base compared to Dry Pepper. In response to the growing popularity of energy drinks, Pepsi-Co acquired AMP to broaden their range of beverages. Recognizing and meeting consumer preferences is crucial for survival in the beverage sector; hence, Pepsi-Co and Coca-Cola jointly dominate around 75% of the market share.

The United States' economy faced a decline in 2009, causing job losses and reduced disposable income for consumers. This affected the beverage industry, making it crucial for competitors to be aware of current and future economic conditions. If a smaller company sees a decrease in sales volumes, they may not generate enough revenue to sustain their distribution channels. This could lead to liquidation or divestiture, requiring them to sell off assets and products.

The manufacturing and bottling process of products incurs significant costs due to energy usage. Additionally, if a company doesn't directly own its distribution business, costs can increase due to fuel expenses. This poses a problem for Dry

Pepper, as they have fewer bottling companies compared to Coke and Pepsi. Moreover, the costs of raw materials like sweeteners, juice, fruit, and water greatly affect the selling price to consumers. During a recession, this can lead to failure. In such a situation, the company with lower costs and its distribution center is likely to be the only survivor by offering consumers the most desired factor: the cheapest price.
The threat of new entrants in today's beverage market is low due to multiple reasons.

In today's market, the threat is low due to several main factors. One factor is the high cost barriers caused by the involvement of bottlers. Another factor is the saturated American market, which is a result of the brand loyalty created by Pepsi and Coke. Furthermore, emerging markets have their own laws and regulations that pose challenges. Lastly, there are costly risks associated with matching consumer taste trends and preferences. It is worth noting that each of the three main competitors in the beverage industry has their own bottling process as part of their manufacturing and distribution process. Particularly, competitors like Pepsi and Coke have their own bottling companies.

This paragraph discusses the benefits of owning franchises in the beverage industry, specifically focusing on Coca-Cola, Pepsi-Co, and Dr. Pepper. The Coca-Cola website provides detailed information about the legal agreements that suppliers must follow when conducting business with them. These agreements include the "Trade Sanctions Policy," which prohibits any involvement with individuals or countries under embargo. Similarly, Pepsi-Co and Dr. Pepper have their own guidelines for suppliers, making it challenging for new companies to find partners for bottling distribution collaboration. In the

American market, Coke, Pepsi, and Dr. Pepper collectively dominate around 85% of market share; as a result, many companies avoid competing against them due to strong brand loyalty among consumers.

To address this issue, it is necessary to adopt a holistic approach when formulating a new product strategy that caters to present consumer trends and preferences. Nonetheless, the drawback of such an idea is its high costs for emerging businesses, including research and development expenses, as well as product development expenditure. Numerous companies attempting this approach have ultimately been acquired by one of the three primary competitors. Moreover, the presence of laws and regulations poses another obstacle for new players in the market.

Pepper's website discusses several potential challenges they may face in the future. One major concern is the need to comply with government laws and regulations. They also recognize that new or upcoming beverage regulations could impact their sales. In addition, with the American market already saturated, big players like Coke and Pepsi are expanding into emerging markets for growth opportunities. Hence, it is essential to have a good understanding of international laws and regulations related to manufacturing, safety, labeling, transportation, advertising, and sales processes for beverages when conducting global business.

Starting companies may find the costs of entering markets to be too high. Dr. Pepper stated that 70% of their profits come from the United States and they are not yet ready to enter emerging markets (Agents & Analyst, 2013, Dr. Pepper site). The soft drink industry in America is especially impacted by substitution threats as many Americans are switching to bottled water, tea, juice, diet drinks, etc., due to health concerns

(Agents & Analyst, 2013, Dr. Pepper site).

An article from "Food Business News" on April 29, 2013, states that bottled water sales have increased by 7% year over year, reaching $1.1 million in 2012. The demand for a healthier option is clear, but the bottled water industry also faces similar regulations as the soft drink industry. In May 2013, Loyola University in Chicago joined approximately 15 other schools in the United States and Canada in deciding to cease selling bottled water in vending machines on campus and in their cafeterias starting from fall (Fisherman, Charles. 17 May 2013. Web. Newscasts for National Geographic).

In addition, a number of major municipalities including New York, Seattle, San Francisco, and Chicago have enforced bans on the use of government funds for purchasing bottled water. These bans have resulted in heightened competition within the bottled water industry as companies employ aggressive pricing strategies. Consequently, the strongest financially positioned company will have the best chance to acquire other brands, making it an advantageous situation for potential buyers such as Coke, Pepsi, or Dr. Pepper.

To combat substitute products, companies in this industry heavily rely on extensive advertising efforts and brand equity while ensuring convenient accessibility for consumers. Dr. Pepper's customers hold significant bargaining power due to various factors: they can switch to competitors who offer lower prices; they can choose whether and when to purchase the product; and there is a decline in consumer trends and preferences towards soft drinks.

Dr. Pepper's main customers include bottlers, distributors, and retailers like supermarkets, convenience stores,vending machines,and fountain outlets. Among these customers,larger volume retailers possess considerable influence over Dr.Pepper's business.

Pepper's profitability

is highly dependent on Wall-Mart, as approximately 13% of their consolidated net sales come from this retailer alone (Annual Report. 2012. DIPS). However, there are some implications of relying on large volume retailers like Wall-Mart for the sales of Dry. Peppers products. One such implication is that these retailers also offer generic soft drinks that can easily substitute for Pepper's products when consumers are deciding which brand to purchase. Additionally, if there is a decrease in the demand for soft drinks due to health concerns and changing trends, it could negatively impact sales in these large retailers. Consequently, Wall-Mart may reduce or even cease purchasing Dry.

Pepper products fully. The customer holds the ultimate bargaining power in purchasing a soft drink as it is not a necessity but a desired want. * Suppliers have high bargaining power: the suppliers of Dry. Pepper have significant bargaining power due to fluctuating raw material costs, and they also own the bottling manufacturing process to provide the finished product to retailers and ultimately reach the end-user.

The three brands, Pepper, Coke, and Pepsi, all utilize the same base materials in their production processes. However, there may be a few undisclosed ingredients that help to differentiate their products according to specific consumer preferences. Dry.Pepper primarily relies on aluminum cans, glass bottles, PET bottles, caps, paper products, sweeteners, juice, fruit, and water (Annual Report. 2012. DIPS). The costs associated with these raw materials can fluctuate significantly due to factors such as climate changes, water availability, metal scarcity, and various other influences. In the event that Dry.Pepper and their raw material supplier fail to reach an agreement on a particular cost, it could

potentially create issues for Dry.Pepper's operations.

The price increase of Pepper ultimately impacts the final end-users. Additionally, the fuel cost also affects the channels of Dry Pepper as they rely on employees operating trucks for transportation. These supplier-related factors have prompted Coke and Pepsi to adopt a backward integration strategy, aiming to acquire control and ownership over their suppliers. Through this approach, they aim to eliminate the bargaining power in the manufacturing process of their products.

Dry. Pepper has not yet acquired their own bottling companies, but they have established strategic partnerships with bottling franchisees. These partnerships have helped to reduce supplier power by implementing contracts, policies, and guidelines that lower costs, speed up availability, improve product quality, and ensure exclusivity with suppliers. The suppliers are required to solely supply Dry. Pepper and are prohibited from doing business with any other competitor or beverage company. Despite this, Dry.

Pepper has reduced the power that their suppliers once held over them, although it has not been completely eliminated. This is because the costs of the raw materials used for their concentrate can still be subject to change based on industry developments.

Opportunities and threats for DIPS are assessed through the External Factor Evaluation (FEE) and Competitive Profile Matrix (CPM). The beverage industry is highly competitive and influenced by numerous external factors. The three leading companies in managing these factors effectively are Coke, Pepsi, and Dry.

This is a CPM chart illustrating the top 9 critical success factors that companies in this industry must acknowledge in order to sustain profitability. The chart assigns a rating to each competitor based on their ability to effectively manage these factors,

with 1 being the lowest and 4 being the highest. According to the chart, Dry. Pepper ranks last while Coke currently holds the lead. From this matrix, it is evident that Dry. Pepper should concentrate on global expansion and improving their bottling manufacturing process.

In-depth Environmental Analysis: Internal-External Matrix of DIPS: Figure 1.1 According to the IEEE Matrix for DIPS, they currently hold and maintain their market share in the beverage industry. Based on our SOOT analysis findings, one of the most effective solutions is to penetrate the current market or start product development. We are currently financially strong and investing in R;D, Marketing, and forming strategic alliances with our distributors will help us progress in the market, increasing market share and profits.

Buyers wield considerable influence over our products as they hold the determining power of choosing when and if they wish to make a purchase. Incorporating personalization in both our products and advertising would enhance the possibility of making a sale. To successfully penetrate the market, it is essential to cultivate stronger relationships with existing suppliers in order to reduce variable costs. By decreasing manufacturing expenses, we can maximize potential profits during periods of low demand and effectively manage price fluctuations during economic instability.

Future results of DIPS can be achieved by limiting customer objections based on price, better understanding customers' needs and values, and building long-term relationships with suppliers for an efficient distribution system. The Space Matrix for DIPS shows the following financial position:
1. Return on investments (ROI) rating of 1
2. Leverage rating of 3
3. Liquidity rating of 4
4. Working capital rating of 5
5. Cash flow rating

of 4
The average financial position is 3.4.

In terms of industry position, DIPS has the following ratings:
1. Alliances with bottling manufacturers and distribution centers
2. Investments in product development in the bottled water market and energy drinks market, which is expected to grow by 19% next year
3. Entry into the concentrated drink market is low, but it comes from large retailers like Wall-Mart.
The average industry position is 3.

The stability position of DIPS is -2, indicating a slight decline, while the threat of new competitors is rated -1.
Most of DIPS' profit comes from resources that are easily accessible with a rating of -4. The stability position is average at -2.4.

In terms of competitive position, DIPS has a market share rating of -5.

Factors affecting DIPS' stability include:
1. Decrease in consumer demand for soft drinks due to health concerns
2. Elasticity of prices towards consumer demand
3. Gaining market share through new emerging markets
4. Changes in laws and regulations regarding raw materials
5. Competitors' brand recognition globally.

The average stability position is -2 and the overall competitive position is 1.

According to the results of Dry. Pepper's space matrix, the following factors are considered:
1. Product quality -2
2. Customer loyalty -3
3. Capacity utilization -2
4. Technological know-how -3
5. Control over suppliers & distributors -7

The Competitive Position (CAP) Average is 4.4 and the Conclusion SP Average is 4.4 with a CAP Average of -3.7. The IP Average is -2.4 and the UP Average is 3.4.

The Directional Vector Coordinates are as follows:
- X-axis = -3.7+-2.4 = 6.1
- Y-axis = 4.4+3.4 = 7.8

Based on these results, Figure 1-2

suggests that aggressive strategies should be pursued. The purpose of this matrix is to guide the selection of action plans in the implementation process.

The results obtained for DIPS show that the company is financially strong and has significant advantages in the North American beverage market. Our goal is to aggressively pursue opportunities while addressing internal weaknesses. Let's analyze DIPS using a SWOT analysis: Our strengths include extensive geographic distribution coverage and a reliable cash flow. However, we also have weaknesses such as a high debt-to-equity ratio of 2.87 compared to 2.34, which limits our ability to pay dividends or effectively reduce debt. Furthermore, we have recently become a supplier to major airlines like Spirit Airlines, giving us an advantage over competitors.

The Return on Assets has consistently remained at a low rate of 6% from 2010 to 2012. The inventory turnover ratio has declined for three consecutive years, indicating a continued emphasis on soft drinks. Sales primarily occur in the North, accounting for 70% of total sales in the past year. However, there has been a significant increase of 64% in the value of the company's stock. The profit margin remains limited, reaching a maximum of 10%. Dry Pepper Snapper has actively divided its loyalty between Coca-Cola and PepsiCo for three years by utilizing acquisitions and alliances for distribution purposes. Market insiders have observed a lack of knowledge regarding the water industry. Nevertheless, despite these challenges, the company maintains a strong market position.

Solid brand portfolio and broad product line are key strengths for large retailers. However, their limited control over the majority of revenue and decreasing advertising effectiveness have resulted in lower variable

costs. There are opportunities to increase profits through global expansion in emerging markets and gaining market share in growing substitute industries. To achieve this, retailers can increase their presence in new markets, conduct research on emerging airlines, and form strategic alliances with beverage suppliers to improve distribution. Additionally, hiring a marketing team for online advertising can help gain control in the advertising sector.

The text suggests various strategies to enhance the company's performance and increase profits. These strategies include:

1. Product development aimed at expanding the range of products offered to increase market share.
2. Expansion into South Africa to tap into new markets and increase profitability.
3. Utilizing competition distributors in foreign markets to reduce costs and improve profitability.
4. Forward integrating the bottling process to streamline operations and improve efficiency.
5. Hiring industry data experts to minimize risks and make informed business decisions.
6. Acquiring new customers through partnerships with airlines and leveraging online marketing to reach potential customers in foreign markets.
7. Recognizing the importance of meeting consumer needs and the occasional indulgence in their purchasing decisions.
8. Concentrating on industries expected to grow by 3.3% next year to capitalize on market opportunities.
9. Recognizing the increasing consumer interest in sustainable products, which can provide a competitive advantage.

The demand for personalization in consumer needs is expected to increase. This poses a threat to single-source technology strategies and the stability of the economy. To address this, Strategy 1 involves offering a reward collection agency to track consumer trends in the market. Strategy 2 includes hiring a loyal advertising team and decreasing the program's cost to generate income per household (Wool, WWW, TO).

Furthermore, there is a 3% increase in fuel costs

for buyers (SO-10, TO), prompting Strategy 2 to locate suppliers abroad and expand sales by 5% in YOU sales. Strategy 3 involves conducting external moves and starting new business ventures, while Strategy 4 focuses on the changing laws and regulations regarding high audits on fructose corn syrup (WI, WWW, TO).

Lastly, Strategy 5 acknowledges the market saturation in America by 3%.

Coke and Pepsi, two leading energy drink companies, heavily depend on water for 70% of their overall market share. The bottled water industry has experienced a 7% growth in the previous year. However, carrying out research and development activities in emerging markets comes with risks associated with foreign laws and regulations. Competitors directly competing with these companies have successfully established strong brand recognition globally. It is projected that sales of energy drinks will increase by 12.9% over the next three years, emphasizing the growing importance of natural ingredients. Notably, the DIPS in-depth SWOT analysis highlights key factors such as global expansion and expenditure.

With a strong presence in North America, we possess a stable and significant amount of free cash flow. Globally renowned for their successful expansion and market growth, our competitors Coca-Cola and Pepsi serve as excellent examples to learn from. To prevent failure caused by insufficient knowledge, it is crucial that we utilize a portion of our free cash flow and leverage our partnership with Spirit Airlines to enter international markets and introduce our products to the travel industry.

Global expansion has been shown to boost profits and market share, a feat achieved by our main competitors as well. Changing taste preferences and health concerns, influenced by external factors, are causing shifts in

consumer trends. Utilizing online marketing and advertising is a cost-effective and efficient way for us to connect with current consumers and gather a database of trend information. Ultimately, by leveraging this data, we are able to create personalized advertisements targeting specific consumer segments and potentially gain market share through targeted segmentation.

To counter the declining demand in the soft drink market, it is crucial for DIPS to build knowledge in the bottled water and energy drink market. Projections indicate a 12.9% increase in energy drink sales and a 7% increase in bottled water sales, whereas soft drinks are only expected to see a 3.3% increase. By conducting research and analysis in this evolving market, DIPS can gain a better understanding of their competitors, especially as these once distinct markets become more aligned. The BCC Matrix of DIPS serves as a tool to assess our divisions' rankings compared to competitors and industry growth rates.

Currently, all of DIPS divisions are located in the question mark quadrant, which signifies a low market share and competition in a high growth industry. However, unlike other companies in this quadrant, DIPS does not have low cash reserves. The reason for this is that we do not compete globally in all markets like our major competitors. Instead, our main focus lies in achieving success specifically within North America where we hold 70% of the market compared to the industry average of 15%. To remain profitable in this industry, it is vital for us to engage in market development, product development and expansion.