Case Study - Dr Pepper

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Practice Case 1: Dr Pepper Snapple Group, Inc: Energy Beverages

1. How would you characterise the energy beverage category, competitors, consumers, channels, and DPSG’s category participation in late 2007?
Energy Beverage
Category: Energy drinks provide consumers with a boost of energy and they fall under the category of functional drinks. Functional drinks are non-alcoholic drinks which include ingredients such as herbs, vitamins, minerals, amino acids or other nutritional ingredients. Other functional drinks include sport drinks, teas, fruit drinks and enhanced water drink.
DPSG participation → In the US and Canada, Dr Pepper Snapple Group participated primarily in the flavoured carbonated soft drink (CSD) market segment …show more content…

6. What dollar amount for media advertising and promotion should be budgeted for a new energy beverage brand?
Dr. Pepper Snapple Group, Inc. does not have media advertising fund available to even come close to Red bull.
However, a new brand will require a higher media advertising expenditure to create consumer awareness and stimulate brand trial AT LEAST first year.
In 2006, the top 5 competitors spent about $70 million for advertising media.
The group needs to pay $54 million, 18% of gross margin for advertising

7. What suggested retail price should be recommended for a new energy beverage brand?
Monster - $3.62 ($6.58 per 1L)
Mother - $2.80 ($5.60 per 1L)
Red Bull - $3.95 ($11.97 per 1L)
V - $3.47 ($9.77 per 1L)
Lucozade - $2.85 ($7.5 per 1L)

Average per 1L - $8.30
Average per can - $3.34
Recommended retail price = $3.30 ($8.30 per 1L)
8. What is a reasonable first-year sales forecast for a new energy beverage brand based on your recommended target market and marketing mix?

Extract from Monster Beverage Corporation Annual Report MONSTER!! | 2012 | 2011 | 2010 | 2009 | 2008 | Gross Sales | $2373499 | $1950490 | $1488516 | $1309335 | $182876 | Net Sales | $2060702 | $1703230 | $1303942 | $1143299 | $1033780 |

A reasonable first-year sales forecast for a new energy beverage in comparison to existing energy drink ‘mother’, would be 1,500,000.

9. Prepare a pro-forma income statement based on your

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