Drink Manufacturing by Cadbury Plc

Subject: Strategic Marketing
Pages: 12
Words: 3336
Reading time:
12 min
Study level: PhD

Introduction

Company Description

Unlike imagination of many people around the world, Dr. Pepper/7Up Inc. is a division of Cadbury plc, which again, is the world’s third largest soft drink manufacturing company. Similarly, Cadbury Plc Company is ranked fourth among the confectionary companies with most products selling in over 200 countries world wide. On the other hand, Dr Pepper/7UP.Inc is the largest enterprise in non-cola soft drink in North America. The company is widely renowned for its national and regional brands that comprise of products brands such as; Dr Pepper, Canada dry Squirt Sundrop among others. Apart from Dr Pepper/7UP.Inc (DPSU), being ranked among the three largest soft drink manufacturers in the United States of America, two of its most renowned brands i.e. Dr Pepper and 7UP have consistently featured in the Top ten lists of soft drink brands according to market share.

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Strategic Focus and Plan

Due to the company recent down ward growth in market shares of its products, the company marketing department should come up with a strategic focus and plan. The plan will enable the company, not only to seek business survival, but also to remain competitive by reverting to the profitable trends. There is a number of strategic focus and plans that the company can incorporate in rejuvenating its operations. One of such operation is that, the company should first focus on discovering the plans that have made its competitors i.e. the coca-cola and Pepsi to gain more market shares compared to them. With this strategic focus, the company will learn their weakness or the strength of their competitors and try to adjust accordingly. In case, Dr Pepper/7UP realizes that, their weakness is the cause of downward growth in market shares; they are supposed to rectify such weakness with immediate effect. However, it could as well be that the cause of Dr Pepper/7UP poor performance is the fact that their competitors have simply outshined them in plans and other factors. The company is equally supposed to come up with strategic plans of countering the strength of their rivals.

The other strategic focus that Dr Pepper/7UP, should emphasize is the market demand of its products and those of their rivals. Incase the demand of their products is less compared to those of the rival companies; Dr Pepper/7UP should also look for the cause of the downward trend of demand, and equally analyze the factors leading to the rivalry impeding company success. Starting with the market performance of Dr Pepper/7UP products in comparison to those of competitors, Dr Pepper/7UP should try to act with haste in order to facilitate upward rise of demand of its products. Mostly, customers may have felt that Dr Pepper/7UP products such as Squirt are no longer satisfying their needs and hence in the process opted to consume substitute products from the rival companies. Similarly, it could also be possible that the coca-cola and Pepsi had actually come up with a substitute product to Squirts, whose in the market is less expensive compared to Squirt. This case would similarly lead many customers shifting allegiance from Dr Pepper/7UP products to the new cheap products. In the process, the demand of Dr Pepper/7UP products will eventually hit a major blow.

In most cases strategic plans are usually long-term and mostly involve a lot of capital resources (Kerin & Peterson, 2004, P.76).This fact does not however imply that Dr Pepper/7UP.Inc, should not try to come up with a strategic plan aimed at restoring the glory of the company. A well structured and researched plan will oversee the company have a good chance of rejuvenating its chances of once again. Through a strategic plan Dr Pepper/7UP Inc, will be able to counter attack the competition staged by its rivals through. A good strategic plan will take in to consideration factors such as the financial capability of the company compared to that of its competitors. Such a plan will propose sources of finance within the capability of the company, in case it can’t meet the financial muscle of the rivals.

Apart from proposing the way forward in which the company will deal with the rivals, a good strategic plan will equally develop means of avoiding such instances from taking place again in future. In case of inferiority in company’s products, a good strategic plan will equally try to highlight the best move of restoring the products statures back to its original. Similarly, a price cut by the rival in order to woo more customers can as well be taken care of, through analyzing the available options. Dr Pepper/7UP Inc. can opt to either increase revenue through reducing price and consequently increasing the amount of products offered in to the market. Similarly, the company can improve the quality of its products and in the process hike the price of the product.

Mission Statement

Dr Pepper/7UP Inc will go down the history lane as one specific company that endeavored in improving the living standards of the whole population of US through manufacturing and distribution of soft drinks. Through this process the company aspires to provide variety of cost-effective healthy soft drinks to all its customers within the boundaries of the US and the whole world at large with time. This operation is expected to indemnify a return on investment, with a projected profit of 30% before tax and possibly 35% per year revenue growth. Similarly, the company aspires to strengthen its customer base, so that in the process, more sales can be realized that will eventually lead to better profit.

Goals & Objectives

Just like any other company Dr Pepper/7UP Inc, has as well its own goals to achieve and objectives to meet; similarly, some of these goals and objectives are monetary and other are not concerned with money. Among the goals Dr Pepper/7UP Inc, has set to achieve include increase in sales, better revenue, profit growth and eventually financial independence. The company aspires to provide quality products to its huge network of customers improve the living standard of its customers and the entire society at large, improve the working conditions of its workforce as well as meeting the demand of its customers in both production and pricing of its products.The highlights above clearly reflect an image of a company which will not simply opens its doors daily chasing for monetary benefits, but equally thrive to have satisfaction in other fronts while at the same time bettering other people’s lives. From the point form of the goals and objective reflected, a more detailed explanation can be obtained. For the part of increased sales, this sounds a simple goal but can actually prove tough to some extents. In order to achieve this, Dr Pepper/7UP Inc. ought to radically foster its marketing team so that more customers are presented not only with the right information about the company’s products but also with the right products at the right place and time. Similarly, other activities such product promotion through advertisement should equally be emphasized with enough capital set aside to take care of the expenses involved. The growing population of the US citizens is another factor that Dr Pepper/7UP Inc. should consider before coming up with the best advertising channel possible. Of specific consideration is the fact that most customers targeted are youth from all races. The Hispanic population should therefore be considered as part of the anticipated esteemed customers. Increase in the customer base will automatically raise sale, whereby with a well controlled budget he profit of Dr Pepper/7UP Inc, will eventually grow meaning the that even the general company growth will be experienced.

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One of the company’s objectives is to provide quality products to its customers. Dr Pepper/7UP Inc. can easily fulfill this objective by carrying out an elaborative research on its products and those of the competitors. In case most customers prefer products from the rival companies, Dr Pepper/7UP Inc. should try to come up with an explanation of what has made the rivals products better than theirs and in the process formulate ways of countering the effect. On matters pertaining improving the living standards of its workforce and that of society surrounding it, Dr Pepper/7UP Inc. can accomplish these feat by setting aside a part of their profit and in the process come up with project ventures that would incorporate the society. The company can for instance, decide to improve the health condition of the locals by building them a clinic or carrying out promotions to sensitize the importance of good health. Similarly the company can come up with projects to promote the bright needy students from their area of operation. On their staff conditions; this can equally be planned where the staff can benefit from pay rise or medical cover from the company funded insurance policy.

Core Competencies and Sustainable Competitive Advantage

There is a relationship between core competence and the sustainable competitive advantage. According to the competitive advantage model of Porter, the basis of operating above the average in an industry is sustainable competitive advance (Armstrong, 2006, P.74) This reality is brought around by the fact that a firm could be possessing some quality other firms in an industry are not endowed with or in case it’s a company, the same company could be in possession of some superior quality such as better financial base and hence remaining competitive is not a big deal. According to Dr Pepper/7UP Inc. the company has quite a lot of factors that can allow it to perform better than the competitors. According to the analysis of their products, Dr Pepper/7UP Inc. owns a more superior brand of soft drink compared to Coca-Cola and Pepsi. Squirt in particular, is more established not only in the US but also in neighboring countries such as Canada. With this particular brand and many more that always appear among the top ten soft drinks in US going by market share, Dr Pepper/7UP Inc. can have a competitive advantage and remains on top of its rivals.

Financially, Dr Pepper/7UP Inc. could equally have a competitive advantage compared to its competitors. Owing to the fact that Dr Pepper/7UP Inc. is just a division of the entire Cadbury Plc, the company can raise more capital either from the mother company reserves or through bank financed by the mother company.

Situation Analysis

SWOT Analysis

A company often finds itself in dire need of strategies that enable it to realize its goals and objectives. In most cases, successful strategies usually address four elements which, in one way or another, help the company gain competitive advantage. Strength, weakness, opportunities and threats are the four elements, which, if a company uses them, to achieve strategic advantage is referred to as the SWOT analysis (Bohm, 2009.P35). Bohm (2009, P.35) further observes that strengths and weakness usually address the internal factors that a company can exercise control over. By this factor, the company can either prevent some of the problems caused by its weakness from taking place, or at the same time utilize its strength to expand its influence. The opportunity and threats elements of SWOT are usually external factors that mostly are beyond the capacity of the company to control.

The case surrounding Dr. Pepper/7UP Inc. can equally be analyzed using the four elements of SWOT. The company possesses a number of strengths in which if it critically makes use of, will be able to have a strategic advantage in comparison to its rivals. To start with its marketing plan, Dr Pepper/7UP Inc. can maximize the fact that most of its products are already well established in the market. Taking Dr Pepper, 7UP and Squirt for example, the company does not necessarily need to use a lot of resources to promote the products through advertisement and through this fact the company has a relatively higher strategic advantage. Another strength that can help the Dr. Pepper/7UP Inc achieve strategic advantage over its competitors is the fact that the company is just a subsidiary of another more successful company. By this strength, the company can gain competitive advantage over its rival. The rivals being individual companies will find it hard to shoulder all the cost alone but in case of Dr Pepper/7UP Inc, this company will benefit from many activities of the mother company such as advertising. Similarly due to its great number of bottlers the advertising budget will partly be footed by them and hence in the process reduce advertising cost to the company itself.

Dealing with the market plan, Dr. Pepper/7UP Inc. is the leader in manufacturing of grape fruit soft drink. This is one advantage or strength the company can use to gain strategic advantage. By this fact, it means that Dr Pepper/7UP Inc. does not have much competition when grapefruit soft drink is concerned. Similarly as a leader in grapefruit soft drinks, the company enjoys a wide market contrary to its rivals. To a great extent Dr Pepper/7UP Inc. can continue enjoying the position of a leader in grapefruit soft drink manufacturing, if it will be able to sustain itself and equally fight the influence of the competitors. Through retaining the same soft drink quality and frequently regulating the market prices of its drinks to fit the demand in the market, Dr Pepper/7UP Inc. will be able to counter any specific or general attempt by the rivals to overthrow them as leaders.

Another strength associated with Dr Pepper/7UP Inc. is the fact that it also boost for having the highest product brand recognition in the grapefruit soft drink market. This specific strength will enable DPSU to carry out an extensive market research to come up with a solution of any impending takeover from rivals. The strength equally provides the company a chance of making more sales compared to its rivals because while the rivals are advertising their products, DPSU brand is already highly recognized.

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The greatest weakness with DPSU is that it is competing with two companies with a market share and resources it can not meet. Coca-cola to start with enjoys the greatest market of the three companies competing in soft drink business. Similarly, it should be clear that despite the market share of coca-cola company being large, the company enjoys a variety of brands compared to those of DPSU. By this, we mean that coca-cola produces a variety of soft drinks and not just grapefruit soft drink like it is the case with DPSU. On resources, it is also clear that compared to Coca-cola and Pepsi, DPSU enjoy the least resources meaning that its advertising budget is to a very great extent affected. While its rivals can easily and comfortably foot the advertising budget DPSU will be forced to carry minimal advertising. This has an effect on its operations because the other companies are highly resourceful and hence can be able to stage the most expensive advert, which will definitely give a blow to its attempts.

On opportunities and threats, DPSU is likely going to benefit from the growing Hispanic population that is well known for their love of grape soda. If this chance is utilized effectively it will be a big boost to a brand with flat sales. The sale will actually improve, and in the process, the company will realize better revenue. One possible threat to DPSU is the endless resources of the competitors which make them have an unparalleled advertising budget. This particular threat is not the best thing that can happen particularly to a company with flat sales. The only regret with these opportunities and threats facing DPSU, is that they fall beyond its capability, and therefore the company can literally do nothing or very little to control or change the conditions.

Industry Analysis

The soft drink industry is certainly one of the most lucrative industries in the world. Dealing with elastic products which are literally consumed daily by millions of people around the world, the industry has what it takes to be rewarding. In US alone, the number of soft drinks taken daily on average is greater than the number of pure water taken. Similarly, the market for soft drink is inclined to the youth and young adults more than in any other part of the world.

This industry has over the time been very competitive. Competition is on producers of the soft drinks as well as the bottlers. Coca-cola and Pepsi and DPSU have literally been in competition for quite a long period of time but due to the fact that DPSU usually produces Squirt, a non -cola soft drink; the competition for cola soft drinks is left to Coca-cola and Pepsi Company.

Competitor Analysis

Coca-Cola and Pepsi are the two major competitors of DPSU Company. These two competitors compared to DPSU enjoy quite a large market share in all their products and similarly, they boast of more resources. Due to their enormous resources, these competitors are able to enjoy a better advertising budget compared to DPSU.

Company analysis

Being a division of Cadbury Plc. DPSU to a great extent produces soft drinks of various varieties in the whole of US. The company is the third largest soft drink manufacturer in the US and fourth in North America. Most of its products such as the Squirt enjoy consistence ranking in the favorite drinks list according to the market share. The company equally boasts of being the leader in grapefruit drinks as well as having the most recognized brand of products in the US.

Customers’ Analysis

Customers form an integral part of any industry. In the soft drink industry, customers have a huge bargaining power. Soft drinks are usually not consumed daily, which means that rarely will you find a customer looking for a drink crazily. What matters most with soft drinks as far as customers are concerned is the convenience of the drink. Rarely too will you find a customer buying in bulk; most small customers usually buy in single units, which means that most customers are interested in the convenience of location of the product.

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Conclusion

Dr Pepper/7UP Inc is a division of Cadbury Plc. which is another company headquartered in London. Dr Pepper/7UP Inc. produces soft drinks of various varieties in the whole of US. Most of its products such as the Squirt enjoy consistence ranking in the favorite drinks list according to the market share. The company equally boasts of being the leader in grapefruit drinks as well as having the most recognized brand of products in the US. Dr Pepper/7UP Inc. is currently experiencing problems with its products and has decided to come up with some strategic focus and plans in order to alleviate the situation.

The mission statement of the company is also clearly outlined: improving the standard of living of the society, being considered. Similarly, the company’s objectives have equally been elaborated. From these goals and objectives, there are both the financial and non financials but of course with the financial goal and objective given the first priority. In order to be able to get out of the situation the company is undergoing, the company’s core competency and sustainable competitive advantages have been given a consideration. Among the core competencies of Dr Pepper/7UP Inc. is the leadership in grapefruit drinks. Through this core competence the company is able to sustain competition from its rivals. The whole situation of the company has further been analyzed through SWOT analysis. The four elements or structures of SWOT analysis have been used to critically look at the Strength, Weakness Opportunities and Threats that DPSU may be facing. With strength and weakness, these are factors within the company capability whereby the company can manage to control them. On the side of Opportunities and Threats, these are similar factors but outside the capability of the company; meaning that the company is left without the power to make change or control their effects.

References list

Armstrong, J (2006) Beyond the Mission Statement: Why Cause-Based Communications Leads, paramount market publishers: Geneva.

Bohm, A (2009). The SWOT Analysis, GRIN Verlag Publisher: Hamburg.

Kerin, RA & Peterson, R (2004) Strategic Marketing Problems, Prentice-Hall: New Jersey.