7UP
The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten brands sold. Colas are the dominant flavor in the U.S carbonated soft drink industry; however, popularity for flavored soft drinks has grown in recent years. The changing demographics of the U.S population have been an important factor in the growing popularity of these flavored soft drinks. The possible impact of this factor will be addressed later in the case.
ٱ Squirt Brand
Squirt is a caffeine-free, low-sodium carbonated soft drink brand with a distinctive blend of grapefruit juices that gives it a tangy, fresh citrus taste. Squirt is the best selling carbonated grapefruit soft drink brand in the United States. The origin of Squirt can be traced back to 1938 when a man named Herb Bishop began experimenting with Citrus Club. Bishop created a new carbonated soft drink that required less fruit and sugar to produce compared to other sodas that were being made at the time. The new drink “seemed to squirt onto the tongue,” so Bishop named the drink Squirt. Squirts sales grew during WWII because its low sugar content helped bottlers restricted by sugar rationing rules. By the mid 70’s, Squirt was introduced internationally in Central and South America. In 1977 a company named Brooks Products purchased Squirt from Bishop. In 1983, Diet Squirt became the first soft drink in the United States to be sweetened with Nutra Sweet. Squirt joined A&W Brands in 1986, which was later purchased by Cadbury Schweppes PLC in 1993. Responsibility for manufacturing, marketing, and distribution of Squirt was assigned to Dr Pepper/Seven Up, Inc, which had been acquired by Cadbury Schweppes PLC in 1995. It still remains under the Dr Pepper/Seven Up, Inc. branch. The Squirt Brand remains highly competitive among the grapefruit and citrus-flavored brands in the United States. It has extreme competition from similar brands distributed by Coca-Cola and Pepsi-Cola.
The chart below shows the volume breakdown of citrus soft drinks by year compared to other competitors in the carbonated grapefruit and citrus-flavored market.
Case Volume Trend for Major Carbonated Grapefruit and Citrus-Flavored Brands in the United States: 1996-2000
Case Volume (millions) by Year
Company/Brand 1996 1997 1998 1999 2000
Coca-Cola
Fresca 28.0 26.2 25.9 25.5 24.1
Citra NA NA 21.0 26.2 15.6
Mello Yellow 59.0 46.6 42.4 41.6 45.7
Surge NA 69.0 51.8 26.7 11.8
Pepsi-Cola
Mountain Dew 605.9 683.2 748.1 793.0 809.8
Regular 535.6 605.2 665.1 705.0 715.6
Diet 70.3 78.0 83.0 88.0 94.2
Dr Pepper/Seven Up
Sundrop 19.7 20.1 20.4 20.1 20.2
Squirt/Ruby Red 55.8 55.7 54.8 56.0 54.6
Total Case Volume 768.4 900.8 964.4 989.1 981.8
*Note: 2000 Competitor case volume data represent estimated figures
Squirt’s market share is calculated by dividing case volume by total case volume for the entire market. The market share for Squirt for the past years is as follows:
1996-55,800,000/768,400,000= .0726 or 7.26%
1997-55,700,000/900,800,000= .0618 or 6.18%
1998-54,800,000/964,400,000= .0568 or 5.68%
1999-56,000,000/989,100,000= .0566 or 5.66%
2000-54,600,000/981,800,000= .0556 or 5.56%
The numbers above show that the percent of market share for Squirt has slowly declined in recent years.
It is now up to Kate Cox, brand manager at Dr Pepper/Seven Up, Inc. responsible for Squirt, to make sure that this percentage does not continue to decrease and affect the success and market share of Squirt. Cox believes that attention must be drawn to Squirt’s advertising and promotion plan. Both topics were addressed in a June 2001 presentation by the brand’s advertising agency, Foote, Cone & Belding. Following a review of U.S. Census 2000 statistics, Squirt consumption data, and its own and Dr Pepper/Seven Up research, Foote, Cone & Belding proposed a refinement in Squirt’s target market and positioning which had previously been aimed at 18- 34 year olds. Through research that featured Squirt’s consumption by racial/ethnic group and age relative to carbonated soft drink users, Foote, Cone & Belding recommended that Squirt target a multicultural, 18-24 year old segment in order to tap into this heavy carbonated soft drink user segment. The total sales broken down by racial/ethnic groups can be seen below.
12% of 54,600,000(total case volume for Squirt in 2000) =6,552,000 cases were sold to the Hispanic population
15% of 54,600,000(total case volume for Squirt in 2000) =8,190,000 cases were sold to the African American population
73% of 54,600,000(total case volume for Squirt in 2000) =39,858,000 cases were sold to the Caucasian population
The suggestion by FCB to target a multicultural younger segment was supported by recent information provided by the U.S. Census 2000. According to the Census, the Hispanic population in the United States increased by 57.9% from 22.4 million in 1990 to 35.3 million in 2000. This was compared to an increase of 13.2% for the total U.S. population. Hispanics accounted for 12.5% of the U.S. population, while African Americans accounted for 12.3% of the U.S. population with 34.7 million people. 35% of the Hispanic population is under 18 years old. This means that a possible 65% of this demographic may fall into our target segment that is above 18 years old.
65% * 35,300,000(total Hispanic population)=22,945,000 Hispanics may possibly make up the new target segment
*This number is assuming that the rest of the population falls between the ages of 18- 34, which is not likely.
32.4% of African Americans were under the age of 18, while 42.6 % were under 25. From this we can conclude that 10.2% (42.6%-32.4%) falls within the range of 18-25 year olds.
10.2% * 34,700,000(total African American population)=3,539,400 African Americans could possibly fall within Squirt’s target market.
Assuming that the makeup of each demographic is correct, Squirt stands to have a total possible market of 26,484,400(Hispanic segment+ African American segment) people that are from the Hispanic and African American communities in which to target. Targeting these markets could be very beneficial if they continue to grow in the future.
Squirt has already been exposed to many Hispanics, primarily those of Mexican decent because of the popularity of the beverage in Mexico. This could be a very beneficial for Squirt in the U.S. market considering that there is a very large Mexican population in the United States. In California alone 77% of the Hispanic population is of Mexican ancestry.
77% of 11,000,000 (Hispanic population)=8,470,000 people are of Mexican decent in California.
The figure above shows that it may be beneficial for Squirt to focus primarily on the Hispanic market segment in California. Over 8 million people who are of Mexican ancestry reside in this one location. A portion of the population may already be familiar with the brand because of its popularity in Mexico, possibly saving the company on sales promotion and advertising.
In comparison with the seven major grapefruit and citrus brands, Squirt is positioned in between the young and not so young age genre. It also places itself with a higher level of thirst-quenching ability compared to other brands. Through a product positioning analysis Foote, Cone, & Belding concluded that a strategy was needed to increase relevancy with a younger target market while continuing to focus on Squirt’s thirst-quenching property.
Squirt has the highest consumer brand awareness among carbonated grapefruit soft drinks in the United States. This is due to consistent advertising over an extended period of time. Compared to competitors, Squirt’s advertising expenditures are typically lower. Combined expenditures for advertising and promotion amount to 20%-25% of total dollar sales. A breakdown of sales compared to dollar spent on advertising can be seen below.
54,600,000(Total volume sales for 2000)
$390,000,000(Squirt Regular/Diet advertising)+ $537,200,000(Squirt Ruby Red advertising) =
.0588 units per dollar spent on advertising
The above figure shows that for every dollar spent on advertising .0588 units were sold. This means that Squirt had a very low percentage of sales compared to the amount that it spent on advertising.
Many factors contribute to Squirt’s position in the market. As addressed above, Squirt has the highest brand awareness among carbonated grapefruit soft drinks. It also requires less sugar to produce than other competitors. This is beneficial to Squirt because of the trend towards healthier beverages. A weakness that has plagued Squirt in the past is its inability to appeal towards an ideal target market. The target market has changed numerous times in previous years as well as its positioning strategy. Squirt’s inability to correctly place itself within an ideal market has cost it the opportunity of possible sales in the past. There are opportunities; however, that Squirt can take advantage of. Its immense popularity in Mexico that was addressed above gives Squirt a competitive edge in capturing a larger segment of the growing Hispanic market. Squirt does however have many threats to consider with direct competition from brands distributed by Coca-Cola as well as Pepsi-Cola.
After being presented the valuable information by Foote, Cone, & Belding, Squirt is faced with the critical decision of continuing the present market targeting and positioning strategy, adopting the recommendation made by Foote, Cone & Belding, or exploring another market targeting and positioning strategy. It is obvious by the decreasing market share shown earlier that it would not be beneficial to Squirt to continue with their current strategy. If Squirt were to continue with its current plan they will continue to see market share decrease. The recommendation by Foote, Cone & Belding seems to be extremely in line with the changing market. As shown above, the changing U.S. population means that Squirt must focus on different demographic segments in order to capture a segment of the growing Hispanic and African American markets. One con however of the suggested plan is that it may too narrowly focus Squirts target market. Perhaps a plan that does take the suggestion of the multicultural target market from FCB can be combined with a larger age segment, perhaps including consumers younger than 18. Recent Census information shows that the Hispanic population under the age of 18 is expected to continue to grow. Targeting younger consumers could be a potential market for Squirt. It could help develop brand loyalty at a young age.
ٱ Squirt Brand
Squirt is a caffeine-free, low-sodium carbonated soft drink brand with a distinctive blend of grapefruit juices that gives it a tangy, fresh citrus taste. Squirt is the best selling carbonated grapefruit soft drink brand in the United States. The origin of Squirt can be traced back to 1938 when a man named Herb Bishop began experimenting with Citrus Club. Bishop created a new carbonated soft drink that required less fruit and sugar to produce compared to other sodas that were being made at the time. The new drink “seemed to squirt onto the tongue,” so Bishop named the drink Squirt. Squirts sales grew during WWII because its low sugar content helped bottlers restricted by sugar rationing rules. By the mid 70’s, Squirt was introduced internationally in Central and South America. In 1977 a company named Brooks Products purchased Squirt from Bishop. In 1983, Diet Squirt became the first soft drink in the United States to be sweetened with Nutra Sweet. Squirt joined A&W Brands in 1986, which was later purchased by Cadbury Schweppes PLC in 1993. Responsibility for manufacturing, marketing, and distribution of Squirt was assigned to Dr Pepper/Seven Up, Inc, which had been acquired by Cadbury Schweppes PLC in 1995. It still remains under the Dr Pepper/Seven Up, Inc. branch. The Squirt Brand remains highly competitive among the grapefruit and citrus-flavored brands in the United States. It has extreme competition from similar brands distributed by Coca-Cola and Pepsi-Cola.
The chart below shows the volume breakdown of citrus soft drinks by year compared to other competitors in the carbonated grapefruit and citrus-flavored market.
Case Volume Trend for Major Carbonated Grapefruit and Citrus-Flavored Brands in the United States: 1996-2000
Case Volume (millions) by Year
Company/Brand 1996 1997 1998 1999 2000
Coca-Cola
Fresca 28.0 26.2 25.9 25.5 24.1
Citra NA NA 21.0 26.2 15.6
Mello Yellow 59.0 46.6 42.4 41.6 45.7
Surge NA 69.0 51.8 26.7 11.8
Pepsi-Cola
Mountain Dew 605.9 683.2 748.1 793.0 809.8
Regular 535.6 605.2 665.1 705.0 715.6
Diet 70.3 78.0 83.0 88.0 94.2
Dr Pepper/Seven Up
Sundrop 19.7 20.1 20.4 20.1 20.2
Squirt/Ruby Red 55.8 55.7 54.8 56.0 54.6
Total Case Volume 768.4 900.8 964.4 989.1 981.8
*Note: 2000 Competitor case volume data represent estimated figures
Squirt’s market share is calculated by dividing case volume by total case volume for the entire market. The market share for Squirt for the past years is as follows:
1996-55,800,000/768,400,000= .0726 or 7.26%
1997-55,700,000/900,800,000= .0618 or 6.18%
1998-54,800,000/964,400,000= .0568 or 5.68%
1999-56,000,000/989,100,000= .0566 or 5.66%
2000-54,600,000/981,800,000= .0556 or 5.56%
The numbers above show that the percent of market share for Squirt has slowly declined in recent years.
It is now up to Kate Cox, brand manager at Dr Pepper/Seven Up, Inc. responsible for Squirt, to make sure that this percentage does not continue to decrease and affect the success and market share of Squirt. Cox believes that attention must be drawn to Squirt’s advertising and promotion plan. Both topics were addressed in a June 2001 presentation by the brand’s advertising agency, Foote, Cone & Belding. Following a review of U.S. Census 2000 statistics, Squirt consumption data, and its own and Dr Pepper/Seven Up research, Foote, Cone & Belding proposed a refinement in Squirt’s target market and positioning which had previously been aimed at 18- 34 year olds. Through research that featured Squirt’s consumption by racial/ethnic group and age relative to carbonated soft drink users, Foote, Cone & Belding recommended that Squirt target a multicultural, 18-24 year old segment in order to tap into this heavy carbonated soft drink user segment. The total sales broken down by racial/ethnic groups can be seen below.
12% of 54,600,000(total case volume for Squirt in 2000) =6,552,000 cases were sold to the Hispanic population
15% of 54,600,000(total case volume for Squirt in 2000) =8,190,000 cases were sold to the African American population
73% of 54,600,000(total case volume for Squirt in 2000) =39,858,000 cases were sold to the Caucasian population
The suggestion by FCB to target a multicultural younger segment was supported by recent information provided by the U.S. Census 2000. According to the Census, the Hispanic population in the United States increased by 57.9% from 22.4 million in 1990 to 35.3 million in 2000. This was compared to an increase of 13.2% for the total U.S. population. Hispanics accounted for 12.5% of the U.S. population, while African Americans accounted for 12.3% of the U.S. population with 34.7 million people. 35% of the Hispanic population is under 18 years old. This means that a possible 65% of this demographic may fall into our target segment that is above 18 years old.
65% * 35,300,000(total Hispanic population)=22,945,000 Hispanics may possibly make up the new target segment
*This number is assuming that the rest of the population falls between the ages of 18- 34, which is not likely.
32.4% of African Americans were under the age of 18, while 42.6 % were under 25. From this we can conclude that 10.2% (42.6%-32.4%) falls within the range of 18-25 year olds.
10.2% * 34,700,000(total African American population)=3,539,400 African Americans could possibly fall within Squirt’s target market.
Assuming that the makeup of each demographic is correct, Squirt stands to have a total possible market of 26,484,400(Hispanic segment+ African American segment) people that are from the Hispanic and African American communities in which to target. Targeting these markets could be very beneficial if they continue to grow in the future.
Squirt has already been exposed to many Hispanics, primarily those of Mexican decent because of the popularity of the beverage in Mexico. This could be a very beneficial for Squirt in the U.S. market considering that there is a very large Mexican population in the United States. In California alone 77% of the Hispanic population is of Mexican ancestry.
77% of 11,000,000 (Hispanic population)=8,470,000 people are of Mexican decent in California.
The figure above shows that it may be beneficial for Squirt to focus primarily on the Hispanic market segment in California. Over 8 million people who are of Mexican ancestry reside in this one location. A portion of the population may already be familiar with the brand because of its popularity in Mexico, possibly saving the company on sales promotion and advertising.
In comparison with the seven major grapefruit and citrus brands, Squirt is positioned in between the young and not so young age genre. It also places itself with a higher level of thirst-quenching ability compared to other brands. Through a product positioning analysis Foote, Cone, & Belding concluded that a strategy was needed to increase relevancy with a younger target market while continuing to focus on Squirt’s thirst-quenching property.
Squirt has the highest consumer brand awareness among carbonated grapefruit soft drinks in the United States. This is due to consistent advertising over an extended period of time. Compared to competitors, Squirt’s advertising expenditures are typically lower. Combined expenditures for advertising and promotion amount to 20%-25% of total dollar sales. A breakdown of sales compared to dollar spent on advertising can be seen below.
54,600,000(Total volume sales for 2000)
$390,000,000(Squirt Regular/Diet advertising)+ $537,200,000(Squirt Ruby Red advertising) =
.0588 units per dollar spent on advertising
The above figure shows that for every dollar spent on advertising .0588 units were sold. This means that Squirt had a very low percentage of sales compared to the amount that it spent on advertising.
Many factors contribute to Squirt’s position in the market. As addressed above, Squirt has the highest brand awareness among carbonated grapefruit soft drinks. It also requires less sugar to produce than other competitors. This is beneficial to Squirt because of the trend towards healthier beverages. A weakness that has plagued Squirt in the past is its inability to appeal towards an ideal target market. The target market has changed numerous times in previous years as well as its positioning strategy. Squirt’s inability to correctly place itself within an ideal market has cost it the opportunity of possible sales in the past. There are opportunities; however, that Squirt can take advantage of. Its immense popularity in Mexico that was addressed above gives Squirt a competitive edge in capturing a larger segment of the growing Hispanic market. Squirt does however have many threats to consider with direct competition from brands distributed by Coca-Cola as well as Pepsi-Cola.
After being presented the valuable information by Foote, Cone, & Belding, Squirt is faced with the critical decision of continuing the present market targeting and positioning strategy, adopting the recommendation made by Foote, Cone & Belding, or exploring another market targeting and positioning strategy. It is obvious by the decreasing market share shown earlier that it would not be beneficial to Squirt to continue with their current strategy. If Squirt were to continue with its current plan they will continue to see market share decrease. The recommendation by Foote, Cone & Belding seems to be extremely in line with the changing market. As shown above, the changing U.S. population means that Squirt must focus on different demographic segments in order to capture a segment of the growing Hispanic and African American markets. One con however of the suggested plan is that it may too narrowly focus Squirts target market. Perhaps a plan that does take the suggestion of the multicultural target market from FCB can be combined with a larger age segment, perhaps including consumers younger than 18. Recent Census information shows that the Hispanic population under the age of 18 is expected to continue to grow. Targeting younger consumers could be a potential market for Squirt. It could help develop brand loyalty at a young age.
Entradas
No hay comentarios:
Publicar un comentario