Dr Pepper Case Study

Dr. Pepper is a beverage company that was founded in the 1880’s by a young fellow who concocted a new fountain flavor which he named after his father in law (Dr. Pepper). After fine refinement, the drink began to be marketed on a commercial basis in 1885. The company is operated by a management team full of qualified, experienced individuals and family members who have been replacing one another over the past years. Ever since its commercial debut, the company has maintained consistent sales growth over the years despite its strong competition from Coca-Cola and other well-known beverage companies. “Total sales volumes for 1974 are $120 million”. Its recent growth shows that the company has risen as the “fourth largest selling soft drink in the nation behind Coca-Cola, Pepsi, and Seven-Up”. Unlike other beverage companies, Dr. Pepper is not diversified but rather focuses on improving and marketing one product (sugar free Dr. Pepper) and this has rendered them tremendous sales growth. The company uses different strategies and methods such as broad promotion efforts that allow them to compete with other beverage companies while meeting customer demands. Although many of today’s companies are focusing more on brand expansion especially internationally, Dr. Pepper continues to focus on its one product strategy. “With our untapped potential, it would be criminal to branch off into something else,” said W. W. Clements, its president.

I. Case Objectives

The objective of the case is to help students have a better understanding of internal and external operations of companies including strategies they utilize that allow them to maintain their success in the market. It also allows students to apply in class learned concepts to situations occurring in the “real world”.

II. Key Issues

The main issue that Dr. Pepper is facing is its reluctance to diversify. While surrounding companies are producing multiple products, Dr. Pepper continues to focus on its only product. As a result, the company may face future challenges when trying to compete with different products in the market. Their reluctance to diversify is deterring them from expanding their market share and perhaps growing from the number four spot in the beverage industry to replace Coca-Cola at the top spot. We can use Coca-Cola as an example of diversifying its product(s). As demonstrated by its recent purchase/asset-swap deal with energy drink company Monster Beverage, Coca-Cola is more than just a slinger of soda. The company draws billions of dollars in revenue from other liquids, including Dasani water and Powerade sports drinks. That's par for the course in the sugary beverage industry. Coke's eternal rival PepsiCo does a brisk business selling drinks that aren't soda, such as the Starbucks ready-made concoctions