Class Assignment- Dr. Pepper/7 up Inc.

Squirt brand Case

Introduction and Marketing Issues-

Dr Pepper/7Up Inc., is one of the largest soft drinks company in the world. This company
has its production in 200 countries. Most popular soft drinks are: Dr Pepper, 7 UP, RC
cola, A&W Root Beer, Canada dry, Hawaiian Punch, and Squirt.

Squirt, is a drink that was invented in the course of an experiment by Herb Bishop in
1938. It was a new carbonated soft drink that required less fruit and less sugar to
produce hence it was quite famous during WWII. Later, in 1977, Squirt was bought by a
bottler Holland Michigan. The company updated Squirt’s logo and positioned the brand
as a mainstream soft drink. 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. Nowadays, Squirt is bottled and sold by some 250 Bottlers
in the US. Since 1990 Squirt’s unit sale volume has been stable until recently.

There is a huge volume of carbonated soft drink consumption in the US. American
consumes 849 eight- ounce annually. CSD are popular among individuals aged 20 – 49.
Consumption of diet drinks is popular at the age group of 25 and over. Today, Squirt’s
product line consists of regular, diet, Ruby Red, and Diet Ruby Red. Diet Squirt and Diet
Ruby Red account for 20% of Squirt’s total sales.

The study of Squirts sales volume has shown a slow decline in recent years, although
squirt remains one of the best selling brands among citrus flavored drinks, still the
competition due to better marketing budgets and techniques from the two main
competitors Coca cola and Pepsi and changing market trends can bring the market share
down for Squirt. The flat sales of Squirt need to be boosted before competing brands
begin to erode the market share enjoyed by Squirt, therefore to safeguard against this
Kate Cox, brand manager at Dr. Pepper/ seven up inc began to develop plan for market
targeting and product positioning as prescribed by Foote, Cone and Belding that is
brand’s advertisement agency. In the mid- summer 2001, Squirt Brand management
team, had to begin drafting annual advertising and promotion plan for Squirt in the US to
chart a right marketing plan the team had to come up with answers for the following
questions:
Q1: What should be Squirt’s target market? Or what target market to choose? (FCB
recommendations)
Q2: How should Squirt be positioned according to the target market?
Q3. Is it beneficial to follow recommendation of Foote, Cone and Belding of targeting
and positioning Squirt or should old methods be followed or there should be some new
innovative methods to increase sales and promotion of Squirt?

Situational analysis-

Squirt has been advertised in all the mediums of media like newspapers, television, and
radio.
Although squirt remains one of the best selling brands among citrus flavored drinks, still
the study of Squirts sales volume has shown a slow decline in recent years. The
competition due to better marketing budgets and techniques from the two main
competitors Coca cola and Pepsi and changing market trends can bring the market share
down for Squirt.

Squirts advertising agency Foote, Cone and Belding suggested market targeting and
brand positioning as two ways for Squirt to come out of this problem.

Following their suggestion and considering that the answers to the questions mentioned
above will serve as main decision making tools we analyzed the market situation for
Squirt.

Competitive market-
Carbonated drink industry is highly competitive industry As mentioned previously this
industry of carbonated drinks is dominated by three companies, Coca cola, Pepsi and Dr.
Pepper/ 7 up inc These three companies also represent the top ten selling brands in the
United States market. Squirt brand of Dr. Pepper is the best selling carbonated grapefruit
soft drink brand in the United States. It 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. Hence it has a different market then other caffeinated drinks but it has competitors
in form of Fresca, citrus, mellow- yellow and surge from Coca – cola and mountain dew
from Pepsi. Consumer research conducted by Dr. Pepper/ 7 up inc. in taste testing of
Squirt and Citrus of coca-cola group indicated that Squirt scored higher on the thirst
quenching attribute. Compared to Dr. Pepper/7up inc. Coca- Cola and Pepsi show more
aggressive for of advertising and promotion of products Consumer.

Buyer Behavior and customer segmentation-

Data suggests that in U.S the consumers drink more carbonated drink then tap water. In
2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. This
statistics shows that there is a huge market for carbonated drinks in U.S.
It was observed that age and ethnic/racial angle played an important role in growing
consumption of soft drinks. Hence changing demographics have been critical factors in
the growing popularity of these flavored soft drinks.

Age-
Previous target market for squirt has been between 18 to 44 yrs old. According to the
research by Foote, Cone and Belding, Squirt was more of a thirst quenching product then
refreshing. They suggested that youngsters would identify with this “thirst quenching
attribute of Squirt, and the research also suggests that this group is supposed to be the
large consumer of soft drinks. Therefore, they recommended targeting youngsters
between 18 -24 year old.

Ethnic/ racial-
In U.S 25% Americans are under 18 years of age and one quarter of U.S population is
Hispanic and African- American. By a census in 2000, it was predicted that soon 17% out
of youth under the age of 18 will be Hispanic; also they will amount to 45% of all
minorities in U.S thus surpassing African Americans to become the largest ethnic group
in U.S. It was also observed that per capita consumption of flavored soft drinks is higher
in Hispanics and African- American than the other racial groups. This information
prompts a wise decision to target these ethnic- racial groups to increase the market share
of the squirt flavored carbonated drink. If the census of 2000 is accurate then it is a fact
that to target this huge population of Hispanics and African- Americans as future market
for Squirt will be very beneficial.

Squirt has already been exposed to many Hispanics, primarily those of Mexican decent
because of the popularity of the beverage in Mexico. It is one of the largest selling brands
of soda in Mexico, and Squirt has large brand recognition there.

Competitive market- Carbonated drink industry is highly competitive industry As

mentioned previously this industry of carbonated drinks is dominated by three
companies, Coca cola, Pepsi and Dr. Pepper/ 7 up inc These three companies also
represent the top ten selling brands in the United States market. Squirt brand of Dr.
Pepper is the best selling carbonated grapefruit soft drink brand in the United States. It 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. Hence it has a different market
then other caffeinated drinks but it has competitors in form of Fresca, citrus, mellow-
yellow and surge from Coca – cola and mountain dew from Pepsi.

SWOT analyses –

SWOT analyses of the Squirts market potential, is as follows:

Strengths-
Squirt is the best selling carbonated grapefruit soft drink brand in the United States.
It is already has brand name recognition in the Mexican market, hence while targeting the
Hispanic population Squirt will have a competitive edge over his competitors who are
also targeting the same market fiercely.

Weaknesses-
Squirt brand has budget restrictions for advertising and promotion, which is not the case
with its competitors like Coca- cola and Pepsi.

Opportunities-
Squirt has a huge opportunity to successfully expand its brand by targeting young
because their grape flavor attracts more youngsters because of its unique thirst quenching
attribute and. penetrating Hispanic groups and African – American market to target them
as guaranteed consumers for future, as it is predicted that Hispanics are going to be the
most populous ethnic group with more number of youths as compared to other minority
groups in U.S.

Threats-
There are no threats specifically, but depending too much on particular ethnic group and
particular age, in short narrow targeting criteria can prove to be disaster if it backfires due
to certain reasons, anchoring the target consumers because they are the main source and
they dictate the location to get the soft drink, also dominate taste preferences because soft
drinks is an elastic product.

Considering the above mentioned information, it is clear that the recommendations of

Foote, Cone and Belding for targeting and positioning of Squirt are rational and by
targeting Hispanic and African - American, young population of 18 to 24 yrs of age will
be beneficial for Squirt in a long run.

Problems and Opportunities:

Young Hispanics are considered to be the target market for positioning of Squirt for
brand promotion. Also, considering the fact that Squirt is already popular among the
Mexicans, can be used as a positive sign for this venture. Facts mentioned above in the
situational analysis like that Hispanics are fast growing ethnic group in U.S, it is
predicted that maximum number of youth is going to belong to the Hispanic community,
Hispanics, does not like hard sell messages and likes messages that are real and relevant
to them, they like shop closer to home in mom and pop stores, also the majority would
prefer ads in Spanish (50%) while 30% prefer English and the rest have no preference.

Positioning and specific targeting is the main issue for the Squirt brand. The
advertisements are not appealing to the suggested new modified target audience which
should include Hispanics (specifically in the states of California and Texas). The
advertisements should focus more on real life moments while showing Squirt being
consumed by individuals. This will allow the target audience to connect with the Squirt
brand. Also, Squirt should show advertisements in Spanish as well as English. Also,
budget for advertising should be expanded.
Strategy:

Using the above information and the research provided by FCB’s presentation, it is clear
that Squirt should focus on the age demographic of 18-24 year olds. An effective
marketing campaign targeted towards 18-24 year olds has a two potential results: 1) a
short term solution of increasing sales of squirt to 18-24 year olds and 2) a long-term
solution of positioning squirt as a staple beverage for 18-24 year olds such that as
consumers of squirt move out of the targeting age demographic they will continue to be
loyal consumers of Squirt, thus increasing squirt sales in the 25+ market within a few
years.

Kate Cox has a few options in how she markets Squirt to the target audience of 18-24
year olds:

 A “multicultural marketing mind-set” approach

 18-24 year-olds (regardless of race)
 A hybrid approach

1) A multicultural marketing approach would appeal to the increasing amount of

Hispanics and African Americans in the 18-24 age range. It would also provide
for the popularity of Squirt in Mexico to filter in to the U.S.’s Mexican
population. The concern with such a strategy, however, is that Caucasian’s are
still the largest consumer of Squirt. The risk with a multicultural marketing mind-
set is that such a marketing campaign has the potential to isolate Caucasian
consumers. The benefit of such a campaign is to increase the consumer base to
those who are not Caucasian, trusting that Caucasian’s will continue to consume
Squirt, a wider appeal of the beverage to consumers would increase sales.
2) An 18-24 year old marketing campaign would target all consumers in the 18-24
demographic. By identifying Squirt as a popular beverage amongst consumers in
this age range, regardless of race, Squirt has the potential to both increase sales
within the age demographic as well as within the Hispanic and African-American
demographic. Such a campaign would have to be carefully thought out and the
recommendation is for Cox to identify a celebrity or fad that is popular amongst
18-24 year olds, regardless of race. Such a campaign could be aligned with an
event. For example, a Squirt campaign that is aligned with the Olympics with
Olympic athletes as spokespersons could appeal to 18-24 year olds regardless of
race. Another strategy that could work is partnering with a popular television
program or event. For example, Coca-Cola’s sales increased with it being the
official beverage of American Idol judges. Such alignment with a popular TV
program is sure to increase sales amongst all races within the targeting age-
demographic.
3) A hybrid approach would, perhaps, be the most expensive, however, if nervous
about leaving out the Hispanic and African-American populations through an
 overall marketing campaign targeting towards all 18-24 year olds, Squirt could do
a “spin-off” campaign with commercials and packaging in Spanish. Such a
campaign would reach all 18-24 year olds as well as all Hispanics, regardless of
age. The initial costs are the initial down-fall, however a successful campaign
could re-define Squirt in two needed demographics, all Hispanics and all 18-24
year olds.

Recommendation:

A Hybrid campaign is the best option for Squirt. As 73% of Squirt consumers are
Caucasian, redefining Squirt as a drink popular amongst 18-24 year olds with celebrity or
event backing popular amongst the targeting demographic is the best option to create a
brand for Squirt that will create consumer loyalty amongst 18-24 year olds, securing a
place in the 25+ market within a few years. A smaller, geographic specific side campaign
targeting towards Hispanics with Spanish ads and packaging will help Squirt capitalize
on its popularity in Mexico and will see an increase in sales in border states, such as
California and Texas.