Leo Dudziak
MGMT 522
6/23/2016
1. Andrew Barker should recommend that the company produce, market and
distribute a new energy brand. Overall carbonated drinks are on the decline.
Declining from a 70% market share in 1991 to 57.4% in 2006. Products like Snapple
have been increasing and increases the bottom line the most. The energy drink market
is growing. With a projected growth rate of 10.5 percent from 2007 to 2011.
Although there is growth it has reached maturity or is close to reaching maturity. It is
not a cash cow but it is not a dying industry either.
2. There is some strategic risk if they don’t get into the market. The energy market
could significantly increase. Cutting into Snapple and soft drink products. Creating
an unprofitable company. That is unlikely and there is more risk in entering the
market and failing because on average only 10% of new products are successful.
3. The new market would be in-between a question mark and a dog. 5 companies in
the energy drink market make up 94% of the industry. The growth of the industry is
slowing down. It is still higher than average but it may have reached maturity. One
bright light is that the industry leader is losing market share fast. Red Bull went from
82% market share in 2000 to 43% market share in 2006. It is not a complete dog
because there is still growth but it is a hard market to get into. If Dr. Pepper Snapple
Group Inc. has cash flow problems it would be a dog. If they have money for new
product development it could be a winner.
4. The lesson learned from Accelerade is that it is possible to enter a premium
product into a market and succeed. Accelerade was over twice the price of the market
leader but still was a success. Accelerade was successful because it differentiated its
self from its competitors. It provided a source of carbs and protein while Gatorade
just provided carbs and electrolytes. It could be useful if Barker wanted to try a
premium product like tea energy drink, energy drink sports drink or all natural
organic energy drink. If Baker just wants an energy drink it is not as useful because
the market is highly price sensitive. The average price of energy drinks have dropped
30 percent from 2001 to 2006 settling in at about 2.00$ per a serving size. The highest
price offeree Red Bull has lost over 50% of its market.
5. An example of vertical integration is Dr. Pepper Snapple Group Inc. buying
