Dr Pepper TEN a Casualty of “/1” Campaign

Courtesy of brandmagazine.com
Courtesy of brandmagazine.com

As Dr Pepper invests more support to highlight their “1/1″ campaign for Dr Pepper and Diet Dr Pepper, are they providing less support to Dr Pepper TEN?  The beverage manufacturer continues to feature their core soda offerings and exclude the low-calorie Dr Pepper TEN soft drink.  As much as the company says that this segment is growing, neither Pepsi (makers of Pepsi Next) nor Dr Pepper Snapple Group (makers of Dr Pepper TEN, RC Cola TEN, 7UP TEN, Sunkist TEN, Canada Dry TEN, and A&W TEN) have provided the same media support levels since the 2012 launch period.  Given consumer trends of shifting consumption away from soft drinks, what will happen to these Dr Pepper low-calorie sodas if they are not supported by Dr Pepper?

As seen above, the commercial’s final scene shows both Dr Pepper and Diet Dr Pepper but not Dr Pepper TEN.  The marketing message for Dr Pepper TEN is clearly different from Dr Pepper and Diet Dr Pepper, but it is concerning that there has not been additional support behind Dr Pepper TEN.  With market activity, consumer trends, and expert opinions all suggesting a continued decline toward carbonated beverages, it is understandable to support Dr Pepper and Diet Dr Pepper since it delivers the biggest return.  Conversely, not supporting these two brands will also provide the most detrimental effects to the business.  This is why Dr Pepper and Diet Dr Pepper will continue to receive the majority of funding.

With the low-calorie products receiving less funding, sales decline should be expected.  But by how much?  While the initial repeat levels were above expectations and more than half of all sales were sourced from outside the carbonated soft drink business, these early wins were not sustained.  Dr Pepper Snapple Group’s SEC  10-K filing from February 2014 indicated as much:

Our Core 4 brands, which included the impact of the launch of our Core 4 TEN products, decreased 1% compared to the year ago period. This result was driven by a a 5% decrease in 7UP, a 7% decline in Sunkist soda and a 2% decrease in A&W, partially offset by a 6% increase in Canada Dry. Crush, Squirt and RC Cola declined 7% , 4% and 4% , respectively.

The entire 2013 annual report can be found here.  So while it’s possible that other soft drinks within the 7UP, Sunkist, A&W, Canada Dry and RC Cola portfolio also declined, the fact that these TEN products sales did not balance the other beverage losses indicate that they were also losing sales thselves.  Times are tough within carbonated soft drinks right now, especially when you’re not a Coca-Cola or Pepsi with a broader more diversified beverage (or food) portfolio.  And even these two global conglomerates recently released results that were slightly less positive.

Dr Pepper TEN and the other TEN products still stand a chance at survival, because it is keeping in line with trends toward lower calorie consumption.  However, delivering growth with less marketing support and when everyone is pushing full calorie offerings makes it challenging.  At some point, Dr Pepper Snapple Group will have to make a decision whether they will re-invest in Dr Pepper TEN, or turn their attention toward other initiatives.  Let’s just hope they make this decision sooner rather than later.

Advertisements

Coming Soon – Five More 10-Cal Soft Drinks From Dr Pepper

Dr Pepper Snapple Group company logo

Some months back I wrote about how Dr Pepper was releasing a 10 calorie version of their popular soft drink in select markets, trying to create their own niche market by targeting men specifically (link here).  It looks like the launch was successful, as they are now planning on expanding their 10 calorie portfolio to include five other beverages: A&W, Canada Dry, Sunkist, 7up, and RC Cola.

Larry Young, the beverage manufacturer’s chief executive was quoted,

Chief Executive Larry Young who said, “Now they [consumers] can come back, drink our ‘Ten’ products and enjoy the full flavor of our brands and not worry about the caloric intake. You have to keep the doctor happy.

While Dr Pepper 10 successfully targeted men and gained significant media exposure with their recent campaign, will these five other sodas have the same positioning?  Should the 7up 10 calorie offering or the A&W 10 calorie offering target men specifically?  Or would the company exclusively target women with these 10 calorie products?  Dr Pepper came under fire for making fun of female consumers when they released Dr Pepper 10 nationally, so having history repeat itself in such a short time – even all in over-the-top good humor – may not be a good idea.  However, the free media and the conversation starter of whether the drink was for men only cannot be under estimated.  At the very least, Dr Pepper 10 may have gained trial when shoppers bought the beverage to see if it was really anything special, so it can be considered successful in that regard.  If given the chance to repeat the same marketing strategy, Dr Pepper may have chosen differently so female consumers are not alienated.

That said, it’s also unlikely that the company will be targeting men specifically for the five other 10 calorie beverages.  The more 10 calorie offerings that are specifically targeted at men, the more probable that Dr Pepper earns a reputation as a men’s only beverage organization and cutting off the company from half of the potential customers.  Something else to keep in mind would be that females are the shoppers for the family unit and if the beverages does not appeal to the female shopper, the end consumer (the husband or son) will likely be drinking something else that she approves of, and the 10 calorie beverage will remain on store shelves.   So while the research indicates that men do not want to be associated with the word “diet”,  keying in on males when females are the main shoppers are not likely to help them move product unless the shopping list has “Dr Pepper 10” written on it.

How should Dr Pepper target and position these upcoming products?  Is there a specific age group or ethnographic that they should go after?  Or should it be aimed toward the general calorie-conscious consumer, regardless of age, gender, or ethnicity?  Since Dr Pepper’s initial advertising platform for the Dr Pepper 10 raised the profile for their 10 calorie offerings, there is no need to continue on this line of positioning if it alienates shoppers from them.  Their upcoming focus should be on the product’s benefits.  The 10 calorie sodas should focus on the sweeteners that give them the 10 calories and the closest taste profile to the full calorie versions.

Since the news of the line-up expansion broke not too long ago, Dr Pepper may be in the infancy stages of releasing these other products.  Let’s hope that they gain media exposure for the right reasons this time.

7UP Throwback Now Available

courtesy of 7up.comLooking again at retro beverages this week, Dr Pepper Snapple Group (DPSG)  announced they will be producing their own retro packaging ‘throwback’ soft drink.  For a limited time starting this month, 7up will undergo retro packaging and glass bottles to bring back a 1970s and 1980s feel.  Similar to the Pepsi Throwback, it will be substitute real sugar instead of high fructose corn syrup.

A question to look at in more detail based on this product launch:  Why would Dr Pepper Snapple Group launch a retro soft drink right now, and one that is not their core product?  Is there a stronger affinity/relationship between consumers and 7up, rather than Dr Pepper?  When one product is successful, it invites imitators trying to piggyback on the success of the original product.  DPSG may not be trying to piggyback on the Pepsi Throwback’s success, but seeing that there is a market demand with a retro Pepsi cola, they may be also be demand for a retro 7up soda.  The timing of this launch comes well after its publicity on the Celebrity Apprentice television show, and also seeing that Pepsi Throwback has become a regular product rather than just a limited time product.

While consumer loyalty to either 7up over Dr Pepper is a question, DPSG’s decision to launch a classic 7up may be more strategic placement than anything.  As Dr Pepper and Pepsi are both colas, releasing a retro Dr Pepper may indeed lead consumers to believe it is a copycat product.  7up on the other hand, is a lemon-lime soda, so there are slight areas of differentiation between Pepsi and 7up.  Consumers interested in picking up a cola will not need to choose between two retro products and for the same rationale lemon-lime category loyalists will not have to decide between Pepsi and 7up.  Furthermore, the lemon-lime soda category has been struggling with advertising and innovations the last few years, so for a classic product to be released is something refreshingly new.

A word of warning to DPSG is that not all retro products are successful.  While Pepsi Throwback and Mountain Dew Throwbacks were both launched at the same time, only Pepsi Throwback has survived to become a regular shelfed product.  The key point is that a retro product’s success ultimately depend on two things: 1) that the product has a strong historical relationship with the buying public and 2) the consumers truly like the older product better than the new one.  And as mentioned in the previous post, cannibalization should be a strong consideration for the manufacturer.  After all, if the real sugar retro 7up has strong consumer loyalty and is stands differentiated from the current 7up, why not make it a regular offering?

Re-Energizing the Lemon-Lime Category

Advertising Age published an article last week detailing the marketing investments of Coca-Cola, Pepsi, and Dr. Pepper Snapple Group (DPSG) in the lemon-line soda category (link here).  Until this was mentioned, I actually had not noticed that there really wasn’t much advertising around Sprite, Sierra Mist, and 7up in Canada.  Sprite always appeared to be advertising because of their partnership with the National Basketball Association, so it doesn’t seem like they had not advertised at all in the past few years.  No Sierra Mist advertising in Canada because of DPSG’s agreement with Pepsi, but 7up itself has not done any advertising in the last few years.  The article reports that marketing dollars for this beverage category had shrunk 80% and the money was being reallocated to other beverage categories such as enhanced waters, energy drinks, and sports drinks.

However, all this is about to change (or in Sprite’s case, has changed already).  Driven by consumer insight that clear sodas are a healthier alternative than colored sodas (untrue, by the way), all three major beverage companies are reinvesting marketing dollars into the category.  In terms of product innovation, Sprite launched Sprite Green in 2009, while Sierra Mist will introduce Sierra Mist Natural later this year for the US.  Both drinks are naturally sweetened beverages (Sprite with Truvia and Sierra Mist Natural with sugar) to keep in line with the consumer trends searching for healthier alternatives.  7up had already reformulated to contain 100% all natural flavors, removing artificial flavors and preservatives in 2006.

Sprite has also launched a global integrated marketing campaign titled “The Spark” which began with Drake’s commercial seen above.  Sprite’s marketing campaign includes a music project as well as a film project, and will be marketed through TV, out-of-home, online, and mobile media placements.  The music project gives teens the ability to mix their own music and save it as ringtones or send to their friends, while the film project encourages teens to create their own mini-film through choosing the setting, plot, characters, and ending.  All these efforts tie in with their theme to “spark” creativity and sharing it with others.

courtesy of adage.comWhat about 7up?  Since Sierra Mist cannot be sold in Canada, consumers’ lemon-lime soda options are limited to Sprite, 7up, or private label brands.  Are there any product or package innovations coming from 7up?  Advertising Age indicated that 7up will be stepping up their marketing and will be spending $25 million in these last four months, but no idea if that translates over into the Canadian market.  I’m curious to see what 7up will do because there may not be a lot of leverage to build upon these remaining 4 months.  Holidays are normally a ramp-up for beverages, but Christmas usually sees Coca-Cola and Pepsi promoting their own core brands.  And with 8 months of the year past already without much brand exposure, what will 7up be spending their $25 million on the remainder of the year?  According to Nielsen market share data, 7up held nearly 6% market share in 2009, while Sprite held less than 4% during the same time period.  Despite the US market being larger, shouldn’t 7up invest more advertising into Canada to protect and increase their market share points since there is less competition here?  If nothing is done, 7up stands to not only lose market share to Sprite, but possibly its market leader status.