Squirt Beverages Case Analysis

Running head: Squirt Beverages

Squirt Beverages Case Analysis

Case Recap

Squirt Beverages, a Dr. Pepper/7 Up brand and Cadbury Schweppes PLC company is a major soft drink brand offering a grapefruit flavored soda beverage. The flavored beverage industry has had an increase in product entry into the market over the past decade. Flat sales and fear of losing its position in the market has prompted Squirt to evaluate its promotion plan and advertising strategies. Part of this evaluation included bringing in an outside consulting firm, FCB, to assist with further research and recommend possible areas for growth and strategy, including targeting and product positioning. This case will provide in-depth discussion of Squirts prospects for growth including a detailed view of the brands strengths, weaknesses, opportunities and threats.

Problem Identification

The problem facing Squirt is that their sales have stagnated due to a marketing strategy that fails to focus on, and appeal to, its target market. The Hispanic consumer has been identified by Squirt and FCB as the ideal target for their product. While Squirt has known this in the past, they have failed to capitalize on this particular demographic. Squirt is evaluating its marketing strategy and will need an organized approach which can be effective with a rather limited budget.

Case Analysis

Squirt is a grapefruit flavored carbonated beverage which was originally created by Herb Bishop in 1938. At that time Herb created a new soft drink that required less fruit and less sugar to produce than the then popular Citrus Club beverage. After being position as a likeable soft drink with the character "Little Squirt" in the 50's and as a mixer in the 70's, Squirt was reformulated in 1977 by Brooks Products of Holland, Michigan. Currently Squirt has a marketing mix that includes Diet Squirt, Ruby Red Squirt and Diet Ruby Red Squirt and is sold internationally (Kerin & Peterson, 2010).

Many of the necessary tools for success are already in place for Squirt. They have partnerships throughout the country enabling them to mass distribute the product easily. The common notion that bottlers and concentrators split advertising costs 50-50 enables Squirt to manipulate specific local markets with a strong advertising campaign. This type of approach relieves some of Squirts financial burden in advertising. Another strength for Squirt is that it currently holds strong brand awareness. In fact, Squirt has the highest brand awareness of any carbonated grapefruit beverage in the United States (Kerin & Peterson, 2010).

While awareness of the brand is currently strong, it has not necessarily translated into an increase in market share for Squirt. Budget constraints are a real weakness in this regard. Because Squirt is the 10th brand in its parent company's portfolio, it does not have the spending power to create a large marketing campaign which can capitalize on its brand awareness. This weakness is especially scary when considering the spending power and innovation of some of Squirts major competitors, namely Mountain Dew. As the competition continues to roll-out new and enticing flavors with large campaigns, Squirt runs the risk of slipping into obscurity as opposed to growing. Many competitors are vying for the same demographic, and in a business where high-cost advertising drives sales, it is difficult to take advantage of opportunities when your budget is limited.

A limited budget is indeed what Squirt is working with. But, this does not mean it lacks the ability to take advantage of opportunities that exist within specific geographic and ethnic demographics. Drinks similar to Squirt are popular amongst Hispanic populations, especially in the West and Southwestern United States. Those same potential customers share other traits, such as affinity for loyalty and heritage, which can provide excellent opportunities (Kerin & Peterson, 2010). Increasing the significance of those points are the fact that this particular demographic is rapidly growing and trending in a direction that may give Squirt an opportunity to capitalize.

Identifying the Root Problem Components

Today Squirt is realizing flatness in its market share. While not drastically losing ground, Squirt wants to gain market share and has decided to reevaluate its marketing and advertising plan. To be successful in this, Squirt, has identified a new target market, focusing on Hispanics between the ages of 18 and 24, and to some extent African Americans in the same target age group. Squirt will need to market itself in such a way that it leverages its brand recognition to create brand loyalty. Being in a market filled with well established conglomerates, Squirt is in a situation where it must blend the markets appetite for "new and cool" with the economic realities of its limited budget.

Evaluating Alternatives

After a review of their internal research, current and past strategies and recommendations from FCB, Squirt has come to the conclusion that they essentially have three possible courses of action to take. The first option is to continue moving forward using their current marketing and advertising plan. This selection would require the least amount of change and upheaval. Staffing levels would remain the same and investment costs related to a major overhaul would be negated. Given the fact that Squirt holds brand recognition, the argument can be made that the company is doing a good job with its current plan. Staying the course may suit the 10th brand in a large portfolio just fine. At the same time, the status quo is not producing growth and the opportunities shown in the data suggest growth is possible.

A second strategy would be to move forward with FCB. This may seem especially wise given that FCB has an outlook which reflects the positive outlook Squirt should have given the market opportunities. Driving the FCB plan is the notion that a segment of the population, mainly Hispanics and mainly in the West and Southwest hold the key to growth for Squirt. FCB certainly has good data to support such a plan. Hispanics are one of the fastest growing ethnic groups in the US, and according to the 2010 U.S. Census the total number of Hispanics reached 50.4 million people, equivalent to 16.3% of the total population (Corona, 2011) . Marketing to this demographic is a natural choice given all the factors a marketing manager must consider. The problem is that