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Dr. Pepper Channel Report

Company Overview

Mission and Strategy

Dr. Pepper’s overall mission is to be the best beverage business within the Americas. The firm’s brands are synonymous with flavor, fun, and refreshment for generations. The company’s strategic approaches involve establishing and enhancing its leading brands, pursuing profitable packages, categories, and channels, and leveraging the firm’s integrated business models (Dr. Pepper Snapple Group, 2017; Calia, 2014a). Besides, other strategic approaches include strengthening the company’s route to market and improving the operating efficiency (Dr. Pepper Snapple Group, 2017; Dr. Pepper Snapple Facility Under Way, 2008). Dr. Pepper’s strategic approaches are informed by core values such as accountability, customer-centric, own decisions, transparency and honesty, Inspect What We Expect, and no blame fixing (Dr. Pepper Snapple Group, 2017).

Segments

Even though the final customer is responsible for pulling demand for the beverage industry, retailers and distributors or bottlers constitute beverage firms’ direct customers (Leach, 2017; Calia, 2014b). Within the B2B space, Dr. Pepper’s direct customers are retailers such as Wal-Mart, Kroger, and Safeway. The firm also sells products to other business, particularly foodservice businesses such as Burger King, McDonalds and Yum! Dr. Pepper’s B2C space involves selling products directly to customers of all ages. The company’s products or brands such as Cherry Vanilla, Canada Dry, 7UP, A&W, and Sunkist Soda are targeted at different customers. For instance, Cherry Vanillas is highly preferred by individuals aged between 18 and 24 years (Discovery Research Group, 2014). A specific customer profile for such as product would appear as follows:

“Maria Donald”

• 18-24 years old
• Middle-upper class income (working class)
• Lives in GTA

Flow of Physical Goods

Figure I: Flow of Physical Goods

Source: Author’s Drawing

Even though the figure above shows the flow of products and goods throughout the channel, Dr. Pepper often sells its products directly to retailers and foodservice businesses. It is also vital to note that the company has been depending on services of third-party distributors like PepsiCo Inc. and the Coca Cola Company. The Food and Beverage trade shows also provide an opportunity for the company to acquire potential channel partners.   

Service Output Demand (SOD)

Channel members within Canada’s beverage industry desire features such as on-time delivery and spatial convenience options. Considering the fast-paced nature, seasonality, and high product demand levels that characterize the industry, retailers and wholesalers demand that Dr. Pepper deliver beverages on time and often has adequate stock, particularly during warmer months, festive seasons and weekends.  Competitive companies such as Pepsi and Coca Cola are more effective in meeting these goals than Dr. Pepper (Leach, 2017; Dr. Pepper Snapple Group, 2014). For instance, the firm often seeks the services of these rivals when it comes to ensuring that products are delivered on time to final consumers.

Service Output Supply (SOS)

Dr. Pepper’s most significant SOS’s is its capability to establish and sustain robust associations with customers and partners within the channel. Dr. Pepper has robust relationships with channel members, especially retailers such as Wal-Mart, Safeway, Target, and Kroger Co, and major food services businesses like McDonalds and Yum! (Cleverism, 2019). These channel members enjoy warm working relationships with the firm, which often goes overboard to ensure comfort to channel members handling its products. The firm also provides assistance in promotion and offers advice to sellers within the retail space, particularly retailers such as Kroger, Safeway, Wal-Mart, and Target. In addition, Dr. Pepper provides warranties for product market channel members.

Gap Analysis

In relation to the analysis executed in the SOD and SOS sections, it can be noted that Dr. Pepper less effective in delivering products to consumers in time relative to its competitors such as Coca Cola and Pepsi, especially during warmer months, weekends, and festive seasons. The company’s presence in direct distribution is largely limited by its reliance on the services of third-party companies such as Pepsi and Coca Cola.

Power Analysis

Table I: Reward Power

Table III: Coercive Power

Table III: Legitimate Power

Table IV: Referent Power

Table V: Expert Power

Short-Term Fix Identification

Dr. Pepper’s major competitors such as Pepsi and Coca Cola are larger multinational firms and that explains their possession of highly extended distribution channels. Whereas these rivals operate in similar pattern to that of Dr. Pepper, which is characteristic of larger players in Canada’s beverage industry, Coca Cola and Pepsi possess international connections that enable them to excel when it comes to global distribution of products.  As aforementioned, beverage firms often sell their products to wholesalers (distributors and bottlers), who in turn sell products to retailers, who then sell to final buyers or end users (Leach, 2017). Nonetheless, when it comes to Pepsi and Coca Cola, this process is different in the sense that these companies employ their firm-owned distribution outlets. The two companies have intensified or strengthened their distribution channels by ensuring that they have a proliferation of distribution centers across the country. In some situations, Dr. Pepper is compelled to hire the services of these firms in order to deliver its products to end users in a timely manner. Therefore, it can be noted that Pepsi and Coca Cola have a competitive edge over Dr. Pepper in terms of highly extended distribution channels. This potential enables these companies to directly involve themselves in the delivery of products to customers.

Dr. Pepper should focus on embracing the approach employed by Pepsi and Coca Cola to ensure that it strengthens its distribution networks across the country. While such an undertaking will be viable, Dr. Pepper will be compelled to incur enormous costs in adapting its distribution chain to match those of its rivals. Focusing on the expansion or strengthening of the company’s distribution chains will be a high risk change considering that enormous upfront costs will be involved including construction of novel warehouses, purchases of extra trucks to supply products to be newly developed warehouses and recruiting workers, as well as the coordination of these activities. It is also significant to note that Dr. Pepper, Pepsi, and Coca Cola have a shortcoming in relation to ensuring that retailers to do not run out of stock when it comes to providing major brands from these companies during peak seasons such as festive seasons. Therefore, Dr. Pepper’s management should be informed of this shortcoming so that necessary measures are embraced to address it. Dent (2014) argues that adequate planning and effective cooperation with wholesalers and warehouses is significant in addressing issues associated with shortage of products or beverages in retail stores. Dent (2014) adds that beverage companies can also exploit opportunities provided by online sales platforms, as this can drive product sales in retail stores, thereby leading to constant stocking of shelves. Whereas Dr. Pepper may be focusing on the expansion of its distribution networks, the company’s management should remain cognizant of the potential environmental impacts that its supply chain can have on the environment. According to Jiang (2017), bigger supply chains are associated with more pronounced effects on the environment relative to smaller supply chains. 

The Ideal Channel

Currently, Dr. Pepper is almost close to the realization of the ideal channel for its operations. The company should focus majorly selling its products directly to consumers including retailers. This goal can be accomplished when the company comes between the wholesalers and retailers, who are part of Dr. Pepper’s customers. The firm’s management should commence by acquiring various distribution outlets across the country in order reinforce its product supply chains or outlets. In this manner, the company will solely focus on company-owned warehouses, which in turn will enhance direct interaction with customers, on-time delivery of products, and elimination of the issue of product shortage on the part of retailers during peak seasons. The ideal channel for Dr. Pepper is provided below:

Dr. Pepper’s management should also supplement the above channel by harnessing its trade website to establish sales for the company. Palanisamy and Liu (2018) assert that companies should focus on leveraging their Search Engine Optimization (SEO) with the aim of increasing the chances of customers finding products that they are looking for or searching on the firms’ websites. Moreover, social media campaigns should be created to grow the firm’s distribution reach. Full implementation of the proposed channel can be accomplished in the long-term, as it requires enormous financial resources. However, its complete implementation will result in massive gains to the firm, as aforementioned mentioned in this section.

downsides, hence facilitating an effective engagement process.