The Carbonated Soft Drink Industry: Struggling to Transition its Brands in a Healthy Society

The entire beverage industry has noticed changes in sales and changes in consumers’ wants/needs in the past 2-3 years. However, the non-alcoholic beverage industry, most specifically carbonated soft drinks (CSDs), has been hit the hardest. Mintel’s Carbonated Soft Drinks-June 2009 Report says that, “During 2003-08, carbonated drinks gained 19% in current-price sales, with growth coming entirely from price increases. During 2009-13, Mintel projects carbonated beverage sales in the U.S. to grow at 5% in current terms but decline by 3% in inflation-adjusted prices”. This is an incredible change of events for the carbonated soft drinks and their manufacturers, because CSD’s have enjoyed steady growth and profit for as long as America can remember. Manufacturers are trying their best to generate new beverages, both carbonated and non-carbonated, that will fit with the new healthy consumer’s needs. However, many of these beverages are marketed well, but do not actually provide the consumer with a beverage that is healthier than past options. This type of marketing deception may benefit the manufacturers in the short-run, but may have very damaging effects in the long run. Additionally, manufacturers are trying to pump out new beverage options and stock them on the retail shelves, however; there is limited space on shelves. Manufacturers may have to choose to remove long-lasting and storied beverages (i.e. CSD’s) that have been very profitable for the company in the past, but now are not generating the same returns as healthy beverages. Also, consumers may want healthier beverage options, but definitely do not want to sacrifice taste and flavor. I wonder how well the manufacturers are executing their new beverages and whether these beverages are still satisfying (in terms of taste and flavor to consumers)?

There are many other questions that I will want to explore when researching this topic, including; the success rate of meeting new consumer’s needs by the big 3 manufacturers, consumer satisfaction for the new changes in beverage options, what will be the next consumer trend in the industry, and how will this affect the healthier beverage options, how much of the population has the healthy trend affected and has it reached its maximum point, etc. These types of questions and answers will provide me with a comprehensive understanding of societal trends and the implications that they have had on the CSD manufacturers. This may also provide some insight into future trends and how the manufacturers will need to adjust their strategies to fit these new consumer needs.

I am very interested in this topic because I interned at Dr. Pepper Snapple Group this past summer, and I am going back to work for DPSG full-time after I graduate from McCombs in May. During the summer, I had the opportunity to work with the Innovation team and the Canada Dry brand team on a water project. My project’s objective was to generate a water strategy for DPSG as a whole, and try to take advantage of the new health trends in the marketplace. I had the opportunity to create a survey, conduct focus groups, and do market research to determine important consumer insights that could lead DPSG in the right direction in its water strategy. Throughout the summer, I gained valuable knowledge of the consumer and how he or she views products in the stores and what ingredients may or may not be important to them. For example, I was very interested in determining whether consumers actually care about the level of sodium in their seltzer water. Sodium appears in most food and drink in America, and I wasn’t sure whether consumers ever notice. Through my research, I found that consumers are very aware of the amount of sodium in their diets and definitely prefer to have no sodium in their still or carbonated waters. Consumers viewed water as a haven from all of the other unhealthy beverages, and wanted to make sure that this safe drink remained unadulterated. I never realized how important sodium levels were in beverages, and my research helped me understand this insight, and helped me implement a solution for the company. I hope to take other insights that I gained from the summer’s project and apply them to this research report. I think it will be very interesting to assess the manufacturers’ success rate and predict what changes they must make going forward. I believe that each manufacturer’s success rate of including healthy beverages in their current portfolio, will be a good predictor of how each company will perform in future changes. I look forward to diving into the research and learning more about the CSD industry.

3 Different Market Research Techniques

After reading the Blink, Metaphorically Speaking, and the Customer Input Article, I can see why market research is so important within the marketing industry. Companies are always trying to be on the edge of market research, so that they can provide consumers with differentiated products that either don’t exist in the marketplace at that time, or are vastly improved to the products that their competitors sell. In the Blink Article, Malcolm Gladwell uses many company examples to show how traditional market research (i.e. asking consumers what they want) does not work. Instead, Gladwell suggests that observing consumers, performing secret tests, such as the “yellow” butter example with the margarine, and listening more to experts than the average consumer opinion, are very important to the success of a product in the marketplace. I really like Gladwell’s approach to market research, because I also believe that consumers don’t always understand what they really want. I always wonder how a consumer can say he wants something that he can’t even visualize or understand. For example, when there were non-cordless phones in the marketplace, people wanted the ability to walk around without a cord, but a person at that time could never imagine or say he wanted a cell phone and all of its capabilities. If companies only based their innovation on the words of their customers, than our society would not have many of the amazing innovations that we enjoy today.

The Metaphorically Speaking article used a different research approach than Gladwell’s article. Zaltman talked about a new technique called ZMET, which gets consumers to pick out images that represent a product to them. The ZMET process includes in-depth interviews with the consumers and with their pictures, digging deep into consumers’ associations with the pictures and the product/brand. I am somewhat uneasy about this technique because I feel that there is a very large risk of the interviewer pushing or leading the interviewee to a certain answer or interpretation of the pictures. However, I do feel that allowing the consumer to bring his own pictures, rather than choosing from a group of the interviewer’s pictures is a great idea. It gives the interviewee more freedom to express himself and his associations with the product/brand. In comparison to Gladwell’s approach, I believe that Gladwell’s approach makes a lot more sense and implements two approaches: expert opinion and consumer observation. The ZMET uses experts and interviews with consumers, and although it tries to dig deep into consumer’s true needs, I still feel that it relies too much on what consumers say, which we have seen time and time again to be very unreliable.

The Customer Input article discusses another approach in which there is a 5 step process to generate important insights and then use them to create new innovations. It involves taking a process or product and creating buckets, capturing true desired outcomes from all of the buckets, organizing the outcomes into their appropriate buckets, rating the outcomes based upon satisfaction and importance, and then applying the outcomes into new innovations. I really like this approach because it is organized and has a clear sequential order. This 5 step process can work for any individual at a company looking to generate insights. Although it is more complicated than just following the 5 steps and generating insights, Ulwick lays out a pathway for market researchers to follow as a first step.

In terms of comparison, I would say Ulwick’s 5 step process is an easier approach in most situations that the complicated ZMET process. The ZMET process appears to be more time intensive, as well as more difficult to perform for a random market researcher. In comparison to Gladwell’s approach, I believe that the 5 step process is an easier approach to perform on any given day. I think Gladwell’s process of observing consumers is a great approach and can really generate some unthinkable insights. However, I also think that it is difficult to always observe consumers anytime a company may want to learn something new about a product or consumer. Gladwell’s approach may be the best research tool to use when a company wants to create a new product or service in the marketplace. While Ulwick’s 5 step process may be the best research tool to use when a company wants to create a brand extension or optimize a brand that is currently in the marketplace. The ZMET method would also be a great tool for an existing brand, but not very good for a new innovation. Consumers would not be able to find pictures for things that they can’t visualize, and the interviewers may find the conversation and the deep dive to be very confusing and unhelpful.

Overall, I think all three research approaches use interesting methods to gain insights from consumers. Some are easier to implement then others, and some are more organized than others, but at the end of the day, a company has to choose the research method that fits its culture and fits its employees’ skills/experiences. But then again, if a company sticks with one method, its innovation will dry-up and the company may lose market share to other companies that want to take risks and try new approaches. It will be a constant balancing act for all companies in this marketplace, all trying to create the next big thing.

My Persona

In the following posting, I have created a persona based upon myself and my interests.
My persona can be summarized as “Split-Personality, Sports-Focused Engaged Grad Student”. I am currently a graduate student at the McCombs School of Business at the University of Texas at Austin. I worked in finance/consulting prior to business school, but I decided to come to UT to obtain a MBA and change my career from consulting to brand management. I realized that I was unhappy sitting behind excel spreadsheets all day, and I wanted to add more ‘people-interaction’ to my daily work. As you will see below, I am a very passionate person and I really need interaction with family and friends to feel happy. I was fortunate to obtain a marketing internship with the Dr. Pepper Snapple Group this past summer, and I will be going to work for DPSG full-time after I graduate in May. In addition to my career plans and goals, I am engaged to a beautiful girl named Andrea, and we are getting married in Dallas, TX on May 30, 2010. I am very excited about getting married to Andrea and starting a new chapter in our lives. I know that we are only in our mid-twenties, but we both feel that we are ready to get married, and we both know that we are the perfect match for each other.
I would like to share a little more about myself and my personality. I am a very outgoing person who never has a problem speaking-up and saying what is on my mind. Additionally, I feel that I have a split personality. I am a Type A and Type B person, depending on the context of the situation. For example, when I am at work or in school, I exhibit a Type A personality and I am very organized and goal-oriented. However, when I am relaxing on vacation or on the weekend, I exhibit a Type B personality. I do not need to plan things out, and I am happy to deal with situations as they arise. Both personality types allow me to maximize my enjoyment and success in every situation. I also believe that I enjoy being around other Type A people, including many members of my family and my fiancé. Additionally, many of my good high school and college friends are Type A, and our friendship is due partially to our similar personality type.
I feel that I am in an exciting time in my life. I have lots of hobbies and interests, and I have been able to enjoy these interests throughout the last two years of school, due to the flexible MBA schedule. I love playing sports, such as racquetball, golf and tennis. I have played sports all of my life, and I am happy that I can continue with this trend throughout my life. Specifically, golf has been a true passion of mine since I started playing the sport in middle school. My father is a very good golfer and he was the person who helped peak my interest in the sport. Golf enabled my whole family to spend a lot of time together, as the four of us enjoyed a round of golf that lasted around 4 to 5 hours each session. It was a great time for our family to stay active, go outside, and enjoy each other’s company. These experiences are fond memories that I still think about concerning my childhood. I have a very close relationship with both my parents and my sister, and sports enabled the four of us to grow closer together.
Although golf has been a great part of my life up until this point, there is one thing that has been an even greater passion, and that one thing is The Washington Redskins football team. I grew up in Virginia Beach, Virginia and the area did not have any professional sports teams. However, Virginia Beach is only 3 hours away from Washington, DC, and every Sunday Washington Redskins games were broadcasted on TV in my area. As discussed above, I have always loved sports, and it didn’t take me long to grow fond of the Redskins, and make them my team. At this point in my life, it has been over 15 years since I started watching the Redskins on TV, and my passion has not diminished. I watch them play every Sunday during the season, and my emotions are affected by their wins and losses. My passion towards the team has taken a weird turn because I am moving to Dallas, TX, home of the infamous Dallas Cowboys/biggest rivals of the Washington Redskins. My finance’s family is from Dallas, and unfortunately, they are big Cowboy Fans. Hopefully this will not cause any issues with our relationships in the future. I have seen how sports can bring people and families together. However, I hope that sports in this situation will not tear us apart. I have a great relationship with my fiancé’s family and I am confident that sports can continue serving the same role that it has for my family for the last 25 years.