M4 & M5 Project Corrections

Investment Proposal

Student Name

University

Introduction

Dr. Pepper Snapple Group, Inc. is soft drink Company based in the United States, and it focuses on the production, marketing, and supply of soft drinks. The company’s beverage products are categorized in two, the non-carbonated soft drinks and the carbonated beverages that are flavored. The company operates in three segments for it to be able to meet its customers’ demands. The departments are Soft drink Concentrates, Packaging department, and the Latin American soft drinks. The first segment, the beverage concentrates is accountable for production and sale of the carbonated beverages among other branded syrups and concentrates. The second section which is the packaging segment is responsible for production and distribution of the packaged soft drinks among other products through the direct delivery system to the retail outlets. The third portion focuses on producing and supplying syrups, concentrates and finished soft drink products. Dr. Pepper Snapple Group, Inc. holds a market share of 14.7% positioning it in the third place after Pepsi-Cola which has 35.3% of its market share (Hill, 2012). Dr. Pepper Snapple Group, Inc. has defined its briefcase efficiently through concentrating on their sales and marketing resources. The company’s marketing strategy will enable the organization to focus on the various market analyses which will allow the company to identify the impact the critical brands produced and how they could improve them to gain a more significant market share (Hoskisson, 2012).

Through the information gathered from the market, analysis sources show that the company expense will not be affected because the products that the targeted population need are not new products in the market. Also through the third-party distribution plan and the increase of the in-store activity contributes significantly to minimizing the cost of the advertisement.

The Break-Even Point

The break-even point is calculated by comparing the amount of units that have to be sold in order to cover for the fixed and variable costs. In the case of Dr. Pepper Snapple Group, Inc, the break-even point analysis will be based on the number of units that the company has to sell in order to cover for all expenses.

Break-even point in units= Fixed Costs/(Sales price per unit-variable cost per unit)

=$100,000/$75-$67

=$100,000/$8

=12,500 units

Internal Rate of Return

The internal rate of return (IRR) will be used to assess the profitability of the project undertaken by Dr. Pepper Snapple Group, Inc.

With a break-even point in units of 12,500, and a calculated volume of 12,500, the company can reach its break-even point within one period.

(NPV) 0 = P0 + P1/(1+IRR) + P2/(1+IRR)2 + P3/(1+IRR)3 + . . . +Pn/(1+IRR)n

0=937,500+937,500(1+IRR)

0=937,500+937,500+937,500IRR

0=1,875,000+937,500IRR

937,500IRR=-1,875,000

IRR=-2%

Net Present Value

NPV=-937,500+(75*12,500) (1-2%)

=937,500+937,500(1-0.02)

=937,500+918750

=1,856,250

Conclusion

The marketing and distribution strategies allow the company to perform tests, observations, and analyses thus enabling it to be in a position to come up with a valid marketing plan for its products and the ability to venture into new markets. The company has been able to survive the competitive market of soft drinks due to its effort of investing in promotion and advertising. Also creating it awareness with its consumers through the collaboration with the third-party distribution and focusing on the ethnic population in America will enable the company to increase its market share in the soft drink industry.

References

Hill, M. E. (2012). Marketing Strategy: The Thinking Involved. London: SAGE.

Hoskisson, R. E. (2012). Strategic Management Cases: Competitiveness and Globalization.