Blue Mountain Spring Water Inc - Marketing and Financial Perspectives - Assignment Example

Blue Mountain Spring Water number Executive Summary Blue Mountain Spring Water Inc. is a Pennsylvania based package drinking water company. The firm has decided to design its next year’s marketing and financial plan. The financial and non financial goals have been taken in to consideration before making the marketing plans. The company has decided to expand its product line up by introducing new products and increasing its existing stock keeping units. Moreover, in the near future it will also expand in to new geographic locations. It has predicted that the proposed business plans will increase its revenue generation by 10% in the year 2013. The company also holds future opportunities in the growing consumption trend of packaged drinking water. It has successfully designed it new product by targeting the young population, thereby increasing its customer base. However, the company also faces a steep competition from the well established brands like Aquafina and Dasani. Despite of the strong competition it has been able to gain market share by implementing competitive pricing and creating brand awareness. Financial Goals The financial goals include increasing the customer base of the company by market penetration. This will be achieved by developing new distribution channels and increase promotional activities. Moreover, the company will also collaborate with several hotels and restaurants and act as a supplier for bottled spring water. The company will further increase its product line by introducing flavored spring water. Thus the company will introduce one new product lines in its existing product port folio of packaged mineral water. This as a result will increase the revenue generation of the company. In the following financial year the revenue is expected to increase by 10%. The company also donates in several charity firms and NGO to promote “save water” campaign. The donation in the following fiscal will amount will to $20,000. This allows the company to increase their brand image and improve relationship other corporate firms. Non-Financial Goals The company has planned to increase its product line by introducing flavored spring water. Moreover it will also delve in new market development by entering in to new geographic locations like Kentucky, Michigan and Ohio. In order to reduce the carbon footprint of the company and reduce its operating cost the company will outsource its material for packaging from a third party company in New Mexico. The company will also launch a new television commercial to push it new product line (Isa, Saman and Mohd “Dynamic Factors for Entry Location Decision by Malaysian Construction Firms in International Market Expansion”). Core Competencies The core competencies of Blue Mountain Spring Water Inc. include cost efficient distillation and packaging process along with efficient distribution channel. The company is best known for its reasonably priced packaged water and improved product quality. Moreover, the Blue Mountain Spring Water owns a water spring, which acts as an unlimited source of natural spring water. This as a result has created a higher competitive advantage for Blue Mountain Spring Water. SWOT Opportunities Owing to the rise in health consciousness, the consumption of mineral water has increased over the years (Lanschützer, “Fruit Juice, Juice Drinks and Smoothies”). Thus it has potential opportunities in the packaged drinking water industry. Moreover, the geographic diversification of Blue Mountain Spring Water Inc. will lead to increased customer base, brand awareness. The company’s decision to introduce a new product line will not only help to expand its business but also will increase its revenue generation. Threats The company faces severe threats from rival brands like Aquafina, Pure-Life, Dasani, etc. This as result forces the company to make investments on brand awareness. Due to the standardization of the product, the competition among the rival firms is mostly on the grounds of creating higher brand equity thereby making it difficult for the firm to compete against the well established brands. The changing regulations of safety concerns of food and other consumable products may add an extra cost for the company. Additional Competitive Factors Apart from the stated competitive forces, there are other factors that can also act as potential challenges for the company. Although the company owns its own bottling plant but the packaging materials are procured from third party suppliers. The number of suppliers in the PET bottle industry is fairly limited thereby increasing the switching cost for the company. The suppliers have the power to decide price of the packaging thereby influencing the profitability of the company. Due to the presence of large number of firms offering identical products, the buyers have very low switching costs. This as a result makes it difficult for the company to maintain customer retention. The availability of substitute products also acts as competitive force. For Blue Mountain Spring Water, the substitute is water procured from home filters or taps. Target Market The target market includes the consumer base that belongs to a wide age group of 18 to 49. However, the company has also witnessed a growing trend in consumption in the higher age groups as well. The target population includes people who have an active life and are concerned about their health. Moreover the new product line of flavored spring water mainly targets the young population who leads an active lifestyle and is concerned about their health and hygienic consumption. Brand Identity Devising the right brand identity is imperative to the success of a product. It determines whether or not the particular product will be accepted by the customers. Blue Mountain Spring Water will design a premium packaging to attract the customers. The brand mark will contain the slogan “fountain of nature” to signify the purity of spring water and its positive heath aspect. The bottle will carry the color combination of blue and green gradient which will signify the “natural” element of the packaged water. Therefore the entire brand will be identified as the symbol of “natural purity”, which is in line with the positioning of the company. Product Strategy The product strategy of Blue Mountain Spring Water is mostly focused on increasing its product line by developing new product and introducing new stock keeping units (SKUs). It has introduced several SKUs starting from 500ml to 2 liters. This as a result allows the consumer to have flexibility in their consumption thereby making their purchase decision easier. The introduction of new product line will allow the company to focus to a particular age group, i.e. the active young consumers. This as a result will help it to increase its consumer base and brand preference. The company has also designed its product line in order add value for its customers. Introducing a smaller or “junior” unit for the kids will further increased its sales by targeting a new customer base. Distribution Strategy The company distributes its products through its own distribution channels and markets its products in local stores and departmental stores. It has decided to opt for market development by moving to new geographic locations in US. This will be achieved by developing new distribution channels or using third party channels to penetrate in to new locations. Using third party channels may shift the power of control from the parent company, but on the other hand it will allow it to leverage the expertise of the distributor company (Cravens and Piercy, “Strategic marketing”). Promotional Strategy The promotion activities of the company will include television commercial, print ads like newspaper, billboards and hoardings, etc. All the marketing communication will focus on the medicinal value of drinking purified spring water and how it can rejuvenate a tired body to help an individual get on with his active schedule. The company also employs other communication tools like direct marketing via email and social media. The advertisement for the new product line will be focused on the active lifestyle of the young population (Kotler and Keller “Marketing Management”). Pricing Strategy The company has kept the price of its product slightly less than that of the competitors, which has given it a competitive advantage. Offering high quality packaged spring water at an affordable price has proved to be the unique selling proposition for Blue Mountain Spring Water. Since, the company owns a natural source of spring water; it has obtained a cost leadership position thereby allowing it to reduce its operating cost. Moreover the prices of the large units, the 2 liters unit in particular, has been kept relatively low in order to attract the customers to opt for the money saver option. Budget Sales Budget Particulars 2010 2011 2012 Revenue $4.26 million $5.65 million $6.215 million Manufacturing Cost 2 million 2 million 2.2 million Donations $15,000 $17,000 $20,000 Promotional Activity $900,500 $1.3 million $1.8 million Gross profit $1.34 million $2.33 million $2.19 million Source: (Created by Author) From the above chart it can be stated that the revenue generation of the company will increase gradually over the next three years. This increase can be justified by the marketing strategies taken by the company. The expansion in to new geographic location will increase its customer base thereby increasing its sales volume which in turn will increase the revenue. Moreover, the introduction of the new product line of flavored spring water will also account to the increased revenue of the company. However, in case of profit making, it has been expected that it will decrease in 2012. This will occur mostly because the company has decided to invest higher capital amount in promotional activities to strengthen its brand equity and increase consumer awareness. Expansion Schedule Year 1 Launching a smaller unit of Blue mountain Spring Water, branded as “Junior” with 8 oz capacity. Penetrating the existing market by developing new distribution channel and employing product push strategies. Outsourcing PET bottles to increase production volume. Year 2 Introducing a new product line of Flavored Spring Water in the existing market. Launching new promotional campaigns to create brand awareness of the new product line. Year 3 Expanding to new geographic location like Kentucky, Michigan, Ohio, etc. Works Cited Cravens, David, and Nigel F. Piercy. Strategic marketing. New York: McGraw-Hill Irwin, 2008. Print Isa, Mat. "A, Mohd Saman, H. and Mohd Nasir, SR 2013a, ‘Dynamic Factors for Entry Location Decision by Malaysian Construction Firms in International Market Expansion’." International Post Graduate Seminar. 2013. print Kotler, Philip and Keller, Kevin. Marketing Management. New Jersey: Prentice Hall. 2011. Print Lanschützer, Heidi. “Fruit Juice, Juice Drinks and Smoothies”. Mintel. 2013. Mintel. PDF File. Read More