Bottled Water Industry and Its Market Strategies - Case Study Example

Bottled Water Industry and its Market Strategies Key Success Factors Bottled water industry deals with production and distribution of safe and convenient water to the consumer market. Safety and convenience remains the main precepts of organizations within this industry. In the recent past, Europe and the US consumer market have embraced use of bottled water in day to day routines. As a non alcoholic beverage drink, this water enjoys more wide market demography, unlike alcoholic beverages which operate in a market with age factor regulations. This water industry operated under strict regulations from both governmental and nongovernmental organizations concerned with quality assurance. One such organization includes the International Bottled Water Association (IBWA), and the America’s Food and Drug Administration (FDA). These bodies are usually concerned with facilitating adoption of safety and quality related standards to consumer markets. Within any economic environment, bottled water industry plays a significant role in enhancing management and rational utilization of ground water (Gleick 54). In addition, this industry provides numerous opportunities for commercial ventures involving different stakeholders like suppliers and logistical manufactures. In the recent past, statistics indicates steadily increasing sales in bottled water within the global consumer market. In 2009 alone, sales of bottled water were approximately $78 billion within that fiscal year alone. In 2010, sales increased by 4.3% to hit a revenue target of $81 billion. This specific increase within that short period indicates availability of business opportunities within the industry (Eshleman 71). In this regard, certain success factors facilitate achievement of production, distribution and sales objectives by involved companies. One such factor is conformance to production standards required by the industry. Bottled water industry is under governance by federal and state authorities in matters relating to product quality. In order for any organization to gain considerable recognition within any given marketing environment, they will first develop reliable standards of production allowed by relevant authorities. Within the American market, success only comes after an organization gains quality approval from the Food and Drug Association. Apart from such a local quality assurance authorities, other producers choose to advance towards attainment of standards required by international bodies like IBWA (Vasconcellos 84). In this context, success is directly related to level of conformance to existing standards of product quality in the market. Another integral success factor in bottled water industry involves marketing strategies employed by a given company. In this case, an example of strategy that directly influence marketing trends include distribution and sales patterns used by a marketing agency to reach target consumers (Eshleman 88). Consumer trends suggest that individuals are more likely to purchase a convenience related product whenever their proximity to that product increases. In actual consumer markets, bottled water occupies same shelves as those of other soft drinks in convenience stores. In addition, bottled water can also be sold along with other soft drinks in restaurants, hotels and snack shops. This means that the ability of an organization to avail their product to these premises increases their chances of sales success. From a more practical illustration, Coca Cola utilized its soft drink distribution channels to deliver its bottled water brands to the market. Fortunately, Coca Cola had a fully developed and efficient distribution channel for their soft drink market. The company was under no commercial obligation to develop a new distribution channel for their new products (Eshleman 92). In this regard, the company in subject supplied mineral water filled bottles to store shelves selling their popular soft drinks. Changes in the industry Since its inception on a commercial scale level, bottled water industry has experienced substantial changes in terms of production and marketing related parameters. In the recent past, growth in sales volume attracted additional food-based conglomerates into the industry. This resulted in shifts within the industry’s suppliers’ chain. Expansion in bottled water production capacities activated engineering companies to develop sophisticated and economical technologies for production and bottling purposes (Kess and Raffaele 61). Consequently, there is an increase in manufacture of production equipment and essential logistics like plastic bottles. In this case, numerous economic opportunities came as a result of the changes within the bottled water industry alone. Apart from changes in production techniques, intense competition and desires for profit maximization has led to changes in marketing strategies. In the earlier stages of the industry’s development, bottled water would only undergo conventional processing and purification stages with no additional special features in the finished product. However, most companies marketing bottled water today employs significant differentiation efforts in striving to secure a big market share. In 2004, Nestle championed production and distribution of flavored bottled water to their market segments (Kess and Raffaele 28). Favorite flavored used include strawberry, vanilla and lemon meringue. Other changes made to ensure expansion of the market size in demographics bracket also gave rise to product packaging changes. Coca Cola adopted use of spill-proof capped plastic bottles meant for use by the children population in consuming the water. The company also enjoys making interesting modifications in bottle shapes in order to capture attention of younger consumers in the market. In the context of actual market settings, all these changes enhance improvement in sales volume and revenue generation each year. Strategies used by the Big Three Companies Coca Cola Strategies In an effort to reach a substantial market share, Coca Cola used its existing distribution channel to supply bottled water to shelves in convenience stores. Coca Cola operates its businesses with both independent and company-owned bottlers and distributors. The company has approximately bottlers in most countries across the world. In this case, it was easy to reach their target markets though distribution services offered by the global bottlers affiliated to Coca Cola. Apart from vast distribution to target markets, Coca Cola is usually commits large capital to managing marketing campaigns for its bottled water brands (Eshleman 64). Within the US alone, the company spent approximately $15 million in advertisements in the first year after introduction of its brand named “Dasani”. Similarly, the company committed significant amount of resources for advertisement purposes in international markets. In marketing activities, intensive promotions create brand awareness to consumers. Integration of brand awareness and efficient distribution channels can result in positive sales revenue; hence boosting the company’s profits. PepsiCo Inc Strategies In the last decade alone, PepsiCo Inc emerged as the forth organization with largest sales with respect to the soft drink products category. The company had tried investing in the water industry as early as 1987 but the bottled water market then could not be economical as it is currently. In 1994, PepsiCo introduced a bottled water brand named Aquafina in the US market. In the process of the product’s development, PepsiCo decided to differentiate it from other bottled water present in the market. The company employed an advanced mode of purification meant to remove chlorine and fluorine elements from the final product. This purification process would eliminate any mineral taste and smell present in Aquafina product. In this regard, the purity level attained in the company’s water would attract consumers who are sensitive to matters of quality (Eshleman 57). In addition, PepsiCo utilized principles of niche marketing in production and distribution of bottled water brands. The company produced flavored and nutrient-enriched water for consumers interested in flavored drinks. In this case, Pepsi followed demands of the American lifestyle patterns in producing customized water for identified niche segments. Groupe Danone Strategies Danone Waters also featured as one of the leading bottled water producers within the US market. In the early 2000, Danone entered into agreements with Coca Cola that would ensure vast distribution of the company’s products to target market segments. Actually Coca Cola would distribute Danone’s bottled water brands like Evian through the same channels used to deliver Dasani. One unique strategy employed by the company involved home and office delivery services (Eshleman 53). This type of unique service enhanced aspects of convenience to consumers who would prefer delivery services to their desired locations. In the process, the company made approximately 30% of their total American market sales through home and office delivery channels. Works Cited Eshleman, Keith. Bottled Water Companies in the United States: Sales Strategies and Plans. Seattle: Lulu.com, Ltd., 2007. Print. Gleick, Peter. Bottled and Sold: The Story behind Obsession with Bottled Water. Pittsburgh: Island Press, 2010. Print. Kess, Johnson and Raffaele, Aledda. Key Success Factors in New Products Development. Indianapolis: Cengage Learning Publishing, 2010. Print. Vasconcellos, Andres. Quality Assurance for the Food Industry: A Practical Approach. New York: CRC Press, 2009. Print. Read More