Final Exam Case

The Brita Products CompanyMarketing CapabilityPowerful ability to infuence distributors relating powerful strategy ofadvertising.=50:50 how it works and how it tastes!"#$%&'!cellent distribution network"ationwide reach!cellent dealer relationshipsa large #arketing budget$ and an e!perienced research and develop#enttea#Market perfor#ance%ccording to the surveys in page &$ custo#ers were buying ' or ( )lters ayear. *his infor#ation can be con)r#ed fro# the table of +rita ,nit -ales$./0/ to .//0 with si#ilar proportion between -yste#s and 1ilers in the)rst two years at '.(5 )lters in ./0/ and '.// )lters per -yste# in .//0respectively. Moreover$ this proportion for the nu#ber of )lter to syste#swasincreasing signi)cantly during .//02s until5.' )lters per syste# in.//0 with stagnating in the late /0s. *hat is to say$ even though therewas signi)cant increasing of sales 3uantities of )lters during that ti#e 4$the percentage which is the nu#ber of using )lter to a syste# had notchanged.*herefore$ 5 believethatthesaturationstateof Pitcherstyleproducts#arket was beco#ing closer. *his argu#ent is able to be supported fro#thepercentageof increaseof +rita,nit -ales *able. ,ntil .//6$ thepercentage of sale to previous year had showed upward trend$ while therewere considerable decrease of the# in the last two years 4fro# 078 to.089.Morevolatilecharacter of syste#unitsis alsoe!e#plifyingof pricesensitivity which is considered as the last strategy of sales.:i#itation;hat are the reasons for custo#ers to buy +rita#b? forthe use of the brand na#e. *hefaucet )lteredwater didnot tasteas goodas thepitcher)lteredwater and+ritahadestablishedthebrandbasedonitsvalue proposition of superior taste as co#pared to any other for#of water.-;@* %nalysis*he following #arketing plan is a response to the current situation and theaddresses the current issues$ analyAes the strengths$ weaknesses$opportunities and threats created by the current issues. *his plan detailsthe positioning the new faucet #ounted syste# and discusses the & PBsviA. Product$ Price$ PlaceandPro#otion. *hedocu#entalsoprovidesapossible e!ecution for the pro#otion strategy. -;@* %nalysis-trengths Market leader of tableCtop pitcher 40(89 and )lter 47589 in .//0 008 of pitcher users were still using it a year later !ponential growth in )lter sales Pitcher delivers water that tasted better+rita is the #arket share leader of the pitcher syste# and )lters. +ritaBs#arket share of the pitcher ranged between 758 and 0(8 fro# .//' to.//0. +ritaBs #arket share of )lters was 758 fro# .//6 to .//0. *he)lter sales have increased e!ponentially due to the continued use of thepitcher. Market research indicates that 008 of the pitcher buyers werestill using the pitcher a year later. *he average user buys '.5 )lters peryear. *hepitchersyste#re#oveswaterhardnessanddeliverscrispertasting water with lower p?.;eaknesses Pitcher )lter treatsonlychlorineandleadbut doesnot re#ove#icroorganis# and other che#icals (8 to &8 royalty to +rita >#b? for )lters *wicethecostoffaucetC#ount)lterwhenco#paringdollarspergallon 1ilters for the pitcher syste# treats only chlorine and lead but not re#ove#icroorganis# or other che#icals such as pesticide$ herbicide$ benAene$and trihalo#ethane.*he pitcher )lter treats less water than faucetC#ountsyste#andtherefore$ costsroughlytwiceas#uchwhenco#paringindollars per gallon treated.%nother weakness is that Cloro! needs to pay a(8 to &8 royalty depending on sales to +rita >#b? for using the +ritana#e on any type of )lters$ although it #ight not buy the faucet )ltersfro# +rita >#b?.@pportunities ?igh percentage of people with concerns about the 3uality of tapwater >rowth of water treat#ent device used in ho#es 4'78 to (089 1aucet #ount syste# #ay increase likelihood to buy +rita product+ased on #arketing research$ 7'8 to 758 of consu#ers have concernsregarding of the 3uality of tap water. *he young adults are #oreconcerned 40/89 as co#pared to seniors 45689. -urvey also indicates agrowth in the use of water treat#ent device fro# '78 in .//5 to (08 in.///.*he increase is pri#arily due to the increase use of pitcher syste#indicating there is still growth potential in pitcher syste#. %notheropportunityisthatthefaucet#ountsyste##ayincreaselikelihoodofbuying a +rita product.*hreats 1aucetC#ount syste# #ay disrupt pitcher sales P,Dand*eledyneplanstoheavilyadvertisetheir faucetC#ountsyste#s P,DBs and -unbea#Bs pitcher )lter can re#ove #icroorganis# Dubber#aidBs pitcher )lter lasts longer P,Disatakeover target byPE>$ whichcouldgivethe)ghtingpower to P,D

*he e!ternal threats are fro# co#ing fro# several co#petitors.P,D and*eledyne plans to heavily #arket their faucetC#ount syste#s.P,DBs and-unbea#Bs pitcher )lter would re#ove conta#inants such ascryptosporidiu# and giardia. Dubber#aidBs pitcher )lter willlast longerthan+ritaBs. %lso$ thefaucetC#ountsyste##aydisruptpitchersales.P,D is a serious take over target for PE>$ a leading co#petitor for Cloro!and the ac3uisition would give PE> an entry into the )ltered water #arketand also give P,D the ability to be #ore aggressive on its #arketing andother spends.*arget stores have started rating syste#s on level of protection o=ered byvariousproductsandP,Dscoresthehighest. P,D)lter technologyissuperior in that it has features that +rita does not including the ability to)lter cryptosoporu# 4the #icroCorganis# responsible for ... deaths9$ anda #echanical device to indicate when a )lter needs to be replaced.Market -eg#ent and Positioning+ritaisalreadypositionedastheleaderingreattastingwaterthroughpitcher sales+ritaavoids falseclai#s 4conta#inants9 controversies byfocusingontaste+ritahasthe)rstC#over advantagebuildonthat withF.00#illionofcu#ulative advertising on taste clai# behind it+ritaBs advertising in the ,nited-tates has concentratedon a tastebene)t to the consu#er. *he #essage has been split in two parts: howthe +rita Pitcher works and how it tastes.%s the product has beco#e wellknown$ the#aGorfocushasbeenthetastebene)t. +ritaclai#sthreereasons for e#phasiAing taste: .9the health bene)tshalowhen talkingabout taste$ perception of people that water with a good taste is healthier'9 the notion of bottled water industry lacking a reference to health$ and(9 the ability of +rita to be Hat the top of the #ountainH by staying awayfro# the health bene)t controversies.+y.///$+rita has spent F.00#illionofcu#ulativeadvertising onthetaste clai# and has established a leading position in this area. +rita haspro#isedanddeliveredclear$ crisp$ refreshingwaterthroughpureandsi#pleadvertisingby showing#ountain strea#s$ waterfalls$ andtheoutdoors. +rita has beco#e theowner of thewaterfall i#agery. *heproposedpositioningtargets7'8of adult consu#erswhoareconcernedabouthouseholdwater supply3uality. H+rita;aterH#eetstheir needfor awater puri)cation syste# to li#it their e!posure to public water suppliesby delivering both a pitcher product and a faucet #ount )lter. 5tleverages+ritaBsestablisheddi=erentiation4greattastingwater9inthewater )ltration syste#s category. *he power of the co#pany co#es fro# the power of its brand.+rita hasthe)rstC#over advantageandneedstobuildonthat. H;henanewtechnology opens the possibility of a new #arket that #ay threaten thee!isting one$ a successful )r# should consider entering the new #arket sothat it will have the )rstC#over advantage in it.H +y positioning as H+D5*%;%*DH$ the co#pany can take advantage of the established +rita brand$andleaveroo#tointroducefurther technologies suchas thefaucet#ount syste# under the +rita u#brella.;e therefore reco##end that +rita spend the entire #arketing budget inpro#otingthe+ritabrandandthegreattasteratherthanonauni3ueproduct. *he faucet and the pitcher syste#s will coCe!ist and will not be#arketedonproductcharacteristicsbutwill be#arketedasadelivery#echanis# for the water with taste backed by the +rita brand.+ritaBs costs for the syste# and each )lter are assu#ed to be F.5.00 andF(.00$ respectively.-cenario 7 provides the opti#al result.*his scenarioassu#esafeaturepriceofF(&.//4708ofunitssold9andlistpriceofF(/.// 4(08of units sold9 for total net revenue of F&($/70$&50.%dvertising and pro#otional spending would total F'6$&00$000.-cenario7couldresult inapositive)rst year total gross #argincontribution4syste# and )lters9 of F6$7'5$000.%s consu#ers are beco#e #ore healthCconscious$ bottled water andwaterC)ltrationsyste#sarebeco#inganecessityfor#ost. *herehavebeencasesinwhich#anypeoplehavediedduetoconta#inatedtapwater and thus there is a signi)cant e#phasis placed on safe$ clean waterthese days. -o#e consu#ersappreciate the portability factors ofwater#ore than the taste and health features. @thers place a heavier e#phasison taste. Consu#ers are beco#ing very well infor#ed about healthy livingas #ore infor#ationregardingthis #atter is ra#pant in the#arketcurrently.*he level of loyalty within the )ltration syste#s #arket is high becauseonce consu#ers purchase a syste#$ they tend to use it for #any yearsandonlyreplacethe)lters. -o#econsu#ers arepricesensitiveandprefer standardproducts that re#ovethe#ost har#ful conta#inantsonly. @ther consu#ers are priceCinsensitive and de#and #a!i#u#perfor#ance out of their )ltration syste#s. Price sensitive consu#ers can typically be found at #ass #erchandisersand depart#ent stores. :ess price sensitive consu#ers can be found atclub stores$ specialty stores$ and drug stores. %ll of these seg#ents canbefoundingrocerystoresbut thelesssensitiveconsu#ersare#orelikely to purchase our products there as they are #ore i#pulsive and ifthey see a 3uality product other than food$ they #ay consider purchasingit. @ur consu#ers are likely parents and healthCconscious people. *ypicallythey are educated and understand all the health risks of un)ltered water.*hey are likely #ost responsive to newspaper advertising$ the radio anddirect #ail. ,singtelevision for advertisingcouldbee=ective too indisplayingtheclarityandfreshnessof ourwateronceit2s)lteredwithwater falls and #ore vibrant visual aids.*here are currently several seg#ents in the industry:. I Parents' I ?ealthCconscious singles or couples( I @lder age group 465J9@lder crowds are likely to be #ore price sensitive but still de#and a highCperfor#ing product because they have #ore healthCrelated issues. Parentsare also likely price sensitive but likely de#and a standard product. *hehealthCconscious seg#ent is looking for a highCperfor#ing product and arelikely the least price sensitive$ since healthier products are typicallyknown to be #ore e!pensive. *he #ost appealing #arket is the healthCconscious consu#ers because they are the #ost likely seg#ent to spendalot #ore#oneyonour healthproducts. ;e#ust ensurethat theyperceive *%-* as synony#ous for ?%:*? with our advertising ca#paignso we can capitaliAe on this opportunity. *his seg#ent is also likely to begrowing at the fastest rate as #ore consu#ers are beco#ing #ore healthCconscious. *hese consu#ers likely value bundled products such asadditional )lters. Perhaps a set of (C5 is suKcient and they would likelyappreciate and :L light to re#ind the# to change their )lters. *hey arelikely the #ost loyal seg#ent and their needs are stable and predictable.;e can continue to i#prove our )ltration syste# over the years to bettersatisfy the#. @ur co#petition is likely targeting this seg#ent as well butour do#inant position in the #arket gives us very high brand recognitionthat draws custo#ers to us #ore than co#petitors. ;e still need to o=erourstandardlowpriceproductstoservetheothertwoseg#entsand#aintain our #arket do#inance$ however$ our resources #ust be weighedheavily towards the healthCconscious seg#ent that de#ands highCperfor#ance. Deco##endation@P*5@" .::aunch faucetC#ounted syste#Pros ConsM ;illserve a #ore diversi)ed#arket that is #ore concerned withpre#iu# perfor#ance and is not concern with keeping the water cold inthe fridge 4although the water could technically be stored in a Gug in thefridge anyways9M ;illreceiverapid#arketadoptionsinceour+ritabrand na#eis3uite recogniAable M ;ill re3uire additional resources in ter#s ofadvertising budget M 5t #ay cannibaliAe our sales@P*5@"': 5#proveourPitcher)ltrationlineinter#sofhigh)ltrationcapability in order to co#pete better with P,D Pros ConsM ;e can #aintain our #arket do#inance and render P,D2shealthiest choice position as less co#pelling M ;ill re3uire #oreDEL and custo#ers #ay beco#e #ore loyal to the P,D line by the ti#ewe launch@P*5@" (: 5#ple#ent both strategies I 5#prove pitcher )ltration syste#and introduce the faucetC#ounted )ltration syste#Pros ConsM ;illserve a #ore diversi)ed#arket that is #ore concerned withpre#iu# perfor#ance and is not concern with keeping the water cold inthe fridge 4although the water could technically be stored in a Gug in thefridge anyways9M ;illreceiverapid#arketadoptionsinceour+ritabrand na#eis3uite recogniAableM ;e can #aintain our #arket do#inance and render P,D2shealthiest choice position as less co#pelling M ;ill re3uire #oreDEL and custo#ers #ay beco#e #ore loyal to the P,D line by the ti#ewe launchM ;ill re3uire additional resources in ter#s of advertising budget M 5t #ay cannibaliAe our sales+rita should #aintain itBs current #arketing strategy to di=erentiate theirproducts on taste. %lthough due to an increase in consu#er healthconsciousness$ water purity cannot be ignored. 1uture #arketing e=ortsalso need to co#bat the P,D #arketing ca#paign based on water purity.% #i!ed #essage should be developed that not only e#phasiAes +ritaBsreputation for superior taste$ but also highlights the i#proved )ltration ofthe faucet #ount syste#.*hree key reco##endations are: .9 -trategic Partnerships:*here isstill6N7of the#arketthatdoesnothaveapitchersyste#andthereisapotential to infuence the rest of the #arket. *he co#pany should partnerwith outlets such as restaurants and co=ee shops to supply pitcher and)ltersat #ini#al cost togain#orevisibility. '9 DeCpositionthebrandtowards healthbene)ts: *hethreats fro#bottledwater andtheP,Dfaucet#ountarereal. +rita#ustreCpositionthebrandviaadvertising$towards health because custo#ers already perceive +rita as the best fortaste. Plus$ all custo#er trends and #arket research highlight thee#phasis custo#ers are placing on health bene)ts in choosing a syste#.+rita should advertise #ore heavily on di=erentiating itself fro# faucetC#ount syste#s. *hey #ust display the fact that faucetC#ount syste#s arenot better on taste and health. (9 -pend #oney on technologicalinnovation: +rita is lagging in the ability of its )lters to re#oveconta#inants. *he co#pany #ust spend on DEL and partner with +rita>#b? to continually develop better )lters.@ur strategy is going to be a #ultipleCseg#ent strategy. ;e will have adiversi)edlineof productsthat cater tohighCperfor#ance$ lesspriceCsensitiveconsu#ersaswell asproductsthat cater toour #orepricesensitive consu#ers. ;e will still co#pete as the best *%-*5"> brand as ithas been working for us for about a decade now. People often associategreat tasting water with a healthy product anyways. *able of Contents5"*D@L,C*5@" 'C,DD"* -5*,%*5@" 'C,DD"* 5--,- (M%DO*5"> P:%" (-;@* %"%:P-5- (PD@L,C* P@-5*5@"5"> 6PD5C /P:%C.0PD@M@*5@" ..C@"C:,-5@".6 .. 5ntroduction+rita has been a leading brand in the )ltered water since ./00. +rita was#arketedinthe,-byCloro!. +ritawaslicensedbyCloro!fro#+rita>#b?$ a >er#an co#pany in ./07. ,nder the license agree#ent$ Cloro!would buy )lters fro# +rita and the )rst +rita product was a pitcher water)lter.

%sof ./// over .7 #illion +rita pitchers were sold in ,- andthe +ritabrand was generating over F '00 #illion revenues in a year$ an esti#ated.(8C.58 of the total ,- households were using a +rita Pitcher and Cloro!held a 708 #arket share of the total #arket.'. Current -ituation5n .///$ P,D$ Cloro!Bs co#petitor$ launched a di=erent water puri)cationproduct$whichisa)lterthatscrewedonto kitchenfaucets.P,D was as#all )r# in the industry$ however were the only co#parable co#petitiontoCloro!andwasapossibletakeovertargetbyother#aGorconsu#erproductsco#paniessuchasPE>. Cloro!haditsownversionoffaucet#ounted )lters ready to launch and was debating if it has to launch thesa#e. *he plan was to sell the faucet #ounted )lters at a de)cit to buildthe custo#er base$ which would then provide a steady strea# of revenuesthrough the sale of )lters. *his #odel was very successful in the case ofthe pitcher syste#.(. Current 5ssues+rita was a strong contender in the pitcher #arket and was a new entrantin the faucet )lter #arket$ a #arket in which P,D was the early entrant.*herewasafearthattheintroductionof thefaucet )lterswouldslowdown the sale of pitchers and the associated revenue fro# the )lters. *heco#pany had to continue to pay the royalty to +rita >#b? for the use ofthe brand na#e. *he faucet )ltered water did not taste as good as thepitcher)lteredwaterand+ritahadestablishedthebrandbasedonitsvaluepropositionof superior tasteasco#paredtoanyother for#ofwater.&. Marketing Plan*he following #arketing plan is a response to the current situation and theaddresses the current issues$ analyAes the strengths$ weaknesses$opportunities and threats created by the current issues. *his plan detailsthe positioning the new faucet #ounted syste# and discusses the & PBsviA. Product$ Price$ PlaceandPro#otion. *hedocu#entalsoprovidesapossible e!ecution for the pro#otion strategy. 5. -;@* %nalysis-trengthsQ Market leader of tableCtop pitcher 40(89 and )lter 47589 in .//0Q 008 of pitcher users were still using it a year laterQ !ponential growth in )lter salesQ Pitcher delivers water that tasted better+rita is the #arket share leader of the pitcher syste# and )lters. +ritaBs#arket share of the pitcher ranged between 758 and 0(8 fro# .//' to.//0. +ritaBs #arket share of )lters was 758 fro# .//6 to .//0. *he)lter sales have increased e!ponentially due to the continued use of thepitcher. Market research indicates that 008 of the pitcher buyers werestill using the pitcher a year later. *he average user buys '.5 )lters peryear. *hepitchersyste#re#oveswaterhardnessanddeliverscrispertasting water with lower p?.;eaknessesQ Pitcher )lter treatsonlychlorineandleadbut doesnot re#ove#icroorganis# and other che#icalsQ (8 to &8 royalty to +rita >#b? for )ltersQ *wicethecostoffaucetC#ount)lterwhenco#paringdollarspergallon 1ilters for the pitcher syste# treats only chlorine and lead but not re#ove#icroorganis# or other che#icals such as pesticide$ herbicide$ benAene$and trihalo#ethane.*he pitcher )lter treats less water than faucetC#ountsyste#andtherefore$ costsroughlytwiceas#uchwhenco#paringindollars per gallon treated.%nother weakness is that Cloro! needs to pay a(8 to &8 royalty depending on sales to +rita >#b? for using the +ritana#e on any type of )lters$ although it #ight not buy the faucet )ltersfro# +rita >#b?.@pportunitiesQ ?igh percentage of people with concerns about the 3uality of tapwaterQ >rowth of water treat#ent device used in ho#es 4'78 to (089 Q 1aucet #ount syste# #ay increase likelihood to buy +rita product+ased on #arketing research$ 7'8 to 758 of consu#ers have concernsregarding of the 3uality of tap water. *he young adults are #oreconcerned 40/89 as co#pared to seniors 45689. -urvey also indicates agrowth in the use of water treat#ent device fro# '78 in .//5 to (08 in.///.*he increase is pri#arily due to the increase use of pitcher syste#indicating there is still growth potential in pitcher syste#. %notheropportunityisthatthefaucet#ountsyste##ayincreaselikelihoodofbuying a +rita product.*hreatsQ 1aucetC#ount syste# #ay disrupt pitcher salesQ P,Dand*eledyneplanstoheavilyadvertisetheir faucetC#ountsyste#sQ P,DBs and -unbea#Bs pitcher )lter can re#ove #icroorganis#Q Dubber#aidBs pitcher )lter lasts longer Q P,Disatakeover target byPE>$ whichcouldgivethe)ghtingpower to P,D

*he e!ternal threats are fro# co#ing fro# several co#petitors.P,D and*eledyne plans to heavily #arket their faucetC#ount syste#s.P,DBs and-unbea#Bs pitcher )lter would re#ove conta#inants such ascryptosporidiu# and giardia. Dubber#aidBs pitcher )lter willlast longerthan+ritaBs. %lso$ thefaucetC#ountsyste##aydisruptpitchersales.P,D is a serious take over target for PE>$ a leading co#petitor for Cloro!and the ac3uisition would give PE> an entry into the )ltered water #arketand also give P,D the ability to be #ore aggressive on its #arketing andother spends.6. Product Positioning*o co##unicate the brand positioning$ +rita will be positioned as H>reat*asting waterH fro#the H:eader in ;ater 1iltration -yste#sH. *hepositioning state#ent is as follows:H*o all those consu#ers who are concerned about household water3uality$ +D5*% ;%*D is the leading choice in 1iltered ;ater that gives you>reat*aste.;ith+D5*% youcanhave crisp$ cleantastingwaterthatisgood for you.H Deasons:Q +ritais alreadypositionedastheleader ingreat tastingwaterthrough pitcher salesQ +rita avoids false clai#s 4conta#inants9 controversies by focusingon tasteQ +rita has the )rstC#over advantage Q build on that:o +ritahas F.00#illionof cu#ulativeadvertisingontasteclai#behind ito +rita pro#ises and delivers clear$ crisp$ refreshing water E owns the waterfall i#ageryQ %ccording to surveys$ in .///:o 7'8 of Consu#ers are concerned about household water 3uality. o Consu#ers are interested in taste E +acteria is way down the listand therefore is not a #aGor obstacle to overco#e$ the #ain pitch of theco#petitorso (08 use water treat#ent syste#so (58donot useadeviceQbut atrenddevelopingwherethenu#ber taking no precautions declined fro# &78 in .//5 to (58 in .///o (08 use bottled waterQ +ritaBs advertise#ent to reinforce its leading position by continuingto show #ountain strea#s$ waterfalls$ and the outdoors+ritaBs advertising in the ,nited-tates has concentratedon a tastebene)t to the consu#er. *he #essage has been split in two parts: howthe +rita Pitcher works and how it tastes.%s the product has beco#e wellknown$ the#aGorfocushasbeenthetastebene)t. +ritaclai#sthreereasons for e#phasiAing taste: .9the health bene)tshalowhen talkingabout taste$ perception of people that water with a good taste is healthier'9 the notion of bottled water industry lacking a reference to health$ and(9 the ability of +rita to be Hat the top of the #ountainH by staying awayfro# the health bene)t controversies.+y.///$+rita has spent F.00#illionofcu#ulativeadvertising onthetaste clai# and has established a leading position in this area. +rita haspro#isedanddeliveredclear$ crisp$ refreshingwaterthroughpureandsi#pleadvertisingby showing#ountain strea#s$ waterfalls$ andtheoutdoors. +rita has beco#e theowner of thewaterfall i#agery. *heproposedpositioningtargets7'8of adult consu#erswhoareconcernedabouthouseholdwater supply3uality. H+rita;aterH#eetstheir needfor awater puri)cation syste# to li#it their e!posure to public water suppliesby delivering both a pitcher product and a faucet #ount )lter. 5tleverages+ritaBsestablisheddi=erentiation4greattastingwater9inthewater )ltration syste#s category. *he power of the co#pany co#es fro# the power of its brand.+rita hasthe)rstC#over advantageandneedstobuildonthat. H;henanewtechnology opens the possibility of a new #arket that #ay threaten thee!isting one$ a successful )r# should consider entering the new #arket sothat it will have the )rstC#over advantage in it.H +y positioning as H+D5*%;%*DH$ the co#pany can take advantage of the established +rita brand$andleaveroo#tointroducefurther technologies suchas thefaucet#ount syste# under the +rita u#brella.;e therefore reco##end that +rita spend the entire #arketing budget inpro#otingthe+ritabrandandthegreattasteratherthanonauni3ueproduct. *he faucet and the pitcher syste#s will coCe!ist and will not be#arketedonproductcharacteristicsbutwill be#arketedasadelivery#echanis# for the water with taste backed by the +rita brand.7. Price+rita pitchers will #aintain their current pricing$ as this line of +rita hasalready been seg#ented. *he +rita 1aucet 1ilter will eventually have itsownseg#entationinthefuture. %tcurrentsituation$ the+rita1aucet1ilter will be priced at F(/.//. +rita 1aucet 1ilter is a new product and is to be introduced as a highCend$high3uality$ highperfor#ance+ritaproductabove+ritapitchers. *hehighpricebeingo=ered gives aperceptionofgood3uality. %lso$ +ritareceives high pro)t #argin at the F(/.// list price.*he direct cost of thefaucet )lter is F.0.*aking account of the '58 #ark up fro# the standardretailers like *arget and ;alCMart and (58 #ark up fro# the #ore upscaledepart#ent stores$ +rita can sell to the retailers at F'/.6' and still earn a658pro)t#argin. %tthisprice$ retailerscanadvertiseatF(/.//andreachtheir (58#ark upstructure. *his wouldalso encouragetheretailers to advertise the list price to reach their #ark up goal.RantisBs #arket research showed that the +rita faucet #ount wasperceivedtobesuperior tothe+ritapitcher inconta#inants andinconvenience. Pricing it at F(/.// yields a .''8 #ark up fro# its F.0direct cost$ which includes the faucet #ount syste# and the replace#ent)lter.*he higher price would further recon)r# consu#ersB perception ofthe superior product. %lso$ RantisBs research indicated that the unit salesand perceptions of value for the +rita faucet #ount were price inelastic atboth the F(/.// and F(&.// prices. Pricing at +rita faucet #ount syste#at F(&.// is forecasted to result in higher unit sales volu#e. ?owever$the F(/.// price would generate a higher total sales a#ount 4see *able %9.*herefore$ +rita 1aucet 1ilter is to be priced at F(/.//.%t this price$ +ritais co#parable to its direct co#petitor P,D.:ist Price 1irst Pear ,nit -ales 1orecast *otal -ales F (/.// .$'&5$000F &/$707$550 F (&.// .$(/5$000F &0$0..$050 0. PlaceQ !cellent distribution networkQ "ationwide reachQ !cellent dealer relationshipsCloro! has been selling the pitcher based )lter syste# for over .0 yearsand has a good reach nation wide. 5t has established a very gooddistributionanddealer networkfor itscurrent product.*hisgivestheadvantageof positioningandchannelingits newproduct throughthealready established network.;e reco##end that Cloro! leverage on thee!isting infrastructure for the new faucet #ounted )lter and this will besold through the e!isting distribution network throughout the nation.+ecausegrocery stores already haveahistory of sellingthepitchersyste#s$ wewill continuetosell thepitchersyste#sthere. 1or#ass#erchandisers$ however$ such as ;al#art or *arget$ we will pro#ote bothproducts but also focus on product visibility through shelf place#ent$ endCaisle and product displays. 1or depart#ent stores$ the ,ltra #odels willbe #arketed there since the consu#ers in this seg#ent are #ore likely tobuy the higher ended product./. Pro#otion1or the pro#otion of the +rita products$ we will be focusing on the tasteco#ponentforthepitchersyste#andthefaucet#ount. ;ith+ritaBsoriginal ca#paignforthepitcher$ theyfocusedontaste$ andforgoodreason.*heresearchshowedthatwhentheytalkedabouttaste$ theyreceived a residual e=ect$ known as the health bene)ts halo.%s an additional note$ they found that when they talked about the healthbene)ts$ it did not co##unicate the idea of taste. *he study done by%C"ielsenRantis concludedthat +ritaBs faucet )lter was perceivedtoi#provethewaterBstaste.;eintendtocapitaliAeonthisconsu#erperception of taste and the custo#erCbased brand e3uity by including thetaste bene)t in the ca#paigns.1or the pitcher syste#$ the co#pany noted that consu#ers foundthe taste to be crispier$ #ost likely due to the lower ph created by thedi=erent )ltration. %gain$ the key concept for our pro#otion is going to bethe taste.*he co#petitors$ such as P,D$ actually recogniAed the successof thetasteca#paign anddecidedtogo for thehealth andsafetypositions$ #ainly duetotheallegedconcernfor conta#inatedwatercreating illness as shown by the ast ;oburn$ M% incident$ where &0($000people were #ade sick and ... died due to the parasite cryptosporidiu#foundinthewater.%sshownbyP,DBs)nancials$ theatte#ptdidnot#aterialiAe into increased sales and earnings. *he taste idea is still thebest courseof actiontocontinuetoreinforcetheconsu#erperceivedvalue of +rita.%ccording to Rantis$ this approach is esti#ated to return .$'&5$000in)rstyearsaleswhenpricedatF(/.//$ andF.$(/5$000in)rstyearsales whenpricedat F(&.//. 5n to achieve these sales levels$ thefollowing reco##endations will be used for pro#otions:Consu#er advertising F.7$000$000Consu#er pro#otion F&$000$000*rade spending F/$000$0001or consu#er advertising$ the budget will be allocated towards pro#otingthefaucetandpitchersyste#sin#agaAines$ newspapers$ theinternetand television. ;e will be pro#oting the taste ca#paign for bothsyste#s. 1or trade spending and consu#er pro#otion$ we will focus onobtaining ideal shelf space and endCaisle displays to increase awarenessand traKc..0. Conclusion;ereco##endthat +rita#ust not trytospend#oneyto#arket itsfaucet #ountedsyste#as a separate product. 5nstead$ it #ust Gustcontinue to #arket its brand and the great taste delivered by its )lters.*henewfaucetsyste##ustbepositionedtocoCe!istwithitse!istingproductlineandwestronglybelievethatthee!istenceofonewill nota=ect the other and both products will continue to yield pro)tablerevenuesandfurtherconsolidate+ritaBs#arket positioninthe)lteredwater industry...0 5ntroduction and Case +ackground;ater 3uality issues$ especially with regards todrinkingwater$ havegarnered #uch attention recently in our post -epte#ber .. social cli#ate$but attitudes towards drinking water were not always rooted in fears of adoo#sdayscenario. %sthe+rita,-%casestudyillustratesconsu#erawareness and concern for clean$ good tasting$ and safe drinking waterled to tre#endous growth in the bottled water industry beginning in the#id to late ighties.Perhaps as an e=ect of the designer and brand label consciousnessconsu#er at#osphere$ that e!isted in the late ighties$ buying water in abottlestartedtobethethingthatyoudid. PayingadollarforHpure#ountain springH water began to be the choice option$ rather thanstanding in line to drink fro# the public fountain. 5n a short ti#e #anyconsu#ers$ not Gust earlyadopters$ begantobuybottledwater. %sbottled water #oved fro# the classes to the #asses$ consu#ers began tobe #ore concerned with price and 3uestioned the worth of paying a dollarfor water. *his reasoningcreated opportunities for those who could )llconsu#ersB need for low cost$ good tasting$ and clean water 4while #aybestill conveying a s#all sense of superiority.9*able . illustrates the siAe ofthe bottled water #arket in ./// Qstill only an 08 seg#ent of the total&&.5+illiongallonbeverageindustry. *hese)guresalsorefectaneardoubling in volu#e fro# ./00 unit sales.*able . S sti#ated +ottled ;ater -eg#ent -iAe in .///Percent +uying >allons %pp!. -pent-till ;ater &58 .$5(0$000$000F .$5(0$000$000 Carbonated ;ater '78 /.0$000$000F '$75&$000$000 +ottled -ervice 4est.9 '08 /5'$000$000 nNast. *otal +ottled ;ater Consu#ption ($&00$000$000 >allonsst. Cost of +ottled -till ;ater F0.0070 per oA.st. Cost of Carbonated ;ater F0.0'(& per oA.5n ./00 the Cloro! Co#pany purchased the rights to the +rita water)ltration pitcher fro# a s#all >er#an co#pany$ +rita >#b?.5n e!changefor a (C&8 royalty on total sales and e!clusive sales of )lters$ +rita >#b?allowed Cloro! to design and sell its own pitchers in the ,.-. under the+rita brand na#e.+y ./// the +rita water )ltration pitcher had sold #orethan .7 #illion units and when co#bined with its captive )lter sales it wasgenerating close to F'00 #illion in revenues per year.%lso by .///$ the+ritapitcher hada#arket penetrationof .(8C.58andheldthetoppositioninthewaterpuri)cationindustrywith708shareof theF(50#illion industry.@ur case analysis will focus on +ritaBs decision to diversify$ or not$into the faucet #ounted )lter business.%fter .0 years of near do#inanceinthewater)ltrationindustry$ +ritawasunderattackfro#anupstartco#pany$ P,D$ who was positioning to gain #arket share by focusing onthefaucet #ountedtechnologytodeliver )lteredwater. +ritafacedseveral alternatives. -houldtheyignorethefaucet#ounted)lterandfocuson#aintaining)lter salesood J C-peedy Lelivery C Jase of 5nstallation J Case of ,se C JLispensed WuantityC J:i#ited by faucet design J C (.0 1inancial %nalysisCloro!co##issionedthe%C"ielsenRantisco#panytoco#pleteatest#arket si#ulation to e!plore the i#pact of a +rita entry into the faucet#ountedseg#ent. *heresultsof thesi#ulationyieldedtenpossiblescenarios which were dependent on various a#ounts of pro#otion$feature pricing$ advertising and co#petition.% su##ary of the potential#argins possible 4net revenues #inus advertising and pro#otion e!pense9foryearoneof eachscenarioispresentedbelowin>raph(. 1orthegraph$ we assu#e that each )lter buyer also buys two additional )lters atan esti#ated price of F6.00 and .$'05$000 units are sold.+ritaBs costs forthe syste#and each )lter are assu#ed to be F.5.00 and F(.00$respectively. -cenario 7 provides the opti#al result. *his scenarioassu#esafeaturepriceofF(&.//4708ofunitssold9andlistpriceofF(/.// 4(08of units sold9 for total net revenue of F&($/70$&50.%dvertising and pro#otional spending would total F'6$&00$000.-cenario7couldresult inapositive)rst year total gross #argincontribution4syste# and )lters9 of F6$7'5$000.%nalternativepresentationofthetenscenarioanalysisispresentedin>raph&. *hegraphevaluatesongoingrevenuesgeneratedbyPear.buyers as they continue to purchase )lters Q at ( )lters each after year ..5talsode#onstratesthatscenario7providestheopti#al results. *heshape of the plot is very si#ilar to the .0 year growth pattern e!hibited bytheoriginal +ritapitcher fro#./00to.//0. *hisshouldhavebeenanticipatedbecauseasti#eprogressestheoriginal losscausedbythesyste# cost is o= set by the steady infu! of )lter revenues.5f -cenario7salesvolu#esarerepeatableandpro#otion$ advertising$and part costs re#ain constant$ then the proGected annual and cu#ulativegross #argins will grow as illustrated in >raph 5.%ssu#ing that the )lterbuyer base grows yearly$ annual #argin contributions #ay reachF50$.05$&50 by the end of year 5.+y co#parison >raph ( also presentssi#ilardataforyears6through.0forthe+ritapitchersyste#. *hatsyste# did not break positive #argin contributions until the seventh year. >raph5Ssti#ated>rossMarginContributionsof+rita1aucet-yste#1ro# -cenario 7 5ncluding "ew-yste# -ales ach Pear%ssu#ptions: 1ilter Price of F6.00$ ( )lter units sold to .008 of syste#buyers in years ' through 5$ -yste# unit sales re#ain constant everyyear.&.0 Deco##endations and Conclusion%sconsu#ersbeco#eincreasingly#orehealthconscious$ thede#andfor)lteredwaterproductsshouldre#ainstrong. Consu#erBsincreasedawareness of environ#ental factors will ulti#ately lead to increasedde#andfor i#proved)ltration. *hefaucet #ounted)ltrationsyste#Bsability to )lter #icroorganis#s$ speci)cally cryptosporidiu# and giardia$ isa product attribute not currently provided by the pitcher )ltration syste#. Most consu#ers will also naturally gravitate to the lowest cost and #ostconvenient #ethods of getting )ltered water. *he cost of water )ltered byeitherthepitcherorfaucet#ounted)ltrationsyste#saresigni)cantlylower than purchasing bottled water. *he faucet #ounted syste# provides)ltered water at appro!i#ately half the cost of the pitcher )ltrationsyste#. *he ease of use$ and dispensed 3uantity of )ltered water fro# thefaucet )ltrationsyste#arekeyattributesnot providedbythepitcher)ltration syste#. 5n our fast paced society$ the speedy delivery of cleanwater$ dispensed in large 3uantities #ay be a key point for pro#otion. %sindicatedby>raph6$ pitcher )ltrationusageishigher thanfaucet #ounted syste# in all ,.-. regions e!cept for the ;est. -tates inthe western region$ speci)cally California$ are typically consideredtrendsetters for the country. *he higher usage of faucet #ount syste#s inthe western region$ as co#pared to pitcher )ltration syste#s$ #ay be anindicationof future,.-. consu#er trends awayfro#pitcher )ltrationsyste#s. >raph 6 S ,sage of Pitcher Rersus 1aucet Mounted 1iltration by ,.-. Degion-ource: ./// ;ater Wuality %ssociation$ "ational Consu#er ;ater WualityDeport5f Cloro! were to ignore the faucetC#ounted business$ they could stand toloseasigni)canta#ountof the#arketCsharetoP,D. -inceP,Dwasslated to be #arketed by Proctor and >a#ble at brute force$ they could3uickly takeCoverthe waterpuri)cation#arket. +asedonthe)nancialproGectionsof thefaucetC#ountedbusiness$ andcontinuedde#andfor)ltered water products$ it is advised that they pursue the faucet #ounted)ltration business in addition to their pitcher business.%lthough potentialcannibaliAation of the pitcher )ltration syste#s e!ists$ the opportunity togainafootholdinthis #arket is critical inorder tokeeppacewithe!pected #arket trends towards the faucet #ounted syste#s.+rita should #aintain itBs current #arketing strategy to di=erentiate theirproducts on taste. %lthough due to an increase in consu#er healthconsciousness$ water purity cannot be ignored. 1uture #arketing e=ortsalso need to co#bat the P,D #arketing ca#paign based on water purity.% #i!ed #essage should be developed that not only e#phasiAes +ritaBsreputation for superior taste$ but also highlights the i#proved )ltration ofthefaucet #ount syste#. *hecurrent advertisingca#paignwithawaterfall could easily be adapted to e#phasiAe both aspects of thesyste#.+rita #anage#ent should also continue to #onitor #arkets trends for )ltration. 1urther advance#ents in )ltration technology as well as dispensing syste# preferences should be closely watched.%dvance#entsand i#ple#entation of i#proved )ltration technology would be bene)cial in co#bating co#petitive clai#s of superior )ltration. Potential consu#er trends towards integration of )ltration syste#s into ho#e appliances and whole house syste#s could be the source of future co#petitive pressures.5n ./07$ the Cloro! Co#pany obtained the ,- rights to sell a ho#e waterCpitcher and )lter syste# #ade by the >er#an co#pany +rita >#b?. *hepitcher is #ade of two co#part#ents$ upper and lower$ and a replaceable)lter. ;aterisplacedintotheupperco#part#entandis)lteredasitfows through to the botto# co#part#ent. *hough sales were sluggish inthe )rst few years of the productBs inception$ by .//0 the +rita pitcherC)lter syste#hadthehighest returnonsales 4(&89 of all of Cloro!Bsproducts withrevenues of '00#illiondollars. ?owever$ withslowingde#andforitshouseholdpitchers$ Cloro!nowfacesathreatfro#theentry of new type of )ltration syste#$ the faucet #ounted syste#$ #adebyitsnewlyac3uired co#petitor P,D. *he faucet#ountedsyste#isa)lter that screws ontokitchenfaucets withtheabilityto)lter waterdirectlyand$ si#ilartothewaterpitchersyste#$ re3uiresreplace#ent)lters for continued use. 5n anticipation of the entry$ Cloro! developed itsown faucetC#ount syste#and is e!a#ining three strategic options:continuingtobuildonitsinstall baseofpitchers$ shiftingitsbudgettopro#ote the sale of )lters$ or putting signi)cant resources behind buildinganewinstalledbaseforfaucetC#ountsyste#s. %ne!a#inationof theCloro!Co#pany$ potential #arketand#arkettrends$ co#petitors$ andcusto#ers shows that theco#panyshouldcontinuetofocus onanddefenditsinstall basebyreCpositioningitself andfocusingonDELfor)lter technology.*he #arket for +rita syste#s includes nearly every household in the ,-and is enor#ous at .0( #illion. 5n total$ only .N7 of the #arket had beencapturedbyall pitcher syste#s$ with+ritaenGoyingover 758#arketshare. *hroughout the .//0Bs$ consu#er awareness to potential haAardsin drinking water was increased with several highCpro)le incidents. 5n onearea$anabnor#allyhigh rateofleuke#iawaslinkedto drinkingwaterconta#inatedwithindustrial solventsandinanother ...peoplediedwhenaparasiteenteredthewatersupply. 5nfact in.//0the,-P%declared that .08 of sedi#ents under ,- surface waters wasconta#inated enough to pose a threat to hu#ans. *his concern ofconsu#ersisfurtherillustratedby)guresthat showby.///$ 7'8ofpeoplee!pressedconcernoverwater3uality. %general trendtowardshealthy living has also e#erged as the de#and for bottled water and fruitGuice outstrips the de#and for soft drinks$ co=ee and beer. 5n the water)ltration #arket speci)cally$ technology has advanced dra#atically to thepoint where )lters have the capability to re#ove previously unC)lterable#icroCorganis#s.*he Cloro! Co#pany is a #anufacturer and #arketer of consu#er goods$operating predo#inantly in household goods. ;ith over (./ billion in salesthe co#pany ac3uired the rights fro# +rita >#b? to sell products$ under+rita ,-%$ including purchasing )lters fro# +rita >#b? and#anufacturingtheirownpitchers. *heco#panyBsstrategyistode)citCspend on the pitchers to build an install base and then #ake a continuousstrea# of revenue on )lters. !hibit . shows a view of the contribution to)!ed costs of the pitcher and )lter. *hroughout the .//0Bs$ as the installbase grew$ the contribution fro# )lters grew at an alar#ing rate. %lthoughthegrowthrateisshowingsignsof stabiliAing$ the008retentionrateco#bined with the revenue strea# fro# )lters puts #odest proGections toco#binedcontributionat Gust under .50#illionin'00.. +ritaBs corestrengths are its )rst #over advantage$ its ability to know its #arket$ itsleverage and control of sales channels$ and its siAe. %s the )rst #over inthe industry$ +rita has beco#e an established product with a huge installbase. *his is i#portant in the )ltration industry because there is inertia toswitch products due to the initial pitcher purchase re3uired. *he co#panyconducts e!tensive surveys to )nd out why their custo#ers were buying$howoften they were replacing )lters$ and how#any people wereretained. Manage#ent tracks infor#ation and is able to correlate surveydataaccuratelyallowingCloro!to#akeaccurateandti#elydecisions.+rita is able to use its siAe and scale of Cloro! to obtain shelf space in avariety of sales channels. *he co#pany is able to use its siAe and positionto de)cit spend to )ght co#petitors on price. +ritaBs #ain weakness is thelack of control it has over the +rita )lters. -ince the )lters are#anufacturedby+rita>#b?$ Cloro!playsnoroleinitsdesigneventhough)ltersthe#ainsourceof revenue. *heco#panyisconstantlyunder attack fro# co#petitors because of its position as #arket leader.+ritaBs custo#ers includeall adults ranginginages fro#.0to65J.Custo#ers are predo#inantly interested in taste$ re#oval ofconta#inants$ price$ and ease of use. 5n recent years$ custo#er interestshave skewed towards the health bene)ts. *he co#pany has atte#pted toaddress all of theseinterests by: .9 Positioningitself ontasteinitsadvertisingandtakingadvantageof thehaloe=ect that iscreatedonhealth bene)ts '9 5ncluding H?ow it worksH sections in advertising (9 ,singpro#otions such Hbuy one get one freeH. +rita has been able to furtheridentifyseg#entsinthe#arketbasedonitsclassto#assstrategy. %class of upscale pitchers is #arketed in depart#ent stores #arked up by(58$ and standard pitchers are sold to #ass #erchants$ drug and grocerystores #arkedup by '58. %t one ti#e +rita even o=ered packaging of)lters to appeal to club shoppers. *o keep the classes distinct$ +rita hasuses a #ini#u#advertised price policy where retail discounts arediscouraged. %s the #arket leader$ +rita has several co#petitors including$ Dubber#aidand P,D as direct co#petitors in the pitcherNfaucet #ounted syste#s andbottledwaterandtapwaterasotheralternatives. !hibit'showstherelative perceptual positioning of each co#petitor. Dubber#aidBs strategyistoattack+ritaonpriceNperfor#ance$ clai#ingthatitischeaperandfaster at )ltering water. P,D on the other hand$ has focused its strategyonthehealthbene)tsof itssyste#. *arget storeshavestartedratingsyste#s on level of protection o=ered by various products and P,D scoresthe highest. P,D )lter technology is superior in that it has features that+ritadoesnot includingtheabilityto)lter cryptosoporu#4the#icroCorganis# responsible for ... deaths9$ and a #echanical device to indicatewhena )lterneeds to bereplaced.P,Dislaunching afaucet#ountedsyste# which poses as a threat to disrupt the pitcher industry because ofits perceived ease of use. 1aucet #ounted syste#s are perceived to bebetter at )ltering conta#inants 4even though they are not9 and is cheaperin ter#s of totalreplace#ent )lter cost. P,D has Gust been ac3uired byPE>which poses a seriousthreatbecauseP,Dwill haveaccesstothedeeppocketsand#arketingstrategyNpracticesthat PE>isknownfor.+ottled water is showing dra#atic increases in growth and is perceived tobethebestinter#sofhealthbene)ts. 1inally$ conventional tapwaterconsu#ption is declining but still o=ers a free alternative.+rita should not get into the faucet #ount business as it is conte#plating. !hibit ( e!a#ines .0 strategies for potential entry into the faucet #ount #arket based on advertising and pro#otion spending$ and co#petitive pricing. -cenario ' is the best in ter#s of pro)tability$ even though all scenarios lead to a loss in the )rst year. !hibit & calculates the Custo#er :ifeti#e Ralue of the Pitcher syste# and the 1aucet Mount syste#. %s shown$ the C:R of the Pitcher -yste# and 1aucet Mount -yste# respectively is F.'.// and CF...0.. *he pitcher syste# is very pro)table to the co#pany whereas the 1aucet Mount -yste# would re3uire heavy de)cit spending to build an install base and #ay not be able to #ake it back on )lters. %lso$ cannibaliAation of +ritaBs Pitcher -yste# #arket$ which would inevitably occur$ would be e!tre#ely costly. +rita would not have an installed base advantage as it does in the pitcher #arket since P,D is actually already ahead of +rita in ter#s of develop#ent and #arketing of faucet #ounts. 5nstead$ +rita should defend its pitcher syste# and atte#pt to grow its install base. %lthough the pitcher syste# #arket is showing signs of leveling o=$ !hibit . shows that #odest proGections to '00. are still very pro)table. *hree key reco##endations are: .9 -trategic Partnerships: *here is still 6N7 of the #arket that does nothave a pitcher syste# and there is a potential to infuence the rest of the #arket. *he co#pany should partner with outlets such as restaurants and co=ee shops to supply pitcher and )lters at #ini#al cost to gain #ore visibility. '9 DeCposition the brand towards health bene)ts: *he threats fro# bottled water and the P,D faucet #ount are real. +rita #ust reCposition the brand via advertising$ towards health because custo#ers already perceive +rita as the best for taste. Plus$ all custo#er trends and #arket research highlight the e#phasis custo#ers are placing on health bene)ts in choosing a syste#.+rita should advertise #ore heavily on di=erentiating itself fro# faucetC#ount syste#s. *hey #ust display the fact that faucetC#ount syste#s are not better on taste and health. (9 -pend #oney on technological innovation:+rita is lagging in the ability ofits )lters to re#ove conta#inants. *he co#pany #ust spend on DEL and partner with +rita >#b? to continually develop better )lters.W.. .. -ales decline 4.///9$ result of #arket change bottled water4fastestCgrowing industry9. 4e!hibit.9'. -hould be #arket led instead of #arketing led 4ch. p.6 9. %s the#arket changes$ so does the values de#anded. *heir late responseentails conse3uences such as:C +ritaonly achieved (58 share co#pared to658 P,D 1M #arketshareC Detailer$suchas +5>;$hasinstalledadisplay whichco#paresalternative )ltration products. P,D does better. C PE> purchasedP,D$ P,D will now be#arketedby establish )r#that is known for its #arketing e!pertise and resources. (. :osingsight their ownvalueproposition4providedgreat tastingwater9$ inconsistency into their 5 strategies.*hey2re trapped to enter into co#petitor2s consistent Xre#oval ofi#puritiesYpositioning. Luetofocusingtoattacktheir co#petitorsbydefensive #arketing strategy$ they forget their basic -*P strategy&. :ate to conduct #arket research$ declining in .///T they decided toXlistenY to #arket by '00& 4proGect *ravolta9.5. :osscusto#er2se3uity 4ch(p.50 9. 5t2sirony as )rst four yearsthey spent #oney$ e=ort and ti#e to si#ply e!plaining its product4ads:Y?ow it worksY9 6. !ternal environ#ent driving the changing #arket 4de#ographics$technology etc9 CUdiKculty and #isperception of the product technologyalso contribute to sales decline. W'. valuating i#portant factors of co#petitive positioning$ 5 reco##end:.. Change currentpositioningas Xi#provedtaste whilst #aintainingcusto#er2s healthy lifestyleY$ will have ' i#pacts:C Depositioning our for#er positioning 4i#proved taste water9C Creating bridge to cater the growing health awareness raise. -o itcan be valued as gradual step to change buyers2 perception toward +rita2sbrandT so we can enter our co#petitor2s #arket too'. 1ill gaps in #arket by producing various tasty bottled waters 4subbranding +rita water9!ecution -teps:Ma!i#iAe #arket research data 4e!hibit 'C&$ 5C.&9 to do -*P process... *arget ( seg#ents CU Principled )lter fans$ aZuent fridge followers$assertive self i#provers. Levelop pro#otion and advertising strategy thatin line with Xwhat trigger of these seg#ent pro)les to buy their productY4e!hibit.(9 4custo#er2s brand e3uity9.'. Positioning concepts+efore they2re doing product seg#entation supplanted by an entirely newtechnology4fro#P*to1M9. *heyshould)ndattractiveniche$ resultcusto#er is willing to pay pre#iu# that best satis)es their needs. (. Marketing #i! for the chosen positioning conceptProduct :.. PMand1Misretainedyet withi#provedtechnologythat evenXdu#best custo#er can use it easilyY'. Rarious tasty #ineral water Price : .. Charge pre#iu# for tasty #ineral bottled water '. Chargenor#al pricefor1MandP*toencouragehouseholdwithbudget constraints to buy +ritaPlace : .. P*E1M: Detailer store with good visual display'. *asty #ineral bottled water in health stores$ gy#nasiu# and sportscenterPro#otion :.. Me#bership to retain custo#er2s loyalty such as X?ealthy livingY. 5twill be good #edia to pro#ote newproducts$ raised wordCofC#outhca#paign by satis)edcusto#er$ educatingabout product usageandbene)ts'. ?ealthy ca#paign awareness(. :oyalty progra# 4if they returned the old )lter get discount9&. P*E1M: advertising about the ease using it for daily life and createhealthy future generation i#age5. +eing sponsor of sports events for tasty #ineral bottled water;hitney ;illia#sMO* &'0M; ':00C(:.5-epte#ber '0$ '000*he +rita Products Co#pany[ohn Leighton[anuary .5$ '00'..*o what do you attribute +rita2s successood ?ealth.Oey product design decisions C DEL should focus on adding tasteto water rather than re#oving i#purities.+rita already re#oves about ..#ain conta#inants in the water. Consu#ers perceive great tastee3uivalent to healthier water. %lso people drink #ore water when it tastesbetter. -ofocusingonadding#ineralstoprovidegoodtastingwaterwould prove to be useful a#ong consu#ers. C *here is no need to co#e up with a new product. [ust an alternationto the e!isting P* and 1M product is re3uired. Desources and costs neededfor this #odi)cation will be less. C Co#petition re#oves i#purities. *heidea of di=erentiatingtheproduct by providing taste will help +rita stand out.C %lso Consu#ers perceive great taste e3uals healthy. Marketing Mi!4product$ price and delivery9 ProductC Modi)ed Pitcher and 1acet Mount productC "ew and easily identi)able design features to let custo#ers knowwhen there is a need to change their )lters.C %fter sales serviceat distributioncenters andphonehotlinetoanswer consu#er 3uestions.C . week return and take new option C 6 #onths warranty to service the product.PriceC @n par with co#petition. *he target seg#ent is frugal. Cant price atpre#iu#. C Can2t price too low when being positioned as a great tasting andhealthy water.C Liscounts on )rst few early birds.Pro#otionC Lirect phone #arketing could be used as well to pro#ote the newdesign to e!isting consu#ers.C*arget seg#ent is tech savvy. -o use of 5nternet ads$ tech and science#agaAines and *R ads as well.PlaceC ,se e!isting distribution channels.:ess cost.C toll free hotlines to service consu#ers2 3uestions*he +rita Products Co#pany began in ./00 under the reco##endation ofCharlie Couric$ a #arketing e!ecutive with the Cloro! Co#pany. @pti#isticof its capability to be pro)table$ Cloro! ac3uired the right to #arket theho#e water )ltrationsyste#. Cloro!$ citing the overriding longCter# bene)ts of continuous )ltersales$ initiallyengagedinde)citspending. -uch#easurespaido=andCloro! not only created a F(50 #illion #arket$ but also captured 708 ofthe#arketrevenue. +ritaenGoyedsuccessinthe#arketbycreatingaperception of better tasting water. ?owever$ as water puri)cationtechnology i#proved and consu#er awareness increased$ taste alone wasnolongerenoughtosustainits#assive#arket share. Consu#ersarede#anding #ore in ter#s of health bene)ts and +rita needs to respond totheir growing needs and wants. *he #arket environ#ent is characteriAedby fast growth. %s consu#ers are beco#ing #ore healthCconscious$bottledwaterandwaterC)ltration syste#s arebeco#ing a necessity for#ost$ with a +rita pitcher in . out of 7 ho#es I .0( #illion households.+rita2s co#petitors were unable to e=ectively rival +rita in pitcher sales.+ritado#inateddespite#anynewentrantstothe#arket. ?owever$ as#all co#petitor$ P,D$ launched a di=erent water )ltration product. P,D2sfaucetC)lter syste# o=ered added healthand convenience bene)ts that+rita2s pitcher couldn2t provide. "ow suddenly$ our co#petitors ca#e upwith the )rst #over product.*hus Couric is considering allocating resources to launch a faucetC#ounted)ltrationsyste#inresponsetothesee#ergingco#petitors.Manythink+ritaneeds tocapitaliAeonthis opportunitytogainnewconsu#erswhiletheirna#estill re#ainssynony#ouswith3ualityandtaste. *hus raisingthe3uestion$ howshould+ritaatte#pt tofurtherpenetrate the #arket with their products< :ets take a look at the Pros andCons of each option:@ption .: 5#ple#ent the new faucet #ount )ltration syste#*he Purpose*hiswritingai#stopresentonepossiblesolutiontothedile##athatCloro!Co#panyfaces. *heCloro!Co#panywasthe#arket leaderinwater )ltration in the ,-% with the +rita Pitcher 4one of the Cloro!2s #osti#portant product9$ but in ./// they faced the threat of a new product Bthe faucet #ounted )lter.Cloro! already had its own version of this new product ready to launchintothe#arket$ sotheissuewastodecidethebest of thefollowingstrategies:.. Continue selling only the current productT'. 5ntroduce their new faucet #ounted )lter in addition to the pitcher intothe #arket'. *he %nalysisMarket -u##aryCloro! launched in ./00 the +rita Pitcher and after a decade they werethe #arket leaders of water )ltration syste#s with a #arket share of 6/8.%fter the +rita pitcher launch$ the water 3uality beca#e a growingconcerntoconsu#ers. *hisnewattitudeabout the3ualityof drinkingwater allowed the puri)ed water #arket to grow in both bottled water and)lter syste#s. *his growing on the water #arket$ allowed Cloro!%fter overview?as not de)ned productMarket seg#entation