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