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Bottled Water Industry

Extracts from this document...

Introduction

Case #1 Competition in the Bottled Water Industry Submitted to: Mr. Ahsan Durrani Submitted by: Geeta Khiani TABLE OF CONTENTS: INTRODUCTION ANALYSIS * GENERAL ENVIRONMENTAL FACTORS (P.E.S.T) * INDUSTRY'S DOMNINANT TRAITS * ATTRACTIVENESS OF THE INDUSTRY (BASED ON PORTERS 5 FORCES MODEL) * STRATEGIC GROUPS IN THE INDUSTRY * INDUSTRY DYNAMICS * DRIVERS OF CHANGE IN THE INDUSTRY * KEY SUCCES FACTORS * COMPETITVE PROFILE MATRIX CONCLUSIONS AND RECCOMENDATIONS Introduction: This case study discusses bottled water industry of U.S. It discussed about the global sales of bottled water industry in 2001 and annual growth average between 1996 and 2001. The growing popularity of bottled water industry in the United States was attributable to concerns over the safety of municipal drinking water, an increased focus on fitness and health and the hectic on-the-go lifestyles of American consumers. The factors like convenience purity and portability of bottled water provide natural solution to consumer's dissatisfaction over the tap water. There was an increase in industry volume and dollar sales as a result for the introduction of PET containers which satisfied the needs of convenience, portability and finally purity which would make the bottled water industry very attractive. An increased emphasis on healthy lifestyles and improved consumer awareness of the need for proper hydration led many consumers to shift traditional beverage preferences toward bottled water. Bottled water industry nature of competition was fierce competitive rivalry and it was dominated by a few international food and beverages producers like Coca-Cola, PepsiCo, Nestle and Groupe Danone. Per capita consumption in 2002 fell substantively below consumption rates in Western Europe, Middle East, and Mexico. ...read more.

Middle

Therefore, the attribute "Convenience" can give the consumer easy accessibility to bottled water. Purity focus on fitness and health; and portability of bottled water explains it from the perspective of easy-to-carry than glasses or cups of water. Product Innovation: The industry has gone through product innovation. > Bottled water used to deliver to homes and offices in returnable five-gallon containers and dispensed through coolers. > It also used to be sold in one-liter or smaller single-serving polyethylene terephthalate (PET) > The product has been in the high-density polyethylene (HDPE), too. > The introduction of enhanced waters since the bottled water gain widespread acceptance in the United States. > Most sellers in 2002 were moving quickly to introduce variations of their product that included vitamins, carbohydrates, electrolytes, and other supplements. > The innovation seemed to be a hit with consumers - the market for enhanced bottled waters expanded from $20 million in 2000 to $85 million in 2001 and was expected to surpass $100 million in 2002 And finally it is in the small shape of plastic bottle that is not heavy but easy to carry. Degree of Product Differentiation: The industry differentiated the bottled water from the tap water: > By removing or stripping all chlorine and other particles out of tap water. > By refining and purifying water by installing: * Filtration equipments * Reverse osmosis equipments * Distillation equipments * Deionization equipments * Labeling equipments * Bottle washers > By adding ozone gas to the water to prevent bacteria growth. (Pepsi Co does). > By placing different associations like EPA, FDA or IBWA to require for the bottled water producers to test the presence of bacteria. ...read more.

Conclusion

3 0.45 Recall .15 3 .45 4 0.6 1.0 3.2 3.15 Strategic Factor weight Coca-Cola rate weighted score Group Danone Rate weighted score Perception .3 3 0.9 2 0.6 Innovation .2 3 0.6 2 0.4 Brand Loyalty .2 3 0.6 2 0.4 Distribution .15 3 0.45 3 0.45 Recall .15 3 0.45 1 0.15 1.0 3.0 2.0 Conclusion: There has been an improvement in technology in the bottled water industry for the use of equipment which provides water purification and filling bottles and also a state-of-the art bottle facility that would require a capital investment of more than $100 million. Types of equipment includes a complete line of filling equipment, filtration equipment, distillation equipment, deionization equipment, bottle washers, labeling equipment, packaging equipment, and reverse osmosis equipment, with others specializing in a few equipment categories. Due to the technological change and advancement, bottled water industry were successful in satisfying the needs and requirements of the final consumers and that the final consumers would be purchasing PET containers of bottled water because of convenience, portability and purity and the future aspect of the bottled water industry as being attractive in the current trends, would prosper in the near future by major improvements in technology. RECOMMENDATIONS > The bottled water industry should implement advanced supply chain management software such as S.A.P to improve the effectiveness and efficiency of distribution channel systems > They should increase the no of advertisements regarding their products in TV regarding about the health awareness. > They should spend more on the promotional strategies to promote the product in such a way that consumers would be brand loyal to a bottle water industry as compared to the substitute products industry. ...read more.

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