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Conclusion on the bottled water industry
Conclusion on the bottled water industry
Market segment for bottled water
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This paper answers the following questions:
1. What are economic characteristics of the bottled water industry?
2. What is competition like in the bottled water industry?
3. Which strategic groups do you think are in the best or worst position?
4. What are the successful key factors in bottled water industries?
5. What recommendation would you make to Coca-Cola to improve its competitiveness in the global bottled water industry?
1. What are economic characteristics of the bottled water industry?
If we define the economic characteristics in term of macro environment, there is several ways that we can categorize as the follow;
Market size and growth rate
The bottled water industry has a high potential in growth rate and in the terms of sales volume or per capita consumption rate. For example, the United States’ capita consumption of bottled water lagged those of soft drinks by more than a 2:1 margin. In term of bottle water, the majority of sales volume has burden on single- serving PET containers than 5 or 1-2.5 gallon high density polyethylene containers which use for home or office. The single PET container has been satisfied by the customers because they are convenience and portable. So it could be purchased from a convenience store.
Number of rival
There were fierce competitions among the producers that have scale and scope of operations which were similar to each other. For instance, the Pepsi Co. and Coca Cola companies have developed the strategy and infrastructure, which are hard for the local sellers to complete with them. However, there were still many producers including new entrants that try to access the market and compete seriously with low price and differentiation- strategies among rival...
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... objects and customer regions. Do making a clear differentiation image between its soft drinks and bottled water. Because the consumers may believe that bottled water of Nestle sounds healthier than Coca-Cola brand since Nestle tend to emphasize their image on healthy food products. Then do market test for new taste, new packaging, or new innovation according to each regions, and especially for Europe, the company should launch the new one to replace Dasani image in order to seize their market shares. They may renew all nutrients and packaging. Finally Coca-Cola should continue its joint ventures with the regional companies in order to protect their products from barriers to entry both international trade restrictions and distribution channels. Furthermore, joint venture with local brand is a long term contract guarantee to make it easier for HOD to a specific region.
Pacific Institute (2008). Bottled Water and Energy: A Fact Sheet. Retrieved July 31, 2008, Web site: http://www.pacinst.org/topics/water_and_sustainability/bottled_water/bottled_water_and_energy.html
As the bottled water becomes more popular, people prefer to drink bottle water over tap water. According to them, it has a better quality and taste. Unfortunately, people are being fooled by the water industries. The “purified” water, as its label, comes from municipal reserves. This research will discuss:
To begin, the article, “Water Water Everywhere-in Bottles,” the author uses logos to show that the water bottle industry and the soda industry are competing. Because there are so many different brands of water, the water industry is set to outsell the soda industry. The article shows many facts about water bottles and how they compare to soda such as, “Between 2000 and 2014, capita bottled water consumption more than doubled to 34.02
The beverage industry is highly competitive and presents many alternative products to satisfy a need from within. The principal areas of competition are in pricing, packaging, product innovation, the development of new products and flavours as well as promotional and marketing strategies. Companies can be grouped into two categories: global operations such as PepsiCo, Coca-Cola Company, Monster Beverage Corp. and Red Bull and regional operations such as Ro...
Analysis of the carbonated soft drink (CSD) industry shows that there are 2 important players i.e. Concentrate Producers and Bottlers. Focusing on the downstream of the supply chain it is to be pointed out that concentrate producers incure relatively low fixed costs with respect to production plant, staff, equipment and R&D as the concentrate is produced of a more than 100 years old formula and relatively cheap raw material (e.g. caffeine). Concentrate is shipped to bottlers which incure relatively high fixed cost with respect to plant, equipment and staff and which add carbonated water and high fructose corn syrup to the concentrate, bottle or can, package and ship it to the respective retailer. Besides that CDS hold a big stake in the direct delivery of concentrate to diverse fountain accounts like McDonalds, Burger King etc.
Years ago, the concept of selling water was laughable. Why would anyone pay for something they can get for free almost anywhere? Plumbing and free drinking water fountains are as old as Western Civilization. Selling water to a man with a faucet, or even a well, resembles the cliché of selling ice to an Eskimo. Consumers were intelligent enough to recognze that "evian," the name of the pioneering French drinking water bottler, was simply "naïve" spelled backwards. Yet by 1988 evian sold over 1 billion liters of water, all still bottled at the source in Evian-les-Bains, France(1). Competitors and entrepreneurs sensed a change in consumer tastes. In 1987 Suntory Ltd of Japan established Suntory Water Group in the US. It quick...
Bottling Network: Both Coke and PepsiCo have franchisee agreements with their existing bottler’s who have rights in a certain geographic area in perpetuity. These agreements prohibit bottler’s from taking on new competing brands for similar products. Also with the recent consolidation among the bottler’s and the backward integration with both Coke and Pepsi buying significant percent of bottling companies, it is very difficult for a firm entering to find bottler’s willing to distribute their product.
Control of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year. Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share.
First, bottled water is a convenient product that is not a substitute for tap water, rather bottled water is for consumers to use on the go. Suppliers of bottled water would agree with that bottled water is not a substitute for tap water and is for convenience, however, more and more people are switching to bottled water as their main source of water. A 2003 Gallup poll showed that 74% of Americans drink bottled water, with 20% consuming it exclusively. The irony is that most bottled water comes from municipal water sources. About half of all bottled water sold in the United States today is filtered municipal tap water. Nestle is the only brand compared to Coke’s Dasani and Pepsi’s Aquafina that sells from both municipal and spring sources. Nestle Waters is the largest and most profitable bottled water firm and biggest supplier of spring water. In North America, Nestle profits of $4.2 billion in 2009. It owns 15 water brands and operates 50 spring water extraction sites in 15 U.S. states.” The reason the bottled water industry is getting so large and profitable business for corporations is in part with campaigns targeting the positive aspects of bottled water, while altering the public’s perception of tap water at the same
In short, the industry extremely focused on preventing and testing the presence of bacteria. Therefore, bottled water often represented “somewhat of a novelty or prestige product” in the United States, and it gave a perception to their consumers that they need to purchase bottled water in order to stay young and healthy. Because the bottled water industry seemed very attractive and profitable, as mentioned above, there were many competitors, too. Total nine bottled water producers were mentioned in the case study, but four key major rivals were Coca-Cola, PepsiCo, Nestle, and Groupe Danone. However, there was no one buyer that accounts for a significant fraction of overall market demand. Distribution varied depending on the producer, but most distribution channels included food stores, supercenters, supermarkets, discount stores, and wholesale clubs. Because bottled water had an easy availability, consumers in the United States were able to find it anywhere the food was also
The data provided by IBWA (International Bottled Water Association) reveal that bottled water has become extremely popular in the US market. More that $11 billion dollars has been spent for the consumption of bottled water and its consumption increase three times in the last 10 years. The market of bottled water in the United States is the second largest apart from the soft drink. In 2006, the U.S consumption of bottled water was more than 32 billion liters compared to 20 billion liters consumed in 2001. Yearly, an individual in Houston consumes average of 90.5 liters of water more than global average of 24.2 liters. Such growth in the consumption of bottled water is presumable consumers’ perception about safety, purity and convenience of bottled water. Typically, increasing public awareness of bottled water makes 50% of Houston population to drink bottled water and approximately one-third of Houston population drink bottled water regularly. Since 1976, there has been an increase in the market of bottled water in Houston and the United States as a whole. (See Fig 1).
Look SDmart, Retrieved 05/16/07, from http://findarticles.com/p/articles/mi_m1365/is_1_31/ai_63974359/print. Coca-Cola: A Technological View, retrieved 5/18/07, from http://projects.olin.edu/ahs/HOT2004/PolarBears/content.htm. Coca-Cola Our Company- Around The World, retrieved 5/18/07 from http://www.coca-cola http://www.thecoca-colacompany.com/ourcompany/aroundworld.html Nutrition Business Journal. Penton Publishing. October/November 2005.
Consumerism. While watching “The Story of Bottled Water,” I thought to myself, “Is this all true, or is this really being blown out of proportion?” I simply couldn’t grasp the idea that we as consumers are that wasteful. So, I decided to watch the film again to really grasp the narrator’s message. Then it hit me: in high school AP History, we discussed how bottled water started and how it has become a multi-billion-dollar company.
This competitive advantage has been rendered sustainable as other players have found it difficult to catch up with the company's competitive strategy. In spite of this clear advantage, it was noted that the company faces some challenges being the world leader in soft drink distribution. The canning and bottling of the product which is done in many countries have now fallen into the hands of independent companies, thus it becomes hard for a given company to control the quality of the packaging
As well as mounting political persecution of its products, like they are facing today. They must rely on past experiences to get through, but likely will need to start studying the new trends to stay relevant. Learning from Others Coca-Cola has been able to learn not just from their own blunders, but from other beverage companies they’ve acquired for either product expansion or for resources they have that could help them.