Bottled Water Industry In India

Bottled Water Industry In India Pest analysis plays an important role in the beginning of any organization activity/processes as it go through all the functioning aspects of an individual organization and creates a strategy for the various operations. The organization environment is made from various factors ie. a)Political factors-Bottled water industry which falls under FDA.The government plays an important role as they set the rules and regulation for the organization manufacturing. The industry have to go with the rules otherwise they will get charged fine. The following factors which can cause bottled water industry to have variances in their profits or results- Changes in tax laws, account standards, tax rates and regulations Political factors for international companies as companies recently started selling their products into US, so there are restrictions in transferring capital across border, changes in government. Changes in business patterns which includes competitive product, pricings and their ability to maintain share of sales in market, how the company make necessary arrangement with its infrastructure like distribution, technology, bottlers . b)Economic factor- Last year the economy of India was not good, and now its booming but it doesnt effected the bottled water industry. The market is quiet tough and there are other water companies existing now, so industry has decided to enter US. The market in US is very competitive and highly brand conscious, so there is a heavy investment done by companies to build its brand . c)Social factor- Everyone want to stay and live a healthy life. Now people are become more conscious about their diets. This affected the alcoholic beverage industries as people are more into drinking water, coke as compared to beer and alcoholic beverages. The demand for bottled water which is very convenient in daily life .As the age goes up the generation become more serious about their health and this factor will keep the industry company always in demand and keep going. d)Technological factor- The Bottled water industry should do marketing and advertising in a proper fashion, by giving advertisement in internet and television in a stylish way. The industry is producing different shapes of bottles which is much easier to carry and can throw it into bin when its used. As the new technology introduced,the industry must use them for huge production as the companies are growing in a tremendous way and can give a quality speedy delivery service. PORTERS FIVE FORCE MODEL FOR BOTTLED WATER INDUSTRY BARGAINING POWER OF SUPPLIERS: Long Term Relationship Local Government Selection of suppliers is based on quality, equitable prices, etc BARGAINING POWER OF CONSUMERS: Global consumers Different wants, needs etc Long term relationship Look out for maximum customer satisfaction RIVALRY AMONG COMPETITORS: Intensive competition between firms for the customer loyalty, market share and reputation. Main competitors are Bisleri VS Kinley, Aquafina, International market, Pure Life, etc. POTENTIAL ENTRY OF NEW COMPETITORS: Fake Manufacturer who sounds alike. Economies of Scale Capital Investments Research Development POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCTS: Soda Juices Local water Tap water Beer, etc Porters five force model is basically useful for the marketers which provide a simple step for accessing and calculating the position and competitive strength of organization or company. Porters five forces for Bottled water industry- a)Bargaining power of suppliers- The suppliers are basically the input to any firm. Supply of raw materials, bottles, machinery tools to the firms. The suppliers are providing their material to other industry as well so they are not entirely dependent on water industry, so suppliers can negotiate and possibly a pressure on industry profitability. b)Bargaining power of consumers- The consumers are very knowledgeable and brand conscious. These two factor can lead consumers to be highly price conscious and look for quality products can effect the profitability. c)Rivalry among competitors- Like every other industry, bottled water industry also got some competitors in the market .The major problem is product differentiation, the quality, pricing which can effect the industry d) Entry of new competitors- Entry into the market like small firms can quickly enter into the market by sub contraction their manufacturing activities, secondly new suppliers ,new rates so the industry should be updated with all new technologies and with existing or upcoming competitors, because the new entries can weaken the position and decrease profitability e)Development of substitute product- Bottled water industry-water which is easily available anywhere in malls, stations etc. can have a threat by its substitutes like soda, coke, juices in future. Company introduction- Bisleri Ltd., a company of Italian origin, first introduced under the name Bisleri in Mumbai, India in glass bottles in two varieties bubbly still in 1965. Signor Felice Bisleri who first brought the idea of selling bottled water in India started this company. Parle bought over Bisleri (India) Ltd. In 1969 started bottling Mineral water in glass bottles under the brand name Bisleri. Later Parle switched over to PVC non-returnable bottles finally advanced to PET containers. Since 1995 Bisleri has started expanding operations substantially and the turn over has multiplied more than 20 times over a period of 10 years and the average growth rate has been around 40% over this period. Presently Bisleri has 8 plants 11 franchisees all over India. They have their presence covering the entire span of India. In their future ventures they look to put up four more plants in 2008-2009. They command a 60% market share of the organized market. . It is their commitment to offer every Indian pure clean drinking water. Bisleri Water is put through multiple stages of purification, ozonised finally packed for consumption. . Rigorous RD stringent quality controls has made them a market leader in the bottled water segment. Strict hygiene conditions are maintained in all plants. . ProductPackaging: Bisleri is available in a range of sizes. At the same time Bisleri is promoted by an aggressive print-and-TV backed by hoardings and point-of-sale material. Every interface with the consumer is being used as an opportunity to reinforce the message. In 1998, the branded mineral water market had grown to a 424 million litre business, valued at Rs 4 billion2. There were 200 brands available in the country. In their bid to garner greater market share, many companies, including Parle Bisleri tried to make quality and the purification processes they used their unique selling proposition (USP).In 2000, the branded water market had grown to Rs 7 billion. New players like Pepsis Aquafina, Coca-Colas Kinley and Nestles Pure Life entered the market, which gave bisleri a tough compition. The market was segmented into premium, popular and bulk segments (Refer Table below for the price range in different segments). The premium segment was the least crowded with just four brands: French transnational-Danones Evian and Ferrarelle and Nestles Perrier and San Pellagrino. The popular segment was where most of the action was. Bisleri, Bailley, Aquafina, and Kinley were some of the dominant brands in this segment. In the bulk segment (5, 12 20 lit res), bisleri was a major player with Kinley and Aquafina staying out of this segment. The main objective of segmentation is to increase your sales (i.e. strengthen your position in the market) and increase your profits( Dennis J. Cahill, 1997). It has also has some pros and corns which are discussed as bellow: Advantages: Identify new product opportunities. It helps one to identify the needs of different market segments and developing products to satisfy those needs. Develop more efficient methods of promoting existing products by enabling you to: Identify new or highly profitable markets or new channels of distribution. Target a particular market segment more efficiently than spreading limited resources over a wide area. Maintain sales but reduce expenditure on promotion and advertising. Business based on too narrow a market is vulnerable to market decline and/or competition (from new entrants or imports)( Tony Conway, Jonathan S. 2000). Indeed, in addition to advantages, there are distinct disadvantages in segmentation. These are; Disadvantages: Generally there is an increase in costs with segmentation stemming from increased; Market research the need to better understand the needs of the various market segments. Research and development the need to produce different products for the different market segments. Production costs-the need for different products for different market segments. Administrative costs-the need for separate marketing plans for the different segments. Inventory costs-the need for additional stock to cover variations in demand plus additional stock holding and control systems. Distribution costs-the need for different distribution channels for different market segments. By 2002, the mineral water market was worth Rs 10 billion and was growing at the rate of 40% a year. Kinley and Aquafina made inroads into the market and by March 2002, Kinley had a 10% market share, Aquafina had 4% and the share of Bisleri had come down to 51%. By June 2001, Bisleris market share was 47% and Aquafina and Kinley together accounted for over a third of the market. Bisleri reportedly wanted to focus on the bulk segment because Pepsi and Coca-Cola seemed to be strong in the retail segment and would take some time to strengthen their presence in the bulk segment. To strengthen its presence in the bulk segment, Bisleri was investing heavily on marketing and distribution.. The Break Away Seal The New Product Keeping in mind the consumers need to recognize a genuine product that cannot be tampered with, Bisleri developed the break away seal. The unique cap has been patented and cannot be duplicated or tampered with. This technology development in the product ensures that the consumer will only get a highly safe product when they consume Bisleri packaged drinking water Bisleri by its breakaway seal as an assurance of purity . SWOT Analysis- Definition: SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats. SWOT analysis is an important tool for auditing the overall strategic position of a business and its environment( Nigel Piercy, William Giles, 1989) The Key Distinction Internal and External Issues Strengths and weaknesses are Internal factors. For example, a strength could be your specialist marketing expertise, Lawrence P. Ettkin, Marilyn M. Helms, Michael S. Anderson, 2006. STRENGTHS: Value for Money Strong PR Innovation Cheapest Deal Quality Low Price Convenient to get Comprehensive nation wide coverage of the market urban, semi-urban and rural areas. They have quite a number of brands, covering all segments and filling all gaps. Brand name. Pure and Safe. Unlike its competitors who concentrate only in urban areas, Bisleri is found everywhere. It has a countrywide distribution. A huge network of dealers spread all over the country. Global Expansion: Danone also attempted to boost its position in India by purchasing a stake in Parle Bisleri, Indias largest bottled water company, which is in the process of restructuring its manufacturing and distribution arms and tripling its bottling capacity with an eye towards selling precisely 49% of itself to a foreign investor, quite possibly Danone. Product Development. Global Company. Strong RD Strong Advertising. Top Leading Water Supplier in India 40% Market Share. Packaging. The brand has some 18 manufacturing locations spread across the country. Online Sale and Marketing. WEAKNESS: A weakness could be the lack of a new product. No clear target audience. Easy to duplicate. In the packaged drinking water business, Kinley has recorded 32.7 per cent share, against Bisleris share of 35.8 per cent. New entry in market Opportunities and threats are external factors. For example, an opportunity could be a developing distribution channel such as the Internet, or changing consumer lifestyles that potentially increase demand for a companys products.( Lawrence P. Ettkin, Marilyn M. Helms, Michael S. Anderson, 2006) OPPORTUNITIES: Global Expansion. Consumer Behavior. Divisions of customers into different segments Increasing the sales by online marketing/expansion of their offices. THREATS: A threat could be a new competitor in an important existing market or a technological change that makes existing products potentially obsolete. New entry in market. Growing International market. Other existing companies. Local Companies. TOWS MATRIX- Internal factors strength weaknesses External factors a)Comprehensive nation wide coverage of the market urban, semi-urban and rural areas. They have quite a number of brands, covering all segments and filling all gaps. b)Brand name. c)Strong PR. d)Low Price. e)Global Company. f)Top Leading Water g)Supplier in India. h)40% market share. a)No clear target audience. b)Easy to duplicate. c)In the packaged drinking water business, Kinley has recorded 32.7 per cent share, against Bisleris share of 35.8 per cent. d)New entry in market . Opportunities SO Strategies WO Strategies a)Global Expansion. b)Consumer Behavior. c)Division of customers into different segments d)Increasing the sales by online marketing/expansion of their offices a)By using strong financial position the company can expand their offices in various regions and divide the customers in to different segments to know the consumer behavior. b)By using proper public relation, marketing tools it can expand the business globally a)As the market is very huge and there are chances of new entries/competitors, company can expand their offices and can do more brand awareness throughout and provide a good customer satisfaction. Threats ST Strategies WT Strategies a)New entry in market. b)Growing International market. c)Other existing companies. d)Local Companies. By using proper way of brand awarenesss. By keeping a proper track of the product and quality with customers demand helps company to make themselves differ from their competitors. By keeping a proper record of the sales network through different offices can helps company in strong distribution and to compete their competitors Strategic clock- To stay competitive in this heavy market place can only be achieved by getting customers and offering better service.Bisleri is adopting a low strategy as they are delivering best brand of the country in cheap rates.Even though there are many other companies offering same product in competitive rates,but due to companies long time stability and with a good marketing customer are attached and definitely Bisleri can stay longer in this sector. KTDC By considering the strategic clock the Bisleri should do more concentration towards its marketing strategies and product developments interms of quality,service,delivery can provide a better outlook for company compared to competitors. Stakeholders impact on company- The cooperation between the stakeholder and the company gives a success result as it is very important to analyze the stakeholders success criteria and then turning them into a goals. The stakeholder can be a person or an organization which cam impact negatively or positively- Government Environment Shareholders Management Customers Employees Local community Among all these important stakeholders shareholders, employees, management, customers plays a prominent role in success of company. The Bisleri company is spread all over across the country so as per the stakeholders there are some positive and negative impacts which are as follows- a) Rapid growth in the population can lead to increased requirements for drinking water. b) Main challenge of competition has to be tackled by price cutting. Taking the fact into consideration that the companys rivalries have a better competitive advantage in terms of price Bisleri can gain a better edge in the market coming down by price. c) New design and range has to be introduced by the company because the investment in design can make the product attractive . Bisleri should invest more in store expansions and in increasing the number of stores worldwide. d) From this report it is clear that over the years Bisleri has created an image in all over country. This feeling among the people has to be clarified by proper campaigns and advertisements regarding other competitors. e)As new offices will definitely create vacancies for employees. The employees must selected from the local area ,so that they can speak about their product and create more brand awareness. Future Strategies in Bisleri company- Bisleri company is now spreaded all over the country(India) by its strong marketing and financial background and also working out in go internationally. The company is trying to expand its sales to US. In future the company must adopt an stretch strategy to build a good brand and remain core competitive among competitors. By adopting stretch strategy, company can maintain their stakeholders for long term and can grow globally very fast by maintaining compatible culture and strategies. The company will definitely get new leaders, new entrants ,new ideas to expand their business and will definitely be a wow factor in future. Conclusion- Overall to conclude, bisleri has a good market hold in the domestic or Indian market as compare to its competitors which has been described in the theory as above. Bisleri has already cracked the niche market and has taken over a good percentage of water market in todays date but along with that the prices have also hiked up and with growing technological development and to be in business, bisleri still has a long way to go and to come up with new products to stay in the market at the same position. The global bottled water industry is in a very powerful position, but is also under increased scrutiny and criticism