The Prospects of Interesting New Products Company in the Australian Flavoured Water Market - Case Study Example

MARKETING The ever increasing competition in the Fast Moving Consumer Good market (FMCG) segment such as the flavoured water requires companies in this production line to carry out SWOT analysis in order know their positions in the market. This is especially true for companies such as Interesting New Products Company that plans to introduce its flavoured water products in the Australian market. As a result the company has to carry out the SWOT analysis for its flavoured water products it plans to sell in the Australian markets. Strengths Regarding to the flavoured water product that the company plans to import into the Australian market the strengths that the company has revolves around market related areas, finance related areas, operational related, research and developmental related areas as well as the human resource related areas all aimed at ensuring that the company achieves its objectives of penetrating into the competitive flavoured water market in Australia. For example, the high quality of the flavoured water, packaging, distribution channels, superb advertisements about the flavoured water carried youth by the company are some of its strengths. (Wedel, 2000) Weaknesses The weaknesses surrounding the company’s flavoured water include factors within the organization that may hinder Interesting New Products Company from achieving its objectives of successfully penetrating into the flavoured water market in Australia. These factors include, lack of modernized technology in the company to be used in preserving the drink, improper distribution channels, lack of quality packaging materials that makes the company’s products inferior, high costs of carrying out flavoured water business in Australia and inadequate inventory size. Opportunities The company’s opportunities surrounding its products are the external factors that are helpful to the company in achieving its products. These factors include the life style trends of the people in Australia where the majority of plain water consumers are shifting to flavoured water due to its low sugar content, low calories and serves as a good taste alternative. The other opportunity lies in the business and product development in the Australian market segment because the only major player in the industry is Masafi flavoured company and this leaves a big market gap that can be exploited by Interesting New Products Company. Threats However even with the above mentioned opportunities the company faces several threats in its efforts to penetrate flavoured water market in Australia. These threats include competitor’s intentions. This is because both the major and minor players already in the industry may have intentions aimed at preventing other company’s from entering into the industry. Another threat is the seasonality effect. This is especially true as the company has to strive to establish the seasons when the flavoured water is mostly consumed by people in Australia. In addition, legislative effects and environmental effects and regulations are other threats that the company may face in Australia. (Wedel et al, 2000) Positioning strategies Being a new company in the flavour water industry Interesting New Products Company will have to strategically position itself in the market so as to gain its competitive position in the market. As a source of sustainable competitive advantage the company will need to develop strong flavoured water brands. It will also need to deliver on the brands promise through building a brand position. The company will also need to give its brand a character and a personality that can be valued by the customers. Using well positioned brands the company will need to build strong customer relationships as well as building a brand culture within the company itself. Business report Table of contents…………………………………………………………………pg 1.0 Abstract………………………………………………………………………5 2.0 Introduction………………………………………………………………….5 3.0 Main body …………………………………………………………………...6 3.1 Product description………………………………………………………6-7 3.2 Competition……………………………………………………………...7 3.3 Proposed market share…………………………………………………...8 3.4 Pricing…………………………………………………………………...8 3.5 Distribution……………………………………………………………...9 3.6 Market segmentation……………………………………………………10 3.7 Positioning………………………………………………………………10-11 3.8 Future demand…………………………………………………………..11 3.9 Product differentiation…………………………………………………..11 3.91 Competitive advantage…………………………………………………11-12 3.92 Legal and ethical issues………………………………………………...12 3.93 Product development…………………………………………………...12 4.0 Recommendations…………………………………………………………...12-13 5.0 Conclusion……………………………………………………………………13. 1.0 Abstract Flavoured water thrives in well established markets where soft drinks are common. Consumers largely look for innovative products that not only satisfy them but those that provide added value. The flavoured water market has in the recent past been spurred by a clear trend dominated by healthy living as well as wellness. The consumers bored by plain water are slowly switching into flavoured water and those keen to avoid sugary soft drinks are also switching into flavoured water because of its low sugar contents, good tasting alternative as well as low carolie ingredients. Although the flavoured water market in Australia has major players such as Masafi flavoured water Products Company, Interesting New Products Company intends to import flavored water into Australian market. This report describes the product, shows the level of competition the company is likely to encounter, details positioning strategies that the company has to adopt in the market, product differentiation strategies, pricing of its flavoured water as compared to those of its competitors and the legal and ethical issues surrounding the industry. 2.0 Introduction The outstanding growth of approximately $2 billion bottled and flavored water market in Australia continues to astound. The market for flavoured water has skyrocketed in the recent past from 14-18% annual rates. This has been driven partly by the realization that flavoured water unlike the plain water contains healthier and energy provider’s ingredients that are required for various body metabolic reactions. The all-new packaged information on flavoured water bottles that is reorganized, updated and completely revised to reflect the true contents of the flavoured water in the market in Australia focuses exclusively on the retail market. With competition being on the record high from other global beverage rivals such as Masafina, Coca Cola, Dasani, Evian, Danone, PepsiCo, Quaker, Aquafina, Propel and other regional brands present in Australian market, Interesting New Products Company must comprehensively analyze the reasons behind the phenomenal rise in flavored bottled water in Australia as well as the rise in consumption levels so as to strategically position itself in the new market. (McKenna, 1988) The analysis will be useful to the company in providing insightful assessment to the inconceivable future promise and unsafe pitfalls inbuilt in continued flavored water ascendancy. The analysis will also be useful to the company in establishing competitive dynamics, factors in future growth and the attitudes of the retailers towards flavoured water which will reflect a true 21st growth in the flavoured water market. The report is therefore very useful to the company’s marketing managers as it will help them identify the opportunities in the market in order to develop targeted promotion plans for the flavoured water the company intends to import and sell in the Australian market. The report will also be useful to the research and development professionals in the company as it will assist them stay on top of the initiatives of the competitors and at the same time help them explore the demand gap that exists in the Australian market for the flavoured water products as well as establishing the demand for the products in the retail arena. The advertisement department in the company will also benefit from this report because they will gain through understanding of the product buyer so as to develop images and messages that compel the buyers and consumers to purchase the products. The business development executives in the company will also benefit from this report as it will help them understand the dynamics of the flavored water market so that they can make wise decisions in the identification of the possible partnerships. The product and brand managers as well as the market researchers in the company will also benefit from the key and vital information that will be availed in this report so that they can carry their tasks more effectively. 3.0 Main body 3.1 Product description Flavored waters unlike the enhanced or vitamin waters are composed of flavour, water and a sweetener in some cases. Flavored water is of two categories, that is, sweetened and unsweetened with various artificial and natural sweeteners. Several kinds of flavored water include Hint flavored water which is composed of pure water which is accented with a hint of natural flavour. This kind of flavored water does not contain sugar or artificial sweeteners. This kind of flavored water has been consumed as an alternative to juice, sodas and other sweetened drinks. Metro mint is another type of flavored product that is manufactured by Soma Beverage Company which combines the purest ingredients that has extraordinary taste and innovative packaging. The product was launched in 2004 and it has a wide market share in Australia. Other types of flavored waters include, O waters, the Aquafina FlavorSplash which is filtered water with a splash of natural flavours from fruits and they are sweetened with a sucralose. (Pine, 1993) This flavoured water does not contain sugar, carbs or calories. The most common flavored waters in Australian market are the Masafi flavored water products which are manufactured using the innovative hot fill technology. This enables the flavored water to retain its distinct freshness and maintain its flavour strength. Due to the hot fill technology used the Masafi flavored water does not contain nay preservatives and as a result this kind of water is highly preferred by many consumers. It follows that flavored water consumers in Australia are more attracted to the flavored waters that contains less preservatives and has a high degree of purification. As a result Interesting New Products Company needs to adopt revolutionary technology that will enable it import and sell flavored water products that contain less preservative so that it can penetrate the market without experiencing stiff competition from its key competitors. 3.2 Competition Competition in the flavour water market in Australia is very stiff and excellent market penetration strategies are required for any new player in the industry. Many international as well as domestic companies have already acquired strategic positions in the market with the largest competitor in the competitor in the flavour water market being Masafi Company that accounts for 60% the total flavored water that is consumed in the Australian market. Coca Cola Company is also a major player in the flavored water market segment accounting for 25% of the total flavoured water that is consumed in that is consumed in Australia. Dasani, PepsiCo, Danone, Evian, Quaker, Aquafina and Propel are other players in the flavoured water market in Australia. Each of This Companies has various competitive factors that enable them to continue operating in the Australian market despite of the stiff competition. For example, Masafi flavour water Company acts the price leader and the rest of the companies follow the prices set by Masafi. This is because although it is not the oldest flavour water company in Australia the company offers a wide brand of flavoured water products at competitive prices. To penetrate into this market effectively, Interesting New Products Company will need to offer its imported products at very competitive prices in order to attract consumers in various market segments. 3.3 Proposed market share The company’s flavoured product market includes the young teenagers segment that makes a great percentage of the population. The larger percentage of this young population segment is already in the consumption bracket of the products from other key competitors. However, since young people are dynamic and move with the current and modern quality products Interesting New Products Company should come up with differentiation strategies that will make its products more attractive and appealing to the young generation that makes the highest percentage of consumers of flavored water products. In addition, the company’s products should have healthier and energy giving products and less sugary ingredients so that the old market segment which has more healthy problems can consume the company’s products. 3.4 Pricing Since the company’s key rivals have already set prices for their products, the company needs to set competitive prices for its products in order to attract more customers. Pricing of products determines the value the consumers will attach to the products because low valued products may seem as inferior to other products even though they may have same quality. As a result, the company’s pricing strategies should aim at enabling the company to penetrate into the already competitive market without necessarily resulting into the loss of value of the company’s products. Hence the company should set its prices at per with its competitors especially in the middle class markets and set higher prices for its products in high class markets. 3.5 Distribution The company’s distribution capacity will be determined by among other factors thorough market research that will stipulate the distribution channels that can be used in various market segments so that the company’s products can reach every part of Australian market. Effective distribution channels of the company’s products will also determine the rate at which the company’s products will gain popularity in the Australian market. As a result, the company should look for effective methods of distribution of its products so that its products can penetrate in every section of the market. The company can use direct distribution methods as well as indirect distribution methods in the distribution of its products. Indirect distribution methods include, having middlemen such as retailers, wholesalers and distributors. Direct distribution methods include provision of products directly to the customers and these methods include the use of retail catalogs, direct mail or distribution of products over the internet. Since the company’s imported products are new in the Australian market both distribution methods are suitable for distribution of the company’s products. 3.6 Market segmentation This is the process of market classification into different subsets that have similar behaviours or have needs that are similar. Segmentation process consists of segment evaluation, segment characterization, segment identification as well as target selection of the segment. It is important for the company’s marketing department to realize that a market segment is likely to respond in a similar way to a given strategy of marketing when each segment is fairly homogeneous in its attitudes and needs. The company can carry out market segmentation by the use of behavioural data, attitudinal, demographic as well as geographic data. (Day, 1980) The company’s revenues will greatly improve when market segmentation is carried out because identifying groups of potential customers as well as similar customers will enable the company to develop and respond with appropriate marketing strategies in every market segment so as to satisfy different preferences that each segment has. Segmentation will thus enable the company have significant marketing effectiveness of its products because with the right segmentations customer satisfactions can be increased and advertising results increased. The most vital purpose for market segmentation is to allow the sales and marketing programs to focus more on the prospects subsets that appear most likely to purchase the company’s products. When this is carried out the highest return for sales and marketing expenditures is attained. (Steenkamp, 2002) 3.7 Positioning Positioning of the company’s products is the way potential buyers see the product being offered to them in exchange of their money. To position its products rightfully in the market the company has to express its products relative to the competitors’ position. This is because any product brand is positioned using the perception it carries in the customers mind. The brand position should be carefully maintained in the market because any slight alteration in the price of the brand may result into significant changes in the prices, for example, reduction in prices of the company’s flavored products may result into the company’s products being associated with the generic segment. The company’s product positioning process involves defining the market in which the brand or the product will compete and explaining who the appropriate buyers are. (Guiltinan et al, 1996) It also involves the identification of the dimensions or the attributes that define the product space. It also involves sampling customers in order to collect information about their perceptions or views about the company’s flavored products and the relevant attributes thus enabling the company’s management establish its products share of mind. In addition, positioning will also help the company in determining each product’s location currently in the product space. 3.8 Future demand The company’s future demand for its products will be necessitated by the current market entry criteria that will either make the company’s products popular in the minds of the consumers or cause less desire for the products amongst the consumers. 3.9 Product differentiation Since several companies have entered into the flavour water production line, the only way new company’s will survive in the market will be through product differentiation strategies such as packaging, pricing in order to make the products unique. Although Interesting New Products Company intends to import its flavour water into the Australian market intensive research need to be carried out in order to come up with the most appealing packaging techniques. This will in turn put the company’s products at a more competitive position. 3.91 Competitive advantage To gain a competitive advantage the company will need to strategically position its products in a differentiated way because the market is already populated with several flavored water products. The uphill task will therefore be developing marketing strategies that will cause a larger number of consumers to change their preferences and shift into new products. 3.92 Product development Thorough research on the areas of product that need to be improved in order to ensure that the company’s products do not lose taste in the market. 3.93 Legal and ethical issues Consumer protection and environmental friendly as well as corporate socio responsibility are other factors that the company should put into consideration once it starts up its business activities in Australian market. (Chris, 2008).These activities contribute a great deal into forming a wider customer base through close interaction with the company’s customers and non customers. 4.0 Recommendations The company should therefore import this new product into the Australian market because as seen earlier there is still a 15% underexploited flavoured water market in Australia. Coupled with marketing strategies that the company will adopt will enable the company to sell its products into a wider market in Australia. 5.0 Conclusion The flavoured water market in Australia is surrounding by stiff competition both from local players and international companies such as Coca Cola. This makes it more difficulty for new players in the industry to capture a significant share of the market. For example, Masafi a local flavour water company commands 60% of the total market in Australia while Coca Cola with its flavoured water products commands 25% of the total market. However, proper marketing strategies such as accurate brand positioning, proper differentiation strategise such as packaging and pricing will greatly enable Interesting New Products Company to attain a segment of the market in Australia. It is therefore important for the company to import its flavour water products into the Australian market because several different marketing options can be used to penetrate into this market. REFERENCES Day, G. (1980), "Strategic Market Analysis: Top-down and bottom-up approaches", working Marketing Science Institute, (Cambridge, Cambridge Press) McKenna, R. (1988), "Marketing in the age of diversity", Harvard Business Review, (New York, New York Press) Pine, J. (1993), "Mass customizing products and services", Planning Review, (Oxford, Oxford University Press) Steenkamp, K. (2002), "International market segmentation: issues and perspectives", (New York, New York Press) Wedel, J. et al. (2000), SWOT analysis, (New York, Macmillan Press) Chris, N. (2008), marketing and legal and ethical issues surrounding businesses, (New York, McMillan Press) Guiltinan et al. (1996), marketing management: strategies and programs, New York, McGraw Hill Publishers     Read More