Blair Water Purifiers India

Blair Water Purifiers India strategic marketing planning process Presented by : Reham Mohamed Moustafa Yara Shahwan Dian Zorkany Rania Zeid Tarek Zeid Strategic analysis ? The Audit Stage ? Scanning the External Macro environment ? Political legal ? Economic factors ? Sociocultural factors ? Technological factors ? Scanning the internal and external micro environment ? Internal-environment analysis ? External microenvironment analyses ? Demand forecast ? End Users needs ? Factors affecting consumer behavior ? Consumer buying decision process ? Competition analysis The market sales chart in 1996 ? The product mapping technique ? Weighted competitive strength assessment ? SWOT analysis ? TOWS analysis ? Setting objectives ? Setting Strategies ? Our suggestions ? Porter Generic Strategies ? Mckinsey matrix ? Ansoff Growth Strategy ? Segmentation ? Targeting ? Positioning ? Entry Strategy recommended Strategic analysis: Strategic planning precedes marketing planning by providing a framew ork within marketing plan might be formulated. Based on the assessment of: 1. Organizational capabilities 2. Threats from environmental forces 3. Competitor’s strength and weaknesses 4. Customers’ needs 5. Demand This must be done through the following steps: The Audit Stage Step one: Scanning the External Macro environment: Any marketing strategy must develop out of a detailed understanding of the environment. This is important to: Identify organization’s strategic position. Decide on the future of the organization. Matching organizational resources and capabilities For scanning external environment we should use the PEST model, as it will scan the whole external environment to give management clues about strategic decisions [pic] pic] Chatterjee analysis in the two visits was centred only on the urban cities neglecting the rural ones and this is a drawback as the rural cities in India count for around 80% of the population, his purpose was to make recommendations on market entry and on elements of entry strategy. Political legal: †¢ Chaterrjie confirmed that India is attractive to foreign investment through liberalization †¢ Foreign companies were taxed on income arising from Indian operations and pay taxes on any interest, dividends and royalties received The government offer favourable tax treatment if foreign investors will locate on one of the free zones †¢ Tax rate is higher than the USA, however the return on investment is higher than USA †¢ Trademarks and patents were protected in India †¢ Legislation in India was expensive and protracted that foreign firms prefer arbitration Our suggested improvements and comments: He should have analyzed the following: †¢ Monopolies legislation: to hedge against any monopolistic actions that may appear in the future †¢ Environmental protection law Employment law and this is important if the market entry will be joint venture or acquisition Economic factors: Chatterjee analysis completely missing the economic factors, as he didn’t analyze the Indian economy in any way He should have analyzed the fol lowing: †¢ Interest rates †¢ Inflation rate †¢ Business cycles †¢ Unemployment rates †¢ Disposable incomes As these factors are important to give insights about the economic conditions and the economic growth for the next years so as to know whether the market is potential for entry or not Sociocultural factors: Chaterjee identified his target market to be around 40 million households and he identified their needs and behaviour, but he missed identifying the whole sociocultural factors from the following perspectives: †¢ Population demographics: population size, age distribution , religion ,social class are important factor to be analyzed by any firm before entering any market †¢ Income distribution †¢ Levels of education †¢ Social mobility †¢ Work and leisure time These factors are important especially that the target market for him was the rich well-educated high social class so it’s important to identify this class and its growth Technological factors: Chatterjee analysis emphasized that technology was only available in large Indian cities; the lack of adequate distribution and communication infrastructure in rural India meant that any market entry would begin with larger Indian cities most likely in the west coast. But he should have analyzed many other aspects regarding this issue: †¢ Government spending on research Government and industry focus on technological efforts †¢ The speed of technology transfer †¢ New discoveries and development †¢ Rate of obsceneness Step two: Scanning the internal and external micro environment In this step we will start by analyzing the internal and external microenvironment then finalize it by the swat analysis, which was missing in chatterjee’s study. He ignored mainly the microenvironment regarding the suppliers, stakeholders and intermediary’s . He only analyzed consumers and competitors. [pic] 2-1 internal-environment analysis: Employees: Blair Company employed over 4000 people with 380 having technical backgrounds and responsibilities Cash Flow: company sales revenue for 1996 would be almost $400 million with an expected profit close to $50 million Annual Growth in sales revenue: averaged 12% for the past 5 years Capital assets: ignored by Chatterjee Sales in the international division: would reach almost $40 million in 1996, about $70 million would come from Latin and south America, $30 million from Europe and $40 million from south Asia and Australia Materials: ignored in the analyses though it’s important to scan the need materials for operation and theirs availability in the market, he only pointed that importing a few key components would be necessary at the start of the operations The Mckinsey 7 S model must be used here to finalize the step of internal marketing audit and this wasn’t done by chatterjee Mckinsey 7S [pic] By analyzing these 7S we can know the firm’s core competences and it’s competitive advantage, which can be augmented for new market entry. Check List for internal audit: While doing internal audit for strategic analysis, we can also use the below check list to recognize the organization’s strength and weaknesses and it must be weighted because some weaknesses are of less importance than others , while other strengths are of more importance than others 2-2 external microenvironment analyses: Stakeholders: these were ignored in the analyses although it’s important to scan the stakeholders for the organization Suppliers: again it was ignored in the analyses, our suggestions that the analyses of the suppliers must have be done from the following perspectives: Their number, their prices, their bargain power (if any), their strategic alliances with competitors (if any present), their distribution channels, their management structure Consumers and demand forecast: Consumer’s analysis is essential for any strategic planning as they are the main concern for the organization and this must be done through: Demand forecasting Consumers (end users needs) First: Demand forecast: Chatterjee estimated the market potential based on collecting unit sales estimates for a 10-year period for 3 similar product categories –vacuum cleaners, sewing machines and colour televisions. In addition a Delphi based research firm had provided him with estimates of unit sales of Aquagard, the largest selling water purifier in India. Chatterjee had used the data in two forecasting models available at Blair Company along with three subjective scenarios -realistic, optimistic and pessimistic. But it was conservative as they described only first time sales not replacement sales and it only applied to industry sales in larger urban areas which was the present industry focus. Second End Users needs: The target segment was around 40 million households plus those in another 4 million households that share common needs. They valued comfort and product choice. They liked foreign brands and would pay higher price for such brands. One thing that seemed certain was that many Indians felt the need for improved water quality. Folklore, newspapers, consumer’s activities and government officials regularly reinforced this need by describing the poor quality of water. Quality suffered especially during the monsoons and because of numerous leaks and unauthorized withdrawals from the water system Better educated, wealthier and more health conscious consumers took steps to safeguard their family ‘s health and use water purifiers to purify the water all over the year. This is the target segment for Chatterjee. They are people who value comfort and product choice. They saw consumption of material goods as a way to a higher quality of life. o His analysis was missing forecasting the growth of this segment as his potential market is based on the educated aware segment but he missed forecasting the growth of this segment as the growth of the segment closely relates to the growth of the sales The analysis also missed a deeper look at the target segment. From our point of view, market survey should be conducted to show in details the target segment preferences, their demographics (age, social class, occupation, style of life) whether they like flavours to be added in the water or not, their ethnic direction, even their political views (if they are anti-Americans or not) as thes e factors may affect potential sales in the short and long terms . Consumers in the target market needs (according to Chatterjee) can be summarized as the following 1) Product performance to remove sediments, bacteria and viruses ) Purchase price this is only concern for consumers who boiled water who count for 50% of the target market 3) Ease of installation 4) Warranty and availability of financing for purchase Factors affecting consumer behaviour: We should analyze the uncontrollable and controllable factors affecting the Indian consumer behaviour, the uncontrollable factors are the sum of the macro environment analysis (PEST) but the controllable factors reflect the marketers efforts in designing the 7 PS in a way that make the product convenient for the consumer so from the analysis of the target market done by chatterjee. Also there are other factors like motivation, life style, consumer perception and attitudes towards the product From the consumer analysis we can summarize that consumers in the target market need product of high quality, medium price (to be able to target a wider segments especially in the rural areas as they count 80% of the population and if they were successfully penetrated this will result in huge sales), ease of installation, warranty is needed, the emphasis on the need of healthy life style and better water will be a motive for consumers to buy the product. For consumer analysis, we suggest that he should have used also the decision making process to know exactly what are the forces that affect the consumer’s buying behaviour Consumer buying decision process: [pic] So according to this model we should analyze how consumers in India become aware of the water problem and so the need for purifiers is recognized, then from where consumers get the information (from magazines, newspapers, reference groups) , then how they evaluate alternatives (based on price or quality or warranty or capacity ,,,,) . Then the purchase and post purchase evaluation Competition analysis: It is very important for any strategic marketing plan to deeply analyze competition especially when it is done for new market entry Steps of Product /Market analysis 1. Identifying the generic need satisfied by the product categories (The need for improved water quality) 2. Identify the product categories (types / Classification) The need for water purifiers for household 3. Identify the specific product-markets Water purifiers, candle filters 4. Identify the product-variants (brands) competing with each other. Chatterjee analyzed the competition in a detailed way, which can be summarized in the following: The market sales chart in 1996: Product |Price |Strength (competitive advantage) |Weakness | |Aquaguard |RS 5500 |Huge personal selling force |Needs electricity | | | |Sales calls |Enormous fixed costs for sales efforts | | | |TV commercials |(100-120 millions on sales commissions | | | |Magazines and newspapers advertising |only) | | | |Advertising expenditures RS 1 million |No st orage capacity | | | | |Slow flow rate | | | | |Stop functioning at 190 volts | | | | |Couldn’t eliminate strong odours | |Puresip |RS 2000 |Water could be stored safely for later usage |Promotional tools was limited as it was | | | |Doesn’t need electricity |sold only by small no of independent | | | | |dealers | |Zero B |RS 2000 +RS 200 |3 stage purification process |Lack of onsumer’s awareness | |(Puristore) |yearly |Prevent iodine deficiency diseases |No heavy advertisement | | | |Water can be stored up to 8 hours |No sales efforts | | | |No electricity or plumbing is needed |Limited distribution | | | |Store 20 litters of water | | | | |TV advertisements and point of sales brochures | | | | |Marketing expenditure RS 3 millions | | |Aquarius |RS 4000 |Remove sediments, heavy metals, bacteria, fungi|Life of the device was listed as 40000 | | | |No electricity is needed but need water |liters | | | |pressure | | | | |Heavy advertising (TV, magazines, newspaper s) | | | | |Perfect design | | | | |Superior distribution channels | | | | |Knowledgeable personnel | | | | |3000 independent dealers | | |Delta brand | |More eye pleasing design | | |Alfa Water |RS 4300-RS 6500 | | | |purifies | | | | |Spectrum |RS 4000 | |Remove only suspended sediments not heavy | | | | |metals or bacteria | |Water Doctor |RS 5200 |Third stage ozonator to kill bacteria | | | | More attractive countertop 6-12 litre | | | | | | | | | | | | |Candle Filters | | | | |(Bajaj ) | | | | The analysis shows that the market is Oligopolistic structure The product mapping technique: Quality Puristore Puresip Aquaguard Weighted competitive strength assessment: We should do the weighted competitive strength assessment in the analysis to be able to see the relative importance of key success factors and the relative strength of each competitor on each of these factors |Key success factor |Weight | | O | T | |-Poor water quality in India as a result of infrastructure. |- Competition in India market regarding water purifies. | |-Reinforcement of government officials and newspapers to improve water | | |quality. Regarding Eureka Forbes | |-Life styles of Indians that value comfort and product quality choice. | | |-Ineffectiveness of traditional methods in bacterial and viruses’ elimination. |Huge sales force that highly motivated and well managed. | |-Liberalization and opened Indian economy to foreign investment. |- Tremendous brand equity. | |-Market in India requires more than one design. | | |-skilled labor in India was around Rs. 20to Rs. 25 per hour less than if |Regarding Ion Exchange. | |compared to that in USA. | |-The weak st rategic component of Aqua guard |-ZERO-B purifies marketing efforts will intensify to increase awareness | |-No filter or purifies in India market can remove iron contamination to a |-New advertising program to increase awareness. | |satisfactory level. | | |-No company in India target rural areas. |Regarding Singer. | |* lack of consumer awareness of the consumers of the ZERO-B | | |*the upper middle class households prefer high price and high quality for |-It was superior in comparison to other primitive products in the markets| |foreign brands |in design and distribution channels | TWOS ANALYSIS | | | |Past Huge success of Blair company. | -Product should be worked by | | |-Brand name in USA. |electricity | |Internal elements |-Regarding water purifies company | | | |experts as superior in term of quality|-Lack of sales office in India. | | |and performance. |*lack of sales force | | |-High technology that certified by | | | |WHO. – Product name (Delight) not knowing | | |- Design distinguished from |it might infringe on any existing | | |competitors |brand in India. | | |-Blair Company employee (4000 people | | | |with 380 having technical background) |-They still faced major issues in | | |-Strong financial position |configuring technologies into physical| | |*sales in the international division |products. | |reach almost $ 140 million in 1996 | | | |* Deligth has a distinguish western | | |External elements |design | | | |*the option of using battery is | | | |available | | | |Strategic options | | |-Poor water quality in India as a |S-O* using high technology that is |W-O | |result of infrastructure. certified by WHO to satisfy the need |*We can use the low cost skilful | |-Reinforcement of government |for pure water in India |labour in India to overcome the | |officials and newspapers to improve |*Using the strong financial and |shortage of sales force in India | |water quality. |international division to build up an | | |-Life styles of Indi ans that value |opportunity in the liberalized Indian | | |comfort and product quality choice. |market | | |-Ineffectiveness of traditional |* Using the high tec. to attack the | | |methods in bacterial and viruses’ |Aquaguard weak strategic components | | |elimination. * Using the high quality products to | | |-Liberalization and opened Indian |satisfy the needs of the upper middle | | |economy to foreign investment. |class | | |-Market in India requires more than | | | |one design. | | | |-skilled labor in India was around | | | |Rs. 20to Rs. 5 per hour less than if | | | |compared to that in USA. | | | |-The weak strategic component of | | | |Aquaguard | | | |-No filter or purifies in India | | | |market can remove iron contamination | | | |to a satisfactory level. | | |-No company in India target rural | | | |areas. | | | |* lack of consumer awareness of the | | | |consumers of the ZERO-B | | | |*the upper middle class households | | | |prefer high price and high quality | | |for foreign brands | | | |*to trade up the users of candle | | | |filters to a better safer product | | | |- Competition in India market |S-T |W-t | |regarding water purifies. |*Using the high technology to compete |*we must try to cope the product tec. | | |with the other brands |with India to be able to overcome the | |Regarding Eureka Forbes. *Using the western design to compete |Indian market competition | | |with competitors | | |-Huge sales force that highly | | | |motivated and well managed. | | | |- Tremendous brand equity. | | | | | | | |Regarding Ion Exchange. | | | | | | |-ZERO-B purifies marketing efforts | | | |will intensify to increase awareness | | | |-New advertising program to increase | | | |awareness. | | | | | | | |Regarding Singer. | | | | | | | |-It was superior in comparison to | | | |other rimitive products in the | | | |markets in design and distribution | | | |channels | | | Step three: Setting objectives: The main objective is to consolidate the Indi an market and stimulate tremendous growth, as the situation in India is attractive for foreign investment and considered to be a window of opportunities The objective is smart as it is specific, measurable, achievable, realistic and time framed Step Four: Setting Strategies: Based on the above situational analysis, we can now choose the strategies that will be used to achieve Blair Company’s objectives According to Chatterjee, he identified two entry strategies †¢ Skimming strategy: which means high price (RS 5900) and high quality Where the product design would be superior with higher performance and quality, longer warranty period, more features and more attractive appearance †¢ Penetration strategy: which means low price (RS 4400) and lower quality Our suggestions: First: Porter Generic Strategies [pic] Using Porter’s Generic Strategies, since the competitive scope is broad and competitive advantage is higher cost. We suggest using Differentiation strategy to enter the Indian market . y using the high technology strength of the Blair Company, the product must be high performance regarding to quality and western unique design. Second: using Mckinsey matrix: [pic] Since the competitive position of the firm is considered strong du e to high technology and strong financial position and the market is attractive, we suggest adopting the Protect Position strategy where the company has to invest to grow at maximum digestible rate and concentrate efforts in maintaining strength From our strategic point of view Blairwater must enter the Indian market by acquisition (high investment) using the low cost Indian labour force and the liberalized investment atmosphere in India. Third Ansoff Growth Strategy: [pic] According to Ansoff growth strategy matrix, Blair Water Purifier Company will adopt the Market Development strategy as the market is new but the product is the existing product. Regardless that the product must have some modifications regarding the Indian market, for example it may need extra purifying stage that the Indian water require, may be a whistle that tells the purifiers users that the unit is functioning probably, a small battery to operate the filters for several hours in case of a power failure (a common occurrence in India and other LDCS) or even permitting users to add fluoride, vitamins or even flavourings to their water. Step Five: STP (Segmentation, Targeting and Positioning) [pic] 5-1 Segmentation: Previously we focused on approaches to environmental, customer and competitor analysis, and the frameworks within which strategic marketing planning can best take place. Against this background we now turn to the question of market segmentation, and to the ways in which companies need to position themselves in order to maximize their competitive advantage and serve their target markets in the most effective manner. In Blair’s company case Chaterjee analyzed his target market to be the better educated, wealthier, and more health-conscious consumers who took steps to safeguard their family’s health hand often continued these steps years around. By estimation Chatterjee thought it would be around 40 million, these consumers were similar in many respects to consumer in middle and upper class households in the US and European Union who valued comfort and product choice they saw consumption of material goods as a mean to a higher quality of life, they liked foreign brands and would pay a higher for such brands He reached the conclusion that his target market is these 40 million households plus those in another four million households who had similar values and lifestyles Chatterjee divided the target segments 40 million as follows: *50 % from the target market boil water *10% from the 50% filter the boiling water *40% used a mechanical device in improving water divided to consumers who use candle filters and consumers who use water purifiers *10 % remaining consumers who know nothing about the problem and if they know they don’t want to pay There are three marketing distinct approaches to marketing strategy which exist s uch as 1 Undifferentiated or mass marketing Product-variety or differentiated marketing 3 Target or concentrated marketing These are well illustrated in Figure Marketing segmentation: Dividing the total market into different units, the units are heterogynous with each other We see that chatterjee divided the market using the following 4 segmentation factors into 4 segments: He used the demographics (age) , social class (to show the buying power ,income and education ),Family size (to show the demand volume ) ,geographic (between rural and urban ) and volume of usage 5-2 Targeting: Choosing one or more segment Chatterjee chooses segment 1,2 and 3 and ignored segment 4 5-3 Positioning: Positioning is determined according to the price strategies that Chatterjee mentioned whether if it skimming or penetration, product design for the skimming strategy would be noticeably superior with higher performance and quality longer warranty period, more features and more attractive appearance than the design of the penetration There are several positioning possibilities performance and taste, value for the money/low price, safety, health, convenience, attractive styling, avoiding diseases and health related bills and superior American technology. The only position he considered taken in the market was that occupied by Aquaguard protect family health and service at your doorstep. According to the differentiation entry that we selected, the positioning should be Superior American technology and design, performance and taste. Due to the three segments that we mentioned above, Chatterjee must design three different marketing mix as shown below: Model of smaller capacity for segment 1, model for larger capacity for larger houses for segment 2 and 2 models for segment 3 that would remove iron, calcium and other metallic containments that were peculiar to particular regions, for example Calcutta. Question 2: The 3 ways to enter the Market: †¢ Joint working arrangement †¢ Joint venture company †¢ Acquisition Main three Factors while selecting the best entry method: Litigation Problems could extend a case for easily a generation †¢ Foreign companies were taxed on Income arising from Indian operations †¢ The foreign company should pay taxes on also any interest, dividends, and royalties received and on any capital gains received from a sale of assets. Licensing Consideration: Chatterjee Analysis †¢ Blair Company Financial Position will be minimal †¢ Expenses: 30,000 in capital for production facilities and equipment , another $ 5,000 for office facilities †¢ Annual fixed costs should not exceeds $ 40,000 †¢ these investments would be offset by the Licensee’s payment to Blair company for technology transfer and personnel training †¢ Decrease of annual fixed costs to $ 15000 once Indian national are hired, trained and left in charged †¢ Duties of the Indian Labor will include seeing how the units are produced in USA with Blair company specification. The licensee would pay to Blair company around 280 R. S for each unit solid in the domestic market and 450 R. S for exported units, so the average will be around 300 R. S Licensing Analysis Brief: †¢ Indian company would manufacture and market the product. †¢ Licensee fees would be remitted to Blair company per unit basis over the term of the agreement Licensing Definition: A contractual agreement whereby a multinational marketer (the licensor) makes available intangible assets – such as patents, trade secre ts, know-how, trademarks, and company name- to foreign companies in return for royalties or other form of payments Licensing Pros and Cons: Pros: †¢ Quick and easy way to enter the market. Could be the only way to open the market. †¢ Provides life extension for products in the maturity stage of their life cycles. †¢ Is a good alternative for foreign productions and marketing? †¢ Royalties are guaranteed and periodic. †¢ Licensing can overcome high transportation costs which make some exports noncompetitive in export market. †¢ Licensing is immune to expropriation. Cons: †¢ No full control over production and marketing. †¢ Royalties are negligible compared with equity investment potential. †¢ There is a danger of creating competition in third country, or even home country markets if the licensee violates territorial agreement. Joint Venture/ Acquisition: Chatterjee Analysis: Financial investment and annual fixed costs would be higher and depnd on the scope of operations. †¢ Estimates of annual fixed expenses via acquisition would be same for joint venture †¢ Estimates for the investment might be considered higher/lower depend on what will be purchased. †¢ Assumption where made on the skimming, penetration pricing strategies Joint Venture Brief: †¢ Blair company will be a partner with an existing Indian company specially for manufacturing and marketing the product †¢ Profits will split between the two companies according to their agreement Acquisition Brief: †¢ Blair company will purchase an existing Indian company †¢ Profits will belong to Blair company Join Venture Definition: A long term partnership between two or more companies sharing equity and risk with the purpose of making profits in a target market. Pros: †¢ Potential for higher profits. †¢ More control over production and marketing. †¢ Better market feedback. †¢ More experience in international marketing. Cons: †¢ Great investment of capital. †¢ Higher level of risk. †¢ Potential conflicts between partners. Acquisition Definition: Ownership by the international firm in foreign markets Pros: †¢ Maximum profits. †¢ Full control over production and marketing. †¢ Better market feedback. †¢ Great experience in international marketing †¢ Integration of operations on a worldwide basis. Cons: High capital and management resources requirements. †¢ Higher risk of expropriation Why Acquisition is the better entry way for Blair Company : Based on all the mentioned analysis we have found that the Acquisition will be the best entry way due to all the acquisition pros the maximum profits, the full control and the better market feedback. In addition it will avoid the Licensing problems example no control over production and marketing as the Indian labor will know how the units are produced and their specifications as they must be trained in order to reduce the cost as the Indian Labor cost is less than the American Labor cost. Therefore, this is considered a negative point; As for the joint venture it is not considered a good entry way as in India the Litigation Problems could extend a case for easily a generation in addition to the higher level of risks and the potential conflicts between partners. ———————– WEAKNESSES Areas of relative disadvantage that: Indicate priorities for marketing improvement Highlight the areas and strategies that the planner should avoid OPPORTUNITIES Environmental trends with positive outcomes that offer scope for higher Levels of performance if pursued effectively: Highlight new areas for competitive advantage THREATS Trends within the environment with potentially negative impacts that: Increase the risks of a strategy Hinder the implementation of strategy Increase the resources required Reduce performance expectations STRENGTHS Areas of (distinctive) competence that: Must always be looked at relative to the competition If managed properly, is the basis for competitive advantage Derive from the marketing asset base S3 Adults 25-45 Social class A, B High income Healthy life style Regions with iron contaminants S4 Adults 25-45 Rural areas Social class c Low income Low infrastructure S2 Adults 25-45 Social class A, B High income Healthy life style Large family size Big houses High volume usage S1 Adults 25-45 Social class A, B High income Healthy life style Small family size Flats residence Low volume usags1e Project content [pic] Submitted to Dr Usama Saleh