Marketing Study on Portable Water Cooler Essays

Marketing Study on Portable Water Cooler Essays Marketing Study on Portable Water Cooler Essay Marketing Study on Portable Water Cooler Essay Executive Summary Breeze Waters will introduce a bottled water cooler that is portable and easy to bring outdoors and will provide cool/cold water anytime, anywhere. The product’s main feature is its portability. Bottled water coolers are mostly indoors and are place in a fixed spot in vicinity. Our product will take on the mobility of users as the target market will be professional athletes that are always on the go in their trainings and game tours, and other professionals whose work are mostly on the field and access to a cool/cold water is limited to stores and offices. We are also taking advantage on the health benefits of cold water as a daily human need. The primary marketing objective is to achieve first year Philippine market share of one percent (1%) with unit sales of 1,000,000. The primary financial objectives are to achieve first year sales revenues of P5 million, keep the first year losses to less than 100000, and break even early in the middle of first year. I. Situation Analysis A water cooler is a device that cools water. It is generally broken up in two categories. First is the bottle-less or the point of use (POU) water coolers where the device is hooked to a water supply. Second is the bottled water coolers (BWC) that requires large bottles from vendors. In recent years, with increasing attacks from the environmental movement on bottled water in small plastic disposable bottles, water coolers has emerged an arguably the more environmentally friendly approach to dispensing bottled water. Market volumes for water coolers are holding steady, despite difficult market conditions. Whilst the overall market was stable, figures showed an increased bias in favor of POU coolers as against BWC. However this decline for BWCs is expected to slow over the coming year. Market value in 2009 had decreased since the peak experienced in 2005 but still showing some growth taking as a whole decade since 2001. Philippines market for water coolers had developed slowly since the 1990s, but aggressive cut-price competition has resulted in very low margins that are insufficient to offer quality delivery service to the consumers. Consumers mostly in the public sector felt it was best for staff working in large offices to have ready access to water and for this reason BWCs can provide a more flexible option. In the private sector, too, smaller companies and those, for example on construction sites, who need ready supply of water, choose the bottled variety. However, current market has not yet considered providing cool/cold water to workers that are always on the go and does not stay in an office for a long period of time, through the use of a BWC. To gain market share, Breeze Waters will focus its efforts on a specific target market bringing in the feature of portability as a value to be created in a growing market of water coolers. 1. Market Summary Breeze Waters’ market consists of professional fieldworkers (sales representatives, field auditors, surveyors, etc. ) and athletes who are always on the go and seldom stay inside an office or a building. After being on a field for a long period of time, these consumers would like a drink of cold water especially during hot and humid temperatures, and would find it more convenient if a cool/cold water is readily available. Exhibit A shows how Breeze Waters addresses some of the most basic needs of the target market in a cost-effective manner. The additional benefits like temperature adjuster, being cordless, and chic design of the product just enhances its appeal to the identified segments. Bottled water coolers are operated by either thermo-electric or compressor units. Thermo-electric units are silent and the most cost-efficient to operate but are not suitable for use in very hot environments. Compressor units, on the other hand, are extremely powerful and produce colder water, even in the highest temperatures. Both types can dispense cold, or room-temperature, depending on the particular brand and model. Exhibit A: Needs and corresponding Features/Benefits of Breeze Waters |Target Segment |Customer Need |Corresponding Feature/Benefit | |Professionals Clean and crisp cool water while on the go |Portable water cooler from 12 ounce to 1 liter | |Fieldworkers, |Â   |sizes. | | | | | |Athletes | | | | | |Stays cold for a longer period of time. | |Readily available whenever and wherever |Can be plugged in to any power source. | | |Cordless |Battery operated and rechargeable. | | |Adjust water temperature |Temperature adjuster based on the user | | | |preference. | [pic] 2. Market Demographics The profile for the typical Breeze Waters customer consists of the following geographic, demographic, and behavior factors: Geographics Breeze Waters will initially focus its effort of distribution in the Philippines, particularly in multinational and local companies that have employees engaged in field works such as pharmaceutical companies, heavy equipment companies and other organizations that invest heavily in marketing agents and sales representatives to sell their products. ? Breeze Waters will also cater to Philippine national and college/university sports teams particularly basketball and football. ? Total targeted population is 100,000 users in the first year of operations. Demographics ? There is an almost equal ratio between male and female users. The working group aged 22 to 35 will be the bulk of Breeze Waters products. They are mostly the age group that companies hire to be their sales representatives and/or agents. ? Part of Breeze Waters clientele will be the sports athletes both in university and national levels. This will comprise of users aged 17 to 21. Behavior Factors ? Users enjoy cold and crisp water anytime, anywhere especially after hours of working and/or practice/games. ? Users usually bring handy water containers when travelling long distances. ? Users are always on the go and are assigned to far flung areas where instant access to cold water is unlikely. Market Analysis | | | | | | | |Potential Customers |Growth |2013 |2014 |2015 |2016 |2017 | |Working group aged 22 to 35 |15% |50,000 |57,500 |66,125 |76,044 |87,450 | |Sports Athletes |Â   |Â   |Â   |Â   |Â   |Â   | | National |10% |35,000 |40,250 |46,288 |53,231 |61,215 | | Collegiate/University |5% |20,000 |23,000 |26,450 |30,418 |34,980 | |Other |3% |10,000 |11,500 |13,225 |15,209 |17,490 | |Total |33% |115,000 |132,250 |152,088 |174,901 |201,136 | 3. Market Needs Breeze Waters is providing the market with a handy water cooler that anyone can bring anytime and anywhere, and have a cold and crisp water at their beck and call. The c ompany seeks to fulfill the following benefits that are important to its customers: ? Portable/Mobile. Users can bring anywhere a water cooler to provide them with fresh and cold water anytime they want. ? Rechargeable. Permanent power source will not be needed always as the product runs through battery. Users can just bring spare batteries like for cell phones and digital cameras to continue usage of Breeze Waters. Adjustable Temperature. Users don’t just get cold water, they get the cold water they want. Drinkers of cold water have varying preference as to the degree of coldness in the water they are drinking. Some like it ice cold, some just like it chilled, and some like it depending on the weather. With this feature, Breeze Water is able to give the drinker the freedom to adjust the water’s temperature according to preference. 4. Market Trends Breeze Waters will differentiate itself from other similar products in the market in its portable and rechargeable feature . Research of the current market revealed that no product exists similar to Breeze Waters. Closest product to Breeze Waters is the typical water coolers that operate on a permanent power supply and smallest size cannot be conveniently put inside an average backpack or is too bulky to carry around. The water cooler market is composed of approximately 360,000 bottled water coolers. Over the last several years many bottled water cooler customers have migrated from bottled coolers to mains-fed plumbed-in. POU (mains-fed) water coolers now account for approximately 50% of the market. However, the migration from bottled to POU (mains-fed coolers) has all but ceased. Latest available data (2000 to 2013) showed that the total market will enjoy modest growth of 1% or 2% per annum over the next four years, with little or no change in the product mix between bottled and POU coolers. [pic] 5. Market Growth Using figures based on factual volume and financial data provided directly from members of British Water Cooler Association, the review contained some surprising results as it reported on the trends for Point of Use and Bottled Water Coolers over the last 5 years. There was a modest growth in bottled water coolers and a continuing reduction in the growth for mains fed water coolers, with improved margins for bottled coolers against plummeting margins for mains fed coolers. The same too can be expected in the Philippines as people are clamoring for clean water especially that not all places in the Philippines can provide clean water. Plus the need for cold water especially in areas without electricity is also high. Giving them the alternative of battery operated water coolers albeit in small sizes is more than welcome. [pic] 6. Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis Breeze Waters has several strengths on which to bank the product, but our major weakness is the lack of brand awareness and imaging due to little investment in marketing. The major opportunity for the product is its portability and mobility which is a feature that is yet to be tapped in the bottled water cooler market. A major threat on the other hand is that of the mass availability of substitutes like bottled waters that can easily be bought from stores. Strengths a. Portability/ Mobility Breeze water comes in tumbler-like sizes of twelve (12) ounces and one (1) liter that will be easier to bring or put inside a bag for the yuppies and sportsmen that are always on the go. b. Cordless ? Breeze Waters is a water cooler that is able to cool water from a portable power source (battery pack) without any cable or cord to limit its mobility. Furthermore, the user may opt to cool his beverage at the time of drinking which gives a crisp coolness to the water instead of cold water turned tepid due to long period of time being ignored. c. Rechargeable ? The portable power source that makes Breeze Waters portable is rechargeable. Users can bring as many battery packs as they can when travelling to continue easy access to a cool/cold water anytime, anywhere. d. Adjustable temperature ? Breeze Waters is capable of adjusting the cooling level of water depending on the desired coldness of the user. Weaknesses a. Lack of brand awareness ? Breeze Waters has no established brand or image as no similar products are yet available or/or known in the market. Brand awareness will be the primary goal of advertising in the early months after the product launch. b. Small sizes ? The product’s main feature is its portability and mobility which makes the size to be inherently small. Small sizing of Breeze Waters may not satisfy users as to the volume of water they can cool at one time anytime, anywhere. To counteract this weakness, we will emphasize on the value of Breeze Waters that good things come in small packages. Opportunities a. Growing market for water cooler industry ? Customers are becoming more demanding with regard to the look, features and service of water coolers whether in the office or on the go. b. Product is in the introduction phase of product life cycle ? Breeze Waters can be a pioneer brand in the classification of portable water coolers , and intellectual property may be established. Threats a. Varying substitute products ? Instead of bringing portable water cooler in the field, consumers may just go to any retail stores to buy bottled cold drinks and a wide array of choices are available. Breeze Waters have to intensify marketing of the advantages and benefits of a portable water cooler especially in far flung areas where cold water is hard to come by due to, for instance, the absence of electricity and commercial establishments. In such cases having a cold water to drink is a luxury- a luxury that Breeze Waters only can offer. b. Aggressive cut-price competition of water coolers in the Philippine market ? This resulted to very low margins that are insufficient to offer quality delivery service to the consumers. Breeze Waters’ objective of breaking even with the second-year sales is realistic, given the low margins in the Philippine market for water coolers. 7. Competition Research of the current market revealed the absence of product similar to Breeze Waters with regards to size and features. Hence, no direct competition can be identified. However, several substitutes exist as follows: a. Portable Insulated Water Cooler Jug ? Heavy duty construction resists dents and corrosion. Extra thick insulation keeps beverage hot or cold. Screw tight insulated lid. Interior lid vent for smooth pouring. Fast flow faucet for easy pouring. b. Bottled Beverages ? Any potable liquid substance contained in a bottle. Bottled drinks are not limited to water, it also includes soda, energy drinks and others. c. Tabletop Water Cooler Tabletop water dispenser offers both hot and cold water dispensing and thermoelectric cooling. Lightweight design includes durable ABS construction, push button faucets for hot and cold drinking water, a removable drip tray, built-in cup holder, and full LED display for all functions. Hot and cold water operations have separate on/off switches . 8. Product Offerings Breeze Waters offers the following standard features: ? Operates in an ion-based battery pack capable of easy recharging and replacement ? Temperature of water may be controlled depending on the user’s preference ? Handy- sizes of twelve (12) ounces and one (1) liter ? Chic and stylish First year sales revenues are projected at 1 million, based on 50,000 units of 12 ounces and 50,000 units of 1 liter, sold of Breeze Waters at a wholesale price of 500 and 1,000 respectively. Bigger sizes of Breeze Waters will be introduced in the second year and will be focusing on providing cold water to areas without electricity, as a direct competition of main stream water coolers operating through a permanent power source. 9. Distribution Breeze Waters will be distributed through a network of wholesalers and retailers in the top 100 Philippine markets. Among the most important channel partners being contacted are: ? Electronic specialty stores Breeze Waters will be included in featured electronic must haves of the season (summer). ? Appliance Centers Leading appliance centers in the country will carry Breeze Waters in stores, in catalogs and also on-line. ? Bottle fillers To line up with the traditional water coolers and dispensers, Breeze Waters will be included as a handy and chic version of water coolers now available in the market. ? Sports apparels stores Breeze Waters will be introduced as a better and permanent substitute to conventional water jugs and tumblers as workout companion. Distribution will initially be restricted in the Philippines, with appropriates sales promotion support. Expansion outside the Philippines will follow after target sales have been reached. 10. Keys to Success The key to success is being able to engage big companies and teams to contract with Breeze Waters. Through this, the company can establish niche and loyal customer base. As the target market of the product are athletes and field workers who usually travel places, bringing Breeze Waters with them will also serve as advertisement to places where regular publicity and promotions of Breeze Waters cannot reach. 11. Critical Issues As start-up business, Breeze Waters is still in the introduction stage. The critical issues for Breeze Waters are: ? Establish itself as the premier provider cordless and portable water cooler. ? Emerging microbial control issues in cooling water systems ? Constantly monitoring consumer satisfaction, ensuring that the growth strategy will not compromise service and satisfaction levels. II. MARKETING STRATEGY Breeze Waters will aggressively be courting sports apparel shops and bottle filling stores to intensify the product’s distribution to sportsmen/athletes and industry field workers, on the first phase after product launching. Being able to attach Breeze Waters to a popular sports person or team will be a good mode of advertising and publicity for the product. The same thing with the field workers, companies can add to their usual procurement Breeze Waters product for their field personnel and even to office based workers. Being able to contract with big companies will give a steady stream of sales for Breeze Waters at least as the product goes about the introduction stage. After launching Breeze Waters, it will join the season must haves of specialty electronic stores that will present Breeze Water products as personal collectibles, gift items and the likes. Finally, Breeze Waters will join other electronic appliances and conventional water coolers and dispensers in appliance centers nationwide. 1. Mission Breeze Waters mission is to provide cold and crisp water anytime, anywhere through a portable and cordless water cooler, chic and small enough to carry around or put inside an average backpack. 2. Marketing Objectives ? Maintain positive strong growth each quarter (notwithstanding seasonal sales patterns). ? Achieve a steady increase in market penetration. ? Achieve 1% market share in the water coolers market through unit sales of 1 million in the first 2 years of operation. 3. Financial Objectives ? Sales of to achieve first year sales revenues of P5 million. ? Keep the first year losses to less than 500,000. ? Break even early in the middle of first year. 4. Target Markets As mentioned in Exhibit A above, efforts will be focused to the field workers agents and sports people who spend most of their time outdoors. 5. Positioning For professionals on the go who like their cold and crisp cold water readily available anytime, anywhere. Unlike conventional water coolers, Breeze Waters are easy enough to carry around to give the drinker instant access to cold water without the need of a permanent power source. 6. Strategies The utmost objective is to become the pioneer of cordless water coolers available in the market, serving our fieldworkers and athletes in the outdoors where access to cold and clean water is limited to stores in a given area. The marketing strategy will seek to first create customer awareness concerning the offered product. Compared to other industries, the cooler industry has a significant opportunity to use marketing and PR to drive business forward. Small distributors will be tapped given their entrepreneurial expertise. Breeze Waters will be matched with the right markets (fieldworkers and athletes primarily), and the right players within the market. In addition, we like our brand to be perceived as the pioneer in the market that delivers innovative and state of the art water coolers at reasonable prices. 7. Marketing Program ? Pricing. This will be based on a per product retail price. Distribution. Breeze Waters will be introduced to four different channels: electronic specialty stores, appliance centers, bottle fillers, and sports apparel shops. ? Advertising and Promotion. Aside from collaborating with top companies and school and national sports team, promotions will come in small packages as smal l distributors especially in rural areas will also be utilized to widen the reach of the product. Aesthetics will also play an important role in Breeze Waters advertising, as consumers are naturally drawn to attractive things and the photography we will be using reflects the quality of the products and attention to detail we put into it. Customer Service. Perpetual warranty will be provided. Breeze Waters believes that products sale is not the end of the cycle. Customer satisfaction is constant and hence perpetual. 8. Marketing Research We need to cover two main elements of market research: ? Manufacturers. We need to know the market of manufacturers in the geographic area of our target market, including market trends and developments related to manufacturers of water coolers. ? Channel Marketing. We nee to know the trends in channel competition, emergence of new channels, economics, major competitors and substitutes, new technologies and major players in the target market. Being in the introduction stage, our research is mainly secondary research generated by keeping up with the media, including trade press, international association of water cooler companies and the Internet. We should quickly establish a strong filing system so that we can use the information that appears in secondary sources and catalog and organize for effective use later on. III. Financials The following sections will outline the important financial assumptions. Breeze Waters will address break-even analysis, sales forecast, expense forecast, and indicate how these activities link to the marketing strategy. 1. Break-even Analysis The Break-even Analysis indicates what is needed in monthly revenue to break even. Break-even Analysis |12 ounce |1 Liter | |Monthly Units to break-even |1,000 |500 | |Monthly Sales break-even | 500,000. 00 | 500,000. 00 | |Assumptions: |Â   |Â   | |Average per unit revenue |500 |1000 | |Average per unit variable cost |350 |700 | |Estimated monthly fixe d cost |150,000 |150,000 | 2. Sales Forecast Breeze Waters conservatively projected its sales. It will steadily increase sales as the advertising budget allows. Our sales will have a steady minimum increase of 10% per year both for the 12 ounces and 1 liter sizes of Breeze Waters. Sales Forecast |2013 |2014 |2015 |2016 |2017 | |Sales: | | | | | | |12 Ounce Breeze Waters | 6,000,000. 00 | 6,600,000. 00 | 7,260,000. 00 | 7,986,000. 00 | 8,784,600. 00 | |1 Liter Breeze Waters | 500,000. 00 | 550,000. 00 | 605,000. 00 | 665,500. 00 | 732,050. 00 | |Total Sales | 6,500,000. 00 | 7,150,000. 00 | 7,865,000. 00 | 8,651,500. 00 | 9,516,650. 0 | | | | | | | | |Direct Cost of Sales (70% of Sales) | | | | | |12 Ounce Breeze Waters | 4,200,000. 00 | 4,620,000. 00 | 5,082,000. 00 | 5,590,200. 00 | 6,149,220. 00 | |1 Liter Breeze Waters | 350,000. 00 | 385,000. 00 | 423,500. 00 | 465,850. 00 | 512,435. 00 | |Subtotal Cost of Sales | 4,550,000. 00 | 5,005,000. 00 | 5,505,500. 00 | 6,056,050. 00 | 6 ,661,655. 00 | 3. Expense Forecast The expense forecast will be used as a tool to keep Breeze Waters on target and provide indicators when corrections/modifications are needed for the proper implementation of the marketing plan. The same with monthly sales, expenses are also expected to grow at least by 10% each year and a steady contribution margin of 30% for five years. |Monthly Expense |2013 |2014 |2015 |2016 |2017 | |Payroll | 420,000. 00 | 462,000. 00 | 508,200. 00 | 559,020. 00 | 614,922. 00 | |Sales and Marketing Expense | 600,000. 00 | 660,000. 00 | 726,000. 00 | 798,600. 00 | 878,460. 00 | |Depreciation Expense | 60,000. 00 | 66,000. 00 | 72,600. 00 | 79,860. 00 | 87,846. 0 | |Leased Equipments | 144,000. 00 | 158,400. 00 | 174,240. 00 | 191,664. 00 | 210,830. 40 | |Utilities | 120,000. 00 | 132,000. 00 | 145,200. 00 | 159,720. 00 | 175,692. 00 | |Insurance | 24,000. 00 | 26,400. 00 | 29,040. 00 | 31,944. 00 | 35,138. 40 | |Taxes | 240,000. 00 | 264,000. 00 | 290,400. 00 | 319,440. 00 | 351,384. 00 | |Total Expenses | 1,608,000. 00 | 1,768,800. 0 | 1,945,680. 00 | 2,140,248. 00 | 2,354,272. 80 | | | | | | | | |Percentage of Sales |24. 74% |24. 74% |24. 74% |24. 74% |24. 74% | |Contribution Margin | 1,950,000. 00 | 2,145,000. 00 | 2,359,500. 00 | 2,595,450. 00 | 2,854,995. 00 | |Contribution Margin/Sales |30. 00% |30. 00% |30. 00% |30. 00% |30. 00% | IV. controls This plan is about implementation, introducing new and innovative products and making it better. It is worth nothing if not implemented. In this chapter we look at specific implementation programs, and the details that it takes to make it happen. ? Implementation. The following table and chart identify the key marketing programs. Dates and budget are clearly established. Point persons are informed of their main programs and they are on board with implementation We will be tracking plan vs. actual results for each of the programs and discussing them at our monthly meetings. The programs will be revised each year. This year’s plan includes only the programs to be implemented this year. Milestones |Â   |Â   |Â   |Â   | |Corporate Identity Revisions |3-Jan |5-Feb | 10,000. 00 |KMDM | |PR Development Quotes |20-Jan |22-Oct | 20,000. 00 |ACM | |Website Online |2-Jan |30-Mar | 55,000. 00 |KNDM | |Standard Page Brochure |3-Mar |30-Apr | 50,000. 00 |KNDM | |PR: Sponsorship in schoo l leagues |12-Jun |30-Sep | 350,000. 00 |ACM | |Targeted Advertising |16-Aug |15-Nov | 100,000. 0 |KMDM | |Athletes (collegiate/national) |16-Aug |15-Nov | 500,000. 00 |ACM | |Industry Fieldworkers |11-Sep |31-Dec | 300,000. 00 |ACM | |Press Release 1 |6-Jun |6-Jun | 5,000. 00 |KMDM | |Press Release 2 |1-Dec |1-Dec | 5,000. 00 |KMDM | ? Marketing Organization. Our Marketing Department is headed by Arnold C. Madrio, a seasoned marketer exposed in various marketing efforts brought about by his previous experiences in the field. We need the marketing department to maintain its professional integrity above and beyond the specific associates looking out for our marketing goals and implementing the marketing program as best fits our strategy. ? Contingency Planning. The most likely change in the marketing scheme is adding bigger sizes of Breeze Waters and introducing the same to a different market segment. We will be keeping a close eye on the market trends related to this plan. As of today, we expect we can develop our niche and focus without direct competition from the market with the same product specifications. Worst case scenario is that Breeze Waters cannot support itself on a going concern basis and having to liquidate equipment and intellectual capital to cover liabilities.