Executive summary
The main idea behind entrepreneurship is the production of goods and services that perform well in their respective markets, thus creating opportunities for optimum financial gains for the entrepreneurs. However, the development of such products and services requires the fulfilment of certain specific conditions to ensure that the goods or services gain acceptance in the market coupled with developing and remaining relevant even as trends in the market change.
As exciting as the launching of such products and services may be, the process of ensuring that they get to the intended consumers while elevating profit levels is not without its challenges. This paper looks at an example of these aspects through a case study regarding Fiji Water and its manufacturing company.
The paper is analytical in nature and it displays some of the aspects that make the product unique and relevant in the market, some of the challenges that the product’s company encounters, how the company has dealt with the challenges in the past, as well as challenges that it currently faces, and possible solutions to its presenting problems. It also provides a possible contingency plan in case such solutions do not prove fruitful.
Fiji Water: Situational assessment
Fiji Water is a bottled water brand from Fiji that sells artesian water containing silica, which is a mineral renowned for its anti-aging and rejuvenation properties. Although the product’s launch market was Fiji, it has gained international acclamation through its distribution to other countries including the United States, Canada, and Australia. Due to such widespread recognition, the products market is vast and dynamic, thus enabling more sales and reaching consumers than the company had earlier anticipated.
Although this element has positive implications regarding financial gain, the vastness of the market also means that the product faces competition from numerous other companies selling similar products. Bottled water is an alternative product, as opposed to supplementary products such as most fast foods that accompany the consumption of soft drinks. As such, Fiji water faces competition from various local brands that sell similar products in different countries.
For instance, in the United States, the brand goes against local brands such as Ice Mountain, Deer Park, Arrowhead, and Poland Spring. In addition, the brand’s classification in the same category as soft drinks puts it in the same pool as renowned brands such as Coca Cola and PepsiCo, both of which have an established clientele worldwide.
These two companies are part of the few in the world that enjoy a form of monopoly in the soft drinks department. Such monopoly has created a challenge for Fiji Water to curve a niche in the market and become relevant.
Certain attributes of the product have enabled it to stand out thus giving it a competitive edge against others in its category. First, the quality of Fiji water has enabled it to gain and maintain approval from consumers and distributors alike. Unlike most other mineral water brands, Fiji water contains light mineralisation and its artesian quality gives it a clean crisp taste that enables consumers to feel the purity of the product.
In addition, unlike most other brands that are bottled at cold mountainous regions, Fiji Water comes from a tropical region, thus giving it a sense of exotic luxury, which is refreshing for the consumers. Good quality ensures that consumers repurchase a product in the future and market it to other potential customers through the word of mouth. Secondly, the uniqueness of its packaging ensures that consumers are in a position to distinguish the product from others on sight when shopping for bottled water.
When the company introduced its brand, especially in the American market, the majority of other brands of bottled water were bottled with paper labels bearing conservative colours. In order to ensure that people shopping for bottled water would immediately spot Fiji water, the packaging company, Fiji Water LLC, packaged the product in square bottles with brightly coloured labels bearing three-dimensional graphics that were stylishly attractive and easy on the eyes.
This bold move ensured that people noticed the product first as retailers lined it up with other brands on shelves in supermarkets and convenience stores and that they would easily recognise it when going for future purchases.
The marketing and strategy for the product also set it apart from the rest of the brands. For instance, in the United States, the product was distributed to wholesale as well as retail stores in strategic cities such as Los Angeles and Miami. In order to reach a wider market, the company supplied the product to big strategic outlets as well as small retail outlets such as drug stores and gas stations, thus ensuring a wide reach and more objective response.
In 2005, the brand had distribution in over 400 Cole’s supermarkets. The bottles also bore a series of unique phrases that created awareness about the product’s origin and quality, such as “bottled in Fiji” and “what ecosystem is your water”. The trend with regard to consumption of bottled water is that people perceive it as a “cool” or “trendy” drink. People have made it “fashionable” to drink bottled water, hence giving it a sense of prestige and luxury.
The marketing team for Fiji Water took advantage of this concept in the pricing by ensuring that the price range is suitable enough to fall into the same category with products from beverage giants such as Coca Cola and PepsiCo, yet low enough to provide an affordable alternative for such other high quality brands. Research shows that consumers would rather pay extra for a good quality product than buy a cheap bad quality product.
In the marketing and distribution of a product, it is important to consider the regulatory framework that governments apply in various countries in order to facilitate the estimation of profitability. For instance, it is important to research on taxation policies and ensure that they favour the company before embarking on a business in a given country.
Some countries impose high importation duties in order to facilitate local production of certain products while others keep the taxes affordable to encourage importation and facilitate reduction in prices on specific products in a country. In instances where the import duty is high, the determinant factor would be the demand for the product, thus laying the basis on whether the sale of the product in such a country offsets the costs incurred during importation.
For instance, during the early years of production of Fiji Water in Fiji, the government of Fiji, upon realisation of the impact the company had on the economy, decided to raise its taxes on exportation of bottled water in order to gain from the venture.
However, due to the influence that the company had and the high employment rates it had created in the country, the company managed to counter the policy by threatening to lay off most of its labour force, which was essentially comprised of local inhabitants from areas surrounding the bottling plant. This move would cause mass unemployment and create the possibility of protests as people ranked the company as one of the most well paying institutions in the country.
It is also important to assess the norms in a country in order to evaluate the acceptance of the product and its consequent profitability. For instance, after a successful entry into the Australian market, Fiji Water tried to make entry into the United Kingdom. However, the company faced opposition from environmentalists and conservationists because of the distance that the water would travel to reach the people and the damage this element would have on the environment.
Britain is one of the countries with the highest quality tap water in the world and thus environmentalists and conservationists thought it illogical to transport drinking water from Fiji to Britain when people could simply drink tap water. They also thought it unnecessary to go through such trouble when there was already a product from France, which was much nearer and thus provided a “cleaner “option that served the same purpose as Fiji Water.
The aspect of provision of alternatives and variety, which had provided for acceptance of the product into the market in other countries, did not seem to apply to the conservative British society as conservation of the environment through the production of least possible amounts of carbon emissions took centre stage as part of the society’s norms.
The introduction of Fiji Water into the British market sparked controversy and created scrutiny of the product and the company’s operations worldwide. It also sparked protests against bottled water, terming it as an unnecessary evil. The main concern was the amount of carbon emissions released into the atmosphere during transportation and production of the products throughout the world and the general effects that such emissions have on the environment, such as the escalation of global warming.
SWOT Analysis
In determining the viability of a product for future success, it is crucial to perform an analysis of the product’s strengths, weaknesses, opportunities, and threats (SWOT).
Strengths
One of Fiji Water’s strengths is the uniqueness of the product when compared to similar products in the market. Most bottled water products come from mountainous regions and undergo high levels of mineralisation, a factor that has a great impact on the taste of the water. Fiji Water undergoes natural filtration by volcanic rocks for 450 years and it contains silica (a mineral with rejuvenating and anti-aging properties), thus requiring very light mineralisation.
Therefore, the water has a crisp clean taste that is appealing to consumers and contributing to the establishment of a more permanent market. Secondly, the pricing of the product ensures affordability by most people in the countries that the company distributes the product. This aspect ensures that Fiji Water is a household product with all the qualities of a luxury brand. The wide distribution of the product is also another notable strength as it ensures for a bigger market and more profitability.
Weaknesses
The product has a few weaknesses, and one such weakness is the location of the bottling company. This aspect is important as it determines accessibility of the product and the expenditure spent on transportation. Although profit margins make up for transportation inconvenience, development of infrastructure in the area would make it cheaper to transport the product by road. Another weakness is the involvement of various other companies in the production and distribution process that makes it vulnerable to lags in decision-making.
Opportunities
The Company is expanding into other countries hence new opportunities, including the possibility of expansion into untapped markets such as Asia and Africa. As global trends keep evolving, they create opportunities for access into other markets. Advancements in technology also provide opportunities for the water company to tap into markets worldwide through Internet marketing.
Threats
The operation of the company and the product face two main threats, viz. the uproar that environmentalists and conservationists create regarding carbon emissions from the bottling and transportation processes and the sustainability of the water source. The most crucial concern of the two is the sustainability of the source considering the area of the source and the amount of water harvested for distribution.
Problem statement
The primary problem exhibited in the case study is the effect that the protests by environmentalists and conservationists have on the productivity and profitability of the company. A rise in boycotts for bottled water products would mean a decrease in consumption and unnecessary expenditures leading to massive losses.
Alternatives
The company can employ several alternatives in the mediation of the primary problem.
- Expansion into rising untapped markets in Asia and Africa
- The sale of bottled water to companies in different countries so that the buying companies can offset transportation costs
- Strategic expansion and concentration on specialised markets
- The use of the Internet in marketing
Evaluation
The criterion for measurement of success for the alternative methods depends largely on reduction in expenditure and increase in profitability. The company should use as little money as possible in expenses while gaining as much as possible from the sale of the product.
Analysis of alternatives
The main advantage of expanding into upcoming markets is that the cost of marketing is reasonable and people are more open to trying out new products.
The most crucial disadvantage for this alternative is the unpredictability of the market. It is difficult to establish the trends in consumption in such markets. The advantage of selling the product to companies straight from the source is that it saves money in expenditure previously applicable to transportation. It also cuts out some of the blame that was the focus of upraise against the product in Britain.
Strategic expansion means that the company should focus on just a few markets that have the greatest potential for growth and profitability. Although this option curtails wide distribution, it promotes smart distribution creating a few reliable markets for the product. Internet sales would reduce advertisement costs greatly while making up for the loss created by the strategic expansion formula.
Recommendations
The most recommendable option among the alternatives would be strategic expansion, as it ensures that the company remains profitable while eliminating unnecessary costs in advertisement and efforts for wide distribution. It also creates a more reliable market for the product, thus reducing the negative variables in evolving market trends.
Action plan
The company should concentrate on selling the product more in countries that are most receptive and indicate higher sales as this ensures profitability and sustainability for the company. The use of research would be vital in the establishment of such markets before the initiation of the implementation process.
Contingency plan
In case the recommended plan does not prove viable, the company would benefit from the exploration of the other alternatives in the analysis as they all aim at the same objectives, viz. reducing expenditure and increasing profitability.