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The Brita Products Company

Marketing Capability
Powerful ability to influence distributors relating powerful strategy of
advertising.

= 50:50 how it works and how it tastes



Excellent distribution network
Nationwide reach
Excellent dealer relationships
a large marketing budget, and an experienced research and development
team

Market performance
According to the surveys in page 4, customers were buying 2 or 3 filters a
year. This information can be confirmed from the table of Brita Unit Sales,
1989 to 1998 with similar proportion between Systems and Filers in the
first two years at 2.35 filters in 1989 and 2.99 filters per System in 1990
respectively. Moreover, this proportion for the number of filter to systems
was increasing significantly during 1990s until 5.2 filters per system in
1998 with stagnating in the late 90s. That is to say, even though there
was significant increasing of sales quantities of filters during that time (,
the percentage which is the number of using filter to a system had not
changed.
Therefore, I believe that the saturation state of Pitcher style products

market was becoming closer. This argument is able to be supported from


the percentage of increase of Brita Unit Sales Table. Until 1996, the
percentage of sale to previous year had showed upward trend, while there
were considerable decrease of them in the last two years (from 87% to
18%).
More volatile character of system units is also exemplifying of price
sensitivity which is considered as the last strategy of sales.

Limitation
What are the reasons for customers to buy Brita?
There is no a simulated test market of faucet filter.
Faced Issue and problem
Clorox fears that the introduction of the faucet filters would affect
negatively on the sale of pitchers and the associated revenue from
the filters.
The company had to continue to pay the royalty to Brita GmbH for
the use of the brand name.
The faucet filtered water did not taste as good as the pitcher
filtered water and Brita had established the brand based on its
value proposition of superior taste as compared to any other form
of water.
SWOT Analysis
The following marketing plan is a response to the current situation and the
addresses the current issues, analyzes the strengths, weaknesses,
opportunities and threats created by the current issues. This plan details
the positioning the new faucet mounted system and discusses the 4 P's
viz. Product, Price, Place and Promotion. The document also provides a

possible execution for the promotion strategy.


SWOT Analysis
Strengths

Market leader of table-top pitcher (83%) and filter (75%) in 1998

80% of pitcher users were still using it a year later

Exponential growth in filter sales

Pitcher delivers water that tasted better

Brita is the market share leader of the pitcher system and filters. Brita's
market share of the pitcher ranged between 75% and 83% from 1992 to
1998. Brita's market share of filters was 75% from 1996 to 1998. The
filter sales have increased exponentially due to the continued use of the
pitcher. Market research indicates that 80% of the pitcher buyers were
still using the pitcher a year later. The average user buys 2.5 filters per
year.

The pitcher system removes water hardness and delivers crisper

tasting water with lower pH.


Weaknesses

Pitcher filter treats only chlorine and lead but does not remove

microorganism and other chemicals

3% to 4% royalty to Brita GmbH for filters

Twice the cost of faucet-mount filter when comparing dollars per

gallon
Filters for the pitcher system treats only chlorine and lead but not remove
microorganism or other chemicals such as pesticide, herbicide, benzene,
and trihalomethane. The pitcher filter treats less water than faucet-mount
system and therefore, costs roughly twice as much when comparing in
dollars per gallon treated. Another weakness is that Clorox needs to pay a
3% to 4% royalty depending on sales to Brita GmbH for using the Brita
name on any type of filters, although it might not buy the faucet filters

from Brita GmbH.


Opportunities

High percentage of people with concerns about the quality of tap

water

Growth of water treatment device used in homes (27% to 38%)

Faucet mount system may increase likelihood to buy Brita product

Based on marketing research, 72% to 75% of consumers have concerns


regarding of the quality of tap water.

The young adults are more

concerned (89%) as compared to seniors (56%). Survey also indicates a


growth in the use of water treatment device from 27% in 1995 to 38% in
1999. The increase is primarily due to the increase use of pitcher system
indicating there is still growth potential in pitcher system.

Another

opportunity is that the faucet mount system may increase likelihood of


buying a Brita product.
Threats

Faucet-mount system may disrupt pitcher sales

PUR and Teledyne plans to heavily advertise their faucet-mount

systems

PUR's and Sunbeam's pitcher filter can remove microorganism

Rubbermaid's pitcher filter lasts longer

PUR is a takeover target by P&G, which could give the fighting

power to PUR
The external threats are from coming from several competitors. PUR and
Teledyne plans to heavily market their faucet-mount systems. PUR's and
Sunbeam's

pitcher

filter

would

remove

contaminants

such

as

cryptosporidium and giardia. Rubbermaid's pitcher filter will last longer


than Brita's.

Also, the faucet-mount system may disrupt pitcher sales.

PUR is a serious take over target for P&G, a leading competitor for Clorox

and the acquisition would give P&G an entry into the filtered water market
and also give PUR the ability to be more aggressive on its marketing and
other spends.
Target stores have started rating systems on level of protection offered by
various products and PUR scores the highest. PUR filter technology is
superior in that it has features that Brita does not including the ability to
filter cryptosoporum (the micro-organism responsible for 111 deaths), and
a mechanical device to indicate when a filter needs to be replaced.

Market Segment and Positioning


Brita is already positioned as the leader in great tasting water through
pitcher sales
Brita avoids false claims (contaminants) controversies by focusing on
taste
Brita has the first-mover advantage build on that with $100 million of
cumulative advertising on taste claim behind it
Brita's advertising in the United States has concentrated on a taste
benefit to the consumer. The message has been split in two parts: how
the Brita Pitcher works and how it tastes. As the product has become well
known, the major focus has been the taste benefit.

Brita claims three

reasons for emphasizing taste: 1) the health benefits halo when talking
about taste, perception of people that water with a good taste is healthier
2) the notion of bottled water industry lacking a reference to health, and
3) the ability of Brita to be "at the top of the mountain" by staying away
from the health benefit controversies.
By 1999, Brita has spent $100 million of cumulative advertising on the
taste claim and has established a leading position in this area. Brita has
promised and delivered clear, crisp, refreshing water through pure and
simple advertising by showing mountain streams, waterfalls, and the
outdoors.

Brita has become the owner of the waterfall imagery. The proposed
positioning targets 72% of adult consumers who are concerned about
household water supply quality.

"Brita Water" meets their need for a

water purification system to limit their exposure to public water supplies


by delivering both a pitcher product and a faucet mount filter.

It

leverages Brita's established differentiation (great tasting water) in the


water filtration systems category.
The power of the company comes from the power of its brand. Brita has
the first-mover advantage and needs to build on that.

"When a new

technology opens the possibility of a new market that may threaten the
existing one, a successful firm should consider entering the new market so
that it will have the first-mover advantage in it." By positioning as "BRITA
WATER", the company can take advantage of the established Brita brand,
and leave room to introduce further technologies such as the faucet
mount system under the Brita umbrella.
We therefore recommend that Brita spend the entire marketing budget in
promoting the Brita brand and the great taste rather than on a unique
product. The faucet and the pitcher systems will co-exist and will not be
marketed on product characteristics but will be marketed as a delivery
mechanism for the water with taste backed by the Brita brand.

Brita's costs for the system and each filter are assumed to be $15.00 and
$3.00, respectively. Scenario 7 provides the optimal result. This scenario
assumes a feature price of $34.99 (70% of units sold) and list price of
$39.99 (30% of units sold) for total net revenue of $43,970,450.
Advertising and promotional spending would total $26,400,000. Scenario
7 could result in a positive first year total gross margin contribution
(system and filters) of $6,725,000.
As consumers are become more health-conscious, bottled water and
water-filtration systems are becoming a necessity for most. There have
been cases in which many people have died due to contaminated tap

water and thus there is a significant emphasis placed on safe, clean water
these days. Some consumers appreciate the portability factors of water
more than the taste and health features. Others place a heavier emphasis
on taste. Consumers are becoming very well informed about healthy living
as more information regarding this matter is rampant in the market
currently.
The level of loyalty within the filtration systems market is high because
once consumers purchase a system, they tend to use it for many years
and only replace the filters. Some consumers are price sensitive and
prefer standard products that remove the most harmful contaminants
only. Other consumers are price-insensitive and demand maximum
performance out of their filtration systems.
Price sensitive consumers can typically be found at mass merchandisers
and department stores. Less price sensitive consumers can be found at
club stores, specialty stores, and drug stores. All of these segments can
be found in grocery stores but the less sensitive consumers are more
likely to purchase our products there as they are more impulsive and if
they see a quality product other than food, they may consider purchasing
it.
Our consumers are likely parents and health-conscious people. Typically
they are educated and understand all the health risks of unfiltered water.
They are likely most responsive to newspaper advertising, the radio and
direct mail. Using television for advertising could be effective too in
displaying the clarity and freshness of our water once its filtered with
water falls and more vibrant visual aids.
There are currently several segments in the industry:
1 Parents
2 Health-conscious singles or couples
3 Older age group (65+)
Older crowds are likely to be more price sensitive but still demand a highperforming product because they have more health-related issues. Parents

are also likely price sensitive but likely demand a standard product. The
health-conscious segment is looking for a high-performing product and are
likely the least price sensitive, since healthier products are typically
known to be more expensive. The most appealing market is the healthconscious consumers because they are the most likely segment to spend
a lot more money on our health products. We must ensure that they
perceive TASTE as synonymous for HEALTH with our advertising campaign
so we can capitalize on this opportunity. This segment is also likely to be
growing at the fastest rate as more consumers are becoming more healthconscious. These consumers likely value bundled products such as
additional filters. Perhaps a set of 3-5 is sufficient and they would likely
appreciate and LED light to remind them to change their filters. They are
likely the most loyal segment and their needs are stable and predictable.
We can continue to improve our filtration system over the years to better
satisfy them. Our competition is likely targeting this segment as well but
our dominant position in the market gives us very high brand recognition
that draws customers to us more than competitors. We still need to offer
our standard low price products to serve the other two segments and
maintain our market dominance, however, our resources must be weighed
heavily towards the health-conscious segment that demands highperformance.

Recommendation
OPTION 1: Launch faucet-mounted system
Pros

Cons

Will serve a more diversified market that is more concerned with

premium performance and is not concern with keeping the water cold in
the fridge (although the water could technically be stored in a jug in the
fridge anyways)

Will receive rapid market adoption since our Brita brand name is

quite recognizable

Will require additional resources in terms of

advertising budget

It may cannibalize our sales

OPTION 2:

Improve our Pitcher filtration line in terms of high filtration

capability in order to compete better with PUR


Pros

Cons

We can maintain our market dominance and render PURs

healthiest choice position as less compelling

Will

require

more

R&D and customers may become more loyal to the PUR line by the time
we launch
OPTION 3: Implement both strategies Improve pitcher filtration system
and introduce the faucet-mounted filtration system
Pros

Cons

Will serve a more diversified market that is more concerned with

premium performance and is not concern with keeping the water cold in
the fridge (although the water could technically be stored in a jug in the
fridge anyways)

Will receive rapid market adoption since our Brita brand name is

quite recognizable

We can maintain our market dominance and render PURs

healthiest choice position as less compelling

Will

require

more

R&D and customers may become more loyal to the PUR line by the time
we launch

Will require additional resources in terms of advertising budget

It may cannibalize our sales

Brita should maintain it's current marketing strategy to differentiate their


products on taste. Although due to an increase in consumer health
consciousness, water purity cannot be ignored. Future marketing efforts
also need to combat the PUR marketing campaign based on water purity.
A mixed message should be developed that not only emphasizes Brita's
reputation for superior taste, but also highlights the improved filtration of
the faucet mount system.
Three key recommendations are: 1) Strategic Partnerships: There is still
6/7 of the market that does not have a pitcher system and there is a
potential to influence the rest of the market. The company should partner
with outlets such as restaurants and coffee shops to supply pitcher and
filters at minimal cost to gain more visibility. 2) Re-position the brand
towards health benefits: The threats from bottled water and the PUR
faucet mount are real. Brita must re-position the brand via advertising,
towards health because customers already perceive Brita as the best for
taste. Plus, all customer trends and market research highlight the
emphasis customers are placing on health benefits in choosing a system.
Brita should advertise more heavily on differentiating itself from faucetmount systems. They must display the fact that faucet-mount systems are
not better on taste and health. 3) Spend money on technological
innovation:

Brita is lagging in the ability of its filters to remove

contaminants. The company must spend on R&D and partner with Brita
GmbH to continually develop better filters.

Our strategy is going to be a multiple-segment strategy. We will have a


diversified line of products that cater to high-performance, less pricesensitive consumers as well as products that cater to our more price

sensitive consumers. We will still compete as the best TASTING brand as it


has been working for us for about a decade now. People often associate
great tasting water with a healthy product anyways.

Table of Contents
INTRODUCTION

CURRENT SITUATION
CURRENT ISSUES

MARKETING PLAN

SWOT ANALYSIS

PRODUCT POSITIONING

PRICE 9
PLACE 10
PROMOTION 11
CONCLUSION16
1. Introduction
Brita has been a leading brand in the filtered water since 1988. Brita was
marketed in the US by Clorox. Brita was licensed by Clorox from Brita
GmbH, a German company in 1987. Under the license agreement, Clorox
would buy filters from Brita and the first Brita product was a pitcher water
filter.
As of 1999 over 17 million Brita pitchers were sold in US and the Brita
brand was generating over $ 200 million revenues in a year, an estimated
13%-15% of the total US households were using a Brita Pitcher and Clorox
held a 70% market share of the total market.
2. Current Situation
In 1999, PUR, Clorox's competitor, launched a different water purification
product, which is a filter that screwed onto kitchen faucets. PUR was a
small firm in the industry, however were the only comparable competition
to Clorox and was a possible takeover target by other major consumer
products companies such as P&G. Clorox had its own version of faucet
mounted filters ready to launch and was debating if it has to launch the
same. The plan was to sell the faucet mounted filters at a deficit to build

the customer base, which would then provide a steady stream of revenues
through the sale of filters. This model was very successful in the case of
the pitcher system.
3. Current Issues
Brita was a strong contender in the pitcher market and was a new entrant
in the faucet filter market, a market in which PUR was the early entrant.
There was a fear that the introduction of the faucet filters would slow
down the sale of pitchers and the associated revenue from the filters. The
company had to continue to pay the royalty to Brita GmbH for the use of
the brand name. The faucet filtered water did not taste as good as the
pitcher filtered water and Brita had established the brand based on its
value proposition of superior taste as compared to any other form of
water.
4. Marketing Plan
The following marketing plan is a response to the current situation and the
addresses the current issues, analyzes the strengths, weaknesses,
opportunities and threats created by the current issues. This plan details
the positioning the new faucet mounted system and discusses the 4 P's
viz. Product, Price, Place and Promotion. The document also provides a
possible execution for the promotion strategy.
5. SWOT Analysis
Strengths

Market leader of table-top pitcher (83%) and filter (75%) in 1998

80% of pitcher users were still using it a year later

Exponential growth in filter sales

Pitcher delivers water that tasted better

Brita is the market share leader of the pitcher system and filters. Brita's
market share of the pitcher ranged between 75% and 83% from 1992 to

1998. Brita's market share of filters was 75% from 1996 to 1998. The
filter sales have increased exponentially due to the continued use of the
pitcher. Market research indicates that 80% of the pitcher buyers were
still using the pitcher a year later. The average user buys 2.5 filters per
year.

The pitcher system removes water hardness and delivers crisper

tasting water with lower pH.


Weaknesses

Pitcher filter treats only chlorine and lead but does not remove

microorganism and other chemicals

3% to 4% royalty to Brita GmbH for filters

Twice the cost of faucet-mount filter when comparing dollars per

gallon
Filters for the pitcher system treats only chlorine and lead but not remove
microorganism or other chemicals such as pesticide, herbicide, benzene,
and trihalomethane. The pitcher filter treats less water than faucet-mount
system and therefore, costs roughly twice as much when comparing in
dollars per gallon treated. Another weakness is that Clorox needs to pay a
3% to 4% royalty depending on sales to Brita GmbH for using the Brita
name on any type of filters, although it might not buy the faucet filters
from Brita GmbH.
Opportunities

High percentage of people with concerns about the quality of tap

water

Growth of water treatment device used in homes (27% to 38%)

Faucet mount system may increase likelihood to buy Brita product

Based on marketing research, 72% to 75% of consumers have concerns


regarding of the quality of tap water.

The young adults are more

concerned (89%) as compared to seniors (56%). Survey also indicates a


growth in the use of water treatment device from 27% in 1995 to 38% in
1999. The increase is primarily due to the increase use of pitcher system
indicating there is still growth potential in pitcher system.

Another

opportunity is that the faucet mount system may increase likelihood of


buying a Brita product.
Threats

Faucet-mount system may disrupt pitcher sales

PUR and Teledyne plans to heavily advertise their faucet-mount

systems

PUR's and Sunbeam's pitcher filter can remove microorganism

Rubbermaid's pitcher filter lasts longer

PUR is a takeover target by P&G, which could give the fighting

power to PUR
The external threats are from coming from several competitors. PUR and
Teledyne plans to heavily market their faucet-mount systems. PUR's and
Sunbeam's

pitcher

filter

would

remove

contaminants

such

as

cryptosporidium and giardia. Rubbermaid's pitcher filter will last longer


than Brita's.

Also, the faucet-mount system may disrupt pitcher sales.

PUR is a serious take over target for P&G, a leading competitor for Clorox
and the acquisition would give P&G an entry into the filtered water market
and also give PUR the ability to be more aggressive on its marketing and
other spends.
6. Product Positioning
To communicate the brand positioning, Brita will be positioned as "Great
Tasting water" from the "Leader in Water Filtration Systems". The
positioning statement is as follows:
"To all those consumers who are concerned about household water
quality, BRITA WATER is the leading choice in Filtered Water that gives you
Great Taste. With BRITA you can have crisp, clean tasting water that is

good for you."

Reasons:

Brita is already positioned as the leader in great tasting water

through pitcher sales

Brita avoids false claims (contaminants) controversies by focusing

on taste

Brita has the first-mover advantage build on that:

Brita has $100 million of cumulative advertising on taste claim

behind it
o

Brita promises and delivers clear, crisp, refreshing water & owns
the waterfall imagery

According to surveys, in 1999:

72% of Consumers are concerned about household water quality.

Consumers are interested in taste & Bacteria is way down the list

and therefore is not a major obstacle to overcome, the main pitch of the
competitors
o

38% use water treatment systems

35% do not use a device but a trend developing where the

number taking no precautions declined from 47% in 1995 to 35% in 1999


o

38% use bottled water

Brita's advertisement to reinforce its leading position by continuing

to show mountain streams, waterfalls, and the outdoors


Brita's advertising in the United States has concentrated on a taste
benefit to the consumer. The message has been split in two parts: how
the Brita Pitcher works and how it tastes. As the product has become well
known, the major focus has been the taste benefit.

Brita claims three

reasons for emphasizing taste: 1) the health benefits halo when talking
about taste, perception of people that water with a good taste is healthier
2) the notion of bottled water industry lacking a reference to health, and

3) the ability of Brita to be "at the top of the mountain" by staying away
from the health benefit controversies.
By 1999, Brita has spent $100 million of cumulative advertising on the
taste claim and has established a leading position in this area. Brita has
promised and delivered clear, crisp, refreshing water through pure and
simple advertising by showing mountain streams, waterfalls, and the
outdoors.
Brita has become the owner of the waterfall imagery. The proposed
positioning targets 72% of adult consumers who are concerned about
household water supply quality.

"Brita Water" meets their need for a

water purification system to limit their exposure to public water supplies


by delivering both a pitcher product and a faucet mount filter.

It

leverages Brita's established differentiation (great tasting water) in the


water filtration systems category.
The power of the company comes from the power of its brand. Brita has
the first-mover advantage and needs to build on that.

"When a new

technology opens the possibility of a new market that may threaten the
existing one, a successful firm should consider entering the new market so
that it will have the first-mover advantage in it." By positioning as "BRITA
WATER", the company can take advantage of the established Brita brand,
and leave room to introduce further technologies such as the faucet
mount system under the Brita umbrella.
We therefore recommend that Brita spend the entire marketing budget in
promoting the Brita brand and the great taste rather than on a unique
product. The faucet and the pitcher systems will co-exist and will not be
marketed on product characteristics but will be marketed as a delivery
mechanism for the water with taste backed by the Brita brand.

7. Price
Brita pitchers will maintain their current pricing, as this line of Brita has
already been segmented. The Brita Faucet Filter will eventually have its

own segmentation in the future.

At current situation, the Brita Faucet

Filter will be priced at $39.99.


Brita Faucet Filter is a new product and is to be introduced as a high-end,
high quality, high performance Brita product above Brita pitchers.
high price being offered gives a perception of good quality.

The

Also, Brita

receives high profit margin at the $39.99 list price. The direct cost of the
faucet filter is $18. Taking account of the 25% mark up from the standard
retailers like Target and Wal-Mart and 35% mark up from the more upscale
department stores, Brita can sell to the retailers at $29.62 and still earn a
65% profit margin.

At this price, retailers can advertise at $39.99 and

reach their 35% mark up structure.

This would also encourage the

retailers to advertise the list price to reach their mark up goal.


Vantis's market research showed that the Brita faucet mount was
perceived to be superior to the Brita pitcher in contaminants and in
convenience.

Pricing it at $39.99 yields a 122% mark up from its $18

direct cost, which includes the faucet mount system and the replacement
filter. The higher price would further reconfirm consumers' perception of
the superior product.

Also, Vantis's research indicated that the unit sales

and perceptions of value for the Brita faucet mount were price inelastic at
both the $39.99 and $34.99 prices. Pricing at Brita faucet mount system
at $34.99 is forecasted to result in higher unit sales volume.

However,

the $39.99 price would generate a higher total sales amount (see Table A).
Therefore, Brita Faucet Filter is to be priced at $39.99. At this price, Brita
is comparable to its direct competitor PUR.
List Price

First Year Unit Sales Forecast

$ 39.99

1,245,000

$ 34.99

1,395,000

$
$

Total Sales

49,787,550
48,811,050

8. Place

Excellent distribution network

Nationwide reach

Excellent dealer relationships

Clorox has been selling the pitcher based filter system for over 10 years
and has a good reach nation wide. It has established a very good
distribution and dealer network for its current product. This gives the
advantage of positioning and channeling its new product through the
already established network. We recommend that Clorox leverage on the
existing infrastructure for the new faucet mounted filter and this will be
sold through the existing distribution network throughout the nation.
Because grocery stores already have a history of selling the pitcher
systems, we will continue to sell the pitcher systems there.

For mass

merchandisers, however, such as Walmart or Target, we will promote both


products but also focus on product visibility through shelf placement, endaisle and product displays. For department stores, the Ultra models will
be marketed there since the consumers in this segment are more likely to
buy the higher ended product.

9. Promotion
For the promotion of the Brita products, we will be focusing on the taste
component for the pitcher system and the faucet mount.

With Brita's

original campaign for the pitcher, they focused on taste, and for good
reason.

The research showed that when they talked about taste, they

received a residual effect, known as the health benefits halo.


As an additional note, they found that when they talked about the health
benefits, it did not communicate the idea of taste.

The study done by

ACNielsen Vantis concluded that Brita's faucet filter was perceived to


improve the water's taste.

We intend to capitalize on this consumer

perception of taste and the customer-based brand equity by including the


taste benefit in the campaigns.
For the pitcher system, the company noted that consumers found
the taste to be crispier, most likely due to the lower ph created by the
different filtration. Again, the key concept for our promotion is going to be

the taste. The competitors, such as PUR, actually recognized the success
of the taste campaign and decided to go for the health and safety
positions, mainly due to the alleged concern for contaminated water
creating illness as shown by the East Woburn, MA incident, where 403,000
people were made sick and 111 died due to the parasite cryptosporidium
found in the water.

As shown by PUR's financials, the attempt did not

materialize into increased sales and earnings. The taste idea is still the
best course of action to continue to reinforce the consumer perceived
value of Brita.
According to Vantis, this approach is estimated to return 1,245,000
in first year sales when priced at $39.99, and $1,395,000 in first year
sales when priced at $34.99.

In to achieve these sales levels, the

following recommendations will be used for promotions:


Consumer advertising

$17,000,000

Consumer promotion

$ 4,000,000

Trade spending

$ 9,000,000

For consumer advertising, the budget will be allocated towards promoting


the faucet and pitcher systems in magazines, newspapers, the internet
and television.

We will be promoting the taste campaign for both

systems. For trade spending and consumer promotion, we will focus on


obtaining ideal shelf space and end-aisle displays to increase awareness
and traffic.
10. Conclusion
We recommend that Brita must not try to spend money to market its
faucet mounted system as a separate product. Instead, it must just
continue to market its brand and the great taste delivered by its filters.
The new faucet system must be positioned to co-exist with its existing
product line and we strongly believe that the existence of one will not
affect the other and both products will continue to yield profitable

revenues and further consolidate Brita's market position in the filtered


water industry.

1.0

Introduction and Case Background

Water quality issues, especially with regards to drinking water, have


garnered much attention recently in our post September 11 social climate,
but attitudes towards drinking water were not always rooted in fears of a
doomsday scenario.

As the Brita USA case study illustrates consumer

awareness and concern for clean, good tasting, and safe drinking water
led to tremendous growth in the bottled water industry beginning in the
mid to late Eighties.
Perhaps as an effect of the designer and brand label consciousness
consumer atmosphere, that existed in the late Eighties, buying water in a
bottle started to be the thing that you did.

Paying a dollar for "pure

mountain spring" water began to be the choice option, rather than


standing in line to drink from the public fountain. In a short time many
consumers, not just early adopters, began to buy bottled water.

As

bottled water moved from the classes to the masses, consumers began to
be more concerned with price and questioned the worth of paying a dollar
for water.

This reasoning created opportunities for those who could fill

consumers' need for low cost, good tasting, and clean water (while maybe
still conveying a small sense of superiority.) Table 1 illustrates the size of
the bottled water market in 1999 still only an 8% segment of the total
44.5 Billion gallon beverage industry.

These figures also reflect a near

doubling in volume from 1988 unit sales.


Table 1 | Estimated Bottled Water Segment Size in 1999
Percent Buying
Still Water

45%

Gallons

1,530,000,000

Appx. Spent
$

1,530,000,000

Carbonated Water 27%

918,000,000 $

2,754,000,000

Bottled Service (est.)

28%

952,000,000 n/a

Est. Total Bottled Water Consumption

3,400,000,000 Gallons

Est. Cost of Bottled Still Water

$0.0078 per oz.

Est. Cost of Carbonated Water

$0.0234 per oz.

In 1988 the Clorox Company purchased the rights to the Brita water
filtration pitcher from a small German company, Brita GmbH. In exchange
for a 3-4% royalty on total sales and exclusive sales of filters, Brita GmbH
allowed Clorox to design and sell its own pitchers in the U.S. under the
Brita brand name. By 1999 the Brita water filtration pitcher had sold more
than 17 million units and when combined with its captive filter sales it was
generating close to $200 million in revenues per year. Also by 1999, the
Brita pitcher had a market penetration of 13%-15% and held the top
position in the water purification industry with 70% share of the $350
million industry.
Our case analysis will focus on Brita's decision to diversify, or not,
into the faucet mounted filter business. After 10 years of near dominance
in the water filtration industry, Brita was under attack from an upstart
company, PUR, who was positioning to gain market share by focusing on
the faucet mounted technology to deliver filtered water.
several alternatives.

Brita faced

Should they ignore the faucet mounted filter and

focus on maintaining filter sales? Should they compete with their own
faucet mounted filter and potentially cannibalize their pitcher sales? Our
paper will investigate these questions and explore additional issues which
will aid in the development of our recommendations and conclusions.
We will need to understand the financial metrics related to the decision
making, such as how much profit came from filter sales; how long people
kept pitchers and continued buying filters, and how much revenue was
possible from the faucet systems? Additionally, we need to explore what
the market was doing and where it was going in 1999.
maintain its marketing emphasis on taste alone?

Could Brita

What did consumers

want in 1999 - convenience, taste, speed, safety, capacity, or a


combination of all?

Did trends exist in 1999 that could have indicated

consumer attitude shifts regarding drinking water?

Finally, could Brita

have combined all these aspects to predict future competition and


technologies

(refrigerators,

simpler

whole

house

systems,

cheaper

supermarket dispensers.)
2.0

Market Analysis

The Brita pitcher captured a commanding market share position by


providing a simple solution to the problem of obtaining clean, good tasting
water.

The complexity of the technology was embedded in the filter,

which consumers replaced with ease. The simplicity of filling up a pitcher


and placing it in the refrigeration made the product an attractive
alternative to the more complicated whole house and available faucet
options. The "pennies per glass" price attractiveness was another positive
that the pitcher offered over bottled supermarket and delivery drinking
water. Bottled water was 5 to 15 times more expensive by comparison.
A survey conducted in 1998, by Yankelovich Partners, found that two
thirds of Americans claimed to be familiar with expert recommendation to
drink 64-ounces of water a day. Table 2 provides an estimation of water
consumption by U.S. adults. From these estimates the percentage of
Americans currently drinking the recommended amount is less than 20%.
It is reasonable to expect an increase in water consumption as more U.S.
adults become familiar with the recommendation, and those already
familiar increase their consumption to the recommended level.
Table 2 | Estimated Water Consumption by Adults in the U.S.
Average Daily Intake

% of Americans

> 64 oz

20%

10,300,000

< 24 oz

44%

8,497,500

< 64 oz but > 24 oz

36%

Appx. Gallons

6,952,500 to 18,540,000

Values Based on Approximate 103,000,000 household base


As indicated by Graph 1, sales of bottled water grew dramatically from
1988 to 1997.

By 1998 bottled water sales were the largest growing

segment of the U.S. beverage industry.

Graph 1 | U.S. Beverage Market Growth from 1998 to 1997 by Segment


Source: 1999 Beverage Marketing Directory
Graph 2 further illustrates current U.S. consumer attitudes and behaviors
towards

filtered

water.

Most

U.S.

consumers

are

currently

either

purchasing bottled water or have some type of filtration system in their


homes, with the usage the highest in the western U.S. region.
Graph 2 | Filtered Water Product Market Penetration
Source: 1999 Water Quality Association, National Consumer Water Quality
Report
Note: Total percentage of respondents either purchasing bottled water or
that have some type of home filtration system.
To determine potential points of differentiation between the pitcher and
faucet mount filtration systems an attribute analysis was conducted and
summarized in Table 3. Some attributes are positively ranked between
both systems, although several key points of differentiation are identified.
These points include filtration cost, safety from microorganisms, ease of
use, and dispensed quantity.
Table 3 | Attribute Analysis of Pitcher vs. Faucet Mounted Systems
Perceived Benefit

Pitcher System

Filtration Cost

Space Saving

Cold On Demand

Safe from Microorganisms -

Safe from Chemicals

Softens Water

Taste Good

Speedy Delivery

Ease of Installation +
Ease of Use -

+
-

Faucet System

Dispensed Quantity -

Limited by faucet design +


3.0

Financial Analysis

Clorox commissioned the ACNielsen Vantis company to complete a test


market simulation to explore the impact of a Brita entry into the faucet
mounted segment.

The results of the simulation yielded ten possible

scenarios which were dependent on various amounts of promotion,


feature pricing, advertising and competition. A summary of the potential
margins possible (net revenues minus advertising and promotion expense)
for year one of each scenario is presented below in Graph 3.

For the

graph, we assume that each filter buyer also buys two additional filters at
an estimated price of $6.00 and 1,205,000 units are sold. Brita's costs for
the system and each filter are assumed to be $15.00 and $3.00,
respectively.

Scenario 7 provides the optimal result.

This scenario

assumes a feature price of $34.99 (70% of units sold) and list price of
$39.99 (30% of units sold) for total net revenue of $43,970,450.
Advertising and promotional spending would total $26,400,000. Scenario
7 could result in a positive first year total gross margin contribution
(system and filters) of $6,725,000.
An alternative presentation of the ten scenario analysis is presented in
Graph 4.

The graph evaluates ongoing revenues generated by Year 1

buyers as they continue to purchase filters at 3 filters each after year 1.


It also demonstrates that scenario 7 provides the optimal results.

The

shape of the plot is very similar to the 10 year growth pattern exhibited by
the original Brita pitcher from 1988 to 1998.

This should have been

anticipated because as time progresses the original loss caused by the


system cost is off set by the steady influx of filter revenues.
If Scenario 7 sales volumes are repeatable and promotion, advertising,
and part costs remain constant, then the projected annual and cumulative
gross margins will grow as illustrated in Graph 5. Assuming that the filter

buyer base grows yearly, annual margin contributions may reach


$50,105,450 by the end of year 5. By comparison Graph 3 also presents
similar data for years 6 through 10 for the Brita pitcher system.

That

system did not break positive margin contributions until the seventh year.

Graph 5 | Estimated Gross Margin Contributions of Brita Faucet System


From Scenario 7 Including New
System Sales Each Year
Assumptions: Filter Price of $6.00, 3 filter units sold to 100% of system
buyers in years 2

through 5, System unit sales remain constant every

year.
4.0

Recommendations and Conclusion

As consumers become increasingly more health conscious, the demand


for filtered water products should remain strong. Consumer's increased
awareness of environmental factors will ultimately lead to increased
demand for improved filtration. The faucet mounted filtration system's
ability to filter microorganisms, specifically cryptosporidium and giardia, is
a product attribute not currently provided by the pitcher filtration system.
Most consumers will also naturally gravitate to the lowest cost and most
convenient methods of getting filtered water. The cost of water filtered by
either the pitcher or faucet mounted filtration systems are significantly
lower than purchasing bottled water. The faucet mounted system provides
filtered water at approximately half the cost of the pitcher filtration
system. The ease of use, and dispensed quantity of filtered water from the
faucet filtration system are key attributes not provided by the pitcher
filtration system. In our fast paced society, the speedy delivery of clean
water, dispensed in large quantities may be a key point for promotion.
As indicated by Graph 6, pitcher filtration usage is higher than
faucet mounted system in all U.S. regions except for the West. States in
the western region, specifically California, are typically considered

trendsetters for the country. The higher usage of faucet mount systems in
the western region, as compared to pitcher filtration systems, may be an
indication of future U.S. consumer trends away from pitcher filtration
systems.
Graph 6 | Usage of Pitcher Versus Faucet Mounted Filtration by U.S. Region
Source: 1999 Water Quality Association, National Consumer Water Quality
Report
If Clorox were to ignore the faucet-mounted business, they could stand to
lose a significant amount of the market-share to PUR.

Since PUR was

slated to be marketed by Proctor and Gamble at brute force, they could


quickly take-over the water purification market.

Based on the financial

projections of the faucet-mounted business, and continued demand for


filtered water products, it is advised that they pursue the faucet mounted
filtration business in addition to their pitcher business. Although potential
cannibalization of the pitcher filtration systems exists, the opportunity to
gain a foothold in this market is critical in order to keep pace with
expected market trends towards the faucet mounted systems.
Brita should maintain it's current marketing strategy to differentiate their
products on taste. Although due to an increase in consumer health
consciousness, water purity cannot be ignored. Future marketing efforts
also need to combat the PUR marketing campaign based on water purity.
A mixed message should be developed that not only emphasizes Brita's
reputation for superior taste, but also highlights the improved filtration of
the faucet mount system.

The current advertising campaign with a

waterfall could easily be adapted to emphasize both aspects of the


system.
Brita management should also continue to monitor markets trends for
filtration. Further advancements in filtration technology as well as
dispensing system preferences should be closely watched. Advancements
and implementation of improved filtration technology would be beneficial
in combating competitive claims of superior filtration. Potential consumer

trends towards integration of filtration systems into home appliances and


whole house systems could be the source of future competitive pressures.

In 1987, the Clorox Company obtained the US rights to sell a home waterpitcher and filter system made by the German company Brita GmbH. The
pitcher is made of two compartments, upper and lower, and a replaceable
filter. Water is placed into the upper compartment and is filtered as it
flows through to the bottom compartment. Though sales were sluggish in
the first few years of the product's inception, by 1998 the Brita pitcherfilter system had the highest return on sales (34%) of all of Clorox's
products with revenues of 200 million dollars. However, with slowing
demand for its household pitchers, Clorox now faces a threat from the
entry of new type of filtration system, the faucet mounted system, made
by its newly acquired competitor PUR. The faucet mounted system is a
filter that screws onto kitchen faucets with the ability to filter water
directly and, similar to the water pitcher system, requires replacement
filters for continued use. In anticipation of the entry, Clorox developed its
own faucet-mount system and is examining three strategic options:
continuing to build on its install base of pitchers, shifting its budget to
promote the sale of filters, or putting significant resources behind building
a new installed base for faucet-mount systems. An examination of the
Clorox Company, potential market and market trends, competitors, and
customers shows that the company should continue to focus on and
defend its install base by re-positioning itself and focusing on R&D for
filter technology.
The market for Brita systems includes nearly every household in the US
and is enormous at 103 million. In total, only 1/7 of the market had been
captured by all pitcher systems, with Brita enjoying over 75% market
share. Throughout the 1990's, consumer awareness to potential hazards
in drinking water was increased with several high-profile incidents. In one
area, an abnormally high rate of leukemia was linked to drinking water
contaminated with industrial solvents and in another 111 people died
when a parasite entered the water supply. In fact in 1998 the US EPA
declared

that

10%

of

sediments

under

US

surface

waters

was

contaminated enough to pose a threat to humans. This concern of

consumers is further illustrated by figures that show by 1999, 72% of


people expressed concern over water quality.

A general trend towards

healthy living has also emerged as the demand for bottled water and fruit
juice outstrips the demand for soft drinks, coffee and beer. In the water
filtration market specifically, technology has advanced dramatically to the
point where filters have the capability to remove previously un-filterable
micro-organisms.
The Clorox Company is a manufacturer and marketer of consumer goods,
operating predominantly in household goods. With over 3.9 billion in sales
the company acquired the rights from Brita GmbH to sell products, under
Brita

USA,

including

purchasing

filters

from

Brita

GmbH

and

manufacturing their own pitchers. The company's strategy is to deficitspend on the pitchers to build an install base and then make a continuous
stream of revenue on filters. Exhibit 1 shows a view of the contribution to
fixed costs of the pitcher and filter. Throughout the 1990's, as the install
base grew, the contribution from filters grew at an alarming rate. Although
the growth rate is showing signs of stabilizing, the 80% retention rate
combined with the revenue stream from filters puts modest projections to
combined contribution at just under 150 million in 2001. Brita's core
strengths are its first mover advantage, its ability to know its market, its
leverage and control of sales channels, and its size. As the first mover in
the industry, Brita has become an established product with a huge install
base. This is important in the filtration industry because there is inertia to
switch products due to the initial pitcher purchase required. The company
conducts extensive surveys to find out why their customers were buying,
how often they were replacing filters, and how many people were
retained. Management tracks information and is able to correlate survey
data accurately allowing Clorox to make accurate and timely decisions.
Brita is able to use its size and scale of Clorox to obtain shelf space in a
variety of sales channels. The company is able to use its size and position
to deficit spend to fight competitors on price. Brita's main weakness is the
lack of control it has over the Brita filters. Since the filters are

manufactured by Brita GmbH, Clorox plays no role in its design even


though filters the main source of revenue. The company is constantly
under attack from competitors because of its position as market leader.
Brita's customers include all adults ranging in ages from 18 to 65+.
Customers

are

predominantly

interested

in

taste,

removal

of

contaminants, price, and ease of use. In recent years, customer interests


have skewed towards the health benefits. The company has attempted to
address all of these interests by: 1) Positioning itself on taste in its
advertising and taking advantage of the halo effect that is created on
health benefits 2) Including "How it works" sections in advertising 3) Using
promotions such "buy one get one free". Brita has been able to further
identify segments in the market based on its class to mass strategy. A
class of upscale pitchers is marketed in department stores marked up by
35%, and standard pitchers are sold to mass merchants, drug and grocery
stores marked up by 25%. At one time Brita even offered packaging of
filters to appeal to club shoppers. To keep the classes distinct, Brita has
uses a minimum advertised price policy where retail discounts are
discouraged.
As the market leader, Brita has several competitors including, Rubbermaid
and PUR as direct competitors in the pitcher/faucet mounted systems and
bottled water and tap water as other alternatives. Exhibit 2 shows the
relative perceptual positioning of each competitor. Rubbermaid's strategy
is to attack Brita on price/performance, claiming that it is cheaper and
faster at filtering water. PUR on the other hand, has focused its strategy
on the health benefits of its system. Target stores have started rating
systems on level of protection offered by various products and PUR scores
the highest. PUR filter technology is superior in that it has features that
Brita does not including the ability to filter cryptosoporum (the microorganism responsible for 111 deaths), and a mechanical device to indicate
when a filter needs to be replaced. PUR is launching a faucet mounted
system which poses as a threat to disrupt the pitcher industry because of
its perceived ease of use. Faucet mounted systems are perceived to be

better at filtering contaminants (even though they are not) and is cheaper
in terms of total replacement filter cost. PUR has just been acquired by
P&G which poses a serious threat because PUR will have access to the
deep pockets and marketing strategy/practices that P&G is known for.
Bottled water is showing dramatic increases in growth and is perceived to
be the best in terms of health benefits. Finally, conventional tap water
consumption is declining but still offers a free alternative.
Brita should not get into the faucet mount business as it is contemplating.
Exhibit 3 examines 10 strategies for potential entry into the faucet mount
market based on advertising and promotion spending, and competitive
pricing. Scenario 2 is the best in terms of profitability, even though all
scenarios lead to a loss in the first year. Exhibit 4 calculates the Customer
Lifetime Value of the Pitcher system and the Faucet Mount system. As
shown, the CLV of the Pitcher System and Faucet Mount System
respectively is $12.99 and -$11.01. The pitcher system is very profitable
to the company whereas the Faucet Mount System would require heavy
deficit spending to build an install base and may not be able to make it
back on filters. Also, cannibalization of Brita's Pitcher System market,
which would inevitably occur, would be extremely costly. Brita would not
have an installed base advantage as it does in the pitcher market since
PUR is actually already ahead of Brita in terms of development and
marketing of faucet mounts. Instead, Brita should defend its pitcher
system and attempt to grow its install base. Although the pitcher system
market is showing signs of leveling off, Exhibit 1 shows that modest
projections to 2001 are still very profitable. Three key recommendations
are: 1) Strategic Partnerships: There is still 6/7 of the market that does not
have a pitcher system and there is a potential to influence the rest of the
market. The company should partner with outlets such as restaurants and
coffee shops to supply pitcher and filters at minimal cost to gain more
visibility. 2) Re-position the brand towards health benefits: The threats
from bottled water and the PUR faucet mount are real. Brita must reposition the brand via advertising, towards health because customers

already perceive Brita as the best for taste. Plus, all customer trends and
market research highlight the emphasis customers are placing on health
benefits in choosing a system. Brita should advertise more heavily on
differentiating itself from faucet-mount systems. They must display the
fact that faucet-mount systems are not better on taste and health. 3)
Spend money on technological innovation: Brita is lagging in the ability of
its filters to remove contaminants. The company must spend on R&D and
partner with Brita GmbH to continually develop better filters.

Q1.
1.

Sales decline (1999), result of market change bottled water

(fastest-growing industry). (exhibit1)


2.

Should be market led instead of marketing led (ch1 p16 ). As the

market changes, so does the values demanded. Their late response


entails consequences such as:
-

Brita only achieved 35% share compared to 65% PUR FM market

share
-

Retailer, such as BIG W , has installed a display which compares

alternative filtration products. PUR does better.


-

P&G purchased PUR, PUR will now be marketed by establish firm

that is known for its marketing expertise and resources.


3.

Losing sight their own value proposition (provided great tasting

water), inconsistency into their 5 strategies.


Theyre trapped to enter into competitors consistent removal of
impurities positioning. Due to focusing to attack their competitors by
defensive marketing strategy, they forget their basic STP strategy
4.

Late to conduct market research, declining in 1999; they decided to

listen to market by 2004 (project Travolta).


5.

Loss customers equity (ch3 p150 ). Its irony as first four years

they spent money, effort and time to simply explaining its product
(ads:How it works)
6.

External environment driving the changing market (demographics,

technology etc) ->difficulty and misperception of the product technology


also contribute to sales decline.
Q2. Evaluating important factors of competitive positioning, I recommend:
1.

Change current positioning as improved taste whilst maintaining

customers healthy lifestyle, will have 2 impacts:


-

Repositioning our former positioning (improved taste water)

Creating bridge to cater the growing health awareness raise. So it

can be valued as gradual step to change buyers perception toward Britas


brand; so we can enter our competitors market too
2.

Fill gaps in market by producing various tasty bottled waters (sub

branding Brita water)


Execution Steps:
Maximize market research data (exhibit 2-4, 5-14) to do STP process.
1.

Target 3 segments -> Principled filter fans, affluent fridge followers,

assertive self improvers. Develop promotion and advertising strategy that


in line with what trigger of these segment profiles to buy their product
(exhibit13) (customers brand equity).
2.

Positioning concepts

Before theyre doing product segmentation supplanted by an entirely new


technology (from PT to FM). They should find attractive niche, result
customer is willing to pay premium that best satisfies their needs.
3.

Marketing mix for the chosen positioning concept

Product
1.

PM and FM is retained yet with improved technology that even

dumbest customer can use it easily


2.
Price

Various tasty mineral water


:

1.

Charge premium for tasty mineral bottled water

2.

Charge normal price for FM and PT to encourage household with

budget constraints to buy Brita


Place
1.

:
PT&FM: Retailer store with good visual display

2.

Tasty mineral bottled water in health stores, gymnasium and sports

center
Promotion
1.

Membership to retain customers loyalty such as Healthy living. It

will be good media to promote new products, raised word-of-mouth


campaign by satisfied customer, educating about product usage and
benefits
2.

Healthy campaign awareness

3.

Loyalty program (if they returned the old filter get discount)

4.

PT&FM: advertising about the ease using it for daily life and create

healthy future generation image


5.

Being sponsor of sports events for tasty mineral bottled water

Whitney Williams
MKT 428
MW 2:00-3:15
September 20, 2008
The Brita Products Company
John Deighton
January 15, 2002
1. To what do you attribute Britas success?

It is owned by a well established and successful company, Clorox.

They own a large amount of market share.

Each pitcher sale starts a flow of filter sales.

Their customer lifetime value was remarkable. The retention rate is

also a high 80%.

They didnt give up in the early years when sales were very slow

because they believed in their product.

They have a large advertising budget.

They focused advertising equally on how it worked and tasted.

They were so much bigger than all of their competitors, and no one

could really compete on their level. PUR is the only one that comes close.

They have the R&D team that most companies only wish they had.

2. What marketing assets has Clorox acquired in these years of vigorous


growth, and what is the best use to which the assets can be deployed?
Over the years Clorox has gained substantial market share in the
filtered pitcher market. They also have a lot of brand recognition, a large
marketing budget, and an experienced research and development team.
Clorox can use their large market share to attract customers to new or
improved products. Their customers know what types of products they
produce and will not be hesitant to purchase them. Brand recognition will
be very important in the sale of the faucet filtration systems. They claim

to have the best tasting water and according to their research, customers
are more concerned about that than removing contaminants.

Even

though the Brita products are a bit more expensive, people are willing to
pay that price for great tasting water. Because Clorox is so successful,
they have a significantly large marketing and R&D budget.

This gives

them a huge advantage over their competitors. They more money they
can spend on advertising, the more people are going to see the product
and potentially buy it.
3. What are the prospects for filter sales? What are the prospects for the
faucet-mount system? Which would you favor?
Filters have been on a continuous upward slope since being
launched, but from 1994 to 1998 they really took off and sales were very
high.

They are showing no sign of slowing down or decreasing.

They

more pitchers they can sell the better chance of filter sales increasing
even more. There are basically two ways to increase filter sales. First,
you have to encourage people to use their pitchers more so that the filters
will need to be changed more frequently. Second, you have to sell more
pitchers.
The ACNielsen Vantis study showed positive signs for the faucetmount system.

Launching the product will increase the likelihood of

someone buying a product from the Brita line. Even though it is higher
priced, people said they will still purchase it. Also, a great deal of people
said they will use both products together. Not only is Brita trying to target
new customers with the faucet-mount, but also existing ones. They can
be used together because the faucet mount is for convenience and
removing contaminants while the pitcher is for great tasting water.
Personally, I would have both the faucet-mount and the pitcher. I
dont always have time to stop and fill up the pitcher and wait five
minutes. I would want the faucet mount there for when I need a quick
drink from the faucet. Then when I do have time I would want the pitcher
for cold, great tasting water.

4. How will you defend against the new competition?


So far Brita has done a great job fending off their competition.
When you own about 80% of the market share it is hard for anyone to
compete with you. The only company that really even comes close is PUR.
They need to use their large market share and brand recognition to their
advantage.

They should stick behind their products and continue to

market them as a product that makes water taste great. Brita is a brand
that people know and trust and I dont see them losing many of their
existing customers to their competition as long as they continue to
produce quality products.
Conclusion
Courics final decision should be to put the weight of their resources
behind building a whole new installed base in faucet-mounts.
Reason
Launching a new product line of mounted-faucets will increase Britas
market share and have a positive impact on revenues.
Evidence
After calculating customer lifetime value and net present value for each
scenario, I chose to go ahead and launch the faucet-mount because it had
the highest CLTV and NPV. The numbers show that it will be a successful
product and have a positive impact on Brita. The ACNielsen Vantis study
proved that the faucet could live side-by-side with the pitcher and that it
would increase the likelihood of buying a product from the Brita line.
Because Brita has already acquired about 80% of the market they have a
huge advantage over their competition. They already have a steady
customer base and can use that as a starting point when launching the
faucet-mounts. Brita is unique because they use great taste as their
advertising strategy while everyone else uses contaminant elimination.

So far, it has been a successful strategy for Brita and they should continue
to use that to promote their products. In the following pages you will see
my calculations and reasoning behind choosing to launch the faucetmount.

Issue Identification
Role: A consultant to Charlie Couric of Clorox.
The water filtration industry was experiencing some shifts in the
competitive landscape and now Clorox, a market leader, is considering
several options to maintain its dominance in the market. Couric is
considering allocating resources to launch a faucet-mounted filtration
system in response to emerging competitors, notably PUR.
Our objectives are to consider the impact of not entering the faucetmounted filtration market on our market share, brand image and
profitability. We must consider the short-term and long-term implications
of different scenarios including: entering the faucet-mounted market,
increasing our current pitcher sales, and increasing our filter sales.
Our competitions strategies must be analyzed in terms of how much
expected market share they are going to take from us if we do not
respond and how we can respond most effectively. We need to asses our
returns on advertising expenditure to see how impactful our advertising
techniques really are and whether we need to project a different image in
order to satisfy the current market trends. Our distribution strategy must
be assessed and optimized to suit our position in the market.
The level of urgency at the moment is not severe as our major
competitors are still experiencing losses, however, it is expected that they
are going to become more aggressive in their advertising and thus we
need to formulate an effective strategy that will counteract their efforts. It
took the Brita line four years before it began witnessing success. Next
year will be the fourth year since our major competitors launch their
pitcher systems and so we need to implement an effective plan within a
year.
External Analysis
Market Environment

The market environment is characterized by fast growth. As consumers


are become more health-conscious, bottled water and water-filtration
systems are becoming a necessity for most. There have been cases in
which many people have died due to contaminated tap water and thus
there is a significant emphasis placed on safe, clean water these days.
Some consumers appreciate the portability factors of water more than the
taste and health features. Others place a heavier emphasis on taste.
Consumers are becoming very well informed about healthy living as more
information regarding this matter is rampant in the market currently.
Technology is becoming more available in the market to create these
filtration systems. It seems as if every year there is a new microbiological
specimen that people need to be concerned about in their waters, and
technology resolves these concerns almost immediately with improved
filtration systems. Regulators in the industry are always testing claims of
water-filtration and bottled-water companies to ensure that they are
consistent, so it is important to deliver what you promise in this industry
otherwise it becomes very difficult to recover any brand equity.
Companies can choose to compete through price or quality in this market.
Some firms offer standard quality bottled water and filtration systems,
which cater to the needs of specific segments. Other firms have more
sophisticated systems and products that purify water significantly and
some segments do value this. Depending on how companies position
themselves in that regard, appropriate distribution channels can be
selected to capture and distributed their products. Bottled water can be
found virtually anywhere from department stores, mass merchandisers,
grocery stores, vending machines, restaurants, club stores, and even drug
stores. Filtration systems on the other hand are less accessible to
consumers but that is not to say it is difficult to find one in the market.
Filtration

systems

can

be

found

in

department

stores,

mass

merchandisers, grocery stores, club stores, and drug stores. Depending


one which channel is selected, distributor power can vary from low to
high. There are not currently very many substitutes for filtration systems

in the market, however, competition is growing and it is expected that


there will be eventually with products like faucet-mounted systems and
advanced pitcher filer systems. In terms of bottled water there are a lot of
substitutes and it can be difficult to capture a targeted market and retain
them as consumers have many similar products to choose from.
Competitive Analysis
Competitor

Strengths

PUR

Technologically more advanced than us and removed more

Weaknesses Threat Level

contaminants including cryptosporidium and giardia (which we do not)

Offered portable drinking water systems for outdoor enthusiasts

Offered desalinators for marine and military use

Has a higher advertising budget

Competed on HEALTH advantage

Has a diversified line of products including standard and premium

pitcher filtration systems as well as faucet-mounted systems (currently


the market leader in faucet mount system)

Converging on our filter sales as the only competitor with double

digit market share

Still operating at a loss

Holds less than 10% of market share in the pitchers system This

is

our most feared competitor and they are converging on our market share.
The threat is low-moderate at the moment but can become very serious
soon so we must be very wary.
Rubbermaid

The compete on low price

They have comparable performance as us but are converging on

our filter sales with claims that their filters have a longer life cycle

They have a portability advantage with their bottle that has a

carbon filter built in the cap

They just recruited some excellent marketing staff from P&G

They have yet to even market their products

They do not hold a significant market share

Their sales figures are terrible

The threat at the moment is low

but they are planning to advertise more aggressively. They have the

potential to converge on our filter sales and we must keep an eye on them
in the upcoming year.
Sunbeam

Introduced a product that removes microbiological

cysts on top of chlorine and lead

They

are

not

holding

any

significant market share at the moment

They have a weak advertising budget compared to us

Low,

irrelevant at the moment.


Teledyne

Introduced a faucet-mount system recently an is the

only major competitor to PURs faucet-mount system

Currently has the third largest market share in the filter sales

market

Filter market share has been consistently dropping

They have no significant market share, if any, in the pitcher

filtration market

Low at the moment but could be a serious competitor

next to PUR should we decide to enter the faucet-mount filtration market.


Bottled-Water Brands

This market is growing at a rapid rate

and currently holds 8% of all the liquid people drink

Over 70% of households purchased either carbonated or non-

carbonated water

It provides a better portability factor than filtration systems


More expensive to consumers on a per ounce basis Low-moderate

threat level. Currently the market consumes bottled water outside of their
homes more than they do inside their homes. Our filtration systems are
more designed for in-house usage.
All Others

Combined they have a small portion of the market

share that should be ours

Their market share has been consistently

dropping over the past decade

Low

PUR has proved themselves to be our most serious competitor and we


must respond to their strategies. They are positioning themselves on the
HEALTH aspects of things with claims that they purify their water better
than anyone else. We position ourselves on TASTE which has been very
effective for us over the past few years and is anticipated to continue to

work. Their only real advantage over us is their faucet-mounted filtration


system and we should look into launching one of our own to maintain our
competitive position over them. PUR is launching their PUR Plus product
that is competing directly with our Brita Ultra line and we must ensure
that our advertising budget at least matches theirs (it currently does not)
so that we can keep our brand awareness out there. PUR products are
likely found in the same distribution channels that we are in because we
are competing for more or less in the same market. We must continue to
keep our distributors happy with satisfactory margins as well as pre- and
post-sales support.

Consumer Analysis
As consumers are become more health-conscious, bottled water and
water-filtration systems are becoming a necessity for most. There have
been cases in which many people have died due to contaminated tap
water and thus there is a significant emphasis placed on safe, clean water
these days. Some consumers appreciate the portability factors of water
more than the taste and health features. Others place a heavier emphasis
on taste. Consumers are becoming very well informed about healthy living
as more information regarding this matter is rampant in the market
currently.
The level of loyalty within the filtration systems market is high because
once consumers purchase a system, they tend to use it for many years
and only replace the filters. Some consumers are price sensitive and
prefer standard products that remove the most harmful contaminants
only. Other consumers are price-insensitive and demand maximum
performance out of their filtration systems.
Price sensitive consumers can typically be found at mass merchandisers
and department stores. Less price sensitive consumers can be found at
club stores, specialty stores, and drug stores. All of these segments can
be found in grocery stores but the less sensitive consumers are more

likely to purchase our products there as they are more impulsive and if
they see a quality product other than food, they may consider purchasing
it.
Our consumers are likely parents and health-conscious people. Typically
they are educated and understand all the health risks of unfiltered water.
They are likely most responsive to newspaper advertising, the radio and
direct mail. Using television for advertising could be effective too in
displaying the clarity and freshness of our water once its filtered with
water falls and more vibrant visual aids.
Distribution Channel Analysis
In terms of distribution channels department stores take one of the
highest margins next to speciality stores at 35%. They do draw a
significant portion of our performance-demanding consumers. Mass
merchandisers draw our more price sensitive consumers looking for
standard products and take a 25% margin. Other channels including drug
stores, grocery stores and club stores draw a diversified pool of traffic and
it would be difficult to target our efforts to a particular segment.
The higher volume channels such as mass merchandisers and department
stores likely have more bargaining power than the rest of the channels.
We have to keep them happy with acceptable margins, timely delivery
and post-sales support including warranties. We can, however, negotiate
some covenants as we did with the minimum advertised price with our
more premium products. As noted in the case, a breadth of distribution
was important to our company to support our ad budget and for future
prospective product entries. W must develop relationships with as many
channels as we can however maintain our focus on mass merchandisers,
drug stores and grocery stores as they are experiencing the most growth
in their sales volume.

Internal Analysis

Our strategy is revolved around providing a diverse set of products to


capture the needs of different segments in the filtration industry. We add
value by providing standard products are competitive prices as well as
premium products for our more performance-demanding consumers. A
major source of our revenue is filter sales since the life cycle is low and
people have to buy 2-3 per month. We are currently positioned as
premium and value brand that offers innovative water filtration solutions.
We distribute our products through many different channels and have
even recently entered drug stores. With the launch of the PUR pitcher
filtration system, we respond by issuing a 2-for-1 sale which was quite
effective and has kept us as the market leader with a dominating 80%
market share in revenues. We do not offer any faucet-mounted products,
however, we have one ready for launch and are considering it. Launching
this product will give our consumers more choice which is consistent with
our value delivering strategy.
Market Segmentation & Creation
There are currently several segments in the industry:
1 Parents
2 Health-conscious singles or couples
3 Older age group (65+)
Older crowds are likely to be more price sensitive but still demand a highperforming product because they have more health-related issues. Parents
are also likely price sensitive but likely demand a standard product. The
health-conscious segment is looking for a high-performing product and are
likely the least price sensitive, since healthier products are typically
known to be more expensive. The most appealing market is the healthconscious consumers because they are the most likely segment to spend
a lot more money on our health products. We must ensure that they
perceive TASTE as synonymous for HEALTH with our advertising campaign

so we can capitalize on this opportunity. This segment is also likely to be


growing at the fastest rate as more consumers are becoming more healthconscious. These consumers likely value bundled products such as
additional filters. Perhaps a set of 3-5 is sufficient and they would likely
appreciate and LED light to remind them to change their filters. They are
likely the most loyal segment and their needs are stable and predictable.
We can continue to improve our filtration system over the years to better
satisfy them. Our competition is likely targeting this segment as well but
our dominant position in the market gives us very high brand recognition
that draws customers to us more than competitors. We still need to offer
our standard low price products to serve the other two segments and
maintain our market dominance, however, our resources must be weighed
heavily towards the health-conscious segment that demands highperformance.
Low Performance

High Performance

High Price
Low Price
Buyer Choice/Rejection Process
The choice/rejection process of the buyer is as follows:
Why not stick to tap water? Oh yes, it could potentially be harmful to my
health. What choices do I have in the market? Why should I choose pitcher
filters instead of faucet-mounted systems? I guess faucet-mounted
systems are more convenient but Id like to keep my water cold too. How
much money will I need to spend? Whats the highest performing product
at the best price? Ive heard good things about Brita, never really heard
too much about PUR but it looks like they have a healthier line. Why
should I choose Brita? I guess my friend is satisfied and they also say the
water tastes amazing so Ill make the same purchase. But wait, what
about a warranty? And how many times do I have to replace those damn
filters? Is it a complicated process? Well these visual aids on the box are
pretty helpful, and it does seem quite easy. Filters probably do not cost

that much anyways. Okay, Ill try it and see how it works...besides, I can
return it if Im not satisfied. (One year later) Im pretty happy with this
Brita Pitcher system...Id recommend it to my friends.
We can see the different questions the buyer may ask and thus have to
address all these concerns to satisfy their needs and attain their loyalty.
Advertising and word of mouth will have a great impact on the customer
and their dissatisfaction and rejection process of our competitors.
Alternatives
OPTION 1: Launch faucet-mounted system
Pros

Cons

Will serve a more diversified market that is more concerned with

premium performance and is not concern with keeping the water cold in
the fridge (although the water could technically be stored in a jug in the
fridge anyways)

Will receive rapid market adoption since our Brita brand name is

quite recognizable

Will require additional resources in terms of

advertising budget

It may cannibalize our sales

OPTION 2:

Improve our Pitcher filtration line in terms of high filtration

capability in order to compete better with PUR


Pros

Cons

We can maintain our market dominance and render PURs

healthiest choice position as less compelling

Will

require

more

R&D and customers may become more loyal to the PUR line by the time
we launch
OPTION 3: Implement both strategies Improve pitcher filtration system
and introduce the faucet-mounted filtration system
Pros

Cons

Will serve a more diversified market that is more concerned with

premium performance and is not concern with keeping the water cold in
the fridge (although the water could technically be stored in a jug in the
fridge anyways)

Will receive rapid market adoption since our Brita brand name is

quite recognizable

We can maintain our market dominance and render PURs

healthiest choice position as less compelling

Will

require

more

R&D and customers may become more loyal to the PUR line by the time
we launch

Will require additional resources in terms of advertising budget

It may cannibalize our sales

Positioning
Our strategy is going to be a multiple-segment strategy. We will have a
diversified line of products that cater to high-performance, less pricesensitive consumers as well as products that cater to our more price
sensitive consumers. We will still compete as the best TASTING brand as it
has been working for us for about a decade now. People often associate
great tasting water with a healthy product anyways.
Three words to describe our products: CLEAR, CRIPS and REFRESHING
WATER
These words have been effective in the past and thus should be used
consistently with the waterfalls theme.
Recommended Marketing Mix
Product Strategy
Our products are going to include a new and improved Brita Ultra, Brita
Standard, and the new Faucet-Mounted Brita system called The Brita Tap.
All these products will have long life cycles. The filters are going to have
short life cycles of course as they did in the past. Fridges are being more
designed to accommodate larger objects and thus we must measure the
standard fridge capacity and ensure our new products are as large as

possible to hold the greatest volume yet still fit inside the fridge.
The new Brita Ultra will look more aesthetically pleasing with an LED light
to indicate when the filter needs to be replaced in order to better compete
with the PUR Plus product. The Brita Standard can remain the same in
terms of features. The Brita Tap must communicate to the customer on
the packaging that it has a very high contaminant removal filtration
system (on that is at least as good as PURs system). The new Brita Ultra
should also communicate this improved filtration on the packaging.

Pricing & Profit Dynamic


We will keep our pricing higher than our competitors for our more
premium lines including the Brita Tap. We should consider dropping our
gross margins and transferring them over to our distributors in order to
motivate them to increase their sales efforts to our benefit. Refer to
Exhibit 1 for an analysis of our cumulative net income with varying sales
growth, gross margins and ad budgets. We can generate a lot more sales
revenue if we increase our advertising budget so those numbers in the
exhibit are actually understated. We should reduce our gross margin to
48% for the upcoming year and increasing our ad budget to about
$45,000 to compete better with PUR who is investing $40,000. We can use
a metric such as RETURN ON AD EXPENDITURE to measure our advertising
effectiveness. Our profits should be relatively stable with this strategy and
we should keep an eye out for some cannibalization on our Brita Ultra line
due to the launch of the Brita Tap. We will price the Brita Tap slightly
higher than what PURs faucet-mounted system is priced at. Our Brita
Ultra will witness a 5% price increase and our Brita standard will remain at
the same price.
Distribution Strategy
We will reduce our gross margin and pass it over to our distributors to
motivate their sales efforts in our favour. Our gross margin is currently

50% on average and we can reduce this to 48% for next year. This will
allow distributors to offer further promotions of our products particularly
the introduction of our new Brita Tap. Since the Brita Tap is going to be a
more premium product, we must employ the same covenants as we did
with our Brita Ultra line. Distributors will not be allowed to promote the
product below the recommended minimum price. Distributors should be
compliant with this request as we are offering them slightly higher
margins. We will use mass merchandisers to market our Brita Standard.
Drug stores and grocery stores will hold our Brita Ultra and as for the Brita
Tap, it would be best to market it through the drug stores only for the time
being for a more premium feel or employ a similar distribution strategy as
PURs faucet-system.
Advertising & Promotions Strategy
In terms of advertising we will use radio, newspapers, television and direct
mail. This is to ensure our product awareness reaches all our multiple
segments. 80% of the advertising budget should be spent emphasizing
the TASTE aspect with more satisfied FACES of people enjoying the drink.
Also the waterfall theme will remain as it has been effective for many
years. Advertising budget must be increased to $45-$50K to compete
more effectively with PUR and because we are launching a new product.
Sales Strategy
-who is the sales force targeting and where are they located?
-what type of people do they need to deal with? (business people, party
animals, parents?)
-is it more important to understand our products and our value proposition
or their business dynamics and needs?
-what skills do our sales reps need to be better than competitor sales
reps?
-how should the sales forces time be split between existing and new
customers?
-how frequently will the salesperson need to call on accounts? How long

will each account take?


-what NON-selling responsibilities will the sales force have?
-how do we measure their performance?
-how do we encourage good performance and punish poor performance?
-how clear is the salespersons inputs and outputs?
-they should be clear on the target market
-they should have a clear objective for EACH segment
-which sales force strategy has the best impact on the profit dynamic?
The sales force should be focussing a significant portion of efforts on drug
stores and mass merchandisers as they will require the most service. The
sales force should be trained extensively to understand out products very
well and they must know that each product line is different and serves
different consumers. We will reward good sales performance with bonuses
at 50% of pay. Performance will be measured by how many sales account
are secured.
Contingency Plans
As a contingency, I would recommend keeping an eye on cannabilization
rates. If they are too severe on our BRITA UTLRA line perhaps increasing
the advertising budget to portray the different benefits of BRITA TAP AND
BRITA ULTRA would be good. Consumers need to understand the
distinctive benefits and if they do, they can make a more logical purchase.
We have enough time to employ these strategies. By next year we must
launch Brita Tap and if cannibilization is continuous for 3 years we must
consider removing the product, either brita tap or brita ultra, that provides
us with the least contribution. It does not make sense to have 2 products
that serve the same need.

Case: BRITA- In search of a winning strategy


Some of the challenges that Brita faces are as follows:

Decline in sales since 1998. As companys flagship brand, Brita was

expected to contribute double digit top line growth. But in reality, there
was approximately a 5% decline in sales every year since 1998 and this
decline continued until 2006.

Faced the problem of losing customer faith in the Brita brand. Brita

had slowed established a string brand position among consumers over the
ten year period since 1988. It grew to be a $200m grossing company from
a small filter system provider. Brand awareness stood at 70% and 18% of
103m households in US used Brita pitchers. This reputation was at stake
due to the decline in sales and consequently losing its strong share
position in the market.

Heightened

pressure

from

competitors.

There

were

many

competitors who entered the market but failed to succeed against Brita.
Many competitors came up with the similar kind of filters but unable to
succeed due to strong branding of Brita achieved due to its first mover
advantage. But suddenly in 1998, competitors like PUR came up with the
FM product an alternative product to PT filter provided by Brita. This was a
success in the market. There was an increase in competition now and
most competitors pitched around health and safety, an issue sensitive to
consumers.

Consumers shifting to different brands. Previously consumers did

not have much choice over tap water.

The introduction of Brita PT

systems was seen as an innovative product which provided clean and


tasty water. With more competitors entering the market and providing
alternate options, the consumers had more choice to choose from the lot.
With increased choice of products, they had other options over Brita based
on their needs.

Complaints from current Brita users. In an environment where

consumers had many choices to select a filter product, Brita did not adapt

its product to the changes in technology. Many of the Brita consumers had
complaints about the design of the product. Example: some were not sure
when to change the filter? There was no indication on the product when
the filter needed to be changed. Britas PT systems were also perceived as
inconvenient by some consumers.

Increasing popularity of bottled water. Bottled water was a new

innovation. This sector was fast growing and capturing the market share.
There was a tremendous growth of bottled water consumption in 1990s.
Many consumers were switching to use bottled water because it was
convenient, portable and clean.

Inability to recognise shift in consumer trends.

Inability to turn the fortunes around until 2006. There were various

strategies which Brita came up with in response to competition and to


prevent decline in sales. But none of the strategies which Brita came up
with to resolve the losing market share problem was successful and they
did not seem to work. Following are some of the reason why these
strategies did not work:

No consumer focus. Brita was just blindly responding to competitive

pressure. They were clearly responding to sales decline, loss of market


share

and

competition.

comprehensive

market

None

of

research

the
on

strategies
how

involved
the

doing

consumer

perceptions/behaviours have changed?

Looks like they were moving away from their initial brand

positioning of great tasting water and clean water. No market focus seen
on strategies attempted. They are trying to compete with soft drink
beverages. This is far from their safety and health focused positioning.

Most of the strategies were short term. No time given to see their

effects. Need for immediate response from market.

Urgent and flawed technological solutions have been proposed to

come up with a fix to the solving the existing flaws in the product designs.
This doesnt seem to have worked well to solve consumers issues.

Attempt to make the product cheaper than bottled water->

downgrades the health and safety focused brand position. Brita is in the
business of removing impurities and a cheap product doesnt give
credibility about the product.

A standard STP process involves the following:


1.

Market Segmentation

a.

Identify bases for segmenting the market

b.

Develop segment profiles

2.

Target Marketing

a.

Develop measures of segment attractiveness

b.

Select the target segments

3.

Positioning

a.

Develop positioning for target segment/ segments.

b.

Develop a marketing mix for the chosen segment/segments.

Analysis of the Market Segmentation study


The segmentation study was conducted by Brita using an internet based
survey. It was based on a range of factors of consumers such as:
-

General attitudes

Attitude toward consumption of beverages

Information of beverage consumption

Consumption of tap water

Factors that influenced the purchase of filter systems

Life style, values and demographics.

The study identified six possible segments among consumers. But some of
the issues with the segment study were:
a.

Small numbers. Not substantial. Considering the size of the water

purification industry ($350 m at retail every year), only 2000 respondents


to understand the consumers seems to be less. Close to 5000 respondents
would be better.
b.

Internet based not all population can participate.

c.

Also more than 80% of the respondents were filtration system

owners. Only about 20% were non filtration owners. Inclusion of more non
filtration system owners would enable to understand why they wouldnt
want to use a filtration system.
d.

I would except that people aged above 50 would be more health

conscious rather than conservative. This goes to say that they would be
drinking filtered water.

But data suggests that they are tap water

traditionalists. Segmentation by age demographics is not good.


Target Marketing
In order to select the segment, there is a need to develop measure of
segment attractiveness. The following are the list of some of the criteria
that I used in selecting my target segment:
o

The size of the segment

Segment growth rate

Industry trends

Potential gains and risks associated with this segment

Customer needs and behaviours

Segment penetration costs

Customers habits driving the purchase.

Does the firms value proposition match with the benefits asked for

by the consumers from the target segment?


o

Quantity of water consumed by this target segment.

Time spent by consumers at and away from home.

Lifestyle led by the target segment -> busy, healthy, exercising?

Companys objective and resources. Some attractive segments may

no mesh with the long run objective.


o

Profitability in that particular segment.

Attitudes toward water.

The ease with which you can reach this target segment.

Keeping the above criteria in mind, I recommend that Brita should position
itself to attract the following two segments:
Target Segment 1: Affluent fridge followers
Target Segment 2: Principled filtered fans
Value proposition and Positioning Strategy
Selected Target segment 1: Affluent fridge followers
Segment (customer) attributes and Preferences

One

of

the

largest segment: 14.2% of the market ( exhibit 7)


-

Looking for convenience (Exhibit 14).

Looking for clean and good tasting water (Exhibit 14)

Currently less of number of people in this segment use Brita

products. Though this represents high penetration costs, this also means
that there is a very high potential to grow in this segment (Exhibit 12).
-

High income segment. (Exhibit 7)

High growth segment. Number of people using refrigerator systems

is increasing.
-

About 74% use filters in their refrigerator systems (Exhibit 11).

82.5 % of the households in this segment use filtered water (exhibit

9).
-

75.7% of this segments primary source of water is filtered

Medium water consumption segment with more than 50% of water

consumption at home rather than outside (Exhibit 8).


-

Tap satisfaction index is low at about 81 (Exhibit 7)

Positioning Statement and value proposition

water at your reach


-

It conveys the value proposition of providing:

1.

Great taste

2.

Clean and healthy

3.

Convenience

Pure

and

tasty

Key product design decisions

R&D should focus on adding taste

to water rather than removing impurities. Brita already removes about 11


main contaminants in the water. Consumers perceive great taste
equivalent to healthier water. Also people drink more water when it tastes
better. So focusing on adding minerals to provide good tasting water
would prove to be useful among consumers.
-

Need to design filters that will fit in fridges. A product that fits with

existing refrigerator systems in the market. Designs should target some of


the major refrigerator producers in the market. Need to consider the costs
associated with introducing a new manufacturing line that produces a
refrigerator-fit filter.
-

Management has to realise the possibility that the pitcher market

could be reaching its saturation point in its product life cycle. So,
introduction of a new product could hold the key to getting back on its
growth track.
Marketing mix (product, price and delivery)

Product

New product -> refrigerator fittable filters.

Possibility different filter designs to fit in different fridges.

1 week return and take new option

6 months warranty to service the product.

Price
-

Premium over other existing refrigerator filters to differentiate

its quality and value over other filter manufacturers.


-

Place

Joint ventures with refrigerator companies

Use retail channels for refrigerators.

Use current distribution networks.

Service
-

Home delivery, Ordering thru phone, Customer Service centre,

Warranties, Home Repair(Fridge)


Promotion
-

Radio -> for drivers

Magazines -> home consumers

Ads on trains and buses

Selected Target Segment 2: Principled Filtered Fans


Segment (customer) attributes and Preferences

This segments

main focus in on using filtered water.


-

Penetration costs are significantly less for this segment

Largest market segment of 17.4% (exhibit 7).

Customer attitudes to use filtered water meshes well with the

Britas position to sell filtration systems.


-

They are frugal they wouldnt want to go for bottled water which

is expensive.
-

60% own Brita (exhibit 12). Brita brand awareness is really high in

this segment. Easiest market to target and build consumer loyalty. Not
much penetration costs for this segment.
-

Other 40% would want to use some filtration systems. So need to

make them use Brita filters


Positioning Statement and value proposition

Newer, Better and

Healthier
-

The value proposition of this positioning is as follows:

1.

Great taste

2.

Innovation. Easier to use.

3.

Good Health.

Key product design decisions

R&D should focus on adding taste

to water rather than removing impurities. Brita already removes about 11


main contaminants in the water. Consumers perceive great taste
equivalent to healthier water. Also people drink more water when it tastes
better. So focusing on adding minerals to provide good tasting water

would prove to be useful among consumers.


-

There is no need to come up with a new product. Just an alternation

to the existing PT and FM product is required. Resources and costs needed


for this modification will be less.
-

Competition removes impurities. The idea of differentiating the

product by providing taste will help Brita stand out.


-

Also Consumers perceive great taste equals healthy.

Marketing Mix(product, price and delivery)

Product

Modified Pitcher and Facet Mount product

New and easily identifiable design features to let customers know

when there is a need to change their filters.


-

After sales service at distribution centers and phone hotline to

answer consumer questions.


-

1 week return and take new option

6 months warranty to service the product.

Price
-

On par with competition. The target segment is frugal. Cant price at

premium.
-

Cant price too low when being positioned as a great tasting and

healthy water.
-

Discounts on first few early birds.

Promotion
-

Direct phone marketing could be used as well to promote the new

design to existing consumers.


-

Target segment is tech savvy. So use of Internet ads, tech and science

magazines and TV ads as well.


Place
-

Use existing distribution channels. Less cost.

toll free hotlines to service consumers questions

The Brita Products Company began in 1988 under the recommendation of


Charlie Couric, a marketing executive with the Clorox Company. Optimistic
of its capability to be profitable, Clorox acquired the right to market the
home water filtration
system. Clorox, citing the overriding long-term benefits of continuous filter
sales, initially engaged in deficit spending. Such measures paid off and
Clorox not only created a $350 million market, but also captured 70% of
the market revenue. Brita enjoyed success in the market by creating a
perception of better tasting water. However, as water purification
technology improved and consumer awareness increased, taste alone was
no longer enough to sustain its massive market share. Consumers are
demanding more in terms of health benefits and Brita needs to respond to
their growing needs and wants. The market environment is characterized
by fast growth. As consumers are becoming more health-conscious,
bottled water and water-filtration systems are becoming a necessity for
most, with a Brita pitcher in 1 out of 7 homes 103 million households.
Britas competitors were unable to effectively rival Brita in pitcher sales.
Brita dominated despite many new entrants to the market. However, a
small competitor, PUR, launched a different water filtration product. PURs
faucet-filter system offered added health and convenience benefits that
Britas pitcher couldnt provide. Now suddenly, our competitors came up
with the first mover product.
Thus Couric is considering allocating resources to launch a faucetmounted filtration system in response to these emerging competitors.
Many think Brita needs to capitalize on this opportunity to gain new
consumers while their name still remains synonymous with quality and
taste. Thus raising the question, how should Brita attempt to further
penetrate the market with their products? Lets take a look at the Pros and
Cons of each option:
Option 1: Implement the new faucet mount filtration system
The Purpose

This writing aims to present one possible solution to the dilemma that
Clorox Company faces. The Clorox Company was the market leader in
water filtration in the USA with the Brita Pitcher (one of the Cloroxs most
important product), but in 1999 they faced the threat of a new product '
the faucet mounted filter.
Clorox already had its own version of this new product ready to launch
into the market, so the issue was to decide the best of the following
strategies:
1. Continue selling only the current product;
2. Introduce their new faucet mounted filter in addition to the pitcher into
the market
2. The Analysis
Market Summary
Clorox launched in 1988 the Brita Pitcher and after a decade they were
the market leaders of water filtration systems with a market share of 69%.
After the Brita pitcher launch, the water quality became a growing
concern to consumers. This new attitude about the quality of drinking
water allowed the purified water market to grow in both bottled water and
filter systems. This growing on the water market, allowed Clorox
After overview
Has not defined product
Market segmentation