Overview of the Company Blair Company is in its early steps of the market investigation. Its entrance to the water filtration industry was a success by introducing its first product a desalinator used by mobile home. Since then the company crawl in the industry to include other product such as, particle filters, ozonators, ion exchange resins and purifiers. Five year after its inauguration in 1975 the company went global in 1980, invading the Mexican market first then other Central American countries to end up by entering the European market as well. Its international division has generated $140 million in 1996. Blair Company employed 4000 people with sales revenue over $ 400 million and an expected profit of $ 50 million. With a new product line named Delight, a water purifier, Blair Company has detected success signal from the Indian market, where 100.000 people die of water contamination every year and a rural population estimated at 700 million residing in about 1.42 million habitations spread over 15 diverse ecological regions and counting for around 80% of the population
The External Macro Environment the PEST Model Political and Legal Factors
The pre-existence of a 100 company including the multinationals, show the attractiveness of the market purifiers, which is Chatterjee’s conclusion as well. India becomes attractive to foreign investment since its liberalization approach. Foreign companies were offered favourable tax treatment, especially if the investors will locate on one of the free zones Tax rate, which makes the return on investment higher even higher than the one in the US. Wide tax concessions are offered, including liberal depreciation allowances and generous deductions. Repatriation of
profits is easy to obtain if the investor could show that the profit repatriated is from the export operations. The general atmosphere for foreign investors is steadily favourable Economical Factors
Under the new legislation regarding foreign investors; the government of India has regulated the Tax law in a manner so to encourage the exports. Companies were taxed according to the income that comes only from their internal market operations, which leaves them the opportunity to have almost a full profit on the export operations. The purifiers industry has all the ingredient for a promoting future, especially that many Indians felt the need for improved water quality; a need that is reinforced by the government officials, consumers activists and the local newspapers. As the present focus was only on the urban areas, its preliminary sales forecast only for the next ten years were signalling a growing and profitable market estimated at 44 million households. Soc io -c ul tur al Fa cto rs
Under the social context, Blair Company preliminary research has indicated that beside the urgent need of the water purifiers, the awareness of the purifiers’ necessity to obtain healthy water is poor. Awareness about the dangers related to contaminated water is a part and parcel of the purchasing power. Price is a factor and a concern for the people who choose to boil the water. As it was estimated by Chatterjee, 50 % of the target market believes in the efficacy of the boiling procedure (traditional method) and not aware of it inefficacy in removing physical impurities and unpleasant odours. Inexpensive mechanical methods were also used counting for 40% of the target market. The most mechanical method used is the candle filters they are priced at Rs 350 and Rs 1100, but ineffective in eliminating bacteria and viruses. The reaming of the market uses the modern water purifiers. Their prices were ranging from Rs 7,000 and Rs 2,000. The better educated, wealthier and more health conscious consumers took steps to safeguard
their family‘s health and use water purifiers to purify t he water all over the year, which represent Blair’s target segment Technological Factors
In order to ensure quality products and service, the government of India put regulation for the industrial entering the national market. The technology used by the company should be new, modern and has proven success in similar markets.
Water Purifier Market in India In India, over one lakh (is a term in the Indian numbering system. 1 lakh = 100 thousand people) die of water borne diseases annually. It is reported that groundwater in one-third of India’s 600 districts is not fit for drinking as the concentration of fluoride, iron, salinity and arsenic exceeds the tolerance levels. With increasing number of people becoming conscious of the risks of drinking contaminated water, the demand for water purifiers is rising rapidly. In the past few years, Indian water purifier industry has witnessed an exponential growth of more than 22% CAGR (Compound Annual Growth Rate). According to TechSci Research India (A local firm that provides market research reports in a number of areas to different organizations) conducted a survey across 10 major cities in India with 500 users of water purifier to understand the consumer behavior patterns. The cities covered in survey were, Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Chandigarh, Pune and Bhopal. The Indian market has tremendous potential which is more evident from the fact that many global majors are looking to increase their share of the market.
The competition Product Assessment Brand Name Aquaguard
Product Characteristics 1-Uses Ultraviolet rays
Market Price 1-Rs 5,500
Brand’s Activities 1-10 years market history
2-Wall mounted 3-Small amount of carbon 4-Ineffective for strong odors and nitrate and iron compounds removal 5-No storage capacity 6-Need electricity 1-Uses Polyiodide 2-No electricity needed 3- Water storage option 1-Halogenated resin tech 2-Three purification stages 3-Prevent iodine deficiency diseases 4-No electricity needed 5-Water storage option
Remove sediments, heavy metals, bacteria, fungi No electricity Life time: 40,000 to 70,000 litres
2-2500 sales force 3-Dynamic Sales commercials, advertising magazines and newspapers
Blair product assessment
Price Remove Sedimentation Remove Heavy metal Remove Odor Remove color Kill Bacteria & Viruses Fungi Remove bad taste and strong colours Storage Capability
Brand Name Delight
Rs 4,400 - 5,900
1-Independent retailers 2-Very limited advertising 3-Small channel distribution 1-Light TV advertisements 2-Few Point of sales brochures 3-Low Marketing expenditure 4-No awareness 5-Three years of existence 6-Future aggressive advertising campaign Heavy advertising Attractive design 300 Dealers Well trained staff
Marketing Entry Strategy A Marketing Plan is a written strategy for selling the products/services of a new business. It is a reflection of how serious a company is in meeting the competition head on, with strategies and plans to increase market share and attract customers. An effective Marketing Plan is backed by carefully collected market, consumer and competitor information. After the brief assessment of the competitors, it seems to be much more comfortable to make a decision regarding the three modes of entry available to Blair Company. Seg me nta tio n
According to the segmentation done by Chatterjee
-50 % from the target market boils water
-10% from the 50% filter the boiling water
40% used a mechanical device in improving water divided to consumers who use candle filters and consumers who use water purifiers
-10 % remaining consumers are not aware of the problems and are not ready and accepting change
Chatterjee was attracted by the family spirits and its wellbeing as the general positioning theme so to set up the tone for all the integrated marketing mix tools for their brand, but the idea was already taken by Aquaguard. However the findings of the research indicate several main spheres of interests to the general public, such as positioning on performance and taste, value for the money/low price, safety, health, convenience, attractive styling, avoiding diseases and the superior American technology.
The best Market entry Method Licensing:
It is a contractual agreement whereby Blair Company (the licensor) makes available its intangible assets the knowhow and the company’s name to an Indian company in return for royalties or other form of payments. Its financial implications are as follow •
Annual fixed costs should not exceeds $ 40,000 30,000 in capital for production facilities and equipment + $ 5,000 for office facilities these investments would be offset by the Licensee’s payment to Blair company for technology transfer and personnel training Decrease of annual fixed costs to $ 15000 once Indian national are trained The licensee will generate around 280 R.S for each unit sold in the domestic market and Rs 450 for exported units, so the average will be around Rs 300.