Transcript
June 11, 2011
Mid-term Exam: Part (1)
Seminar Marketing Mid-Term Exam Part ² 1
"Blair Water Purifiers India" Instructor: Dr. Usama Saleh
Presented By:
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Rasha
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Mohamed
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Ahmed osama
El-Amir Fawzy Helal
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Mid-term Exam: Part (1)
Blair Water Purifiers India The company¶s mission is to provide equipment that will meet the needs of its target market in terms of filtration and purification of water for having high quality water. As part of the organizational goal, the company is also aiming to enter international market to be able to be known in both local and international level and position itsel in the global competition. As part of the geographic expansion of the company, they are trying to produce innovative products to meet future needs in terms of water purification and filtration. Rahul Chatterjee, one of the company's international market liaisons, had made two fact-finding trips to India to survey the Indian market and competition for home water filters and purifiers, and the foreign investment issue in India. Based on these findings, he had to evaluate the feasibility of launching the Company's own "Delight" home purifier in the Indian market. After several researches and analysis made on the data obtained, he provided his recommendations on the appropriate entry strategy for the Indian market. From the analysis made by Chatterjee and the Indian research agencies, we can identify that :
Strategic
Analysis :
Situational y
analysis : External (Macro) Environment Analysis :
1-Political/legal factors: - Liberalization had opened the Indian economy to foreign investors .liberalization had meant major changes in approval requirement for new commercial projects ,investment policies, taxation and attitudes o government officials. - India governments offered a wide range of tax concessions to foreign investors, including liberal depreciation allowances and generous deductions. The government offered even more favorable tax treatment if foreign investors would locate in one of India's six Free Trade Zones. - Trademarks and patents were protected by law in India. 2- Economic factors: - The Indian market seemed clearly to be a mature one. The Indian market is large and expected to grow over three-fold in the coming five years. - Investment and trade regulations in 1996 meant that business could be conducted much easier than before. All saw the promise of huge market developing over the next few years. 2
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3- Social
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factors : The market for clean water in LDCs was huge, profitable and attractive in a socially responsible sense .Considering one of the corporate social responsibility.
4- Technology factors: - Traditional Method for Home Water Purification: Boiling : two to five liters of water for 10 minutes, allow it to cool, and then transfer it to containers for storage. This procedure is cumbersome, time consuming, and ineffective in removing physical impurities and unpleasant odors. Candle Filters: low price depend on material (plastic, porcelain or stainless steel) and easy of using. Candle filters were slow, ineffective in eliminating bacteria and viruses Water Purifiers: better than Candle Filters. There are three steps, the first removed sediments, the second objectionable odors and colors and the third harmful bacteria and viruses .Water purifiers generally used stainless steel containers.
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External
(Macro) Environment Analysis:
1-Product : - Delight Purifier: Used a combination of technologies to remove four types of contaminants found in potable water: sediments, organic and inorganic chemicals, microbial or cysts, and objectionable tastes and odors. In addition, two modules are available to remove iron, calcium and other metallic contaminants peculiar to specific Indian regions. This technology to purify water to a level beyond WHO standards.
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Delight
purifier has two models that were countertop and wall amount
design. 2- Consumers: 40 million consumers were similar in many respects to consumers in middle and upper middle class households in the united states a nd the Europe union. They valued comfort and product choice they saw consumption of material goods as a means to higher quality of life. 4 million households who had similar values and lifestyles but yet took little effort to improve water quality in their homes. 50% of the target market used boiling to make clean water. 10% of the target market filtering their boiled water through candle filters. 40% of the target market used a mechanical device to improve their water quality (candle filter and water purifiers). Competition: There are three major competitors. There are: 3-
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Mid-term Exam: Part (1)
Eureka
Forbes Joint venture Company in 1982 between Electrolux (Sweden) and Forbes Campbell (India) .the Company marketed a broad line of modern life style products. First brand name was ³Aquaguard´ (used ultraviolet rays to kill bacteria and viruses) Rs.5,500.It was clearly the market leader and came close to being India's only national brand. Second brand name was ³PureSip´ (used polyiodide resin to kill bacteria and viruses) Rs.2,000 Used 2, 500 person sales force (directly on households) to sale Aquaguard and independent dealers to sale PureSip.
2. Ion Exchange Began operation in 1964, specializing in treatments of water they use brand name was ZERO-B (Zero-Bacteria) ZERO-B purifiers used a halogenated r esin technology. It helped prevent iodine deficiency diseases and permitted purified water to be stored up to eight hours without fear of recontamination Every year needs to replace the halogenated resin at a cost of Rs. 200. 7% of Indian water purifier market . 3. Singer The newest competitor to enter the Indian water purifier market. Might be a suitable partner to manufacture and distribute the Delight purifier. Aquarius The product contained nine stages (removed sediments, heavy metals, bad tastes, odors, and colors, killed bacteria and viruses, fungi, and nematodes) Life of flow rate at 3.8 liters per minute was at 40,000 liters (4.4years for 25 liters per day), but slower liters per minute was 70,000 liters (7.6 years for 2 5 liters per day). They described their product as ³state of the art´. Singer was a well-known and respected brand name in India .further; Singer's distribution channels were superior to those of any competitor in the market, including those of Eureka Forbrs. 4. Others The Delta: a copy of Aquaguard. Alfa Water Purifiers Symphony¶s Spectrum The Sam Group : ³Water Doctor´ purifier Batliboi At least 100 Indian companies made and marked candle filters. No single manufacturer of candle filter had more than 5% of any regional market .Still the candle filters market deserved serious consideration ± perhaps Delight's entry strategy would attempt to" trade ±up " users of candle filters to a better safer product.
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SWOT
Mid-term Exam: Part (1)
analysis for entering India market :
External Opportunities :
1. The Indian market strongly believes in the need for improved water quality that¶s supported by folklore, newspapers, consumer activities and government's officials who regularly reinforced this need by describing the poor quality of Indian water. 2. Water quality greatly diminished during the monsoons because of ; Highly polluted water entering treatment plants. Numerous leaks and unauthorized withdrawals from wat er system. y y
3. Government concerned with water quality as they took measurements at thousands of locations throughout the nation and advised consumers when water became unsafe. 4. Around 40 million households were similar in many aspects to consumers in middle- and upper ±middle ±class households in the USA and the European Union they liked foreign products. 5. 4 million households are mid to high income and highly educated and do not treat water due to lack of confidence in available products. 6. Indian customers are favorable toward Western products, and also Indian government is actively seeking foreign investors. 7. Nearly 85% of population is not being reached by any competitor. 8. Three major competitors, marketing to large metropolitan areas. 9. Very low labor costs. External Threats
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1. Blair Company must apply for market entry to the foreign investment promotion board for industrial approvals. 2. Tax rates in India are somewhat higher than in the United States. 3. Eureka Forbes is a well established brand in India with established sales force. 4. Singer India LTD is well established brand in India with established storefronts, distribution and dealer networks and sales force.
Internal Strengths: 1. Blair Company was developing water solution since 197 5.Employed over 4000 people, with 380 having technical backgrounds and responsibilities. 2. International success and growth since 1980 in Latin and South America, Europe, Africa, south Asia and Australia. 3. The international division had sales offices, small assembly areas, and distribution facilities in Frankfurt, Ger many, Tokyo, Japan and Singapore . 4. Industry experts state product line superior in terms of quality and performance: faster flow ±rate than any competitor. Superior durability and reliability.
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5.
Quality of Blair¶s product appears superior to Indian competitors. 6. The Delight purifies water to a level beyond WHO standards and removing four types of contaminates found in potable water. Internal Weaknesses :
1. Industry experts state Blair product line prices usually higher than those o many competitors. 2. Lack of established distribution or sales network in India. 3. Delight must utilize electricity. Also consider an unknown brand in India.
Marketing Strategies
That Emerge
from the SWOT:
Penetrating India's market with Delight will require a multi-stage strategy and implementation. Field Test In Target Market: y
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Delight can remove four contaminants commonly found in potable water. In addition, two modules are available to remove iron, calcium and other metallic contaminants peculiar to specific Indian regions. Currently, no competitive product can successfully purify at Delight's standards. Penetration of the market requires first-hand knowledge that Delight and its modules can deliver purification standards above WTO an d India consumer expectations.
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Calcutta and surrounding areas suffer from iron contaminants. Placing twenty units with appropriate modules for three to six months in Calcutta and two other surrounding area homes will provide accurate performance data. It is expected that Delight's performance will be above consumer expectations resulting in twenty homes accepting your product over the competition. The decision to test really was a decision to enter .The testing period also would give Blair Company representative time to identify a suitable Indian company as a license, joint venture partner, or acquisition. Favorable results from the field tests can be distributed to potential Indian business partners within the Calcutta region and surrounding areas.
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Blair¶s Target Market:
40 million households of middle- and upper-middle-class households in the United States and the European Union. 4 million households who had similar values and lifestyles. 50% of our target market used boiling to make clean water. 40% of our target market used a mechanical device to improve their water quality.
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Three Business Plans for Indian: 1. Apply for market entry to the Foreign Investment Promotion Board, Secretariat for Industrial Approvals, Ministry of Industries. 2. Approval of any royalties and fees, remittances of dividends and interest by Reserve Bank of India, Ministry of Finance. 3. ³Virtually guarantee´ by consulting firm. y
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Tax
Rates and Average Return on Assets: 1. The average return on assets for all Indian corporations in recent year was almost 18%, for United States corporations was about 11%. 2. Corporate tax rates in India probably were somewhat higher than in the United States. y
Recommendations:
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Strategic focus on rural or smaller urban areas would not be wise, at least at the start. Cost of skilled labor in India was around Rs.20 to Rs.2 5. Blair Company should find an Indian partner.
Market Penetration Strategy: -
Estimated Initial Investment Cost:Rs. 8,000,000 All major competitors in India have various home product lines that provide additional sales revenues and manufacturer name recognition. Blair company should not attempt to penetrate the Indian market without additional home product lines and assistance through an established Indian manufacturer. Several ideal partners have been selected due to location, manufacturing experience, and selection of home products, dealer networks and business success. Polar Industries, Calcutta Videocon Appliances, Aurangabad BPL Sanyo Utilities & Appliances, Bangalore Onida Savak, Delhi -
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Recognized top competitors such as Eureka Forbes, Ion Exchange and Singer India LTD do not have strong presence in any of these cities. In addition, Calcutta has iron contamination issues that can be solved by Delight. Polar Industries is the business partner of choice due to location. Initial operational scope should not exceed four specified regions although potential partners such as Polar Industries have 10,000 or more dealers. Delight's advantage in the market is its ability to add modules to purify region specific water contaminants. Utilizing your potential partner's extensive dealership network will permit regional selectivity for Delight. In the future, as brand recognition is realized, national dealer sales can be re-examined.
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Q2 ± Market Entry policies: In order to reach our goal we have identified three different alternatives: 1. Licensee Consideration: Entering the market as a joint working arrangement with a license, the company would have minimal financial costs and the revenue would come more easily and quickly; on the other side there would be a limited control over product quality and marketing mix activities and there would be the possibility of never really know the Indian market well. Also you may lose your image in the international market. 2. Joint venture / Acquisition consideration : Entering the market in the form of a joint venture or an acquisition, financial investment and annual fixed costs would be much higher but on the other side other side there would be a limited control over product quality and marketing mix activities. The
most beneficial method is to enter as a joint venture;
Assuming the joint venture agreement calls for even split of profits, Delight will recoup its field test cost, initial investment cost and first year fixed overhead expenses in the first full year of sales with 100 percent market potential met. Marketing Campaign "Delight your wallet and pallet with our advanced water purification modular system. Want the iron out of your water? Just add the iron module to your Delight. Want the calcium out of your water? How about those peculiar metallic contaminates specific to your region? Delight in knowing your drinking water is free from contaminates. Delight is having an affordable water purification solution. Don't wait, see the dealer nearest you!" Summary
and Request for Action India's market is ready for Delight's entry. India's foreign investment regulations require lengthy approval processes. To ensure market availability, field-testing should begin immediately in Calcutta as soon as your business proposal has been accepted. During field testing of your products potential joint venture partners can be thoroughly researched. At the conclusion of the field-testing and selection of prime oint venture partner.
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Reference:
www.docshare.com/doc/Blair-company-Inc www.oppaprs.xcom/essays/Blair-purifiers-india www.casestudywithsolution.com
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