Blair Water Purifiers Indiastrategic marketing planning process Presented by :

Reham Mohamed Moustafa Yara Shahwan Dian Zorkany Rania Zeid Tarek Zeid

Submitted to Dr Usama Saleh

Project content

Strategic analysis The Audit Stage Scanning the External Macro environment Political legal Economic factors Sociocultural factors Technological factors Scanning the internal and external micro environment Internal-environment analysis External microenvironment analyses Demand forecast End Users needs Factors affecting consumer behavior Consumer buying decision process Competition analysis The market sales chart in 1996 The product mapping technique Weighted competitive strength assessment SWOT analysis TOWS analysis

Setting objectives Setting Strategies Our suggestions Porter Generic Strategies Mckinsey matrix Ansoff Growth Strategy Segmentation Targeting Positioning Entry Strategy recommended

Strategic analysis:Strategic planning precedes marketing planning by providing a framework within marketing plan might be formulated.

Based on the assessment of:1.Organizational capabilities 2.Threats from environmental forces 3.Competitors strength and weaknesses 4.Customers needs 5.Demand

This must be done through the following steps:

The Audit Stage Step one: Scanning the External Macro environment:Any marketing strategy must develop out of a detailed understanding of the environment. This is important to: Identify organizations strategic position. Decide on the future of the organization. Matching organizational resources and capabilities

For scanning external environment we should use the PEST model, as it will scan the whole external environment to give management clues about strategic decisions

Chatterjee analysis in the two visits was centred only on the urban cities neglecting the rural ones and this is a drawback as the rural cities in India count for around 80% of the population, his purpose was to make recommendations on market entry and on elements of entry strategy.

Political legal: Chaterrjie confirmed that India is attractive to foreign investment through liberalization Foreign companies were taxed on income arising from Indian operations and pay taxes on any interest, dividends and royalties received The government offer favourable tax treatment if foreign investors will locate on one of the free zones Tax rate is higher than the USA, however the return on investment is higher than USA Trademarks and patents were protected in India Legislation in India was expensive and protracted that foreign firms prefer arbitration Our suggested improvements and comments: He should have analyzed the following: Monopolies legislation: to hedge against any monopolistic actions that may appear in the future Environmental protection law Employment law and this is important if the market entry will be joint venture or acquisition

Economic factors:Chatterjee analysis completely missing the economic factors, as he didnt analyze the Indian economy in any way

He should have analyzed the following: Interest rates Inflation rate Business cycles Unemployment rates Disposable incomes

As these factors are important to give insights about the economic conditions and the economic growth for the next years so as to know whether the market is potential for entry or not

Sociocultural factors:Chaterjee identified his target market to be around 40 million households and he identified their needs and behaviour, but he missed identifying the whole sociocultural factors from the following perspectives: Population demographics: population size, age distribution , religion ,social class are important factor to be analyzed by any firm before entering any market Income distribution Levels of education Social mobility Work and leisure time

These factors are important especially that the target market for him was the rich well-educated high social class so its important to identify this class and its growth

Technological factors:Chatterjee analysis emphasized that technology was only available in large Indian cities; the lack of adequate distribution and communication infrastructure in rural India meant that any market entry would begin with larger Indian cities most likely in the west coast. But he should have analyzed many other aspects regarding this issue: Government spending on research Government and industry focus on technological efforts The speed of technology transfer New discoveries and development Rate of obsceneness

Step two: Scanning the internal and external micro environmentIn this step we will start by analyzing the internal and external microenvironment then finalize it by the swat analysis, which was missing in chatterjees study. He ignored mainly the microenvironment regarding the suppliers, stakeholders and intermediarys .He only analyzed consumers and competitors.

2-1 internal-environment analysis:Employees: Blair Company employed over 4000 people with 380 having technical backgrounds and responsibilities Cash Flow: company sales revenue for 1996 would be almost $400 million with an expected profit close to $50 million Annual Growth in sales revenue: averaged 12% for the past 5 years Capital assets: ignored by Chatterjee Sales in the international division: would reach almost $40 million in 1996, about $70 million would come from Latin and south America, $30 million from Europe and $40 million from south Asia and Australia Materials: ignored in the analyses though its important to scan the need materials for operation and theirs availability in the market, he only pointed that importing a few key components would be necessary at the start of the operations The Mckinsey 7 S model must be used here to finalize the step of internal marketing audit and this wasnt done by chatterjee Mckinsey 7S

By analyzing these 7S we can know the firms core competences and its competitive advantage, which can be augmented for new market entry.

Check List for internal audit:

While doing internal audit for strategic analysis, we can also use the below check list to recognize the organizations strength and weaknesses and it must be weighted because some weaknesses are of less importance than others , while other strengths are of more importance than others

2-2 external microenvironment analyses:Stakeholders: these were ignored in the analyses although its important to scan the stakeholders for the organization Suppliers: again it was ignored in the analyses, our suggestions that the analyses of the suppliers must have be done from the following perspectives: Their number, their prices, their bargain power (if any), their strategic alliances with competitors (if any present), their distribution channels, their management structure Consumers and demand forecast: Consumers analysis is essential for any strategic planning as they are the main concern for the organization and this must be done through: Demand forecasting Consumers (end users needs)

First: Demand forecast:Chatterjee estimated the market potential based on collecting unit sales estimates for a 10-year period for 3 similar product categories vacuum cleaners, sewing machines and colour televisions. In addition a Delphi based research firm had provided him with estimates of unit sales of Aquagard, the largest selling water purifier in India. Chatterjee had used the data in two forecasting models available at Blair Company along with three subjective scenarios -realistic, optimistic and pessimistic. But it was conservative as they described only first time sales not replacement sales and it only applied to industry sales in larger urban areas which was the present industry focus.

Second End Users needs:The target segment was around 40 million households plus those in another 4 million households that share common needs. They valued comfort and product choice. They liked foreign brands and would pay higher price for such brands.

One thing that seemed certain was that many Indians felt the need for improved water quality. Folklore, newspapers, consumers activities and government officials regularly reinforced this need by describing the poor quality of water. Quality suffered especially during the monsoons and because of numerous leaks and unauthorized withdrawals from the water system Better educated, wealthier and more health conscious consumers took steps to safeguard their family s health and use water purifiers to purify the water all over the year. This is the target segment for Chatterjee. They are people who value comfort and product choice. They saw consumption of material goods as a way to a higher quality of life. o His analysis was missing forecasting the growth of this segment as his potential market is based on the educated aware segment but he missed forecasting the growth of this segment as the growth of the segment closely relates to the growth of the sales o The analysis also missed a deeper look at the target segment. From our point of view, market survey should be conducted to show in details the target segment preferences, their demographics (age, social class, occupation, style of life) whether they like flavours to be added in the water or not, their ethnic direction, even their political views (if they

are anti-Americans or not) as these factors may affect potential sales in the short and long terms .

Consumers in the target market needs (according to Chatterjee) can be summarized as the following1) Product performance to remove sediments, bacteria and viruses 2) Purchase price this is only concern for consumers who boiled water who count for 50% of the target market 3) Ease of installation 4) Warranty and availability of financing for purchase

Factors affecting consumer behaviour:We should analyze the uncontrollable and controllable factors affecting the Indian consumer behaviour, the uncontrollable factors are the sum of the macro environment analysis (PEST) but the controllable factors reflect the marketers efforts in designing the 7 PS in a way that make the product convenient for the consumer so from the analysis of the target market done by chatterjee. Also there are other factors like motivation, life style, consumer perception and attitudes towards the product From the consumer analysis we can summarize that consumers in the target market need product of high quality, medium price (to be able to target a wider segments especially in the rural areas as they count 80% of the population and if they were successfully penetrated this will result in huge sales), ease of installation, warranty is needed, the emphasis on the need of healthy life style and better water will be a motive for consumers to buy the product.

For consumer analysis, we suggest that he should have used also the decision making process to know exactly what are the forces that affect the consumers buying behaviour

Consumer buying decision process:

So according to this model we should analyze how consumers in India become aware of the water problem and so the need for purifiers is recognized, then from where consumers get the information (from magazines, newspapers, reference groups) , then how they evaluate alternatives (based on price or quality or warranty or capacity ,,,,) . Then the purchase and post purchase evaluation

Competition analysis:It is very important for any strategic marketing plan to deeply analyze competition especially when it is done for new market entry

Steps of Product /Market analysis1.Identifying the generic need satisfied by the product categories (The need for improved water quality) 2.Identify the product categories (types / Classification) The need for water purifiers for household 3.Identify the specific product-markets Water purifiers, candle filters 4.Identify the product-variants (brands) competing with each other. Chatterjee analyzed the competition in a detailed way, which can be summarized in the following:

The market sales chart in 1996:Product Aquaguard Price RS 5500 Strength (competitive advantage) Weakness

S personal selling ales Huge

Needs electricity force Enormous fixed Sales calls costs for sales TV commercials efforts (100-120 Magazines and millions on sales aquaguard and puresip newspapers advertising commissions only) all other companies Advertising No storage capacity expenditures RS 1 Slow flow rate million Stop functioning at 190 volts Couldnt eliminate strong odours

Puresip RS 2000 RS 2000 +RS 200 yearly

Water could be stored safely for later usage Doesnt need electricity 3 stage purification process Prevent iodine deficiency diseases Water can be stored up to 8 hours No electricity or plumbing is needed Store 20 litters of water TV advertisements and point of sales brochures Marketing expenditure RS 3 millions Remove sediments, heavy metals, bacteria, fungi No electricity is needed but need water pressure Heavy advertising (TV, magazines, newspapers) Perfect design Superior distribution channels Knowledgeable

Promotional tools was limited as it was sold only by small no of independent dealers

Zero B (Puristore)

Lack of consumers awareness No heavy advertisement No sales efforts Limited distribution

Aquarius RS 4000

Life of the device was listed as 40000 liters

Delta brand Alfa Water purifies Spectrum RS 4300RS 6500

personnel 3000 independent dealers

More eye pleasing design

RS 4000

Remove only suspended sediments not heavy metals or bacteria Third stage ozonator to kill bacteria More attractive countertop 6-12 litre

Water Doctor

RS 5200

Candle Filters (Bajaj ) The analysis shows that the market is Oligopolistic structure

The product mapping

technique:

Qualit

y

Puristore

Puresip

Aquaguard

Weighted competitive strength assessment:We should do the weighted competitive strength assessment in the analysis to be able to see the relative importance of key success factors and the relative strength of each competitor on each of these factorsKey success factor Quality Image Raw material access Technological skills Advertising effectiveness Distribution Financial Strength Relative cost position Ability to compete on price Sum of weights1 6.65 7.55 5.6 6 6.75 0.05 5 8 8 7 6 0.05 5 8 5 5 5 0.15 8 8 8 7 7 0.1 0.1 6 5 7 9 5 4 5 5 4 8 0.1 6 6 6 7 7 0.05 5 7 5 5 5 0.2 0.2 7 8 7 8 6 4 6 6 8 7

Weight

Delight

Aqua guard Pure Sip

Zero-B

Aquarius

Rating scale 1=very week, 10 = very strong We should also in the competition analysis use Porter

Five Forces

model to analyze the competitive environment from other dimensions:

The competitive Rivalry within the industry is the 5 brands we discussed in the above table, we should analyze them in details knowing their key success factors, their strengths and weakness and their promotional efforts Bargaining power of suppliers: this part was neglected although its important to analyze the suppliers bargaining power especially if the market entry will be joint venture or acquisition Bargaining power of consumers: this will be done by deep consumer analysis to detect their needs and their bargaining power Threat of new entry: the government regulations for new entry are Considered threats for competitors as well as high costs of investments

Swot analysisThe SWOT analysis is an extremely useful tool for understanding and decision-making for all sorts of situations in business and organizations. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.

OPPORTUNITIES Environmental trends with positive outcomes that offer scope for higher Levels of performance if pursued effectively: Highlight new areas for competitive advantage

WEAKNESSES Areas of relative disadvantage that: Indicate priorities for marketing improvement Highlight the areas and strategies that the planner should avoid

STRENGTHS Areas of (distinctive) competence that: Must always be looked at relative to the competition If managed properly, is the basis for competitive advantage Derive from the marketing asset base

THREATS Trends within the environment with potentially negative impacts that: Increase the risks of a strategy Hinder the implementation of strategy Increase the resources required Reduce performance expectations

S-Past Huge success of Blair company. -Brand name in USA. -Regarding water purifies company experts as superior in term of quality and performance. -High technology that certified by WHO. - Design distinguished from competitors -Blair Company employee (4000 people with 380 having technical background) -Strong financial position *sales in the international division reach almost $ 140 million in 1996 * Deligth has a distinguish western design *the option of using battery is available

W-Product should be worked by electricity -Lack of sales office in India. *lack of sales force - Product name (Delight) not knowing it might infringe on any existing brand in India -They still faced major issues in configuring technologies into physical products

O

T- Competition in India market regarding water purifies. Regarding Eureka Forbes Huge sales force that highly motivated and well managed. - Tremendous brand equity. Regarding Ion Exchange. -ZERO-B purifies marketing efforts will intensify to increase awareness -New advertising program to increase awareness. Regarding Singer. -It was superior in comparison to other primitive products in the markets in design and distribution channels

-Poor water quality in India as a result of infrastructure. -Reinforcement of government officials and newspapers to improve water quality. -Life styles of Indians that value comfort and product quality choice. -Ineffectiveness of traditional methods in bacterial and viruses elimination. -Liberalization and opened Indian economy to foreign investment. -Market in India requires more than one design. -skilled labor in India was around Rs.20to Rs.25 per hour less than if compared to that in USA. -The weak strategic component of Aqua guard -No filter or purifies in India market can remove iron contamination to a satisfactory level. -No company in India target rural areas. * lack of consumer awareness of the consumers of the ZERO-B *the upper middle class households prefer high price and high quality for foreign brands

TWOS ANALYSIS

Past Huge success of Blair company.

-Product should be worked by

electricity

Internal elements

-Brand name in USA. -Regarding water purifies company experts as superior in term of quality and performance. -High technology that certified by WHO. - Design distinguished from competitors -Blair Company employee (4000 people with 380 having technical background) -Strong financial position *sales in the international division reach almost $ 140 million in 1996 * Deligth has a distinguish western design *the option of using battery is available -They still faced major issues in configuring technologies into physical products. - Product name (Delight) not knowing it might infringe on any existing brand in India. -Lack of sales office in India. *lack of sales force

External elements

Strategic options

-Poor water quality in India as aresult of infrastructure. -Reinforcement of government officials and newspapers to improve water quality. -Life styles of Indians that value comfort and product quality choice. -Ineffectiveness of traditional methods in bacterial and viruses elimination. -Liberalization and opened Indian economy to foreign

S-O* using high technology that is certified by WHO to satisfy the need for pure water in India *Using the strong financial and international division to build up an opportunity

W-O *We can use the low cost skilful labour in India to overcome the shortage of sales force in India

investment. -Market in India requires more than one design. -skilled labor in India was around Rs.20to Rs.25 per hour less than if compared to that in USA. -The weak strategic component of Aquaguard -No filter or purifies in India market can remove iron contamination to a satisfactory level. -No company in India target rural areas. * lack of consumer awareness of the consumers of the ZERO-B *the upper middle class households prefer high price and high quality for foreign brands *to trade up the users of candle filters to a better safer product - Competition in India market regarding water purifies. Regarding Eureka Forbes. -Huge sales force that highly motivated and well managed. - Tremendous brand equity. Regarding Ion Exchange. -ZERO-B purifies marketing efforts will intensify to increase awareness -New advertising program to increase awareness. Regarding Singer. -It was superior in comparison to other primitive products in the markets in design and distribution channels

in the liberalized Indian market * Using the high tec. to attack the Aquaguard weak strategic components * Using the high quality products to satisfy the needs of the upper middle class

S-T*Using

W-t the high *we must try to cope the product tec. with India to be able to overcome the Indian market competition

technology to compete with the other brands *Using the western design to compete with competitors

Step three: Setting objectives:The main objective is to consolidate the Indian market and stimulate tremendous growth, as the situation in India is attractive for foreign investment and considered to be a window of opportunities The objective is smart as it is specific, measurable, achievable, realistic and time framed

Step Four: Setting Strategies:Based on the above situational analysis, we can now choose the strategies that will be used to achieve Blair Companys objectives

According to Chatterjee, he identified two entry strategies Skimming strategy: which means high price (RS 5900) and high quality Where the product design would be superior with higher performance and quality, longer warranty period, more features and more attractive appearance

Penetration strategy: which means low price (RS 4400) and lower quality

Our suggestions: First: Porter Generic Strategies

Using Porters Generic Strategies, since the competitive scope is broad and competitive advantage is higher cost. We suggest using Differentiation strategy to enter the Indian market .by using the high technology strength of the Blair Company, the product must be high performance regarding to quality and western unique design.

Second: using Mckinsey matrix:

Since the competitive position of the firm is considered strong due to high technology and strong financial position and the market is attractive, we suggest adopting the Protect Position strategy where the company has to invest to grow at maximum digestible rate and concentrate efforts in maintaining strength From our strategic point of view Blairwater must enter the Indian market by acquisition (high investment) using the low cost Indian labour force and the liberalized investment atmosphere in India.

Third Ansoff Growth Strategy:

According to Ansoff growth strategy matrix, Blair Water Purifier Company will adopt the Market Development strategy as the market is new but the product is the existing product. Regardless that the product must have some modifications regarding the Indian market, for example it may need extra purifying stage that the Indian water require, may be a whistle that tells the purifiers users that the unit is functioning probably, a small battery to operate the filters for several hours in case of a power failure (a common occurrence in India and other LDCS) or even permitting users to add fluoride, vitamins or even flavourings to their water.

Step Five: STP (Segmentation, Targeting and Positioning)

5-1 Segmentation:Previously we focused on approaches to environmental, customer and competitor analysis, and the frameworks within which strategic marketing planning can best take place. Against this background we now turn to the question of market segmentation, and to the ways in which companies need to position themselves in order to maximize their competitive advantage and serve their target markets in the most effective manner. In Blairs company case Chaterjee analyzed his target market to be the better educated, wealthier, and more health-conscious consumers who took steps to safeguard their familys health hand often continued these steps years around. By estimation Chatterjee thought it would be around 40 million, these consumers were similar in many respects to consumer in middle and upper class households in the US and European Union who valued comfort and

product choice they saw consumption of material goods as a mean to a higher quality of life, they liked foreign brands and would pay a higher for such brands He reached the conclusion that his target market is these 40 million households plus those in another four million households who had similar values and lifestyles Chatterjee divided the target segments 40 million as follows: *50 % from the target market boil 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 who know nothing about the problem and if they know they dont want to pay There are three marketing distinct approaches to marketing strategy which exist such as 1 Undifferentiated or mass marketing 2 Product-variety or differentiated marketing 3 Target or concentrated marketing

These are well illustrated in Figure

Marketing segmentation:Dividing the total market into different units, the units are heterogynous with each other We see that chatterjee divided the market using the following 4 segmentation factors into 4 segments:

He used the demographics (age) , social class (to show the buying power ,income and education ),Family size (to show the demand volume ) ,geographic (between rural and urban ) and volume of usage

S2 S1 Adults 25-45 Social class A, B High income Healthy life style Small family size Flats residence Low volume usags1e Adults 25-45 Social class A, B High income Healthy life style Large family size Big houses High volume usage

S4 Adults 25-45 S3 Adults 25-45 Social class A, B High income Healthy life style Regions with iron contaminants 5-2 Targeting: Rural areas Social class c Low income Low infrastructure

Choosing one or more segment Chatterjee chooses segment 1,2 and 3 and ignored segment 4

5-3 Positioning:Positioning is determined according to the price strategies that Chatterjee mentioned whether if it skimming or penetration, product design for the skimming strategy would be noticeably superior with higher performance and quality longer warranty period, more features and more attractive appearance than the design of the penetration There are several positioning possibilities performance and taste, value for the money/low price, safety, health, convenience, attractive styling, avoiding diseases and health related bills and superior American technology. The only position he considered taken in the market was that occupied by Aquaguard protect family health and service at your doorstep. According to the differentiation entry that we selected, the positioning should be Superior American technology and design, performance and taste. Due to the three segments that we mentioned above, Chatterjee must design three different marketing mix as shown below: Model of smaller capacity for segment 1, model for larger capacity for larger houses for segment 2 and 2 models for segment 3 that would remove iron, calcium and other metallic containments that were peculiar to particular regions, for example Calcutta.

Question 2: The 3 ways to enter the Market: Joint working arrangement Joint venture company Acquisition

Main three Factors while selecting the best entry method:

Litigation Problems could extend a case for easily a generation Foreign companies were taxed on Income arising from Indian operations The foreign company should pay taxes on also any interest, dividends, and royalties received and on any capital gains received from a sale of assets.

Licensing Consideration:

Chatterjee Analysis Blair Company Financial Position will be minimal Expenses: 30,000 in capital for production facilities and equipment , another $ 5,000 for office facilities Annual fixed costs should not exceeds $ 40,000

these investments would be offset by the Licensees payment to Blair company for technology transfer and personnel training Decrease of annual fixed costs to $ 15000 once Indian national are hired, trained and left in charged Duties of the Indian Labor will include seeing how the units are produced in USA with Blair company specification. The licensee would pay to Blair company around 280 R.S for each unit solid in the domestic market and 450 R.S for exported units, so the average will be around 300 R.S

Licensing Analysis Brief: Indian company would manufacture and market the product. Licensee fees would be remitted to Blair company per unit basis over the term of the agreement

Licensing Definition:A contractual agreement whereby a multinational marketer (the licensor) makes available intangible assets such as patents, trade secre ts, know-how, trademarks, and company name- to foreign companies in return for royalties or other form of payments

Licensing Pros and Cons:

Pros: Quick and easy way to enter the market.

Could be the only way to open the market. Provides life extension for products in the maturity stage of their life cycles. Is a good alternative for foreign productions and marketing? Royalties are guaranteed and periodic. Licensing can overcome high transportation costs which make some exports noncompetitive in export market. Licensing is immune to expropriation.

Cons: No full control over production and marketing. Royalties are negligible compared with equity investment potential. There is a danger of creating competition in third country, or even home country markets if the licensee violates territorial agreement.

Joint Venture/ Acquisition:

Chatterjee Analysis:

Financial investment and annual fixed costs would be higher and depnd on the scope of operations. Estimates of annual fixed expenses via acquisition would be same for joint venture

Estimates for the investment might be considered higher/lower depend on what will be purchased. Assumption where made on the skimming, penetration pricing strategies

Joint Venture Brief: Blair company will be a partner with an existing Indian company specially for manufacturing and marketing the product Profits will split between the two companies according to their agreement

Acquisition Brief: Blair company will purchase an existing Indian company Profits will belong to Blair company

Join Venture Definition:A long term partnership between two or more companies sharing equity and risk with the purpose of making profits in a target market.

Pros: Potential for higher profits. More control over production and marketing. Better market feedback. More experience in international marketing.

Cons: Great investment of capital. Higher level of risk. Potential conflicts between partners.

Acquisition Definition:Ownership by the international firm in foreign markets

Pros: Maximum profits. Full control over production and marketing. Better market feedback. Great experience in international marketing Integration of operations on a worldwide basis.

Cons: High capital and management resources requirements. Higher risk of expropriation

Why Acquisition is the better entry way for Blair Company :Based on all the mentioned analysis we have found that the Acquisition will be the best entry way due to all the acquisition pros the maximum profits, the full control and the better market feedback.

In addition it will avoid the Licensing problems example no control over production and marketing as the Indian labor will know how the units are produced and their specifications as they must be trained in order to reduce the cost as the Indian Labor cost is less than the American Labor cost. Therefore, this is considered a negative point; As for the joint venture it is not considered a good entry way as in India the Litigation Problems could extend a case for easily a generation in addition to the higher level of risks and the potential conflicts between partners.