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Three Year Marketing Plan—Blue Mountain Spring Water, Inc.

Executive Summary

Blue Mountain Spring Water’s three-year marketing plan has been created by

its owners to secure additional funding for growth and to inform employees

of the company’s current status and future direction. Since our launch five

years ago, Blue Mountain has experienced excellent revenue growth and

increased market penetration. However, expansion outside our regional

market is vital to Blue Mountain’s future success.

Executive Summary

This three year marketing plan for Blue Mountain Water has been

created by its owners to solidify marketing and expansion objectives with

future growth in mind. Since Blue Mountain’s launch five years ago, the

company has enjoyed larger profit margins than competitor’s—an 8%

increase in growth despite downward market trends in 2008. Although Blue

Mountain products are enjoying growth in the Pennsylvania region,

particularly in high end grocery stores and on college campuses, the brand

would like to continue expansion in surrounding states and target active

parents with children.

To accommodate planned growth and expand distribution, Blue

Mountain will expand its production facilities and look into utilizing a

wholesaler by year three to improve distribution and cut costs of buying and

selling.

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With a goal of 40% profit increases per year, Blue Mountain will

adjust its pricing structure to target different marketing segments while

expanding profits. Incremental cost pricing and the modified breakeven

concept will be utilized to target higher end markets with higher prices and

image based messages of product value, while college markets and newer

regions will have a slightly lower price structure to remain competitive and

introduce the product.

New promotional strategies will involve hiring a few employees to

lead an advertising and marketing effort focused on building the brand, target

marketing, and expanding into new regions. The website will be improved and

redesigned to foster public education and create an interactive consumer base.

Additionally advertising will target regional newspapers, blogs, and high

traffic public spaces with quality ads emphasizing health and value of the

brand. New public relations strategies will include social networking and

buzz marketing on college campuses. Press releases will periodically be sent

focusing on new markets and introducing the brand. Along with the launch of

the new “junior” size, a public education effort will be made in K-8

classrooms educating kids about recycling, spring water, and sustainability

while sampling the product. Eventually, a limited clothing line will be

introduced for promotional efforts. Blue Mountain will seek to maintain core

ethics of sustainability, high value products, and comparatively low prices

during the expansion.

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Company Description

Located in the western Pennsylvania mountain region, Blue Mountain Spring

Water was founded five years ago by entrepreneurs Sam Chambers and Brad

Phillips. Chambers earned an undergraduate marketing degree and worked

several years in the carbonated soft drinks (CSD) industry for a producer of

all-natural, flavored iced teas. Phillips earned an undergraduate degree in

chemistry and worked for companies in the bottling and recycling industries.

Phillips had an opportunity to assume ownership of his family’s 20 acre farm

(known as Blue Mountain Farm), which contains a protected natural spring

with an unlimited supply of spring water. Phillips and Chambers, life-long

friends, agreed to pool their experience, constructed a bottling facility on the

farm and founded Blue Mountain Spring Water, Inc.

Chambers and Phillips incorporated the technologies of micron filtration,

ozonation and the application of ultraviolet light in the bottling process.

Thus, no residue, taste or odor is left in the bottles. This pristine bottling

process and the unique blend of minerals from the natural spring determine

the clean, fresh taste of Blue Mountain Spring Water. These elements created

a bottled spring water product that is delicious, refreshing, and appeals to

healthful consumers of all ages.

Blue Mountain Spring Water is currently sold in 500 ml, 750 ml, 1 liter and 2

liter sizes. Each bottle type is ergonomically shaped for easy carrying and

contains 30% less plastic versus comparable size CSD beverage containers –

which conforms with the company’s goals of being as eco-friendly as

possible, while manufacturing healthful products and contributing to local

conservation programs.

Blue Mountain Spring Water is currently sold at select natural food markets,

gourmet supermarkets and local stores throughout western and central

Pennsylvania, as well as border-state areas. Recent distribution growth

includes college and university campus stores. In order to penetrate these

market segments and maintain its high-quality image, Blue Mountain has

chosen not to distribute to mass-market and discount retailers. Although Blue

Mountain Spring Water appeals to healthful consumers of all ages, we have a

strong following among active consumers between the ages of 18 and 49.

Increased growth is trending in the 65+ age group and with parents of active

children under the age of 18. Our core customers understand the differences

between “purified” and “spring” water, thus appreciating the benefits of

drinking Blue Mountain Spring Water, versus “tap” or “purified” products.

Blue Mountain’s website has promoted these benefits and presented general

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facts about water, in order to educate consumers and retailers. However, the

website could be revised to improve its effectiveness.

With the exception of 2008, Blue Mountain Spring Water has achieved double

digit sales increases in each year since its founding, which are more than

double the increases experienced by the total U.S. bottled water market. The

economic downturn of 2008 affected sales revenues in many industries. But

while the total bottled water market experienced a decrease of 3% in sales,

Blue Mountain Spring Water’s sales increased 7% in 2008. The increase can be

attributed to the loyal customer base that enjoys the high quality and

reasonable price of Blue Mountain Spring Water. Currently, we are working

to achieve increased sales through expanded distribution and new product

applications – which Blue Mountain Spring Water will be able to support in

its current bottling facility. If future bottling capacity is required to meet

future sales demands, the facility can be expanded without acquiring

additional real estate.

Blue Mountain Spring Water is committed to creatively producing and

marketing high quality, reasonably priced spring water products for active

consumers to enjoy. We are also committed to producing our products in an

eco-friendly environment, while exploring improved recyclable or

biodegradable bottles and packaging.

The marketing plan will outline how Blue Mountain Spring Water intends to

introduce new products, expand its distribution, increase its customer base

and give back to the community.

Blue Mountain’s Mission and Goals

Blue Mountain’s mission is to be the leading producer and marketer of

bottled spring water in its (current and future) distribution areas, for health-

conscious, active consumers of all ages. Blue Mountain wants to educate

people about the benefits of drinking its spring water and protecting water as

a natural resource. In addition, Blue Mountain strives to preserve the natural

environment through support of recycling programs and integrating

manufacturing to reduce its carbon footprint.

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Financial Goals

1. Obtain financing to increase customer base, expand distribution, and

introduce (X) new product line(s). [determine value for X]

(X)=”Junior” line (8 oz. bottles), new ergonomic eco-friendly bottles, branded

clothing.

2. Increase revenue by (Y %) per year. [determine value for Y]

(Y)=50 percent per calendar year.

3. Donate $30,000 per year:

$10,000 to Charity Water- Organization that funds charity water projects

and gives access to clean water for people in developing countries

(http://www.charitywater.org/donate/)

$10,000 to developing spring water health education initative/school

demonstrations aimed at educating younger demographic about the

eco-conscious and health benefits of spring water while demonstrating

new junior sizes.

$10,000 to Water Charity- Organization providing sustainability and

education and health resources to those in need.

(http://www.watercharity.org/)

4. [add additional goals as appropriate]

Expand current facilities to support production growth with ecologically

friendly facilities.

Devote financial resources to developing and expanding current

advertising and PR efforts throughout the region. This will increase in

house labor costs and ad budget.

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Nonfinancial Goals

1. (Z)=Junior” line (8 oz. bottles), new ergonomic eco-friendly bottles, branded

clothing.

2. Enter new geographic markets –

Expand in border states of Ohio, New York, Connecticut, New Jersey,

Delaware, Maryland, D.C, and West Virginia.

3. Source plastic materials for bottles that further reduce our products’ carbon

footprint.

4. [add additional goals as appropriate]

Develop successful internet site that builds image and promotes core

values. Expand into social networking sites to foster community and viral

media usage.

Continue to explore green production technologies and implement when

possible.

Explore promotional opportunities to connect with communities.

Develop strong relationships with retailers, and upon expansion,

wholesalers who will distribute our products.

Core Competencies

Blue Mountain will use its core competencies to continue achieving a unique,

sustainable competitive advantage. Currently, Blue Mountain’s core

competencies include: a recognizable, high-quality branded product; a loyal

customer base among active consumers in its current regional market; and a

reputation among retailers as a reliable bottler with excellent customer

service that increases consumer awareness of our products. Blue Mountain

will build on these core competencies through targeted marketing efforts, in

order to achieve company goals.

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Blue Mountain’s core competencies make the brand stand out from

competitors. The brand is known to be extremely high quality because of

micron and UV filtration, and offer a unique high value to consumers in cost

and quality. Proud to be one of the few firms on the marketplace that bottles

from a locally owned natural spring, the company practices sustainability in

production processes and seeks to educate the consumer about eco-conscious

ideals. Consumer education efforts will involve community outreach to

children regarding spring water and sustainability, blogs, social networking,

and frequent in-person promotions and displays.

The brand is highly recognizable to consumers through creative

branding strategies, great partnerships with retailers, and the recognizable

slogan “Blue Mountain is Nature’s Fountain!” Blue Mountain with expound

upon these competencies by increasing the type of products offered (Junior

size, branded clothing line), by expanding distribution and utilizing a

wholesaler within the next 5 years, and by giving back to the community

locally and globally (community education, global water and sustainability

charities).

Situation Analysis

Blue Mountain’s marketing environment presents excellent growth

opportunities, as well as some challenges that the company intends to meet

successfully. Following this discussion is a SWOT analysis of Blue

Mountain’s strengths, weaknesses, opportunities and threats.

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In the five years since its founding, Blue Mountain enjoys significant

strengths while optimistically targeting new opportunities. Our growing,

loyal customer base, strong fiscal management, intense quality control and

unlimited spring water resource, place Blue Mountain in an excellent growth

position. In addition, our founders’ combined experience creates a significant

understanding of both the technical and marketing aspects of the bottled

water industry. But, as Blue Mountain expands distribution and product

lines in new markets, the company must continue recognizing the scope of

our business and guard against market-share erosion from large competitors

in the spring water category. Targeting and educating active consumers that

understand and prefer the benefits of natural spring water will protect Blue

Mountain from encroachment by competitors in the purified water category.

Blue Mountain‘s expansion must also consider our bottling facility. Although

Blue Mountain has an unlimited supply of natural spring water, our current

bottling capacity is finite. Currently, Blue Mountain can triple bottling

capacity without considerable re-tooling of the facility. However, that

capacity would eventually be affected when increasing product lines. Thus,

as Blue Mountain increases distribution and products, we must coordinate

increased bottling capacity with growing production needs. The Blue

Mountain compound has adequate space to build an extension to our

bottling facility, but financial planning must include the possibility of

construction, if required. Based on the current relationship between sales

revenue and bottles produced, Blue Mountain would reach maximum

bottling capacity when approximately $9 million in annual sales are

achieved.

SWOT Analysis

Strengths

Blue Mountain’s talented founders understand the product and target

market due to their technical and marketing experience.

Blue Mountain has achieved increased distribution at several levels in

its regional market, while consistently increasing annual revenue.

Our company has no debt and is poised for significant growth.

An unlimited water resource and a self-contained, state-of-the-art

bottling facility, ensures excellent quality control.

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Weaknesses

Blue Mountain’s founders may lose sight of the company’s business

scope as it expands.

Blue Mountain is relatively unknown outside of its regional market.

Expansion could potentially create cash flow problems and require

additional employees.

Blue Mountain’s bottling facility may require physical expansion

when sales eventually exceed capacity.

Competitors in the Bottled Water Market

Bottled water producers sell over $11 billion worth of products in the U.S.

each year. Consumers have demonstrated a strong thirst for bottled water

that will continue in the future. A high level of interest exists for products

that consumers perceive as a healthful alternative to other beverages. In

addition, domestic non-sparkling water is the largest and strongest category,

representing almost 96 % of total volume last year. The retail premium PET

(polyethylene terephthalate) segment - consisting of individual servings of

non-sparkling water in PET bottles - continues to drive the category’s

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development, enjoying more than a 60% share of total bottled water volume

sold.

The U.S. bottled water market is comprised of many competitors in the local,

regional and national markets. National leaders of the purified water

segment include: Pure-Life (Nestlé Waters North America), Aquafina

(PepsiCo) and Dasani (Coca-Cola). However, Nestlé Waters North America

(the nation’s largest producer of bottled water) has purchased - and markets -

several regional brands with strong name recognition. Regionally, with some

geographical overlaps, these brands are: Arrowhead (West); Ice Mountain

(Mid-West); Ozark (Southwest); Deer Park (Mid-Atlantic and South); Poland

Spring (New England); and Zephyrhillis (Florida). Thus, consumers may

believe they are buying from a regional company versus a multinational

corporation that also sells purified water. Blue Mountain’s leading regional

competitors are Poland Spring and Deer Park. Regardless, Blue Mountain

offers consumers the best quality bottled spring water available, at an

affordable price.

Convenience store and supermarket chains that sell their private brand of

spring water influence local markets, but are often limited by the resources of

a variety of suppliers. In addition, some regional bottlers also provide direct

delivery service of 3 and 5 gallon containers (and dispensers) to homes and

businesses. Technological innovations in designing and printing bottle labels

have created growth in a new niche. Namely, some spring water companies

sell their water brand with customized labels for promotional use at

tradeshows, universities and events. With a minimal investment in printing

software, bottlers can, for example, provide an individualized, promotional

product of branded spring water to smaller retailers at an affordable price. As

described above, potential continued growth for the industry continues to

look positive.

While there are many competitors in the industry, Blue Mountain has

achieved success by: targeting consumers that desire spring water versus

purified water; creatively marketing the taste and health advantages of Blue

Mountain Spring Water; educating consumers about recycling and the

environmentally friendly facilities that produce a clean fresh taste; and

expanding distribution through dependable relationships and excellent

customer service.

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Additional competitive factors:

Blue Mountain’s competitors have the financial resources to

squelch growth into new markets. Two of the largest regional

competitors, Deer Park and Arrowhead, are both owned by Nestle

Waters. In order to compensate for this Blue Mountain will rely on

unique local marketing methods such as grassroots and

educational initiatives. Blue Market will continue to clearly

distinguish and emphasize that it is a local and regional brand,

sourced regionally and focused on purity and health unlike many

of the larger competitors in the industry.

The bottled water industry is dominated nationally by very few

large brands, as mentioned above. These brands compete with

each other on national stages, and more frequently are competing

on a global level. Blue Mountain will strive to differentiate itself—it

will never be merely a “commodity” available to just about

everyone. It will be a distinct product and marketed and distributed

selectively to distinct eco/health conscious and active individuals

regionally. Blue Mountain’s vision is not necessarily to dominate

nationally, rather to infiltrate select regional markets for growth

with a distinct product.

New entrants to the bottled water scene will not automatically

enjoy brand loyalty. This must be created through distinct brand

dress, along with a PR and advertising campaign distinguishing

the product.

Target Market

The target market consists of healthful and eco-conscious consumers

aged 18-49 located mostly throughout western and central Pennsylvania.

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Trending groups include those on university campuses, seniors over age 65,

and parents with active children under age 18. As a group they appreciate

high value at low prices, and tend to shop at high end gourmet markets,

natural food markets, local stores, and college and university campuses. As a

group they are very active, and “know the difference between ‘purified’ and

‘spring’ water…appreciating the benefits of … spring water, versus ‘tap’ or

‘purified’ products” (MP 2). Thus in addition to being active, these

customers are interested in the value of natural health based products rather

than modified or purified varieties. As consumers of natural products, they are

typically more conscious of sustainability practices.

Those geographically situated near college campuses may be

considered as one market segment. They are psychographically well educated

and active, and demographically represent a younger population either with

low income or parental support. The college age set will respond to an

interactive internet and social media to complement their busy, technology

based lifestyles (Boone & Kurtz 282). Straightforward messages of

sustainable practices and value will attract the educated and price conscious

college consumer.

Seniors over 65 form another market segment. As the textbook

indicates, this segment “experienced economic hardship during childhood”,

and therefore may also be responsive to messages that emphasize high value

with low prices (Boone & Kurtz 284). They “value hard work”, and may

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therefore respond to messages of hard work inherent in the companies local

recycling and sustainability efforts (Boone & Kurtz 284). They “like to

associate with people of similar backgrounds”, while they are not necessarily

the first to try a new product (Boone & Kurtz 284). Integrating lifestyle

messages that are lifestyle and eco-conscious may make seniors feel they are

integrated into a particular culture group of peers with similar values, and will

make them feel that they are not the first among their peers to try this brand of

water. This group will be more receptive to television and radio messages.

Parents with active children under 18 are a segment largely influenced

by the wants and needs of their school aged children, “particularly in the area

of food” (Boone & Kurtz 282). Spending money on marketing to children,

making smaller portable bottles, and including messages that are fun or

entertaining will influence children and parents to select Blue Mountain Water

over other beverages. Parents will also be interested in purchasing nutritious

products for their children, so further highlighting the health benefits of

natural spring water as opposed to purified varieties will make parents feel

secure in their purchases. These active children will also receive “junior”

bottles designed and marketed especially for them, as they are on-the-go and

will presumably drink smaller quantities.

As Blue Mountain expands the company will continue to target these

same demographics in bordering states of New York, New Jersey, West

Virginia and Ohio. These bordering states will have more urban high traffic

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areas than Maryland and Delaware, where Blue Mountain may decide to

expand at a later date. Cities selected for expansion will initially focus on

urban areas in these states—as buzz marketing and recognition may be more

readily successful there than in rural areas. Initial campuses targeted include

somewhat elite competitive urban universities such as New York University,

Columbia University, Ohio State University University of Pennsylvania, and

Princeton University. In the surrounding geographic cities, the brand will

employ distribution at more select high end grocery stores, utilizing messages

that will attract seniors over 65 along with active parents with children. New

PR efforts will be utilized including buzz marketing, billboards, radio and

television advertisements to develop brand recognition and loyalty.

The Marketing Mix

Details of Blue Mountain’s proposed marketing mix are outlined in the

following discussion.

Product Strategy

Currently, Blue Mountain Spring Water is available in 500 ml, 750 ml, 1 liter

and 2 liter sizes for individual unit sales (e.g. the refrigerated section). The

500 ml bottle is also available in consumer 12 or 24 packs, the 750 ml in 12

packs and the 1 liter bottle may be purchased in consumer 6 packs. Each

bottle type is ergonomically shaped for easy carrying. The 2 liter bottle is

primarily used at home by families. In response to customer suggestions,

Blue Mountain is planning to launch an 8 oz size, designed with kids in

mind. A perfect size for a lunch box or a quick drink on the go, the “Junior”

fits easily in cup holders and has a non-tip design. Retail pack availability for

the “Junior” has not yet been finalized. Additional market research shows

positive reception of a 1.5 liter size and increased inquiries from segmented

retailers about custom labeled products.

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New products will include the introduction of a “junior” size bottle in

packs of eight, to be marketed toward children and their active parents. The

bottles will feature fun facts about physical activities and “green” ideas for

reusing or recycling the bottle. This will be further marketed through the

introduction of an outreach program to promote sustainability utilizing the

junior size bottles for promotions and demonstrations in regional K-8

classrooms.

Other new products will include a promotional line of branded

clothing such as t-shirts and hats. These can be worn by staff and distributed

through online contests and at promotional events. Additionally, buzz

marketing can be utilized on college campuses by employing select students

to wear the clothing and promote the product. This will aid in promoting the

product in the growing college demographic. Children may also receive the t-

shirts in sustainability marketing efforts.

The marketing mix will grow with and further promote the company’s

expansion in the region. Advertising campaigns must expand into new

regions which will include advertising in community newspapers, blogs, and

on billboards in select high traffic public areas. Social networking and

blogging will also expand over the next year to introduce active elements such

as a blog, and community spaces on Facebook and Twitter. In person

demonstrations will take place in growing markets to introduce the product.

As the company grows, Blue Mountain will attend trade shows to market the

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product to wholesalers who will distribute and further market the product

responsibly. In new markets and college markets, the value focus will be cost

based. In health markets and higher end grocery stores, the marketing focus

will focus more heavily on the ethics and intrinsic value of the product itself

compared to similar products, utilizing “value based pricing.”

Distribution Strategy

Blue Mountain Spring Water is currently sold at select natural food markets,

gourmet supermarkets and local stores throughout western and central

Pennsylvania and border-state areas (Ohio, New York and West Virginia).

Recent distribution growth includes college and university campus stores.

Opportunities for increased revenue exist within the regional areas and

through geographic expansion.

INSTRUCTIONS: Complete after receiving feedback for Written Assignment 8, question 2. After receiving your mentor’s feedback from your completed written assignment 8, make any necessary corrections or adjustments and enter your Distribution Strategy here.

The company is poised for expansion, and according to the SWOT

analysis this “could create some cash flow problems, require additional

employees”…and the “founders may lose sight of the company’s business

scope as it expands.” (MP 7) In order to cut service and distribution costs

while expanding the scope of the company, Blue Mountain will begin using a

longer channel of distribution over time span of three years, involving

wholesalers that practice selective retail distribution at high quality grocery

stores, college area stores, and health markets. The wholesaler can serve as an

“immediate source of funds”, outsourcing the distribution and cutting the cost

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of buying and selling (Boone & Kurtz 421). Blue Mountain will still want to

retain marketing information in order to retain a high quality image, so they

will “hire their own field representatives” who will “service retail accounts

with marketing information” (Boone & Kurtz 421). The wholesalers will

manage “actual sales transactions”, while Blue Mountain will have greater

control over retail relationships and marketing (Boone & Kurtz 421). This

strategy will enable cost reduction and ease the burden of expansion, while

enabling Blue Mountain to exercise agency in terms of marketing and

selective distribution intensity. Moving the goods physically to wholesalers

may present an added cost, but this can be alleviated by utilizing a only a

select few wholesalers who will receive bulk truck deliveries from the

company.

Promotional Strategy

Effectively communicating with consumers and retailers is essential for Blue

Mountain. Information about the company, our products and spring water in

general, is provided via the Internet, direct mailings and personal contact.

Blue Mountain strives to promote the value and benefits of its high-quality

spring water products. Our slogan “Blue Mountain is Nature’s Fountain!”

has received high recognition ratings by consumers and retailers.

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As part of overall trade dress and visual cues, the company will

develop a brand mark pictorial design that will be memorable and distinguish

the product from competitors (Boone & Kurtz 385). The brand mark will tie

together health and eco-conscious themes through the utilization of simple and

effective imagery, which will include an altered version of the universal

recycling symbol encasing a mountain. The recycling symbol is in the public

domain, meaning it is not trademarked and available to be used for this

purpose. The arrows will be blue and look like water, flowing over a blue

mountain lush with greenery, circling back under the mountain as a spring,

and circling back to the top of the mountain. On one side of the brandmark

next to the image of spring water will be the word “health”, on the other side

of the brandmark will be the word “nature”. Both words will be in green.

Underneath the brandmark the slogan” Mountain is Nature’s Fountain!” will

appear (MP 12). This logo will combine interests of health and eco-conscious

markets by further appealing to and promoting concepts of health and

sustainability. The brandmark will represent a cycle that the consumer is

implicated in. The packaging will be a simple light green color to further

emphasize eco-conscious motifs and encourage more attention to be drawn to

the brandmark. A text panel to the right of the word “nature” will state “30%

less plastic versus comparable size CSD beverage containers”, and give a few

facts about how spring water is different from purified and why it is a good

choice for the health conscious consumer (MP 3).

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In terms of packaging, the company will use as little plastic as

possible, and create an ergonomic design convenient and portable for active

adults and those at the gym. The company will consider easy open snap caps

that will save the consumer time and protect from spills, satisfying the first

major objective of packaging—protection from damage. The package will

assist in marketing the product by using as little plastic as possible, and by

stating so. Also it will be ergonomic, fit in traditional drink holders, and

portable, for active consumers. The company will also cater to children with

active parents by producing small portable bottles with reuse ideas on the

packaging, and fun facts for kids about being healthy and eco-conscious.

Blue Mountain will communicate product information to consumers and

retailers with a solid promotional strategy that will continue to promote the

value and benefit of the product and spring water in general. The company

growing company will continue its current effort of internet contact, with the

ultimate objective of developing targeted advertising campaigns, trade

promotions, and public relations efforts. All efforts will feature the brand

mark and endeavor to promote the slogan “Blue Mountain is Nature’s

Fountain!” The campaigns will deliver a cohesive message fusing messages of

health, advantages of spring water, and overall value.

The internet can facilitate both informative and reminder advertising.

Strategic ads in regional newspaper websites, local

health/fitness/sustainability blogs, and on select college students facebook

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pages can inform/remind the target markets that a product exists and create

demand (Boone & Kurtz 532). Blue Mountain’s web page can continue to

offer informative product information and will leverage a blog and social

networking pages to reach target demographics.

Traditional media will also be utilized. Print ads will appear in the

health and community sections of local newspapers, and press releases will

periodically be released to regional media. Strategically placed billboards will

also occupy high traffic community recreation spaces in order to target active

consumers.

It is recommended that due to the “high per reader cost” of direct mail,

that this method only be used to reach newer demographics with special offers

that have a high response rate—such as coupons for college students, or to a

select neighborhood where the product is just being introduced (Boone &

Kurtz 475). Buzz marketing may be utilized on college campuses, by hiring

select students to promote the product. Trade promotions will be periodically

leveraged in community gyms, health centers and specialty stores so that

consumers can try the product and learn about the product in a personal

manner.

As a result of expansion and a decision to use wholesalers, one great

marketing method could be tradeshows where the wholesalers can compare,

learn about, and purchase the product. This will give them a better initial idea

of the product and offer a chance to educate them about the benefits of spring

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water.

Pricing Strategy

As previously described, Blue Mountain offers consumers the best quality

bottled spring water available, at an affordable price, which requires

competitive awareness. Our products are competitively priced, relative to

other premium spring waters, but less than imported spring waters. Blue

Mountain has successfully achieved its goals through carefully planned

growth and by not offsetting high sales volumes with low prices.

Blue Mountain’s pricing will reflect growth objectives while aiming to

remain competitive in the marketplace. Profitability will be a main first

objective—the ability to cover expenses and providing an economic cushion

for the future (Boone & Kurtz 612). Blue Mountain will utilize the

incremental-cost pricing technique, which “which attempts to use only costs

directly attributable to a specific output in setting prices” (Boone & Kurtz

625). As Blue Mountain grows labor hours, manufacturing costs, demand, and

competition may remain variable—incremental-cost pricing will take this into

account and allow pricing contracts to vary in different climates. For

example, Blue Mountain may sell more in the hot summer months, and due to

labor decrease in the winter may charge less to obtain certain contracts—

while still maintaining the ability to breakeven.

The firm will also utilize the modified breakeven concept to sell at

different prices to specific markets, evaluating “consumer demand by

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comparing the number of products that must be sold at a variety of prices to

cover total cost with estimates of expected sales at the various prices” (Boone

& Kurtz 627). A range of profitable prices can target the various markets to

hit the breakeven point and generate profits. This concept will allow the

concept of “value” to mean different things in each market in order to remain

competitive (Boone & Kurtz 615). In markets where value is attributed to low

prices, or where Blue Mountain is a “fighting brand” introducing itself to the

market, the pricing will be lower (Boone & Kurtz 611). These markets may

include college students, and new regions of distribution. By contrast, health

food and natural high-end markets will cater to a demographic with higher

income and looking for non-price value in the product. These customers will

be charged more and be catered to with a “value priced” marketing strategy,

which emphasizes the benefits of the product in comparison to the

competition for a particular quality product (Boone & Kurtz 615). The firm

will seek to adjust volume of production by “maximizing sales within the

profit constraints” of each particular market by using the modified break even

concept—allowing varied marketing and pricing to sell more in each market

(Boone & Kurtz 619).

Blue Mountain seeks to offer the best quality at an affordable price, so

prestige value of the product must be taken into consideration. In all markets

the quality and exclusiveness of the company’s image must be emphasized.

Especially in high-end, value priced markets, the benefits of spring water,

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health, and eco-conscious concerns must dominate the image and be

emphasized even further in order to justify the cost of the product and remain

competitive with similar brands. The possible complexity of this pricing

strategy will be alleviated by creating only two tiers of pricing that are slightly

different from one another—one for the college value based set, and another

for the natural foods/health market consumers.

Budget, Schedule and Monitoring

Since Blue Mountain Spring Water began five years ago, it has enjoyed

consistent annual sales increases. The figures below depict historical sales

revenue and projected sales, including product line expansion, budgeted for

the next three years.

Sales Budget

Historical

2005 2006 2007 2008 2009

$750,000 $1.5 million $2.75 million $2.95 million $3.75 million

Projected

Blue Mountain will aim for a 50% sales increase each year to cover

overhead, expansion, advertising, and eventual cost of a wholesaler

INSTRUCTIONS: Complete as part of Written Assignment 11 Considering the other components of your marketing plan, insert your Projected Sales for the next three years here.

2010 $ 5.25 million

2011 $ 7.35 million

2012 $ 10.29 million

MP-24

Expansion Schedule

The timeline for expanded distribution and the introduction of new products

is described below. Blue Mountain will closely monitor the implementation -

and evaluate the performance - of the following tasks.

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Year 1

Launch of the “Junior” (8 oz. bottle) in retail packs of 8. This will

correspond with a sustainability effort in K-8 classrooms educating kids

about spring water and health benefits while demonstrating the product.

Launch of website redesign, entry into social networking and viral marketing

communities.

Hire 3-5 new employees to handle advertising and public relations efforts.

Research option of wholesalers for cost reduction and further distribution.

Year 2

Work with a wholesaler who will distribute to select high end retailers and

near college campuses in bordering states.

Introduce product in high end grocery stores and college campuses in border

states.

Launch targeted advertising and promotional campaigns in new regions

utilizing web and print ads, and product demonstrations.

Expansion of production facilities to support launch into surrounding states.

Year 3

Launch branded clothing line for promotional use.

Fully launch product into all target markets in bordering states.

Send agents into field to gain marketing information and assess future growth

areas.

Based upon industry trends, Blue Mountain anticipates continued growth in

the future and has no plans to exit the market. We are committed to remain

an independently owned private company. Therefore, Blue Mountain will

avoid mergers and public stock offerings. As discussed in this plan, Blue

Mountain intends to increase its market presence with controlled growth.