EXECUTIVE SUMMARY

The bottled water industry in India is currently valued at more than $ 1.5 billion. The bottled
water industry is growing at rate of 18% CAGR and has attracted many players including Pepsi
and Coca Cola. The pioneer of the industry Parle Bisleri has grown over the years and
maintained its top position.

The bottled water industry consists of organized and unorganized players. There are about 2000
unorganized players which operate locally. The industry is dynamic and the companies operate
in hypercompetitive environment. The strategic analysis of company like Dew Drops becomes
very important. In the present business Plan, I have made a business plan of my new product –
“DEW DROPS NATURAL SPRING WATER”. I have used different models for analysis
purpose. I have tried to analyze the different strategies to be adopted over the years. The
company however faces threat from its competitors as it is single product company.

A BRIEF ABOUT THE PRODUCT

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Product Name – Dew Drops Natural Spring Water

Product Category – Convenient Good

Nutrition Information -

• Dissolved mineral salts: 290 p.p.m.

• Fluoride ions: 0p.p.m.

Estimated Figures for the next 5 years -

Parameters Dew Drops Natural Spring Water
Market Share 60%
Selling Price Rs 12
Profit margin Rs 2
Marketing Mass media advertisements, hoardings,
etc. will be used for promotional
campaign. Change in packaging to
reposition its brand. Will have credence
attributed and positioned itself as ‘safe’
in the minds of consumers. Will become
generic brand for natural spring water
and creating PULL entirely.
Vision
Our vision is to be the dominant player in the branded water business where the second player is
less than 20% of our business.
Mission
We are in the business to serve the customer. He is the most important person. He is the only one
who pays. He deserves the best quality and presentation at a worth of the price. We must have
world class quality, at the lowest production & distribution cost.

INTRODUCTION
The global bottled water industry consists of selling of flavored as well as unflavored water.
With regards to Indian context there is sale of only unflavored water. The bottled water segment
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is rapidly growing which has a total market size of more than $ 1.5 billion. The market is mainly
controlled by the organized sector with over 500 brands existing in the market. A growth in the
sector has been viewed mainly because of the health conscious people, improper water supply
and the unpredictable municipal water supply. With a high growth rate and low entry barriers has
attracted many players in this segment. The market operates in lower margins, the price increases
when the cost of packaging and transportation increases the major players in the market are
trying to establish themselves in bulk water business through brand equity, whereas the
unorganized players are resisting them by using differentiation strategy.

Dew Drops water is a new player in this big and competitive industry. The company established
its first plant in Himachal Pradesh in January 2010. Dew Drops is natural spring water with
minimal mineral content. In this study, we have studied how dew drops plans to maintain its
market position, and also we look at strategic decisions that the company plans to take to gain
sustainable competitive advantage.

Marketing Mix

Product
• Brand name
• Quality and Purification processes
• Variety (1Lt, 500ml, 5lt, 20lt)
• Unique Hexagonal Packaging

Price
• Volume Discount

Place
• Strong distribution channel (3.5 Lac outlet)
• No of plant (12 New plants would be set up)
• Market Coverage
• Fully owned Transportation

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 • Reverse logistics

Promotion
• Pull Strategy
• Push Strategy
• Play safe Ad campaign

SWOT Analysis

Strength
• Brand
• Distribution channel
• Quality
• Innovation

Weakness
• Duplicity in the market
• Less awareness about mineral water.

Opportunity
• Growth – cover untapped market
• Market expansion by acquiring local brands
• Premium pack.

Threats
• Aggressive competition
• Low-entry barriers

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 • Restriction by government on plastics
• Water purifier

PEST Analysis

Political Environment
•Government failure to provide safe drinking water
•laws encouraging ground water exploration
•FDA and various govt. agency As mineral water is covered under the Prevention of Food
Adulteration\ Act (PFA), drinking water is not and the Act must be immediately amended to
include
•Environmental regulation.

Economic Environment
•Developing economy
•Better Infrastructure:-
•Career Attributes: - Employment Opportunity.

Social Environment
•The quality of water available in the country is bad
•Scarcity of water
•Health Conscious People
•Population Growth rate.

Technological Environment

• Economies of scale

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PESTLE Analysis

There are various factors affecting the Indian bottled water industry, the government policies
regarding the quality of packaged water are very stringent and all the companies have to adhere
to the BIS standards. The low cost in set up and the availability of cheap players has exerted a
pull of many small and big players in the market. There is a constant pressure on the bottled
water companies on the quality of product and the packaging. The technological advances in
purification processes help in enhancing and maintaining quality of water. There is no industrial
licensing policy present currently which attracts many players to enter in this industry. The low
entry barrier in this segment affects the major players of the market. There has been a price
ceiling imposed by the government in this market segment due to which price war is not possible
in this industry. The scarcity of safe drinking water in many areas creates opportunity for the
players to cater to this growing demand. There have been instances of protest against the bottled
water companies against the pricing strategy and over the depletion of scarce resources. The
industry has considerable growth prospect in newer areas and the macro environmental factors
present attract new players.

Porter’s model
The bottled water industry is a part of beverage industry which comes under the fast moving
consumer goods. When talking about the porter’s five forces model with respect to the bottled
industry in India.

Threat of Entry: since the entry barrier is low, making it easy to enter the bottled water market.
As per the product differentiation the threat of new entrants is high. But in a broader prospective
it is moderate.

Bargaining Power of Suppliers: the bargaining power is low here as the municipal water system,
bottles and plastic cap, label printer filtration and deionization equipment, plastic grains and etc.
The large availability of suppliers leads to less bargaining power.

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Bargaining power of Buyer: the bottled water industry is categorized as an oligopoly. The
number of producers is less due to which the bargaining power of the buyer becomes less. The
bargaining power depends on the price, availability and the product.

Substitute products: since bottled water is categorized under the beverage industry hence, the
degree of substitutability is medium as the coffee, tea, juice and soft drinks acts as a substitute to
water. The availability of substitute affects the price and the market. The availability of substitute
provides the option to customer and hence he can switch from one product to other.

Rivalry: the degree of rivalry affects the price, quality, profit and revenue in an industry. The
market is almost on saturation state, and the industry refers the oligopoly competition so there is
a high competition to increase the market share. The intensity of rivalry is low as there is limited
player and the product is not price sensitive.

CORE COMPETENCY
The brand of Dew Drops is a relatively new brand but with its different look and high health
standards, creates a brand which becomes a core competency for Dew Drops. The seal of Dew
Drops bottles help the consumers clear their doubts on the purity of water. The company
maintains the physical and financial resources very efficiently and effectively. These resources
when combined helps in maintain and retaining customer’s expectations to achieve the targets of
the company. The intellectual capital of the brand plays a major role as the bottle seal of Dew
Drops is patented. Dew Drops is planning to have a very strong distribution network, which will
help it to reach out to almost all the regions in the country, and the company shall have about
500000 outlets across the country. The company will work on its dual-distribution strategy to
gain competitive advantage.

MARKET SIZE & SHARE

The bottled water industry is expected to grow at 18% CAGR in the year 2010. The sale of
bottled water industry is expected to reach at 6466.8 million liters translating to market worth of
more than $ 1.5 billion. The off trade value of the sales has increased by 25% in 2009. There

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were no significant products launched during last year. The average price per unit has increased
by 4% in the off-trade business in 2009 ("Bottled water- India," 2009).

The market consists of organized as well as unorganized players. The organized players consist
of brands like Bisleri, Kinley, Aquafina, Oxyrich, Himalaya, etc. Dew Drops will ensure that it
achieves to be the market leader with a market share of 38.5% which right now is held by bisleri.
The bottled water industry in India still consists of still bottled water. The carbonated and
flavored water has very niche segment and there were negligible sales in 2009. There are large
numbers of unorganized players and most of them are involved in selling by means of tampering
with seals of organized player’s product.

COMPETITOR ANALYSIS
The parameters are taken to differentiate Dew Drops from its competitors. Bisleri acquires
38.5% of market share whereas Kinley has a market share of 21% only and Aquafina covers only
14% of the total market share of the bottling water. Kinley has a cost price of manufacturing a
bottle up to Rs 12.25 and it sells the bottles for Rs. 14/15 which gives it a profit margin of Rs
1.75/2.75. Whereas, Bisleri has a profit margin of Rs 2 as its cost price is Rs 10 and the selling
price is Rs 12. Aquafina on the other hand earns a profit margin of Rs 2 with cost price as Rs 8
and selling price as Rs 10. We will focus a lot on the advertisement of our brand and keep on
differentiating ourselves by making variances in the brand or packaging of the bottles. As we
plan to use white color for packaging, as it symbolizes purity, whereas the other bottling
companies use blue color to pack their bottles. Our advertisement will commit to provide safe
and pure natural spring drinking water whereas Kinley is going to launch its advertisement as
‘Vishwaas Karo’. Aquafina does not concentrate on advertising; it has a very low advertising in
selected places like cinema halls.

The distribution network of all the three companies varies. The distribution network helps in
making the product available to its customers whenever they need it. The distribution network of
Bisleri is such that from the manufacturing plant the bottles reach company warehouse from their
through the trucks it reach to its retailers or through distributors it reach to the retailers and then
from retailers finally to the customers. Through distributors it also goes to the institutional
buyers or orders over internet.
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Aquafina’s distribution system is different. From the company’s manufacturing unit the bottles
reach to distributors and from there to institutional buyers or retailers and then finally to
customers.

Kinley has different distribution network it does not include a big network. From the
manufacturing unit the bottles are sent to the sales and distribution department from there the
bottles are sent to the distributors and outlets directly and the bottles from distributors are also
sent to the outlets. A very small network is there. This makes the product less available in the
market.

STRATEGIC DIRECTIONS
We have used Ansoff matrix to find out the strategic options which are available with Dew
Drops, in terms of its product and market.

From the analysis we have found that the company can use market penetration and product
development strategy. The company will use the penetration strategy by making products
available in different sizes. The company will also use innovative concepts like 1.2 litre bottle
which helps to offer consumers more content at lower price. we will also penetrate the market by
shifting its focus from retail market to the bulk water segment. The company will use its own
distribution network to cater the bulk water segment. The company will thus penetrate the
market bypassing the competition present in the retail segment.

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EXTENDED VALUE CHAIN ANALYSIS

Porter Value chain

We can divide the Dew Drop's activities in two parts on the basis of value chain model

• Primary activities

• Supportive activities

Primary activities:
Dew Drops shall aim to become a leading organization in packaged bottled water. Its primary
activities will be –

Inbound logistics:

The raw material for Dew Drops natural spring drinking water shall be - natural spring water,
plastic grain for bottle, packaging equipment, bottle cap and labels. We plan to have a good
inventory system and transportation system. It’s inbound logistic will be good enough to supply
the Dew Drops water regularly. This will help us to make the product available everywhere. The
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product availability adds the value to the customer. Dew Drops will manage all the semi-
finished, finished goods and raw material in stores department. In store department we plan to
keep all the stock of rejected bottles or caps to reuse it.

Operation:

Dew Drops will have seven departments of different operation where hygiene and safety concern
will be primarily focused. Different departments will be:

• Filter department

• Caps department.

• Water treatment plant

• Water blowing department

• Water testing laboratory

• HORAI department(grinding plant)

• Stores department.

Filter department will be responsible for the filling and packaging of bottles under the rigid
control of the hygiene and safety. In the caps department the PET material will be used to make
the cap and plastic bottles by using 6 Ekou injection modeling machine of 180 and 330 as per the
requirement of market. Caps are made from a mixture of HDPE and LLDPE using 4 Cincinnati
Milacron and 2 Windsor injection-molding machines. Water treatment plant will be where the
water will be made pure and safe. Water laboratory will check the quality before and after
packaging. The scraps or used bottle again send to HORAI department for the recycle of bottles.
Stores department will manage the all raw material and scraps. Dew drops plans to add value at
each steps of its operation. Customers shall perceive our product to be safe and natural spring
water with secured sealed bottles.

Outbound logistics:
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The outbound logistic of Dew Drops will be very strong. To increase the capacity and to cover
the maximum market, we are planning to have around 2000 trucks. we shall use the route
mapping method, in this method the route of transportation and operation is designed in such a
way that it takes minimum time to transport the stuffs. we will prepare a route sheet along with
the scheduled to make sure the things happen in an effective manner. Dew drops plans to open
the 25 new plants till 2012 to increase the growth of 40%. So it will decrease the supply time and
make the product easily available.

Marketing and sales:

Dew Drops will use competitor price strategy to get the market. As Dew drops is new and the
market is full of competition we have decided to increase the advertising expenses for ad
campaign. The branding and segmentation of Dew drops will be very strong as it will cover
household to big hotels. To target the customer Dew drops will launch different product line with
different prices and different size of bottles. We will have three level of distribution channel,
consisting of wholesalers, dealers and retail shop.

Market strategy development and implementation

Market strategy includes the analysis, strategy development and implementation. First, company
has developed a vision about the market of interest to the company and then selected market
target strategies, establishing objectives and developing and implementing the strategies. It
includes managing and marketing program positioning strategies formulated to fulfill the value
needs of the customers in every market target. Strategic marketing is a process of market-driven
strategy development, taking into consideration a consistent varying business environment and
the requirement to bring excellent customer value. Dew Drops will develope strategic marketing
to concentrate on organizational performance instead of focusing on increasing sales. The
marketing strategy of our brand will try to bring excellent customer value by integrating the
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customer-influencing strategies of the business into an organized set of market- driven activities.
The company will connect its strategic marketing with the organizational environment and views
marketing as a liability of the whole business instead of a specialized purpose. There is
marketing’s boundary orientation between the organization and its customers, competition and
channel members. The marketing processes are centralized to business strategy planning process.
Strategic marketing supplies the knowledge for environmental screening, for choosing what
customer group to serve, for directing product specifications and for selecting competitors for
position against. Dew Drops will successfully integrate cross-functional strategies which are
decisive for offering excellent customer value.

Marketing strategy
The strategic situation analysis considers competitor and market analysis, market segmentation
and incessant erudition of markets. Formulating marketing strategy checks customer targeting
and positioning strategies, market relationship strategies and planning for latest products.
Marketing program development includes product, price, distribution and promotion strategies
formulated and applied to fulfill the value needs of target buyers. Strategy execution and
management considers marketing strategy implementation, control and organizational design.

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