Background and Problem Definition
Mercan Systems, Inc. founded in 1980 their first product being a desalinator which was used to remove salts from brackish well water supplied it to mobile home park residents in Florida. The product was very successful in the market and it quickly expanded to nearby hospitals and bottlers of water for sale to consumer. By 2000, they made vast improvement in their product by including particle filters, ozonators, ion exchange resins, and purifiers. It had kept its price higher than its competitors. They launched a new product and wanted to formulate an entry strategy for the market entry of Delight water purifier in India.
Market and Industry Analysis
There were approximately 44 million households who took precautions and all the safety measures for their family. About 50% of the target market used traditional boiling water method, 20% used candle filters and another 20% used water purifiers. The major competitor for Mercan was Eureka Forbes
who mainly had two products namely Aqua guard and Pure sip. The unit prices for Aqua guard and pure sip were approx. Rs.5500 and Rs.2000. Apart from this there were other companies like Ion Exchange, Singer, and Delta Brand. On more careful observation Chatterjee found out that maximum Sales were from urban areas where the existing manufacturers were reaching only 10-15% of the entire Indian population. Evaluation of Alternative course of Action
Direct Acquisition/Joint Venture
Looking at the estimated sales figure from Exhibit 3 we find that the Sales were approximately 430000 units. Analyzing it further we see that in case we adopt the skimming price strategy and sell products through Dealer channel we can estimate a sales of 279.5 million INR in comparison to 129 million INR in case Penetration strategy. We observe the same thing for Direct Sales we can see that in case of skimming strategy the estimated sales were 215 million INR and in case of penetration strategy it was 86...
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