Competition in the Bottled Water Industry in 2006
1. What are economic characteristics of the bottled water industry?
If we define the economic characteristics in term of macro environment, there is several ways that we can categorize as the follow;
Market size and growth rate
The bottled water industry has a high potential in growth rate and in the terms of sales volume or per capita consumption rate. For example, the United States’ capita consumption of bottled water lagged those of soft drinks by more than a 2:1 margin. In term of bottle water, the majority of sales volume has burden on single- serving PET containers than 5 or 1-2.5 gallon high density polyethylene containers which use for home or office. The single PET container has been satisfied by the customers because they are convenience and portable. So it could be purchased from a convenience store.
Number of rival
There were fierce competitions among the producers that have scale and scope of operations which were similar to each other. For instance, the Pepsi Co. and Coca Cola companies have developed the strategy and infrastructure, which are hard for the local sellers to complete with them. However, there were still many producers including new entrants that try to access the market and compete seriously with low price and differentiation- strategies among rivals.
Scope of competitive rivalry
The Local sellers have a little amount of scale and scope comparing to huge bottled water production companies (Pepsi, Coca Cola, Nestle Waters, and Group Danone). Those kind brand producers benefits of strong economies of scale and scope. For instance, Pepsi Co has its own spring water company and utilizes the facilities that produce soft drinks. These producers can purchase a large quantity of raw materials at a time which means they can reduce price per units. However, the small producers were having a hard time completed with those big companies because they don’t have enough budgets to achieve economic of scale like the big companies do.
If we define the economic characteristics in term of macro environment, there is several ways that we can categorize as the follow;
Market size and growth rate
The bottled water industry has a high potential in growth rate and in the terms of sales volume or per capita consumption rate. For example, the United States’ capita consumption of bottled water lagged those of soft drinks by more than a 2:1 margin. In term of bottle water, the majority of sales volume has burden on single- serving PET containers than 5 or 1-2.5 gallon high density polyethylene containers which use for home or office. The single PET container has been satisfied by the customers because they are convenience and portable. So it could be purchased from a convenience store.
Number of rival
There were fierce competitions among the producers that have scale and scope of operations which were similar to each other. For instance, the Pepsi Co. and Coca Cola companies have developed the strategy and infrastructure, which are hard for the local sellers to complete with them. However, there were still many producers including new entrants that try to access the market and compete seriously with low price and differentiation- strategies among rivals.
Scope of competitive rivalry
The Local sellers have a little amount of scale and scope comparing to huge bottled water production companies (Pepsi, Coca Cola, Nestle Waters, and Group Danone). Those kind brand producers benefits of strong economies of scale and scope. For instance, Pepsi Co has its own spring water company and utilizes the facilities that produce soft drinks. These producers can purchase a large quantity of raw materials at a time which means they can reduce price per units. However, the small producers were having a hard time completed with those big companies because they don’t have enough budgets to achieve economic of scale like the big companies do.