The Clorox Company is about to enter a new product market by launching a faucet mounted filter system in order to maintain its dominance in the water filtration business. To do this in a successful way, Clorox has to conquer this market with the right entry strategy. Main goal is therefore to gain market share by targeting the right customer segment and make an appropriate marketing investment. Also the previous pitcher market leadership must be maintained.
The biggest impediment is that the Clorox enters an already existing market and the dominant market leader, PUR, has well developed its “PUR Ultimate” system. Moreover Procter & Gamble are about to take control over PUR. It is also likely that the sale of faucet mounted products will lead to a decline of our pitcher system unit sales.
To enter the new market successfully, it is necessary to divide the market into the different customer segments. By choosing the path of the least resistance we easily steel market share from our main competitor and weaken him thereby. Once successfully entered the new market, we improve technique and distribution channels to encourage rival customers to switch the brand.
II. Problem Analysis:
The main goal of this case is to enter the faucet mounted filter market and gain market shares (first year unit sales approx. 1,205,000) by launching our product to the right customer segments.
Bottom–line Marketing Goal
Improve our brand awareness as only 1/7 US households use a pitcher filter Keep our leadership in the Pitchers segment: maintain our market share (83%) Improve the technology of the pitcher regarding contaminants removal
Consumer Marketing Goal
Target the right and best customers, according to age and zone, to get easily into the market. Adapt the promotion to the goal: choice of the brand name, choice of the best message for advertising. Distribution strategy must be assessed and optimized to suit our position in the market.
The key impediment is Competition:
The most powerful competitor is PUR, the market leader of faucets segment. [Exhibit 6]
• It held a 74% volume market share (US)
• Procter and Gamble was planning to acquire PUR: the competition can be harsher as P&G will raise the financing resources to reinforce advertisements, promotions, R&D. Moreover PUR will now be marketed by a firm that is known for its marketing expertise. • There is another competitor, Teledyne who got the remaining Market Share Volume (26%)
• Brita learns that a retailer, Target Stores, has installed a display which compares alternative filtration products on their ability to remove contaminants from water. Brita does poorly on this comparison relative to PUR. (4 bullets - highest rating - for PUR, only 1 bullet for Brita) • A survey showed that consumers become more health-conscious but still prefer bottled water (38%) over faucets (11%) or pitchers (16 %) [Exhibit 4] • The risk of cannibalization. The market as a whole is not expected to expand. • Considerable amount of advertising and promotion budget in order to compete with other famous super-premium brands.
III. Solution Introduction
For a successful implementation of the new product, we’re recommending the path of the lowest resistance. It is necessary to divide the market into the different customer segments and attack the easiest customer segment first. Therefore we offer following solutions:
The Brand Extensions
Launch the Faucet mounted as a new production inside the Brita brand.
Brita is market leader in the pitcher segment and well known as brand which delivers a superior taste to other filter companies. Using the existing name gives us the advantage to get easily our current customers which are loyal to our brand. The name Brita will lead to higher brand awareness and greater market share. Building up a new brand costs lot of money and...