Team MaverickVenkatesh KG venkateshg.pgpm15c@greatlakes.edu.in 9789589365Dhulipalla Bharadwaj dhulipalla.pgpm15c@greatlakes.edu.in 9551122267 Harish Narayan harish.pgpm15c@greatlakes.edu.in 9962221862

On the Mark – Aava Case Challenge

Bottled Water Industry : Market overview

• Rising disposable income levels, coupled with increased health consciousness, comprise the primary factors driving the bottled water market in India

• Additionally, the rapid introduction of new brands and variants is further boosting the market • Rising awareness levels with regard to safe drinking water and health-related issues,

especially have helped push the sales of bottled water • Metropolitan consumers have been observed to be the largest consumers of bottled water • India’s bottled water market has charted a high growth trajectory, due to its easy availability,

anytime-anywhere consumption, and convenience. It is expected to grow at a CAGR of 19% from the 2013 valuation of INR107 billion to INR360 billion in 2020

• Western region accounts for nearly 40% of the market while eastern region accounts for merely 10% of the market

Segments Brands Coverage Price Range Market Share

Regular Kinley, Aquafina, Bisleri INR 15-20 per liter 70%

Mid market Qua , Himalayan , Aava INR 25-50 per liter 25%

Premium and Specialty Evian and Danone Above INR 100 per liter 5%

Natural mineral water industry insights Drivers:•Growing upper middle class population and disposable income.•Increasing level of health awareness•Water scarcity•Growing sub-segments•Increasing urbanization

Challenges:•Low penetration into tier 2 cities of the country where disposable income is increasing rapidly.•Increasing transportation cost.•Increasing use of water purifier•Lower price of other bottled water not coming under natural mineral water

Trends:•Brand building•New entrants•Wide range of packaging formats•Institutional sales•Expanding global presence

Insights:•Customers are unaware of differentiating natural mineral water from other bottled waters

Macro economic consideration•Increasing per capita income•Decrease in per-capita water availability from 5177 in 1950 to 1520 in 2013.

Threats of substitutes•Substitutes for natural mineral water is not only regular mineral water which sold at a lower price than the natural mineral water but also non-alcoholic beverages like soft drinks, fruit juice, energy drinks to quench thirst.

Supplier power•Major supplier in this industry is plastic preform required for bottle manufacturing. •Water supplier for packaged water factory. However for natural mineral water, it is not applicable since owners either owns or lease it from the owner.

Rivals in the industry•Himalayan is the top player in B2C segment and has maximum market share because of its brand name - TATA and also due to it’s deep distribution network.• Rivals in this segment have superior packaging and have strong brand perception.

Buyer power•Health conscious/ upper class people having higher disposable income comes under this category (B2C market). Hence it is not much price sensitive however more emphasis is given on brand perception. Building strong brand image is the driving factor. •In B2B market, it is both brand perception and price sensitive. Hence a balance has to be maintained for both•Thanks to the intense competition, buyer is indeed powerful.

Threats of New entrants•Threats of new entrants in natural mineral water industry is very low because it is procured from natural source.

Mineral Water – Competitors Qua Himalayan Vedica

Bottle Trendy, Trapezoidal and screen printed. Bottle emulates premium factor of the brand. Clear bottle emphasizes purity

Trendy, see through clear bottle Trendy hexagonal bottleSee through clear bottle but stickered

Form Factors and Price

1000ml for Rs. 50 500ml for Rs.30250ml for Rs. 18

1000ml for Rs. 50 500ml for Rs.30250ml for Rs. 18

1000ml for Rs 40500ml for Rs 25250ml for Rs 15

Source Himalayan Mountain range Himalayan Mountain Range. Himalayan mountain Range.

Website http://www.danonenarang.com/• Simple & Attractive web page with details on the

brands pitch and other products in their portfolio.• Web page completely blue in colour, reflects safety

and purity.

http://www.himalayanmineralwater.com/A decent webpage without much information on the product.

http://www.vedicaspring.com/Trendy ,unconventional website emphasizing the prominence of Himalayas in their product. The web page also echoes their desire to be on the top.

Social Media • Facebook dormant activity on facebook. Only 598 likes and inactive since 2009.

• Same on twitter with 37 followers and dormant since 2009.

• Sold online through bigbasket.com and naturesbasket.co.in and also at premium modern retail.

• Facebook Around 1600 likes on facebook and dormant since 2012.

• Not present on twitter.• Sold online through bigbasket.com and

naturesbasket.co.in and also at premium modern retail.

• Facebook Highly active on facebook with over 57000 likes and regular activity.

• Constant promotional activities happening through social media.

• Not so active on twitter • Sold online through bigbasket.com and

naturesbasket.co.in and also at premium modern retail.

Strategy Top down strategy. Associated with high profile celebrity events, fashion shows and awards.

Associated with Lakme fashion week and other high profile conferences.

Associated with Fashion shows, theatre arts and other celebrity events.

• It is observed that Qua and Himalayan have superior brand strength which is evident with the higher volume sales in B2C market. This is attributed to attractive packaging.• Market leaders like Himalayan, Qua, Vedica emphasise more on B2C marketing and hence their focus is on small volume bottles. Aava comes in 10L, 20L and is having higher volumes sales in B2B marketing . Hence they have lesser customer awareness.• Quality is assessed by the customer bases on their familiarity to the product and their packaging. Since Aava is lacking in both of them, it is perceived to be of relatively weaker value in their market segment.

Aava : Brand Perception

Form Factors and Price

1000ml for Rs. 30 500ml for Rs.15200ml for Rs. 7

Points of Parity Points of Difference

• Product : Natural Mineral water • Format : Bottled water • Shapes: Modern tetrahedron plastic

containers*• Sold in supermarkets and in bars and

restaurants *

• Natural Spring water , untouched by hands

• Lower price • Variants run through medicinal gardens –

to enrich the water with the natural flavors and add medicinal benefits to it*

• Premium Positioning opportunity

* To be implemented to improve brand perception

Move into B2C segment, maintain existing B2B as it is. Moving to B2C:

Rebrand 1000ml, 500ml and 250ml water bottles with a new name ayur Aava. Address Packaging : Tetrahedron clear bottle. Screen print the brand name. Price it just below the market leader in B2C premium mineral water segment. Product Mix : Differentiate with natural flavored water like Tulsi, Mint, Aloevera by running the

water through the respective gardens. Increase visibility in the digital world – more social media marketing.

Develop a call center, portal and a better website to take care of B2B. Distribution Network : Strategic tie ups for logistics & distribution Diversify into conventional bottled water market.

Invest in R&D to come up with better techniques of water purification like organic purification and minimize the use of chemical substances.

Differentiate the bottled water brand by having bottles which are more catchy w.r.t the competitors

Diversify into traditional Indian coolers segment.

Aava : the Road Ahead

The appeal of Aava lies in its high quality natural spring water and premium imagery. It plays upon the themes of being natural and pure in an artificial world – which is the perfect beverage of choice among wellness seekers

Branding Aava is currently packaged in a curve

shaped bottle with a label running across the body

Leading brands both domestically & internationally have modern clear tetrahedron packages with the brand name screen printed

Aava should also follow the norm and come up with attractive packaging to look premium and also to stand out in a premiuim market

Packaging

Aava: Packaging and Branding

• Rebrand as “Ayur Aava”, from the Aaravallis.• Concentrate only on 250ml,500ml and 1L form factors • Use green color to reinforce the natural image subconsciously• Run the water through Ayurvedic gardens – so that the water is enriched with the

medicinal benefits and natural associated with the herbs

• Introduce similar themed bottles(See Pic) for various flavors of drinking water • Turn consumers into connoisseurs : encourage consumers to focus on the flavor

of their water

Competitive Advantage

Only natural spring water to be run through medicinal garden

Cannot be imitated by other players in this segment

Target SME segment using the already existing distributor network in Mumbai, Delhi, Chennai

For example Fruit Shop chains in Chennai is an upmarket natural juice center where Aava can be prominently displayed and incorporated in the menu

Include organic shops like Brown Tree , Nuts n Spices to increase retail network

Tie up with Gyms ,speciality hospitals , theme hotels ,up market bars multiplexes

Focus on Modern Retail – better shelf space and visibility to a larger population

Spend on a good structurally stable standee .

After establishing firmly in the above segment , partner with a company like ITC/Dabur and leverage their distribution network through Joint Branding

ITC/Dabur do not have water in their portfolio

This will increase Aavas reach tenfold and make it available across the country in 10 million outlets

Aava Distribution : Open up new avenues

Logitics A two pronged approach, to deal directly with bulk institutional buyers and dealership network to deal with lower volume retailers.

Because of smaller scale of operation, Aava can outsource its down-stream distribution channel because they can not achieve economy of scale.

Logistics can be outsourced.

Outsource call centre and a portal to take care of B2B ordering for replenishment

Bottling unit maintenance can be outsourced to facility management services and for cleanliness and prompt actions in case ofmachine breakdown.

Aava is facing issues with maintaining relationship with its clients as majority are major institutional players in airlines, hotels and other domain. So Aava can have direct interaction with major/bulk players and dealership model for smaller volume customers .

Outsource

Promotions in social media. Since internet penetration is increasing and our target segment is upper end of pyramid, we can get easy coverage at lower cost.

In developing economy like India, word of mouth acts as a major influencing force for purchasing decision(Survey conducted bymckinsey). Encourage dealers to give positive comments on our product and have incentive based program based on turnover.

Sponsoring teams in less expensive sports leagues in the country like ISL, IBL and Kabaddi league, Health awareness Runs . Sponsoring film festivals, comic cons etc.

Emphasize the differentiating factor – water passing through medicinal herbs and its associated health benefit to gain peoples attention.

Increase visibility through adds in in-flight magazines, internal design magazine. Could be sold online too on websites like bigbasket.com and godrej's naturesbucket.co.in

Promotion

After gaining sufficient volume in higher end of consumers, we can tap others by promoting our products using celebrities. This creates a sense of eliteness for using the product.

Provide exclusive shelf to premium shops/ big chain of retails like reliance, Big Bazaar to place Aava products to attract customer attention.

Phase – 1(Incubation)

Phase – 2(Expansion)

Phase – 3(Diversify/

Gain volume)

For tapping 90% of the market share we can promote our regular mineral water in social media/ Television programs explaining the minimal chemicals used for purification as a distinguishing factor.

Have packaging in this segment which looks better than the competitors to gain higher market share and at the same time ensure it is having lesser visual appeal than our premium packaging to minimize cannibalization.

Phase – 4(International

presence)

Target low-cost airlines like South west airlines because they can get natural mineral water at lower price. Later we Can targetupper end airlines after developing trust and expand in internal markets.

Thank You