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SWOT Analysis Case Study

SWOT Analysis Case Study

Strengths
a) Product and package differentiation: the company intends to introduce vitamin-enriched bottled water for athletes. The package includes an ergonomic bottle (environment-cautious) and a sport cap. All the characteristics mentioned above help to differentiate the product as sport-oriented (the company’s target market is athletes within the age of 10-30 y.o.)
b) Safety standards and scientific expertise positive references – the water is taken from natural springs in the ground. It is naturally filtered by rocks etc leaving all the minerals in the water that are good for the body without any harmful substances.
c) Package marketing approach – the labeling on the bottle will have different sports statistics, pictures etc, thus the package will continue to market the product before and after the purchase is made.
d) Extensive product line – water types like flavored water, mineral water, etc.

Weaknesses
a) Price limitations – the price is felt to be a bit high in comparison with other bottled water brands.
b) Weak distribution network – again, the distribution of the new product is estimated to be weak as compared to the market leaders.
c) Location of production (excess transportation costs)
d) Totally new brand on the market – current brand unawareness complicates gaining the market share.

Opportunities
a) Increase of consumption
In 2006, total U.S. category volume surpassed 7.5 billion gallons, a 10.7% advance over 2004’s volume level. Per capita consumption of bottled water has been growing by at least one gallon annually. The average water consumption is 26.1 gallons per person. This means U.S. residents annually drink more bottled water than any other beverage, except the carbonated soft drinks.
But in fact, the soft drink market has been stagnant lately, largely due to competition from bottled water.

b) Bottled water market growth
Despite the seeming market saturation, is continues to grow and has good forecasts. The Compound Annual Growth Rate of the five-year period from 2001 to 2006 shows the bottled water volume increased by 9.4%. Over the past decade the sales of bottled water have faced a five–fold increase. This has resulted in sales of over $8.3 billion in the U.S. in 2003 and over $10 Billion in the U.S. in 2006. IBWA foresees that in the next 6 years in the United States alone the bottled water industry will grow to $45 Billion.

c) Increasing value of healthy way of life and sport
Although the issues of healthy food and physical development have been “on air” for over fifty years now, it is obvious that the Americans are now more cautious about their health. The media is constantly providing frightening information on the unhealthy food and increased environmental pressures on our health. People are much more aware of what is healthy and what not, and with this perspective, pure natural bottled water has far more chances to be sold than the carbonated soft drinks. The consumption of bottled water is expected to surpass soda within a decade.

Threats:
a) Competitors
The market is occupied by the “monsters” of business like Pepsi-Cola and Coca-Cola. It is quite difficult to enter any niche and compete with their budgets and price wars.
Pepsi-Cola’s Aquafina, the number one brand of bottled water in the U.S., has 13% of the market of bottled water. Coca-Cola’s Dasani takes the second place with 11% of the market share. Despite the presence of the two market leaders, Nestlé Waters North America (NWNA) is the largest bottled water company in the U.S., owning six of the top 10 best-selling bottled water brands in the country, which are Poland Springs, Arrowhead, Deer Park, Ozarka, Zephyrhills and Ice Mountain. the other remaining two brands, which are Evian and Crystal Geyser are owned by Danone Waters North America (DWNA).

Aquafina’s segmentation is all about the newest explosion of waters that aren’t really water–flavored waters, enhanced waters, colored waters, water drinks branded after everything from Special K breakfast cereal to Tropicana juice. It is the main rival to the New Bottled Water Company’s brands.

b) FDA regulations and Environmental pressure
Bottled water is comprehensively regulated by federal, state and local governments. At the federal level, bottled water is regulated as a packaged food product, governed by the U.S. Food and Drug Administration (FDA) through the Food, Drug, and Cosmetic Act. At the state level, bottled water is regulated in through state environmental, food or agricultural agencies.
New regulations might occur that would impede the company’s market entrance.

 

 

 

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