Bottled Water Case Study

According to the “Competition in the Bottled Water Industry in 2006 Case,” bottled water industry became the one of the world’s most attractive beverage categories, as more and more people began to focus on health and fitness. Consumers start realizing the need of proper hydration, and they began purchasing bottled water instead of drinking tap water, because they were worried about safety of tap water, which tasted like chemicals. Actually, tap water contained chemicals, such as chlorine and fluoride, which are harmful for human body; however, this problem was solved when the bottled water was brought to the market. Due to bottled water’s convenience, purity, and portability, and safety, bottled water industry began to rise rapidly. During

In short, the industry extremely focused on preventing and testing the presence of bacteria. Therefore, bottled water often represented “somewhat of a novelty or prestige product” in the United States, and it gave a perception to their consumers that they need to purchase bottled water in order to stay young and healthy. Because the bottled water industry seemed very attractive and profitable, as mentioned above, there were many competitors, too. Total nine bottled water producers were mentioned in the case study, but four key major rivals were Coca-Cola, PepsiCo, Nestle, and Groupe Danone. However, there was no one buyer that accounts for a significant fraction of overall market demand. Distribution varied depending on the producer, but most distribution channels included food stores, supercenters, supermarkets, discount stores, and wholesale clubs. Because bottled water had an easy availability, consumers in the United States were able to find it anywhere the food was also

Mainly, it is price-based competition. The switching costs and product differentiation remains low, which increases the competition. The article mentioned that “10 to 25 percent of consumers looking for a specific brand and an additional two-thirds considering only a few brands acceptable,” which means that the brand of bottled water is not that important as long as the price remains low. Therefore, efficient distribution systems are needed in order to survive in this industry. For example, a company has to “maximize the number of deliveries per driver since distribution included high fixed costs for warehouses, trucks, handheld inventory tracking devices, and labor.” If a company has efficient distribution system, then it will possibly lower the selling price and keep the