Marketing Management
Table of Contents
Executive Summary 2
Business Description 3
Mission Statement 3
Core Objectives: 3
Current Market Analysis 3
Industry Analysis 3
Competitor Analysis 4
Business Environment 4
Economic Analysis 5
Cultural Analysis 6
SWOT Analysis 7
STRENGTH 7
WEAKNESS 7
OPPORTUNITIES 7
THREATS 8
MARKETING STRATEGY 9
Objective #1 9
Strategy: 9
Objective #2 9
Strategy: 9
Objective #3 9
Strategy: 9
MARKETING MIX 10
PRODUCT 10
Product testing: 10
Product logo: 10
Product technology: 11
PACKAGING 11
PRICE 11
DISTRIBUTION 12
BUDGETING 12
EVALUATION AND CONTROL 12
Performance standards & financial controls 12
Monitoring procedures: 13
References: 14
Executive Summary
The world’s bottle water industry is expected to grow by more that 27% in the last half decade ending in 2015, with estimated revenue of more than $126 billion. The global bottled water industry deals in sale of sparkling unflavored water, sparkling flavored water, still flavored water, and still unflavored water. Insufficient availability of natural water and safe drinking water is major issue in the United Arab Emirates. The rapidly rising UAE population has increased water consumption levels, necessitating more supply of bottled drinking water. Ground water supplies have rapidly diminished, resulting in growing reliance on desalinated water. In fact, water usage per-capit in the UAE is among the highest in the world. Projections show that safe drinking water needs are bound to increase in the years to come. This paper presents a marketing plan for AquaSafe Inc., a proposed new business operation dealing in supply of healthy drinking water with headquarters in the city of Dubai.
Business Description
AquaSafe Inc. is a new water supply company proposed to be located at the heart of Dubai city, in the United Arab Emirates. The company will exist as private limited company. The company shall specialize in mineral and bottled water, which shall be distributed in the entire Gulf region. The company will be built on a 200 thousand square meters piece of land in downtown Dubai. It plans to recruit between 500 – 1000 employees.
Mission Statement
AquaSafe’s mission is to be a global supplier of healthy drinking water to the increasing world population.
Core Objectives:
1. To gain significant market share among the larger middle- and lower-income customers within one year of inception.
2. To increase product awareness (flavored mineral water) among consumers within 1 year.
3. To increase the overall 1st year sales by 25% by end of the following year
Current Market Analysis
Industry Analysis
Traditionally, the bottled water market in UAE was influenced by sales to the high-income consumers. In the recent past, however, the buying patterns have changed as more of the population become enlightened about safe drinking water. As such, purchase of bottled water in the UAE is no longer for the affluent consumers alone given that the middle- and lower income groups are increasingly turning to healthy bottled drinking water as tap water become untrustworthy (Wait, 2008). While the UAE government has invested heavily in water production and related infrastructure, majority of the citizens prefer bottled water. This is because majority of people have negative point of views of mineral imbalances in tap water, doubt he sanitation standards of intermediate water storage tanks, and are concerned with the cleanliness of both the seawater source for production. Sales volumes of bottled drinking water are also among for tourists and travelers. The increasing awareness of the need for safe drinking water among rural areas and small towns in the UAE has diversified the market and promises good business for our proposed AquaSafe water company.
Except for premium water (carbonated and flavored) that experienced significant drops in growth as a result of the drop in tourism and the economic down turn, the bottled water market in the UAE is doing well generally. It is estimated that the average monthly residential demand for water in Dubai is 16.4 million cubic meters (Wait, 2008). On average, individuals spend AED 69 (US$ 19) per month on bottled water. While the price for bottled water is not uniform across the UAE, 500mL bottle goes for AED 1 (US$ 0.27) or AED 1.5 (US$ 0.41) per 1.5L bottle.
Competitor Analysis
The industry leader is Masafi Mineral Water Company, whose value share is about 38%, while Al Ain accounts for 24% followed by Jeema with 10% market share. Fluctuations in the market has made larger water companies such as Pepsi and Coca Cola to resort to consolidation, capacity boosting and diversifying their product portfolio through acquisition of smaller water companies having local or niche advantages.
Business Environment
The UAE business environment has become increasingly attractive to foreign investors because of the creation of strategic free-trade zones in recent past. As it is, the UAE has currently one of the most sensible and reasonable legal environment for conducting business in the world. This is especially the case because the UAE is a signatory to the WTO TRIPS, World Intellectual Property Organization (WIPO), and the Paris Convention for the Protection of Industrial Property (Wait, 2008). As such, we are confident in investing in a country that guarantees support and protection of our investments. In addition, the UAE is acclaimed as having one of the easiest customs clearance, quality infrastructure, reliability of transport and communication systems, and ease of acquiring foreign labor.
Dubai is the commercial hub of the UAE. The city is strategically situated in the business logistics transshipment centre of the greater Arab Gulf. It is also a major source of global petroleum together with natural gas supplies. The rulers of Dubai have in the recent years undertaken an aggressive campaign to draw global financial and transnational organizations to the city through benevolent real estate and flexible residence visa programs, state-of-the-art research & development, as well as educational and leisure hubs.
Economic Analysis
The UAE is composed a vast population, consisting of about 70% and 30% female. An estimated 80% of this population has its roots from outside the UAE. Nearly 50% of the population is made of South Asians. The official currency is the Dirham. The growth rate of UAE is estimated to 7.4% this year and it is expected to rise in the following year. The average per income is about $17 while the average household income is about Dhs 36, 438. The average spending of individuals is about 53.6% on housing and food. The Oil production is the major activity – UAE is the fourth largest oil producer, accounting for approximately 2.5 million barrels per day (Wait, 2008). There is provision for foreign investors to participate with up to 49% in a company. UAE’s rate of unemployment is the least (approx. 3%); while the inflation rate is at 12%.
The tax situation is particularly encouraging – minimal to nonexistent, though constant fees for local permits exist and are always revised upwards every year. External trade and domestic consumer expenditure greatly relies on such key sectors as tourism, infrastructure, commerce, finance, banking services, and industry. The UAE boosts of a stable political system, high oil revenues, solid infrastructure, and developed banking system along with excellent geographical location which contribute to high economic growth.
Cultural Analysis
In the Arab society, family is the most significant institution. The family is constituted of the immediate nuclear family as well as the extended family unit. The political system of the UAE is a blend of contemporary and modern administrative structure. While there are ongoing adjustments to the traditional political structure, the UAE keeps its core traditions alive. The UAE has a complex legal system, consisting of Shari’a courts and civil courts that operate parallel. The country has a characteristic high power distance and uncertainty avoidance. Islam is the predominant religion, which adheres to a caste system that avoids significant upward mobility of its people. Arabic is the main language but other foreign languages such as English, Malayalam, Urdu and Persian are common among large proportions of hired labor originating from Pakistan, India and Iran and are used as medium of communication in most trade and commerce activities (Wait, 2008). The UAE’s communication systems are world-class and top the region in terms of reliability.
SWOT Analysis
STRENGTH
• Water with great flavor- AquaSafe has a strategy to integrate state-of-the-art innovation in production of its mineral water by making flavoring it with fruits like strawberry, lemon, and peach which are favored by the UAE people.
• Country of Origin – as foreign investors in the UAE from the United States, we are advantaged by the fact that the local people trust the quality of our products and services as compared to other countries from the Gulf region.
WEAKNESS
AquaSafe Inc. is a first water company in the UAE and will need much time to establish its name in the market which means the first years of operation may not be profitable.
OPPORTUNITIES
AquaSafe stands a great chance of hitting high revenues through sale of premium distilled water to the middle- and lower-incomes customers. The major players in the market have concentrated on tapping the upper-income groups by offering expensive distilled water.
In addition, AquaSafe Inc. has opportunity for much business considering the scarcity of natural safe water in the UAE and the increasing consumption of water.
Generally, the UAE has favorable economic conditions and strong support for foreign investment by the government. Forecast of the market paint a positive picture – bottled water sales are projected to continue increasing at 8% total volume for the coming year. However, the greatest potential lays in direct delivery to businesses and homes. This translates that water companies like ours stand a chance to register high sales and cut out retailer margins. In the following year, flavored bottled water is projected to grow at an impressive total volume CAGR of 19%.
Lastly, there are a few flavored mineral water products with peach, lemon, or strawberry in the UAE market. This translates that AquaSafe has an opportunity to gain significant market share and realize high profitability.
THREATS
• Key competitors – The UAE bottled water market is currently dominated by household names such as Masafi Mineral Water Company, which has been in the business for over three decades. AquaSafe will thus safe immense competition from them and would to do more gain desirable market share. Other competitors include Nestle, Kinley, and Aquafina.
• Unstable political situation – The Arab world is currently experiencing unstable political conditions following the ongoing Syrian crisis and after effects of revolutions in neighboring states like Libya, Egypt and Algeria. The unresolved issue of Iran Nuclear program poses significant risk to investment (Zaman, 2011).
• Perception change – There is likely danger that UAE government may embark on intense campaign to have its population trust tap water and effectively switch allegiance from bottled drinking water that AquaSafe and other deals in (Zaman, 2011).
• High inflation in the UAE poses a significant risk to sustainable growth and businesses.
MARKETING STRATEGY
AquaSafe Inc. marketing strategy is designed to achieve its mission statement and meet its three core objectives.
Objective #1
– To gain significant market share among the larger middle- and lower-income customers within one year of inception.
Strategy:
• It would be achieved through intensive targeted advertising and personal selling
• It would also be realized through awarding of free samples of AquaSafe Mineral Flavored Water
Objective #2
– To increase product awareness (flavored mineral water) among consumers within 1 year.
Strategy:
• AquaSafe will enter sponsorship deals with popular brands to promote our own
• Awareness programs will be run in the media, radio, TV, newspapers, and the Internet.
Objective #3
– To increase the overall 1st year sales by 25% by the end of the following year
Strategy:
• AquaSafe will give incentives to retailers and distributors to increase sales
• Purchasing three products will earn buyer one free product.
Furthermore, AquaSafe shall employ strong and effective target positioning as a marketing strategy. This will be necessary because customers currently lack awareness of our new brand and product. To this effect, we shall use a unique catchy slogan …”Water with Taste”. Different slogans shall be adopted to coincide with the season of Ramadan in addition to offering limited time offers or discounts.
MARKETING MIX
PRODUCT
AquaSafe Inc. shall offer high quality products tailored to meet the needs of customers. Our natural mineral water will come in a range of bottle sizes :
• 1.5 litres, 500ml (regular and sports)
• 330ml kids packaging (both regular and sports)
• 250ml, 200ml, 125ml, & recyclable 4G bottles (mineral cups)
The flavored mineral water will serve double function quenching thirst and providing essential nutrients to the body. The Peach, Lemon, and Strawberry flavors will help attract our target market and appeal to other consumers.
Product testing:
AquaSafe Inc. will daily general chemistry and microbiological testing on its water obtained from the source before packaging.
Product logo:
The logo of AquaSafe Mineral water will be designed to represent the trusted source of the water: the catchment area of Abu Dhabi. The logo will be simple and unify the look that depicts vital elements and values to consumers.
Product technology:
Our product will use innovative “hot fill technology” which would enable the water to retain its distinct flavor and freshness. The bottle of the water will be for one-time-use having no refills and no chemical residues. They will also be recyclable.
PACKAGING
Our water shall be packaged colorfully and attractively. Individual flavors shall have distinct colored cap on the bottle compliment the contained fruit. The design, features and packing will be differentiated from those currently available in the market through pet or polyethylene terephthalate.
PRICE
AquaSafe shall adopt a reasonable price for its products as an entry market strategy and means to gain maximum market share. We shall also offer facility of discount to our retailers and wholesalers who purchase in bulk. The recommended price for the 500ml bottle is AED 1 (US$ 0.27), or AED 1.5 (US$ 0.41) per 1.5L bottle
We shall use a cost-base pricing policy which would enable us to manipulate the prices at any given time through control of cost or reduction of our profit margin after gaining maximum market share.
We shall also use market penetration strategy to appeal to large number of consumers quickly and gain maximum market share within one year of our establishment. We shall offer low price and strive to attract nonusers and customers of our competitors. Production and distribution cost will reduce when our sales volume increases.
DISTRIBUTION
AquaSafe Inc. shall employ indirect channel in distributing its product. These are: manufacturer to wholesaler; wholesaler to retailer; and then retailer to consumer.
Manufacturer¬¬¬¬¬¬¬¬¬_________Wholesaler____________Retailer_________Consumer
Our channel objectives and constraints are in line with the demand of consumer need. such an intensive distribution channel is needed considering that our product is an everyday product, which must be available at all times and all over the market. Our distributors shall be selected on grounds of strong financial base, sufficient market exposure, and quantity & quality of its workforce. We shall offer incentives, bonuses, and commissions to our sales team, and the distributors will be defined a specific target to meet. Achievement may be rewarded with trophies or trip abroad.
BUDGETING
The owners have $50,000 in capital to invest in the proposed water company. This will be supplemented by another $50,000 long term interest free loan from the Gulf Bank. A further 40,000 will be needed over the first year. The owners committed to take loans from their individual banks to come up with an overdraft of $43,000. This is because financial needs will vary each month while there would still be no profits to repay capital. Review of finance arrangements will be done after the first year given the more predictability of trading levels then.
EVALUATION AND CONTROL
Performance standards & financial controls
• The total budget for billing analysis, product research and customer survey will account to 60% of our annual promotional budget for the following year
• Each tam shall present all its financial expenditures using a standardized reporting form provided by the marketing executive.
• The marketing director shall ensure adherence to the budget and will report to the CEO on weekly basis.
• Any new product offering shall be evaluated on quarterly basis to determine profitability.
Monitoring procedures:
• Actual performance of AquaSafe Inc. shall be constantly compared with its plan objectives. Monitoring procedures shall include establishment of timeframes, financial expenditures and human resource needs; constant monthly comparison of actual and planned operations in the first year and on quarterly basis after initial implementation phase.
• Each project team shall determine necessary adjustments to procedures, product focus, or activities where applicable.
References:
Wait, I. (2008). Changing Perceptions: Water Quality and Demand in the United Arab Emirates. Retrieved from: http://www.iwra.org/congress/2008/resource/authors/abs40_article.pdf
Zaman, U. N. (2011). UAE and Globalization – Attracting Foreign Investments. Munich: GRIN Verlag.
