Brita Products Company Essay

1.To what do you cave in Britas advantage?The success of Brita in the USA grocery store place is out-of-pocket on the one hand to attributes of the core product and on the new(prenominal) hand to factors related to the market environment and successful marketing.Attributes of the core productThe baton twirler itself had the fol impoverisheding benefits it reduced chlorine and odors, it make piss to experiment better, it was extracting dangerous metals from the piddle and the water was non depositing salts/sediment when boiled.Market environmentInitially, at that place was no major concern to the consumers to the highest degree filtering the tap water. However, the sensitivity that raft showed stiff to some health problems and/or accidents that rose during the decade of 1990, aided by signifi corporationt forwarding of these health problems, assisted Brita to easily increase pit aw beness to the consumers and create a signifi flockt market.Moreover a upsurge of pe ople perceived Brita filter as a present for their friends. prospering marketingBrita ewer was a technologically advanced product made from a well known German producer of industrial and consumer water filtration products, characteristics which made it attractive to Clorox who had remarkable marketing experience and distribution channels in the US. Clorox, which obtained the license from Brita GmbH to set up a subsidiary in USA, knows genuinely well the specific market as it was a major manufacturing business and marketer of home products with $3.9 billion dollars of sales in 1998.Clorox provided the support for Brita smashing for 4 old age, the desired know how and leadership, as expressed by the pressure sensation and personal involvement of Mr. Couric.Furthermore, Brita was the first very successful ashes of water filter, which created the home water finish pains.In the distribution area, Brita USA has achieved dominant allele position in to the highest degree of the ou tlets and department stores in the market applications programme all five possible channels of distribution (Department stores, Mass merchandisers, grocery stores, Club stores, Drug stores).Another important element that contributed to Britas success is the different pricing policy set according to the POS outlet. This direction that the community could satisfy its consumers according to different needs and habits.Last, but probably the most successful decision was the great taste positioning concept that helped Brita to market the hillocks with a clear furtherance and advertising st calculategy ascensioning its sales, as there was no other competitor with such a rigid image.2.What are Cloroxs marketing assets expiry forward? Can you comment on their positioning choices?Marketing assetsThe Clorox company for the first four familys set about genuine problems to launch the pitchers mound in the market. After the four years the company managed to create a strong image and b uild strong brand equity. These assets of the Britas pitcher are revealed through the following facts get-go of all Brita company is a strong brand name in the market of water purification system. This functions as an asset to support and boost the sales of Britas pitcher (or any other water purification system), as there is high degree of brand awareness.Also, by the year 1999 Clorox had created with the Brita pitcher a significant home water purification industry worth of $350 million at retail and was holding about 70% of r take downue share or about $250 million, be a market leader.Furthermore there is a strong customer base who forget buy new filters for the attached years (80% of the buyers who have tried the pitcher were still using it a year later and they were re-buying extra filters of about 2.5 pieces per year). Furthermore, from the Lifetime Value of a Customer (LVC) analysis shown in the next question (No 3), it is obvious that filters contributeimportantly to the l ucreability of this product.All these inside information above are showing to us that the Brita company has significant assets (brand equity, loyalty, awareness, being a market leader, having a strong customer base of people who buy filters) for exhalation forward with any clear strategy.Positioning choicesAt the starting time Brita company positioned the pitcher as a purification system providing water of unique taste. They positioned most on this benefit for 3 reasonsa) Surveys showed that taste means health, b) whole bottled water industry had been built without reference to health and c) Brita cherished to develop an unbeatable position (be at the top of the mountain) which would not be possible by positioning on how more of some impurity is removed.We believe that Clorox made an important decision for the promotion and advertising campaign under the idea of taste (great gustation water, clear, fresh, wonderful) because it was also consistent with the attributes of the core product (water thence tasted better after filtration with a Brita pitcher).Brita stuck on one USP and promoting as taste as one central benefit avoiding a confused or doubtful positioning strategy which would lose the attention of the consumers.The choice that Brita did not make was focusing on health. Filters decrease health hazards by low quality tap water (even if not all dangers are eliminated). The publicity given to health problems due to water could easily serve to tone up Britas position. Health is PURs choice for positioning their faucet mount system, which is not quite a head-on attack, since they would attempt to occupy a different position in the mind of the consumers.3.What is the lifespan value of a customer with a pitcher? How does it compare with that of a customer with a faucet mounted system? Does theirbogo promotion make sense? concord to Gupta and Lehmann, Lifetime Value Of a Customer (LVOC) isLVOC = m r/(1+i-r), where m= adjustment, i= damage of working capi tal and r=retention rate.Since cost of capital is not mentioned in the case study, we assumed a value of0% for simplification purposesand a scenario with3% which can be considered closer to real valuesA scheme with cost of capital 0Under this scenario, with r=0.8 (80% yearly retention rate) and i=0, the ratio r/(1+i-r) is equal to 4. From the case study (p.18) the gross margin for the pitcher is 7,36, while gross margin for the filters is 2,05.1a. The lifetime value of a customer with a pitcher system is the followingLVOCpitcher system= LVOC from pitcher + LVOC from filters== margin from pitcher + 4*margin of filters*2,5 filters/y==7.36+4*2.05*2.5=$27.86So, we can see that Brita is going to mystify $27.86 from one customer for the lifetime flow rate of a customer with a pitcher.2a. At this point we examine the lifetime value of a customer with a mounted faucet in two different models(i)Best scenario pricing at $40 and retention at 80% ( homogeneous as for pitchers)(ii)Worst scena rio pricing at $35 and retention rate of 80%Cost as mentioned in the case study is interpreted as $15.We have also assumed that Brita will keep on filters for faucet-mounted the same margin as in filters for pitchers.i.(40-15)=25+4*2.05*3=$49.8*LVOCfaucet=ii.(35-15)=20+1*2.05*3=$26.15*The worst scenario of the faucet production for Brita is that it is going to give birth $26.15 from the lifetime value period of one consumer and the best scenario reveals that Brita is going to receive $49.8 for the same period.If we compare the worst scenario of (2aii) with 1a we see that the two amounts are close but pitcher systems have high LVOC ( LVOCfaucet is $26.15 while received LVOCpitcher is $27.9) and in case of (2ai) there will possibly be significantly higher profits by the faucet ($49.8) in comparison with the pitcher system ($27.9).Using the lifetime values of the pitcher and faucet filter, we can conclude that if Brita is going to enter the market of faucet filters, it will receive higher margins of profits by 78% if all goes well, while even in a bad scenario it would lose 6,5% of its margin.A hypothesis with cost of capital of 3%1b.Similarly, the case when cost of capital is considered to be 3% and all other things unchanged, then our calculations will beLVOCpitcher= 7.36+3.45*2.05*2.5=$25.04a.(40-15)=25+3.5*2.05*3=$46.52**2b.LVOCfaucet=b.(35-15)=20+0.94*2.05*3=$25.78**.As we can conclude from the above calculations the profit Brita is going to receive according to LVOC of pitcher and LVOC of faucet are close to those of the 1st hypothesis. In the best scenario there can be significant profit from the faucet. In the worst case, the faucet remains (even marginally) higher since the higher price of the faucet brings most of the benefit of the LVOC in the beginning (when the system is sold).An important element in the calculations above was the hypothesis that filters will be priced to provide the same margin of $2.05.BOGOThe amount of money Brita is going to r eceive it is based to the following hypothesisRetention rate would be the same as for the pitcher.The consumers will use the second filter as the first, regenerate filters at the same rate.There was no cannibalization of the market.COGS per pitcher is shown to be $7,8 at p.18 of the case studyCost of capital is also taken at 0% for simplicity reasons.LVOCbogo= 4*2.05*2.5-7.80=$12.7Brita hopes to receive an extra amount of money of about $12.7 from the jag is going to give it as a present.If the conditions / hypothesis presented above are true, then the BOGO promotion did indeed make sense.BibliographyKOTLER R. KELLER K, merchandising MANAGEMENT 11TH EDITION, PRENTICE HALL 2005