Bottled water industry is dominated by three leading companies that include Nestle Waters, Coca-Cola and PepsiCo whose performance is dependent on the strategies applied in line with their strengths and weaknesses as well as market opportunities and threats. In that respect, the suitable recommendations for the three companies depending on their SWOT analysis given the year 2006’s market and companies’ information are as follows.
- Nestle Waters
Nestlé’s strengths were defined by a number of factors beginning with the company being the leading bottled water seller and the world leading Food Company that enjoyed a wide market with 75 brands in 130 countries. In addition, Nestle had a range of differentiated products including spring and purified water that targeted those who prefer pure and mineral water. Finally, it had a low cost pricing which made its products more competitive in the market as its $8.44 average retail price per case of bottled water was the lowest among the competitors.
The business’ weakness is marked by much reliance on own production and bottling instead of a partnership with independent producers and bottlers like the Coca Cola company that used independent bottlers to produce its products.
In respect to opportunities, there were emerging markets including Africa, that presented suitable target market for Nestlé’s global brands. Further, customers’ changing lifestyles and growth of the youth’s market provided opportunities for developing new brands and packaging that reflected their lifestyles.
The Company faced threats including high competition from companies including Coca-Cola and PepsiCo that had a significant market share. In addition, customers’ changing lifestyles resulted to products losing market share as customers shifted to new brands that suited their new lifestyles.
The company should apply the following strategies to enhance competitiveness in the international market.
- With PepsiCo and Coca Cola having promotion strategies that range from encouraging customers to buy products across their brand portfolios in order for them to enjoy benefits of immediate shipping, Nestle should also take advantage of its establishment in the foods industry to pursue a strategy in order to increase its sales in export segments as foreign markets increasingly demand its products.
- Competitors including Coca Cola have been employing outsourcing by engaging independent bottlers hence Nestle should consider establishing partnership with independent bottlers in the global market to enhance low cost leadership. This strategy could enhance reach to more markets and develop an advantage in understanding market needs enhancing the company’s ability to deliver products that are tailored to changing customer needs and lifestyles.
- Apply acquisition, production expansion and new venture strategies to increase operations in the emerging markets including Africa, that could be well suited for low cost products. This is also appropriate considering the company’s vast distribution network as well as well-known brands that could make it easier to penetrate new markets.
- The company should also adapt marketing strategies focusing on products and promotion by developing new products and packaging that suit the changing customers’ lifestyles. This could include packagings that involve use of bottle styles that attract both children and adults.
- Coca Cola
Coca Cola’s strengths included being the leading producer and seller of non-alcoholic beverages with a portfolio of over 300 brands worldwide. Further, it was the third largest seller of bottled water products in addition to having a vast global distribution channel that enhanced its global market reach.
The company had some weakness including poor controls that saw the launch of Desani with impurities that could cause cancer hence its discontinuation in American and Europe markets. Further, the company’s specialization on the beverage products is a weakness that resulted to a limited focus on the bottled water market.
Coca Cola’s opportunities included the increasing technological advance that could be applied to enhance production and distribution process. In addition, changing customer needs and emerging markets presented opportunities for new products and ventures.
Among the threats that Coca Cola faced were the rising health concerns as consumers become more aware of products’ health effects which could result to reduced demand for products that do not address the concerns. Further, high competition in the market that was dominated by few large companies was a threat to the company’s market share and performance.
The following are the strategies that Coca Cola should apply to enhance competitiveness given its positioning in the bottled water industry.
- Coca Cola should apply low cost pricing strategy by lowering prices to compete for the low market with companies including PepsiCo that had the lowest average price per case of bottled water at $8.44 at a time when Coca cola’s retail price was $8.65.
- Considering the cited case of Coca Cola having to discontinue Desani brand in the American and Europe markets, the company should employ more advanced production methods to ensure that it delivers products that suit market’s needs hence avoiding launch of unsuitable products.
- With a worldwide reach of the beverage market, the company should use its vast distribution network to enhance bottled water sales through promotion strategies including sales samples for new markets like Africa and loyalty programs for developed markets like the USA.
- In addition, Coca Cola should consider delivering products that feature enhanced nutritional needs for the youthful market that increasingly demand for energetic drinks given their active life. This could involve an introduction of brands that feature added vitamins.
The company had a well-known flagship brand Aquafina that earned significant customer loyalty. In addition, the company’s local market focus on international markets through acquisition of local manufactures is also a strength that enhanced market knowledge and penetration.
The major weakness for the company was a lack of specialized water production facilities that resulted to use of the same facilities for bottling of soft-drinks and water products.
Among the opportunities available for PepsiCo were the rising demands for more healthy products in the existing markets that could be served with new products that address the concerns.
The company faced high competition from low priced competing brands from Nestle waters that were a risk to its market share and performance.
Given the high competition that PepsiCo faces from Nestle and Coca Cola, the company should apply the following strategies to competitively position itself among the industry players.
- Given the growing demand for vitamin water and other differentiated products, the company should use innovation through development of production facilities that are specialized to produce brands that meet customers’ nutritional needs.
- In addition, the rising concerns over the environmental effects of organization operations in other countries outside the US, the business should establish production and packaging means that are environmentally friendly as the use of returnable containers rather than use of disposable bottles and containers. This is feasible given the company’s ability to tailor products for local markets to address the markets’ health and environment concerns that could enhance customer loyalty.
- Adapt low cost pricing strategy to enhance competitiveness with low priced products from Nestle.
- PepsiCo should also take advantage of its well-known brand to expand its operations to new markets where it could easily penetrate the emerging markets. This is given the changing lifestyles that are increasingly fueling bottled water demand as customers adapt the American on-the-go lifestyle.
- Given the competitive advantage that competitors like Coca Cola enjoy as a result of promotional strategies that involve events sponsorship among others, PepsiCo should engage in sports sponsorship mainly in the African emerging market where sports like football are becoming popular. This could enhance the company’s ability to reach the market with its brands targeted at the suitable groups including the sport-loving youths who would also want to identify with products that have stylish flavors and packaging.