Identification of Challenges Facing Bottled Water Industry - Case Study Example

Competition in the bottled water industry is fierce, as each company is essentially marketing the same product (water), and they only have a few factors they can use to entice buyers – the source of water (all natural European spring water, might, for instance, sell better than Joe’s House of Drink), image, and brand loyalty.
Identification of challenges facing the bottled water industry

There are several issues facing the bottled water industry today
• Increased competition from other drinks (energy drinks, for instance)
• Shrinking of the market based on people leaving bottled water for alternatives such as home filtration systems
• Pressure from environmental forces
• Image of non-sustainability
• Raising transport costs
o Water is an incredibly heavy resource that can be sold for very little per unit
Analysis and Evaluation
The fact is that bottled water is operating in a very harmful market environment.

The people who would be its primary consumers, such as health-conscious people, also tend to be most acutely aware of the supposed problems of sustainability associated with bottled water.
OPTIONS: What does bottled water have going for it?
There are several options that companies could pursue to increase sales and revenues in the bottled water field and protect themselves from some of the harmful market forces:
• Attempt to build brand loyalty
o Target younger audience
• Target other drinks and try to cannibalize their market share
o Get soccer moms to buy bottled water rather than soda, marketing its health benefit and convenience
• Diversify the marketplace by expanding to similar, but slightly different products

Recommendation: Build, but diversify
Many bottled water brands have good public images and popularity, but the fact remains that bottled water is an expensive commodity that people can easily get for free by buying home filtration units and a permanent bottle, such as aluminum ones that are becoming so popular. I would recommend that bottled water companies continue to support their primary product while simultaneously diversifying to be able to escape if the market continues to be more and more hostile to their product. Luckily, diversifying is somewhat easy.

They could also begin adding additives to their water, such as vitamins, minerals, and nutrients, to make their product differentiated from what people could get at home. Bottled water, as an industry, may be on the decline, and if that is the case companies need to prepare for the future. Read More