GlaxoSmithKline: Introducing the Potential for a Line of Bottled Waters - Essay Example

? GlaxoSmithKline: Introducing the potential for a line of bottled waters Table of Contents List of Figures 2 3 Introduction 4 GlaxoSmithKline 5 Company Overview 5 Over the Counter Product Lines 6 Social Responsibility and Reputation 6 Bottled Water 7 Bottled Water Sales 7 SWOT 10 PEST Analysis 11 Creating the Brand 11 Product Description 13 Branding 13 Demographic 14 Marketing Plan 15 Bibliography 17 List of Figures Figure 1 Global Bottled Water Growth in Context 1997-2013 (Dege and Wiley Interscience 2011: 13) 9 Figure 2 Regional Bottled Water Growth (Dege and Wiley Interscience 2011: 14) 9 Figure 3 SWOT analysis of the potential for a new line of water products for GlaxoSmithKline 10 Figure 4 Pure Label Example 14 Figure 5 Pure Specialized Label Example 15 Abstract The following paper explores the idea of introducing a line of bottled water, branded under the GlaxoSmithKline Corporation. As GlaxoSmithKline is most well known for their pharmaceuticals, both prescription and over the counter products, the addition of a line of bottled water would be best introduced with the idea of nutritional supplements added to the product. In order to differentiate within the market, the supplements would be developed so that the water taste was not changed, and through marketing to the segment of the population that is starting to experience minor ailments and issues that can be directly addressed through supplements. The segment would be the aging population that is 40 and over. Marketing will also have to be directed to a broader demographic through onsite marketing that is less specific to age. As the bottled water market has increased steadily since 1997, the potential for success is high. Introduction Bottled water has become a staple in Western society, a trend that stems from a variety of areas of concern. One of the reasons that bottled water has become a prominent resource for hydration is that the fitness industry has determined that a significant amount of water, usually defined by about 2 litres, per day is necessary for good health (World Health Organisation 2004: 486). Another reason that bottled water has become more marketable in the last few decades is that public water, as in tap water, has come under attack for the purity and safety that it contains. As a result, a natural marriage between the health industry and bottled water has emerged in which diversification into the bottled water market makes sense for corporations that have health related products already in their product line. One company that has yet to develop bottled water is GlaxoSmithKline. Through the exploration of their current line of products and brands, along with an exploration of the overall market, the addition of a line of water to the GlaxoSmithKline product line would enhance the current product line as well as open up a new market. The brand name of the proposed new line of water will be called PURE with a supplemental line of text used to define which type of water is being offered. The line of bottled water would not simply be the one line of basic water, but in order to appeal to the chosen demographic, a line of water with supplements within them would increase the potential success of the line. Taking the example of waters such as Dasani by the Coke product line and Aquafina by the Pepsi product line, creating flavoured waters or water with minerals and supplements has shown to have success. The twist on this line of water is that all of the water will taste like water, but will have supplements that target the differing needs of those who are aging. GlaxoSmithKline Company Overview Formed in 2001 through a merger between GlaxoWelcome and SmithKline Beecham, the company holds its headquarters in Great Britain with most of its business being conducted in the United States. As a pharmaceutical leader, the company is a leader in respiratory, central nervous system research, diabetes and vaccines, with 2003 seeing pre-tax sales of more than 21.4 billion. Profits were approximately 6.3 billion with an investment of 2.7 billion in research and development (Great Britain, National Audit Office 2004: 27). The year 2006 saw increases to 7.8 billion (Peal and Strauss 2008: 272). GlaxoSmithKline is the second largest pharmaceutical company in the world, but in 2006 a series of public relations challenges emerged from legal difficulties which included a settlement with the US internal revenue service of 3.1 billion and a series of lawsuits about the use of animal testing on two of their biggest selling drugs, Avandia and Paxil. GlaxoSmithKline is vigilant about keeping their reputation clean and with the appearance of having a social conscious. According to Peal and Strauss (2008: 272), “The Company knows that a single seed of discontent can quickly grow into a full-fledged reputation crisis”. Therefore, even in 2005 when legal problems surfaced, the corporation acted towards creating counterbalancing programs that would keep the relationship with the public on a positive level. Over the Counter Product Lines GlaxoSmithKline has a series of over the counter product lines that support consumer health. These products include Aquafresh toothpaste, Beano for gas related issues, Nytol sleep aide, Massengill for feminine hygiene, and Os-cal vitamins and natural supplements (GlaxoSmithKline 2010). There are over 190 global markets in which GSK participates. The company releases approximately 2000 new product lines per year. The company spends 275,000 per hour in new product development (Griseri and Seppala 2010). As the company has developed a line of vitamins and natural supplements, the extension of that line into a line of bottled waters would be a natural move. Social Responsibility and Reputation The relationship that the company has built with consumers is based upon providing care, rather than emphasizing profitability. The program GSK for You is designed to assist in creating savings for consumers who are having difficulty affording their medications (Peal and Strauss 2008). The company has donated more than 55 million in cash and products to developing countries per year and actively pursues opportunities to increase health in nations that are developing through education and provisions of products that are in high demand and need in those nations (Griseri and Seppala 2010: 109). Doyle (2008) outlines three steps in creating relationships with consumers: the first is to understand the needs of consumers, the second is to create a differential advantage, and the third is to convert both the understanding that has been established and the differential advantage into a continuing relationship. A pharmaceutical company has an advantage of stakeholder partnerships with the medical community who act as intermediaries between the company and the public, writing prescriptions based upon the effectiveness of their product in balance with the relationships built through drug representatives. Consumers are still the final provider for decisions on making purchases; creating a public reputation as a caring and responsible company is crucial in creating and maintaining a positive relationship with the consumer. GlaxoSmithKline accomplishes this through diligent care with their reputation and actively pursuing the right level of social responsibility through utilizing its charitable advantages in order to support causes that are important to the public. Bottled Water In developing a new line of bottled water, the first step would be to study the current market for bottled water and assess the current success of the current brands available, the saturation of the market, and how to approach the branding of the line of bottled water in order to capture a potential new demographic sector. The next step would be in the development of the line of water and to determine how best to make it specific to the intended demographic, as well as expanded to a larger consumer share so that it has a focus, yet does not alienate other market sectors. In seeking a gap in the current product development and the demographics that are targeted, a new market sector can be opened. Bottled Water Sales Between 1997 and 2009, steady growth in the bottled water industry has been appreciated (Table 1). The reasons that bottled water has emerged as a valued resource for consumers is through a variety of terms that affect their perceptions on health. Beyond the obvious marketing advantages of the health benefits of water, bottled water originally emerged as a lifestyle choice, an emblem of financial superiority as packaging and a sense of exclusivity through origin (as exampled through Evian from France and Fiji water from Fiji) provided for a sense of extravagance. Bottled water become a staple through marketing of waters that were not as expensive nor exclusive, but that appealed to the average consumer through convenience of portability and the expressed need for more water for health benefits. The perception of higher quality and the sensitizing of taste towards bottled and away from tap water have inspired the public to reject public water as a resource for hydration. Finally, as habits have developed towards the use of bottled water it is unlikely that the market will fall unless consumer confidence is shattered in the quality of the product (Dege and Wiley Interscience 2011: 14). As in evidence in Figures 1 and 2, the growth of the bottled market has appreciated a steady incline since 1997. Bottled water sales have depended on branding that promotes water as a product in which quality can be controlled through the location of bottling. Brand equity is purposely built through foreign shores marketing as the exotic is defined by a location that is remote from the consumer base. Brand image enhances differentiation, and where the water is bottled is a key element to denoting quality and value for the consumer (Dahlen, Lange, and Smith 2009). The one segment that has the lowest penetration for bottled water is that of the aging population as they grew up using tap water and without the sense of the importance of drinking 2 litres of water per day. This means creating a new demand through appropriate marketing approaches (Senior 2005). Figure 1 Global Bottled Water Growth in Context 1997-2013 (Dege and Wiley Interscience 2011: 13) Figure 2 Regional Bottled Water Growth (Dege and Wiley Interscience 2011: 14) SWOT The use of a SWOT analysis is beneficial for plotting the various challenges and advantages available in the development of a product. As seen in Figures 1 and 2, the market for bottled water has steadily increased since 1997. In order to justify the potential for the product, the SWOT analysis (Figure 3) shows that while there is a high level of competition, the market is still growing, giving room for new products to emerge. Although there is a glut of available products, a product with a new demographic target would have an opportunity to penetrate the market and develop into a powerful resource. Figure 3 SWOT analysis of the potential for a new line of water products for GlaxoSmithKline PEST Analysis A PEST analysis provides context for how a product can be situated into the market. Politically, the issues are minimal and the only challenge to the public systems is in implied claims that bottled water is better than tap water. Environmentally, the problem with bottled water is that the bottles create an environmental waste issue. This can be addressed through the creation of a system in which a permanent smaller bottle is available for sale made out of a higher quality product that is intended to be reused and filled at home, with larger bottles of the product that decreases the need for plastic products and subsequent disposal. Social factors arise where bottled water becomes a status symbol and the use of the product provides inclusion within a branded social group. As well, for an aging population that is often accused of not keeping in step with the modern world, the use of a progressive product provides for inclusion in the modern world. Technologically the water needs to be developed as it is resourced from an exotic location, then additives put into the water for the target benefit of the supplement. Political: Political issues revolve around the comparison of public water quality to bottled water quality Environmental: Plastic packaging is a problem for waste management Social factors include status and increased health Technological factors include the creation of a product in which the taste of water is maintained, with the health factors of the supplement available for the body. Additionally, a resource for the water that indicates an exotic location is crucial in the development of the resource. Creating the Brand Dahlen, Lange, and Smith (2009: 197) describe branding as a democratic process that allows for the consumer to participate in the building of the brand through voting which is accomplished through purchasing power. They describe the development of a brand through five questions that define the focus of the brand: Which market or markets do we want to target? What is the customer profile and behaviour of the target market? Who are or will be our main competitors? What do we want our brand(s) to stand for? How do we ensure that our target audience (or audiences) perceives our brand as the superior alternative? In defining the proposed product for GlaxoSmithKline, the demographic that has been defined is the aging population who have reached a point in their life in which age related problems inspire a search for solutions to those issues. The base customer profile is defined by the following characteristics: Over the age of 40 Still relatively active Seeking relief from minor health issues (such as joint pain) Open to the use of modern ideas about health Jones (2008) identifies the aging market segment as an untapped demographic for bottled water. Chen (2008) suggests that the over 50 demographic is under marketed and that the higher levels of disposable income lead to a rich, but often untapped resource for consumer activity. The sub-segments beyond the customer profile will include those who have deeper health issues, the under 40 group that does not need the supplements, and those with a health conscious lifestyle. The questions that need to be answered in order to support the product development through the customer profile is how does the demographic represent a higher level of profitability, who uses bottled water and how does that effect the launch of this product, and what customer group is more likely to react positively to the product line (Pillkahn 2008: 423). Product Description Flavoured waters have saturated the market, creating a plethora of choices where flavoured drinks are concerned, some with calories and others with little to no calories. The taste of most of these products, however, is unnatural and does not create an appealing alternative to tap water. To appeal to an older population, the idea of water that tastes like water, with supplements that they know are good for the various aspects of their physical experiences as differing ailments are affecting them in their aging state, would be a better alternative to forced flavours that don’t always have a natural appeal. While development of the product for tasteless supplements would need to be a part of the overall process of creating the product, this paper will propose that this possibility has already been achieved in order to move forward through the different aspects of marketing that must be addressed. Branding For the purposes of this mock product line, the brand name of the water is PURE and the secondary line of the label will be a descriptive that focuses on the type of water. As an example, in Figure 2 the label reads ‘PURE simply’ which indicates that the water is just pure water. Figure 4 Pure Label Example Demographic In developing a new brand of bottled water, one of the best choices towards creating something that is new to the market might be in approaching the elderly market through aspects of health that would be of interest to an aging population. While there are waters that are focused on youth and athleticism, and even those that are imbued with vitamins and supplements, a brand of bottled water that is intended for those with specific needs that arise from the aging process would open up a new market sector and also relate to the type of products that are already within the Glaxokline Smith line of products. Water that is pure would be the foundation of the brand, thus to keep it clean and simple, the brand name of the bottled water would simply be ‘Pure’. As a marketing tool, the simple brand name would be larger, with the specialized focus of the additional forms of the water would be smaller and next to the brand name. As an example, if one of the waters was developed with glucosamine, a product that is reported to have benefits for joint health, that type might be seen as PURE joint health. An example of a potential logo can be seen in Figure 3. Figure 5 Pure Specialized Label Example Marketing Plan Creating the marketing mix requires that the price, promotion, product, and place be appropriate to the highest potential for the product. The pricing of the product should be in line with other bottled water products. The average cost of a bottle of water in the United States, the primary location for GlaxoSmithKline products is $1.49. The product is defined as a bottled water product, with the promotion of the product being specified to a demographic that does not appear to be tapped by the bottled water industry. The place for the marketing of this product would be in the United States, with the spread of the product in other markets being done as success is established in the primary market. The first factor for the marketing plan is to develop a product in which the base water is supplied from an exotic location that is associated with health and well being. The supplements for the water are tasteless, thus the integrity of the pure taste of water is maintained. The second factor in developing the marketing plan is in creating labels that are distinctive and provide clear instructions on the benefits of the product without long, drawn out explanations necessary. The example label represents simplicity, gentleness in the product, and provides a descriptive that is attractive, while the subscript provides enough information for the target of the supplement in the water. The third factor concerns the target demographic. As most bottled water targets a broad and indistinctive consumer base, this product will be attractive to an aging population as their needs will be specifically addressed through the choices in supplements. The intention is to penetrate a market segment that may not have adapted to bottled water to the extent that the younger generation has, tapping into their needs and exploiting a search for relief from minor health inconveniences. The brand also denotes the idea of purity, thus also attracting a broader consumer segment who seeks pure water for their health needs. The final factor relates once again to the demographic as product lines that stem from Coke and Pepsi tend to target a broad, yet young market, whereas Evian and Isklar attract a higher socio-economic segment of the market. This product is targeted towards an aging population with the benefits clearly available to all age groups. Bibliography Beal, Andy and Judy Strauss. 2008. Radically transparent: Monitoring and managing reputations online. London: Wiley Publishers. Dahlen, Micael, Fredrik Lange and Terry Smith. 2009. Market communications. A brand narrative approach. London: Wiley Publishers. 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