Declining Demand for Bottled Water - Research Paper Example

? Declining Demand for Bottled Water in the United s and The Declining Demand for Bottled Water in the United States The market demand for bottled water in the United States is rapidly declining after several years of constant growth. The United States constitutes the greatest consumer for bottled water, but the market demand is projected to grow by 6.7% in the year 2013 (Worldwatch Institute, 2013). Data released in March 2013 by the Beverage Marketing Corporation indicates that this is the smallest growth in demand experienced in this decade. Demand for bottled water continues to expand in global popularity; however, several restaurants, schools, natural food stores and municipalities in the United States have decided to consume tap water instead of packaged products. Bottled water marketers are striving to find out the contributing factors to this trend and institute appropriate mechanisms to regain the initial market share. Manufacturers pack bottled water in transparent plastic bottles. This water is used in schools, homes, restaurants and municipalities. The cost of bottled water varies between $500 and $1,000 per cubic meter in the United States (Worldwatch Institute, 2013). The demanders for this water include young, middle aged and the old aged people. Consumers hold a belief that these packaged products are cleaner, safer and more convenient than tap water. The estimated consumption of bottled water in the United States is 27.6 gallons per person (Worldwatch Institute, 2013). Marketers target 100% of the United States population since water is a basic need for survival. Reasons for Declining Demand for Bottled Water The economic status of consumers influences the demand decisions for bottled water. The price of tap water is $0.50 per cubic meter as compared to bottled water that ranges between $500 to 1,000 for the same quantity (Worldwatch Institute, 2013). This limits most of the United States residents from purchasing this product. The prior perceptions that the quality of ground and surface water represent risks encourage the financially stable citizens to purchase bottled water as a primary drinking source. Some studies, however, contradicts this as they reveal that the minority groups spend 1% of their income on bottled water as compared to stable citizens who spend only 0.4% of their income on this product (Gleick, 2011). The reason for this could be higher marginal propensities to save and invest that characterize the financially stable citizens than the minorities. The general trend for consumption of bottled water reveals that financially stable citizens buy bottled water because they can afford while the minorities are scared away due to unaffordable prices. The age and gender constituting the market share determines the number of consumers for bottled water. Young and females are more likely to drink bottled water than the aged and the males. Young people are susceptible to advertising and marketing promotions, which are the primary selling strategies used by the bottled water companies. This proportion of the population spends most of its time watching televisions programs and reading newspapers. The population of young people in the United States has decreased considerably over years. The high probability of female drinking bottled water is consistent with the previous study findings on gender differences on health risks associated with health and food (Gleick, 2011). The educated population of female spends less time on television due to commitments to work and family matters. The number of women watching television programs and reading newspapers has decreased, thus reducing people who access bottled water advertisements. Ethnic and regional backgrounds of consumers affect the consumption of bottled water. A research carried out in the year 2011 revealed that the residents of Midwest and West mountain areas are less likely to use bottled water either for purposes of primary drinking or special occasions (Gleick, 2011). Residents of the southern pacific and the south constitute e the greatest consumers of bottled water. The Latino and Black parents are three times more likely to buy their children bottled water compared to white parents. The reason for this is that minority communities believe that bottled water is superior, and thus a necessary expense (Gleick, 2011). This suggests that place specific factors influences the decisions for bottled water consumption. Environmental attitudes and issues associated with bottled water forms the greatest basis for its criticism. Water companies recycle more than 40% of its plastic bottles while approximately two million tons of bottles are disposed in landfills every year. The Corporate Accountability International estimates the annual cost of disposing water bottles to $70 million (Worldwatch Institute, 2013). These concerns are the primary causes of a shift in consumer choices. The mayors of the United States cities such as Salt Lake City and San Francisco have voted to ban the government use of bottled water when possible. The Corporate Accountability International estimates that rising campaigns against bottled water have led to reduced expenditures in more than sixty cities in the United States. Actions for Addressing Declining Demand for Bottled Water Firstly, bottled water companies should lower prices for packaged water. Lowering prices will enhance affordability of bottled water, with a consequent increase in the quantity of water consumed. Water companies will achieve this through seeking technologically advanced methods of production that are cost effective. Pricing affects the success of the product in the market; affordable prices will increase the utility of bottled water to consumers and maintain the demand (Hooley, Piercy & Nicoulaud, 2011). Secondly, beverage companies should address the environmental concerns associated with bottled water. Companies can achieve this through introducing corporate social responsibility programs aimed at mitigating the problems caused by bottle disposals. This may reduce the costs associated with disposing water bottles and change the attitude of the public towards bottled water. For example, in 2012, Coca-cola announced that the company has plans of starting to use less than twenty-four ounces caps on plastic bottles. The company also plans to improve its water use ratio recycle 90% of its production waste (Worldwatch Institute, 2013). Third, bottled water companies should develop marketing programs that are effective at persuading all citizens to consume bottled water. Marketing and promotions should be directed to young people and female since they are susceptible to advertisements (Gleick, 2011). Companies should target these two groups with persuasive messages about the quality and safety of drinking bottled water. Marketers for bottled water can access young people and female in schools, colleges and universities as well as job places. The advertisers should not ignore the old age population and men since they have the potential of changing their attitudes towards bottled water. Marketing Bottled Water in the United Arab Emirates (UAE) The United Arab Emirates is the best foreign country to market bottled water. The UAE comprises of six states with the estimated population of five million, four hundred and seventy three thousand, and nine-hundred and seventy-two by July 2013 (United States, 2013). The per capita gross domestic product for the UAE is equal to those West European nations. According to the estimates of the year 2012, the UAE’s GDP per capita was estimated to $49, 800 (United States, 2013). This shows that most of the citizens in the UAE are financially stable and can afford bottled water. The mean age of the population is thirty years, implying the greater population of the citizens is composed of young people. The table below illustrates the age structure estimates for UAE by the end of July 2013. Cohort Percentage Male Female 0-14 years 20% 577,599 551,346 15-24 years 13.8% 449,258 306,410 25-54 years 61.5% 2,570,054 798,070 55-64 years 3.1% 127,569 40,996 65 years and above 1% 33,481 19,189 (Source: United States, 2013) The table above shows that the middle-aged and young people constitute the largest proportion of the population. These two groups of audiences are influenced by marketing and advertisements. The lifestyles of females and young people are complex, and they like consuming prestigious commodities. These factors make the United Arab Emirates the best foreign market for bottled water. Bottled Water Segmentation and Positioning in the United Arab Emirates Bottled water marketers should divide the UAE markets into segments based on customer characteristics and needs. Market segmentation activity will involve determining the actual and potential customers for bottled water (Hooley, Piercy & Nicoulaud, 2011). This will enable the marketers to identify the market and consumer groups. The companies should analyze the intensity of competitors in the market since they will influence the profitability and market share for bottled water. The competitors for bottled water include tapped water supplier companies and local water processing units. The final step in market segmentation is selecting the most attractive market for bottled water. This may be an ethnic group region or a specific age group. When companies have identified a market segment, marketers will identify the differential potentialities of each segment (Hooley, Piercy & Nicoulaud, 2011). The companies will create identities of bottled water in these markets and place the bottled water in these segments based on demand patterns. Proper market segmentation and positioning will be critical elements for success in selling bottled water in United Arab Emirates. References Gleick, P. H. (2010). Bottled and sold: The story behind our obsession with bottled water. Washington, DC: Island Press. Hooley, G. J., Piercy, N., & Nicoulaud, B. (2011). Marketing strategy and competitive positioning. New York, NY: Pearson Financial Times/Prentice Hall. United States. (2013). The CIA world fact book. Washington DC: Central Intelligence Agency. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html Worldwatch Institute. (2013). Bottled Water Demand may be declining. Vision for a Sustainable World. Retrieved from http://www.worldwatch.org/node/5878. Read More