Brita Products Company Essay

1.To what do you contribute Britas success?The success of Brita in the USA securities industry is due on the one pile to attributes of the core product and on the other hand to factors related to the market environment and prospered marketing.Attributes of the core productThe hill itself had the followers benefits it reduced chlorine and odors, it made irrigate supply to taste snap off, it was extracting heavy metals from the water and the water was non depositing salts/sediment when boiled.Market environmentIniti every(prenominal)y, there was no major(ip) concern to the consumers almost filtering the tap water. However, the sensitivity that large number showed about approximately health problems and/or accidents that rose during the decade of 1990, aided by solid publicity of these health problems, assisted Brita to easily increase filth sentience to the consumers and create a significant market.Moreover a lot of people perceived Brita filter as a present for their fr iends.Successful marketingBrita baton twirler was a technologic totally in ally advanced product made from a hale known German producer of industrial and consumer water filt dimensionn products, characteristics which made it kind to Clorox who had significant marketing experience and distribution channels in the US. Clorox, which obtained the freedom from Brita GmbH to set up a subsidiary in USA, knows very well the specific market as it was a major manufacturer and seller of nucleotide products with $3.9 billion dollars of gross sales in 1998.Clorox caterd the support for Brita heavy(p) for 4 years, the desired know how and leadership, as expressed by the insistence and individualised involvement of Mr. Couric. furthermore, Brita was the first very successful strategy of water filter, which created the home water purification industry.In the distribution area, Brita USA has achieved dominant mystify in most of the outlets and department stores in the market covering al l five possible channels of distribution (Department stores, Mass merchandisers, Grocery stores, hostelry stores, Drug stores).Another primary(prenominal) element that contributed to Britas success is the unlike pricing policy set according to the POS outlet. This means that the high society could quit its consumers according to polar needs and habits.Last, but probably the most successful decision was the great taste pose concept that helped Brita to market the hummocks with a clear promotion and advertisement strategy boosting its sales, as there was no other competitor with such a strong image.2.What are Cloroxs marketing assets release forward? Can you comment on their positioning choices?Marketing assetsThe Clorox company for the first four years faced solid problems to launch the pitcher in the market. After the four years the company managed to create a strong image and build strong brand equity. These assets of the Britas pitcher are revealed through the following factsFirst 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 revenue enhancement share or about $250 million, being a market leader.Furthermore there is a strong client base who will get new filters for the next years (80% of the bargainers who have tried the pitcher were compose 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 distrust (No 3), it is obvious that filters contribute significantly to the kaleability of this product.All these details high up are showing to us that t he Brita company has significant assets (brand equity, loyalty, awareness, being a market leader, having a strong node base of people who buy filters) for going forward with any clear strategy.Positioning choicesAt the beginning 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) tout ensemble bottled water industry had been built without reference to health and c) Brita wanted to take an unbeatable position (be at the top of the mountain) which would not be possible by positioning on how much of about impurity is removed.We believe that Clorox made an important decision for the promotion and advertising campaign under the idea of taste (great tasting water, clear, fresh, wonderful) because it was also consistent with the attributes of the core product (water indeed 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 obscure positioning strategy which would lose the attention of the consumers.The choice that Brita did not trace was focusing on health. Filters decrease health hazards by low feeling tap water (even if not all dangers are eliminated). The publicity devoted to health problems due to water could easily serve to strengthen Britas position. Health is PURs choice for positioning their faucet mounted 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 lifetime treasure of a customer with a pitcher? How does it compare with that of a customer with a faucet mounted system? Does their bogo promotion make sense?According to Gupta and Lehmann, biography Value Of a Customer (LVOC) isLVOC = m r/(1+i-r), where m= adjustment, i=cost of capital and r=retention rate.Since cost of capital is not mentioned in the elusion study, we assumed a value of0% for step-down purposesand a scenario with3% which can be considered aboutr to real valuesA system 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 work through that Brita is going to elate $27.86 from one customer for the lifetime period of a customer with a pitcher.2a. At this point we examine the lifetime value of a customer with a mounted faucet in ii different models(i)Best scenario pricing at $40 and retention at 80% ( homogeneous as for pitchers)(ii)Worst scenario pricing at $35 and retention rate of 80%Cost as mentioned in the case study is t aken 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 beget $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 higher(prenominal) LVOC ( LVOCfaucet is $26.15 while current 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 think 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 wou ld 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 higher up calculations the profit Brita is going to receive according to LVOC of pitcher and LVOC of faucet are close to those of the initiatory 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 harm 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 receive it is ground to the following hypothesisRetention rate would be th e same as for the pitcher.The consumers will use the second filter as the first, replacing 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, MARKETING oversight 11TH EDITION, PRENTICE HALL 2005