Customer And Competitive Analysis Icelandic Glacial Marketing Essay

Icelandic Glacial is a Brand of Bottled Natural Spring Water from Olfus, Iceland. This company was established in the year 2004 and its headquarter is in Hlidarendi, Olfus, Iceland. The company is a sole proprietor company and dealing with the production and selling of the bottled water across the world. With its initiation, the company started the business in Iceland only and in the year 2005, it started exporting the branded bottled water to various other countries like USA, Germany, France, Mexico, UK and Canada. The company has very strong credentials and the bottling plant and the product finished by the company is accredited by NSF International.

According to the company, customers buy Icelandic Glacial as their best choice because of the source of unparallel purity which is free of contamination, high quality bottle design which is absolutely recyclable; it is considered to be affordable luxury, it is environmentally friendly and last, but not the least, it is NSF certified.

Target market for the product/service in the home market

Home market for Icelandic Glacial Packaged drinking water is Iceland from where the product is produced. Target market for Icelandic Glacial is mainly schools and college canteens, various offices and households (especially bigger bottles), several grocery stores, etc. If segmentation of the target market of Icelandic Glacial is done, there are mainly three segments that can be identified clearly. These are as follows:

Foreign tourists: These are the people who really do not like to drink the normal water from anywhere because of the health safety purpose.

Domestic tourists: These are the people who really do not waste time in finding water from here and there and would spend money and devote their time in roaming around.

Health conscious people and fashionable people: These are people who do not like to drink normal water ever and give priority to mineral water. Mineral water has also become a brand recognition as several people consider it a symbol of high class.

Especially, people of age group 20 to 35 years is the main target market for Icelandic Glacial in the home country i.e. Iceland. The main motive of Icelandic Glacial was to produce high quality bottled water not a low quality product which most of the other companies produce.

Brief summary of the product’s/service’s competitive strategy, marketing program, and positioning in the home market

Competitive strategies of Icelandic Glacial

Competitive strategies of Icelandic Glacial include a high focus on packaging quality and a cautious placement of the product as a preferred brand in the market. However, the company had a spoilt image in other countries, not because of its product quality but a spill-over effect of the “bad name associated with Iceland”. This had given a huge advantage to the competitors. To overcome this problem, the company came up with a different bottle with an art work on it and it really worked. It looked as if there is an ice formation on the bottle which really attracted the people. It created a landscape kept in the shelves of the stores just through change in the style.

Marketing Programs of Icelandic Glacial

In order to get an edge in the market, the owner of the company used his contacts in the business and the film industries which resulted in Icelandic water to be present in every party and even at every film festivals (Birchal, 2007).

Promotional video has been on the website of the company with two very beautiful women showing the bottle of Icelandic Glacial on the main page of the website to attract customers

Marketing Positioning of Icelandic Glacial

Icelandic Glacial positioned the packaged drinking water in the market through various successful marketing strategies. In order to position the product in the market, the company used some very powerful slogans such as: “Icelandic Glacial is the purest water; it is eco-friendly; it is certified by NSF; the bottles have the best physical structure”; etc.

Evaluation of the marketing program: S.W.O.T ANALYSIS

There are more of strengths of the marketing programs which have been implemented by the company than its weaknesses.

Strengths

Icelandic Glacial is the purest bottled water in the world;

It is eco-friendly and has zero carbon footprints;

It is certified by NSF;

the bottles have the best physical structure and are recyclable;

Company has gained recognition in the global market;

People got very much attracted by the bottle designs

It was seen in the film festivals which really helped a lot to increase the sales of the product

Weaknesses

Company had to spend a lot of money to gain the recognition in the market

Company has not established vast and firm global presence;

Company has no presence in the UAE beverage or bottled water market.

Opportunities

UAE is a very rich country with very high per capita income;

Large and very active demand for quality bottled water

Unsaturated market expansion possibilities to other GCC countries

Threats

Competitors in the market – size and strength

Government protection of domestic suppliers

Company Analysis for ENTRY market

Analysis of the company’s capabilities in entering new market

Icelandic Glacial is marketed and distributed in large countries such as the USA, Germany, France, Mexico, UK and Canada. The company entered US in the year 2005 where after being a bad reputation of water being associated to Iceland, company made a stunning reputation. At present scenario, American company, Anheuser-Busch has around 20 percent stake in Icelandic Glacial.

Icelandic Glacial is capable of producing 30,000 bottles in an hour. A separate type of distribution takes place in Canada, UK and Netherlands. Recently, Icelandic Glacial entered into the market of China. This packaged drinking water is known for its purity and zero carbon footprints and very much renowned in Europe and North America. It is now entering into the beverage market of China to increase its footprint all across the world (Icelandic Glacial Enters China Beverage Market, 2010). China Water and Drinks is the company which is the subsidiary of a US company Heckmann Corporation Inc. which is taking the responsibility of distribution of Icelandic Glacial in China. It is distributed to all the mentioned companies by various very renowned companies in the sector of water supplies.

With such a huge and increasing global distribution and recognition as the purest bottled water in the world with zero carbon footprints, Icelandic Glacial has the capable of launching its product successfully in the UAE which could prove a big market for Icelandic Glacial. UAE, being one of the fast developing countries of the world can easily welcome the product with a huge sale all across the country. There is a huge opportunity for Icelandic Glacial to enter the UAE beverage market and compete with the existing products in its field. Icelandic Glacial could find UAE to be a very successful place like the USA.

Identification of the business model

Business Model which can be used by Icelandic Glacial for expanding its business in UAE is “Distribution Business Model” in which the company which has started its business from Iceland, and expanded its business to various countries of the world by distributing its product in the foreign market. UAE will be the next foreign branch of the company in which it will expand its distribution services. Main cost drivers for Icelandic Glacial in UAE for setting up its feet in the market could be huge promotional cost, plant setting up cost, cost of distribution channels, etc.

Customer Analysis for ENTRY market

Identification of 360-degree profile of customer segments

There are almost every company which has its office in UAE and huge number of hypermarkets and shopping complexes.

Regular Population

Foreign tourists

Customer Characteristics

Demographics

7.5 Million

10 Million per year

Psychographics

Treat it as necessity and many treat it as hygienic

Do not trust on regular water

Location

Urban as well as Rural

Urban and sub urban

Purchase

Characteristics

Purchase Occasion

Very often (purchase it as a regular product)

Almost regular

Benefit Sought

Value in the market

Value in the market

Product Usage

hygienic concerns

Necessary Product

Evaluation of potential segments and selection of target market

Potential Segment for Icelandic Glacial in UAE bottled water industry could be huge numbers of foreign tourists coming, increasing population in UAE. College and school canteens, health conscious people, offices, households, etc can be considered as the target market for the company.

Volume potential

Bottled water business in the country accounts for more than 40 percent of the total drinking water which gives up a business of AED 570 million (UAE’s Bottled Water Industry Set to Sustain Growth by Boosting Capacity, 2009). Demand for drinking water in the country is going to increase in future due to increase in population and tourism. Present companies, for example, Al Ain is planning to expand its business in UAE. This means that there could be a huge projected growth for Icelandic Glacial in the country once it finds a good place in the market.

Most of the well established brands in the country produce 15,000 of 1.5 l bottles in an hour. Thus, we can assume that at the starting we could produce 5,000 to 7,000 and in future could easily compete with the competitors.

Margin potential

The industry is not that price sensitive but price should not be very high or very low. It should be kept as the industry average. The industry average for 1.5 liter packaged drinking water in UAE is between AED 5 to AED 7 for a 1.5 liter bottle.

Persuasion potential

There are a huge number of competitors in the market like PepsiCo Aquafina, The Coca Cola Company Kinley, Nestle Purelife, Masafi mineral water, Al Ain Mineral water, Gulfa, etc which absolutely satisfy the needs of the customers with Al Ain being the topper in the list with 40 percent share in the market.

I would highly recommend Icelandic Glacial to enter into UAE market because there is high need of water market in the country and this is also a fact that almost 40 percent GDP of UAE is based on this business. In spite of the fact that there is a high level of competition in the market, but still market is so high that surviving is very easy.

But in order to gain a considerable amount of market share, it is necessary for the company to pursue the customers to buy the product which could be done by high level of promotion of Icelandic Glacial in the local market as taglines like “the purest water on earth”, etc.

Identification of value drivers for the target market

Benefits: UAE is a country where there is a huge need for drinking water. It is a market which earns the highest per capital income from packaged drinking water as compared to any other part of the world.

Point-of-resistance: There will be huge competition in the market. Almost each and every international brand is present and along with that there are several big and small local brands as well.

Industry and Competitive Analysis for ENTRY market

Industry analysis

Product i.e. Bottled water market is in the maturity stage and this is the reason that Icelandic Glacial is confident enough to enter into the market and get a considerable amount of success. But as the product is in maturity stage it is really difficult to gain a huge amount of market share as there are still companies who have made their brands for the past many years.

Porter’s Five Force Model

Bargain power of the Suppliers: It totally depends on the geographical location of the country. There is a huge problem of drinking water in the country as there is inadequate supply of water.

Substitute Product: Cold drinks, tea, coffee, juice, etc. can be considered as the substitute products

Bargain power of Buyers: Customer has a lot of choices in the market as there are a lot of brands of packaged drinking water exist in the current market

New Entrants: Market is in its maturity stage, hence there could be just entrants in the market

Rivalries: There is an oligopoly competition in the market as the market is in maturity phase (Bottled Water Industry and Competitive Environment Analysis, 2009).

Identification of major competitors and the competitive strategy used by each

Major competitors for Icelandic Glacial in UAE could be PepsiCo Aquafina, The Coca Cola Company Kinley, Nestle Purelife, Masafi mineral water, Al Ain Mineral water, Gulfa, etc.

Strategies Used by each

PepsiCo Aquafina: This Company uses natural and underground water which makes it different from the other brands available in UAE

Nestle Purelife: Purelife is imported in the country from Saudi Arabia and it promoted with a statement on it label that Purelife is water coming from natural spring and deep well.

Masafi mineral water: This is a local company in UAE which is situated in Ras Al Khaimah. It positions itself in the market by its superior quality product with ISO 9002 and ISO 9001:2000 certifications.

Al Ain Mineral water: Clear leader in the cities like Abu Dhabi and Al Ain with more than 40 percent share in the market. It positions itself with great quality product and high customer loyalty.

Marketing audit of competitors

Analysis of Marketing Program

There are several marketing programs done by various brands in the country. For example, Al Ain, which is the brand with maximum percent share in the market, is sponsoring Al Ain International Aerobatics Championship of 2008 (Al Ain Mineral Water, proud sponsor of the Al Ain Air Show introduces bottle recycling programme , 2008). Misafi Mineral Water came up with a flavored mineral water in order to give customers a combination of sweet drink and pure water. There are some other efforts made by several companies for establishing their brands in the market through television ads, newspaper ads, banners, etc. All the market programs done have succeeded only because of the fact that there is huge need of drinking water in the country.

Company’s Ability to Support Marketing Programs

Icelandic Glacial is a company which promoted its water in Film award function in the starting of its business in US. This totally implies that Icelandic Glacial is capable of doing its marketing program in UAE due to the huge organizational as well as financial infrastructure available with the country.

Positioning of competitors’ product/brand

There are a very large numbers of competitors in the market but in spite of that there is a huge scope for Icelandic Glacial to sustain in the market because of the fact that need for this product in UAE is huge. At present, there are almost all the international big banners in the field of packaged drinking water present in UAE with enormous number of local manufactures. Among them Al Ain is a company which takes the maximum position in the market with 40 percent of the marker share.

Assessment of industry attractiveness and competitors’ strengths and weaknesses

UAE is a country which is very much attractive for a business of packaged drinking water. According to some previous statistics, UAE has the highest per capita income through the packaged drinking water business. This means that market for Icelandic Glacial is to a high degree certain and there is no doubt about that.

Competitors for Icelandic Glacial in UAE have the strength that they are well established in the country especially Al Ain, which has huge share in the market but these companies have the weakness that there are so many companies in this industry that it could be possible that the qualities of zero carbon footprint, eco-friendliness and purity of the water could enable Icelandic Glacial to establish a niche in the market.