Case Study: The Brita Products Company
In 1988 Charlie Couric, a marketing executive at Clorox, oversaw the acquisition by Clorox of the right to market Brita Water Purifier Pitchers in United States, and then became the President and General Manager of Brita USA. He proposed a risky deficit-spending strategy to gain market with the goal of getting a Brita water pitcher on every kitchen countertop in the United States. As a result Brita USA incurred heavy losses upfront as initial sunk costs dwarfed any revenue from sales, and the company saw no profits in its first 4 years. Couric however, believed that in the long run the strategy would pay ...view middle of the document...
* Option 2: Continue with its current launch plan for its faucet-mounted product with the belief that this is only at best a niche market in the larger water purification market.
* Decision Statement:
Using a SWOT analysis and secondary sources, and Grand Strategy Matrix model, we conclude that of these available options, the recommended course of action for Brita is to execute strategy # –
Option 3: Focus its resources entirely on firming up the install base of its current pitcher and filter products.
This strategy is recommended for the following reasons:
* If Brita does not go into faucet mounts there will be a decrease in brand perception; customer retention rate, and overall profits
* It is in line with the Grand Strategy Matrix.
Strengths | Weaknesses |
* Brita captures 70% market share in industry * Established Brand Name of Clorox and Brita * Infrastructure to invest in faucet mounts promotion * Volume of pitchers sold in the market are 5 times the volume of faucet mounts sold * Serves a niche market can gain advantage by promoting faucet mounts * Only Brita’s faucet mount is perceived to improve the waters taste * Wide array of filtration products to choose from * Pitchers of different sizes Family sized containers Personal water bottles etc | * Brita lost first mover advantage to PUR with faucet mounts * PUR captures 74% of total faucet mounts sales in Market Brita has to earn the market * Basic model of PUR faucet mounts cheaper than basic model of Brita pitchers * Major share of revenue from pitcher filters can decrease with elevated faucet mounts sales cannibalization effect * Requires sunk costs in promotion and innovation with faucet mounts |
Opportunities | Threats |
* Open market available to selected group of * customers * Younger generation more likely to use pitchers * Households likely to use faucet mounts * Introduction of Faucet mounts increase the likelihood of buying a product from the Brita * line * Can market the faucet mounts arguing on improving the waters taste * Competition is not limited to PUR * Huge market with health conscious Bottled water consumers * Should target faucet mount sales in the 18 to 44 aged consumer market where 82 are health conscious | * Sunk cost problem compared to PUR * generates major share of income from faucet * mount sales * PUR investment of 40 million in advertising and promotion of faucets and pitchers * Combined pitcher and faucet-mount market not expected to expand * Return on sales might decrease with introduction * of faucet mounts. * Target market water purification industry is...