Case Study Analysis: Harmonie Water
Introduction
Commercial organizations have a duty to focus on building their value. Callingham (2004, p.44) asserts that the ‘value’ should be built on the basis of the market view. As such, it is imperative for businesses to develop sufficient market intelligence, which can be achieved by conducting market research. Currently, knowledge is increasingly being considered as an important asset in the running of an organization (Hague, Hague & Morgan, 2004, p.32). In the course of its operation, Harmonie Water has recognized the significance of integrating market research in its different aspects of marketing management, for example, advertising, brand management, and market positioning. In respect to this, the firm implemented two projects Project Unify and Project Aqua, which were intended at strengthening the Harmonie’s competitiveness in the bottled water market segment.
Nevertheless, the case study on ‘Harmonie Water; Refreshing the World Naturally’ by John A. Quelch and John L. Teopaco highlights the existence of challenges in regards to the implementation of the market research findings. The firm’s management team is yet to reach a consensus on how to leverage market research findings. This case study analysis examines a number of aspects relating to the market research findings. Among the areas examined include Harmonie Water’s external competitive environment, consumer segmentation criteria, and how the company can reposition itself as a global brand based on the findings from Project Aqua and Project Unify. The analysis further examines the different elements of the presented marketing mix for this brand and how they are enhancing the brand’s market position.
Evaluation of the case study
External competitive environment
The attractiveness of a particular industry and subsequently its profitability is influenced by diverse factors amongst them the degree of competition (Callingham, 2004). As a multinational corporation, Harmonie Water operates in an industry that is characterized by intense competition. The company faces intense competition from domestic and international companies. Among the global bottled-water producers that the firm faces include Suntory Water Group, PepsiCo, Coca-Cola Company, Icelandic Water Holdings, Nestle Pure Life, and VOSS. Some of the dominant players in the US market include Vitaminwater, PepsiCo, Poland Spring, Glaceau, and Dasani. Conversely, the key industry players in China include Mizone, Master Kong, C’ estbon, and Nongfu Spring (Quelch & Toepaco, 2017, p. 4).
A large number of competitors means that Harmonie Water operates in a perfectly competitive industry. The intense competition has resulted in an increase in industry rivalry as the industry players try to gain industry dominance. The intensity of industry rivalry is further increased by low product differentiation (Ghai & Gupta, 2002). Subsequently, the cost of consumers switching to a competing product is considerably low. Johnson et al. (2017, p. 34) assert in a market characterized by low product differentiation, the industry players tend to compete on the basis of price. The intense competition has resulted in the industry is highly fragmented. Apart from the Asia Pacific market, Latin America, and Western Europe regions where the company enjoys a considerably high market share at 8.2%, 5.3%, and 4.5% respectively, the company’s market share in North America, Middle East and Africa, Eastern Europe, and Australasia are relatively low at 0.2%, 1%, 2%, and 0.2% (Quelch & Toepaco, 2017, p. 4). The low market share in these markets highlights that the firm is yet to develop sufficient industry dominance in some of its regional markets.
Customer segmentation
Customers belong to different groups and are characterized by varying needs. It is therefore important for firms to distinguish them through market segmentation in order to make a decision on how best to exploit the market opportunities by formulating strategies on how to optimally target customers and achieve an optimal market position by offering customers superior customer value (Doole & Lowe, 2005, p.67). Market segmentation should be based on select market variables (Johnson et al., 2017, p.34).
In the pursuit to build a strong brand, Harmonie Water has entrenched segmentation as part of its marketing management. The firm has employed different variables in its market segmentation. One of the bases of market segmentation that Harmonie Water has incorporated include consumer-based variables, which includes the behavioral variables. The behavioral variables of market segmentation are associated with the consumers’ attitudes, benefits being sought, and their level of knowledge. The benefit sought market segmentation dimension relates to the benefit that consumers intend to derive from a particular product (Tyagi & Kumar, p. 16). With regard to the benefit sought, Harmonie Water targets customers in the developed countries whose consumption of bottled water is influenced by the functional benefits that they are likely to derive from the product. This customer segment is largely comprised of health-conscious consumers who are committed to avoiding the consumption of sugary drinks. Additionally, these consumer groups consider the consumption of bottled water to be highly beneficial in regards to being a source of vitamins, hydration, and antioxidants in addition to being a source of hydration (Quelch & Toepaco, 2017). As a global enterprise, Harmonie Water has further segmented its market on the basis of the geographical dimension. The firm has established market presence in seven geographical regions that include Australasia, Latin America, Western Europe, North America, Latin America, Eastern Europe, and Asia Pacific (Quelch & Toepaco, 2017, p. 4).
To enhance its effectiveness in exploiting the market opportunities in the bottled water industry, Harmonie Water should consider integrating the psychographic variables in its market segmentation. The rationale of integrating the psychographic variables is underlined by the fact that individuals belonging to the same demographic characteristics, for example, income group, are characterized by divergent psychographic profiles. Some of the psychographic variables that the firm should use in segmenting its market include the target customers’ social class and lifestyle (ReRERerere). With regard to social class, the firm should consider targeting the high-end customer group. In respect to this, the company should consider focusing on the premium segment. Premium pricing will play a vital role in the firm’s effort to market its product to consumers who associate high product prices with value (Tyler, 2020, p. 1). Alternatively, the firm should also consider targeting customers on the basis of their interest consumption of goods. The rationale of including lifestyle as the basis of consumption is underlined by the fact that some consumers are motivated to make a particular purchase decision by the need to express their lifestyle.
Repositioning
Branding in the contemporary business environment is increasingly facing challenges arising from the hyper-competition, rapid globalization, and growth in the rate of product consumption (Janiszewska & Insch, 2012, p. 54). In respect to the findings from Project Aqua, Project Unify, and the external market analysis, Harmonie Water should consider repositioning itself as a premium brand. The rationale of premium brand positioning is underlined by the fact that it results in the creation of a strong psychological image in relation to the products’ value (EquiBrand Consulting, 2020, p.1). In its premium brand repositioning, the company should consider a number of aspects. The first aspect includes the product class. The consideration of the product class should be intended at improving the firm’s capability to satisfy a specific consumer need (Klein et al., 2019, p. 34).
The second element that the firm should consider in the repositioning strategy includes consumer segmentation. In employing customer segmentation as an approach in the firm’s premium brand positioning, Harmonie Water should consider entrenching the ‘revitalizing’ and ‘refined’ perspectives as proposed under the Project Unify and Project Aqua. In line with this, the company should consider employing the positioning theory which emphasizes the importance of taking into account the target consumers’ needs, characteristics, and product expectations (Sengupta, 2005, p. 193). Under this dimension, Harmonie Water should consider targeting high-end customers in regard to income level and health-conscious consumers. The company should, therefore, consider elevating Harmonie Water’s position to the premium status.
One of the aspects that the company should take into consideration includes enhancing the composition of its water in regards to mineral levels, its purity, and pH. By taking into consideration the composition of its water, Harmonie Water will gain an edge in attracting the consumers who are inclined towards the functional benefits of water. In view of this, the company should pay more emphasis on the ‘revitalizing’ and ‘refined’ aspects of its market positioning. Another product attribute that the firm should consider in its repositioning process includes ‘refreshing’. This attribute will aid in communicating the capability of Harmonie Water to quench thirst. This will enhance the organization’s capability to differentiate its product relative to its competitors.
In entrenching these attributes, Harmonie Water should ensure that it adopts a global brand management approach while ensuring that it observes a local brand management approach across different countries. Moreover, the company should also consider integrating pricing as one of the dimensions of its premium brand positioning. In respect to this, the company should ensure that its product is priced at a relatively higher price relative to the competitors. The higher price of the Harmonie Water brand will aid in signaling the prestige quality of the brand. By adopting the proposed issues, Harmonie Water will gain an edge in positioning itself within the premium water market segment.
Marketing mix elements
Effective integration of the marketing mix can play a fundamental role in enhancing the brand position. However, a firm must ensure that the respective marketing mix elements are optimally applied. CFI (2015, p.1) notes that the inconsistent application of the marketing mix can result in a weak market position. Harmonie Water has incorporated a number of marketing mix elements in its brand.
Product; One of the marketing mix elements that Harmonie Water has entrenched in its brand includes the product, which is underlined by the provision of the Harmonie bottled water. Among the fundamental aspects that the firm observes in the production of bottled water include quality and purity. Over the years, the company ensures that the consistency of its bottled water n respect to these aspects are maintained. As a result, the company is able to safeguard the health of its clients (Quelch & Toepaco, 2017, p. 5). From the case study, Harmonie Water is yet to fully exploit the product mix dimension. This assertion is underlined by the fact that the company is yet to leverage the concept of product diversification, packaging, and product features. By leveraging on these aspects, Harmonie Water will gain an edge in attracting its diverse consumer group.
Promotion; Harmonie Water has appreciated the significance of creating market awareness through advertising. However, the company is yet to fully exploit the benefits of advertising in a market that is characterized by intense competition. For example, Harmonie Water is yet to make a determination on whether to employ a standardized advertising strategy in the global market or adapt the advertising strategy to a specific market. The firm’s marketing director is of the view that adopting a standardized advertising strategy would significantly hamper its effectiveness in marketing its products in markets that are characterized by significant cultural differences. By adapting its advertising to specific markets, Harmonie Water will succeed in addressing the distinct needs, tastes, and preferences of the target customer groups.
Pricing; in spite of the growth in the premium market segment, Harmonie Water is yet to venture into the premium market segment. This has significantly limited the firm’s capability in attracting customers who associate high product prices with high production value. By integrating premium pricing strategy, Harmonie Water is likely to benefit from the growth in the premium market segment.
Distribution strategy; the case study highlights that Harmonie Water has entrenched an extensive distribution strategy. As a result, the firm is able to establish a market presence and market share across different global regions. However, the case study highlights that the company has not developed adequate competitiveness in some regions, for example, Australasia, Eastern Europe, Middle East, and Africa, and North America as underlined by the low market share. To improve market share in these markets, it is important for Harmonie Water to consider improving its distribution capability, for example, by increasing its locations, market coverage, and logistics (CFI, 2015).
Conclusion
The case study highlights the existence of significant challenges and gaps that have limited Harmonie Water’s competitiveness in the global bottled water segment. However, the firm can enhance its competitiveness by pursuing the proposed aspects with respect to market segmentation, brand repositioning, and optimal implementation of the marketing mix strategies.
References
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