Read the following case carefully and answer all the questions. Use a critical and analytical style and be clear in answering the questions; general answers earn zero marks.

The maximum score is 100 marks, each question has 25 marks.

Great Water of France, Inc.: Perrier

Perrier is naturally carbonated spring water with smaller bubbles and a distinct flavor when compared with competing products, most of which are charged with machine-made carbon dioxides. Thedistinctivelyshapedgreen-tintedbottle,theequalitydistinctivelabel,thepremium price, and the advertising all combine to have a snob appeal and build an elitist image.

Perrier is globally known for its quality due to low mineral content (particularly sodium). Perrier plans to be perfect anytime by providing the best tasting sparkling water on the market. They are not only marketing for the rich and/or famous, but they also want to be an everyday thirst quencher. Perrier's vision is to be the number one sparkling mineral water in the world. Perrier’s mission is to offer bottled water to meet consumer needs anywhere, anytime.

In May of 1989 in an issue of Fortune, the company was depicted as one of six companies that compete best. Fortune quotes, “These are companies you don’t want to come up against in your worst nightmare. In the business they are in, they amass crushing market share.” Perrier controlled 24% of the total US bottled-water business. Even competition like Coca-Cola, PepsiCo, and Anheuser-Busch was hardly affecting the sales of Perrier. After all, we can conclude that Perrier is a competitive business that also understands the importance of how business is conducted.

In February 1990 news reached Perrier’s executive suite that traces of benzene had been found in its bottled water. Ronald Davis, President of Perrier Group of America ordered an intensive recall of all Perrier bottles in North America. A few days later Perrier S.A. expands the recall to the rest of the world. At first, the excuse given by Perrier officials was that the contamination occurred because an employee mistakenly used cleaning fluid containing benzene to clean the production-line machinery that fills bottles for North America. Perrier now finally admits that benzene naturally occurs in Perrier water but the problem was now visible because the workers forgot to replace the filter. Then Perrier faced a big problem. Due to this drastic recall, Perrier was completely out of the market for a total of 5 months. Ronald Davis, President of North America Perrier, later pointed out that the company didn’t have to recall all 70 million bottles of U.S. inventory. It was too late for that. By the end of 1990, it was very obvious that Perrier was not going to regain its market position. Perrier’s sales had only reached 60% of pre-recall levels.

We can easily notice that Perrier has had great success when first got to the US market. However, after this tremendous success, its sales get decreased dramatically. When you’re running a business in a highly competitive environment as in Perrier’s case you have to be more flexible and not depend on word-of-mouth advertising. That’s why in this situation the right move according to us is to let the advertising agency launch its advertising campaign and try to regain the company’s “newsworthiness”. We think that the initial success of the company is not only due to that it’s a nice quencher, but because it is a naturally carbonated spring water which consists of small bubbles and that’s what distinguishes it from the other spring waters. One of the biggest problems for the company is the plan for shifting their distribution from gourmet shops to the soft drink section of supermarkets. Also, another issue is their vision that their product would be sold as a “price special”.

Questions:

1. Market segmentation divides a market into well-defined slices and uses different variables for segmentation. Justify which segmentation variable Perrier can use to reach the local Lebanese Market.

2. Explain the buyer-readiness stage and apply the marketing funnel to Perrier and to another competing brand for selling carbonate water in the Lebanese market, and justify the different loyalty status for Perrier.

3. Although many different growth strategies are available to firms, some of the best opportunities come from growing the core—focusing on the most successful existing products and markets. Critically analyze the three strategies that Perrier can use to improve revenues and to lower costs.

4. A company’s positioning and differentiation strategy must change as its product, market, and competitors change over the product life cycle. To say Perrier has a life cycle is to assert four assumptions. Discuss and explain the four assumptions and support your answer from the case.

Answer rating: 100% (QA)

1 Market segmentation divides a market into welldefined slices and uses different variables for segmentation Justify which segmentation variable Perrier can use to reach the local Lebanese Market Whil... View the full answer