Strategic plan for Deerside mineral water and soft beverages company

Strategic Plan

The mineral water market is highly competitive, so Deerside will require a comprehensive strategy in order to excel in the marketplace. There are a number of different theoretical approaches that can be taken in order to understand the strategy that the firm should undertake in order to carve out its niche in this market. Before working with these approaches, Deerfield management needs to understand its product and the consumer base for mineral water in general. The product is a mineral water from the Republic of Georgian. As there are few Georgian people in the U.S., there is no inherent appeal to this water on the grounds of its national origins. The primary appeal of this water is expected to be the content of the water. This water is rich in ingredients that have been proved to be good for the human digestive system and the prevention of colon diseases. The company cannot trade explicitly on this benefit without undergoing the full application process from the FDA's dietary supplement laws as per the Dietary Supplement Health and Education Act of 1994. However, the company can advertise the ingredients of the water -- all being naturally occurring - without inferring any benefit. Consumers interested in supplements and natural medicine already are aware of the benefits of these ingredients -- it would be no different from a regulatory perspective as marketing a drink with acai berry juice. The product is, however, differentiated from other mineral waters by the presence of these juices. In addition, the water comes from the Republic of Georgia, a remote part of the world. Shipping from Georgia is difficult and must pass through the Black Sea, the Bosporus and the Mediterranean before crossing the Atlantic. This makes the process expensive for the company.

The first framework by which the strategy can be developed is the three value disciplines, which are operational excellence, product leadership and customer intimacy (Johnson, 2011). Companies that pursue operational excellence do not deliver anything special with respect to product or service, but they do run a tight ship. Firms adopting this strategy often compete as price leaders. While Deerside needs to bring the water from Georgia effectively, it does not appear that the company will enjoy any special strategic benefit from doing so. Product leadership comes from companies that seek to win business by offering the absolute best product available. This could partially describe the Deerside approach, in that the product is special. However, Deerside is not as committed to innovation as this description implies. That said, Deerside does feel that there is potential growth in the industry from product line extensions. Customer intimacy is reflected in a very customer-centric approach. Unique needs are identified and satisfied. This could describe Deerfield's approach if the company wants to remain a niche market player. If Deerfield wants to compete for the mass market of mineral water, it may need to go beyond the core niche market of customer that will understand the value in the minerals that the water contains.

The second framework by which the strategy can be developed is the generic strategy. Michael Porter explains these as differentiated and low cost, either in mass market or niche market size (QuickMBA.com, 2010). For Deerside, the high cost of bringing the water to the U.S. would seem to imply that a cost leadership strategy is not reasonable. It is impossible to bring this water all they way from the Caucasus Mountains to the United States and sell it at the same price as water sourced locally. Therefore, a differentiated strategy will be used. The major issue for Deerside to resolve, then, is whether it wants to target the mass market or a niche market. For the most part, a highly specialized product or service could compete in the niche market. There is a niche market for water. The company could choose this route. Deerside, would, however, need to back up a niche market strategy will FDA approval as this would truly distinguish the product and justify the company charging superpremium prices for it.

The third framework by which the strategy can be developed is the grand strategy. This is in the form of a broad strategic action. The company would articulate this action, and it would allow this broad strategy to then be translated into a series of minor actions. The company's broad strategy likely would be based on marketing the benefits of the water to help differentiate the water from the competition and allow prices charged for it to be high enough to offset the cost of bringing it to market. As this cost is expected to be high, having a broad strategy that supports being able to recoup that investment is an important part of the Deerside business plan

Taking these three frameworks together, it is evident that Deerside needs to focus on becoming a truly differentiated player in the market. Deerside will in all likelihood be a niche market player, so it needs to differentiate itself as much as possible. It can and should apply to be regulated as a dietary supplement, as this will give the company much greater leeway with respect to marketing the water and will give it a point of differentiation that is difficult to match among its immediate competitors in the mineral water business. That the benefits of its ingredients are proven will streamline the application process.

It is also worth considering that the company should implement a degree of operational excellence. It faces a difficult challenge in bringing the product to market, so excellence will not only ensure that the product gets to market smoothly but that Deerside can make this happen in a cost-effective manner. If the company can achieve operational excellence, it will earn higher margins and this will help it to expand.