Bottled water consumption decline in the United States market

MARKETING

Discuss product service terms current target market demographics U.S. Census Data. 2.Determine product service declining popularity. Be include information social, demographic, ethnic markets; economic technological factors; political legal factors; competitive factors.

Product description

The market for bottled water in the U.S. has been experiencing a steady decline in growth as a result of huge awareness campaigns that are conducted to curb consumer demand. This is in contrast to other parts of the world where the popularity of bottled water is continuing to increase by 6.7% each year which is reported by the Beverage Marketing Corporation (2008)

as the smallest increase experienced in the last 10 years. The U.S. used to be the largest consumer of bottled water but in the latest years, there has been a shift towards preference of tap water rather than bottled water Institute, 2012()

The Beverage Marketing Corporation (2008)

states that 54 per cent of the American population drinks bottled water with 36 per cent drinking it regularly which is more than once every week. The target market of bottled water is the African-American, Hispanic and Asian communities who constitute 54 per cent of the consumer demographic trends for 2011. According to the U.S. Census Bureau (2010)

, Latinos and African-Americans together account for almost half of the U.S. population that is living under the line of poverty. As a result of this, these communities lack access to clean water which makes them prefer bottled water which they believe is much safer to drink. American target market demographics also state that women constitute the majority of drinkers of bottled water. Data indicates that 45 per cent of women aged between 18 and 34 years and 44.6 per cent of women aged between 35 and 54 years old consume bottled water. The percentages for men are much lower with 35.3 per cent of those aged between 18 and 34 years and 34.5 per cent of those aged between 35 and 54 years consuming bottled water. According to the U.S. Census Bureau (2010)

, women constitute 50.8 per cent of the American population with 32.3 per cent aged between 18 and 34 years and 35.8 per cent aged between 35 and 54 years which is a clear indication that women form a greater majority of consumers of bottled water.

Reasons for declining popularity

It is believed that this paradigm shift from bottled water to tap water is as a result of economic, social justice and environmental reasons. Marketing campaigns run by municipal councils also seek to emphasize on these reasons which has encouraged increased the popularity of tap water. Furthermore, restaurants, schools and food stores have all decided to purchase tap water instead of carrying bottled water. They have all created lobby groups which have led to significant cancellation or non-renewal of bottled water contracts. Other cities have responded with bans on the sale of bottled water at city functions.

The economic factors that have led to the decline of popularity are as a result of the high pricing of bottled water. In the U.S., bottled water costs between $500 and $1,000 per 1,000 liters as compared to $0.5 for the same amount of municipal water in California. Pricing for other states differ but are at the same range. This shows a significant premium pricing of bottled water yet industry data reported by the Olson (1999)

study on bottled water shows that 40 per cent of bottled water is sourced from public water supplies.

As a result of the study conducted by the Natural Resources Defense Council as well as the American Beverage Association, Mayor's Business Council and International Bottled water Association, there is no significant difference between the qualities of bottled water over tap water. In recent years, municipal supply of water has been improved considerably which has given it competitive advantage against bottled water. This has led to the municipal campaigns for the shift from bottled water to tap water.

In 2011, Corporate Accountability International pressured bottled water companies to disclose the sources and quality of their water which revealed shocking information to the public. Pepsi announced that their bottled water product, Aquafina comes from purified public water sources. Though Coca-Cola did not respond to this, information from reliable sources shows that Dasani bottled water is also from a public water supply. Nestle's Pure Life Purified Drinking water was also announced to come from municipal supplies. These shocking reveals are also a major reason for the decline in popularity of bottled water.

Recommendations for marketers

The best chance for the marketers to recover their products from doom as a result of the declining popularity is the use of advertising and promotion activities to assure the public on the significant difference in quality of bottled water over tap water. Marketers will need to reach the wider population and especially those who are underserved with clean tap water. Through advertising and promotion, marketers should inform the public on the other advantages of bottled water which include the convenience of the packaging, additional taste and flavoring and the addition of nutritional supplements to improve the nutritional value.

Marketers may also be able to salvage the situation through consumer education. This will require consumer education activities that conduct experiments to show these differences as well as educate the consumers on other benefits of bottled water such as convenience of carrying. Consumers should also be educated on the recyclable nature of the plastic packaging of bottled water which reduced environmental impact considerably. This will help paint the picture of the eco-friendly nature of bottled water packaging.

Marketers will also be able to counter this paradigm shift through better pricing. As revealed by the target market characteristics, bottled water uses a premium pricing policy. Marketers should evaluate the impact of reduction in pricing in order to use this as a strategy to increase the popularity of drinking water. A significant reduction in pricing of bottled water will change the attitude of consumers towards bottled water being very expensive as compared to its competitor, tap water.

Product segmentation

Target market demographics for the U.S. can be used to establish product segmentation for bottled water in India. Segmentation variables to be used for the market include age, income levels, gender, social class, education background, ethnic background and lifestyles Ferrell & Hartline, 2010.

The bottled water will be targeted at persons aged between 15 and 64 years of age who make up 65.2 per cent of the population Central Intelligence Agency, 2012()

with women being the major target gender. The product will be targeted at low to middle class persons who are the most unlikely to have access to clean supplies of water. The education background of the target market includes individuals who have reached the secondary level of education who will be able to appreciate the difference in quality and purity of bottled water over tap water. The product will be targeted at Indo-Aryans who make up 72 per cent of the Indian population Central Intelligence Agency, 2012.

In terms of geographic segmentation, the product will be targeted at both city residents through supermarkets, departmental stores, and restaurants and those who live in the outskirts of the city who do not have access to clean water supplies.

Product positioning

The product will be positioned to compete with the other beverages in the market such as carbonated soft drinks, dairy and milk beverages, soya beverages, energy drinks, sport drinks, fruit and vegetable juices and other hot drinks such as tea, coffee and hot chocolate. The product will be positioned to attract to the non-alcoholic target market population through promotional pricing to increase product awareness and sales. India is a price-driven market and the cost-leaders win market share. The product will thus be positioned for cost-leadership.