Brita CaseMarch 2006

Brita – Overview

• Pioneer in water filter technology• Over 10 years of successful sales and

market domination

• “Leaky bucket” and decreasing market share

• Brita Blue Filters

Past

Present

Future

Brita’s success – the “blue-water” decade

Brita created the market for filtered water, aided by shifting consumer values towards safety, health, and great taste

1988

1999

1993- First in the market with value proposition ofgreat tasting water

- Educational ad campaign onhow to use Brita

“Tap water transformed”

- National distribution (40,000 stores)- Brand awareness 70%- 18% of 103mil households use Brita

- 80% of customers still using it one year on- Industry worth $350MM (owned 71%)- 70 competitors failed- Consumer choice limited to tap water or PT

Brita’s problems 1999 - 2006

Strategy 1 Strategy 2 Strategy 3 Strategy 4 Strategy 5

Where does water belong?

Bottled Water as the bad guy

Leaky Bucket Tap water Turn-offs

Bottled Water as the bad guy

Re-visited• Quit the

water business

• Beverage vs. filter

• Difficult to change people’s behaviour

• Bottled water taste without the bottle

• 46% of PT lapsed in a year

• Gauge & Windows

• innovation did not succeed

• Revisit filtration when BW is so prevalent

• Transform the taste of tap

• More convenient

• Cheaper

Brita did not identify their target market and failed to come up with an effective value proposition

• Brita’s share of the filtered water market was threatened by PUR (exacerbated when they were purchased by P&G) and the emergence of bottled water (1997)

Target market selection criteria Criteria Tap

Traditionalists

Weary Tap Satisfied

Principled Filtered Fans

Affluent Fridge Followers

Assertive Self improvers

Bottled Water Indulgers

Segment is well defined/identifiable

All of the segment are well defined.

Accessible 1 2 6 4 5 3

Competitor Intensity

Highest tap satisfaction index (220) limited room for market entrant

High competitive intensity(lots of substitutes) focus convenience & budget

FM, other pitchers, refrigerator filter system

No room for non-refrigerator mark entrant

Competition from other filtered water options: Refrigerator, FM, PT, and bottled water

High-20% of producers control 80% of sales

Stability of preferences

Want: Tap WaterLikely to switch: NoSusceptible to innovation: NoTSI: 220

Want: Cheap & ConvenientLikely to switch: No Susceptible to innovation: NoTSI: 171

Want: Filtered WaterLikely to switch: NoSusceptible to innovation: YesTSI: 43

Want: Convenient filtered water Likely to switch: NoSusceptible to innovation: YesTSI: 81

Want: Volume, healthy, value-seekers Likely to switch: YesSusceptible to innovation: YesTSI: 121

Want: Simplicity and accessibility Likely to switch: NoSusceptible to innovation: Maybe TSI: 34

Profit potential Low Low High Medium High Low

Target market selection rationale

Primary Source of Water

Water Consumption

Aver

age

Tap T

radit

ionali

st

Weary

Tap S

atisifi

ed

Princ

ipled

Filter F

ans

Afflue

nt Frid

ge Foll

ower

s

Asse

rtive

Self Im

prov

ers

Bottled

Wate

r Ind

ulger

s02468

10121416

2.815 2.99 1.64 2.7 2.88 4.01 2.67

5.25 5.64

2.384.56 4.45

10.33

4.14

Away from Home At Home

# o

f 8o

z G

lass

es P

er D

ay

0

20

40

60

80

100

Target Markets

Principled Filter Fans

Assertive Self-Improvers

• Current core consumer base• High accessibility and profitability• Primary source of water : Filtered water• Sound bite: Filtered water is healthier than tap

• Potential new segment• Good accessibility• High growth potential: Lack of penetration &

high water consumption• Primary source of water : Filtered water & Tap

water• Sound bite: I drink a lot of water – it keeps me

healthy

Consumer perspective on competitive products

0

2

4

6

8

10 Bottled Water Pitcher (PT)

Consumer Perception (BW vs. PT)

Consumer Perception (PT vs. FM)

0

2

4

6

8

10 PT Faucet

Brita Blue – Smart Filter

The Website

The Filter

How it Benefits Brita

• Helps solve leaky bucket• Increases filter purchases

• Differentiates us from competition

How it Benefits the Customer

• Convenience – Know when to change filter

• Safer – Change filter to avoid contaminants

How it Benefits Brita

• Increases customer interaction

• Customer data – demographics

• Additional revenue stream

How it Benefits the Customer

• Drinks water for health – meet daily quota of consumption

• Ease of purchase

Brita’s Value Proposition Points of Parity

Remove Contamina

nts

Tastes Better

Than Tap

Water Clarity

Convenience – Color Indicator

Website

Points of Differentiation

Brita Blue is the most technologically advanced and cutting-edge filter on the market because its colour-change indicator

lets you know when a new filter is needed so that you can avoid contaminants and continue enjoying clear, great-tasting

water.

Pricing Considerations

Product Pitcher Faucet Mounted “Traditional” Filter

Brita Blue (New Filter)

New Price Unchanged Unchanged Unchanged High price high margin

Rationale

New Filter

Assumptions:1. Optimal filter changes occur 6x per year (1/2months)2. Customer leakage on traditional filter wrt PT= 20%

Pitcher

Brita B

lue F

ilter

Fauce

t Mou

nted

Brita B

lue F

iler

$0

$20

$40

$60

$30

$5 $8

$48

$45

$5 $8 $48

$24 $30 Traditional Filter

Traditional Filter

Methods of Distribution

Communication Strategy- Focusing on the 6 M’s

- Increase awareness, consideration and purchase of our Brita Blue Smart filter

Mission

- Our existing customers- The Assertive Self-Improvers

Market- Brita Blue alerts you to change your filter- Website allows you to track your water consumption

Message

- TV & print ads- Website

Media

- To be determinedMoney

- Sales of Brita Blue- # subscribed users on the website

Measurement

Decision Making Process

Awareness Consideration Attitude Trial Repeat/

Loyalty

Provide to Yoga

Studios/GymsBrand-Building

AdsAffective AdsProduct Promoting Ads

Apply push & pull tactics to influence the customer decision making process

Product-Promoting Ad

Decision Making Process

Awareness Consideration Attitude Trial Repeat/

Loyalty

Provide to Yoga

Studios/GymsBrand-Building

AdsAffective AdsProduct Promoting Ads

Apply push & pull tactics to influence the customer decision making process

Attitudinal & Behavioral Objectives

Attitudinal Objectives

Think

Feel

Believe

Do Chang

e FiltersDo

Use Websit

eDon’t Switch Brand

s

The Brita Blue filter is trustworthy and convenient Brita cares about overall well-being and caters to my lifestyleBrita is improving my overall quality of life

Increase filter change frequency and confidenceCreate Brita Blue account & improve consumption awarenessDecrease likelihood of brand-switching

Behavioral Objectives

Risk & Concerns with Marketing StrategySingle Message to

Consumers

Competitor Innovation

Consumer Price Sensitivity

• The current marketing plan is focused on sending a single message to consumers regardless of their product choice

Website Adoption

• Demand elasticity with respect to price is unknown for our target segments (ie. will the more expensive filter fail on the basis of price)

• The Assertive self-improvers, despite being diligent, do not indicate a heavy use of the internet. If the segment does not use the website there is room for competitors to displace us• An omnipresent threat in the competitive and fragmented filtered water market, will P&G come up with a more innovative product?

Questions?

Appendix A: The Website

Filter Capacity Days used Cups per

Litre

Cups per Day

100 L 50 Days 4.23 8.46

Example

Appendix B