SUBMITTED BY:Pr i yanka Ba ja j (A11)

Ve rn ika (A12)Moh i t Sachdeva (A13)

Akshay Ma l ik (A14)Nikh i l Madan (A15)

The Brita Product Company

SUBMITTED TO:Prof. Hitesh Jhanji

Clorox Company

Chairman and CEO: G. Craig SullivanMajor Manufacturer and Marketer of Laundry Additives, Home-

Water Purifiers, Household Cleaners & Auto-Care products etc.85% Brands, first and second in their categories. In Jan’99, Clorox brought “First-Brands”, a $1.2billion

Manufacturer of Auto care Products and Home Fireplace Products.

Combined Revenue: $3.9billion in 1998.Merger resulted in Sales beyond U.S reached 20% from 18%.Charlie Couric: Marketing executive at Clorox.

The Brita Products Company

Founded by Heinz Hankammer in 1966.A Family owned corporation.Headquarter: Tanusstein (near Wiesbaden), Germany Producer of a variety of Industrial and Consumer Water Filtration

Product.Struggled in U.S before the merger with Clorox.In Sept. 1988, Clorox merged with Brita and formed a subsidiary

Brita USA after strong negotiations.“Filters from Brita and produce own Pitchers”

3% Royalty to Brita Gmba.Couric appointed as the president and G.M.

Clorox’s Brita-USA

Brita USA struggled due to small base of Sales for 4 years.Survey: Brita customer would have a remarkable lifetime value.

“Each pitcher sale would start a flow of filters sales.”1990: Product on hold.1999: 13% to 15% of the 103million households in the US were

using Brita pitchers.Brita had created a home water purification industry worth

$350million at retail.Held a 70% revenue share, a strong base installed.

The ProductComponents:

-A two-compartment Pitcher.

-Replaceable Filters.

Consumer Attitude: A Concern…

Decade of 1990s: Unsafe tap water concerns U.S households.Wells supplying contaminated water.U.S. Environmental protection agency declared 10% of the U.S.

surface water ”sufficiently contaminated” with toxic pollutants.1993: In Milwaukee, 403,000 people got sick , 111 died.

Reason: Parasite Cryptosporidium entered the Municipal Water supply.

Resultant: 47% of Respondents preferred not to drink water straight from the tap.

Sales of Bottled water increased rapidly.

Market Performance

Brita‘s Terminology: “Systems” for pitchers and Faucet-Mounted units, “Filters” for the Replacement Filters.

First four years of Brita USA: Slow and Dull system sales. Rapid growth in filter sales.

Similar Profiles of Brita in Canada and U.K. Survey: 25% of buyers had given a Brita pitchers as a gift.

80% of buyers were still using it a year later and buying 2 or 3 filters a year.

July 1998: Company offered “BOGO” (buy one, get one free), System sales Doubled and Share increased by 10 points.

After advertisement and trade promotions, Brita USA earned a 24% net return on sales, Highest of all the Clorox units.

Brita’s offers

Brita unit sales(In’000)

1 2 3 4 5 6 7 8 90

5000

10000

15000

20000

25000

30000

Filters

Systems

(In ‘000)

(In ‘000)

Brita Distribution

“Class to Mass”

Upscale pitchers

Standard pitchers

Bonus pack systems.

1992 1998Department stores

27% 13%

Mass merchandisers

31% 34%

Grocery stores 11% 14%

Club stores 31% 21%Drug stores - 12%

Positioning and Advertising: Couric Explained

People had no idea about Pitchers.Advertising Split:o How it works; How it tastes?Focus on Taste because:“Talk Taste implies Talk Health”.

Bottled water industry does not refers Health. To be on the top of the mountain.

Pure and simple advertising:o Showed Mountain Streams, waterfalls and

outdoors.o Promised clear, crisp, refreshing water.

Brita’s value position

Remove contaminants

Taste better than tap

Water clarity

Competitors

Competitors: PUR, Sunbeam, Rubbermaid, Teledyne, Melitta, Omni, Corning, Electrolux, Culligan, Kenwood, Mr. Coffee.

Brita’s Market Share: 65% to 75% across the decade. 1997: Rubbermaid:o Launched a low price product, with Technology similar to Brita’s.o Claimed 800 glasses versus Brita’s 560.o No advertising, Fail 1998: At Chicago Show, Dozens of Manufacturers unveiled new filters, to

attack the Leaders. Sunbeam:o Launched “Fresh Source” that removes Microbiological cysts, Chlorine and

Lead.o $10 million on Advertising.

“Closest” Competitors…

Teledyne:o Position: 3rd .

o 1998: Unveiled Faucet Mount Product at the show.PUR:Position: 2ndo Publicly held U.S. corporation.o Company made water system for outdoor enthusiasts and

Desalinators for marine and military use, in addition to water filters.o Spent $40million in advertising and promotion to support its

line of faucet-mount and pitcher filters.o 1999: PUR “only competitor with 2 digit Market Share”.

Top Competitor

PUR’s promotional program

A)30-second add on spot network TV.

B)To point out the differences between PUR and current pitchers.

PUR’s Faucet-mount

Pitchers Faucet Mount

Stored in Refrigerators, cold water.

Only Pitcher removes Hardness of Water.

Water is passed at low pressure.

Tasted more crisper, with low ph.

Filter lasts shorter, a glass costs higher.

Not stored in Refrigerators.

Faucet Mount would not.

Water passed through at Higher pressure.

Comparatively less crisper.

Filter lasts longer, A glass of water costs lesser, half.

Pitchers and Faucet Mount…

Brita’s interest towards Faucet mount

Before 1995: Brita expressed interest in Faucet-mounted water filtration systems.

Out of the 50 countries in which Brita did business, only Japan had a significant faucet business.

1994-95: Faucet segment started forming.PUR launched a faucet-mounted products through Recovery

Engineering inc.; Success.1995: Brita hired an outside design company to design a Faucet mount.Brita filtration technology played no part in Faucet Mount design.Conversation held on whether to use Brita’s name; Royalty Issues.Faucets Mounts: Direct Cost: $15

Filter: $3

SIMULATION STUDY:

567 Respondents, 3 different rooms, displayed 10 products available in the market.

o Faucet Filter increased the likelihood of buying a product from Brita Line.o Combined Pitcher and Faucet Filter market cannot expand.o Even with the high price, Brita Faucet Filter generated same level of purchase

intentions as Brita Pitcher does.o Half the Brita pitcher owners will continue to pitcher along with Faucet

Filters.o Both Brita’s and PUR’s Faucet Filters were perceived to be superior to Brita

Pitchers.o Brita’s Faucet was perceived to improve water taste.o Unit sales at both $34.99 and $39.99 were strong.Study implies Sales of Faucet Filters for the first year would lie between

350000 and 1395000 units .

Couric’s Conclusion…

Three point of views taken:o Keep the focus on building the installed base for Pitchers.o Shift the budget to encourage the installed base to buy more

Filters.o Put the weight of resources behind building a whole new

installed base in Faucet Mounts.House-Hold Pitcher penetration slowing, 6 out of 7 did not have

one.Targeting the segments of singles and to the parents of young

children.Investing in Direct Mail or other highly targeted marketing tools.

Couric’s Conclusion…

Recovery engineers had a technological edge over Brita.PUR had been first to market with number of new features.PUR has outplayed Brita in terms of health aspect of cleaning the

microorganismsBrita is yet to cover 2,3 and 4 bullet levels of clearing the

microorganism that PUR has already done.Procter and Gamble, Clorox’s most respected competitor now

controlling PUR, implying strengthening of oppositions.Brita needs more time to launch proper and health-friendly Faucet

Filters.o The company has been in a dangerous risk now as a number of

competitors has combined with a better product line.

Thank You!!!