Evian bottled water brand in the US market

Evian bottled wet provoker in the US foodstuff1. fiber overviewAlthough it has achieved great success in a nonher(prenominal) part of the human beings, the Danone and its Evian bottled piddle distinguish are cladding signifi bottomlandt pressure while handling the U.S. trade. later on the genus Cola giants black eye and Pepsi set up their take bottled water strike outs, Dasani and Aquafina, Danone is the tot four in the U.S. marketplace with only a 3.5% market component part in 2001. Danone is facing two main problems when bay windowing with the U.S. market. Firstly, the U.S. nodes do non sham the aid on the Evian brand, they care less ab come out the oddball of the bottled water and prefer cheaper water like Aquafina or Dasani. Then, the distribute governance in U.S. market is quite different from that in Europe. To carry out a scheme for its further production line in the U.S., Danone made the outgrowth agreements in April 2002 with one of its most powe rful opponents Coca-Cola to let Coke record tending of the Evian brand in North America. Coca-Cola allow supporter Danone at bottom the distribution and market performance, and will quarter incentives in return of the one-year sales growth of Evian bottled water. The second agreement carried in June 2002 is mainly intimately the two companies announced a joint venture. Danone will contributes license for spend several value brands and production facilities, while Coca-Cola pays cash for ownership intimacy and provide management. Coca-Cola inevitably to help achieve a guaranteed profit level however, the penalty is not clear.The alliance of the two companies provokes debates about whether it is a guidance to improve sales condition or it is a sign of Danones summary quit from the U.S. bottled water market. What is the right decision for Danone remains to be proved.2. why Evians market persona in the U.S. kept falling after the dope giants start their bottled water bran ds in the late 1980s?The Japanese strategian Kenichi Ohmae developed the 3Cs Model indicated three main players that are necessary for happy business schema the corporation, the customer, and the competitors. (Kenichi Ohmae, 1982)When mention the competitors, Coke and Pepsi who sell purified water that repress extra handling and transport woos, enjoy often lower represent than Evian does. Meanwhile, their distribution systems are well developed thanks to their successful in operation(p) on other beverage such as cola. The result is that they screwing attain their cheaper products on more(prenominal) shelves quickly. What is more, as Coca-Cola, Pepsi and Nestl are all well-known(a) companies throughout the America, not only their products quality are guaranteed, but alike their bottled water brands do not need too much promotion.For the customer part, in the European market where Danone has achieved great success, the customers understand the differences between glacier -sources water and purified water or tap water. They are willing to pay the subvention terms to purchase the consistent quality and taste of bottled water. But the U.S. customers see to ignore the classifications of bottled water, and they are extreme price-sensitivity, their first choice is often the cheapest water on the store shelves.Obviously, the Danone Corporation itself has done quite hardly a(prenominal) when facing the hard situation. The high society was not well prepared for the entry of cola giants at the beginning. The former achievement within other part of the world especially in Europe makes the company blind worship its Danone business equation and refused to change its business strategy to fit the U.S. market. Also, Danone did not acquaint its innovative products which are very popular in the European market, and few market activities such as advertises are mentioned to introduced to encourage the U.S. market accept the glacier premium.3. Positive and ostra cize sides of Danones strategy of running business on its own in the U.S. market.Generally speaking, one advantage of going it alone strategy is it will help keeping the companys national, historical and family pride. The following will prove the pros and cons of two parts of this remaining one single business entity strategy respectively.The first part is to admit that the Evian brand is not a U.S. market attraction but a niche product which is a game-end premium bottled water with the label of health. As the U.S. bottled water market determines the market leader by price and logistics, Evian has to make full use of its nature of unequalled pristine qualities to provide higher-margin product for specialised customers who understand and appreciate the price premium of bottled water which has better resource and quality. Such customer posterior be created by purposeful marketing and advertising. Though the group size of it of these customers efficiency be not so big, the sale profit can be guaranteed by the higher sale price. Clearly, segmentation will help the company focus its strategy but the development of broad-brand equity energy be inhibited.The second part is about to place its locally-sourced spring water argue against the Big Three of the U.S. bottled water market in the mid-market which has high sale volume and is price-driven. This plan sounds a good way for Danone to get the lost market share back in the U.S. The defect of this strategy is that large sum of investment need to be paid for getting the production facilities and distribution systems, the cost-recovery, however, would take a very long-time. Since the result of compete against Nestl and cola giants in the U.S. market are not so pellucidness or even optimistic, this plan is unsuitable for Danone. Besides, manage large shape of new employees for production and distribution would be another problem for the company.4. The issuance of Danone give up the whole U.S. bottled water m arket.The impact of keeping Evian brand only as a niche player in the U.S. market has been cited before as only a smaller group of specialized customers will be considered as target, and Evian will be redefined as a high-end premium bottled water in the market.There are many other ramifications of Danones getting out of the U.S. market.Firstly, since there is no report of red in the American market, it keeps createing money for the company though not as much as other market does, abandon the U.S. market means the company will lose the market share and profit from the market.Secondly, the company has to deal with assets and employees that will no longer working for the corporation. Since there are only a few potential buyers for these assets, powerful buyers can minimize their cost of purchase. Thus the company may suffer a sizeable loss on that.Thirdly, leaving the U.S. market might be a negative signal to other markets and its stakeholders that the company is ineffectual to handl e such a profitable market. The direct result may reflect on its share price which will experience a significant fall. What is more, the exiting strategy will blemish the value and goodwill of both Evian brand and the Danone Group and it is not good news for the companys business in other market.Finally, once exit, the get into to the market will be much tougher. While remain in the market helps keep the long-term opportunities for the company, it is really difficult for any foreign company to find a chance to get in and earn money.5. Comment on the joint ventures with Coca-Cola.Clearly, the joint ventures with the cola giant have many advantages. To be specific, since the Danones strategy and market method cannot meet the needs of the U.S. market, shifting the marketing and distribution control to a company that has more success experience is sensible. With the help of Coke with the marketing and delivery, Danones products can live a sizeable increase in sell. Besides, as Coca-C ola take charge of those Danones business in the America, the saved resources including marketing and managing expenses and human resources can be put into other markets which are more likely to gain success. In addition, the Evians brand image of high-end will be maintained according to the marketing strategy of the joint ventures. In other words, to remain the corporation and its products in the U.S. market with the sale volume growth guarantee provided by Coke is a safe game for Danone.However, there are some inordinate factors within the joint ventures. First, as is mentioned in the case, no punishment of Cokes unable to achieve the sale promise is unclear, what if the Danone products keep losing market share? Second, as Coca-Cola gets 51% of the ownership, Danones suggestions might be so weak while make important decisions. Besides, there seems to be an overlap between Cokes bottled water Dasani and Danones Danone brand spring water, so it is doubtful the cola giant is willing to fill the sale growth of its joint ventures partners at the expense of its own products.In sum, the cooperation with Coca-Cola is the most ideal way for Danone when handling the U.S. market, but the result might not so ideal because of those internal and external (i.e. economic and market changes) uncertainties.BibliographyOhmae, K. (1982). The mind of the strategist the art of Japanese business. New York McGraw-Hill.Kotabe, M Helsen, K. (2008). world(a) marketing management. Hoboken, NJ John Wiley Sons, Inc.