Fairchild Water Technologies, Inc. Essay

I. insertionFairchild wet Technologies was founded in 1980 by Eugene Fairchild. The societys first harvest-home was a desalinator accustomd by mobile sign of the zodiac parks in Florida to pull in iodines horns coarseness from easily body of wet supplied to residents. As the desalinator became a huge success, the participation fatten outed into the coastal regions adjacent to the connections headquarters in Tampa, Florida, and consequently to desert neighborhoods in the southwestern f on the whole in States. By 2002, they had expanded their ware lines to embarrass desalinators, particle filters, ozonators, ion exchange resins, and purifiers. Their products were generally priced high than their competitors, exactly regarded to be superior in terms of performance and prize.In the course of study 2000, Fairchild piddle Technologies was expected to endure revenues of $four hundred jillion, and an estimated attain of $50 one thousand thousand. For the past fi n stratums, they posted a 12 pct growth in their annual gross gross sales. In 1985, the high society managed to start its exports to Mexico, Belize, and tardyr to piddle bottlers in Germ all(prenominal). By 1990, due to the rapid growth in export sales, the fraternity ceremonious its International Division. sales in the International Division grew to $140 meg in 2000. About 50 part of International sales came from Latin and south America, $30 zillion from Europe, and $40 million from South Asia and Australia.In 1995, the companionships Frankfurt, Germ whatsoever office stressed the need to become and make doplace products that fag consumer ho exampleholds. The first estimate was to develop a home pee supply filter. By late 1995, the comp any was able to develop devil models that were designed in the U.S. and introduced in Ger legion(predicate), Poland, Hungary, Romania, the Czech Republic, and Slovakia. The products were greatly successful. But, the toni city of water in create countries neces depend onate a purifier rather of filters. Thus, in late 1999, company executives initiated the development of a water purifier which was given the brand trope assault.The Delight purifier was able to remove commonsensical levels of sediments, organic and inorganic chemicals, microbials, cysts, and unpleasant tastes and odors. intelligent levels are those described by al virtually(prenominal) World Health Organization (WHO) reports as appropriate for potable waters. Also, engineers had repeatedly informed Mr. Chatterjee, the companys international liaison, that research lab testing showed no product bereavement later on 5,000 hours of continuous use. Chatterjee employ his expertise in the Indian securities industry to guard engineers into pursuing a eyeshade of use design or else of a point of entry design.More everyplace, Chatterjee provided engineers with some recommendations such as the talent to add a venial battery that will act a force play source in courting of queen failure. Additional recommendations acceptd the great billet to add fluoride, vitamins, and flavors, fuse rates, dimensions, and storage mental cogency. by means of consumer surveys, Chatterjee was able to determine a grocery store preference for the countertop design over the wall- hinge on design.II MARKETING ISSUESFairchild piss Technologies is quest to enter the Indian Market in the water purifier product category. They check had a successful track record in designing and securities industrying home purifiers in European and South American Markets. In this case, they are trying to enter the commercialise in a developing commercialize that is in the process Liberalization. Accordingly, they are set close to multiple administering issues that are censorious for the success or failure of their product. The add up of food commercialiseing issues includes the following1. recognize to cease any entry int o the Indian commercialise2. place the market under a licensing agreement3. visualise the market by utilizing a joystick happen and a skimming price method4. Enter the market by utilizing a joint venture and a penetration determine methodIn addition to these main(a) marketing issues, Fairchild Water Technologies had to decide whether they compliments to patsy urban areas or rude areas where the musical note of water is poorer and where 80% of the creation lives. It was determined earlier that the company would prey the hobnailed opportunity for now, due to the overlook of a a great deal needed infrastructure. Also, the company established an memory access to manufacture in India, where labor is much seamyer when compared to the fall in States. However, the company would import few components that are lively for operations. Finally, it was recommended that Fairchild should strain an Indian ally that is self-aggrandising enough to have a dispersal and manu facturing infrastructure, but not too double where it commands the direction of the product line.III. SITUATION psychoanalysis TASKSA. Buyer BehaviorMany Indians mark the need for and improved water whole step. Newspapers, consumer advocates, governing body officials, and the general public are witting of the poor quality of Indian water. The bulk of Indians have no choice but to consumer the water that is accessible to them. But, better educated, wealthier, and health-conscious Indians took some measures to improve the quality of water that is consumed by their families. It is estimated the number of such households is around 40 million.Health-conscious households are similar to middle- and upper-middle class households in the U.S. and Europe. They cherish convenience and product variety, and pick up consumption of material goods as a means to higher quality of life-time. Moreover, Chatterjees research suggests that product performance was all important(p) consumers. near product characteristics that were cited include the readiness to remove sediments, bacterium and viruses, capacity, safety, and foot bulls eye space.Purchase price was important for market segments that boiled water, boiled and filters, or solo filtered their water. The third most important performer was the ease of installation and service, along with personal manner and appearance. The least important factor was sanction and the availability of financing. Finally, in that respect was an agreement among all segments that the purifier should have a warranty amidst 18 and 24 months, and to perform amidst 5 and 10 years without any issues.B Customer SegmentationThe Indian market could be segmented by consumers ability and willingness to use a water purification device. Research shows that there are 40 million households that include middle- and upper middle class families, that cheer quality and a European / American lifestyle. In addition there is an untapped market segm ent in the rural areas that have a need for water purifiers, but are either isolate or do not have the means to buy a water purifier.C Competitive MarketMainly, Fairchild Water Technologies will be competing for market fortune with companies that manufacture and sell water purifiers. But, there is also a need to overcompensate competitive methods that are authoritatively creation used by health-conscious Indian consumers. For instance, lambert part of the target market expends a tralatitious method to purify water. A maid, cook, or family member would boil two to five liters of water, allow it to cool, and transfer the bottles to a refrigerator.Boiling water is seen as in dearly-won, in force(p) against dangerous bacteria, and ingrained in hoi pollois traditions. In fact, many consumers lead it to be to a greater extent effective than any an separate(prenominal) product on the market. However, simmering affected the tastiness of water and do it flat. Also, boiling was c onsidered to be burdensome, time-consuming, and futile in removing physical residues and unpleasant odors. ecstasy part of this target market took an pleonastic step and boiled water by with(predicate) atomic number 48 filters, despite knowing that recontamination could occur.At the same time, closely 40 portion of the target market used a mechanical device to improve the quality of water. Half of this group used cadmium filters because of their low price and ease of use. The atomic number 48 filter is made of two containers that sit on top of each other the top container has one or more porous ceramic cylinders known as tapers. Candle filters stored in the midst of 15 and 25 liters of water and cost between Rs. 350 for scummy plastic models to Rs. 1,100 for a bear-sized stainless-steel model. However, certificate of deposit filter were slow, unavoidable cleaning, and needed candle replacement at least in one case per year.Half of consumers that work on amelior ate the quality of their water use water purifiers, which are considered to be more train than traditional candle filters. Water purifiers utilize three processing stages. First, sediments are removed, followed by odors and colors, and finally bacteria and viruses. While Fairchilds engineers were skeptical some the efficiency of these products, they agree that they are more helpful than candle filters. In fact, candle filters were proven to be ineffective in removing bacteria and viruses. Water purifiers were made from stainless steel and change anywhere between Rs. 2,000 and Rs. 7,000. Ten percent of the target market did not use any of these procedures and thought that their water quality was acceptable. Overall, Catterjee believed that 90 percent of the target market could be induced to change their current purification method.In addition to traditional water purification methods, it was determined that closely 100 companies competed for share in the Indian home water filters and purifiers market. The most established water purifier was Eureka Forbes, which was established in 1982 as a joint venture between a Swedish company and an Indian company. The company marketed water purifiers, nullity cleaners, mixers, and grinders. Aquaguard, the brand name used for purifiers, was super established and many consumers mistakenly used it to refer to the entire product category. Aquaguard was the market leader, but its manufacturing company had introduced a innovative product called Puresip that used polyiodide resin instead of ultraviolet rays to kill bacteria and viruses, which meant that water, could be stored for later use. Also, Puresip did not require any electricity to operate, but it was sell in small home appliance stores instead of a direct sales force. Aquaguard exchange for approximately Rs. 5,500, while Puresip sold for 2,000. Puresip sales were growing at a much faster rate than Aquaguard.Aquaguard was mounted on a kitchen wall, and required plum bing and a two meter long power source. The unit would stop functioning if power supply dropped to 190 volts or lower. The flow rate was considered to be slow at one liter per minute, and had enough blow to last only for one week. Aquaguard targeted households that denounce more than Rs. 70,000 per year, and spent 11% of its sales revenues (Rs. 120 million) on sales activities to the highest degree Rs. 100 million were spent on sales commissions, and about Rs. 1 million was spent on advertizement. Eureka Forbes was well up established, had a highly motivated and well managed sales force. However, they had extra reach in rural areas that represents 80% of the countrys population.Another direct competitor is Ion permutation and its home water purifiers with the brand name ZERO-B (Zero-Bacteria). In 1985, the company became a tout ensemble owned Indian company, and it serves customers in a diverse group of industries including thermal power stations, fertilizers, refineries , textiles, automobiles, and home water purifiers. Zero-B used a halogenated resin technology that was able to remove impurities, eliminated odors and tastes with carbon, and killed bacteria using iodine. The unit stored 20 liters of water for eight hours without the risk of recontamination, and sold for Rs. 2,000, but required a annually replacement of halogenated resin at Rs. 200. Chatterjee estimated the Zero-B had about 7% market share, and lacked consumer awareness, had limited distribution, and limited advertising. There were rumors that Zero-B intended to implement door-to-door sales strategy with an expected marketing expenditure of Rs. 3 million.The third and most recent competitor to enter the Indian market was singer, a subsidiary of the Singer Company located in the United States. The company provides a variety of products to the Indian market such as secure machines, irons, mixers, toasters, and color televisions. The company had estimated sales of about Rs. 900 mil lion.The Singer Company manufactured a home purifier called Aquarius. The product sold for Rs. 4,000, required no electricity, had a single countertop model, had a flow rate of 3.8 liters per minute, and a life span of 4 to 6 years. The product looked impressive, according to Chatterjee, and was described as assert of the art by a trade article. The resin used by Aquarius was demonstrable by NASA and was proven 100 percent effective against bacteria and viruses. Aquarius had hoped to sell 40,000 units over the next two years. Singers distribution channels were superior to competitors and include 210 company owned showrooms located in major urban areas around the country. The product was also sold by 3,000 independent dealers, who were supplied by 70 distributors. Distributors earned a brink of 12 percent of the sell price, while dealers earned a b ordinationline of 5 percent.Along with many other products, Zero-B and singer accounted for 60,000 units in sales for the year 2000, while the remaining 190,000 units were sold by Aquarius and Puresip.E SWOT1 Strengthsa. turn out track record in exploring and come in new marketsb. Superior product qualityc. Market association and ability to bring on innovative products2. Weaknessesa. Lack of knowledge about the Indian marketb. Large segments in the market live in contrary areasc. Variable needs in the market, depending on the city or metropolitan aread. Lack of established manufacturing and distribution capabilities3. Opportunitiesa. kick in on assets in India averages 18% compared to 11% in the U.S. b. Low wages, and central situation to wealthier South Asian Countries c. Liberalization trends in India and market developmentd. There is no significant dominance by one brand4. Threatsa. Legal environment and expensive litigationb. Large number of competitorsc. Some established brands with extensive knowledge about the Indian marketIV. STRATEGYA. dodging recommendation & decisiona. Select to forgo any entry into the Indian marketADVANTAGES stave off the risk of ledger entry the market in a developing country, where there is solace some misgiving about the extent of economic liberalization. Avoid competing with over 100 products that are before long available in India. Expand market presence in countries such as Mexico, Germany, Poland, etc.DISADVANTAGESForgo the opportunity to sell products for over 40 million households. have the opportunity to have large profit marginsLose the opportunity to manufacture in a country where labor is cheapLimited market presence in South Eastern Asia, where the majority of the publics population lives. Increase market presence and brand awareness.b Enter the Indian market under a licensing agreementADVANTAGESLow capital enthronisation is requiredHigher return on enthronisation and lower amount of riskHuge market potency and opportunities to expand in rural areasDISADVANTAGESLimited promise of the manufacturing and distribution process Forgo the latent of large gains in exchange of a royalty feeLimited movie to the selling process in a developing marketLimited ability to manufacture additional product linesc Enter the Indian market finished a joint venture and by utilizing a skimming pricing liftADVANTAGESLarger potential gains and a 50/50 split in earnings talent to influence manufacturing and distribution strategies Ability to expand into rural areas and increase manufacturing capacity Develop a market knowledge for growing and developing economiesDISADVANTAGESRequires a large investmentHigher prices than competitorsUncertainty of markets in developing countriesHigh competitiond Enter the Indian market through a joint venture and by utilizing a penetration pricing approachADVANTAGESProfits are split between the two companiesAbility to hear manufacturing and distributionDeveloping market with large potentialHigher margins and low manufacturing costs straighten out market exposure and proximity to uphill eco nomiesDISADVANTAGESRequires a large capital investmentUncertainty of developing marketsLower pricing strategy and lower contribution margin per unit sold Ability to stick the ripe(p) company to partner withRecommended computer programme of Action Fairchild Water Technologies should pursue a licensing agreement with an Indian company.B Goals and Objectivesa. comply a licensing agreement with a partner that is able to sell at least 75,000 per year b. Increase sales by 10 % on an annual rootC Target MarketThe target markets for Fairchild Water Technologies are the 40 million households in India, which cherish a comfortable, convenient, and healthy lifestyle, and are similar in many aspects to middle- and upper-middle class households in the U.S. and Europe. Also, Fairfield Water Technologies should target consumers that move from lower to middle class, as the Indian market develops and continues to grow.D trade Mixa. Product / Price strategyFairchild Water Technologies should m anufacture a take-away purifier that offers Indian consumers the convenience and effectiveness of a quality purifier. The purifier should have a reliever battery, a selling price of Rs. 5,000, and a proven ability to kill bacteria/viruses, fast flow rate, and allow for the ability of storing water without the risk of contamination.b. Distribution and SalesBy entering into a licensing agreement, Fairchild Water Technologies decreases the amount of risk, but it has less control over the distribution and sales of its product. Fairchild could seek a partner that is willing and have the capability to sell 75,000 units on an annual basis, with a 10% increase in the units sold for every year. This approach would still guarantee Fairchild Water Technologies some levelheaded profits.c. Advertising and PromotionBy selecting a licensing strategy, Fairchild Water Technologies would not commit itself into having an advertising budget. On the other hand, the licensee would be make to advertis e the product in order to meet the minimum quota for annual sales. This allows Fairchild to have an average profit of 300 Rs without committing any resources into salaries or advertising budget.E book PlanThe licensing agreement would adtake a language that guarantees Fairchild Water Technologies annual sales of 75,000 units, with a 10% increase in units sold thereafter. The agreement should have an opt out clause for both parties after three years, while holding the licensee to offend on the technology and patent if they take in to opt out of the agreement. Fairchild must monitor lizard sales on a monthly basis, and conduct meetings in order to tell that sales in the Indian market are heading in the right direction.