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Fairchild Water Technologies, Inc. Essay

I. INTRODUCTION Fairchild Water Technologies was founded in 1980 simply by Eugene Fairchild. The company’s first item was a desalinator used by portable home leisure areas in Florida to remove sodium from well water delivered to occupants.

As the desalinator started to be a huge achievement, the company extended into the seaside region’s next to the company’s headquarters in Tampa, Florida, and then to desert areas in the south west United States. Simply by 2002, that were there expanded their product lines to include desalinators, compound filters, ozonators, ion exchange resins, and purifiers. Many were generally priced above their rivals, but considered to be remarkable in terms of overall performance and top quality.

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In the year 2k, Fairchild Drinking water Technologies was expected to have got revenues of $400 mil, and approximately profit of $50 million. For the past five years, they posted a 12 percent growth in their annual sales. In 85, the company was able to start the exports to Mexico, Belize, and later to water bottlers in Indonesia. By 1990, due to the fast growth in export revenue, the company set up its Worldwide Division.

Sales in the Intercontinental Division grew to $140 million in 2000. About 50 percent of International product sales came from Latina and South usa, $30 , 000, 000 from The european union, and $40 million by South Asia and Sydney. In 1995, the company’s Frankfurt, Philippines office stressed the need to develop and market products that target consumer homeowners. The initially idea was going to develop a home water filtering. By overdue 1995, the corporation was able to develop two types that were designed in the U. S. and introduced in Germany, Especially, Hungary, Romania, the Czech Republic, and Slovakia.

These products were significantly successful. However the quality of normal water in developing countries needed a purifier instead of filter systems. Thus, in late 1999, organization executives started the development of a water cleanser which was given the brand term “Delight”.

The Delight cleanser was able to take away “reasonable levels” of sediments, organic and inorganic chemical substances, microbials, cysts, and annoying tastes and odors. Sensible levels are those referred to by many World Overall health Organization (WHO) reports while appropriate for tolerable waters. As well, engineers acquired repeatedly certain Mr. Chatterjee, the company’s international addition, that clinical testing revealed no item failure after 5, 000 hours of continuous employ. Chatterjee employed his experience in the Of india market to direct designers into pursuing a “point of use” design rather than “point of entry” design and style.

Moreover, Chatterjee provided technical engineers with some recommendations such as the capability to add a tiny battery that may act a power source in case of electricity failure. Additional recommendations included the ability to put fluoride, vitamin supplements, and flavours, flow rates, dimensions, and storage capacity. Through consumer research, Chatterjee surely could determine a market preference pertaining to the kitchen counter design in the wall- attach design.

II MARKETING ISSUES Fairchild Normal water Technologies is seeking to enter the Indian Marketplace in the normal water purifier product category. They have had a successful track record in designing and marketing residence purifiers in European and South American Markets. In cases like this, they are trying to enter the marketplace in a developing market that may be in the process Liberalization.

Accordingly, they are really facing multiple marketing problems that are crucial for the failure or success of their product. The list of marketing issues comes with the following: 1 ) Select to forgo virtually any entry in to the Indian industry 2 . Your market under a licensing agreement 3. Your market by utilizing a partnership and a skimming prices method 4. Enter the industry by utilizing a joint venture and a penetration pricing approach In addition to these primary marketing issues, Fairchild Water Systems had to make a decision whether they need to target cities or country areas where the quality of water can be poorer and where 80% of the inhabitants lives.

This was determined previously that the organization would forgo the rural chance for now, because of the lack of a far needed system. Also, the business established a technique for manufacture in India, in which labor is much cheaper when compared to the United States. Yet , the company would import handful of components which can be critical for procedures. Finally, it absolutely was recommended that Fairchild should seek a great Indian partner that is big enough to have a distribution and developing infrastructure, but not too large where it instructions the direction of the products.

III. CONDITION ANALYSIS TASKS A. Client Behavior A large number of Indians stress the need for and improved water quality. Newspaper publishers, consumer recommends, government representatives, and the average person are aware of the poor quality of Indian drinking water. The majority of Indians have no choice but to customer the water that may be accessible to them. However better informed, wealthier, and health-conscious Indians took a lot of measures to further improve the quality of drinking water that is consumed by their households.

It is believed the number of such households is approximately 40 million. Health-conscious people are similar to middle- and upper-middle class homes in the U. S. and Europe. That they cherish comfort and product variety, and consider ingestion of material goods as a means to raised quality of life.

Additionally, Chatterjee’s research suggests that merchandise performance was important buyers. Some item characteristics which were cited range from the ability to remove sediments, bacteria and viruses, capacity, safety, and foot print space. Purchase price was important for market segments that boiled normal water, boiled and filters, or only strained their water. The third the very first thing was the usefullness and assistance, along with style and look. The least important factor was warranty and the accessibility to financing.

Finally, there was a contract among all portions that the cleaner should have a guaranty between 18 and 24 months, and to execute between your five and a decade without any concerns. B Customer Segmentation The Indian industry could be segmented by consumer’s ability and willingness to use a water refinement device. Exploration shows that you will find 40 mil households which include middle- and upper midsection class households, that benefit quality and a European as well as American way of living. In addition there may be an untapped market section in the rural areas which have a need to get water cleaners, but are both isolated or perhaps do not have the means to purchase a water purifier.

C Competitive Industry Mainly, Fairchild Water Technologies will be rivalling for market share with corporations that manufacture and sell drinking water purifiers. However there is also a have to address competitive methods which can be currently being employed by health-conscious Of india consumers. As an example, fifty percent from the target market utilizes a traditional solution to purify water. A cleaning service, cook, or perhaps family member would boil two to five liters of water, let it cool, and transfer the bottles to a refrigerator.

Boiling water is seen as economical, effective against dangerous bacterias, and inbedded in people’s traditions. Actually many consumers consider it to be more effective than any other merchandise on the market. Yet , boiling damaged the tastiness of drinking water and made it “flat”. Also, boiling was considered to be troublesome, time-consuming, and ineffective in removing physical residues and unpleasant smells.

Ten percent of this target market required an extra stage and hard boiled water through “candle filters”, despite knowing that recontamination may occur. At the same time, about 40 percent with the target market used a machine to improve the standard of water. Half of this group used candlestick filters because of their low price and ease of use.

The candle filter is made of two containers that sit on leading of each various other; the top container has one or more porous ceramic cylinders known as candles. Candlestick filters stored between 15 and twenty-five liters of water and cost between Rs. 350 for small plastic models to Rs.

1, 100 for the large metal model. However , candle filter were sluggish, required cleaning, and necessary candle alternative at least once each year. Half of individuals who work on improving the quality of all their water make use of “water purifiers”, which are regarded as more sophisticated than traditional candlestick filters.

Water purifiers make use of three control stages. 1st, sediments will be removed, and then odors and colors, and finally bacteria and viruses. While Fairchild’s engineers had been skeptical regarding the performance of these items, they decided that they are even more helpful than candle filters. In fact , candle light filters were proven to be inadequate in getting rid of bacteria and viruses.

Water purifiers were created from stainless steel and offered anywhere between Rs. 2, 1000 and Rs. 7, 1000. Ten percent with the target market would not use some of these procedures and thought that all their water quality was appropriate.

Overall, Catterjee believed that 90 percent of the target market could be caused to change their current refinement method. Moreover to classic water purification methods, it had been determined that almost 90 companies taken part for reveal in the Indian home normal water filters and purifiers marketplace. The most founded water purifier was Eureka Forbes, which has been established in 1982 as a joint venture between a Swedish firm and an Indian organization. The company advertised water purifiers, vacuum cleaners, mixers, and grinders.

Aquaguard, the manufacturer name intended for purifiers, was highly founded and many consumers mistakenly tried it to refer to the entire merchandise category. Aquaguard was the marketplace leader, but its manufacturing organization had launched a new item called “Puresip” that employed polyiodide plant instead of ultraviolet (uv) rays to kill bacteria and viruses, which resulted in water, could possibly be stored later. Also, “Puresip” did not require any electric power to operate, however it was bought from small house appliance retailers instead of a direct sales force.

Aquaguard sold for about Rs. 5, 500, when Puresip people paid 2, 000. Puresip product sales were developing at a far faster price than Aquaguard. Aquaguard was mounted on a kitchen wall structure, and required plumbing and a two meter long electrical power source.

The machine would end functioning in the event that power supply decreased to 190 volts or lower. The flow price was considered to be slow for one liters per minute, together enough carbon dioxide to previous only for one week. Aquaguard targeted households which make more than Rs.

70, 000 per year, and spent 11% of their sales profits (Rs. 120 million) on sales activities; about Rs. 100 million were invested in sales commissions, and about Rs. 1 mil was used on advertising. Eureka Forbes was well established, a new highly motivated and well managed sales force.

However , that were there limited reach in country areas that represents many of these of the country’s population. One other direct rival is Ion Exchange as well as its home water purifiers together with the brand name ZERO-B (Zero-Bacteria). In 1985, the corporation became a completely owned Of india company, and it serves customers within a diverse group of industries which includes thermal power stations, manures, refineries, fabrics, automobiles, and home drinking water purifiers. Zero-B used a halogenated plant technology that was able to remove impurities, taken away odors and tastes with carbon, and killed bacterias using iodine. The unit kept 20 liters of water for eight hours without the risk of recontamination, and sold for Rs.

2, 000, but necessary a every year replacement of halogenated resin in Rs. 200. Chatterjee estimated the Zero-B had about 7% business, and weren’t getting consumer recognition, had limited distribution, and limited marketing.

There were gossip that Zero-B intended to implement door-to-door revenue strategy with an predicted marketing costs of Rs. 3 million. The third and many recent competition to enter the Indian marketplace was Musician, a subsidiary from the Singer Business located in the us.

The company gives a variety of products to the Of india market such as sewing machines, irons, red bull, toasters, and color television sets. The company experienced estimated revenue of about Rs. 900 mil.

The Performer Company produced a house purifier called “Aquarius”. The merchandise sold for Rs. 4, 500, required no electricity, had a single countertop unit, had a stream rate of 3. 8 lt per minute, and a life time of four to six years. The merchandise looked amazing, according to Chatterjee, and was described since “state with the art” with a trade article. The plant used by Aquarius was developed by NASA and was tested 100 percent effective against viruses and bacteria.

Aquarius got hoped to market 40, 500 units above the next 2 yrs. Singer’s circulation channels were superior to opponents and included 210 firm owned showrooms located in main urban areas throughout the country. The item was as well sold by simply 3, 000 independent traders, who were given by 70 suppliers. Distributors attained a margin of 12 percent of the retail price, while retailers earned a margin of 5 percent. Along with many other products, Zero-B and musician accounted for 70, 000 models in product sales for the season 2000, while the remaining one hundred ninety, 000 units were sold by Aquarius and Puresip.

E SWOT 1 Strong points a. Proven track record in exploring and entering new markets n. Superior product quality c. Market understanding and capacity to produce ground breaking products installment payments on your Weaknesses a. Lack of know-how about the Indian market w. Large sectors in the market live in remote areas c. Changing needs on the market, depending on the town or metropolitan area deb. Lack of established manufacturing and distribution features 3. Possibilities a. Returning on assets in India averages 18% compared to 11% in the U. S. b. Low wages, and central location to wealthier Southern region Asian Countries c. Liberalization tendencies in India and industry development g. There is no significant dominance simply by one brand 4. Dangers IV.

TECHNIQUE A. Strategy recommendation & decision a. Select to forgo virtually any entry in to the Indian marketplace ADVANTAGES Prevent the risk of going into the market within a developing country, where there remains to be some doubt about the extent of economic liberalization. Avoid contending with more than 100 goods that are now available in India. Expand marketplace presence in countries just like Mexico, Indonesia, Poland, and so forth DISADVANTAGES Forgo the opportunity to promote products for over 40 , 000, 000 households.

Lose the opportunity to possess large profit margins Lose the chance to manufacture within a country where labor is affordable Limited market presence in South Asian Asia, where majority of the world’s populace lives. Enhance market existence and brand awareness. b Enter the Indian market under a licensing arrangement ADVANTAGES DISADVANTAGES Limited power over the production and circulation process Forgo the potential of significant gains in exchange of a royals fee Limited exposure to the selling procedure in a growing market Limited ability to produce additional product lines c Enter the Indian market through a joint venture and by utilizing a skimming pricing approach ADVANTAGES DISADVANTAGES m Enter the American indian market through a joint venture through utilizing a transmission pricing strategy ADVANTAGES DRAWBACKS Recommended Strategy: Fairchild Normal water Technologies ought to pursue a licensing arrangement with a great Indian company.

B Objectives a. Pursue a guard licensing and training agreement with the help of a partner that is able to sell at least 75, 1000 per year b. Increase sales by a small portion on an gross annual basis C Target Market The prospective markets to get Fairchild Normal water Technologies are the 40 million households in India, which usually cherish an appropriate, convenient, and healthy lifestyle, and are identical in many aspects to middle- and upper-middle class households in the U. S. and Europe. As well, Fairfield Water Technologies should target individuals who move from lower to middle category, as the Indian industry develops and continues to grow.

D Marketing Mix a. Item / Value Strategy Fairchild Water Systems should manufacture a portable purifier that offers American indian consumers the ease and success of a top quality purifier. The purifier needs to have a back up battery, a selling price of Rs. five, 000, and a proven capacity to kill bacteria/viruses, fast flow rate, and allow for the ability of keeping water without the risk of contamination. b. Distribution and Revenue By entering into a license agreement, Fairchild Water Systems decreases the amount of risk, however it has fewer control over the distribution and sales of its item. Fairchild may seek someone that is ready and have the power to sell seventy five, 000 units on an gross annual basis, which has a 10% embrace the units sold for each year.

This approach might still assure Fairchild Water Technologies a few sizable earnings. c. Marketing and Campaign By selecting a licensing approach, Fairchild Water Technologies probably would not commit alone into having an advertising budget. On the other hand, the licensee will be obliged to advertise the product to be able to meet the bare minimum quota for annual product sales. This allows Fairchild to have an typical profit of 300 Rs without doing any solutions into incomes or advertising budget. E Control Plan The licensing agreement would take up a terminology that ensures Fairchild Normal water Technologies gross annual sales of 75, 1000 units, which has a 10% embrace units distributed thereafter.

The agreement needs to have an opt out clause for both parties following three years, while holding the licensee to infringe around the technology and patent if they want to opt out in the agreement. Fairchild must screen sales on a monthly basis, and execute meetings to be able to ensure that revenue in the Indian market happen to be heading the right way.

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