Group 4

1. Group 4 M987Z226 刁鳳嬌 M987Z218 Nguyen Thi Hong Duy M987Z247 Nguyen Mac To My

2. Outline: Blair Water Purifiers India Indian market for home water filtration and purification Foreign investments in India Blair company Delight purifier Competitors Recommendations

3. Objective of The Case • To make a recommendation on market entry and on elements of an entry strategy.

4. Indian Market for Home Water Filtration and Purification • Four or five competitors in the market. • Only one or two companies in India’s 25 states. • The market is in early growth stages. • Many Indians felt the need for improved water quality.

5. Target • 40 million households of middle- and upper-middle-class households in the United States and the European Union • 4 million households who had similar values and lifestyles • 50% of our target market used boiling to make clean water • 40% of our target market used a mechanical device to improve their water quality

6. Traditional Method for Home Water Purification • Boiling-> two to five liters of water for 10 minutes, allow it to cool, and then transfer it to containers for storage (often in a refrigerator) This procedure is cumbersome, time consuming, and ineffective in removing physical impurities and unpleasant odors. Before storage they will filter their boiled water through “candle filters”. Water can become recontaminated during handling and storage.

7. Mechanical Methods for Home Water Filtration and Purification • Candle Filters -> low price depend on material (plastic, porcelain or stainless steel) and easy of using. Candle filters were slow, producing 15 liters (one candle) to 45 liters (3 candles). It is needed to be removed, cleaned, and boiled for 20 minutes. Price Rs.350 to Rs.1,100. • Water Purifiers -> better than Candle Filters. There are three steps, the first removed sediments, the second objectionable odors and colors and the third harmful bacteria and viruses. Price is Rs.2,000 to Rs.7,000.

8. Foreign Investment in India • Joint working arrangement • Supply key purifier components • License fees will be calculated by per unit basis over the item of the agreement • Joint venture company • Be partner with an existing Indian company • Share 50% profit • Acquisition • Purchase an existing Indian company then expand to include the water purifier • All profit will belong to us

9. Three Business Plans for Indian • Apply for market entry to the Foreign Investment Promotion Board, Secretariat for Industrial Approvals, Ministry of Industries. • Approval of any royalties and fees, remittances of dividends and interest by Reserve Bank of India, Ministry of Finance. • “Virtually guarantee” by consulting firm.

10. Tax Rates and Average Return on Assets • Corporate tax rates in India probably were somewhat higher than in the United States • The average return on assets for all Indian corporations in recent year was almost 18%, for United States corporations was about 11%.

11. Blair company • In 1975, Blair Company firstly produced desalinator which is used by mobile home parks to remove salts from brackish well water supplied to residents. This product got a huge success and quickly expand to many regions in Tampa, Florida, and then in the Southern US. • In 2000, Blair with new products such as particle filters, ozonators, purifiers, etc… was highly appreciated for both performance and quality, although its prices were higher than those of many competitors. This year, its revenues was almost US$ 400 million, much higher than expecting profit of US$50 million. • Blair company began its export sales of desalinator and related products in 1980, and rapidly grew with US$ 165 million in 2000. Nearly a half of profit came from Latin and South America, and the area of South Asia and Australia also was the potential customer with the amount US$ 50 million of total profit.

12. Blair company • In Germany, Blair company opened Frankurt office to receive consumer and distributor requests for a home water filter soon after the fall of the Berlin Wall in 1989. Then, in 1993, two models was designed in US and introduced in Germany and some eastern region countries as Hungary, Poland, Romania, etc, … and company’s executives considered the reaction of those clean water market. • Clean water market in LDCs was a potential and profitable market but would not be satisfactory => the final design in the project named “Delight” was appeared.

13. “Delight” features • “Delight” is the name of water purifier that was effective as long as contaminants in the water. This product focused on “point of use” design treating water arriving only on countertop, wall, or at the end of a faucet. After testing this at the laboratory, Blair Co. decided to test it in India market in order to convince consumers and retailer for buying. • “Delight” had some advance details of both technical and stylish features to distinguish from other competitors’ products.

14. Competitors Three major competitors Eureka Forbes A Joint venture company in 1982 between Electrolux (Sweden) and Forbes Cambell (india). First brand name was “Aquaguard” (used ultraviolet rays to kill bacteria and viruses). It costs Rs.5,500. Second brand name was “PureSip” (used polyiodide resin to kill bacteria and viruses) Rs.2,000 Aquaguard was sold by 2,500 person salesforce (directly on households) and independent dealers to sale PureSip

15. Ion Exchange • Began operation in 1964 with brand name ZERO-B (Zero-Bacteria) • Used a halogenated resin technology. • Helped prevent iodine deficiency diseases and permitted purified water to be stored up to eight hours without fear of recontamination • Must replace the halogenated resin every year at a cost of Rs. 200.

16. Singer • A suitable partner to manufacture and distribute the Delight purifier. • Contained nine stages (removed sediments, heavy metals, bad tastes, odors, and colors, also killed bacteria and viruses, fungi, and nematodes) and sold for Rs.4,000. • Life of flow rate at 3.8 liters per minute was at 40,000 liters , but slower liters per minute was 70,000 liters . • Described the product as “state of the art”. • A well-known and respected brand name in India.

17. Other competitors • The Delta from S&S in Madras (carbon copy of Aquaguard) • Alfa Water Purifiers and Symphony’s Spectrum in Bombay • The Sam Group in Coimbatore with “Water Doctor” purifier • Batliboi

18. Chatterjee recommendation To which Indian market to subject: • In the beginning, it was better that Blair focus on the large Indian cities rather than rural or smaller cities because of the lack of adequate distribution and communication infrastructure in rural places. • India has a large low-cost skilled labor source (about US$ 0.5 per hour, compared with US$ 20 per hour for US labor). Company just used local components and imported a few necessary components. • They should find a local partner. (however, they finally still did not choose any suitable company for their acquisition.)

19. Field testing and product Recommendations • The field test was a considered issue for Chatterjee because if Indian market was not a potential market, it would been just wasted time and money. Besides, the testing time acquired Blair identify a suitable Indian company as a licensee, joint venture partner, … • Product design was very important that purification technologies of Delight could be “packaged in almost any fashion as long as we have electricity”. This made Chatterjee thought that a modular approach would be best, because most of Indian customer needed one module or the other, but very few would need both. (One basic module would be in terms of flow rate, palatability, durability, etc, … and would store two liters of purified water. The addition module would remove iron, calcium, or other metallic contaminants.)

20. Market Entry and Marketing planning Recommendations • According to licensee considerations, if Indian market worked in term of a licensee, the financial investment would be minimal. Chatterjee thought that the investments for production facilities, office facilities and equipment would be completely offset by the licensee’s payment. The annual fixed cost to Blair company should not exceed US$ 40 thousand at the outset and would decrease to more than a half when an Indian national could be hired, trained, and left in charge.

21. Market Entry and Marketing planning Recommendations • Acquisition consideration: if market entry was in form of either a joint venture or an acquisition, financial investment and annual fixed costs would be much higher and depend greatly on the scope of operations. • Annual fixed expenses for sales activities, general administrative overhead, research, etc were all needed. Chatterjee estimated that annual fixed expenses for market entry via acquisition would be identical to those for a joint venture; however, this estimate might be different depending on what was purchased.

22. Market Entry and Marketing planning Recommendations • The most important assumption was Delight’s pricing strategies. If they sold product through dealer channel, the final price of product would be higher (Rs. 5500 to dealer and up to Rs. 5900 to customer). • If they sold through a direct sales force, the prices charged to customer would not change from those listed previously. But they should pay more for sales commissions (increasing fixed cost) to maintain and manage the sales force. • Chatterjee believed that considerable advertising and promotion expenditures would be necessary to communicate Delight’s positioning. And, Blair company should entry to Indian market quicker to avoid competing with two big competitors: Singer and Aquarius.

23. Conclusion • It is necessary to gather the background data on the possibility of Blair Company entering the Indian market for home water purification devices. Chatterjee in his trip studied Indian consumers and find information on possible competitors. Base on Chatterjee’s view, they could find similar problems in terms of water supplied to their residents, and could favorable to home water purification. • By comparing Chatterjee’s recommendation and the report from Blair Company liaisons who were focusing their effort on Argentina, Brazil, and Indonesia, they would plan a suitable marketing strategies to enter the Indian market.