Acquisition valuation - punch products, Marketing Management

Assignment Help:

Punch Products (PP) is a regional producer of soft drinks and sells mainly in the states of Kansas, Oklahoma, and Texas. Three years ago, in 2009, it made the decision to diversify into the bottled water industry, whose market enjoys a good reputation in a health-conscious America and is especially popular in areas where the quality of municipally provided water is suspect. Firms cater to businesses and homes, obtaining income mainly from the delivery of bottled water and the rental of water coolers. The market PP entered has one highly successful firm, Clear Springs, which is family owned with yearly sales of about $6M. The next largest firm is Well Water and there are ten extremely small firms with one or two trucks, six of which have appeared in the last two years.

When the decision was made to produce bottled water, nearly all of PP's executives were extremely confident that the venture would be highly profitable. This optimism was based on  (1) projections showing the bottled water market was growing; (2) cost estimates implying that PP could undersell its competitors by 10 percent; and (3) PP's ability to pick winners in the soft drink market. Unfortunately, there was a barrier to entry that few realized: firms were not buying a product so much as a service and the marketing strategies of mass advertising (newspaper, radio, TV, etc.) and price discounts simply did not work. Mass advertising was ineffective because consumers believed correctly that all bottled water was really the same thing. Therefore, it is hard for a firm to differentiate its product, unlike firms in the soft drink industry. Price discounts failed for two reasons. First, a firm's managers were not especially attracted by price discounts. More important, firms were not buying a product but a service-a visit and chat with the delivery person. All in all, it was hard to convince firms to switch bottled water firms. As one manager put it: "So we save a few bucks." But that means we won't see Dave every week. And-my goodness - Dave's like family! It wouldn't be right to switch."


Related Discussions:- Acquisition valuation - punch products

How is selling of products performed on web marketing, How is selling of pr...

How is selling of products performed on Web Marketing? An organization sell their products straight to consumer, employ trading networks or auction sites to arrive at new custo

Marketing research, Marketing Research Marketing  research,  one  of  ...

Marketing Research Marketing  research,  one  of  the  components  of  an  information  system,  include collecting information relevant to a particular marketing problem faci

Order issued by mrtp commission regarding unfair trade, Q. Order Issued by ...

Q. Order Issued by MRTP Commission Regarding Unfair Trade? Subsequent to making inquiry into unfair trade practices if commission finds that these trade practices are deceptive

Channel management in rural market, Channel management in rural market: ...

Channel management in rural market: In rural distribution we need relatively longer chain distribution involving multiple channels as we have widely scattered markets. Multi

What are the functions of advertisement in marketing, What are the Function...

What are the Functions of Advertisement in Marketing? Functions of Advertisement: a) Enhance the market potential. b) Increase the sales. c) Communication to target

Explain about marketing dynamics, Explain about marketing dynamics. Ma...

Explain about marketing dynamics. Marketing Dynamics: Products and markets are very constantly changing because of technological advancements. Increasingly companies are

Marketing and customer value, MARKETING AND CUSTOMER VALUE Creating and...

MARKETING AND CUSTOMER VALUE Creating and delivering better customer value is the only route by which firms implement the marketing concept. Customer satisfaction is the centra

Shopperstop, draw the Typical Profiles Of Shoppers Stop Customer Segments ....

draw the Typical Profiles Of Shoppers Stop Customer Segments .

How is information in technology structure affected, How is information in ...

How is information in technology and organizational structure affected? Conversely, information systems have enabled companies to gain many benefits as like efficiency gains, q

What are business analysis and mark share analysis, What are Business Analy...

What are Business Analysis and Mark Share Analysis? Business Analysis and Mark Share Analysis: In this stage is very much significant in total process of latest product d

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd