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

Manage market research, DEVELOP an appropriate organisational context of t...

DEVELOP an appropriate organisational context of the project

Describe the freeze -thaw activity, Describe the freeze -thaw activity ...

Describe the freeze -thaw activity Repeated cycles of freezing and melting of water in rock  called as freeze -thaw activity or frost action widen the cracks and may even split

What is productive service in marketing, What is productive service in mark...

What is productive service in marketing? Choices are comprises physical objects, persons, services, places, ideas and organizations. Similarly, the service is any activity or b

Marketing & business are changing, Q.How marketing & business are changing?...

Q.How marketing & business are changing? Ans.:  Companies should adopt a clear vision of the right direction in which to take their brands and challenged marketing c

Discuss the following topic, 1.Value delivery process and value chain 2.A h...

1.Value delivery process and value chain 2.A holistic marketing framework 3.Business unit strategic planning 4.Internal records 5.Demographic environment

Consumers confound marketers, difference between marketing efficiency and m...

difference between marketing efficiency and marketing effectiveness

IN DEPTH, I WANT TO KNOW THAT WHAT IS INTERNET OF THE FUTURE WHAT IS WHAT I...

I WANT TO KNOW THAT WHAT IS INTERNET OF THE FUTURE WHAT IS WHAT I AM CURRENTLY STUDING IN MY MASTERS OF BUSINESS ADMINISTRATION ABOUT CUSTOMIZATION WOULD YOU KINDLY PROVIDE ME SOME

Case study solution, why mayo clinic i so good at customer service

why mayo clinic i so good at customer service

Explain how brand meaning and brand value are created, Question 1: (a) ...

Question 1: (a) What do you consider the most pressing ethical issues facing advertisers? Explain. (b) What are the key components of a communication model and how do they

Elements of the marketing, Elements of the marketing: the marketing thinki...

Elements of the marketing: the marketing thinking starts with the customer needs. Today each marketer wants to retain and satisfy the customer because of the intense competition.

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