Developing a Marketing Strategy: Delivering and Capturing Value Marketing Plan

Plan Objective: Retain our leading position in the market by launching the faucet-mounted system under our wellpositioned brand. Prior actions review We know that a segment of consumers are concerned with reducing their exposure to contaminated water for regular consumption, and the approach Brita had on its advertising campaigns was mainly based on taste and not on safety. - Brita created and developed the market, and after that was not able to read the trends as competitors did. - The top management of the company under-estimated the competitors capacity to innovate and to deliver value to customers. A competitor was the first mover in the faucet-mount category. Major opportunities There is a general concern about the quality of water that is causing an increase in the sales of bottled water and purifiers. Market research showed that a new product in the faucet-mount category would increase the likelihood of a consumer buying any given product with our brand. Consumers are willing to pay a higher price for this product given the benefits they will obtain from it. Since the category is not expected to expand with the introduction of the faucets, we expect to shift part of our current demand from pitchers to a higher contribution product (faucets), resulting in an increase of revenue. Summary of the strategy Knowing the large amount of money the competitors are planning to spend in the introduction of their faucet systems, we need to develop an aggressive marketing strategy. We will spend $15 MM in consumer advertising, $3 MM in consumer promotions and $6.1 MM in other trade spending, we will use a consumer-value-added-price and will intensively communicate the benefits of the product to our potential customers. Detail Marketing Program: a) Market studies and information analysis 567 respondents The main learnings are that 25% of our buyers give the pitcher as a gift. Our costumer base is loyal, after one year 80% of our buyers are still using the pitcher. The insights found regarding the Faucet-Mount system are the following: - The probability of choosing any product from the Brita line would increase if the consumer is aware of the faucet-mount systems. Therefore, confirming the need to introduce the faucets under the Brita brand. - Half of our consumers would still use the pitcher in conjunction with the faucet-mounts. - The value perceived by the customer for the Faucet justifies a pricing between $34.99 and $39.99. There is a low sensitivity to price variations of competitors; the tangible benefits they perceive from Brita are the remove of contaminants, convenience and, mainly, taste. b) Positioning Our main objective is to add to our current taste positioning the attribute of safety. Our approach will be the following: You do not need to sacrifice taste or safety, you can have it all in one c) Consumer value proposal We need to be able to highlight the benefits of the faucets to our current consumers. First, it is convenient because each filter can treat 100 gallons of water (60 gallons more than pitcher), which represents a lower cost per glass of 50%. Safety will also be increased because higher pressure helps eliminate more microorganisms than other systems, and taste is not sacrificed. This will help us develop a co-creation of value for both the company, by increasing the awareness of the brand, and for consumers, by acquiring a product that adapts better to their needs. d) Target Market: Well target young people and families who are concerned with drinking water safety issues and are willing to pay for a more efficient system than the one they currently own. We know that about half of them would use both systems (pitcher and faucet).

Our consumers are between 20 and 44 years old, and advertising will be directed to women who frequently are the ones who make the purchase decision for this kind of products, and to young couples who are actually worried to drink clean water. e) Sales Strategy: Well develop an educated sales force that is able to communicate the benefits of our product to the customer. Well also create a compensation plan based on results to encourage the sales force to increase their performance. f) Price Strategy: Based on the marketing research, we are establishing a value added pricing strategy for the Faucet-Mount systems. Following the pitchers historical sales price breakdown, 30% of sales will be made at list price, which will be set at $39.99, and the rest will occur at feature price, $34.99, keeping the MAP Strategy. We will maintain a 50% margin for filters, setting an average price of $6.52 per filter. g) Distribution Strategy: We will use all the distribution channels that Brita is currently selling through: department stores, mass merchandisers, grocery stores, club stores and drug stores. The same product will be sold across all distribution channels. For the club store channel we will offer a filter bundle. h) Communication and Brand Strategy: We will invest $15 MM in consumer advertising for our communication strategy, focused on TV and print ads. The main goal is to communicate the tangible benefits of the product such as the taste, safety and the new LED indicator while using our Brita Brand to take advantage of its credibility and positioning. i) Customer attraction Strategy: We will invest $3 MM in consumer promotion and $6.1 MM in trade material. Our main goal is to develop POP material to communicate the benefits of the product. We know that by creating awareness of the new product and of a complete line of water filters it is more likely for consumers to purchase any of the Brita line products. As a second part of the strategy we will also do promotions like 2X1 pending upon results. j) Customer development and retention Strategy: By emphasizing the new LED indicator in the faucet-mounts we expect to increase consumer compliance with the need of replacing the filters. As of yet, pitchers generate about 40-50% compliance. For faucetmounts we expect this number to double. In order to retain our customer base we will carry on a loyalty program consisting on rewarding consumers with free filters after a certain amount of purchase. Detail for the implementation Plan: Total A&P Investment: $24.1 MM Scenario 7 After evaluating every possible scenario, we found that this one maximized the companys revenue for our best sales forecast. Deployment: Stage I: Fill product pipeline and deliver POP material at the same time; Stage II: Execution of the mass media campaign; Stage III: Follow up and corrective actions (targeted promotions); Stage IV: Launch loyalty program. Expected results/KPIs: First year system sales: 1,205,000 units (Exhibit 1) First year filter sales: 1 unit / system (Conservative scenario considering yearly distribution of system sales) Market share: Current, 83% plus 10 basis points (BPS) Net income: $51,286.74 (Exhibit 1) Evaluation Method: We will build the new forecast into our current Sales & Operations Planning process. We will track weekly sales and generate a rolling forecast for systems and filters. This will allow us to act quickly and carry out corrective plans in case sales targets are not met.