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Aquapure - Case 6 (CC0)

Case 6 (CC0) -- Aquapure

CLIENT SITUATION

Our client is Aquapure, a $400M provider of premium water bottled at the source of artesian springs
in tropical countries. Aquapure has been considering redesigning their bottle such that it’s
compostable and more environmentally-friendly. Should they do it?

NOTES FOR INTERVIEWER

Ask candidate: how would you go about structuring your approach to this problem?

Relevant facts (reveal one-by-one when asked):

1) Aquapure is hoping to distinguish itself from its competitors to boost sales and profits through
this initiative (environmental improvement is a secondary concern to them).

2) It’s unclear exactly how much such a redesign would cost, but preliminary estimates put it at $5M
upfront for the redesign and retooling of the packaging plants and an additional 2 cents per bottle
ongoing.

3) The market is growing at about 1% a year, with competitors growing revenue as shown:
(figures in $M)

Water
2007 2008 2009 2010 2011
producer

Aquapure $384 $388 $392 $396 $400

Foss $200 $190 $192 $194 $196

Naïve $1,500 $1,515 $1,530 $1,545 $1,561

Water Yes $200 $202 $204 $206 $208

Refresh $1,800 $1,818 $1,836 $1,855 $1,873

4) Foss redesigned its bottle to use less plastic in 2008.

INSIGHT Consumers did not respond favorably to

#1: Foss’ environmentally-friendly initiative.

Bottle design can have a major impact

INSIGHT
on sales and such decisions must not
#2:
be made lightly.
Ask candidate: How
might we go about estimating the sales impact of redesigning our bottle?

INSIGHT Candidate lists at least three options

#3: (e.g. survey customers).

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5) Customer ranking of Aquapure vs. other brands on key purchasing criteria (1 is 1 st place; 5 is last
place):

Water
Criteria Aquapure Foss Naïve Refresh
Yes

Taste 3 2 1 4 5

Mouth feel 3 1 4 2 5

Bottle feel 1 3 2 4 5

Bottle
1 2 4 5 3
convenience

Bottle
2 4 5 3 5
aesthetics

Price 4 5 1 2 3

Prestige 2 1 5 4 3

INSIGHT Customers really appreciate the current

#4: Aquapure bottle design.

6) Results of survey on environmentalism and water bottle purchasing:

Proportion who Number of water

Classification of survey
fall into this bottles purchased
responder
category annually

High environmental concern 5% 10

Medium environmental
40% 100
concern

Low environmental concern 55% 104

Relatively few people have high levels

INSIGHT #5: of environmental concern.

People’s water bottle purchasing

INSIGHT
behaviors are largely unaffected by
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#6: whether they have a medium or high

level of environmental concern.

Those with high environmental concern

INSIGHT likely carry refillable water vessels with
Ask candidate: What
proportion of water
#7: them and may be unlikely to purchase
bottles are purchased bottled water regardless of how
by individuals with environmentally friendly it may be
high environmental
anyway.
concern?

A very tiny proportion (<1%) of bottled

INSIGHT
water purchases are made by those with
#8:
high environmental concern.

It’s likely imprudent to risk upsetting

INSIGHT loyal customers who love our bottle in
#9: order to chase after the small amount of
CALCULATIONS people who care about an
1) Multiply the environmentally friendly bottle.
proportion of people
falling into each classification by their average number of water bottles purchased annually, then
divide each relative contribution by the sum of these relative contributions to determine what
overall percentage each segment contributes.

Relative
Proportion
contribution
Number of of bottles
Proportion to number of
water purchased
who fall bottles
Classification bottles (Relative
into this purchased
purchased contribution
category (proportion X
annually / total
number of
contribution)
bottles)

High
environmental 5% 10 0.5 0.5%
concern

Medium
environmental 40% 100 40 41%
concern

Low
environmental 55% 104 57.2 59.5%
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concern

TOTAL 100% 97.5 100%

Copyright Victor Cheng / All Rights Reserved 2012 / Not for use by unauthorized
parties
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