MMH709-Marketing Management

REPORT ON

Submitted By:
KIRAN KUMAR D GHOSH
121923603019
1998kirankumar@gmail.com

In Partial Fulfilment of Requirement for the Award of the Marks towards CASE STUDY
as part of MMH709-Marketing Management Course in Master of Business Administration

Under the Guidance of

Jyothsna M

Professor (Marketing Management)

GITAM Institute of Management, GITAM (Deemed to be University), Visakhapatnam
Andhra Pradesh, India-530045

GITAM Institute of Management

GITAM (Deemed to be University)
Visakhapatnam-45
About AAVA
The AAVA story began when time began, before the Himalayas or the Alps were born. This
is the story of the majestic Aravallis, one of the world's oldest mountain ranges, a legend that
lives on with the passage of time from where AAVA originates. Drop by drop, for 20 years,
AAVA trickles down from the catchment area to our deep underground reservoirs. Along the
way it is purified as it passes through layers of alluvium and clay that act as natural filters. To
ensure purity and an unaltered natural mineral composition in every sip, our bottling
environment adheres to the toughest international certification standards.

An Abstract from the Case

Launched in 2005, AAVA natural mineral water is one of the key brands in the natural
mineral water market in India. It had sales of over Rs. 15 crore (150 million) in 2012 and it is
the second largest brand and a volume leader in the natural mineral water category. The case
discusses the dilemma faced by its Managing Director and his team in light of the emerging
competition. The company needs to take important decisions related to customer segment
selection, product mix and introduction of new product offerings.
SWOT Analysis of AAVA NATURAL MINERAL WATER A

Limitations of the SWOT Analysis of AAVA NATURAL MINERAL

WATER A
Even though the SWOT analysis is an effective tool, it has certain limitations as well.

Its major limitation is the fact that there can be an overlap of strengths and weakness, with a
single factor being both strength and a weakness. For example, a large number of outlets can
be strength in a growing economy or a weakness if the economy is going through a recession.
The matrix is not an end as it does not show how to achieve the objectives. It should be used
as a starting point to make strategic decisions.
The assessment done through a SWOT analysis is a static one and does not take into
consideration the changes that take place in the competitive environment.
The factors listed down in a SWOT analysis may be overemphasised by the company.
There are certain interrelationships between the internal and external factors that the SWOT
Matrix overlooks.

Weighted SWOT analysis of AAVA NATURAL MINERAL WATER A

In response to the above mentioned limitations, a weighted SWOT analysis can be conducted
for AAVA NATURAL MINERAL WATER A that involves assigning weightage to each of
the strengths and weaknesses mentioned in the SWOT analysis for AAVA NATURAL
MINERAL WATER A.
It also involves estimating the probability of an event occurring in the external environment.
This allows managers to focus on the important factors, and give less consideration to the less
important ones.

The limitation of the weighted SWOT analysis is that it does not look at how holistically
different factors affect the business when combined.

Advanced SWOT analysis/SWOT Matrix

AAVA NATURAL MINERAL WATER A SWOT analysis lists down the strengths,
weaknesses, opportunities and threats to any organisation, but does not tell management what
can be done by these. To overcome this limitation and help develop strategies that are
appropriate, an advanced SWOT analysis or TOWS matrix is used. This lists down the
Strengths-Opportunities (SO) strategies that involve using strengths to take advantage of
opportunities. It lists the Strengths-Threats (ST) strategies that involve using strengths to
fight of threats. It involves the Weaknesses-Opportunities strategies that involve converting
weaknesses to strengths by using opportunities. Lastly, Weakness-Threats (WT) strategies
involve overcoming weaknesses to avoid threats.
Production and Manufacturing of AAVA – A Critical Point in the
Case

In 2005, AAVA established the first of its kind fully automated plant for production of
natural mineral water.

•The company had a large source of raw material in the form of natural water
•Out of the total three water sources available with AAVA the company extracted nearly 10%
of permissible water limit in 2011.
•AAVA was one of the few packaged water companies credited with adhering to
pharmaceutical standards using “Clean Room’’ technology for producing pure mineral water.
• In 2010-2011, it produced nearly 30,000 litres of natural mineral water everyday and bottled
around one million bottles every week.

•Despite the advantage of low cost on procurement of basic raw material, the profit margin of
AAVA always remained under pressure.
•For producing a 200ml bottle, the highest selling SKU it incurred plastic preform (1.10),
bottle cap (0.24), label (0.13), and shrink packaging (0.30) respectively.
•For producing a 1 litre bottle, the 3rd selling SKU it incurred plastic preform (2.90), bottle
cap (0.24), label (0.35), and shrink packaging (0.90) respectively.
•The company had to make additionally a provision of wastage at the rate of 3% on basic raw
material and packaging cost.
•For producing a 20 litre jar, it incurred plastic preform (150), bottle cap (1.5), label (3)
respectively.

•Unlike the smaller SKU’s, the 20 litre jars gave AAVA the benefit of amortization to the
company.
•With bulk jars, there were also some unforeseen costs attached like theft and loss of jars
were very common and it nearly added 20% to the variable cost of the jar in the form of
wastage.
•As the company catered to various types of clients like retail and small institutions
(restaurants, clubs, etc) and large institutions (airlines, hotel chains, etc) the tax structure for
the company varied for all types of SKU’s.
•For its 200ml SKU the company had to pay excise duty at the rate of 12.36% on the total
cost, inclusive of variable cost, fixed production cost, and wastage. The total amount of such
cost was further charged with VAT (value added tax) at the rate of 15%.

•For the 1 litre bottle, AAVA had to pay VAT at the rate of 15% on total cost, inclusive of
variable cost, fixed production cost, and wastage.
•As per government norms, for a 1 litre bottle the excise duty at the rate of 12.36% was
imposed on 55% of the MRP value.
•For bulk water jars, the excise duty was levied on the cost, inclusive ofinclusive of variable
cost, fixed production cost, and distribution cost.
•The sum of such costs was further charged with VAT at the rate of 15%.
Important Aspects of the Case with Marketing Theories

The Market Analysis of Bottled Water segment from the case

Consumers

 Customers (90%)
 Retail Customers (10%)
 In the aviation sector (in-flight sales) AAVA was a dominant player with nearly 60 per
cent market share
 B2B is AAVA’s strength

The Company’s Goals that actually form the basis for the case
Product Portfolio in the Market

Packaging

 AAVA is currently packaged in a curve shaped bottle with a label running across the
body
 Leading brands both domestically & internationally have modern clear tetrahedron
packages with the brand name screen printed
 AAVA should also follow the norm and come up with attractive packaging to look
premium and also to stand out in a premium market.

Branding

The appeal of AAVA lies in its high quality natural spring water and premium imagery. It
plays upon the themes of being natural and pure in an artificial world – which is the perfect
beverage of choice among wellness seekers.

Brand Positioning
AAVA Product Distribution

Promotion of AAVA

Phase – 1
(Incubation)
• Promotions in social media.
• Encourage word of mouth and have incentive based program
based on turnover.
• Sponsoring teams in less expensive sports leagues in the
country like ISL, IBL and Kabaddi league, Health awareness
Runs . Sponsoring film festivals, comic cons etc.
• Emphasize the differentiating factor
• Increase visibility through ads

Phase – 2
(Expansion)
 Provide exclusive shelf in premium shops/ big
chain of retails like reliance, Big Bazaar to place
AAVA products to attract customer attention.
 Phase- 3
(Diversify/Gain Volume)

For tapping 90% of the market share we can promote our regular mineral
water in social media/television programmes explaining the minimal
chemicals used for purification as a distinguishing factor.
Have packing in this segment which looks better than the competitors to
gain higher market share and at the same time ensure it is having lesser
visual appeal than our premium packaging to maintain cannibalisation

Phase – 4
(International
presence)

Target low-cost airlines like South west airlines because they can
get natural mineral water at lower price. Later we can target upper
end airlines after developing trust and expand in internal markets.
To Conclude let’s discuss AAVA’s Road Ahead

Strategies Used

Move into B2C

segment, maintain
existing B2B as it is

Diversify into
conventional bottled
First phase
water market.

Second phase
Diversify into
Third phase
traditional Indian
coolers segment.

Let’s discuss in depth on the First Phase which I feel AAVA should take in the strategy to
capture its market share from its competitors which the case is based on.

 Rebrand 1000ml, 500ml and 250ml water bottles with a new name AAVANeer.
 Address Packaging: Trendy clear bottle. Screen prints the brand name.
 Price it just below the market leader in B2C premium mineral water segment.
 Product Mix: Differentiate with natural flavored water like Tulsi, Mint, Aloevera by
running the water through the respective gardens.
 Increase visibility in the digital world – more social media marketing

Let’s End the Analysis with seeing Creative and Innovative Advertisement Posters of AAVA
as a Marketing Strategy of Promotion and Creating Awareness