Fairchild Water Technologies, Inc.

Executive Summary

Fairchild Water Technologies, Inc. is a US based company that has had great success in designing and marketing residential water purifiers in the European and South American markets. The company executives have realized that there is a huge market for clean water in developing countries. Not only would it be profitable to supply to that market but it would also demonstrate socially responsible behavior. Since the quality of water in many developing countries is so poor that a water filter alone isn’t enough to purify it, the engineers and designers at Fairchild Technologies have developed a water purifier called Delight. Fairchild is looking at entering the Indian market in the field of home water purification devices and launching its new product. The results of an earlier research done to determine the prospects of the company in the Indian market look very encouraging. The Indian market for home water purification systems is a unique one to understand. A major population drinks water as it is, i.e. without treating or purifying it. Wealthier and health conscious people are making some effort to purify their water before consuming it. One thing is clear that the quality of water supplied to the residents is quite poor and many Indians feel the need for improved water quality. The media and government also regularly reinforce this need by describing the poor quality of Indian water. These conditions make it very favorable for Fairchild to enter the home water purification and filtration market in India.

Decision Statement

Fairchild Technologies, Inc. must decide if they should enter the Indian market or explore Argentina, Indonesia and Brazil markets in the field of water purification? If they enter the Indian market what market entry strategy and marketing mix should they use?

Product Analysis

The Delight purifier removes four types of contaminants found in potable water- sediments, organic and inorganic chemicals, microbial or cysts, and objectionable tastes and odors. The purifier uses a combination of technologies to remove these contaminants provided they are at levels described by WHO reports as reasonable. Ten units of the product have been lab tested and have functioned without any failure even after 5000 hours of continuous use. There are two designs under consideration at this time - Point of entry and Point of use design.

Why the Indian market? In this section I will analyze how attractive is the Indian market for Fairchild by examining the macro and microenvironment.

Target Market Analysis

The main target market comprised of 40 million households that are similar in many respects to the consumers in middle and upper middle-class households in the United States. These consumers are better educated, wealthier, more health conscious and comprise of around 40 million households. They see consumption of material goods as a means to a high lifestyle and like foreign brands and would pay a higher price for those brands. The other target market belong to consumers that have similar values and lifestyles as the above mentioned 40 million but have not taken any efforts to improve the quality of their drinking water.

The target markets used traditional methods of purifying drinking water in the past. They did not rely on commercially supplied products but instead on boiling water and cooling it before consuming. About 50% of the target market used this method. Boiling was seen as inexpensive and effective in removing bacteria and was seen as a traditional method that families supported. The target market also considered this method as being more effective than any product out in the market. However, boiling water affects its taste and makes it somewhat flat, besides it is a cumbersome, time consuming and ineffective process in removing physical impurities and unpleasant odors. About 10% of the target market took a second step and filtered their water using candle filters before storing it. About 40% of the target market uses a mechanical device to improve their water quality. About 20% of these consumers use candle filters as they were priced low and were easy to use. The other 20% use slightly more sophisticated water purifiers devices that use a three-stage process to filter water by removing sediments, odors and harmful bacteria and viruses. The remaining 10% of the market neither owns a filter nor a purifier nor seldom boil their water. Most of the consumers that belonged to this 10% also believed that it was futile paying for any water filter devices as they were ineffective. From this group of 10%, Fairchild does not expect to be hugely successful in changing the habits and thinking of this group of consumers. The most attractive segment in the target market is the 90% of households who boiled, boiled and filtered, only filtered, or purified their water. The most important factor for the target market is the performance of the water purifying product in terms of sediment removal, bacteria and virus removal, capacity in terms of flow rate, safety and foot print space. Purchase price is also an important concern for the target market. The next most important factor is ease of installation of the product, service, the style and appearance of the product. The target market has rated warranties and availability of financing options as being least important to them but expect that a water purifier will be warranted against defective operation for 18-24 months and will be able to perform trouble free for 5-10 years.

Competitor analysis

There are over 200 companies that are competing in the Indian market for home water filters and purifiers. The three major competitors are Eureka Forbes, Ion Exchange and Singer.

Eureka Forbes: is the most established competitor in the water purifying market. It is a joint venture company and has been around since 1982 between Electrolux and Forbes Campbell India of Sweden. The brand name used for its water purifiers is called Aquaguard, a market leader and the only national brand. It has tremendous brand equity and people identify the name Aquaguard analogous to water filters. The company has two lines of water filtration and purifying products Aquagurd and Puresip. It is estimated that their total marketing expenditure would be around $120 million, which accounted for about 11% of its sales revenues.

Ion Exchange: is a premier water treatment company in India and specializes in treatments of water, processed liquids, and wastewater in industrial markets. The company has been around since 1964 and is wholly owned subsidiary of British Permutit.