Marketing Strategy Plan

VitaminWater

July 28, 2008

Introduction

In 2007, the functional beverage market reached $9.8 billion. From 2002-07, there was an increase in

the market of 30% at current pricing, and 14% after accounting for inflation. These numbers reflect the health

and wellness movement in the United States, as people are now trying to select healthier food and beverage

options. In 2002-2006, the number of people trying to eat healthier increased by 30 million. Ready-to-drink,

functional teas, enhanced bottled water and sports drinks are leading the way with use highest among

consumers ages 18-34, as well as among households with children. Many of those in this younger age bracket

see these drinks more as a hip, lifestyle beverage.1 These consumer select brands of beverages just as they

select the “in” brands of clothing. Market gains have to do with teens and young adults who flock to the

energy drinks and enhanced waters, as these consumers understand these drinks’ rebellious, taboo and/or

trendy images.2

Customers are now demanding more from the beverages. Instead of just being thirst quenching, these

drinks must have other perceived benefits.3 Water and vitamins are two essential substances human beings

need. What if by chance these substances joined forces? And so, Vitamin Water was born. Glaceau emerged

in 1996 as a "pioneer of the enhanced water category.” Glaceau developed a line of bottled beverages called

Vitamin Water, that combine distilled water with vitamins, herbs, and flavors. 4 In 2007, Coca-Cola Company

purchased Glaceau, for $4.1 billion. Glaceau was attractive to Coca-Cola because of its position in the

enhanced water category, which Coca-Cola wanted to enter. Coca-Cola is speculating this industry will

comprise a large portion of the beverage industry's growth in North America through 2010.5” “The strategy

for the makers of Vitamin Water was “to exit after four years, not to go on as long as it has,’ said one source

familiar with the inner workings of the Whitestone, N.Y.-based company”.6

1 Mintel Reports:Functional Beverages - US - August 20072 Mintel Reports:RTD Non-carbonated Beverages - US - June 20083 Mintel Reports:RTD Non-carbonated Beverages - US - June 20084 http://recipes.howstuffworks.com/vitaminwater.htm5 http://www.foxnews.com/story/0,2933,275386,00.html6 http://www.brandweek.com/bw/news/foodbev/article_display.jsp?vnu_content_id=1002951087

Executive Summary

VitaminWater is a powerful brand that has many strengths in its overall marketing strategy. For one, it

has strong brand positioning where it targets a large demographic???., and claims to work for “celebrities,

soccer moms, superheroes, and you”.7 It is known as a stylish product with its bright and cheerful colors as

well as its humorous sayings on each bottle. VitaminWater also engages in local and mass promotional

activities. These are fun and catchy to correspond with the overall brand image. VitaminWater is marketed as

well as sold in multiple locations, so it can easily be found and kept top-of-mind. This “Nutrient enhanced

water” has a lot to offer to its customers,8 both in terms of real and perceived value.

Although VitaminWater has many positive qualities in its marketing strategy, it is left with some

negative ones, as well. For one, there is only one product line, and it has not yet been expanded upon.

Currently, VitaminWater is a product brand, rather than a lifestyle brand. Several line extensions should be

evaluated in order to grow the brand, and build consumer loyalty. Its bottles are fun and colorful; however,

with its focus on bright pinks and purples, statistics have shown that this drink is purchased by more females

than by males. Further, VitaminWater is said to be “a great tasting, natural, low calorie (50 calories per 8 oz

serving), nutrient packed enhanced water”. 9 Little does Glaceau tell customers, though, about the high sugar

content. Vitamin Water is marketed “for people who want something healthier than the stuff they’ve been

drinking to meet their needs throughout the day”.10

While VitaminWater started out building a strong brand, and has acquired an almost cult following.

The questions that remain: How can VitaminWater maintain its market share in an increasing consumer

product segment? How, if at all, should VitaminWater expand its current offerings to promote a lifestyle brand

versus a single product, fad?

7 VitaminWater slide8 VitaminWater slide9 VitaminWater slide10 VitaminWater slide

Market Analysis

Company Background

Energy Brands, Inc. was founded in 1996 by J. Darious Bikoff. It is based in Whitestone, New York.

As of June 7, 2007, Energy Brands, Inc. became a subsidiary of Coca-Cola Co. The Coca-Cola Company had

been looking to expand its portfolio. They bought VitaminWater maker Glaceau in a cash deal valued at $4.1

billion.i Some analysts say that 4.1 billion was a hefty price to pay to gain market share of the emerging

beverage segments. Other analysts say seeing the fourth straight year of triple-digit volume growth was not a

bad price to pay. Glaceau will continue to grow rapidly by utilizing Coca Cola’s well developed mass

distribution system. VitaminWater is available in North America and recently launched in Australia.

Energy Brands, Inc. offers flavored vitamin water drinks. It has four main product lines under the

Glaceau brand: VitaminWater, SmartWater, VitaminEnergy, and FruitWater. Due to rising obesity rates and

complications such as diabetes resulting from being overweight have led consumers to seek healthier

beverages. Energy Brands, Inc. was very successful at marketing its VitaminWater as the value-added health

drink alternative, and created a new category in the beverage industry called enhanced water. VitaminWater is

the leader of the enhanced water category.

According to Energy Brand, Inc.’s website “it all started when one thirsty man named Darius wanted

better water, but couldn't find any worth drinking, so he decided to make his own. Along came a guy from

Queens named Mike and because Mike has a gift for gab, it's no wonder word got around, thus emerged

Glacéau, a fresh new approach to bottled water. Today Glacéau, the creator and leader of the enhanced water

category, is the maker of vitaminwater®, fruitwater®, smartwater® and vitaminenergy™. Now, with 1,000+

full and part-time employees. Glacéau is all about helping thirsty people like you hydrate responsibly with

products that are free of sodium and artificial ingredients. It means no artificial sweeteners, no artificial colors

and especially no artificial intelligence”.ii

Industry

Economic Factors

Many people believe that U.S. economy is in a recession. There are many economic factors to validate

the belief. According to Bureau of Economic Analysis, GDP growth slowed to just +0.9% in the first quarter

of 2008, and consumer confidence dropped to 57.2 in May- the lowest level in 16 years. The foreclosure rate

continues to rise while the house price continues to drop. In many parts of US, the average price for unleaded

gas is well over $4 per gallon. Consumer’s discretionary spending budget is shrinking, and more people are

paying for food and fuels using credit cards. The U.S. Department of Labor's Web site offers an inflation

calculator that shows the buying power of a dollar throughout the years. What cost $1 in 1980 will cost $2.63

today, and what cost $1 in 1990 will cost $1.66 today.

Market Trends

In the Unites States, consumers are becoming more and more health conscious and the shift towards a

healthier lifestyle also changed their purchasing behavior for food and beverages. More and more carbonated

soft drink drinkers are seeking alternative beverages with health and wellness positioning. Beverages like

VitaminWater are perfect for consumers who are seeking value added benefits without be concerned with

calorie intake.

According to Mintel, “Rising obesity rates, 66% among adults and 32% among children aged 6-19, and

complications such as diabetes resulting from being overweight/obese have led many Americans to seek

healthier food and beverage choices including curbing consumption of high-calorie/high-sugar soft drinks and

juices. Mintel’s exclusive research shows that concerns about general health and about weight are the most

cited reasons among 40% of all regular soda-drinking respondents, who are drinking less soda as compared

with a year ago.” Carbonated beverage volumes continue to decrease while beverages with health and

wellness positioning are on the rise.

Non-alcoholic Beverages: The Market - US - April 2008 - Market DriversFigure 18: U.S. per capita consumption of carbonated soft drinks, bottled water, and sports drinks, 2001-06

Years Carbonated beverages Bottled water Sports drinksGallons % change Gallons % change Gallons % change

2001 54.3 -0.4 19.3 8.4 2.8 122002 54.2 -0.2 21.2 9.8 3.1 10.72003 53.8 -0.7 22.1 4.2 3.2 3.22004 53.7 -0.2 23.8 7.7 3.4 6.22005 52.7 -1.9 26.1 9.7 4.1 20.62006 50.4 -4.4 27.6 5.7 4.5 9.8Source: Mintel/Beverage Marketing Corp./Beverage World

Carbonated soft drinks not only saw a continued decline in their volume last year, but those categories

are losing market share to the newer emerging categories, especially those with a health and wellness

positioning like the flavored and enhanced water. As it is shown in the chart, beverages that are associated

with a healthy image drove the growth of the beverage industry. Flavored and enhanced water is up 30.6%.

Competition

The competition in the beverage industry is fierce. Every year beverage companies are introducing a

considerable number of new products or line extensions to stay competitive. The beverage aisles are getting

overly crowed with different products for consumers to choose from. Companies that come up with product

innovation driven by health/wellness and convenience propositions are more likely to see more than an

average volume growth. The Mintel figure below shows the number of new products launched in the U.S.

during 2002-07, with first quarter data for 2008. The bottled water category ranked highest in new product

introduction for past three years.

* March 2008 Consumer Choices in the Beverage Aisle - US - April 2008 - Innovation and Innovators

Source: Mintel GNPD

The direct competitions of VitaminWater are Gatorade Propel, SoBe Lifewater, Aquafina Alive,

Snapple Antioxidant Water, Skinnywater, Kellogs K2O and Fruit2O. Both Gatorade Propel and Sobe

Lifewater are distributed by Pepsico, and it is the biggest competitor of Coca Cola Company. According to

BevNet, Propel and VitaminWater combined account for 69 percent of the total enhanced water category.

The two companies are in direct competition with each other by showing the consumers better value

added product features and benefits. “Pepsi has launched ads that point out that its Propel Fitwater has fewer

calories than Glaceau's Vitaminwater — 25 calories for Propel compared with 125 calories for Vitaminwater

per 20 ounce bottle. PepsiCo also has put more emphasis on SoBe Lifewater, another Glaceau competitor.

Glaceau's head of marketing, was quick to point out that Vitaminwater, unlike Propel, uses all-natural

sweeteners.” iii According to BevNet research, Propel scored higher marks on most brand equity questions,

including “easy to find,” “fun to drink,” and “good value.” VitaminWater also offers functionality and flavor

that beats the competitions. As the ingredient chart shows below, VitaminWater has different vitamin content

across all flavors. However, Sobe Lifewater provides same vitamin content across all flavors.

Source: www.sobelifewater.com, www.glaceau.com

Product Features and Benefits:

VitaminWater:

Vitamin enhanced water with natural ingredients.

Contains 125 calories per 20oz with no sodium.

Sobe Life Water:

Vitamin enhanced water sweetened with sucrose, no artificial sweeteners.

Contains 50 calories per 8 oz. Also contains 13g. carbs, 25 mg. sodium per 8 oz.

Kellogs K2O water:

Provides 5 grams of protein per 16 oz & 8 grams of sugar.

Contains artificial sweeteners and has 50 calories per bottle.

Propel Fitness Water:

All 8 flavors of Propel contain 10 calories per 8 oz.

Contain 3 g. of carbohydrates and vitamins and minerals.

PomegranateCherry

OrangeTangerine

PassionfruitCitrus

StrawberryKiwi

BlackberryGrape

PomegranateCherry

OrangeTangerine

PassionfruitCitrus

StrawberryKiwi

BlackberryGrape

Customers:

The target consumers for VitaminWater are people “who want something healthier than the stuff

they’ve been drinking to meet their needs throughout the day.”11

SWOT Analysis

Opportunity:

Consumption of soda has declined from 2003-07, consumers are looking for alternative beverages with

health and wellness positioning like vitamin water alternative beverage choices.

VitaminWater as a hip, new age beverage is attracting the youngest adult consumers who feel the

product better represents their image and lifestyle.

11 VitaminWater slide

The “trendy” beverages like vitamin water have become more popular.

As hip, new-age beverages, these NCBs attract the youngest adult consumers who might feel these

products better represent their image and lifestyle.

Older consumers are seeking products that give them extra boost and products that make them feel

young and healthy.

Threat:

Competitive Advantage

Target market:

Vitamin enhanced waters are specifically targeted and marketed towards health oriented consumers

and hipsters in generations x and y. Market research has shown that bottled water is the U.S.’ fastest-growing

“refreshment beverage,” with 2006 bottled water consumption increasing 9.5% from the year before.12

12 http://www.sanangelolive.com/node/495

Beverage Marketing predicts that by 2011, bottled water’s share of the liquid refreshment beverage market

will be 29%, while soda - which currently holds about 42%, will dwindle to 34% that year.13

Even as Americans are drinking bottled water like never before, enhanced waters such as

VitaminWater are the fastest-growing part of that market - to the tune of $245 million wholesale last year, up

from just $20 million when they debuted in 2000, according to research by Beverage Marketing Corp. in New

York. And those who are their biggest fans are health-conscious young adults and baby boomers in trendy

urban areas such as New York and San Francisco.

Positioning (key differentiators)

Energy Brands' Glaceau VitaminWater is scoring in the “hipness” market, with a dozen drinks in a

rainbow of colors, each with a name that promises more than thirst relief - "determination," "focus" and

"rescue," to name three. Heather Dupree Director of Innovation at Kindred Keziah stated, "Vitaminwater has

hit those three prongs (physical, emotional and spiritual) by balancing the spiritual need of overall health and

wellness with the physical of refreshment and the vitamins that you need, plus the emotional with the

packaging having words on it that are cheeky and fun. I think it's one of the best new product introductions

that I've seen in the last few years.14”

Energy Brands, the parent company of Glacéau, advocated healthy living through low-calorie, low

sugar drinks, and non-carbonated water with additional nutritional supplements. Energy Brands was credited

with creating a new category of drinks popularly known as 'enhanced water products.' According to analysts,

Glacéau's success in a scenario in which major soft drinks and beverage manufacturers like Coca-Cola and

Pepsi had a strong hold over the distribution network and spent aggressively in marketing their products,

illustrated that even the most saturated markets could accommodate innovative products.

Competitive Advantage – Analysis and Conclusions:

How a competitive advantage is created and sustained:

After the acquisition of Glaceau brand by Coca-Cola, Pepsi formulated a strategy to directly compete

against VitaminWater- the name design (VitaminWater vs. Life Water), the packaging, the idea - it's all there

to capitalize on the fact that Glaceau is doing semi-revolutionary things with drinks. As Glaceau’s

VitaminWater was at the forefront of market innovation they were able to securely position themselves as

13 http://www.influxinsights.com/blog/article/1372/coke-to-buy-vitamin-water.html 14 - Heather Dupre, Director Innovation, Kindred Keziah, in 2005

market leader amongst new competitive entrants. They were able to draw upon many different layers of

marketing schemes to attract consumers. It wasn’t just purely on the taste factor that attracted people, but it

was more of the sense that the VitaminWater brand was able to convey a whole beverage drinking experience.

What worked for VitaminWater was their ability to package and advertise their product as non-threatening,

fun, and light-hearted and attract those consumers who valued those similar interests. All enhanced waters

have water as the main ingredient. The subcategories vary more in marketing styles than in substance.

The company was able to transcend the enhanced water appeal to the core American desire for

something "more," according to Tom Pirko, president of BevMark, food and beverage consultants in Santa

Barbara. Americans turned to bottled water "not because we don't think our tap water is safe -- it has more to

do with what else you can get." Executives for the enhanced waters tout them with words like "health," "pure,"

"natural," "two-in-one drinks" for consumers "who want more than pure hydration." Coke's Gloria Garrett

described them as "emotional and functional" in a recent Beverage Industry trade magazine. People don't drink

enough water because they get bored -- but they'll drink more if it’s fun and flavored. People today are making

purposeful choices about how they live and what they put in their body. They're fundamentally seeking a

healthy lifestyle but not at the cost of giving up taste and variety.

The perfect element is that VitaminWater is the consummate answer for a lot of people who are tired

of just drinking plain water. Subconsciously, a lot of people realize that drinking water and taking your

vitamins has more benefits than gulping down a drink that is infused with artificial sugar and the promise of

supposed vitamin enrichment. However, it is the culture that we are in allows one to compensate the fact that

while drinking water and vitamins is essentially the better alternate than drinking VitaminWater, its

justification is balanced that drinking VitaminWater is much better than drinking a carbonated soft drink with

over twice the sugar content and no added vitamins. This shows that people crave for something of the lesser

evil, and VitaminWater’s mass appeal has the contributing factor that allows them to be a safe-bet of the

vitamin enhanced beverage category in the market.

Competitive Advantage - Recommendations

Sustainable growth follows the path of constant product innovation. Like most consumer products to

remain relevant in the quick changing palette of consumers, one must constantly think forward. As the

company has brought forth 13 different flavors that are geared to satisfy and cater to specific

functionalities, VitaminWater has to think of other innovative ways to keep a “top of the mind”

reference when people are going to be purchasing a vitamin enhanced water.

VitaminWater lacks the specific focus that it needs to truly understand who their target market is going

to be. They only recently have just begun to have “tween” oriented female musicians, hard hitting

athletes, and rap musicians endorse their product. As they seem to be trying to covet a mass brand

appeal to many different consumer tastes, they may alienate those consumers who feel that they should

not been seen in the same light as the endorser may portray. Although, their approach is more in the

sense that they want it to be a key element that unites all different types of genres in liking the

VitaminWater brand. However, if they truly understood what market segment to push their products

toward, they would be able to better satisfy those consumer needs and hopefully gain insight of what

they want in the long run. The outline below helps break down a simplified version of the

Segmentation Variables:

Segmentation Variables:

Demographic

Consumer

Family income 30k-100k, M/F, diverse ethnicity and educational background

Industrial

Buying processes- point of purchase, wholesale, retailers, mass merchandisers

Geographic

Product preferences- varied products, 50 Cent endorsement catered to the urban market

Market potential- emerging and long-term growth

Competition- new entrants and fierce competition to capture market share

Distribution- high access internationally via Coca-Cola’s presence

Psychographic

Consumer lifestyle

Healthy, fun, lighthearted, educated, sense of humor, conscientious, environmental, witty, risk

takers

Product use and application

Consumer

Purchase purpose: satisfy thirst, vitamin enhanced water substitute, health conscious, pop

culture enthusiast, trendsetter

COMPETITOR ANALYSIS

Company Background Unique Selling Point/Products

Positioning/Target Market

Points of Parity

Points of Difference

Marketing Strategies

Distribution

● Formed 1996, headquarters in New York ● Under parent company Glaceau ● Bought by Coca-Cola Company● Several line extensions including SmartWater, FruitWater

● Pioneer and leader in the enhanced water category ● Fastest growing bottled water brand in the industry ● First in sales in the enhanced water category

●18-49, peak positioning is 35-49● 60% of drinkers are female Caucasian ● College graduate with income range of 30k – 100k

● Bottled water ● Likeness is similar with other brands ● Market can be saturated ● Unpredictable demand/fading trend

● 15 functional varieties with unique combination of nutrients ● Bottle design ● Ingredients

● Focus on branding image not as a sports drink but as a health vitamin replenishment ● Positioned next to the water bottles products

● Sold at retail outlets, natural food and specialty stores in more than 45 States nationwide ● Introduced overseas in Australia and the UK

● Founded: 1966 by researchers at the University of Florida● Purpose was to prevent dehydration on sports team● Pepsico owned company

● Backed by 40 years of research● Proven benefits of rehydration over water ● Expertise in rehydration and sports nutrition over all beverage companies● Market leader

● 18-49, peak positioning is 35-49● 55% of drinkers are female Caucasian with no children ● Income range from 0k- 60k with 50% college rate

● Offers an array of 11 different flavors ● Replenishment drink● Low calorie drink● Vitamin enhanced● Lightly flavored

● Heavy research focus on hydration ● Sports medicine and the attributes that help the body replenish fluids ● Parent brand has a heavy sports sponsorship

● Brand culture focus on sports related activities with the association of main brand Gatorade ● Aligns itself as a forerunner of industry trends in sports liquids: created Gatorade Sports Science Institute

● Parent brand Gatorade available in 80 countries, sold at retail outlets, supermarkets, mass merchants, convenience stores, and warehouse club stores nationwide

● South Beach Beverage Company (SoBe)● Manufacturer of teas, juices, and energy drinks● Subsidiary of Pepsico in 2000● Founded in 1996 in Connecticut

● Reformulated with sucrose, antioxidants, vitamins, and natural herbs● 35 calories per serving

● 12 - 50+, peak demo 12-17● 52% of drinkers are male ● Income range from 0k- 60k with 43% college graduate rate

● Vitamin infused drink ● Variety of different flavors ● Low calorie

● Cheaper unit price over VitaminWater so cut into their market share

● Use of sports figures, celebrities, superbowl ads, gecko trademark to push the brand ● Direct approach to compete with VitaminWater: reversed engineer to the exact molecule

● Sold at retail outlets, supermarkets, mass merchants, convenience stores, and warehouse club stores nationwide

Company Background15 Unique Selling Positioning/ Points of Points of Marketing Distribution

15 http://

Point/Products16

Target Market17

Parity Difference Strategies18

● Aquafina is the No. 1 bottled brand in the US in 2003● Alive is a product extension of the Aquafina line● Subsidiary of Pepsico● First distributed in Kansas in 1994

● Uses PepsiCo's own purification system, which it calls HydRO-7, that includes charcoal filtration, reverse osmosis

and ozonation.● Has 10 calories and 10%DV of fiber to help lightly fill you up.

● 12-50+, peak demo at 50+ ● 62% are female Caucasian ● 69% have no children under the age of 17● Income range $0k – 60k

● Low calorie, vitamin-enhanced water beverage ● Fitness water● Flavored variety

●Carries a "smart spot" to indicate that it is a smart choice for the health-conscious consumer.● Bottle labeled that the water originates from public sources● Bottles are packaged in the same shaped bottle as regular Aquafina water

● Name clearly shows the consumer the product benefit-satiety ● Build on brand heritage● Identified as “nutrient enhanced water beverage”● Film festivals are the sampling venues of choice for the new Aquafina Alive

● Sold at retail outlets, supermarkets, mass merchants, convenience stores, and warehouse club stores nationwide

● Founded in 1972 in New York ● Snapple is derived from a carbonated apple soda● Acquired by Cadbury Schwepps Americas Beverages

● Features seven unique flavors inspired bynature’s “superfruits,” including pomegranates and acai berries. Theantioxidants, vitamins and electrolytes in each flavor provide one of fourdistinct benefits for the body

● 12-49, peak demo 12-17● 60% Female● Diverse ethnic consumer base ● Broad educational level: high index of graduates and post-graduates

● Lifestyle vitamin infused drinking beverage ● Frame of reference that consists of all thirst-quenching drinks

● Packaging too different from what people were accustomed to ● Move away from juice flavored drinks

● Brand slogan is "Made from the best stuff on Earth."● Early Snapple campaign featured Wendy the Snapple lady● Paid $100 million to sponsor NYC school system and have their vending machines replaced by Snapple

● Sold at retail outlets, supermarkets, mass merchants, convenience stores, and warehouse club stores nationwide

16 See Appendix B for examples of competitor product18 See Appendix C for examples of competitor advertising asset17 http://www.quantcast.com

Brand equity:

Key elements in the brand:

Glacéau was able to successfully brand VitaminWater as a health drink by honing down

on an effective marketing and distribution campaign. The company based their core product line

by having vapor-distilled water, and infused their VitaminWater branded drinks with

electrolytes, which are ions of sodium, chloride, potassium, calcium, magnesium, phosphate and

hydrogen carbonate. Glacéau's brand positioning is aligned by having a clean look, upbeat

attitude, and humorous “tongue in cheek” tone of voice. The label packaging text is lower case,

cheeky and confident as well. Bottles are adorned with "one sip, swing or gulp may result in

boycott of other beverages." Color use is bright and vibrant, reflecting the refreshing quality of

the product.

Value:

With the association, leverage, and resources Coca-Cola has to offer VitaminWater has

the potential to reach many people in many different types of markets. Coca-Cola likens to build

an international market out of a brand bought by celebrities like Cameron Diaz, Ben Affleck and

Madonna. The celebrity endorsement will help strengthen the value of the brand and hopefully

create a long term brand association amongst consumers. Chief operating office of Coca-Cola

Muhtar Kent said: "This is an outstanding opportunity for both of our companies to build an

expanded active lifestyle business, first in the United States and then around the world."19

Strengths:

Glaceau boast on its labels and website the motto "vitamins + water = all you need."

Various labels of VitaminWater carry energetic names, and are stated to contain fruit and

vegetable extracts, or vitamins. A grape label, Formula 50, is endorsed by rapper 50 Cent. It's

creative labeling and prints on the bottles give the brand more appeal to consumers whom enjoy

humor. Its "balance" flavor is recommended for "clowns who ride unicycles while juggling

chainsaws;" and the "endurance" flavor contains the warning "usage may result in increased

stamina.”

Their online presence reflects the same brand outlook: vibrant, humorous, and confident.

A user can choose a bottle amongst the many flavors, the product jumps straight up, produces a

19 http://www.guardian.co.uk/business/2007/may/26/4

tune, and displays a quirky Q&A based on the selected drink. For example, we learn that the fruit

punch VitaminWater, called "revive," contains vitamin B and potassium. The exchange of

question and answers typically flies at this level: "q: if I put revive in my fish tank will my

goldfish wake up? a: we don't believe in animal testing." A click on the bottle brings up a

facsimile of the "revive" label, complete with barcode.

Weaknesses:

Actual sugar content and serving size per bottle is a concern for many consumers. While

Vitaminwater contains fewer calories per serving than many sodas, it is still loaded with sugar

and/or corn syrup. And although an 8-ounce serving contains no more than 66 calories the actual

serving size is 2.5: leading a total calorie of 165.20

VitaminWater lacks the foresight to advertise to a large over 50 demographic. According

to a new study by Sweeney Research, only 23 percent of 45 to 54 year olds said advertising was

in tune with their needs or entertaining to watch. Points of contention included images of smiling

retirees strolling around retirement villages, young people used in ads, over-55s depicted as

“old,” and ads that are perceived as speaking down to the elderly. An overwhelming majority

(84%) of respondents (aged 45-54) said they were more likely to take notice of ads that showed

situations they had experienced in real life. Ninety-nine percent said they appreciated ads that

were humorous and light-hearted.

How effectively the brand is managed:

This is a great move for Coke because VitaminWater seems to be delivering the right

experience for today’s generation of soft drink consumers; its water based, but not as boring as

water and has a “natural” profile.

VitaminWater is first and foremost a success story built around a smart product

formulation, great packaging and smart distribution. The product was launched in 2000, but only

started advertising and using celebrity endorsers in the last three years.

20 http://www.marksdailyapple.com/coke-pepsi-cadbury-schweppes/

18

Recently, Outlaw Consulting conducted a survey to discover the most trusted brands amongst

Generation Y “trendsetters”, Vitamin Water ranked 14th, just behind Converse and ahead of Red

Stripe.21

Analysis:

Baby boomers are not out to hijack the genuine culture of youth. Instead they are

interested in a youthful way of life, the recognition that being young is a state of mind, and in a

physical, turbo-charged approach that allows you to bend and stretch well past your 40th birthday.

The most successful advertising campaigns targeted at mature consumers focus on active

and healthy lifestyles and introduce positive role models. Even the youth-obsessed cosmetic

industry (Lancôme ditched Isabella Rossellini as its model because she was considered too old at

42) is getting better at portraying women over 50. Since such women make up over half the

market for face cream in developed countries, it’s a wise move. In 2001 L’Oréal recruited the

then 57-year-old French actress Catherine Deneuve to promote its hair care products (she refused

to have her physical imperfections airbrushed out of the advertisements).

Such initiatives, however, remain the exception, not the rule. Most companies are only

just waking up to the impact shifting demographics will have on consumption. While some fret

about the old age demographic time bomb, others are investigating the possibility that the next

wave of pensioners simply will not act like, well, pensioners, but more like teenagers. Those that

choose to ignore the over-50 opportunity are ignoring a global redefinition of age, but more

importantly, a looming social gerontocracy that will decide their survival in the marketplace.

Recommendation:

From the current advertisement schemes it appears that the appeal of VitaminWater is

geared towards crossing over into unsuspecting and unfamiliar approach in reaching their

demographics. As an example, in an advertisement by rapper 50 cent plays a conductor to a large

classical symphony that plays his hit song “In Da Club” while basketball player LeBron James

plays a successful defense attorney. Clearly both stars are out of their professional element that

they are known for, but VitaminWater’s strategy to transcend urban, hip hop, tween, borders is

on the right path to create an image of “anything is possible” mentality.

21 http://www.influxinsights.com/blog/article/1372/coke-to-buy-vitamin-water.html

19

As the purchasing power of the over 50 is something gravely something to consider, it is

important to distinguish the clear role as to how VitaminWater should tap into that market. As

the baby boomer generation can identify with a lot of cultural aspects, they don’t see themselves

as being irrelevant and “old” past a certain age. In fact, more see themselves as “50 is the new

30”. If consumers see that the brand is depicting themselves as old they would be more reluctant

to purchase the product. Therefore, in a scheme of building brand equity VitaminWater must

develop an advertising campaign that people over 50 can identify but not necessarily think that is

geared toward them.

Campaign ideas would include using notable stars from the 70s like Alice Cooper, the

members of KIIS, Roger Daltrey in various comical scenes that people wouldn’t necessarily

associate themselves with. The company has been successful with the likes of their crossover

commercial advertisements and should continue the theme of using humor to attract potential

customers.

Customer Loyalty and Retention

Description of Current Tactics:

Glaceau’s VitaminWater has a strategic dependency on high levels of customer loyalty,

customer satisfaction, and customer advocacy in order to both drive new customers to the brand,

as well as to promote customer retention among current purchasers. This is especially important

as the enhanced water category moves from having a single player, to many.

VitaminWater’s goal: To turn tryers into buyers into “addicts,” as loyal fans of this

fantastically fruity beverage line call themselves. Since VitaminWater launched in 2000, it has

focused its awareness building tactics on more grassroots and interactive approaches, such as

sampling and interactive engagements (online games, in-person giveaways, etc.), as well as on

quick-witted bottle messaging that keeps consumers spreading the word and coming back for

more. This initial low key strategy gave early customers the feeling that they “discovered” the

product, thereby increasing their psychological investment, and therefore loyalty in the brand.

While promoting awareness was heavily addressed in VitaminWater’s early stages, there was no

initial or strategic focus on continued customer loyalty until recently.

Today, VitaminWater interacts with its consumers in unique and surprising ways to

promote loyalty. For example, the brand recently ran an interactive Facebook campaign that

encouraged customers and potential customers in the Generation X and Y demographic segments

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to pass Vitamin Water along to their friends in this virtual environment. In just one week, the

VitaminWater brand was shared around the community almost ten million times. Enhancing

relationships is also key to the brand’s current retention efforts. VitaminWater’s “Customer of

the Day” program, for example, rewards loyal fans for reaching out to the company via email,

phone, etc. Surprises like this keep customers coming back, and telling their friends, and in the

case below, spreading the word on YouTube!

Letter to the “customer of the day”. Free drinks, hats, and stickers for loyal customers.

Further enhancing the consumer relationship, VitaminWater recently revamped its

website to provide a more consumer-friendly and interactive brand presence that promotes word-

of-mouth communication. Here, visitors can take a quiz to find out what VitaminWater flavor

they are, play a VitaminWater game, download wallpapers, watch current television ads, and

even turn their IM icon into a VitaminWater bottle. In essence, VitaminWater is encouraging

customers to incorporate the brand into many areas of their lives, and customers are excitedly

doing so.

Interactive elements on VitaminWater’s website:

As a result of this recent push for consumer loyalty, VitaminWater has been so successful

that customers have been known to start blogs if they detect that one of the beverage colors or

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flavors has been adjusted ever so slightly. These “addicts” reach out to others, thereby creating

an almost cult-like community around VitaminWater. Measures, such as the annual Brand Keys

Customer Loyalty Engagement Index, offer support that the brand’s tactics are working.

VitaminWater ranked #2 in terms of bottled water brands with the highest customer loyalty, as

displayed in the ranking below:

2008 Brand Keys Customer Loyalty Engagement Index; Bottled Water Category:

1. Aquafina/Fiji (tie)2. VitaminWater3. Poland Spring4. Dannon5. Arrowhead6. Volvic7. Evian8. Deer Park9. Dasani

Customer Loyalty and Retention – Analysis and Conclusions:

● VitaminWater’s strategy around driving customer loyalty and retention has been apparently

successful, although the strategy has centered around Generation X and Ye. The next generation,

Millenials, should be considered in upcoming loyalty-promoting tactics, as many of these

advertising-overexposed individuals may begin building brand preferences and loyalties early on

that will also affect their preferences and purchasing habits in the future.

● Much of the loyalty is likely derived in part from the excitement generated from the overall

newness of the product. While VitaminWater did originate the enhanced water category, many

other brands are stepping in, and today’s increasingly fickle customer is difficult to tie down to

one brand for long periods of time. Additionally, VitaminWater can also be considered today’s

fad, and who knows what tomorrow’s fad may be. VitaminWater may be able to outlive this

image, but they must be pro-active in doing so.

● VitaminWater launched with the premise that it is a healthy beverage. As a result, many

consumers switched from carbonated soft drinks, to enhanced water beverages, like

VitaminWater. Recent news coverage surrounding the unhealthy qualities of VitaminWater, are

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surfacing. VitaminWater’s sugar and calorie levels, for example, have recently been publicized

in both competitor advertising and in health publications. If many initial consumers began

drinking VitaminWater for the health benefits, this may lower the rate of customer retention that

the brand currently enjoys.

● While programs, such as the “Customer of the Day” program, reward the loyal VitaminWater

consumers and advocates, it is unlikely that programs like this can last more than a couple of

years without either becoming stale or costly. Therefore, continuously coming up with new and

surprising ways to reach out to the “fans” will be an essential driver of loyalty and retention in

the next few years.

● VitaminWater gained its large market share and initial consumer loyalty through its first mover

advantage. With so many competitors now on the market, it may need to more aggressively

approach its consumer retention. For example, many carbonated soft drinks “under the cap”

games bring increased loyalty and retention (consumers need to continue purchasing one brand

or another in order to accumulate points, etc.), as well as a drive to the brand’s website for

further engagement. Additionally, VitaminWater is not proactive about capturing consumer

information (other than through grocery store club card transactions), in order to communicate

with them about new products, garner feedback, etc. It is much easier to retain customers if you

know who they are!

Customer Loyalty and Retention - Recommendations:

As VitaminWater is the “inventor” of the enhanced water category, it is able to draw

customer loyalty from this authenticity, as well as from the brand’s guerilla, one-on-one

retention tactics. VitaminWater’s first mover advantage, though, will not last forever, especially

as replicas of the product surge onto the market. VitaminWater will need to try innovative CRM

methods that incorporate a “fun” and viral factor in order to maintain consistency with the image

that the brand has already worked to build. Therefore, in order to maintain a strong level of

loyalty and retention, and to grow to take the number one spot (or at least hold its current

position) in the Customer Loyalty Engagement Index, the following actions are recommended:

● Collect e-mail address from customers and “fans” on the Vitamin Water website in order to

communicate with them, and to build relationships. Utilize/promote the “Customer of the Day”

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concept in order to garner these acquisitions. Turn this into a “club” of sorts, with prizes,

interactive games, consumer generated content, etc. A birthday e-mail program should also be

incorporated to let customers know that they are important. At the same time, Glaceau will be

gathering data about its customers in order to re-message to them in a more personal manner.

This one-on-one like communication is what will keep consumers coming back to the brand.

● Utilize promotions, such as an “under the cap” game to build excitement around the brand, to

build loyalty and to drive the consumer to other brand outlets.

● Offer a VitaminWater rewards card (the user can select their “flavor” of card) where customers

can log on to the VitaminWater website after purchasing a VitaminWater product. They can then

enter a code into their member page on the site to earn points, which can be redeemed for prizes

and product. Further, each time the consumer uses the card, they will see the VitaminWater

branding.

● Publish promotional recipe books, where each recipe would have at least one flavor of Vitamin

Water as an ingredient. A VitaminBar (i.e. VitaminWater Energy Cosmo) version will be

directed to the college-age/young adult crowd, while a version for the younger and older

demographics will be slightly tamer (i.e. VitaminWater Clarity Sorbet Punch). These books will

also incorporate fun quotes, stories to go along with the drinks, and a rainbow of ironic images.

A child’s favorite treat may come out of one of these books (hopefully the non-alcoholic

version!), thereby introducing him/her to the brand at an early age. Consumers would also be

able to register online to receive the VitaminWater recipe of the week. The more touch points a

consumer has with the brand, the more likely he/she will stay loyal.

Marketing Mix

What is the name of this triangle?

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Marketing Mix: Product

Description of Product:

VitaminWater is credited with creating the enhanced water category. The water itself is

de-ionized and distilled, and contains herbal extracts, vitamins and minerals, a differentiating

factor that has given it its “healthy” image. VitaminWater also contains a level of corn syrup

fructose that is similar to that in other sweetened soft drinks. Bright colors and a variety of

flavors, each with its own unique purpose (i.e. energy, clarity, increased metabolism, etc.), offer

distinction from regular water and sports drink beverages.

Aside from the drink itself, VitaminWater is also known for its distinctive bottle shape

and color-blocked label. Lined up on a supermarket or convenient store shelf, the assortment

resembles a can’t-be-missed rainbow. Humorous copy, in all lower case type, is used on the

labels in order to correspond to the brand’s quirky and youthful image. For example, copy from

the Power-C label reads:

"Legally, we are prohibited from making exaggerated claims about the potency

of the nutrients in this bottle. Therefore, legally we wouldn't tell you that after

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drinking this, Eugene from Kansas started using horseshoes as a thigh master or

that this drink gave Agnes from Delaware enough strength to bench-press llamas."

The variety of flavors appeals to VitaminWater’s core generation X and Y target market,

as well as to its peripheral market of soccer moms and younger, highly influenced kids. The

product’s bright coloring and quirky labeling mirrors the imagery and verbiage that today’s

MTV and MySpace generations are familiar with and interact with on a daily basis. Plus, the

vitamins and other health benefits are attractive to this same group, while also extending to older,

health-conscious individuals.

VitaminWater Flavors Include:

● Power-C: Dragonfruit (Vitamin C + Taurine) (Shaq's water--32 0z) ● Energy: Tropical Citrus (Vitamin B + Guarana) {Carrie Underwood's water} ● Revive: Fruit Punch (Vitamin B + Potassium) ● Multi-V: Lemonade (“Vitamin A to Zinc”) ● Focus: Kiwifruit-Strawberry (Vitamin A + Lutein) {Kelly Clarkson's water} ● Essential: Orange-Orange (Vitamin C + Calcium) ● Formula 50: Grape (50% Daily Dose of Vitamins) {50 Cent's water} ● Defense: Raspberry-Apple (Vitamin C + Zinc) ● Rescue: Green Tea (Vitamin C + EGCG) ● Endurance: Peach-Mango (Vitamin E + Ribose) ● Vital-T: Lemon Tea (Vitamin C + Vitamin E) ● Balance: Cran-Grapefruit (Vitamin C + Glucosamine) ● B-Relaxed: Jackfruit-Guava (Vitamin B + Theanine) ● Charge: Lemon-Lime (Vitamin B + Electrolytes) ● XXX - Acai-Blueberry-Pomegranate (Triple Antioxidants) {Sex & the City Movie}

Product – Analysis and Conclusions:

● As vitamin supplements are attractive to the health-conscious, VitaminWater is using its name

and its vitamin ingredients to present itself as a health-conscious drink, even though its sugar

content is no less than that in a regular Coca Cola or other soft drink. There is an inconsistency

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here in terms of what the product stands for in the consumers’ mind, and what the product

actually is. Customers may not have yet caught on to this discrepancy in a widespread manner,

although once they do, drop-off (at least amongst the health-conscious demographic) will likely

become an issue. At this point, Vitamin Water would need to decide how to re-position itself so

that its brand image and name are more inline with its actual product contents.

● While the copy on the product labels are meant to be fun and quirky, the labels themselves,

while distinguishable, do not correspond to this lightheartedness. The simple color-blocking and

black print (no images) are graphically dry in comparison to the overall brand image.

● The majority of Vitamin Water’s consumers are young, and therefore fickle with short

attention spans. Currently, the consumer experiences minimal interaction with the product, as

there is only one type of product available: a sugary beverage. With the strong branding that

VitaminWater has built, there is likely a larger potential for brand fans to incorporate other

VitaminWater products into their lifestyles. Such an extension has not yet been explored.

Product Recommendations:

To take advantage of the lifestyle branding potential, and to reach consumers in many

aspects of their lives, VitaminWater should consider offering extensions (in order to develop a

family of related products) to its original enhanced beverage line. Packaging and copy styles

would be consistent with that of the current product. The ultimate goal is to create a lifestyle

brand that consumers can relate to with a “this brand is for someone like me” statement. For

example:

1. Limited Edition Flavors: to add buzz and immediacy to the brand and product. Constant newness keeps current customers on the lookout for the next flavor.

2. A zero calorie line, including one flavorless/colorless version (VitaminWaterPure): to address the health-conscious consumer who may be turned off by the sugar content in the current product. Additionally, this will help combat the new zero calorie competitors that are coming onto the market. This, as well as the concept above (#1) are recommended as the first efforts in terms of product extension.

3. Two liter versions: to compete with the carbonated soft drinks, and to encourage mass and family-style consumption. Some of these two-liter offerings, will be offered in carbonated versions.

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3. Breakfast and healthy snack bars (VitaminBars): To re-enforce the healthy lifestyle image VitaminWater initially created, as well as to fulfill a need of the typical health- conscious VitaminWater consumer: healthy snack bars. Most likely these consumer are already purchasing bars, although if they are already loyal to the brand, and consider it to reflect their lifestyles, a Vitamin brand bar will make logical sense to them.

5. VitaminMints & VitaminGum: Same fruit flavors as the most popular waters, and enhanced with vitamins. These types of items are carried around in pockets and purses, and are offered to friends, therefore producing a viral branding element, as well as another product to enhance VitaminWater as a lifestyle brand.

6.VitaminWater Popsicles and lollipops (VitaminPops): A way to attract kids to the brand early on, as well as to lure parents by offering a fun way to deliver daily vitamins.

Marketing Mix: Promotion

Promotion Description:

Initially, Glaceau focused on grassroots endeavors to promote the Vitamin Water brand.

Glaceau purposefully avoided mass media outlets, as it wanted to first grow the brand

organically as a fashionable and healthy product, and relied on tongue-in-cheek marketing and

celebrity “spottings” to attract and influence young consumers. Celebrities like Allen Iverson,

and Paris Hilton were photographed with VitaminWater in hand. The majority of

VitaminWater’s promotional efforts, though, were initially centered around several hundred

brand and school campus advocates who worked to generate awareness and word-of-mouth buzz

via product sampling in retail and college locations. The retail sample program was titled

“hydrology,” while the college program was the titled the “campus ambassador” program. Along

with the sampling, these advocates also displayed banners, posters, information brochures, t-

shirts and other such promotional materials for both display and consumer hand-outs.

Such organic promotional tactics were utilized until 2004, when the company began

national marketing campaigns, starting with event sponsorships (action sports, music, fashion

and community-based events to build a hipster, “in the know” vibe around the brand), billboard,

web, and print, and more recently, television. The messaging of these promotions mirrors the

tongue-in-cheek humor that is printed on the VitaminWater product labels. The brand slogan,

“Hydrate Responsibly”, is included in promotional display, and is also meant to correspond with

VitaminWater’s sarcastic and cool brand image.

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By 2006, celebrity endorsements are also heavily utilized. Further, several celebrities

have been given their own VitaminWater flavors. This celebrity-factor has grown substantially

since Coca-Cola took over. Similarly, product placements in movies is now common practice.

VitaminWater has been strategically placed in both male and female targeted, humor-

based movies, such as Dodgeball and Sex and the City. Most recently, in order to continue

increasing awareness and word-of-mouth marketing among the Generation Y consumer,

VitaminWater has begun exploring mobile media and sms messaging as a promotional tool.

Vitamin Water Celebrity and Athlete Endorsers (sample list):

● Carrie Underwood● Kelly Clarkson● Jon Walker● David Lee● Josh Howard● Tony Parker● Shaquille O’Neal● Lebron James● David Ortiz● Tom Brady

Promotion – Analysis and Conclusions:

● As the brand grows, grassroots efforts will likely give way to more mass forms of advertising in order to maintain market share. VitaminWater will need to decide how to utilize other forms of marketing, while still maintaining its humorous, lighthearted image.

● VitaminWater’s television ads are the brand’s most mass-promotional initiative to date. Therefore, may of those seeing these advertisements have likely not been exposed to prior marketing efforts, and therefore may be unclear as to what the product is all about. These advertisements do not explain what the product is about, and feature athletes in some and musicians in others. There may confusion about who VitaminWater is for, what it does, etc.

● VitaminWater’s latest mobile marketing efforts will involve couponing. While mobile marketing is a great way to reach the target Generation Y audience, the coupon portion will allow consumers to pay less for the product, which may devalue the premium positioning that VitaminWater has been working to achieve.

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Promotion Recommendations:

VitaminWater has tested numerous promotional vehicles, and has recently begun moving

into the more mass marketing arenas. While its promotional tactics have been successful, the

brand must consider its next moves, as well as which mediums to continue promoting through,

and which ones (if any) to drop. Some recommendations for the brand are as follows:

● As VitaminWater’s new venture into television ads are generating consumer buzz, and are able to tell engaging brand “stories,” they generate word-of-mouth marketing, position the brand as more of a major player in the beverage market, and keep the brand top-of-mind among today’s television-loving consumers. Therefore, it is recommended to continue its promotional efforts in this medium. VitaminWater will enjoy greater brand awareness, and potentially, a greater market share of the bottled water market.

● To continue reaching Generation Y consumers in a relevant manner, VitaminWater will need to consider which celebrity endorsements to go after next. In order to capitalize on the popularity of reality television, VitaminWater may consider The Hills star, Lauren Conrad, Keeping Up with the Kardashians star, Kim Kardashian, or media icon, Ryan Seacrest as potential candidates for generating buzz among the Generation Y consumer. Product placements within these shows will also gain additional visibility among the target market, and seem less staged than such placements in movies.

● Now that VitaminWater has been able to capture consumers through its previous promotional endeavors, a focus on building loyalty is critical in order to keep theses customers (see loyalty and retention section for recommendations).

● The brand’s promotions are catchy, and therefore draw attention and curiosity, although there is nowhere else for customers to go to find out more. Advertisements should include drive-to-site messaging so that customers can learn more and interact with the brand. The more a potential customer is able to engage with the brand, the more likely he/she will try the product.

● Event marketing, with its cool-factor, will continue to be key to reaching trendsetters and influencers. While the brand should continue promoting itself at sports, fashion and music events, it should also consider promoting itself at popular clubs in major metropolitan areas. Only those “in the know” go (and are then let in) to these hotspots. Plus, if VitaminWater is offered here, it must be cool. Also, have advocates educate bartenders on appropriate drinks that could include VitaminWater. The VitaminWater Cosmo may be the new “it” drink, will encourage experimentation, and generate buzz.

● The brand’s print ads tend to be more focused on product, and less humorous or entertaining than its other promotional vehicles. VitaminWater should test incorporating its iconic humor to more of its print presence. For example, incorporate scent strips (as is done with fragrances) in print advertising. This will add some tongue-in-cheek humor that the brand is known for, and will also have consumers smelling, and possibly craving the drink all day.

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● If VitaminWater moves into line extensions, it will need to market these individually, while tying them back to the initial product and umbrella brand image. For example, the zero calorie beverage’s slogan may be: “fresh squeezed water.” This campaign would be colorful, visual, and tongue-in-cheek to fit in with previous VitaminWater campaigns. A key celebrity endorser would also be used.

i ttp://investing.businessweek.com/businessweek/research/stocks/private/snapshot.asp?privcapId=4399679ii www.glacéau.com.iii www.bevnet.com/news/2008/6-24-2008-pecoriello_ enhanced _ water .asp

References

Promoting at Spring Break:http://promomagazine.com/sampling/news/vitamin_water_samples_spring_break_030507/

Facebookhttp://www.adweek.com/aw/content_display/news/digital/e3i70fa56666e6c5bccbcd1f8c0690137af?pn=4

First marketing Campaign:http://www.bevnet.com/news/2004/07-06-2004-energy_brands_glaceau_marketing.asp

Customer Loyalty Measurehttp://www.brandkeys.com/awards/

Customer Loyalty: Customer of the Day (video):http://technorati.com/videos/youtube.com%2Fwatch%3Fv%3D4S48NN2-KHI

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Promotion Examples:

An Early Promotion Placement Movie Product Placement: Sex & the City

Carrie Underwood Outdoor Placement Mobile Outdoor Placement (sports-theme)

In-Store POP “Celebrity Spotting” (Lindsay Lohan) Kobe Bryant Placement

Branded Promotion Limited Edition VitaminWater Air Force Ones

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(to capture the sneaker-head market)

Marketing Mix: Place

VitaminWater is located in a variety of business channels. It is located within supermarkets,

drug stores, convenience stores, select food service locations and on the internet.22 During 2005-

07, Supermarkets accounted for nine in ten functional beverage FDM sales. Drug stores make

up 5% of the Functional beverage sales. In 2002-07, sales through mass merchandisers (other

than Wal-Mart) experienced a 116% gain. Sales in through mass merchandisers are considerably

less than in the grocery channel, although current increases indicate much potential.23 Below is a

chart of the retail distribution of Functional Beverages.

Functional Beverages - US - August 2007 - Retail Distribution       Figure 43: FDM *sales of functional beverages, by channel, 2005 and 2007

  2005 2007 (est.)Change 2005-07

  $million % $million % % Supermarkets 7,846 92.7 8,856 90.4 12.9Drug stores 370 4.4 488 5 31.7Mass merchandisers 248 2.9 451 4.6 81.9 Total 8,464 100 9,795 100 15.7  * Excludes sales through Wal-MartSource: Mintel/Based on Information Resources Incorporated, Inc. InfoScan® Reviews Information                 

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Going forward, one of the places VitaminWater needs to be placed is in amusement parks. This

will be able to give them more market share as well as introduce the product as a healthy

alternative in a place where soda is usually served. VitaminWater can also be introduced at bars.

22 Vitamin water slide23 Mintel Reports:Functional Beverages - US - August 200724 Mintel Reports:Functional Beverages - US - August 2007

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It can replace Red Bull and other energy drinks and be used as a mixer with vodka. Restaurants

are another place where VitaminWater can make a lot of profit and market share. Once brand

awareness sets in, people will be happy to hear that their favorite restaurant is carrying the brand

they enjoy.

Marketing Mix: Price

The VitaminWater 20oz average unit price range from $1.20 to $1.50 in the grocery stores and

the price for 32oz range from $1.90 to $2.20. The price of VitaminWater needs to stay relatively

the same going forward. People tend to think of a product as lower quality when it is priced

significantly lower than its competitors, so VitaminWater will be kept at a constant, but

competitive price with slight increases due to the inflation rate. There will not be any coupons

for the products since this will cheapen the product and lower the quality of it.

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