Business Studies Essay

The UK bottled water market has been dominated by firms such as Nestlé and Danone for many years. Coca-Cola, the soft drinks producer, recently entered the bottled water market in a number of countries, including the UK, with brands such as Malvern and Glacéau. What do you think is the best strategy for existing businesses to adopt in response to the entry of a new large competitor? Justify your answer with reference to the UK bottled water market and/or other markets that you know.
Nestlé and Danone have been dominating the UK bottled water market for many years with well known brands such as Buxton, Evian and Volvic. Coca-Cola is one of the companies who has decided to enter the bottled water market with brands such as Malvern and Glacéau. Coca-Cola are using Ansoff’s diversification by entering a new market with a new product, although they are moving into a related market so the risk isn’t too high due to the knowledge they already have of the soft drinks market. With a new competitor entering the bottled water market, the current marker leaders may need to adapt their strategies in response to the large competitor.

As a quick response to a new competitor coming into a market, a company could use promotional campaigns to keep customers attracted to their brand. They could invest in merchandising, to create a more attractive way to sell their products or to get better shelf space for their products, as consumers are more likely to buy something that stands out and is at their eye level. The firms could also use popular sales promotion methods such as competitions, free offers, buy one get one free or coupons. As consumers are becoming more environmentally aware, they start to make decisions on homogenous goods based on things such as how ethical they are. In a market where companies are selling homogenous goods they need to differentiate themselves through their brand as this is what they compete on. A bottled water company that has succeeded in doing this