Consumer Behavior Report on Smart Water Consumers

15 – 20 minutes

Summarize each part of the paper

Segmentation grid, positioning map in powerpoint

Section I

The company we chose to examine and analyze is Smart Water. Glaceau Smart Water

was founded by J. Darius Bikoff, and was sold to Coca Cola in 2007 for $4.1 billion, and is still

currently a branch of the Coca-Cola Company. Smart Water is one of the priciest water products

sold by Coca Cola, and overall it is a higher-cost bottled water, sold worldwide. Its increased

price is due to the ingredients and the process they go through in order to create healthier

water versus other leading brands.

Coca-Cola’s marketing strategies includes advertising slogans, jingles, and sporting event

sponsorships. Therefore it is of no surprise that Smart Water has celebrity endorsements and a

well-funded marketing campaign, with the goal to convince consumers that they offer the best

water. Such celebrity endorsements include those of Jennifer Aniston, and Tom Brady. By

having celebrity endorsements, this influences people to buy the water because the celebrities

they look up to drink the water, therefore pushing them to believe they will have that

preference for drinking Smart Water in common. There’s also the fact that because the

celebrities that they choose to advertise are all fit and healthy, this influences people to think

that if they consume the product they will end up looking the same way or living the same

healthy life.

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This then causes consumers to be influenced, and buy Smart Water because they are

drinking the “best” water. Their marketing campaigns start off by the creation of excellent

advertisements and slogans, as for example some of their slogans say, “Vapor-distilled. Inspired

by the clouds” or “Smart because it’s made that way”. These slogans catch the eye of the

consumer, therefore influencing them to choose Smart Water over other water products,

without realizing that ultimately water can be easily obtained freely rather than paying such a

high price for it.

The main issue with this company is its price point. They generally charge a higher price

for a product that you can obtain for very cheap, if not completely free. Water is a natural

resource that all humans need to consume, and it is available in large quantities in this part of

the world. So, why charge a higher price for this product if it can be obtained for free at any

restaurant or drinking fountain? The reason for the higher bottled cost is due to the company

distilling the water in order to make it as pure as rain water (before hitting the ground).

There’s also the fact that they add electrolytes for better taste. Electrolytes are good for

the human body because a well-balanced diet consists of an adequate amount of electrolytes.

These electrolytes are not found in other water products, or ordinary water you get off the

drinking fountain. Due to their efforts to have the best and healthiest bottled water, Smart

Water is able to sell off its pricier product because of the use of its unique ingredients, and

because people are always in the search for what they perceive to be the best products for

their bodies.

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The price for a single 23.7oz bottle of Smart Water at Walgreens is $1.49 while a 33.8oz

bottle is $2.19. Of course the bottle size matters because the bigger the bottle, the more it will

cost. It is not cheap at all to purchase Smart Water; therefore we chose to compare Smart

Water to another common brand of water, which is Ice Mountain. Ice Mountain is a branch of

Nestle Group. A single bottle of Ice Mountain can be found at Walgreens for under a dollar; in

fact a 101.4oz bottle is priced at $1.49 (the same as a 23.7oz bottle of Smart Water).

A 24-pack of Smart Water which is rare to come across at the store can be mostly

bought online for $24-$28. A 24-pack of Ice Mountain can be found in any store for $4-$6. Of

course buying in 24-pack bulks ends up being cheaper for both companies because calculating

the total you would pay for a single versus a bulk ends up being more, which is exactly why

their income is higher because a single bottle of water sells at a higher price than buying in a

larger bulk.

Looking at these different price variances, we chose our Segments to be as follows:

Segment A = Smart Water, and Segment B= Ice Mountain. In each segment, we will research on

why consumers choose (or don’t choose) the corresponding product, and what exactly sets the

value of each brand of bottled water. We decided to choose these two products because of the

price variance, and because they are the two most common brands of water that people

consume. Considering if you go to any store you are more than likely going to see Smart Water

and Ice Mountain in the store fridge.

These two segments considering that they come from different companies are

ultimately still drinking water, and are healthy enough for people to drink considering they have

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been processed and tested to make sure it is suitable for human consumption. The only

difference is the price variance and the last option is left to the customer whom is the person

that chooses to either drink expensive or not expensive water. This decision is ultimately based

on the economic status of the individual because if they have enough money they will end up

purchasing expensive water because of its brand quality, considering Smart Water has better

quality ingredients (electrolytes). Or if they don’t have enough money to purchase the

expensive brand therefore they will end up going with Ice Mountain since it is a more

affordable brand. In this project we will analyze the preferences of people from different age

ranges, backgrounds, etc. to come to a final conclusion of what it is they choose to drink and

what the factors that trigger that decision are.

Section II

Statement of purpose:

To carry out this project we focused on what customers look towards when purchasing water.

In order to test this we have chosen to focus on two brands of water: Smart Water and Ice

Mountain. Due to the high price of Smart Water we have decided to choose its competitor Ice

Mountain which is much cheaper and highly favored among many consumers.

We began with creating two short surveys, one for Smart Water consumers and the

other for Ice Mountain consumers. In this short survey we asked questions about feelings,

benefits and problems, and what triggered the consumer’s decision to buy a specific brand of

water. Based on those answers we created a longer survey asking about the functional value,

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social value, emotional value, epistemic value, and conditional value in regards to water chosen

by consumers.

Due to such a high price of Smart Water compared to other brands, the Coca-Cola

Company will get an insight of customer preferences not only relating to price, but also to taste

and size of the bottle. We questioned whether price is an important factor when choosing the

type of water you buy and used a scale to ask whether each brand is perfectly priced. Based on

those questions the company is able to make changes through which it can get more

customers, generating more revenue.

Discussion on sample:

Smart Water and Ice Mountain are two commonly purchased bottled waters compared to other

brands. What makes both of these brands stand out is not only the price but the components of

the water. While Smart Water is rich in nutrients and more expensive, Ice Mountain has a great

taste and is much cheaper than its competing brand. As a result, both of these brands were

chosen to better understand what factors drive consumers into choosing their preferred water.

Due to the fact that the price difference ranges between both brands, we wanted to test what

consumers think of the price of water and what circumstances will cause the consumer to

purchase one brand over the other.

If we were to do this project over again we would definitely have picked different

segments. Water is a natural resource and is available anywhere. It distinguishes itself from

other drinks such as Red Bull, 7up, Pepsi, etc. in the sense that it does not have sugar and it is

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the healthiest of all. However, comparing one brand of water to another is a difficult task and

not as interesting as we have thought in the beginning. It is difficult because it was hard finding

people who prefer and buy Smart Water. Some people haven’t even heard of the brand. It also

lost our interest halfway through the project because we were comparing water and not two

completely different segments. We began to think that it would have been more interesting to

compare Ice Mountain to 7up or Pepsi because not only are those beverages the ones

commonly bought by consumers, but they are different. They have different color and taste. It

would be then interesting to see what causes consumers to choose Pepsi over Ice Mountain, for

example, or Ice Mountain over Pepsi. Handing out the survey to people would have been easier

because it is most likely that everyone knows of or has drunk before either Ice Mountain or

Pepsi.

Discussion of questionnaire design:

The questionnaire was created based on the theory we studied in class. Before we could create

the questionnaire, however, we first needed to gather preliminary information from a sample

group of consumers. In a real market research firm, this is usually conducted through

qualitative research methods such as focus groups or individual interviews, which stimulates

discussion and gives the researcher further insight. While we were unable to have a focus

group, and therefore discussion, the format of the pre-survey was open ended, so our test

subjects were able to elaborate and give us more insight.

The format of our pre-survey consisted of ten questions relating to the five values: functional,

social, epistemic, emotional and conditional. For each value we asked two questions, one

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pertaining to their brand of choice, brand A, and one pertaining to the other brand, brand B.

For the functional value we asked the benefits and problems associated with either brand A or

B, and social value looked at the groups of people thought to be associated with brand A or B.

Emotional value identifies the feelings evoked by the decision to purchase brand A or B, and

epistemic value showed us what triggered the decision to buy brand A or B. Lastly, conditional

values look at what would cause a brand user to switch brands. Furthermore, because our

study involved two brands, we needed two different survey groups: one for Smart Water and

one for Ice Mountain. Once we created the pre-survey, each member in the group gave the pre-

survey to two Smart Water users and two Ice Mountain users, for a total of ten Smart Water

respondents and ten Ice Mountain respondents.

Once we gathered all our pre-surveys we were able to analyze the responses and gather

similarities and differences among the responses. These insights were then converted into

questions that were used in the questionnaire. We tried to make the questions as close to the

responses as we could in order to limit bias, but we used a few questions that our group was

curious about, and not mentioned in the pre-survey.

Using the pre-survey responses, we began to create our questionnaire. The first section looks at

the respondent’s background related to the brand. For example, we first need to define which

of the two segments (Smart Water and Ice Mountain) they drink, how long they have been a

user and how frequently they purchase the brand. Then we asked questions pertaining to the

competition, product, promotion, price and distribution.

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Section two through six look at the five values in more depth. In section two we looked at

functional values and asked if they agreed or disagreed with statements pertaining to benefits

or problems associated with Smart Water. The third section identifies social values, and what

groups of people the respondent believes are most and least likely to drink Smart Water. The

conditional value is studied in section four, by asking if certain conditions would or would not

cause the respondent to change their decision to purchase Smart Water. Section five examines

emotional values, found by asking whether they associate specific feelings with their decision to

drink or not drink Smart Water. Lastly, section six identifies the epistemic value, in which we

asked whether the respondent drank, or thought about drinking Smart Water for specific

reasons.

Once the five values were looked at, we asked questions relating to the respondent’s lifestyle.

In order to formulate lifestyle questions, we looked at the activities, interests and opinions of

people who drink Smart Water. For example, we asked them to rate how strongly they agreed

or disagreed with statements such as “when I am exercising I drink Smart Water.” In this section

we used Likert scales, which give the following options: strongly agree, agree, indifferent,

disagree, strongly disagree. Biases may have surfaced in this section because we could not

receive any information from the pre-survey relating to lifestyle. We did our best too remain

impartial and use inferences, but there may be biases. Lastly we asked demographic questions

and offered a section for comments.

Discussion of data collection:

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Once we finalized our questionnaire, each group member was responsible for getting twenty-

five respondents: half Smart Water users and the other half Ice Mountain users. In total we had

125 responses.

Before we could input our questionnaire results, we needed to code our survey. In order to do

this, we created an excel spreadsheet with each question and the possible results, all coded

quantitatively. For example, for the first question in section two, we asked our respondents if

they agreed or disagreed with the following statement: “buying Smart Water makes me

smarter.” This specific question would be labeled P2Q1 (part two, question one). If the

respondent answered agree, we would enter 1; if the respondent answered disagree, we would

enter 0.

After the questionnaire was fully coded, we each entered our respondent’s responses into the

excel spreadsheet using the coding. We encountered a few problems during this stage due to

confusion surrounding the coding. To ensure that our results were correct, we went back and

double-checked each person’s answers to make sure they were correctly entered into the

spreadsheet.

Sampling bias may have occurred due to the fact that our sample size was relatively small.

Furthermore, our sample size was not representative of the entire population. Most of our

respondents fell between the age ranges of 18-25, which allows for bias. Furthermore, we

failed to ask about ethnicity, which could also drastically affect our results.

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Discussion of data analysis:

IBM’s SPSS data analysis software is a great solution for compiling data into useful tools

to analyze the behavior of each segment. The 125 individual Smart Water surveys have been

compiled into two useful representations of data: a Crosstab chart which displays profile and

demographic information on the questions answered per segment for part 1 and part 7, and a

T-Test table, which shows the average (mean) of people who responded in favor of the yes or

no questions from part 2 through part 6; again, displayed per segment, and highlighting useful

information on product, price, promotion, and place. When comparing data taken from a large

sample, such as a sample of 125 people, compiling data into a Crosstab Table and T-Test table is

a great way to analyze every person’s answer, while dividing them into to segments, without

the need to have to page through all 125 individual surveys.

Section III

Buyers’ Needs

A. Functional:

The functional value of Smart Water is without a doubt its health benefits. Smart Water is made

with electrolytes that enhance hydration and keep the consumer feeling refreshed and well

hydrated. The product is viewed by the public as a healthier choice when drinking bottled

water. Although it is hard to create bottled water that is healthier than every other bottled

water out there, Smart Water has been able to form the consumers’ perceived value as a

healthy choice. Another functional value of smart water is its bottle size. This could be a

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positive or negative value depending on the circumstances and type of person that is buying

the product. Some people prefer a larger bottle with more liquid like Smart Water. Others

prefer a smaller bottle that is easier to carry such as Ice Mountain. With this said, the bottle size

most certainly plays a role in the functional value of the product.

B. Social:

It is perceived that the social values of Smart Water are that it is consumed and purchased by

wealthier people who do not mind the higher cost for a more unique option. These people may

be celebrities or athletes that purchase Smart Water because it is different than the typical

brand. Business people may also purchase this product so that they stand out in their offices

and appear more eloquent.

C. Emotional:

There are many emotional values associated with Smart Water. First, due to its catchy name,

people perceive it to be the smarter choice when purchasing bottled water. These people don’t

necessarily believe that drinking Smart Water will make you smarter, however; they do believe

that it is the smarter option when making a purchase at the grocery store. This is a perceived

value that Smart Water has been able to exploit and advertise. Secondly, the idea that Smart

Water is unique makes people desire the product. People strive to be different and have their

own personal identity. Buying Smart Water makes a person feel unique and stand out in a room

of people. Lastly, the idea of a healthy choice plays on consumers emotions. People naturally

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want to feel they are choosing a healthy option. Therefore, by marketing that Smart Water is

healthy, it is creating an emotional value.

D. Conditional:

One of the main conditional values of Smart Water is its price. If the price was a little lower,

people may choose to switch from other brands to Smart Water. The bottle size also plays a

role on its conditional value. If Smart Water were to offer more variable bottle sizes, they would

attract the attention of more consumers. Since they only offer a large bottle, may consumers

pay them no attention as they cannot fit their bottles in their bags, purses, or cup holders.

Lastly, a person with medical conditions may make them decide to switch from another brand

to Smart Water. If a person is ill, they may want to change their diet to offer healthier solutions.

This may make them decide to switch brands when it comes to bottled water.

E. Epistemic:

One of the primary epistemic values is the curiosity about the brand. People may decide to

drink Smart Water because they are curious about the taste compared to other brands. They

may also see celebrity endorsers drinking smart water and wonder what is so good about it.

Furthermore, consumers may be bored of other brands or sick of the taste and want to try

something new. This may drive them to purchase Smart Water.

Demographic Profile:

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The demographics of the people who drink Smart Water are as follows. Smart Water

consumers consist of middle to upper class people who have disposable income for more

leisurely products. These people have the extra money to spend on Smart Water to have a

unique bottle of water over the generic bottle of Ice Mountain. The age group of people

purchasing Smart Water is from 24-45. People younger than 24 years of age do not have

disposable income to spend on Smart Water. However, middle aged people that are employed

and concerned about their social status and health want to buy Smart Water. People over the

age of 45 do not care so much for the brand of water they are drinking. These people will

mostly buy whatever is cheaper or even just drink from the tap.

Lifestyle Profile:

People that drink Smart Water have very active lifestyles. These people exercise often and go to

the gym a few times a week. These people may be athletes or health fanatics that care greatly

about their body and being in shape. People with business lifestyles may also be drinking Smart

Water daily at the office. These people are interested in having a good social status and being

known for their unique choices. These people care greatly about how other people perceive

them and want to be unique.

Product/Positioning

Product Attributes:

There are numerous product attributes that set Smart Water apart from their competition. The

main attribute, which Smart Water prides itself on, is the purity of their water; Smart Water

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uses strictly purified water, as recognized by the FDA. Purified water, compared to spring water,

mineral water and artesian water, is distinct due to its various treatments. Therefore,

regardless of the water source, Smart Water retains a consistent, purified taste.

Along with the purification process, Smart Water sets themself apart by adding electrolytes to

the water. Electrolytes are ionized salts found in body fluids that aid the body in energy and

overall health. Electrolytes are added to many sports drinks to help replenish the body;

however, many of these sports drinks have high amounts of added sugar, which is bad for the

body. Smart Water, on the other hand, has the benefits of electrolytes without the harmful

effects of added sugar. The combination of electrolytes and purity makes Smart Water the

healthy choice of drink, with a uniquely fresh and pure taste that other bottled waters lack.

Smart Water is also positioned by its sleek bottle shape and size. The bottle itself has a modern

look and feel that attracts consumers. The bottle is also relatively large, compared to other

bottled waters. At 20 ounces, the regular bottle of Smart Water is larger than its competitors,

whose standard bottles are 12 or 16 ounces.

Competition:

The market for bottled water is highly competitive, with thousands of different brands of

bottled water products. Due to the nature of Smart Water, it makes sense to classify

competitors by water type: purified water, spring water, mineral water and artesian water.

Some brands that strictly use purified water are Aquafina and Dasani. Other brands, such a

Nestle, make different types of bottled water to meet many different consumer needs. Their

purified bottled water is called Nestle Pure Life Purified Water. Brands of spring water include

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Evian, Arrowhead Mountain Spring Water (a subsidiary of Nestle), Mineral Springs and Ice

Mountain. Calistoga and Perrier are examples of mineral water, and lastly, Fiji and Voss are

brands of artesian water.

Position Map:

The position map below is categorized by price and variability of bottle sizes. Smart Water has a

high price and low variability of bottle size, as compared to Fiji and Ice Mountain. Fiji is also a

relatively expensive brand of bottled water, but has a wide variety of sizes to choose from. Ice

Mountain, on the other hand, is quite inexpensive with high variability of bottle size. In order to

have an edge over the competition, Smart Water should reduce their price and introduce more

variability of bottle sizes.

Segmentation Grid Analysis:

After filling out the framework together as a group, we created a segmentation grid to decide

what our most important segments would be. We started by disaggregating the chart and

coming up with over sixty different values. These values were taken from our decisions on the

four P’s and the five values. After coming up with these values, we then cut them down to less

than twenty values by reaggregating the chart. We chose which values were most important

and came up with bases for our segmentation. You can see our disaggregation process in

Appendix 2 below.

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Seller/Marketing Strategy

Product:

Smart Water is our innovative product. Compared to other brands it is not only more pure and

refreshing, but it also contains essential nutrients such as potassium, magnesium, calcium, and

electrolytes. These electrolytes help prevent dehydration which distinguishes itself from other

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bottled waters. It is also vapor-distilled water. It has a unique bottle shape, although larger than

other bottles its smooth surface makes it easy to carry and can be placed anywhere.

Promotion:

The promotion strategy for Smart Water is both push and pull. It is a push strategy in a sense

that the company hires celebrities to advertise the water. For example, the most common

celebrity to be found in Smart Water ads is Jennifer Aniston. The advertisement is promoted

through a producer and then to channel members who in turn promote it to the final

consumer. It is also a pull strategy because it is done through advertisements in billboards,

television, and radio to induce the final consumer to buy the product. Compared to other

brands such as Ice Mountain, advertisements with Smart Water are not as common; however

they do begin to appear.

Pricing:

The pricing strategy is known to be as the market-skimming pricing. The price per bottle of

Smart Water is relatively high compared to Ice Mountain. The price of a bottle of Smart Water

ranges between $1.99 and $2.99, however the price per bottle of Ice Mountain is roughly

around $1.50. A 24-pack of Ice Mountain sells for about $4.00 while online a 24-pack of Smart

Water sells for about $24.00-$28.00. A bottle of Smart Water has been highly valued due to its

additional nutrients which other waters do not have. It is believed to be healthier than other

water brands.

Place:

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The places available to buy Smart Water used to be very selective. In the beginning it was not

distributed to many areas and many stores. However, within time it has become intensive

where it can be bought almost anywhere. Usually, Smart Water can be found in department

stores, grocery stores, and gas stations. It is limited though if you want to purchase it in a case

of 24. These are not commonly available in stores, but can be bought online.

Section IV

IBM’s SPSS data analysis software is a great solution for compiling data into useful tools

to analyze the behavior of each segment. The 125 individual Smart Water surveys have been

compiled into two useful representations of data: a Crosstab chart which displays profile and

demographic information on the questions answered per segment for part 1 and part 7, and a

T-Test table, which shows the average of people who responded in favor of questions from part

2 through part 6; again, displayed per segment, and highlighting useful information on product,

price, promotion, and place.

For the Crosstab Table, our group analyzed the data collected from our surveys on a

quantitative level by converting each individual answer to an integer. Part 1, Question 1

separates the survey-takers into their respected consumer segment (a value of 1 for Smart

Water, and a value of 0 for the competitive segment, Ice Mountain). For all other Parts of our

survey (including the remainder of Part 1), the selected choices are separated into integers that

make the most sense in the context of each question asked. From here, we tallied up the

amount of choices selected per segment, and the number shown in each segment’s column

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P1Q4 Please rank how important the price is to you when choosing a brand of bottled water, with 1 being not important to 7 being very important1 1.30 4.10 2 2.60 6.10 3 3.90 12.20 4 2.60 34.70 5 18.40 28.60 6 32.90 14.30 7 38.20 -

represents a percentage of people that selected that answer. The table below is an example

taken from our Crosstab table that illustrates this process.

Our qualitative scale in Part 1, Question 4, has 1 as a representative integer for a

consumer who doesn’t value the price point as a key indicator of what brand of bottled water

he or she will choose. A consumer who chooses 7 would value the price point as having an

important role when choosing their preferred brand of bottled water. The first column of

values (those having integers after the decimal point) represents the percentage of all

consumers who identified themselves with Ice Mountain. For example, 38.2% of all Ice

Mountain consumers rank the price point as a very important indicator of choosing a brand of

bottled water. On a qualitative level, this makes perfect sense when comparing Ice Mountain

to the pricier option, Smart Water, since the consumers who choose Ice Mountain are likely to

choose it for its cheaper price. Not surprisingly, 0% of Smart Water consumers see the price as

a very important indicator of which bottled water they choose. Because of the behavior

displayed in P1Q4, we can infer that people choosing Smart Water are more financially-secure,

since they tend to value other aspects of the water enough to disregard the higher price of the

product.

Demographic indicators such as income or spending behaviors can be easily interpreted

from the crosstab tables, and their behavioral patterns on how these consumers or potential

consumers feel about bottled water shine right through the numbers. P1Q2 indicates that over

68% of the segment 0 consumers have been drinking Ice Mountain for over a year, while 61% of

Smart Water drinkers began in the last 12 months or less. This is a significant indicator of brand

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loyalty for Ice Mountain drinkers, but Smart Water is still on the rise because of their large

amount of new consumers (16.3% new to Smart Water within the last month alone).

The crosstab table also provides insight on the outreach to each respective segment’s

consumers. P1Q8 asks each segment’s consumers about where they get their information

about bottled water. Smart Water has a successful online campaign, with 56% of all Smart

Water drinkers selecting online media as a source. If a person hears of Smart Water, tries it for

their first time, and likes it, they will most likely share it with their friends, family, or co-

workers. Amazingly, 44% of Smart Water consumers claimed to have gotten their information

from Word of Mouth. Collectively, every single Smart Water consumer who took our survey

claimed that they receive their information from either the internet, or from word of mouth

(44% + 56% = 100% of segment 1 survey takers). This shows just how successful the Smart

Water campaign seems to be.

P1Q7, and the entirety of Part 7 asks specific questions about behavioral trends

regarding Smart Water consumption. When analyzing this data in the crosstab table, we are

presented with each segment’s opinion on these question, revealing thoughts about brand

loyalty, willingness to try something new, as well as lifestyle choices from each segment’s

consumers.

Taking a quick look at P1Q7 before we continue our analysis of Part 7, we are

presented with information regarding Smart Water’s brand loyalty, as well as their quality of

water. The question asks each survey taker how satisfied they are with the taste of Smart

Water, with 1 being not satisfied, and 7 being extremely satisfied. The consumers who identify

themselves with Smart Water revealed that they are generally satisfied with how the water

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tastes. Smart Water does highlight the purity and crispness of their water, and the opinions of

their consumers reflect that; 81.6% of these consumers revealed that they would rate the taste

with a 4 or higher (again, on a scale of 1-7), and 51% of them specifically rated the taste with a

perfect 7. What highlights the quality of taste of Smart Water, however, comes from the

answers from segment 0, the Ice Mountain consumers. Ice Mountain consumers who have

tasted Smart Water before have the required capacity and understanding to answer this

question, and 82.9% of them rated Smart Water’s taste with a 4 or higher, which is even more

than the Smart Water segment. What the data tells us is that, regardless of segment 0 survey

taker’s choice of Ice Mountain, they feel more satisfied with the taste of Smart Water than the

segment 1 survey takers.

Part 7 show our survey taker’s lifestyle choice in context with Smart Water,

regardless of if they normally drink it or not. However, our crosstab separates the consumer’s

choices to these questions into each respective segment that they fall into. The results tell

quite a tale. The questions ask, on a scale of 1 through 5 (1 being a representative for strongly

agreeing, and 5 representing someone who strongly disagrees), when the survey taker chooses

to drink Smart Water. Segment 1 answers vary for almost each question, since Smart Water

consumers might drink Smart Water during different events or for different occasions, while

segment 0 is more heavily weighted towards strongly disagreeing, since they tend not to

choose Smart Water for any of these instances (we are safely assuming that they would choose

Ice Mountain instead). P7Q2 asks “When I travel, I drink Smart Water.” 85.5% of Ice Mountain

consumers feel indifferent, disagree, or strongly disagree. 48.7% of Ice Mountain consumers

specifically stated that they strongly disagree. However, segment 1 answers vary. 44.9% of

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Smart Water consumers either agree or strongly agree, 22.4% are indifferent, and 32.6%

disagree or strongly disagree. This trend continues for other similar lifestyle questions.

The most striking trend that we see with both segments are found in P7Q9 and P7Q10,

when the questions ask about the Smart Water price point. P7Q9 says “I think the price of

Smart Water is too high.” An even 75% of Ice Mountain consumers agreed or strongly agreed,

and not a single Ice Mountain felt that they strongly disagreed with this statement. Smart

Water consumers varied with the answers for P7Q9, which reveals that Smart Water reaches

out to people of all income levels, and some people still drink it even though they are

consciously aware that the price is too high; 46.9% of them, to be exact. P7Q10 states “Smart

Water consumers are usually wealthy.” 72.4% of Ice Mountain consumers either agreed or

strongly agreed, which possibly indicates that they are not wealthy, and/or they choose Ice

Mountain because of their income level. 63.3% of Smart Water consumers felt the same way,

so regardless of segmentation, Smart Water is culturally displayed as a bottled water for the

upper-class. Note: we were happy to see that everyone had an opinion on this question, since

neither Segment 0 or Segment 1 felt indifferent to P7Q10.

The T-Test table include questions from part 2 through part 6 of the survey, and tell us

about how our survey takers value Smart Water in terms of Product, Price, Promotion, and

Distribution. Because there are only two possible answers per question (yes=1, no=0), we

calculate an average of all answers per segment, and display it as a mean. If all individuals

answered yes, then the mean would be 1.00, and if all individuals answered no, the mean

would be 0.

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Price is the first of the four indicators that we are looking for in the T-test data. P2Q4

direclty asks if the individual feels that Smart Water costs too much money. The mean for the

Smart Water segment was 0.53, so just over half agree with this statement. The mean for the

Ice Mountain segment is 0.83. This tells us that the people not choosing Smart Water as their

preferred bottled water feel that Smart Water is too expensive. If Smart Water wanted to

attract more customers, especially new customers, or customers that choose other brands of

bottled water, then they can focus on lowering their price.

A lot of useful information about the opinions of the product is found using the T-Test

analysis. P2Q7 asks if Smart Water is worth it for the taste, and a mean of over 0.5 was

recorded from both segments. Smart Water consumers choose it for the bottle size in P4Q7,

which asks if people choose Smart Water for the bottle sizes (mean of 0.67), and even the Ice

Mountain segment had an unusually large mean of 0.43, which is a lot for people who would

choose other brands. We can see that Smart Water has a strong grasp on its consumers based

on the product.

Promotion might be an area that Smart Water might want to work on. Glacieu

promotes its flagship-bottled water as the intelligent choice for bottled water, with their

naturally inspired distillation process, as well as the name of their product itself. But when we

asked our survey takers if Smart Water either improves intelligence (P6Q8), or if Smart Water

drinkers feel intelligent when drinking the product (P5Q5), we received a mean of 0.16 from the

Smart Water segment for P6Q8, a mean of 0.14 for P5Q5, and we had a mean of 0.13 for both

these question from the Ice Mountain segment. Smart Water is either not getting their

message across clearly enough, or they might want to move on to another marketing strategy.

23

It seems that none of either segment’s members feel that drinking any sort of branded water

has an impact on intelligence level.

Finally, the T-Test table shows useful information on opinions about Smart Water’s

Distribution. P4Q1 asks if people buy Smart Water based on its availability. 0.78 was recorded

as a mean for the Smart Water segment, which tells us that those who prefer to drink Smart

Water are finding it rather available, while only 46% of Ice Mountain consumers feel the same

way (mean was recorded for segment 0 at 0.46).

Section V

One of problems we came across while doing research was that the price of Smart

Water is too high. When compared to other brands of water bottle such as Ice Mountain or

Dasani, Smart Water is significantly higher priced. This leads consumers to choose other brands

over the Smart Water brand. In order to solve this problem, Smart Water needs to lower their

prices and become more competitive with these other brands. With the change in price come

many different pros and cons.

There will be several benefits to lowering the price of Smart Water. One of the primary

benefits will be that consumers will more likely purchase the product. The price can still be

somewhat higher than competitors’ products for it to be successful, however, not much higher.

Consumers that see a bottle of Smart Water only priced a few cents higher than a similar brand

will most likely purchase this product for the brand name and quality. When the price is almost

a dollar higher than other brands, like it is now, consumers will not even consider purchasing it.

Another advantage of lowering the price of a bottle of Smart Water is that more retailers will be

24

willing to offer it. Some retailers do not offer higher end products because they know their

customers will not buy them. If the price is lowered, many retailers that do not currently offer

Smart Water may decide to in the future. Lastly, by lowering the price, Smart Water will be able

to gain a larger share of the market. Thus, making them a stronger member of the industry and

giving them the ability to innovate and introduce more products. Although all of these benefits

to lowering the price sound good, there are also many negatives associated with this solution.

One of the largest disadvantages to lowering the price of a bottle of Smart Water is that

it will significantly lower the revenue brought in by the company. The only way it would be

worth wild for the company to take this loss in revenue is if it was made up by the gain in

market share and increase in quantity sold. Furthermore, another downside of lowering the

price would be that the products would be viewed as less exclusive. One of the key selling

points for Smart Water is the fact that people see it as a unique and exclusive product. By

lowering the price, it may no longer been seen that way by the consumers. Instead it may be

viewed as another typical bottle of water. Lastly, if Smart Water were to lower the price of their

products, they may also have to sacrifice some quality in the production of their bottles. They

may have to do this to keep their profits in check after reducing the price. This is a great

sacrifice that many companies would not be willing to take.

After further research, we concluded that another problem for Smart Water is the

inability to buy in bulk. Smart Water only offers their products as a single bottle or a six-pack.

Many consumers nowadays are looking to purchase their bottles of water in large quantities.

They are doing this to avoid having to do repeat visits to the grocery store. The fact that Smart

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Water only sells in six-packs discourages consumers from purchasing their water. If they were

to offer larger packages, many consumers would choose to stock their home with Smart water

over other brands.

One of the primary benefits to increasing the package size would be an increase in the

market share. In many cases, consumers are looking to buy large quantities of water bottles for

sporting events, large gatherings, and other large events. With the ability to buy a case of Smart

Water with twenty four bottles, many of these consumers would choose Smart Water over

other brands. Another benefit to increasing the number of bottle sold in a pack would be the

fact that larger wholesale distributors such as Costco would carry Smart Water. They currently

do not because these stores base their inventory off of products that they can get in large

quantities in order to offer the best price for their customers. By creating a bulk size product,

Smart Water will be able to get their products into these outlets. Lastly, the ability to buy in

bulk would increase the amount of every day consumers that purchase Smart Water. When

taking a trip to the grocery store, consumers want to buy products that are going to last them

until their next trip to the store. This means that the ability to buy in bulk is extremely

important to the average consumer. If Smart Water was offered in large quantities at many of

their grocery store retailers, they would definitely be chosen over the competition. Although a

larger quantity has many benefits, it also comes with many problems as well.

When a company begins to offer their products in bulk, retailers want larger wholesale

discounts. This is because the product will not only take up more shelf space but also have to be

listed at a cheaper price. Smart Water may not want to give these companies larger discounts

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as it cuts into their profits. Furthermore, Smart Water will have to do more research and

development to come up with designs for packaging. Especially since their bottles are very

large. This process is very costly and time consuming for the company. Finally, Smart Water will

have to advertise this change to the consumers and get the word out that their products are

now offered in bulk. This may not only hurt the products exclusive image but also create

confusion amongst the market. These negative factors must be sorted out and addressed in

order for the bulk selling to be beneficial for the company.

The last problem we found associated with Smart Water is the bottle sizes. Currently

Smart Water only offers large bottle sizes. Their smallest bottle is much larger than any other

typical bottle of water. Although this may be viewed as an advantage to some consumers, many

would still disagree. By offering a larger variety of bottle sizes from small to large, Smart Water

may be able to gain more of the market share and create a larger brand loyalty amongst the

consumers. Companies such as Ice Mountain offer multiple sizes and types of bottles. They

have a bottle size for every occasion. Thus, making their products more marketable to the

consumer. If Smart Water were to do this, they would most definitely become more

competitive.

The first advantage of offering multiple bottle sizes would be that the products would be

marketable to every type of consumer. Currently the bottles are too big to fit in things like cup

holders, purses, and backpack bottle holders. By offering a smaller bottle, Smart Water would

become more appealing to people that need smaller bottles. Furthermore, an option to

purchase multiple different bottle sizes will also be more appealing to any average consumer.

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Consumers go into a store with a desired product in mind. If they are looking for just a small

bottle of water, they will not purchase a huge bottle of Smart Water on the shelf. However, if

there were a smaller bottle of Smart Water next to the big bottle, they will most definitely

purchase it. Lastly, another advantage of offering different bottle sizes is that more service that

provides water may offer Smart Water over other brands. For example, airlines carry specific

types of water for certain reasons. One of the largest factors that determine if an airline carries

a specific type of water onboard is the amount of space it takes up on the aircraft. There is no

way 100 bottles of the current sized Smart Water bottle could fit in the tiny spaces allowed on

an aircraft. If there were smaller bottles, they may choose to offer them instead of other big

name brands like Fiji and Dasani. This is just one example of an outlet that sells bottle water

that rely on space as a determining factor to what brand they offer. With this said, there are

still many negatives that come with offering multiple bottle sizes.

One of the largest disadvantages to offering a wide variety of bottle size is the cost of

research and development. Smart Water would have to spend a great deal of time on

developing new bottle designs and sizes. Furthermore, it would be difficulty to keep a unique

design similar to what their bottles already have. The unique design of the Smart Water bottle

is what defines them. They would have to find a way to resize the bottles while retaining this

unique design concept. Lastly, pricing would be a difficult factor to overcome. They would have

to set prices that are competitive amongst the competition while still being profitable. The

prices would take a large amount of research and though before being definite and ready for

sale.

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All in all, after extensive research, we have decided that the pricing strategy is the

biggest problem for Smart Water. It is important that Smart Water reevaluates their prices and

comes up with a lower cost for their products. This will make them more marketable to the

entire market and make them more competitive altogether. The negatives to this solution are

present but conquerable. With the proper research and time put in, Smart Water should be

able to accomplish this feat and remain among the leaders in the industry.

Appendix 1

Part 1 Variable Question Ice Mountain (0) Smart Water (1) P1Q2 How long have you been drinking the current preferred water for?

Less than 1 Month (1) 6.60 16.30 1-6 Month (2) 10.50 22.40

6-12 (3) 14.50 22.40 Over a year (4) 68.40 38.80

P1Q3 How many bottles of your preferred water do you drink weekly?1 or less a week 21.10 22.40

2-3 a week 22.40 28.60 4-7 a week 27.60 30.60

Over 8 weeks (4) 28.90 18.40 P1Q4 Please rank how important the price is to you when choosing a brand of bottled water, with 1 being not important to 7 being very important

1 1.30 4.10 2 2.60 6.10 3 3.90 12.20 4 2.60 34.70 5 18.40 28.60 6 32.90 14.30 7 38.20 -

P1Q5 How would you rank the following companies on price, with 1 being poorly priced to 7 being perfectly priced?1 18.40 4.10 2 14.50 8.20 3 10.50 18.40 4 10.50 28.60 5 10.50 22.40 6 11.80 14.30 7 23.70 4.10

Crosstab Table

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P1Q6 How would you rank the following companies on taste, with 1 being bland to 7 being delicious?1 3.90 4.10 2 7.90 2.00 3 7.90 8.20 4 10.50 8.20 5 30.30 12.20 6 13.20 14.30 7 26.30 51.00

P1Q7 How satisfied are you with the taste of Smart Water , with 1 being not satisfied to 7 being extremely satisfied?1 7.90 2.00 2 3.90 4.10 3 5.30 8.20 4 15.80 4.10 5 22.40 12.20 6 19.70 16.30 7 25.00 53.10

P1Q8 Where do you get your information about bottled water?Print Advertisements 21.10 22.40

TV/Radio 18.40 22.40 Online 35.50 56.30

Word of Mouth 48.70 44.90 Other 17.10 22.40

P1Q9 How much are you willing to pay for a single bottle of water?Less than $1.00 7.90 10.20

Exactly $1.00 10.50 8.20 $1.00 to $2.00 68.40 38.80 $2.00 to $3.00 13.20 32.70

More than $3.00 - 10.20 P1Q10 Where do you normally go to buy bottled water?

Grocery Store 59.20 71.40 Convenience Store/Gas Station 48.70 53.10

Vending Machine 35.50 24.50 Pre-Packaged case (wholesale) 63.20 46.90

Other 6.60 10.20 Part 7 variable Lifestyle Statement Ice Mountain (0) Smart Water (1)

P7Q1 When I am exercising I drink Smart Water.Stongly Agree (1) 3.90 22.40

Agree (2) 26.30 34.70 Indifferent (3) 22.40 28.60 Disagree (4) 21.10 10.20

Strongly Disagree (5) 26.30 4.10

P7Q2 When I travel I drink Smart Water.Stongly Agree (1) 3.90 14.30


Strongly Disagree (5) 48.70 20.40 P7Q3 When I am thirsty I drink Smart Water.

Stongly Agree (1) 11.80 18.40 Agree (2) 13.20 28.60

Indifferent (3) 30.30 28.60 Disagree (4) 21.10 14.30

Strongly Disagree (5) 23.70 10.20 P7Q4 Smart Water consumers are more likely to also drink Dasani rather than Ice Mountain.




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P7Q5 I prefer to drink Smart Water over other bottled waters.Stongly Agree (1) 13.20 36.70


Strongly Disagree (5) 34.20 8.20 P7Q6 I prefer Smart Water over sweet beverages.



Strongly Disagree (5) 11.80 18.40 P7Q7 Smart Water tastes better than other bottled waters.



Strongly Disagree (5) 10.50 4.10 P7Q8 Smart Water is healthier than other bottled waters.




P7Q9 I think the price of Smart Water is too high.Stongly Agree (1) 43.40 20.40


Strongly Disagree (5) - 4.10 P7Q10 Smart Water consumers are usually wealthy.


Indifferent (3) - - Disagree (4) 21.10 24.50

Strongly Disagree (5) 6.60 12.20 Part 8 variable Question

P8Q1 Gender Ice Mountain (0) Smart Water (1) Male (1) 43.40 53.10

Female (0) 56.60 46.90 P8Q2 Occupations

Retail (1) 1.30 5.40 Student (2) 35.50 49.00

Intern (3) 6.60 2.00 Other (4) 56.60 43.60

P8Q3 Highest Degree CompletedHigh School/GED (1) 5.30 6.10

Some college (2) 73.70 71.40 Associate's Degree (3) 14.50 18.40 Bachelor's Degree (4) 3.90 4.10

Graduate Degree (5) 1.30 - Other (6) 1.30 -

P8Q4 AgeUnder 18 (1) 3.90 2.00

18-25 (2) 86.80 87.80 26-39 (3) 3.90 8.20 40-55 (4) 3.90 2.00

56+ (5) 1.30 -

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Part 2-6 (Significant Variables) Question mean (1) mean (0) T-Value probablilityP2Q5 Helps satisfy my needs better than other brands. 0.47 0.12 4.734P2Q7 Is worth it because of the taste. 0.65 0.32 3.892P2Q4 Costs too much money. 0.53 0.83 3.767P4Q1 Availability. 0.78 0.46 3.642P5Q2 I feel healthy when I drink Smart Water. 0.69 0.38 3.551P2Q3 Makes me healthier. 0.61 0.32 3.388P5Q3 I feel satisied when I drink Smart Water. 0.73 0.45 3.267P5Q10 I feel weak when I do not drink Smart Water. 0.27 0.07 3.203P4Q2 Ability to buy in bulk. 0.69 0.45 2.762P4Q7 Bottle size. 0.67 0.43 2.669Part 2-6 (Non-significant Variables)Question mean (1) mean (0) T-Value probablilityP 3Q7 Families 0.67 0.64 0.328P3Q10 Elderly 0.57 0.59 0.227P3Q12 Rural Residents 0.61 0.72 1.302P2Q4 Cost too much money. 0.53 0.83 3.767P4Q3 Economic conditions. 0.76 0.53 2.617P2Q1 Makes me smarter. 0.18 0.12 1.01P3Q1 Women. 0.14 0.16 0.227P3Q5 Upper Class. 0.18 0.12 1.01P5Q5 I feel intelligent when I drink Smart Water. 0.16 0.13 0.489P6Q8 To see if it improves intelligence. 0.14 0.13 0.178

T-Test Table

Appendix 2

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Appendix 3

This is an academic study about Smart Water. The results of this study will be used for

academic research only, and your responses will be kept strictly confidential.

We are interested in your own personal feelings and opinions. There are no right or wrong

answers.

33

On each page you will find several different kinds of statements about Smart Water. All you

have to do is put an X in the spaces that reflect your own personal feelings and opinions.

PLEASE NOTE:

1.Check only one answer per statement.

2. When you are finished, please check to be sure you have not omitted any answers.

THANK YOU VERY MUCH!

__________________________________________________________________________

PART ONE

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1. Which of the following brands of bottled water do you normally drink?

a. Smart Water

b. Ice Mountain

2. How long have you been drinking the current preferred water for?

a. Less than 1 Month

b. 1-6 Months

c. 6-12 Months

d. Over a year

3. How many bottles of your preferred water do you drink weekly?

a. 1 or less a week

b. 2-3 a week

c. 4-7 a week

d. 8 or more a week

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4. Please rank how important the price is to you when choosing a brand of bottled water, with 1

being not important to 7 being very important.

Price 1 2 3 4 5 6 7

5. How would you rank the following companies on price, with 1 being poorly priced to 7 being

perfectly priced?

Smart Water 1 2 3 4 5 6 7

Ice Mountain 1 2 3 4 5 6 7

6. How would you rank the following companies on taste, with 1 being bland to 7 being

delicious?

Smart Water 1 2 3 4 5 6 7

Ice Mountain 1 2 3 4 5 6 7

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7. How satisfied are you with the taste of Smart Water, with 1 being not satisfied to 7 being

extremely satisfied?

Satisfaction 1 2 3 4 5 6 7

8. Where do you get your information about bottled water?

a. Print Advertisements

b. TV/Radio

c. Online

d. Word of Mouth

e. Other (please specify) ____________________________

9. How much are you willing to pay for a single bottle of water?

a. Less than $1.00

b. Exactly $1.00

c. $1.00 to $2.00

d. $2.00 to $3.00

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e. More than $3.00

10. Where do you normally go to buy bottled water?

a. Grocery Store

b. Convenience Store/Gas Station

c. Vending Machine

d. Pre-packaged case (wholesale)

e. Other (please specify) _____________________________

PART TWO

Please indicate whether you agree or disagree that the following benefits or problems are

38

associated with Smart Water consumption.

Buying Smart Water… Agree Disagree

1. Makes me smarter. 1._____ _____

2. Benefits my social standing. 2._____

_____

3. Makes me healthier. 3._____

_____

4. Costs too much money. 4._____ _____

5. Helps satisfy my needs better than other brands. 5._____ _____

6. Is more environmentally friendly. 6._____ _____

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7. Is worth it because of the taste. 7._____ _____

PART THREE

Not everybody drinks Smart Water. Which of the following groups of people do you believe are

most and least likely to drink Smart Water?

Least Likely Most Likely

1. Women 1.______ ______

2. Men 2.______ ______

3. Lower Class 3.______ ______

4. Middle Class 4.______ ______

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5. Upper Class 5.______ ______

6. Athletes 6.______ ______

7. Families 7.______ ______

8. College Students 8.______ ______

9. Middle Aged 9.______ ______

10. Elderly 10.______ ______

11. Urban Residents 11.______ ______

12. Rural Residents 12.______ ______

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13. Celebrities 13.______

______

PART FOUR

Certain conditions motivate people to behave differently than their regular behavior or habit.

Do you believe that the following conditions might cause you to change your decision to

purchase Smart Water?

Yes No

1. Availability 1.______ ______

2. Ability to buy in bulk 2.______ ______

3. Economic conditions 3.______ ______

4. Illness 4.______ ______

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5. Stress 5.______ ______

6. Healthiness 6.______ ______

7. Bottle size 7.______ ______

8. Working out 8.______ ______

PART FIVE

People sometimes drink or do not drink Smart Water for personal and emotional reasons.

Please indicate whether you personally experience any of the following feelings associated with

your decision to drink or not drink Smart Water.

Yes No

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1. I feel happy when I drink Smart Water. 1.______ ______

2. I feel healthy when I drink Smart Water. 2.______ ______

3. I feel satisfied when I drink Smart Water. 3.______ ______

4. I feel environmentally friendly when I drink Smart Water. 4.______

______

5. I feel intelligent when I drink Smart Water. 5.______

______

6. I feel important when I drink Smart Water. 6.______

______

7. I feel unique when I drink Smart Water. 7.______ ______

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8. I feel educated when I drink Smart Water. 8.______

______

9. I feel superior when I drink Smart Water. 9.______ ______

10. I feel weak when I do not drink Smart Water. 10.______ ______

11. I feel left out when I do not drink Smart Water. 11.______ ______

12. I feel bad about myself when I do not drink Smart Water. 12.______

______

PART SIX

Some people drink Smart Water because they are curious about it, or simply bored the other

brand they are drinking. Do you drink Smart Water or have thoughts of drinking Smart Water

for any of the following reasons?

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Yes No

1. To see what it tastes like 1.______ ______

2. Dissatisfied with other brands 2.______ ______

3. To identify with the celebrity endorsers 3.______ ______

4. To keep up with social standings 4.______ ______

5. To understand why others drink Smart Water 5.______ ______

6. To see how it makes me feel 6.______ ______

7. To see if it improves my health 7.______ ______

8. To see if it improves intelligence 8.______ ______

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Part 7. Lifestyle

1. When I am exercising I drink Smart Water.

Strongly Agree Agree Indifferent Disagree Strongly Disagree

2. When I travel I drink Smart Water.


3. When I am thirsty I drink Smart Water.


4. Smart Water consumers are more likely to also drink Dasani rather than Ice Mountain.


5. I prefer to drink Smart Water over other bottled waters.

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6. I prefer Smart Water over sweet beverages.


7. Smart Water tastes better than other bottled waters.


8. Smart Water is healthier than other bottled waters.


9. I think the price of Smart Water is too high.


10. Smart Water consumers are usually wealthy.


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Part 8. Demographic

1. Gender

a. Male

b. Female

2. Occupation (please specify) ________________

3. Highest Degree Completed

a. High School/GED

b. Some college

c. Associate’s Degree

d. Bachelor’s Degree

e. Graduate Degree

f. Other

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4. Age

a. Under 18

b. 18-25

c. 26-39

d. 40-55

e. 56+

Appendix 3

POWERPOINT

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Consumer Behavior Report on Smart Water Consumers

Documents

Transcript of Consumer Behavior Report on Smart Water Consumers