To increased in volume: new players appear,
To conduct the research of the company within the framework of strategic management, I chose Evian, since I am interested in how this company managed to capture high positions in the premium segment of bottled water. After all, in fact, water (especially still water) does not have significant flavor differences, which means that the company’s success does not depend directly on physical properties, but on premium positioning and competent actions of company management.
The sphere of production and sales of bottled water every year is increased in volume: new players appear, the bottling of water increases – all this is explained by the fact that the production process is carried out with minimal costs. You can also note the constantly growing trend of promoting healthy lifestyle. Water in this case – an integral link, because today a lot of media just say that an adult person to maintain the body in a tone should drink daily 1.5-2 liters of clean water.
Evian is a brand of mineral water coming from several sources near Évian-les-Bains, on the south shore of Lake Geneva. Today, Evian is owned by Danone, a French multinational corporation. In addition to the mineral water, Danone Group uses the Evian name for a line of organic skin care products as well as a luxury resort in France.
In 1789 during a walk, the Marquis of Lessert drank water from the Sainte Catherine spring on the land of a M. Cachat. The marquis, who was allegedly suffering from kidney and liver problems, claimed that the water from the spring cured his ailments. Local doctors began to recommend water from the source as a panacea for certain diseases. In response to the growing popularity of water, Mr. Cachat, on whose land the source of Santa Catarin was located, started a business for selling the water.
In 1859 the business became a public company as the “Société anonyme des eaux minérales de Cachat” and a year later it became French when Savoy was incorporated into France under the Treaty of Turin. The French Ministry of Health reauthorized the bottling of Cachat water on the recommendation of the Medicine Academy in 1878. In 1908 Evian water began to be sold in glass bottles manufactured by the glass factory Souchon-Neuvesel, which today is a part of Owens-Illinois. The first PVC bottle was launched in 1969. During the following year, the BSN Group, which eventually became the Danone Group, took 100% control of the Evian brand. 1978 marked an entrance into the U.S. market. In 1995 Evian switched to collapsible PET bottles.
Evian delivers its water to 110 countries in Europe, Asia, America and the Midwest. In some countries, the company uses its own distribution network, mainly within the EU. In total, the company uses about 150 distributors. The leading national markets include countries such as France, the United Kingdom, Japan, Germany and the United States, together providing 74% of all Evian sales (Euromonitor, 2016).
Evian’s mission: “To provide healthy products to as many people as possible”.
Evian’s objectives are:
· to increase its share in the still water market;
· to expand the target audience;
· to increase the export of bottled water;
· to strengthen the brand image on the market.
The strategic goals of the company include building trust relations with consumers and distributors, increasing the level of loyalty among consumers, in particular, the target audience, maintaining the quality of products at a declared high level and ensuring a worthy reputation for their company.
Thanks to support of the powerful parent company, this facilitates the expansion to different markets. The mode of expansion is direct export through own facilities and distributors, because the production must be kept only in one place, conformingly to the name of the brand.
The portfolio of the company is simple – they have only still drink water and skincare water. The difference between the products is the packaging of different volumes, shapes, and design.
Evian has global marketing strategy – in all countries where the company is present, the communication and activities are the same: since 2009, Evian’s marketing strategy is based on the slogan “Live young”, and impersonates babies throughout the whole campaign. This association gives the potential customers the impression of purity of the product and the positive effect on the health, given by the water of the brand. To support this campaign, the communication was launched globally and simultaneously in most countries of Europe, North America and in some Asian countries. The campaign includes communication through TV commercials, which included famous sportsmen and women, digital platforms, such as viral videos, print materials, PR, and events.
Evian is positioned as a natural premium product, so can be found in grocery stores, with prices above average, as well as in restaurants packaged in expensive glass bottles. To support this image, the company often collaborates with fashion designers and creates series of limited edition bottles.
Evian is a part of Danone Group Water Division as such it shares its values. Danone places sustainability in the heart of its business strategies, having its Nature and Sustainability programs as one of the companies 5 growth pillars. Strategic management carried out within the framework of this organization is the key to the correct construction of a system of actions in the current and future situation in the market. Evian needs to resume its sustainable strategy, which guarantees strengthening of the leading positions in the market and systematic development to ensure that their actions today don’t limit their business in the future, especially to ensure their water supply.
Evian delivers its water to 110 countries in Europe, Asia, America and the Midwest, so it is necessary to consider the external environment of the company in terms of PESTEL-analysis.
Political: in the developed countries of Europe there is a program of state support for companies that reduce emissions of gases into the atmosphere, as well as those who care about the environment. Evian at the moment has the priority task of creating environmentally friendly packaging. Therefore, they can rely only on support from the state.
Economic: in general, the economic situation in many regions is positive for Evian, in Europe, North America and Asia everything is relatively calm, there are no sharp recessions. However there are still countries with high inflation rates.
Social: in most developed countries there is a natural decline in population, which is accompanied by continuous aging. However, at the moment, a healthy lifestyle is gaining popularity: proper nutrition, training and maintenance of water balance. That can favorably affect the volume of water consumption of this company.
Technological: the production of Evian is difficult to attribute to highly technological, however, the company constantly improves the water filtration system, therefore it is necessary to update the cleaning equipment.
Environmental: all developed and developing countries are currently concerned about the environmental situation around the world, therefore, they are actively paying attention to environmental protection. As it was noted earlier, the Evian pays special attention to the environmental friendliness of its own production, and also closely monitors the cleanliness of the water.
Legal: EU has various environmental such as EC packaging waste directive that dictates that 25-45% of packaging must be recycled (Freire et al., 2001).
In accordance with the external environment, the following strategies are highlighted and could be implemented by the company:
1. Geopolitical sphere: special attention should be paid to regular monitoring of the general political situation and miscalculation of political risks in order to minimize losses. Another important direction is the environment. The company should continue its policy of supporting the environment through cooperation with the local population to protect and restore water resources, maintain informative actions and education in this area. Also, the company can promote the participation of local people in effective water resources management and share experience and knowledge with key partners and employees of the company.
2. Socio-cultural sphere: the development of “mass culture” is an extremely important focus for the company. Due to the correct coordination of the activities of the marketing sector of the organization, there is the occupation of new (higher) competitive positions in the market. Concentrating on promoting healthy lifestyles around the world will also lead to significant sales growth, as today people are actively taking care of their nutrition, appearance and way of life. In this regard, it is necessary to continue to develop special marketing campaigns aimed at attracting new consumers.
3. Economic sphere: it should be noted that the trend of globalization in the world economy can lead to “dependence” of the state on transnational companies. Also, the regression of the currency in some countries leads to the emergence of an additional source of undistributed profits, since the company’s fixed assets are stored in dollars.
The next step in analyzing the strategy is SWOT-analysis and choice of strategic alternatives to company’s development:
1. Brand fame
2. Developed marketing activities
3. Good advertising support
4. High quality as a competitive advantage
5. The presence of a unique image
1. High logistics costs
2. Insufficient dynamics in the development and promotion of new products
3. Lack of total consumer loyalty to the brand
4. Openness in the company’s reporting
5. The high price of goods
1. Development of the brand portfolio
2. Trend for a healthy lifestyle
3. Use of innovative packaging
4. Promotion in the markets of countries with an actively developing economy
1. High dependence on the container supplier
2. Instability of exchange rates
3. High competition
4. Geopolitical Threats
5. Seasonality of demand
6. Compliance with changing quality standards
Strengths and Opportunities (SO):
• Good advertising support will allow developing the brand portfolio during the healthy lifestyle trend among the world’s population.
• The high quality of the products and the presence of a unique image will allow the start of active promotion in the developing countries markets.
Strengths and Threats (ST):
• High quality products will add value in competition, and its maintenance will allow to meet the quality standards.
• Sophisticated sales activities will reduce the impact of seasonal demand.
Weaknesses and Opportunities (WO):
• The creation and use of innovative packaging will reduce the cost of logistics.
• Increasing the brand portfolio will increase customer loyalty.
Weaknesses and Threats (WT):
• High logistics costs and unstable economic have a negative impact on the high price of goods.
• An unstable geopolitical situation may lead to the company’s departure from the markets of some countries.
After analysis of the company’s strategy, it can be concluded that Evian plays a significant role in Danone’s brand portfolio. Thanks to the strong parent company, Evian can easily develop its activity globally. Simple product range, which includes only pure water, in combination with strong positioning and brand image across the globe, help Evian to conduct successful business, resistant to the industries’ specificities, such as seasonality, competition, difficulties to differentiate the product and compliance to ecological norms.
Being a producer of pure and natural product, Evian has to constantly develop their sustainability actions, to comply with regulations, as well as maintain brand image. This social responsibility refers also to the supplier of the packaging. It has to be compliant with latest standards of recyclability, emissions and sources of raw materials used during production.Thanks to strong sustainable strategy, Evian is one of the world-wide leaders of the segment of bottled drink water.