The Buyers For The Water Industry

Submitted By danlol
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Pages: 3
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The buyers for the water industry include individual consumers, retailers, food stores, restaurants, convenience stores, vending machines, and mass merchandisers. The main bargaining power is due because bottled water could be purchased from nearly any location. Furthermore, the standards imposed on the quality of water by the EPA and FDA make it a commodity. Therefore, lower prices are valued more than differentiation. Evidence pointing to increased buyer’s power includes; number of buyers, importance of volume purchases, and frequency of purchases. Weakened position is due to the moderate value of branding and a niche market for differentiated brands. Overall we conclude that buyer power is high. The supplier’s positions are moderate to strong. The bottle production line equipment supplied by the machine companies (filtration equipment and so on) is not easily switchable to other suppliers because they need a large capital investment and technical expertise. Secondly, the bottles, plastic caps and label printers are easy to change since they do not have negotiating leverage power. The last is the municipal water system; spring operators and purification involve high capital. Also, shipping water in for bottling is very high cost so those manufacturers prefer to use pipes to supply their water to replace the trucking. Once those systems are set up into a facility it is difficult to change. Substitutes for bottled water are popular in the US. The first substitutes are vitamin water, fruit-flavored water, and non-calorie water. These are strong competitive substitutes for bottled water, but are limited in price and distribution. Therefore, these substitutes have moderate to strong power. A second group of substitutes are soft drinks, tea, coffee, and energy drinks. These have a strong power. People like the differentiation and status associated with this second group of substitutes. One exception is that people are now concerned with their health more, so they are steering away from the second substitute products, which might drive the power of second
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