Product variation is one of the more recognized ways to increase sales or enter an established market, if it is done correctly. Finding the best variation for the targeted customer is the key. Better, newer, faster and/or tastier all come to mind. If a company can find and implement a solid product diversification plan, profits may well follow.
Eldorado Spring Water Inc., a spring water bottler, distributor and marketer, works to market bottled organic vitamin spring water products primarily in Colorado. The company has recently completed one of its most profitable sales periods and is currently working to introduce its product lines throughout the Rocky Mountain and Western states of the US.
In a typical sense, the company is following a standard business model for its products, offering a variety of flavored organic vitamin bottled water drinks to retail, health food and restaurant outlets. As its products have taken hold in its primary Colorado markets, it has engaged Organic Food Brokers Inc. to expand its product distribution range to other Western states and more conventional retail outlets. Where the company parts from the more accepted distribution model is in its offering of product through service contracts directly to the home and business (currently 65% of sales.) With a monthly contract of $18.45, homeowners and/or businesses receive a porcelain water-dispensing unit and two 5-gallon bottles of water. Other services, such as coffee, are available at additional cost. One might wonder, however, how energy costs will affect this portion of the company’s plan.
Although typical and non-typical at the same time, the company is clearly working to distinguish itself in an increasingly crowded marketplace for vitamin-type bottled water products. It is using a basic mineral water source (no tap filtering), located on company-owned land, and adding the now increasingly popular vitamin component to it. As this is an increasingly popular differentiation, the company is taking one step further by adding the organic label to its product description – although possible, no official “organic” markings have been found on packaging. By all accounts, Eldorado Spring Water is making solid progress toward being competitive in the field. If they can make the leap to a larger position in the market, however, profits may just flow… like water.
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