Esther Lauren M.

Perez
Marketing Management: Case Analysis

January 26, 2015

Dr. Antonio V. Concepcion

I. Background
Company
Ocean-Blue Element International Trading Inc. is planning to launch its MaHalo Hawaii Deep
Sea desalinated drinking water in the Philippines.
This company is a subsidiary of Koyo USA Corp., a Japanese firm that partnered with a
Hawaiian state agency called Natural Energy Laboratory of Hawaii Authority or NELHA to
develop the technology for harvesting and processing deep-sea water. Consequently, Ocean-Blue
Element is also located in Hawaii.
Product
MaHalos water, unlike its competitors, comes from around one kilometer below the surface
level of the Hawaiian sea. Its manufacturers claim that MaHalos water is not tainted by pollution,
manmade chemicals, and bacteria. Hence, it targets health-conscious consumers, including those who
have diabetic or have kidney problems. Because of the specialized characteristics of MaHalo, it being
extracted from glaciers where it has been stored for around 2,000 years old, and the fact that it
contains single-ion trace materials that are essential to proper food assimilation and good health, its
retail value is higher that its competitors. A 1.5-litter bottle of MaHalo costs P250 each. Prior to the
Philippines, MaHalo has already been introduced in the United States, and in Japan. In these two
countries, it has been marketed as a dietary supplement that improves weight, stress levels, skin tones,
and digestion.
The company is already in the process of communicating with big Philippine-based
supermarkets, and department stores regarding distribution agreements. It is also considering
distributing smaller bottles in the Philippines to be able to reach a wider market, become more
affordable, and address the Philippines sachet culture that calls for companies to sell their products
in smaller portions, as preferred by Filipino consumers (Case Facts).
Bottled Water Market in the Philippines
In the Philippines, the bottled water segment is grouped under the Soft drinks industry. Hence,
it competes with other softdrinks such as carbonated drinks, energy drinks, bottled teas, and juices.
According to studies, the bottled water segment in the Philippines continues to grow for a number of
reasons. A study conducted in 2014 shouws that bottled water sales grew by 4% in 2013 and is
expected to grow by 3% in terms of average unit price and volume from 2013-2018. The reasons for
the growing demand of bottled water include: 1) The increase in the household income of those that
live in the urban areas, 2) Filipino families are starting to prioritize clean water, and 3) Filipino
consumer prefer value for money products, and in relation to this lower-priced bottled water brands
are becoming more available in the market.
There are basically four categories of bottled water in the Philippines: 1) Carbonated, 2)
Flavored, 3) Functional, and 3) Still. Of these four, still bottled water is comprises 98% of the total
value of sales in 2013, and has outpaced all categories in volume growth terms. Still bottled water is
also the most affordable among the four. This characteristic allows it to generate high demand.
According to studies Filipino consumers often buy what is available and more affordable when it
comes to bottled water, without really considering other factors, such as social responsibility and
environment concerns. In relation to this, local manufacturers and distributors dominate the
competitive landscape when it comes to bottled water. The top 3 when it comes to company shares are
the Asia Brewery Inc., Coca-Cola Export Corp., and the Philippine Spring Water.

Esther Lauren M. Perez

Marketing Management: Case Analysis

January 26, 2015

Dr. Antonio V. Concepcion

Since MaHalo could be classified under the functional bottled water segment, it is important
to note that according to forecasts conducted in 2013, Functional bottled water brands will most likely
face tough competition for the next five years because of the increase in the popularity of energy
drinks and sport drinks categories that also cater to the same health-conscious consumer bases
(Euromonitor, 2014).
Php15.73 is the average price of 0.33 liter bottled water, usually ranging from Php10-20,
while the average price of a 1.5-liter bottle is Php 34.10, ranging from Php25-45 (Numbeo, 20092015).
II. Problem(s)
Local manufacturers and distributors that sell their products at around the price of MaHalo
dominate the bottled water segment in the Philippines. Also, Filipino consumers are more concerned
about the affordability of certain bottled water, rather than other factors such as health and
environment. Also, functional bottled water products face tough competition from energy and sports
drinks that provide similar health benefits.
Should Ocean-Blue continue with its plan to distribute MaHalo in the Philippines? If yes,
what strategy should it employ in order for it earn and be a strong competitor in the bottled-water
segment?
III. Alternative Courses of Action
ACA
1) It should not push thru
with distribution in the
Philippines.

2) It should push thru with

distribution in the
Philippines. Distributing to
all major supermarkets, and
distributors as planned, and
selling only small portions of
the product. This strategy
will sell the product to all
segments of the market, like
a typical bottled water.

Pros
There will be no risk
when it comes to
losing investment in
the Philippines
No additional cost.

It will have a bigger

base of consumers.
It can enter the
Philippine market,
known for being
consumer-driven.
It can take advantage
of the healthconscious trend in
the Philippines.

Cons
The company will
not expand its
current operations.
It may be missing
out on an
opportunity to enter
the Philippine
market, which is also
considered as a
consumer-based
market that is
becoming more
health conscious.
The company will
face many
competitors if it
caters to all markets
and makes its
products available in
all hospitals, hotels,
big supermarkets,
and department
stores.
Most consumers in
the Philippines prefer
the more affordable
bottled water
options.
It will incur more
costs with this

Esther Lauren M. Perez

Marketing Management: Case Analysis

3) It should push thru with

the distribution, but in a
specialized manner, targeting
the A, B, and upper C
segment, as well as
celebrities, and hospitals. It
could sell only in major
supermarkets, hotels, and
have its products endorsed to
hospitals, and by celebrities.

If it caters to this
specialized segment,
it will incur fewer
costs of distribution
and production.
It could focus on the
segment that would
prefer or are not
concerned about the
products more
expensive cost.
It will have less
competition from
other bottled waters.
It has an advantage
over sports drinks
and energy drinks
because it contains
no calories, and
could be more
preferable for the
health conscious.

January 26, 2015

Dr. Antonio V. Concepcion

strategy, and will

likely not receive a
return of investment
within the next three
years.
As a functional
bottled water
product, it will still
be in tough
competition with
energy drinks, and
sport drinks.
The A and B classes
in the Philippines
comprise around 3%
of the population
only, so it could have
fewer consumers.

IV. Conclusion/Recommendation
Based on the given data, as well as the studies in relation to this analysis, it is submitted that
Ocean-Blue Element International Trading Inc. should implement ACA 3. This means that it should
push thru with its plans to operate in the Philippines, but only cater its product in a specialized
manner. The main concern of MaHalo is that it costs more than the average bottled water in the
Philippines. This is an issue because Filipino consumers are more inclined to buy more affordable
bottled water products. Hence, to address this issue it would be best for the company to cater only to a
specialized segment. With this MaHalo could continue marketing its product as a marketed as a
dietary supplement that improves weight, stress levels, skin tones, and digestion. This target market
would include those from the A, B, and upper C income bracket, selling to hotels, and major
supermarkets only. As well as directly selling to hospitals that treat patients with kidney, and diabetes.
It could also have its product endorsed by celebrities that could fit its characteristics. A possible
endorser would be Garry Valenciano, a health-conscious celebrity from the upper income bracket who
is also popularly known to have diabetes.

References
Euromonitor. (2014). Bottled Water in the Philippines. Euromonitor International.
Numbeo. (2009-2015). Cost of Living in the Philippines for 2009-2015. Manila: Numbeo.

Esther Lauren M. Perez

Marketing Management: Case Analysis

January 26, 2015

Dr. Antonio V. Concepcion