Why am I covering Zero Water? Is it not in the food and beverage sector? So then, why should food entrepreneurs or anyone interested in food at retail want to know about the home water filter business? There are some important lessons in how to start a food business.
Consumer products are sold at retail and the issues to pitch a retail buyer, get your product on the shelf or rack and then get the consumer to buy it and buy it again are pretty much the same. It is important to look at many successful consumer brands, not just food and beverage brands, to learn tips and techniques on how to start a food business. You already have a food business? OK so do you know all there is about new product launches and how to start a food business?
We are going to look outside of our industry, food and beverage, to see how Zero water successfully developed retail ready consumer products, home water filters, got them on the shelf and got ultra pure water into the consumer's glass.
Developed Over Fifteen Years Ago to Solve One Family's Desire for Great Water
All great entrepreneurs are superb at recognizing a problem that they can solve for the customer. Sometimes the problem the entrepreneur identifies is only the start and leads them to innovate for a different or larger target market. Many times the product innovation and company are founded out of a necessity for the entrepreneur.
The original problem the founder was looking to solve was providing quality water for his family. Rajan Rajan, founder and inventor of the Zero Water product, lived in a small town in Michigan which had consistently poor water quality. Tap water was not an option and the family relied on drinking bottled water and relied on his wife to haul 2.5-gallon bottles of water from the grocery store. He now had a real problem to solve… relieving his wife of this task!
Rajan and his son started searching for a better filtration system. Rather than "re-inventing the wheel", Rajan looked a range of water filtration technologies that were purifying water for the pharmaceutical industry, nuclear power plants, and even navy submarines. Rajan, being an engineer, took the best of all and combined them into a system that would be suitable for consumer use.
The home water filter business was a category that was innovation-less. Zero water would be known as the innovator.
The Entrepreneurial Journey
The founders recognized they knew how to innovate and needed a seasoned business person with experience growing a consumer products brand - enter Doug Kellam CEO of Zero Water. Doug had the consumer products experience and retail distribution channel knowledge with innovative retail products; he managed the new product launch for the high technology Dyson vacuum line. Doug has extensive new product launch background and although he is not a food entrepreneur, what he is doing is similar to what many of you are doing in the food and beverage sector. His company is small and entrepreneurial, he created a new product launch in a niche market and his objective is to gain shelf space in major retail stores.
Out of the Kitchen (Getting a Product Retail Ready)
The initial product was large counter-top unit, which according to Doug is very common in Asia. The countertop water purification system was effective but was not a product that the bottled water customer segment would buy in place of bottled water. The product development effort was not driven by a market strategy. The product worked but who was the customer for this highly effective and unique water filtration product and where would they sell it?
Doug recognized there was an opportunity in the 5-gallon water delivery market… approximately 5% of US households have water coolers. The countertop water purification system was a perfect product to replace home water coolers. Doug said, "We could solve some real consumer problems here. 5-gallon water bottles are expensive, they are clunky to handle and take up lots of space in the home. But we were still dealing with a small market, 5% of households, and this really limited our growth potential. We had to look at the consumer bottled water category if we were to achieve our growth goals"
According to Datamonitor's Bottled Water, Global Industry Guide, the global bottled water market grew by 3.9% in 2010 to reach a value of $99,335.1 million. Doug knew that the Zero Water new product launch must compare filtered tap water vs. bottled water and show better consumer value than bottled drinking water. Environmental sustainability is factoring into consumer food packaging - and more consumers are replacing disposable water bottles with sustainable reusable metal containers… drinking bottled water less.
The consumer water purification industry is delivering pure water over three segments; pitcher filters, faucet mounts and under sink units. Faucet mounts, examples are PUR and Britta water filters, require the consumer to use a few tools to attach to the faucet and the under sink units require a plumber. There is so much interest in how to filter water, there are web sites that compare water filters.
Doug, being the consummate consumer products marketer, realized the pitcher filter segment is the true consumer side of the business. With 30% to 40% of household using a pitcher, this represented a large enough market for Zero Water to grow. Zero Water began developing pitcher filters that incorporated their unique technology. Focusing on consumer products means preparing to get on the shelf which has little to do with their technology and more to do with product positioning.
On to the Shelf
They targeted Target stores (no pun intended) as their first retailer. According to Doug, "We bombarded Target with reasons why they should take the product on. This persistence on our part finally landed us a few test stores. We really needed Target for our company's survival. Finally, the good news came in… Target said it was a go chain-wide!"
Retail Merchandising Strategy
According to Doug, "Our strategy was 3 parts, competitive pricing, developing direct filtration performance criteria against the competition and creating a unique blue pitcher to clearly stand out on the shelf against the competitors clear plastic pitchers".
Doug added a unique piece to the product, "We included an inexpensive Total Dissolved Solids Meter in the package. The consumer could quickly see that Zero Water really has zero impurities after filtration." The Total Dissolved Solids meter was an important part of the new product launch since it establishes brand credibility with the consumer - they were not only making a promise of zero impurities in the water, they were empowering the consumer to validate that claim. The Check TDS Reading page on the Zero Water site lets the user see just how "bad" their local water is and adds to the benefit claims the brand makes.
Target loved Zero Water's merchandising strategy, "I spoke with a senior person at Target and they have a Good, Better, Best component to their retail merchandising strategy. Upon evaluating Zero Water for distribution the buyer told me they finally saw we were the Best!." This "Best" in class factor allowed Target to charge a premium price for superior performance allowing Zero Water to capture more revenue and profits.
On to the Consumers Plate (Glass)
Zero Water decided their product positioning was a bundle of Taste, Safety, and Purity. This product positioning resonates with customers who are serious about their water and are environmentally aware in a practical way as opposed to zealots.
As with all early stage entrepreneurial ventures, there are no large advertising budgets. Social media plays an important part in Zero Water's marketing efforts.
They created a Facebook Fan Page and used the viral nature of social media to promote the TDS meter. The meter that is included in the water pitcher box has s sticker on it with the Facebook URL encouraging customers to join the Facebook Fan page and share the meter results with other Zero Water fans.
The Zero Water website created a page, test your tap. A visitor to the site can enter their zip code to see the water quality in their area. If the Zip code has not data, the customer will enter their zip code and readings from the TDS meter.
Approximate 20% of customers register their purchase on the Zero Water web site allowing the company to create a powerful consumer database. They aggressively seek out "mommy bloggers" sending product samples for the bloggers to review. Future plans include following blog discussions for greater insight into consumer product usage and ideas for new product development.
Borrow, Adapt, Adopt. It is important to look outside of your industry to generate innovative product ideas to grow a business. Zero Water's founder looked at very disparate industries. At first glance, you would wonder why a consumer products entrepreneur would look to pharmaceutical, nuclear, military sectors. If he had only looked for innovation in the water filtration business, Zero Water may not have been created.
Zero water was not pitching their product to replace the competition like Brita. Rather their product positioning was how Zero Water would bring new people into category… people who were former bottled water users When a consumer is ready to make the decision to switch from bottled water… they catch consumers through their unique packaging with strong benefits claims.
The average consumer is unaware of what's in their water… impurities we don't want to drink. They also don't understand that conventional water filter pitchers do very little to remove impurities from their water. By clearly illustrating "what's in your filtered water", they staked out a solid point of difference that the competition was not able to meet.
Bloggers are powerful in creating the buzz and are an important part of word of mouth marketing. A small company like (ZeroWater) is making a big difference in consumer's lives and improving its brand visibility through blogger product sampling.
Look outside of the food and beverage industry periodically in your journey - getting your product out of the kitchen and on to the retailer shelf and on to the consumer's plate.