Strategic Analysis: Aava Natural Mineral Water's Indonesian Expansion

This report provides a strategic analysis of Aava Natural Mineral Water's potential expansion into the Indonesian market. It begins with an introduction to Aava, its brand recognition, and its current market position in India. The report then delves into the strategic planning required for international expansion, considering the competitive landscape in Indonesia, the rising retail industry, and the changing consumer behavior. It highlights the benefits of the Indonesian market, including opportunities for promotions, foreign investment incentives, and the growing demand for mineral water due to health concerns and lifestyle changes. The report emphasizes the importance of organizational ambidexterity and the AIDA model for effective market entry. Furthermore, the report analyzes Porter's generic strategies, recommending a cost leadership strategy for Aava to gain a competitive advantage. The advantages and disadvantages of this strategy are discussed, along with recommendations for maintaining competitiveness, such as innovative packaging and a focus on direct B2C sales. The report concludes by emphasizing key factors such as the growing middle class, health awareness, and urbanization as drivers for Aava's success in the Indonesian market.

Running Head: AAVA NATURAL MINERAL WATER OF INDIA
Aava natural mineral water of India
Name of the student
Name of the University
Author’s note

1AAVA NATURAL MINERAL WATER OF INDIA
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Strategic planning of Aava for global expansion........................................................................2
Porter’s generic strategy..............................................................................................................6
Conclusion.......................................................................................................................................8

2AAVA NATURAL MINERAL WATER OF INDIA
Introduction
Aava is the natural mineral water brand of India. It was launched in 2005. It comes under
the second largest brand in mineral water category and has the sale of around 150 million. It is a
natural mineral that arise from the mountain range of the Aravallis. Aava had won the award for
best packaging innovation for inventing cup-cap bottle (Dan et al., 2016). The company is based
in Gujarat, India. The objective of the assignment is to provide strategic analysis for its
international expansion in Indonesia. Further the assignment explains the importance of strategic
ambidexterity for increasing and optimising the company and how to address important issues
needed for expansion in Indonesia. The assignment also includes one porter generic strategy to
enter the market in Indonesia. It also includes the advantages as well disadvantages of the chosen
strategy for the firm.
Discussion
Strategic planning of Aava for global expansion
Aava is one of the known mineral water brands in India but for the growth it needs to
expand its business in Indonesian market. Though the brand is doing well in India but it is facing
serious competition by the well-known brands like Aquafina, Bisleri, Himalaya and many more.
The company has one benefit that it deals in natural mineral water rather than packaged drinking
water. Aava in India serves the big brands like Oberoi and Taj groups, British airways, Jet
airways, Swiss airways, Marriott, Hayat and many more aviation and hospitality sector. But in
spite of serving the big brands, the presence of the brand in the retail market was negligible.
Therefore, it decided to implement its strategies in the foreign market (Gopalkrishnan, 2016).

3AAVA NATURAL MINERAL WATER OF INDIA
The retail industry in Indonesia is on a rise due to the changing behaviour of the
consumers. The consumers find it more convenient because the retail industry in Indonesia is
expanding through e-commerce. The country provide the opportunity for promotions and
discounts to the retailers. There are three periods in the country where the retailers expect a high
growth in the business namely New Year, Christmas and Idul Fitr season. The company can take
advantage of the season to launch its product in the market because customers during this season
look for discounts and mostly indulge in impulse buying. It will be easy for AAVA to gather
attention of the customer and establish brand identity in the market of Indonesia.
Indonesia also gives opportunities to the foreign companies to compete with the local
retailers in the market. Because due to the Negative investment list in Indonesia, the foreign
companies and investors are showing interest to do business with the country. The foreign
company for Indonesia like Aava can set brands in the market who are already a well-known
entity in the home country. The people of Indonesia is very price sensitive, so, Aava can adjust
its product according to the demographic need of the customers by targeting customers between
low to medium income. This will enable Aava to know whether the people of the country is
ready to accept the brand or not (Benmrad et al., 2019).
The foreign retailers in the Indonesian market gets many benefits like they can offer
multiple products because they source products from already established market in overseas.
Therefore, for Aava entering the Indonesian retail market for launching its products will prove
beneficial for the brand. One of the major advantage of doing business in the Indonesian market
is that the government provides allowance on the 80% local product duty because they are
foreign brands. These factors will help Aava to boost its sales in the Indonesian market
and gain brand identity among the local mineral water brands of Indonesia.

4AAVA NATURAL MINERAL WATER OF INDIA
The mineral water company Aava should utilize strategy for organizational ambidexterity
for its expansion because multi-channel strategy is essential for securing a position in the foreign
market. The people of Indonesia has a great concern for health and they support the robust
growth of the mineral water industry in the country. The people who fall in middle class are
expected switch more towards the packaged water because of the great concern of the side effect
of drinking soft drinks that include carbonates in high amount. The growth of mineral water not
only targets the middle section of the people but the upper class as well due to obesity and
diabetes. This indicates a positive sign for a mineral water company like Aava to experiment in
the Indonesian market. Due to the steady economic growth and increasing population of
Indonesia, ensures that packaged water sales and growth will increase at faster rate. The busy
lifestyle of Indonesia also made people more demanding about the mineral water. There is an
increased demand of pure water in the country. The potential customer is growing because there
is the need of the pure water in Indonesia and the country’s market size for mineral water is also
growing at a faster rate. This would be an advantage for the Aava to launch its product either
through the retail or supermarkets (Foster, 2016).
The targeted customers initially for the product would be the affluent and the elite
population of Indonesia who finds investing in the water purifier a costlier affair.
Aava sells its bottle in India for only INR 20. This price is affordable for all the income
class of people. Similarly, in Indonesia the packaged water is much cheaper than the soft drinks.
This removes the barriers of entering the market for Aava. Aava can take advantage of one of the
economic condition of the Indonesia, is that many people do not have access for safe drinking
water because in many areas there is poor quality of water supply. Therefore, Aava can introduce

5AAVA NATURAL MINERAL WATER OF INDIA
its product in those areas of Indonesia like Jakarta and other that have poor quality drinking
water.
One of the key features and competitive advantage of Aava is that it deals in mineral
water rather packaged water. There is huge difference between two. Mineral water is collected
from some natural sources from where the water originates and has sulphate substances. But in
the packaged water there is no guarantee of purity. Aava collects its water from the Aravallis,
one of the well-known mountain ranges.
The packaged water brands in Indonesia like Pristine, Total 8+, E+ and other have
alkaline variables and high PH content. But still the brands are well-accepted by the people of
Indonesia due to their low prices. Due to the increasing awareness of the health among the
people of Indonesia, the new launch in the mineral water industry will hit the market.
After launching the product in Indonesian market the brand will face very little
competition or threat from the new entrants because threat of new entry in this entry is very low
because it is obtained from natural resource. Aava in Indian market experimental with innovative
design strategy in the bottle like launching of cup-cap strategy. The only rivalry faced by this
industry is through innovative and superiority in packaging. Aava is well equipped with such
strategy to be launched in the foreign market. To remain competitive in the market of mineral
water business, the company should come up with more strategies to be a market leader in the
industry. Like the company should stop making use of plastic or use such material that is
environment friendly or can be renewable (Rosborg and Kozisek, 2016).
Aava is likely to build its brand identity by investing into direct B2C sales. This is more
price sensitive to initiate the business. Aava can implement its strategies to enter the Indonesian

6AAVA NATURAL MINERAL WATER OF INDIA
market because the population in the middle class is growing at a faster rate, increase level of
health awareness among the people of Indonesia, the scarcity of water in the country, increased
urbanization and growth of sub-segments can be taken into consideration for launching its
product in the international market.
The company can adopt the AIDA model of marketing to enter into new market. This has
four stages that will help Aava gain access to target market as well as gain potential customers.
The stages include awareness, interest, desire and action. The awareness will help in gathering
attention of the potential customer. Aava can create awareness of safe drinking water in those
areas which has scarcity of water or have poor quality of water supply. The supply of mineral
water in those areas will generate interest and develop the desire of consuming pure water.
Finally, due to health need, it will make the customer buy the product. Aava can also generate
desire in the mind of the customers to buy the product by advertising its products that explains
the difference between packaged water and mineral water. This strategy will prove beneficial for
Aava to enter in Indonesian market.
Porter’s generic strategy
The porter generic strategy model explains the three strategies that the organization can
implement to gain competitive advantage. These strategies include cost leadership,
differentiation and focus.
Aava should adopt cost leadership strategy because by adopting this strategy the
company can sell its product at low cost as compared to its competitors. This will help in
achieving low cost advantage in the market. To gain success by implementing this strategy, the
company should have large share. The company should indulge into new technology, mass

7AAVA NATURAL MINERAL WATER OF INDIA
distribution, economy of scale, innovative product design, and easy access to raw material, input
cost and proper utilization of resources. Being the low cost leader is one of the best strategy to
either enter the new market or introduce different product in the same market. The analysis in the
above section indicates that there is the scarcity of pure water in some of the areas of Indonesia
and even there is a poor quality of water supply. The company Aava can take advantage of this
economic issue and target the customer living in the area. Aava should enter the Indonesian
market by lowering its price and offering premium quality product to the customers. Cost
reduction can be one of the best strategies for the company to gain competitive advantage in the
market. Further this can be achieved by adopting cost leadership strategies like a strict control of
the overhead costs and decreasing the distribution cost. The main benefit that the company has
over its competitors that it deals in 100% pure mineral based water and has no preservatives.
Aava provides 100% pure mineral water as compared to other companies whose water are
contaminated due to plastic. Therefore, to be among the top in the mineral water industry the
company should invest more on its capabilities and research and development to ensure best
quality to its customers (Mukharror et al., 2018).
The advantages of cost leadership for Aava will be that it will help in providing more
profit to the company. Due to the reduction in the production and the development cost, it will
help in gaining high profit for the company. Because due to the competitive price that also has
great margin than the competitors, it is likely to gain more business and also a strong value
proposal for the customers. This will also improve the market share as well as progress the
sustainability of the company. The more capital can be created by adopting cost leadership that
can be utilized for further growth. This also reduces the competition in the market.

8AAVA NATURAL MINERAL WATER OF INDIA
Apart from the advantages, cost leadership brings some negative points for the company
as well. This strategy sometimes harm the business by cutting the cost in some critical areas. If
Aava will reduce the cost the cost in the customer service, this will affect the sale of the
company. Cutting too much cost can make the company less innovative because to reduce cost it
will make the company sell the same product every time. Focussing too much on prices reduces
the importance of customer feedback and this strategy only focuses on cost. Therefore, it
disrespects time and prominence of market analysis (Lehndorff et al., 2016).
Conclusion
Therefore, the above analysis concludes that to enter into a foreign market, a company
has to go through a lot of market research. In India, in spite of serving the largest brands, the
company was not able to gain competitive advantage in the market. Thus, the company can
implement innovative strategies to enter the Indonesian market. Since, it’s a mineral water
company and the people of Indonesia are very health conscious, the brand I likely to achieve
success in many portions of the company. By adopting cost leadership, and selling its product in
the niche market, the brand can gain popularity in the Indonesian market. The company should
adopt eco-friendly measures like use of renewable resources in the product to catch the attention
of the potential buyers.

9AAVA NATURAL MINERAL WATER OF INDIA
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