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CHAPTER 2

VALUE PROPOSITION

2.1 Macro Environment and Industry Analysis

This section will analyze drinking water market and industry from Indonesia current

market position.

2.1.1 Macro Environment in Drinking Water Industry

Analysis macro environment of an industry conducted with using PESTLE (Political,

Economic, Social, Technological, Legal, and Environment) analysis. PESTLE is a

tool to identify external factors within an industry‟s environment that could have an

impact to the industry‟s operation. Many of external factors cannot be controlled by

the industry, but the implication from these factors needs to be understood.

Politics highlight the role of governments. Economics refers to macro-economic

factors such as exchange rates, business cycles, and differential economic growth

rates. Social influences include changing cultures and demographics. Technological

influences refer to innovations such as internet, nanotechnology, or the rise of new

composite materials. Legal embraces legislative constraints or changes, such as health

and safety legislation or restriction on company mergers and acquisitions.

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12

Environment stands for „green‟ issues, such as pollution and waste (Johnson, Scholes,

& Whittington, 2008).

1. Politic

Government plays an important role as they set the rules and regulation for the

company who wants to provide drinking water to the society. In every territory of

Indonesia, government provides water supplier company known as PDAM

(Perusahaan Daerah Air Minum) to deliver drinking water directly to customer‟s

residence (house, office, and building). Every PDAM managed by local

government based on Minister of Home Affairs Regulation number 2 in 2007

about Organ and Staffing Company Regional Water Supply. The service for

deliver drinking water into customers regulated in Indonesian Republic

Government Regulation number 16 in 2005 about The Development of Water

Supply System.

Although the name of the water supplier company is drinking water (Air Minum),

up to now there‟s no PDAM are able to deliver drinking water directly to

customer‟s residence. They are only able to deliver clean water which doesn‟t

meet drinking water standard. As mentioned in chapter 1, this condition related to

the high level of leakage in the underground pipe network. To support PDAM,

government were issuing regulation Presidential Decree number 29 in 2009 about

Guarantees and Interest Subsidies from the Central Government in Order to

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Accelerate the Supply of Drinking Water so local government can invest more

money to improve their water supplier company.

While for bottled water industry, government set the regulation in Indonesian

Republic Industry Minister Regulation number 96 in 2011 about Technical

Requirements of the Bottled Water Industry. Every bottled water product has to

meet Indonesia National Standard (SNI) with SNI 01-3553-2006 which regulated

under Republic Indonesia Industry Minister Regulation number 69 in 2009 about

Enforcement of Indonesian National Standards of Bottled Drinking Water is

Mandatory.

2. Economic

Indonesia economy grew 5.02% in 2014 slowed down compared to the year 2013

by 5.58% (Badan Pusat Statistik, 2015). The figure is the weakest level since

2009 which is the peak of the global financial crisis. Indonesia economy slowed

in recent years due to declining prices of primary commodity exports caused by

weakening demand from China and other key markets. Exports did not change

much in 2014, while political uncertainty also makes foreign investment restraint

because many companies who want to see the results of the presidential election

(BBC Indonesia, 2015).

In the midst of slowing economic growth rate, the people of Indonesia can be a bit

of a smile. Indonesia people per capita income rose to Rp 41.81 million

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throughout 2014 from Rp 3.53 million or Rp 38.28 million per year in 2013 and

it‟s already increased in the last three year (Dream.co.id, 2015). The increasing of

Indonesia people per capita income potentially keep drinking water industry

growing in the following years and still gain profit

3. Social

Nowadays people are more conscious about their health. Everyone wants to stay

and live a healthy live. Advertising and campaign to drink more water specially

drinking water makes people more concern about what they drink in daily life. A

lot of obesity cases caused by coke or cola drink or diabetic disease due to sugar

drink are also one of factors that people prefer drinking water rather than other

drink. As the age goes up, the generation becomes more serious about their health

and this factor will keep drinking water industry always in demand and keep

going.

Aqua as the market leader for bottled water in Indonesia is keep doing their

campaign „Mulai Hidup Sehat Dari Sekarang (Start Living Healthy from Now)‟.

The campaign objective is to communicate people to drink drinking water

minimum 2 liters per day (Foodreview Indonesia, 2011). In United States, first

lady Michelle Obama also support drinking water campaign as she involved in

campaign to invite people to drink drinking water more compare to other drinks

that contain sugar (Liputan 6, 2014).

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4. Technological

Water treatment technology has evolved over the past few centuries to protect

public health from pathogens. People use filtration method to remove pathogens

and chemicals from water. The simplest and cheapest filtration method is slow-

sand filtration which using sand and gravels. This method is suitable for small to

medium size communities. However, water from slow-sand filtration usually

cannot drink directly and still need boiled it first. PDAM Water Plant adopt slow-

sand filtration method but in large scale. To make the water ready to drink,

PDAM add some chemicals like chlorine and alum.

Membrane filtration is another technology that simply filtering water through a

sieve or semi-permeable layer such that water molecules are allowed to pass

through, but pathogens are prevented from passing. Most common application of

membrane filtration is Reverse Osmosis (RO) and suitable for individual

households. For moderately large communities, there is Reverse Osmosis (RO)

desalination which can purify sea water into drinking water.

Bottled water company like Aqua using filtration, adsorption (chemical), and

using ultra violet for disinfectant while Amidis are using distillation method.

5. Legal

Drinking water quality in Indonesia is regulated by Permenkes (Ministry of

Health Regulation) number 492 in year 2010 about Drinking Water Quality

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Standards. There are obligatory and addition parameters in the regulation need to

be fulfilled for drinking water. A firm which runs in drinking water industry

should obey minimum the obligatory parameter for their drinking water product.

Obligatory product regulate about microbiology and inorganic chemicals content

in the drinking water product.

6. Environment

Plastic bottle from bottled water industry become the global problem as in big

cities in every country. Million and billion bottles are produces per year and most

of it dumped into waste since it can be used only once.

In 2014, according to ASPADIN data, bottled water sold 23.1 billion liters and

70% of it sold from gallon and other 30% sold from small size bottle. If using

assumption that one gallon is 19 liters and small sized bottle is 600 ml (most

common bottle size), it means that in 2014 there is 850 million gallon caps and

11.5 billion bottles become plastic waste.

From Aqua only, which has 40% market share for bottled water in Indonesia, they

produce around 340 million gallons per year (Kontan.co.id, 2013). Imagine how

much fuel consumption that Aqua used to deliver the whole gallons production

into every area in Indonesia. Those gallon cap and plastic bottle turn into waste

while fuel consumption will increase every year as the demand of drinking water

increasing.

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From PESTLE analysis above, current external factors in drinking water industry

don‟t have significant impact which can stop or disturb the drinking water industry‟s

operation. Drinking water industry still can run well as long as there is no significant

change from the external factors.

2.1.2 Drinking Water Industry Analysis

There are five forces (the threat of new entrants, the threat of substitute, the

bargaining power of customers, the bargaining power of suppliers, and rivalry among

competitors) in the industry competition and can affect the company in some

situations. A company has to understand how they work in the industry and

establishes strategic agenda for dealing in the industry (Porter, How Competitive

Forces Shape Strategy, 1979).

Analyze the drinking water industry in Indonesia is using Porter‟s 5 Forces to

describe the situation.

1. Threat of New Entrants

Drinking water industry is a niche market for new entrants due there is big profit

inside the business. There are four important barriers to entry which are

economies of scale, product differentiation, cost advantage independent of scale,

and government regulation of entry (Barney & Hesterly, 2006).

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- Economies of Scale

As the demand for drinking water keep increasing, the production of drinking

water also will be increase. The increasing production of drinking water

whenever there is a demand will give advantage to the company / new

entrants due to per unit fixed cost of their product will be lower.

- Product Differentiation

The product for drinking water in the industry is relatively the same although

they made with different process. The product is the same as long as it meets

the standard for drinking water.

- Cost Advantage Independent of Scale

In drinking water industry, there is no cost advantage such as secret

technology, taken-for-granted skills, or low cost access to critical raw

material. People can make drinking water with only boiled the clean raw

water so there‟s no special cost advantage in this industry.

- Government Regulation

There‟s no restriction or limitation from government to new entrants enter

drinking water industry and also no cost of entry to industry. As long as new

entrants follow the regulations, government won‟t affect new entrants to enter

the industry.

Based on four important barriers above, there is no significant obstacle to enter

drinking water industry. The threat of new entrants is high.

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2. Threat of Substitutes

There is no substitute for drinking water. It cannot replace by soda, tea, juice,

beer, or any other water. Drinking water is basic needs and people have to drink it

regularly for their own health. The threat of substitutes is low.

3. Bargaining Power of Customers

Customers have many options to get drinking water. Various brands of bottled

water are sold with variants price and customers can freely to choose the products

they want. With the mindset that people prefer to choose bottled water rather than

from water source they have, to switch from bottled water into water from water

filter is not easy. The bargaining power of customers is high.

4. Bargaining Power of Suppliers

The most critical raw material for drinking water industry is the raw water itself.

To get the raw water of course will need cost. In this case, the raw water cannot

increase their price by itself and the companies in drinking water industry won‟t

get many difficulties to get the raw water.

For other materials related to production process, currently there are many

suppliers already existing in drinking water industry with competitive price. For

water filter, there are a few suppliers but there are also only a few buyers since

water filter for drinking water is not common use by urban people. The

bargaining power of suppliers is low.

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5. Rivalry Among Competitors

In drinking water industry, the competitors are bottled water companies (ex:

Aqua, VIT, Le Minerale, etc) and water purifier / filter companies (ex: Pure It,

Advance, etc). Bottled water is the main player since most of urban people use

bottled water as their drinking water. There are around 600 companies compete in

bottled water industry and 40% of its market share dominated by Aqua. The

number of water filter / purifier company is uncertain. However, there are many

companies in the internet which sell Reverse Osmosis machine for drinking

water. With high numbers of competitor in drinking water industry, rivalry among

competitors is high.

Figure 2.1 Porter‟s Five Forces for Drinking Water Industry, Source: Porter (1979)

High

High Low High

Low

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From analysis above, there are three high forces and low forces which mean drinking

water industry is still attractive. The industry also has huge market and potentially

giving profit. However, since there are three high forces, it is needed to take some

strategies to handle those three forces. The strategies are:

1. Threat of New Entrants

Mostly the new players in drinking business industry are producing bottled water

(bottle or gallon). Being different with existing and new entrant players in the

industry by using water filter to produce drinking water is the way to get easily

acknowledge by the customers. The water filter is for not sell but renting it to the

customer because the objective is to give more service rather than product only.

Using water filter and renting method is differentiation strategy and unique

selling point compare to other players in drinking water industry.

2. Bargaining Power of Customers

Customers who choose bottled water have to buy water dispenser first. Same

condition if they choose water filter or purifier, they have to pay for the

equipment. Water dispenser and water filter have lifetime period which means

customers has to spend another cost regularly. This business model makes

customers don‟t have to buy any equipment. Water filter is free provided and

there are also regular checking and maintenance to make sure that the water filter

always produces good quality drinking water. Customers only pay for the water

they drink or use and no more additional cost.

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3. Rivalry Among Competitors

To win in this competition, the strategy is offering more competitive price to the

customers compare to drinking water type they use. More competitive price will

make this business model in front of other competitors in the customer‟s view.

Other strategy is providing better quality drinking water compare with other

competitors and offer better service. Customers always love when they are treated

very well by the producer of product / service they used.

2.2 Market Profile and Opportunity

This business model target market is people who live in Jakarta. Jakarta is the biggest

city at Indonesia with around 9.9 million people (Minister of Home Affairs, 2015).

Those 9.9 million people doesn‟t include with family or single expatriate and other

urbanization people that working at Jakarta but doesn‟t have Jakarta identity card.

With that number of population, it means that people in Jakarta will need at least 25

million liters drinking water every day. According to data above, Jakarta is the most

suitable city for this business model.

Market segmentation is middle up family in Jakarta because this segment is usually

using water dispenser (bottled water) or water purifier for their drinking water need.

A family usually is having around 4 until 5 people in their residence and it means

around 8 – 15 liters drinking water every day. Based on their living place,

segmentation focus is on middle up family who live in gated property and apartment

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since many potential market in one location compare to single house in non gated

property. There are no certain data for the number of gated property in Jakarta

although there are so many of it. For the apartment, there are more than 143.000 units

spread in all over apartments in Jakarta (Colliers International, 2014).

Second market segmentation is office building. Many employees in many office

buildings means a lot of drinking water needed. Office supply in Jakarta currently

reaches 7.82 million m2, where 61% of which are located in the Central Business

District (CBD) area. Outside the CBD area, West and South Jakarta became a favorite

with a contribution of 21% of the office supply (Colliers International, 2014).

Another target market is Bogor, Depok, Tangerang, and Bekasi. This business model

is planned to expand the market into Jakarta‟s surrounding areas after the business

settled in Jakarta around 5 years after running.

2.3 Value Proposition of Drinking Water Filter Renting

Value proposition, also known as a unique selling proposition (USP), is a promise of

value to be delivered and acknowledged and a belief from the customer that value

will be delivered and experienced. To be acknowledged by the customer, drinking

water filter renting business model has to be different with the existing player in

drinking water industry. The differentiation will become the main value for drinking

water filter renting.

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The value propositions for drinking water filter renting business model are:

- Easy. Customers don‟t have to install the water filter or change the spare part

(if something broken) by themselves. Water filter installation is free provided

and maintaining including reparation is regularly conducted (free).

- Effective. Water taken directly from water resources in customer residence.

Customers don‟t have to buy bottled water or order to refill.

- Cost Reduction. Customers only pay for the water they drink. They don‟t need

to spend more additional cost to buy the equipment or spare part.

- Healthy. Water quality will be better compare to other drinking water product

(lower TDS value).

- Hygienic. Regular water quality monthly checking to make sure the water

always meet drinking water standard. Equipment cleaning is also provided

regularly for free.

- Quick Response. There will be customer residence‟s visit regularly so the

possibility for customer‟s complaint will be minimized.

One of key values propositions is lower TDS value (healthy) which determines the

quality of drinking water and usually is unknown by most people. TDS stands for

total dissolved solids, and represents the total concentration of dissolved substances

in water. The lower TDS level in water, the better quality of the water. The maximum

level for TDS in the water is 500 ppm (parts per million) since above 500 ppm means

the water already contaminated (HM Digital, Inc., 2008).

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Figure 2.2 TDS in Parts per Million (ppm) for Drinking Water, Source: www.tdsmeter.com

The ideal drinking water contains TDS 0 – 50 ppm. This business model provides

drinking water with TDS level 0 – 7 ppm which means it‟s an ideal drinking water for

the customers. Most bottled water in the market has TDS level around 65 – 88 ppm.

This result already proved from laboratory result (see Appendix for detail). Based on

TDS parameter, water quality from water filter is better compare to most other bottled

water products in the market.

2.4 Business Model Design

This business model designed following drinking water industry huge market and

profitability. The service should answer what is customers really need to fulfill their

drinking water in their residence.

1. The Values

This business model should become the solution for customers need in fulfilling

their drinking water demand. Customers don‟t have to pay for the equipment and

spend additional cost for maintenance or reparation. They only pay for the water

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they drink / use. Customers also don‟t have to be bothered by changing or refill

the bottled water or do the equipment maintenance or reparation by themselves.

Customers just have to relax, enjoy the glass of water, pay only for they drink or

use, and the rest is business model responsibilities.

2. Product Design

Product design is similar with regular bottled dispenser which commonly used by

urban people. The water filter unit also has hot and cold water features. Design

similarity because of urban people already familiar with drinking water

equipment like water dispenser so they don‟t have to learn how to use new

equipment one. Water filter will be connected directly with plumbing system in

customer residence and it‟s easy to install. The unit is easy to clean with modern

style to add modern look to the kitchen and also has a call card sticker to do list

for recording technician activities doing regular visits (maintenance, checking,

cleaning, and reparation).

Figure 2.3 Water Filter Unit Illustration

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39%

37%

12%

12%

Drinking Water Dispenser Unit Cost

< IDR 200,000

IDR 200,000 - IDR 500,000

IDR 500,001 - IDR 800,000

> IDR 800,000

2.5 Customer Perspective and Behavior

This section will discuss about customer behavior in their way of drinking water and

also customer perspective about this business model. Customer perspective and their

behavior about drinking water are very important to know if this business model can

fit into customers need or not.

2.5.1 Primary Data (Survey)

Another survey conducted to know about the behavior of respondents in their way of

drinking water. Total respondents are 62 respondents who give the questionnaire

feedback.

Questions about the drinking water equipment (57 respondents using bottled water as

their drinking water):

1. How much cost that you spend in the purchase of one unit of bottled water

drinking water dispenser?

Figure 2.4 Survey Result for Drinking Water Unit Cost

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Parameter Cost / Income per Month Respondent

Dispenser Cost <IDR 200.000 22

< IDR 3.100.000 2

IDR 3.100.000 - IDR 9.000.000 9

IDR 9.100.000 - IDR 15.000.000 4

> IDR 15.000.000 7

Dispenser Cost IDR 200.000 - IDR 500.000 21

IDR 3.100.000 - IDR 9.000.000 6

IDR 9.100.000 - IDR 15.000.000 10

> IDR 15.000.000 5

Dispenser Cost IDR 501.000 - IDR 800.000 7

IDR 3.100.000 - IDR 9.000.000 3

IDR 9.100.000 - IDR 15.000.000 1

> IDR 15.000.000 3

Dispenser Cost >IDR 800.000 7

IDR 3.100.000 - IDR 9.000.000 2

IDR 9.100.000 - IDR 15.000.000 1

> IDR 15.000.000 4

57Grand Total

Income per Month

Income per Month

Income per Month

Income per Month

58%28%

12%

2%

When Water Dispenser Damaged

Buying new unit

Fixing in authorized service center

Fixing in unauthorized service center

Not answer

Table 2.1 Survey Result for Drinking Water Unit Cost vs. Income per Month

From the result above it can be seen that most respondents choose inexpensive

water dispenser for their bottled water (gallon). Compare with their income, most

respondents although have good income per month (until more than IDR 15

million) but they still prefer the inexpensive water dispenser. Respondents seem

prefer inexpensive water dispenser although they have ability to buy the

expensive one.

2. When the unit is damaged due to any, what do you do?

Figure 2.5 Survey Result for Action Taken When Water Dispenser Damaged

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Parameter Cost / Income per Month Respondent

Action Buying new unit 33

< IDR 3.100.000 2

IDR 3.100.000 - IDR 9.000.000 9

IDR 9.100.000 - IDR 15.000.000 9

> IDR 15.000.000 13

Action Fixing in authorized service center 16

IDR 3.100.000 - IDR 9.000.000 6

IDR 9.100.000 - IDR 15.000.000 5

> IDR 15.000.000 5

Action Fixing in unauthorized service center 7

IDR 3.100.000 - IDR 9.000.000 4

IDR 9.100.000 - IDR 15.000.000 2

> IDR 15.000.000 1

Action Not answer 1

Income per Month IDR 3.100.000 - IDR 9.000.000 1

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Income per Month

Income per Month

Income per Month

Grand Total

19%

39%

42%

Unpleasant Activity

Buy a gallon of water replacement

Install gallons of water replacement

Clean the dispenser unit

Table 2.2 Survey Result for Action Taken vs. Income per Month

From the result above it can be seen that most respondents choose to buy new unit

when their water dispenser is damaged. Mostly the reason is because the cost to

fix the water dispenser is almost the same with buying new unit, especially when

the damage happens at the compressor. Compare with their income, mostly the

middle income or even respondents with income more than IDR 15 million prefer

to buying new unit rather than to fix the water dispenser.

3. Please sort the following parameters of daily activities (number 1 is the most

unpleasant).

Figure 2.6 Survey Result for Unpleasant Daily Activities

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44%

56%

TDS Term

Familiar

Not Familiar

27%

73%

TDS Value

Know

Not know

From the result above it can be seen that most respondents didn‟t like to clean the

water dispenser unit rather than buy another bottled water / gallon or replace the

empty gallon water.

Questions about the drinking water quality:

1. Are you familiar with the term “TDS” in drinking water? Do you know your

drinking water TDS value?

Figure 2.7 and Figure 2.8 Survey Result for TDS Term and TDS Value

From the result above it can be seen that most respondents didn‟t familiar about

TDS term and they also didn‟t know what TDS value of their drinking water is. It

means that most of people haven‟t understood about water quality and they also

don‟t know what type of drinking water which is best for their body.

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0% 3%

76%

21%

Water Quality Satisfaction

Very dissatisfied

Dissatisifed

Satisfied

Very satisfied

3%

11%

39%

47%

Better TDS Drinking Water

Strongly disagree

Disagree

Agree

Strongly agree

2. How satisfied are you with the quality of your drinking water?

Figure 2.9 Survey Result for Water Quality Satisfaction

From the result above it can be seen that most respondents already satisfied with

their drinking water quality although they don‟t know about water quality or TDS

value of their drinking water.

Questions about the changing the type of drinking water:

1. If you are given better TDS value drinking water choice, will you change the type

of your drinking water?

Figure 2.10 Survey Result for Better TDS Drinking Water

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0%

6%

34%

60%

Water Quality Routine Checking

Strongly disagree

Disagree

Agree

Strongly agree

The questionnaire also explains to the respondents about TDS and what value of

TDS that ideal for drinking water. After explained about TDS and the respondents

know the function of TDS value for their drinking water, most of them are agree

to change their type of drinking water if they offered drinking water with better

TDS value.

2. Water quality routine check is an important added value in determining the choice

of your drinking water

Figure 2.11 Survey Result for Better TDS Drinking Water

From the result above, respondents feel that routine water quality checking is an

important thing and they agree to change their type of drinking water if they

offered with the value of routine quality water checking.

3. Following parameters can make you change your drinking water type

From the survey result, most of respondents choose water quality is the main

reason for them to change their type of drinking water.

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61%21%

18%

Parameter to Change Drinking Water

Water Quality

Water Price

After Sales Service

Figure 2.12 Survey Result for Parameter to Change Drinking Water Type

From the survey result, it can be seen that people prefer spend less cost to buy water

equipment for their drinking water and they need to spend another cost when the

equipment is damaged. One thing that most people didn‟t like about the equipment is

that they have to clean it up regularly.

Most people also would like to change their type of drinking water if they offered

better quality water and also better service like routine water quality checking.

Therefore, this business model with the service offered can meet what most people

need for their drinking water. The value offered is in line with the survey result.

2.5.2 SPSS Analysis

Simple linear regression was run to access the relationship between two continuous

variables so it can be known if there is any relationship between Independent

Variables (Residence Type, Community and Occupation) and Dependent Variables

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Model Summary

R2

1 Residence Type Lower TDS Value 0.642

2 Residence Type Routine Quality Check 0.605

3 Community Lower TDS Value 0.638

4 Community Routine Quality Check 0.787

5 Occupation Lower TDS Value 0.581

6 Occupation Routine Quality Check 0.449

Independent Variable Dependent VariableNo

(Change if Lower TDS Value and Routine Quality Check). The result from SPSS

analysis is shown below:

Table 2.3 Independent Variable vs. Dependent Variable

R square is the proportion of variance in the Dependent Variable (Change if Lower

TDS Value and Routine Quality Check) which can be explained by the Independent

Variables (Residence Type, Community and Occupation). This is an overall measure

of the strength of association and does not reflect to extent to which any particular

independent variable is associated with the dependent variable. The correlation is

scaled to be in range [-1, 1]. Values of R2 close to 1 indicate a strong linear

relationship, values close to 0 a weak one (Verzani, 2002).

After SPSS simple linear regression were run between Independent Variables

(Residence Type, Community and Occupation) and Dependent Variables (Change if

Lower TDS Value and Routine Quality Check), the relationship between Independent

and Dependent Variables are significant. The result is a valid indicator that the

relationship between Independent and Dependent variables is mostly strong and

positive.

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2.5.3 VALS Diagram

VALS (Values, Attitude, and Lifestyle) diagram is one of the primary ways to

perform psychographic segmentation. It is developed first time by Arnold Mitchell in

1978. The VALS framework was developed keeping a consumers resources as well

as his capacity to accept innovation in mind. The X axis consisted of primary

motivation (knowledge, achievement, or social) and the Y axis consisted of resources

such as income, education, confidence etc. Thus these two factors were determined to

be critical to define the values attitude and lifestyle of any consumer. Arnold Mitchell

divided customers into eight different types based on the amount of resources they

had as well as their capacity for primary motivation. Those eight different types are

Innovators, Thinkers, Believers, Achievers, Strivers, Experiencers, Makers, and

Survivors (Mitchell, 1978).

Figure 2.13 VALS Diagram – Eight Different Customers, Source: Mitchell (1978)

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From target market analysis based on VALS Diagram, the right market target for this

business model is the Thinkers customers. The reasons why the Thinkers are fit with

this business model are:

1. The Thinkers are middle up consumer as they have good resources like income

and education. This condition is in line with business model target market which

is middle up society.

2. The Thinkers are actively looking the information for decision process making.

One of this business model key value are lower TDS value for better water quality

and the parameter is rarely known by most people. They have to be informed or

look the information by themselves.

3. The Thinkers like the product or service which last long and have function and

value. This business model is giving lifetime service and gives many values to the

customers as long as they rent the water filter.

4. The Thinkers are open for new idea and also tend to stay at home for their free

time. This business model is a new different service compare to most players in

drinking water industry and will be placed in customer‟s residence.

The best way marketing strategies for the Thinkers are using website, campaign or

public relation activity, customer review website, or referral. What‟s best to offer to

the Thinkers is the value of the services for their money, show the good use of the

services, highlight any user feedback, and also the result of water quality test like

TDS value result to prove that this drinking water has better quality.

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2.6 SWOT Strategy

SWOT analysis is a business analysis technique that a company can perform for each

of its products, service, and markets when deciding on the best way to achieve future

growth. The process involves identifying the strengths and the weaknesses of the

company, and opportunities and threats present in the market that it operates in

(Humphrey, 1960).

SWOT analysis for business model drinking water filter renting is:

Table 2.4 SWOT Matrix Analysis

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The threat of this business model is people perception that bottled water is more

hygienic and their best preference for drinking water. People also didn‟t know much

about drinking water filter system which can process raw water into drinking water.

The opportunity for this business model is the existing player for water filter renting

is very rare. Most of players in drinking water industry are selling bottled water

(product). Renting method is expecting that service will be more given to the

customers rather than only sell the equipment. Another opportunity is drinking water

demand increasing every year and in line with the increasing of bottled water price.

Also the campaign to drink more drinking water is become active nowadays.

The SWOT Matrix analysis indicates four main strategies below:

1. The WT Strategy: strategy in order to minimize both weaknesses and threats.

Centralized customer‟s location in order to minimize the cost for regular

maintenance and checking. Centralized location also will make marketing activity

a lot of easier and focus to the customers in location.

2. The WO Strategy: strategy in order to minimize weaknesses and maximize

opportunities. The strategies are to cooperate with target market organizer like

gated property / house developer or building management and also make

cooperation with suppliers to provide the materials with competitive price to get

mutual benefits.

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3. The ST Strategy: strategy which aims to maximize strength of the business and

overcome the threats from external organization. The main strategy is to educate

people with the campaign or promotion about water quality and minimum

standard of drinking water. There have to be also promotion about drinking water

filter, the function, and the safety. This promotion aims to get people awareness

about drinking water from water filter is safe and hygienic.

4. The SO Strategy: strategy to maximize internal strengths and maximize in

utilizing external opportunities. Active campaign will be conduct about the values

of this business model service and what‟s the benefit compare to other drinking

water products. To get people interest in this business model service, free trial

promotion will be offered for short term (1 week – 1 month). This strategy to

ensure people that this business model drinking water, which is coming from

water filter, is also hygienic as bottled water.