The domestic bottled water market in our country has grown to 2.3 trillion won, but domestic bottled water brands are unable to differentiate themselves and are engaged in price competition, creating a red ocean market. They have failed to develop pro...
The domestic bottled water market in our country has grown to 2.3 trillion won, but domestic bottled water brands are unable to differentiate themselves and are engaged in price competition, creating a red ocean market. They have failed to develop products with clean raw water sources that meet water quality standards and are free from harmful substances, or premium products beneficial to health, indicating a need for business improvement in water companies. Meanwhile, imported bottled water brands are maintaining high selling prices and increasing their market share.
The purpose of this study is to derive attributes for premiumizing domestic bottled water, analyze partial value and importance of these attributes, create a profile bottled water, and estimate how much additional price consumers are willing to pay. This will provide foundational data for premium bottled water development and marketing insights.
To achieve this purpose, the following studies were conducted:
1. Deriving premium water selection attributes through Delphi survey
2. Estimating attribute importance and partial value through conjoint analysis
3. Estimating willingness to pay using Contingent Valuation Method (CVM)
4. Comparing levels through sensory evaluation of the profile bottled water
Study 1 involved a Delphi survey with experts conducted three times, which identified 6 high-level attributes and 12 detailed attributes for premiumization. The Kendall's W values for attribute consensus were all significant, indicating strong agreement. Notably, shortening distribution periods to consume water within a short time after release scored .852, the highest level of consensus, while using glass packaging (not commonly used in domestic products) scored .803. Subsequent priorities included mineral composition attributes, functionality, and uncontaminated bottled water quality.
To create a profile bottled water, detailed attributes were finalized through expert discussions, including:
Water quality (no water quality standard violations, no harmful substances), Packaging (glass bottle, PET bottle), Selling price (3 levels), Functionality (mineral enhancement, maintaining clean raw water source), Drinking timing (within 2 weeks, 2 weeks to 1 month, 1 to 3 months)
Study 2 was conducted with 200 consumers in the metropolitan area through conjoint analysis to estimate the importance of high-level attributes and partial value of detailed attributes. Using the 12 attribute levels derived from Study 1, 72 profiles were created and reduced to 16 attribute combinations through orthogonal method. The full profile method was used, and respondents were asked to rank their preferences. The research model was suitable with a Kendall's tau value of .483, and the importance order was: drinking timing > package material > selling price > clean water quality.
The low importance of clean water quality can be attributed to low awareness of environmental department water quality inspections and the perception that bottled water does not contain harmful chemicals or microplastics. The partial worth of detailed attributes showed: 1-3 months drinking timing at .670, glass bottle at .439, and mineral addition at .391. The optimal attribute combination was: water without harmful substances + glass bottle + mineral addition + 1-3 months drinking timing + selling price over 3,000 won. Based on these results, Profile Water 1 was created using water without harmful chemicals and microplastics that passed quality inspections, while Profile Water 2 was a mixed beverage with minerals added to Profile Water 1 at imported water levels. These two virtual profile waters were used for sensory evaluation in Study 4.
Study 3 aimed to estimate consumers' willingness to pay (WTP) for these premium products. Using the conjoint analysis results, two Profile bottled water products were presented: Profile Water 1 (bottled spring water) and Profile Water 2 (mineral-added). Prices were presented from 1,500 to 6,000 won, with willingness to pay decreasing as price increased, following a typical demand curve. Interestingly, Profile Water 2 showed a higher willingness to pay, indicating a preference for mineral-enhanced products perceived as healthy. For Profile Water 1, the model was statistically significant. The B-value for proposed prices was negative, showing decreased purchase probability with higher prices. Consumers more likely to pay were those with higher household income, frequent department store visitors, imported water drinkers, and those who prioritize minerals. The additional willingness to pay was estimated at 1,465 won above existing domestic water prices.
Profile Water 2 showed similar model characteristics, with additional variables like microplastics being significant. The additional willingness to pay was estimated at 2,225.5 won above domestic water prices, with 759.8 won more than Profile Water 1, attributed to the perception of minerals being beneficial to health.
The bottled water company suggest pricing Profile Water 1 around 2,500 won and Profile Water 2 at 3,000 won or higher, based on the estimated additional willingness to pay.
Study 4 compared the sensory characteristics of profile waters and commercially available bottled waters, evaluating the key premiumization attributes of drinking timing and packaging(bottle) material to assess the competitiveness and appropriateness of the profile waters as premium products. The sensory evaluation was conducted in two parts: professional panel characteristic difference test and consumer preference test.
In the characteristic difference test between profile waters and commercial bottled waters, no significant differences were found in appearance and throat feel of after taste. Significant differences were observed in taste, texture, and after taste persistence. Domestic commercial bottled waters showed superior characteristics in salty and acidic tastes. Overall preference was ranked as: waters with high mineral content > profile waters with clean water quality > imported bottled waters with similar mineral content to domestic bottled waters > domestic bottled waters. The overall preference of profile waters was equivalent to imported bottled waters.
The consumer preference test for profile waters showed no significant differences in appearance, odor, texture, and aftertaste. Taste and overall preference were significant, with the overall preference ranking: high mineral imported bottled water > Profile Water 2 > Domestic commercial bottled water > Profile Water 1 > Low mineral imported bottled water. This indicated that the two profile waters had similar preference levels to imported waters and higher preference than domestic bottled waters, suggesting the possibility of developing premium domestic bottled water.
For the key premiumization attribute of drinking timing, significant differences were found in odor, taste (sweetness), texture (refreshingness), and overall preference. Products with later drinking times showed decreased characteristics and preference. The consumer preference test revealed significant differences in odor and overall preference. Overall preference was highest for samples with shorter drinking times after production, suggesting this could be a competitive advantage for domestic bottled waters over imported bottled waters.
The sensory evaluation of packaging materials (glass vs. PET bottles) showed significant differences in odor, taste, texture, and overall preference, except for appearance. Glass bottle products had significantly higher preference in odor and overall preference. The consumer preference test demonstrated differences in odor, taste, and overall preference, indicating consumer awareness of PET bottles' chemical impact on water quality. Overall preference was glass bottle > PET bottle.
In summary, the study comprehensively examined ways for domestic bottled water companies to diversify and add value to their products. Key findings include:
1. Identified premium water attributes through Delphi and conjoint analyses:
Clean water source (passing quality tests, free from chemicals and microplastics), Glass packaging, Shortened drinking time, Mineral enhancement.
2. Estimated additional pricing potential of 1,500-2,200 won over current products
3. Sensory evaluation confirmed that domestic premium profile waters have equal or superior quality characteristics and preferences compared to imported waters
The bottled water company conclude that by manufacturing and selling such premium bottled waters, domestic water bottled companies can overcome current price-competitive challenges and compete more effectively with imported bottled water brands.