Situation Analysis/SWOT: Provide a thorough SWOT, however, provide only pertinent facts supported by what is in the case. 2. Problem Statement: Provide a statement that summarizes the core problem facing the business. Identify your problem concisely in one or a few sentences maximum. 3. Evaluation of Alternatives: Identify two distinct viable alternative marketing recommendations. Both alternatives, although exclusive from each other, should be able to solve the problem. Describe each option and evaluate them by providing at least two advantages and disadvantages (pros and cons) for each alternative. Tip: consider the analysis from the SWOT to generate ideas. 4. Recommendation: Identify which of the alternatives (# 1 or #2) you recommend as your marketing strategy/solution that would address the core problem. Describe the recommendation with enough detail, e.g. the target market and marketing mix (4 Ps). Have fun and be creative! This is the fun of marketing! Just be sure to provide rationale - defend why you chose this option, facts from the case and the criteria used to make the decision. 5. Objectives: Define realistic numerical objectives (e.g. # of sales, revenue and/or profit) that are time-based for the business that will align with the strategic marketing recommendation. For example, the business will generate $X revenue by end of 2021. Use the Excel template to play around with scenarios. 6. Income Statement: Refer to the Excel template ("Income Statement") provided on Blackboard. You will have to input data from the case in the blue boxes to determine the answer to the following questions. Base questions a,b,c and d on the current situation with numbers from the case. Submit the excel document with your numbers for questions a,b,c and d. No need to submit an Income Statement based on e. a) What is the CURRENT ANNUAL revenue? b) What is the CURRENT ANNUAL gross profit? c) What is the CURRENT ANNUAL gross margin (%)? d) What is the CURRENT ANNUAL operating profit? e) What impact will your recommendation (question #4) have financially? In other words, explain how revenues and operating profit / net income will change and by how much $. Tip: Use the template and play around with the blue box inputs to enter different numbers based on different scenarios. 7. Positioning Statement: positioning statement for the business that incorporates the new strategy you propose.

Aqua Clear Water, Inc. Manuel Rodriguez established his company, Aqua Clear Water, Inc. (Aqua Clear), to market a product designed to purify drinking water. The product, branded as the CLARITY ll Naturalizer Water Unit, is produced by Environmental Control Inc., a corporation that focuses primarily on water purification and filtering products for industrial markets. Aqua Clear is a small but growing business. Manuel started the business with initial capital of only $20,000, which came from his savings and loans from several relatives. Manuel manages the company himself. He has a secretary and six full-time salespeople. In addition, he employs two college students part-time; they make telephone calls to prospect for customers and set up appointments for a salesperson to demonstrate the unit in the consumer's home. By holding spending to a minimum. Manuel has kept the firm's monthly operating budget at only $4,500-and most of that goes for rent, his secretary's salary, and other necessities like computer supplies and telephone bills. The CLARITY II system uses a reverse osmosis purification process. Reverse osmosis is the most effective technology known for improving drinking water. The device is certified by the Environmental Protection Agency to reduce levels of most foreign substances, including mercury, rust, sediment, arsenic. lead, phosphate, bacteria. and most insecticides. Each CLARITY ll unit consists of a highquality l-micron sediment removal cartridge, a carbon filter, a sediment lter, a housing, a faucet, and mounting hardware. The compact system fits under a kitchen sink or a wet bar sink. An Aqua Clear salesperson can typically install the CLARITY II in about a half hour. Installation involves attaching the unit to the cold-water supply line, drilling a hole in the sink, and fastening the special faucet. It works equally well with water from a municipal system or well water and it can purify up to 63 litres daily. Aqua Clear sells the CLARITY II to consumers for $395, which includes installation. The system has no movable parts or electrical connections and it has no internal metal parts that will corrode or I'LISt. However, the system does Use a set of filters that must be replaced after about two years. Aqua Clear sells the replacement lters for $80. Taking into consideration the cost of the filters, the system provides water at a cost of approximately $.03 per litre for the average family. There are two major benefits from using the CLARITY II system. First, water treated by this system tastes better. Blind taste tests confirm that most consumers can tell the difference between water treated with the CLARITY II and ordinary tap-water. Consequently, the unit improves the taste of coffee, tea, frozen juices, ice cubes, mixed drinks, soup, and vegetables cooked in water. Perhaps more important, the CLARITY Il's ability to remove potentially harmful foreign matter makes the product of special interest to people who are concerned about health and the safety of the water the consume. The number of people with those concerns is growing. In spite of increased efforts to protect the environment and water supplies, there are many problems. Hundreds of new chemical compounds ranging from insecricides to industrial chemicals to commercial cleaning agentsare put into use each year. Some of the residue from chemicals and toxic waste eventually enters water supply sources. Further, floods and hurricanes have damaged or completely shut down water treatment facilities in some cities. Problems like these have led to rumors of possible epidemics of such dread diseases as cholera and typhoidand more than one city has recently experienced near-panic buying of bottled water. Given these problems and the need for pure water, Manuel believes that the market potential for the CLARITY II system is very large. Residences, both single-family and apartment, are one obvious target. The unit is also suitable for use in boats and recreational vehicles; in fact, the CLARITY II is standard equipment on several upscale RVs. And it can be used in taverns and restaurants, in institutions such as schools and hospitals, and in commercial and induatrial buildings. There are several competing ways for customers to solve the problem of getting pure water. Some purchase bottled water. Companies such as Ozarka deliver water monthly for an average price of $.30 per litre. The best type of bottled water is distilled water; it is absolutely pure because it is produced by the process of evaporation. However, it may be too pure. The distilling process removes needed elements such as calcium and phosphateand there is some evidence that removing these trace elements contributes to heart disease. In fact, some health-action groups recommend that consumers not drink distilled water. A second way to obtain pure water is to use some system to treat tapwater. CLARITY II is one such system. Another system uses an ion exchange process that replaces ions of harmful substances like iron and mercury with ions that are not harmful. Ion exchange is somewhat less expensive than the CLARITY II process, but it is not well suited for residential use because bacteria can build up before the water is used. In addition, there are a number of other filtering and softening Systems. In general, these are less expensive and less reliable than the CLARITY Ii. For example, water softeners remove minerals but do not remove bacteria or germs. Manuei's first year with his young company has gone quite well. Customers who have purchased the system like it, and there appear to be several ways to expand the business and increase profits. For example, so far he has had little time to make sales calls on potential commercial and institutional users or residential builders. He also sees other possibilities such as expanding his promotion effort or targeting consumers in a broader geographic area. At present, Aqua Clear distributes the CLARITY II in the 13-county gulf coast region of Texas. Because of the RobinsonaPatman Act, the manufacturer cannot grant an exclusive distributorship. However, Aqua Clear is currently the only CLARITY II distributor in this region. In addition, Aqua Clear has the right of first refusal to set up distributorships in other local areas. The manufacturer has indicated that it might even give Aqua Clear distribution rights in a large section of northern Mexico. The agreement with the manufacturer allows Aqua Clear to distribute the product to retailers, including hardware stores, plumbing supply dealers, and the like. Manuel has not yet pursued this channel, but a CLARITY II distributor in Florida reported some limited success selling the system to retailers at a wholesale price of $275. Retailers for this type of product typically expect a markup of about 33 percent of their selling price. Environmental Control Inc., ships the CLARITY II units directly from its warehouse to the Aqua Clear office via UPS. The manufacturer's $200 per unit selling price includes the cost of shipping. Aqua Clear only needs to keep a few units on hand because the manufacturer accepts emailed orders and then ships immediatelyso delivery never takes more than a few days. Further, the units are small enough to inventory in the back room of the Aqua Clear sales office. Several of the easyto handle units will fit in the trunk of a salesperson's car. Manuel is thinking about recruiting additional salespeople. Finding capable people has not been a problem so far. However, there has already been some turnover, and one of the current salespeople is complaining that the compensation is not high enough. Manuel pays salespeople on a straight commission basis. A salesperson who develops his or her own prospects gets $100 per sale; the commission is $80 per unit on sales leads generated by the company's telemarketing people. For most salespeople, the mix of sales is about half and half. Aqua Clear pays the students who make the telephone contacts $4 per appointment set up and $10 per unit sold from an appointment. An average Aqua Clear salesperson easily sells 20 units per month. However, Manuel believes that a really effective and well prepared salesperson can sell much more, perhaps 40 units per month. Aqua Clear and its salespeople get good promotion support from Environmental Control Inc. For example, Environmental Control supplies sales training manuals and sales presentation flip charts. The materials are also well done, in part because Environment Control's promotion manager previously worked for Electrolux vacuum cleaners, which are sold in a similar way. The company also supplies print copy for magazine and newspaper advertising and tapes of commercials for radio and television. Thus, all Aqua Clear has to do is buy media space or time. In addition, Environmental Control furnishes each salesperson with a portable demonstration unit, and the company recently gave Aqua Clear three units to be placed in models of condominium apartments. Manuel has worked long hours to get his company going, but he realizes that he has to find time to think about how his strategy is working and to plan for the future