Camelbak Hydration SWOT Analysis and Business Plan of Action

Camelbak Hydration: SWOT Analysis and Business Plan of Action

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Camelbak Hydration: SWOT Analysis and Business Plan of Action

Summary

Any problem presents an opportunity that an entity can take advantage of to make a mark in the world. Nowhere is this statement more true that in CamelBak Products, LLC. Thirst is a basic human need that is more pronounced in endurance athletics. However, prior to Camelbak, there were no companies that provided customers with efficient products that they could use to quench their thirst while engaging in endurance athletics. In 1989, Michael Eidson was faced with this need as he participated in the 100-mile cycling road race in the Wichita Falls summer heat. He developed an innovative means of quenching his thirst through hands-free hydration and in so doing made the first step in the establishment of Camelbak. Since, then the company has grown in leaps and bounds to become the market leader in the provision of hydration products, hydration packs, protective gear, and other products used by the military and law enforcement agencies. CamelBak has become synonymous with hydration packs. CamelBak products are invaluable to soldiers, law enforcement agencies, and sportspeople.

CamelBak acknowledges the importance of hydration in ensuring soldiers, marines, sportspersons, and other people can undertake their operations in diverse environments. The concept of hands free hydration is vital in the US military, which engages in wars in areas that require its service men to hydrate continuously. In fact, individual hydration is an integral part of the operations of soldiers as it increases their combat effectiveness. As such, the transition to CamelBak hydration platform is one of the most significant advancements in the soldier system within the last 50 years.

Market Analysis

Some of the major rivals of CamelBak include Geigerrig, HydraPak, Osprey, CoolGear, Ergodyne, Samsonite, Leatt, and Salomon. The market can be categorized according to the type of products. These include hydration packs, purification and filtration products, water bottles, accessories and other related products. The market can also be categorized according to the application of products, which include sports, military, and other. The sales channel of the companies is also used in the categorization of the market. Certain companies used the direct channel with other companies using the distribution channel.

Competitive Strengths – Government Sales Sector

CamelBak is the market leader in the provision of hydration solutions to the US military personnel and other federal agencies such as Department of Homeland Security.

CamelBak has good brand recognition among military users. It is a standard issue item among all soldiers and marines.

CamelBak hydration products are also available to military personnel at the Military Clothing and Sales Stores (MCSS). They are also available at the Army and Air Force Exchange Service (AAFES) and Marine Corps main exchanges globally.

Most military base supply stores have CamelBak products, which increases the availability of the products via Government Purchase Card (GPC).

CamelBak also have well-established sourcing, manufacturing, and distribution channels.

Key distributor and downline dealer relationships provide blanketed physical and E-Commerce coverage for larger Federal Agency contract purchase above the small purchase acquisition threshold and commercial purchases at locations outside of the Military Exchange system.

CamelBak has been in existent for more than 20 years. The company has a history of providing hydration products to military personnel and other federal government agencies.

It is the first hydration pack producer in the market. This has given it a foothold in the market.

CamelBak strives to reduce the environmental impact of its activities through the “green movement.” Its distribution centers have rechargeable, electric equipment that have low carbon dioxide emissions.

The company runs educational campaigns on the importance of using reusable bottles and the importance of hydration.

Competitive Weaknesses – Government Sales Sector

Increased competition has led to loss of CamelBak’s market share to rivals such as Source Hydration, Hydro Flask and Nalgene. In addition, overseas copycats have gained a foothold in the market, which is manifested by an increase in the shelf space within CamelBak’s key distributors and dealers.

Many CamelBak products that have been assigned National Stock Numbers (NSN’s) by the Defense Logistics Agency that either do not work or are incorrectly classified in the Military automated ordering system, Global Combat Support System-Army (GCSS-A). This prevents unit orders through the supply system.

CamelBak’s Buy American/TAA, (52.225-1) compliant product assortment has been reduced substantially with no product offered currently that is compliant with the Berry Amendment DFARS (252.225-7012 through 7015). This severely limits the company’s ability to submit offerings above the simplified acquisition threshold of $250,000.

Military Exchanges located in Southwest Asia will continue to shut down as more US troops are recalled from those areas. Of note, was the dramatic drop in sales of tactical related products as US personnel withdrew from Iraq. Expect that trend to continue. Many of the inventory overages of those exchanges were shipped to Exchanges in Europe and can still be found in many of the AAFES stores in Germany.

CamelBak’s products are easy to imitate. For instance, it is simple to imitate the plastic bladder in a bag.

It is difficult to clean CamelBak’s hydration products. Therefore, mold and algae can grow in the hydration packs. This makes the water develop unpleasant taste over time.

Most people feel inconvenienced when they experience sudden thirst and they do not have water left in their hydration packs.

It is more expensive to make ecofriendly products.

Opportunities – Government Sector

Tailored Logistics Supply (SOE) provides the company with opportunities to increase its sales in the government sector.

CamelBak’s good brand positioning would improve the company’s competitiveness.

Increased advertising campaigns would improve the CamelBaks sales.

CamelBak has formed strong working relationships and networks in the government, which it can leverage to improve its sales in the government sector.

There has been an increase in the interest in health in the recent past. Therefore, people are more likely to purchase hydration products as they acknowledge the importance of taking the recommended quantities of water daily.

There has been an increase in the number of endurance competitions and activities. This increases the demand for hydration systems.

There has been a shift away from disposable water bottles due to the green movement.

Threats – Government Sector

Increased competition has made rivals acquire a significant proportion of CamelBak’s government business.

CamelBak’s rivals are using concepts that are similar to those used by CamelBak to gain government business.

Changing rules and regulations of the government may reduce the CamelBak’s sales in the government sector.

Consumers want additional functions such as minerals, vitamins, and electrolytes in their hydration products, which can be offered in plastic water bottles but not in water fountains.

Tap water may be dangerous depending on where it is procured.

Change in the rules and regulations of the government may limit the competitiveness of CamelBak’s products.

Business Plan of Action

Identify and counter competition

CamelBak should work closely with its sale representatives and distributors to identify its fiercest competitors and adopt a strategy that closely with sales representative organizations and distributors to identify closest competitors within the government, military, and industrial (GMI) channel and use a “Will not be beaten” strategy to acquire 100% market share.

Identify GMI CamelBak dealers who are also promoting competitive brands and formulate solutions that would reduce or eliminate the competitive brands promoted by the dealers.

Ensure the prices of its products are competitive compared to other brands.

Monitor product innovation by competitors and strive to stay ahead of the competition.

GMI distributor pricing review and management

CamelBak should review the distribution pricing matrix to ensure the pricing offered to top tier dealers is highly competitive. The company should establish a standard dealer price structure based on the volume of sales. This would encourage the dealers to sell more products of the company.

CamelBak should also meet with GMI team and discuss the possibility of providing additional discounts to dealers to encourage them to hold larger inventory levels. It should provide them with incentives to encourage brand loyalty.

The terms and contracts of the distributors should be negotiated based on the identifiable market sectors that would allow them to maximize their sales opportunities within their sector. This is one of the major challenges since several CamelBak distributors compete for the same customers. Certain dealers spent time and money building a relationship with their customer who may have previously conducted business with another CamelBak Distributor. This is one of the main benefits of the Dealer of Record (DOR) program through which the company rewards dealers that have spent time and effort to bring sales opportunities fruition. The Tailored Logistics Supply (SOE) prime vendor program also provides CamelBak would unique opportunities. This large 6 year DLA IDIQ contract was awarded to several firms all of whom are responsible for administering this contract to Federal Agencies. Giving favorable pricing to only one Distributor, who is a Prime, creates a significant risk that other Prime Vendors are forced to turn to competitive brands who offer more favorable pricing terms for like item products.

CamelBak should also establish a Dealer of Record (DOR) program to additionally incentivize dealers to promote the CamelBak brand to Government customers. This program would reward dealers who bring business to the company. It should provide them with DOR discounts that range from 5% to 10% of the standard dealer pricing.

CamelBak should work collaboratively with GMI department managers to undertake a dealer network analysis to ensure authorized dealers and distributors provide optimal sales representations within the GMI sales channel. This would facilitate the identification and removal of any “kitchen based” dealers.

CamelBak should visit key distributors quarterly to discuss targets of opportunity, product training, and help establish desired sales goals.

National Stock Number (NSN) Maintenance and Management

CamelBak should identify all products that have NSN’s assigned and ensure that those products are able to be ordered through Military automated supply systems.

The company should submit requests to manage and edit all inactive, non-working NSN’s and work closely with DLA to ensure correct supply classification, updated technical data, part numbers and source of supply.

Designated members of the GMI team should develop relationships directly with Federal Agency Program Offices that have the ability and are willing to sponsor cataloging requests for new CamelBak products.

GSA Reseller Management

CamelBak should ensure that listed resellers on GSA are authorized with a current Letter Of Supply (LOS) from CamelBak. Remove all unauthorized resellers from GSA. Not all dealers should be a GSA reseller.

The company should require GSA resellers to maintain product inventory that meets GSA stock to sales ratio. This would ensure that CamelBak customers receive their orders quickly.

CamelBak should establish a fair and competitive pricing among GSA resellers. No one top tier distributor should have more favorable pricing unless they have qualified for other price reductions below standard dealer price.

The company should ensure it has at least one reseller for each of the SBA designated small business set- asides on GSA.

GMI Rep Agency Management

CamelBak uses a contracted sales rep agencies to manage both its AAFES Exchange contract as well as its Government Distributor network. Sales rep organizations can prove to be an important element of a company’s marketing plan as they are relied upon to do the heavy lifting of meeting with customers face-to-face. It would be virtually impossible for CamelBak to incur the costs of hiring numerous field sales representatives to market its products to “Big Box” retailers such as AAFES or REI having numerous store locations throughout the world. In general, it is a sound business choice to use reputable Sales Rep Firms who have a proven track record of performance due to cost savings. Sales Rep firms are committed to promoting the brand, have well established relationships and are incentivized to sell more on a commission based agreement.

Having supervised two Sales Rep organizations and then subsequently establishing an in-house Sales Rep team as Manager of the largest tactical products vendor for AAFES, I learned quickly how important it is to understand the dynamics of the relationship between Vendor, Sales Rep Firm and Manufacturer. Many of the downline sales reps are well established with their customers and have an in depth understanding of their market sector. They are the face and the voice of CamelBak in many ways.

The goal of the GMI manager is to work collaboratively in a support role with these organizations to provide the tools they need as well as guidance on corporate goals, values and decisions. The GMI Manager must understand how to leverage the Sales rep firm’s capabilities to promote the CamelBak brand while maintaining a positive and meaningful relationship that provides a team minded spirit towards success.

Direct Interface with Federal Agency Program Offices

As a manufacturer, it is in CamelBak’s best interest for the GMI sales team to be directly engaged with Federal Program Offices responsible for the development of requirements for operational equipment. Army Program Offices such as Product Manager Soldier Warrior (PM SWAR), Product Manager Air Warrior (PdM AW), Air Force Security Forces Center, Marine Corps Systems Command (MCSC) as well as other Federal Agency Offices responsible for procurement of field operational equipment set the standard for what equipment is used and issued to over a million service or agency members worldwide.

The GMI management team must work directly with these offices to ensure that CamelBak is the Manufacturer of choice for hydration product requirements throughout all US Federal Agencies. This typically requires scheduling meetings with these offices.

Large Government Contracts

Most of the time contracts coming out of the large contract commands are set aside for small businesses. For this, the GMI team relies on its established small business distributors to respond to the contract solicitation. Occasionally, however, contracts do come up for response that are not designated for small business, and in those cases, the GMI team should respond directly to the contract agency’s solicitation. This is especially true for larger program level contracts as this provides CamelBak the opportunity to retain margin normally given to distributors.

Develop New Channels within the Industrial Industry Sector

CamelBak should identify key distributors, dealers and sales organizations engaged in direct sales within the construction, oil, gas and other natural resources mining Industries.

The company should coordinate with regulation agencies responsible for Industry jobsite safety and health such as the Occupational Safety and Health (OSHA) to address hydration requirements. Endorsements of CamelBak products as an on the job hydration solution along with safety policy letters from agencies such as OSHA would significantly benefit market sector penetration.

Develop a distributor network using same Government Distributor pricing structure and terms.

Market Research on Consumers and the Consumer Decision Process

CamelBak should undertake market research to determine what consumers think about their products in general.

CamelBak should determine what consumers think about the brand compared to its competitors.

Market research will determine the reasons as to why customers choose to purchase CamelBak’s products.

Market research with also determine the purchase cycle of customers.

Focus on the Importance of CamelBak’s Efforts to Save the Environment

CamelBak should develop a marketing strategy based on saving the environment. It should focus on the reusable aspect of CamelBak’s hydration products. It should use terms such as “Hydrate Responsibly” or “Water is Life.” The advertisements one the same should comprise of environment-friendly graphics that would highlight the importance of CamelBak’s products on protecting the environment.