Case Studies on Best Practice in External Marketing Communication

1

Introduction

Icelandic Glacial Water Holdings was founded in 2004 by Jon Olafsson and other private investors. The company developed a world-class, NSF-certified bottling plant and started exporting natural bottled water to consumers around the world in 2005, under the Icelandic Glacial brand. The water comes from the legendary Ölfus Spring in Iceland. The company controls the sole commercial rights to bottle and sell water from the Spring, which is recognized as one of the largest in the world regarding capacity.

Figure 1. The Ölfus Spring, where the water comes from

The operation is very automatic and the production can be run with only four people. The factory is built as a pharmaceutical company so there is no bottle factory in the world which has a higher standard, or cleaner, more professional and automatic factory than this one.

1.1 The beginning It started about 10 years ago, when Olafsson son was working for an airline company and the owner of the company asked him to find a water source because they wanted to get into the water business. Jon and his son found a wide labeled company in Ölfus, near Þorlákshöfn in Iceland, which was bankrupt and the legal dealer was accepting offers. They put in an offer, won the bid, however, the airline owner never paid, so Olafsson and his son were stuck with this water company. Olafsson was retiring at the time they bought the water company, he had recently sold all of his previous businesses. However, he realized that retiring was not for him, so he decided to look at this company he had just bought with his son. Olafsson and his son started the company from scratch, doing everything by themselves without hiring anybody to help them. They have however, started to partner up with other companies for different kind of work processes, like when they went into rebranding in 2012 for example . “First you have to build the company, but it comes to a point where the entrepreneurs need to let go and let the professionals do it”, said Olafsson. They looked at the whole world market and tried to analyze where they should position themselves on the market. At the time, the total value for sold bottled water was 50% in the United States and 50% was the rest of the world. However, the consumption was only 20% in the United States and 80% in the other parts of the world. It was a very high margin market, therefore, they decided to go into the United States. They wanted to be on the top of the consumer income pyramid (for the people with high-income), so they decided to go head to head with FIJI water, a popular premium bottled water.

Icelandic Glacial water is now sold on the home market and in 19 international markets around the world. Their product is sold in United States (US) which is the company’s biggest market, as well as in Hong Kong, Canada, England, France, Holland, Belgium, Luxembourg, Russia, White Russia, Kalíníngrad, Ukraine, China, Taiwan, Macau, Thailand, South-Korea, Singapore and Peru.

1.2 The product and brand identity Icelandic Glacial wanted to be very true to Iceland and decided to call it “Icelandic Glacial”. Even tho the water and the glacial shape of the bottle’s neck makes a strong connection to glacials, it is inspired by the glacials but has nothing to do with them since it is not a glacial water.

Figure 2. Packaging and different sizes of the bottles

The owners wanted the bottle to be square, because there is little space between round bottles. There is much more use of the space in the box and in the container when the bottles are square shaped. The owners decided to go head to head with FIJI (square bottles) and everything is built around that approach. The other thing is that FIJI was built in Hollywood, with a lot of work near the Hollywood film and music, and Jon has worked with Hollywood between 30-40 years, so they have as good of a chance to build their product around that channel, and they are now in a lot of TV shows and a lot of movies. “That is the best way to do it, to get the water in the hands of influential people to get it to have some effect on the mass market”, says Jon Olafsson.

Figure 3. "The Source of an Epic Life" seen on the back of a bottle

Icelandic Glacial went through a rebranding progress in 2012 and teamed up with an communications agency Team One, in Los Angeles (USA). The two companies created a new brand identity, label and carton design for Icelandic Glacial Water to strengthen to connection to Iceland. The label is based on the shape of Iceland and the shape of the neck of the bottle shows a visual connection to glacials and the name Icelandic Glacial. The company introduced also a new brand tagline “Source of an Epic Life” that can be seen on the back of the bottle. Icelandic Glacial’s polyethylene terephthalate style-bottles won the award for the overall best bottle and packaging in the PET category. The company was awarded for their products that for its added value, more market impact, fitting its described purpose and for supporting the company's claims as well as being innovated. It was also noted that the bottled water provided improved consumer convenience and ease of use. The packaging was awarded for standing out through excellent and original designs and sustainability initiatives that create measurable environmental benefits. This award among many others that Icelandic Glacial has received helped them increase their market share of foreign markets and in the public eye.

1.3 Critical events Icelandic Glacial entered US in 2005 but it was not benefiting their water to be associated to Iceland. The company decided to do a master distribution agreement in the United States in 2007 with Anheuser-Busch (Budweiser) that had a long history on the market and would provide the company with important information about the market for example. This distribution agreement was a milestone for the

company. This event helped Icelandic Glacial to become the fastest growing premium bottled water in the United States. Olafsson says it is critical to get someone like that to be your main distributor and also a partner. Anheuser-Busch put a lot of money into the company and are about 20% owner today.

2

An entrepreneurial company

Icelandic Glacial was established as a green company, and were the first company in Iceland to be started as a green company from day one and it is the first beverage company in the world to be certified carbon neutral for both product and operation.

2.1 Challenging the traditional business models Icelandic Glacial is competing with large beverage companies like Pepsi, Coke, Nestle, Dannon and FIJI water. These are the company’s main competitors and these are people with deep pockets. Therefore, Icelandic Glacial has to go untraditional ways to get as much for the advertising money as they can. Olafsson said that company has succeed in doing so and proved they are here to stay. The company has created a good brand awareness in its native market as well as foreign. Olafsson said it was not easy to compete with big competitors since they have all the money they need and can easily buy you out of the store shelves or the restaurants and hotels if they chose to do so.

2.2 Changing customers’ minds In 2012, the French luxury goods company Christian Dior partnered with Icelandic Glacial to create a cosmetic line formulated using Icelandic Glacial water. “With Icelandic Glacial’s remarkable purity and optimal mineral balance, we are proud that Christian Dior selected our water to help enhance the efficacy of their skincare products,” said Olafsson. “This partnership further demonstrates Icelandic Glacial’s Ölfus Spring as an essential natural resource of the highest level.” Christian Dior analyzed about 300 brands of water and came to Olafsson and told him: “Your water is not only the best, it is way better than everything else”. The luxury goods company is now producing a cosmetic line which has the Icelandic

Glacial water in it because Christian Dior believes that the key distinction of this water, other than the fact to be the purest water of all the bottled water on the market, is the high alkaline content with PH8.4. The luxury goods company put Icelandic Glacial name on the boxes, which has never been done in the history of Christian Dior. This is a huge recognition for Icelandic Glacial. Icelandic Glacial received a superior taste award in 2013 from the International Taste and Quality Institute and their water was recognized for its premium quality, perfect clarity with superior taste and almost near perfect marks for “Absence of Fault.”

2.3 Marketing Icelandic Glacial did a market survey before going into the production of the bottle and after that they were sure they were ready to go into production. After about three months, they finally had their bottles in the right shape. They started doing all the marketing around the product after that and talked to people around them to see what the appetite was. When they realized that there was a good appetite and the people loved what they had created, they bought equipment and started producing. Olafsson said it was important to do things in the right order. Not just to create something and start producing and then ask yourself who you are going to sell it to. Like stated before, Icelandic Glacial knew right away that they wanted to be on the top of the consumer income pyramid and focused all the marketing to achieve it. Icelandic Glacial’s goal is to establish the source of its brand and the attributes of its water. The company has been using marketing channels that it believes is the most effective and differentiates them from the competition. The company recently began to invest more in the digital space with both display and video advertisements because it has been their most success in reaching their consumers. Icelandic Glacial’s business strategy is to think global and act global. It provides their partners and distributors with the information they need to implement this strategy based on which marketing channels work best for the local market.

The company has been using marketing channels that it believes is the most effective and differentiates them from the competition. Icelandic Glacial has been using marketing channels that it believes is the most effective and differentiates them from the competition. The company does not handle all the marketing channels and marketing abroad because local markets can be very different. The company set the strategy and produces all the material but it depends on the market whether they can handle the marketing or help their distributors by providing them with strategy, knowledge and material. US is their biggest market and the company has handled all the advertising by itself except the new rebranding that was worked with Team One. On other international markets they prefer to assist their distributors as they understand and have knowledge of the local market better and best channels better than Icelandic Glacial. The company has to approve everything that is produced and/or published to make sure it is in the line with their strategy and brand image. Icelandic Glacial’s marketing communications had always been through public relations, product placement, grassroot or guerilla marketing, until 2014. The company just launched their first social video campaign in beginning of May 2015 The "Lúxus" Life. The goals of this campaign are to generate buzz, build brand awareness, and to continue to build their social media following. The company is utilizing partnerships with brands such as McLaren, John Varvatos and Aura Yoga to film a series of four episodes that show examples of the Lúxus Life, or “a life of luxury”. Fans have been asked to participate by sharing photos of themselves on Facebook, Instagram and Twitter using the hashtag #TheLuxusLife for the chance to receive free Icelandic Glacial water. The company will launch a contest in June 2015 in which fans will submit a video of themselves living the Lúxus Life for a chance to win a trip for two to Iceland. The video will be posted on their YouTube account, and also on Facebook and Twitter. The company had never spent any money on traditional marketing, such as print ads, radio, TV advertisements, and billboards until 2014. However, the company has invested money into social media for a longer period of time. Since Icelandic Glacial

is a water company competing on the convenience market, they do not believe in spending money on traditional advertising before their product is widely available. They believe customers are unlikely to go from store to store to look for a specific bottled water like Icelandic Glacial. Before putting effort into paid advertisements, Jon believed that it was very important that their bottled water should be widely available for potential customers so the company would profit from it. Icelandic Glacial is becoming widely available now internationally, after being almost 10 years on the market and are starting to put focus on traditional advertising like billboard signs and on buses. The bottles have gone through some changes in the past, where the old version had a different name on the bottles (H20) and had four different logos that made a visual effect of a landscape. That worked as a selling trick where stores usually allowed retailers to have only one or two spacings, but Icelandic Glacial was allowed to have four or five, just because of the landscape design. The packaging was later updated to appeal more as a premium product. Jon Olafsson worked with Hollywood for around 30 to 40 years. His connections have opened up opportunities to get the product in the hands of influential people to influence the mass market. The company has been very successful in getting their bottles as a product placement in tv shows and Hollywood movies. The bottled water can be seen on shows such as Dexter, The Big Bang Theory, House of Lies, Mike & Molly, Franklin & Bash and Chasing Life. Icelandic Glacial has partnered up with various media events, film festivals, music and food festivals as well as music awards like MTV European Music Awards in 2013. The company has put a lot of focus into being associated with the right events to help them position the bottled water in consumers mind and to create the right brand image, and to help them to continue growing their brand internationally. Icelandic Glacial has sponsored events with providing them with fresh spring water around the world the past decade or so. Icelandic Glacial adapts their methods to different markets. For example, in the US market, the brand is at different lifecycles in different markets depending on geographical location inside of US, as the company has had a presence for the last

seven years. The company has built their distribution in that time and are now in process of establishing their brand’s history to the American consumer. In many other countries, Icelandic Glacial has only recently become available and therefore the brand awareness has not been quite established, for example, new markets such as Japan, Mexico and Bermuda. Internationally, Icelandic Glacial business model is the same for all markets, to work with strong distributors that have strong distribution channels who are willing to co-invest in the brand as it takes time to establish the brand and build awareness. In the end, the company’s strategy that is implemented globally through their distributors. Over all, Icelandic Glacial believes that social media is one of the best ways to go forward and to get in touch with their audience. Product placements and associating them with various events has also helped them increase their brand awareness.

3

New communications features

The company puts a lot of effort into social media and is currently spending money to get in touch with their audience and potential customers. Icelandic Glacial uses social media to connect the bottled water with Icelandic nature for the international market. The design of the bottle itself and packaging play a large role in their social media approach since their digital presence is focused on foreign markets. The company connects all their events, product placements for tv and movies with their social media. The company has over 60,000 followers on their official Facebook account, which was activated in 2008. Only one other Icelandic company has more followers on Facebook, the airline Icelandair. Two of their partners in Singapore (from 2013) and in United Kingdom (from 2012) have facebook pages to appeal to their audience, connecting their cultural events, food and icelandic nature with Icelandic Glacial bottled water. The company has accounts on both Twitter and Instagram, with over 7,300 followers on Twitter and 3,800 on Instagram. They have re-posted and re-tweeted

pictures from customers where the water bottle can be seen. Icelandic Glacial also has a Pinterest account and a channel on YouTube where they upload videos regularly, most of them are clips from TV shows where the Icelandic Glacial water bottle can be seen as a product placement.

4

International issues

Icelandic Glacial has always focused on international markets and is always expanding to new markets such as the Middle East, Asia and China where the local culture is very different from Icelandic culture. Icelandic Glacial’s employees have had to adapt to foreign cultures where the locals work and operate completely differently. This has been a challenge for the company but a nice one. Their customer/supplier relationship management grows steadily without a problem. Icelandic Glacial does not change the formula of the water for foreign markets. The water stays the same but the information written on the packaging is adapted to seven or eight different languages. Icelandic Glacial water is called spring or mineral water, depending on which word has a finer meaning in that country. Icelandic Glacial focuses more on social media and digital advertising in the US, and in Mexico they are investing in more traditional channels such as radio and print to connect to potential customers and have the most coverage.

4.1 Marketing in foreign markets It all depends on the brand lifecycle. Because each market is different, we rely on our partners to utilize the appropriate channels for their market, see answer above. Icelandic Glacial has adjusted their marketing to foreign markets depending on the brand lifecycle. Because each market is different, they rely on their local partners, for example, distributors, to utilize the appropriate channels for their markets.