Economics - Product Pricing & Costs

Product Pricing Component

It is practically everywhere. In the workplace. Beside exercise stations in health clubs. At athletic events. In backpacks hanging from the shoulders of students. Even on tables at conferences and workshops. Bottled water, once considered the refreshment of the affluent, has become the liquid icon of today's active, health-conscious consumer (Lambert, 1991).

Aquafina, a Pepsi product, introduced itself in Wichita, Kansas in 1994, and reached national distribution in 1997. According to Aquafina’s website, since its debut, Aquafina has won over consumers with its great taste and purity. In 2003, they were the best-selling brand of bottled water.

Bottled water emerged as the second largest commercial beverage category by volume in the United States in 2003, and, despite its significant stature, it continued to grow at a rapid pace in 2004. The category is growing even more forcefully on a global scale but in the U.S., volume is unparalleled. In 2004, total U.S. category volume surpassed 6.8 billion gallons, an 8.6% advance over 2003’s volume level. That translates into an average of 24.0 gallons per person, which means U.S. residents now drink more bottled water annually than any other beverage, other than carbonated soft drinks (Beverage Marketing Corporation, 2005).

Carrying around a bottle of water has become a status symbol for many younger Americans. Aquafina recognized the trend, and broke into this once exclusive market. Because water is so important, health and nutrition experts recommend drinking at least two liters of water each day. Bottled water a convenient way to ensure enough water is consumed at wherever a person may be. Bottled water is the beverage of choice for hydration and refreshment because of its consistent safety, quality, good taste, and convenience. The U.S. Food and Drug Administration (FDA) fully regulates bottled water as a packaged food product and requires bottled water to adhere to FDA's extensive food safety, labeling, and inspection requirements.

Aquafina’s bottled water is inelastic. Water is the single most abundant substance in the human body, making up to 60% of an adult’s weight and up to 80% of an infant’s weight. A person can live several days without food, but just a few days without water. Like air, water is