Marketing management - Essay Example

MARKETING MANAGEMENT Introduction Since time immemorial, milk and dairy products have come under consumption due to their nutritional values and representation. In fact, dairy products have been one of the most essential components of the diet because of its benefit of having nutrients that include proteins, essential acids, and calcium. However, the dairy markets on a global platform in the twenty first century has evolved and become one of the most pivotal markets with immense popularity and increasing range of the dairy products. Furthermore, the facts and records also represent that the dairy sector is amongst the industries that is one of the fastest growing sectors in contrast to the other sectors. However, the mainstream growth has come under expectation to come from the developing world that includes Africa, several parts of Asia, and few others (Dimitri, Oberholtzer, & United States. Dept. of Agriculture. Economic Research Service, pp. 15-18). This dairy product exists and is widely accessible to the populace residing in North America, Europe and some portions of Asia as well. Therefore, the next market that the company has its interest in catering is the East and Horn of Africa and Ethiopia in particular. This is because Africa has the great potential due to its organic and macrobiotic resources that are present and found in much more amounts in comparison to the other parts of the world. In addition, the economic growth of the country in the last couple of hears has also shown an escalation coupled to the augmented buying population. Moreover, the technological relocations and transmissions in Africa in the recent years also provides the opportunity for the African dairy product market to become more profitable particularly with respect to the customers’ needs, demands and wants (Sanginga, & Woomer, pp. 40-42). Background Information The records and evidences provide with information that Ethiopia has been in the top ratings in livestock keeping with considerable amount of cattle in Africa and in the world as well. The livestock has been a leading and chief source of livelihood for quite a few households in several parts of Africa. In addition, extensive research studies suggest that agriculture is the key prominence aspect or the backbone of the Ethiopian economy. The agricultural sector significantly contributes to the GDP and exports of the country (Tesema, pp. 9-10, 2006). Furthermore, abundance of natural and organic resources is another key point of emphasis for Ethiopia and Africa on a broad spectrum. The dramatic increase in the buying population in Africa in general for the last few decades is an additional factor of consideration for setting up a new company, especially in the dairy product industry. The economic growth in the recent years in connection with the technological transfers makes Africa, one of the potential prospects largely for launching a new dairy product or line of products (Sanginga, & Woomer, pp. 3-6). Although Ethiopia comes under consideration for having a sufficient population of livestock, yet the overall productivity of livestock sector in Africa still exhibits to be very low with a small fraction of contribution to the overall GDP and the local inhabitants dominates the cattle population. It has also come under consideration that a big proportion of the annual production of milk does not come under advertisement or promotional activities, rather only the small amount of milk consumed comes under marketing (Sanginga, & Woomer, pp. 3-6). However, it has come under witness that government has put up their efforts for the improvement and development of the dairy sector, which even showed a raise in improved dairy cattle, more milk collection points, and processing since the decade of 70s. The private investments also became to expand with the liberalization of the dairy industry from the middle of the decade of 90s. Even after this expansion, the industry experienced a decline and overwhelming and that was because of the inadequate policy and regulatory framework, lack of adequate infrastructure, soil degradation due to over cropping, deforestation, high population density, high taxation levels, poor management of milk processing and lack of marketing (Raikes, pp. 4-8). Even after all these problems, the agricultural sector in Ethiopia is one of the most promising resources available with them. Moreover, records also exhibit that production is devastatingly subsistence in nature and a considerable level of commodity exports come from the small cash crop sector of agriculture. The current market consumption of dairy products include products in the form of raw milk, fresh processed milk, fermented milk, cream, yoghurt, cheese, butter and ghee. The conclusion that can come under drawing from the assessment of the dairy product industry states that there are obvious and apparent indications of an unsatisfied demand for milk and other dairy products (Sanginga, & Woomer, pp. 9-12). It has been an understanding from several sources that developing and emerging nations tend to have unstructured and free dairy industry comparatively to the developed countries. This means that the production of the milk comes under performance on a quite small scale that produces relatively poor quality milk, with little profit despite of strong demand. Situational Analysis A situation analysis classifies and interprets the position and status of the organization’s environment. It also provides the background, context, framework, and knowledge for planning and forecast. Furthermore, it also illustrates the competitive position, operating and financial conditions, and general position of the internal and external affairs of the company. Company Analysis The DANONE Company intends to launch a brand name that is already an existing brand in the company portfolio to the economic zone of East and Horn of Africa where it currently does not have any existence. However, under the facts of the records, while looking at the portfolio of the organization, it has become one of the largest producers of fresh dairy products with its origin in Europe. The dairy products that is the part of the company portfolio includes principally yogurt, cheeses, desserts, baby foods and several other products. The sales record of the company portrays the piece of information that they account for several billions of dollars on a yearly basis in United States and Europe (Danone, 2011). DANONE is one of the organizations that not only manufacture the dairy products but also helps and supports its producers for the improvement in the product quality and at the same time escalate the productivity and profitability with regard to the environment. In addition, DANONE is an organization that works with more than ten thousand milk producers. Besides being a supporter, DANONE also facilitates the vulnerable populations and societies to build and develop feasible, workable, and practical business models (Danone, 2011). The DANONE Company has been dairying in the regions of Europe, France, Belgium, Germany, Spain, Russia, United States, and Brazil for the past few decades and has an employee count of more than eighty thousand people. The core values of DANONE states that “DANONE pays attention to the safety of people and products, acts pro-socially and is environmentally friendly” (Dolan, Garcia, Garcia & Richley, pp. 178, 2006). Additionally, they also treat all their social and commercial partners with value and respect, as they are deeply perceptive to cultural disparities (Danone, 2011). Customer Focus and Analysis The DANONE Company has provided “an adequate amount of evidences for its strict quality standards in all its operations that starts from the collection of milk to the provision of hygienically processed nutritious dairy products to its customers. In addition, the company follows the philosophy and viewpoint of delighting the customers by providing them with quality products on their doorstep” (ILCA, Addis Ababa (Ethiopia) & International Livestock Centre for Africa, Addis Ababa (Ethiopia), pp. 1-5). Furthermore, the enterprise also treats the customers with valuable prospects and believes in an open channel of communication with them. This is because according to them their customers are one of the reliable sources that provided the company with the feedbacks and opinions about their products, which helps them in improving and keeping an edge over the competitors (ILCA, Addis Ababa (Ethiopia) & International Livestock Centre for Africa, Addis Ababa (Ethiopia), pp. 1-5). The company tends to focus on the customer profile with relatively middle class that include lower middle and upper middle class who must have an exposure and awareness of the product freshness and exposure to international countries could be a plus point. This is because the company’s foremost and core focus is on taste, health, and price factor (ILCA, Addis Ababa (Ethiopia) & International Livestock Centre for Africa, Addis Ababa (Ethiopia), pp. 1-5). DANONE for years had implemented the strategy for promoting the sustainable milk, which is one of their integral parts of their business, as they want to create a strong bond and alliance between the producers and their customer, whose satisfaction is their prime responsibility. DANONE always focused for close ties with their customers and with their fresh dairy products, they enhance their relationship with their customers by providing them with new and wide range and options of products (Danone, 2011). Competitor Analysis As DANONE Company manufactures dairy products that are premium in comparison to their competitors, therefore, these premium products may face a challenge in a slowing economy, but the research provide with evidence that it might not hurt their sales. This is because; their previous experiences of launching their brand name in other developing nations provide evidences of boosting in their sales records. The company also keeps a watchful eye over the activities of their competitors so that they can counteract and offset to all the possible threats from them. Moreover, DANONE also keeps a track of the market trends and competitor moves so that they are able to react accordingly. A feedback system is one of the highlighting features of the DANONE Company that they get from their sales team, dealers, and their advertising agencies. The competition with the existing local firms is one of the biggest challenges that DANONE might encounter while institutionalizing its organization. Additionally, the records provide with ample proof that supports the fact that the smallholder dairy producers have been generally competitive and are prone to endure and continue even for a smaller timeframe with particularly low-income groups. The constant dominance of smallholders has come under demonstration even to the states with economically stable conditions (Falvey & Čhanthalakkhanā & International Livestock Research Institute, pp. 361-363). Market Environment Analysis The market analysis provides with the information that dairy prices on an international platform in the upcoming years would remain relatively high and stable after the bounce back of the dramatic falling prices due to global recession. The primary reason for the strengthening of the dairy markets is the strong demands and imports to various parts of the world. However, the records also elucidate the information that the continuing demands of the dairy products are making this industry cross the threshold of relatively high prices on a worldwide basis along with higher production cost and sustained market unpredictability (Food and Agriculture Organization of the United Nations & International Program for Technology Research in Irrigation and Drainage, pp. 50-55). Apart from global recession, soil degradation, deforestation, high population density, high levels of taxation, poor infrastructure are quite a number of pivotal aspects that creates a much stronger demand for the organizations to come and have their business on local basis, rather than imports in Ethiopia. This is because the agriculture of Ethiopia provides the producers and manufacturers a very gifted and potential resource (Food and Agriculture Organization of the United Nations & International Program for Technology Research in Irrigation and Drainage, pp. 50-55). However, while looking at the continent of Africa on a broad continuum, the last few years expose the facts that low growth rates in the production of dairy products have been the key emphasis aspects in Africa when compared to other developing nations who have grown. However, with the passage of time, it has come under notice that Ear Africa eminently has harmonized itself with the international standards that provides opportunity for the companies not only to launch their products with no trouble in such areas but also creates a situation for the companies for free trading. In other words, Africa is creating substantial scope for the foreign investors to penetrate into the African dairy market in the recent years (Food and Agriculture Organization of the United Nations & International Program for Technology Research in Irrigation and Drainage, pp. 50-55). Due to the vast natural, unrefined, organic, and agricultural resources availability in bulk amount, along with the geographical location, it makes Ethiopia a potential state to large extent for the investment in the dairy sector and production of dairy products. However, one of the greatest challenges that the organizations might face is the weak infrastructure that include the storage and transportation facilities (Raikes, pp. 4-8). Additionally, due to the low productivity, the new entrants might also face the challenge of obtaining quality feeds and support services for the production of the dairy products. However, with the increasing demand of the milk and other dairy products, Ethiopia provides a good opportunity to enter into this market due to rapidly increasing population. Governments are also endeavoring to stimulate the dairy industry that includes milk marketing and milk processing in potential areas like Ethiopia. Indeed, Ethiopian government in order to promote the new enterprises and expansions in Ethiopia, they are providing several benefits and incentives to both the foreign and local investors (Raikes, pp. 4-8). SWOT Analysis The SWOT analysis is a strong and powerful mean that clarifies the position of the company in the market place and provides the organization with apparent and unambiguous situations of the industry. The presented SWOT analysis captures the primary strengths and weaknesses of the DANONE Company, illustrate the threats faced by them and the opportunity that the market is providing. However, the unique selling proposition that DANONE Company has for its dairy products that makes them inimitable and exclusive from their competitors is the international packaging with new flip top cap that retains freshness for a long time. This not only ensures the highest quality product but also the best possible taste. Strength Promote practices that create social value Strong association with numerous different suppliers/partners Outstanding well-trained workforce, predominantly attentive with customers Provide the customers with better, improved and enhanced services Elevated customer loyalty Strong brand name and equity Brand name associated with the world ranking Weakness The fight to create the brand equity in a new market High cost of marketing budget to create brand awareness High cost of local employee training Opportunity Growing market in alliance with a significant proportion of the target audience The opportunity to develop customer relationship on a long-term basis by being one of the initial entrants The opportunity to have rising sales on an overall basis Threat Competition from other similar and established dairy product providers on a local and international basis Economic instability and variability The following SWOT analysis swathe with the strengths and weaknesses of the African and Ethiopian industry of dairy products, the treats it provides to the organizations and the opportunities available for them (Nhema, pp. 395-400). Strength Low cost of production due to the extensive availability of the raw material due to organic resources accessible in much more amount Customer demand profile of the dairy products is quite optimistic Employment opportunities and income generation for the local inhabitants Improved nutrition and health conditions Strong economic growth thus reduction in poverty level Weakness Technical manpower with professional training not available or shortfall Poor and weak infrastructure Lack of systematic breeding data and weak support services especially for artificial insemination and disease control Deforestation High levels of Taxation Opportunity Strong demand of dairy products in urban areas where people have high purchasing power Extensive supply of labor with primary education Availability and accessibility of extensive land resources that can support different systems of milk production and expansion Threat Poor quality control of the dairy products Lack of regulations Lack of training amongst the employees Marketing Objectives The mission statement that DANONE Company has defined describes that they focus on building branded dairy products that can aid in improving the quality of life by offering the customers with flavorsome and highly nutritional products that are environmental friendly. Maximizing the shareholders value is another significant aspect of the mission statement. Nevertheless, in order to achieve this mission statement, they have their vision that states that DANONE is the most innovative and fastest growing dairy product company that all their customers would enjoy in their everyday lives (International Livestock Centre for Africa, ILCA & Addis Ababa (Ethiopia), pp. 23-25). In order to cater the market and become the market leader on a long-term and enduring basis, DANONE aims to launch their range of fresh dairy products in small flavors with maintained quality standards coupled to the value for money position. The high quality of the dairy products is indispensible to create the customer confidence in the brand. In addition, the range of flavors is also the point of concentration, as it can become the major source of attraction. The low prices in comparison to the competitors with maintained quality standards are another way to magnetizing the customers (International Livestock Centre for Africa, & ILCA Addis Ababa (Ethiopia), pp. 23-25). This is because the middle class or the average earning families look for products that are more economical and if the dairy product is a high-quality product, getting special attention is must. Coverage on a local basis with high selection of distributors would associate a good image of DANONE in Ethiopia as well with the fresh dairy products. Even though the company determines and aims to distribute the product-line to fewer retailers, the big orders would be the distinguished feature by the distribution channels. For the promotions, DANONE plans to have optimal budgets for the promotional campaigns of the products but the selection of few media platform (International Livestock Centre for Africa, & ILCA Addis Ababa (Ethiopia), pp. 23-25). One of the promoting strategies of DANONE is to create social values that they endorse and encourage from their practices with collaboration with their producers. This even brings value to the great natural balance and stability and even produce better intake of the nutrients. They have named this strategy the promotion of sustainable milk. Through this, they want to make their commitment not only to their business success but also to their social responsibility and progress (International Livestock Centre for Africa, & ILCA Addis Ababa (Ethiopia), pp. 23-25). Marketing Plan A marketing plan includes the strategies that facilitate the organization to achieve the aims and objectives of the organization. In addition, it is a plan or the business document that describes the current market position of a business in correlation to its marketing strategy for the timeframe covered under the marketing plan. In other words, it also describes the activities involved in accomplishing marketing objectives. A marketing plan usually contains the marketing strategy, market situations, budgets, advertising, promiton, and several other activities (BusinessDictionary.com, 2011). Marketing Mix The marketing mix comprises of the four Ps of marketing and that are product, price, place and promotion. These four elements come under tuning that forms an appropriate combination that meets the demands, needs and wants of the customers at the same time generates optimal profits and revenues (BusinessDictionary.com, 2011). The first P of marketing mix that represents product is of high quality and convenient dairy products with unique and new concept packaging offered by DANONE Company to their customers. Price comes under determination using the market penetration and is even lower than competitors offer in the market. This is because they want to cover all the middle class customers who are price conscious but at the same time look for good quality product. DANONE promotes their dairy products in order to create and heighten the awareness in the marketplace amongst the customers. In fact, hygiene has become one of the very important aspects in the today’s era, therefore, by providing high quality products, they wants to catch the attention of the customers. Nonetheless, the core and focal means of advertisements are print and electronic principally television and newspapers as these are the most effective means of creating attentiveness. DANONE views the last P that is place as incentives come under offering to the retailers. Marketing Strategy Marketing Strategy that would facilitate DANONE Company to flourish in the Ethiopian and African zone would take account of investment in quality control and assurance, and product development. This means that the enterprise needs to engage their investments in facilities and process documentation. This is vital in order to attain dairy products quality on a consistent basis. In addition, basic testing equipments and simple laboratory within the company premises would also facilitate the organization to have better quality control check and maintain their standard (Mbogoh & International Livestock Centre for Africa, pp. 42-55). As the transportation takes away a substantial amount of money of the company, therefore, the organization must approach to supply the local demand with local production that would give them cost advantages. Cost efficiencies can also come under achievement with the alleviation and making the operations stable that consists of administration of the product mix suiting the local market (Mbogoh & International Livestock Centre for Africa, pp. 42-55). Investment in breeding and herd improvement is another critical and imperative portion that needs to come under immense consideration. This is because accelerated expansion is possible if the supply of stocks has come under assurance. The breeding and animal procurement also needs to have a proper and appropriate infrastructure support. Therefore, the company should have their focus on designing of more ventures of public and private organizations. This should include the participation of crowd understanding the dynamics of dairy (Mbogoh & International Livestock Centre for Africa, pp. 42-55). Since health is one of the growing concerns in the epoch of twenty first century, the dairy products that provide with hygiene and quality standards have become the aspects of key prominence. Adapting the size of products and their packaging is one of the strategies that need to come under immense consideration in order to retain and uphold the customers (Mbogoh & International Livestock Centre for Africa, pp. 42-55). Advertising and Promotion Advertising and promotion has always been principal and salient to the marketing of any product in every corner of the world. It is one of the fundamental means to communicate and make the customers aware of the new products or services launched in the country or region. However, with reference to the advertisement of the dairy products, the primary ingredient is milk that has come under saying to contain the vital nutrients, which helps preventing various diseases (Mbogoh & International Livestock Centre for Africa, pp. 42-55). The promotion and advertising by DANONE is based on creating the awareness amongst the customers, educating the consumers by presenting them with useful information about product benefits and the diseases caused with the deficiency of consumption. Additionally, the use of doctors in advertisement is also an important technique that can increase the interest of the customers to become aware (Mbogoh & International Livestock Centre for Africa, pp. 42-55). The dairy products can come under promotion and advertisement by accentuating the customers towards the appetizing and delicious taste of the products. By, drawing the attention of the customers towards the nutritional values of the dairy products that express the advantages of consuming such products can also be another eminent way to catch the customers’ interest. Another dominant method that can take away the customers’ concentration is to lay emphasis on the unique selling point of the products (Mbogoh & International Livestock Centre for Africa, pp. 42-55). Placing advertisements of yoghurt on sporting event is a further aspect that DANONE intends to implement as a part of their advertisement campaign. This is because yoghurt is a dairy product that has been a part of almost every meal for most of the Africans who enjoy this delicious product as an option of healthy food. Therefore, by advertising on such an event would lead the consumers to be aware of the high quality and economic dairy product produced by DANONE (Danone, 2011). Marketing Budget The marketing and promotion budget would come under distribution in portions that include print media that is newspapers and billboards, electronic media that include television and internet (as this has become one of the widely used media). The marketing of the product line would be high at the initial level of the launching in order to create mass awareness amongst the local residents (Yamano & Otsuka & Place, pp. 86-88). Since the smallholders have taken the market share with their cheap and low-quality dairy products, therefore, the DANONE needs to increase their marketing budget from the standard share allocated for the marketing purpose. This is important in order to support their sales of their premium dairy products with high quality (Yamano & Otsuka & Place, pp. 86-88). DANONE Company needs to allocate a higher percentage to the marketing budget from the overall budget as they are new entrants into the market of East Africa and customer awareness and loyalty would require huge marketing budgets. The marketing budget would incorporate a comprehensive market research study that can determine the facets like customers, suppliers, target customers, technological constraints, market analysis, and several other factors (Yamano & Otsuka & Place, pp. 86-88). References BsuinessDictionary.com. “Marketing Plan – Definition” BsuinessDictionary.com. 2011. Retrieved on December 28, 2011: http://www.businessdictionary.com/definition/marketing-plan.html BsuinessDictionary.com. “Marketing Mix – Definition” BsuinessDictionary.com. 2011. Retrieved on December 28, 2011: http://www.businessdictionary.com/definition/marketing-mix.html Danone. 2011. Danone 10: Group of Companies. Retrieved on January 10, 2012: http://www.danone.com/?lang=en Dimitri, Carolyn & Oberholtzer, Lydia, & United States. Dept. of Agriculture. Economic Research Service. Marketing U. S. Organic Foods: Recent Trends from Farms to Consumers. DIANE Publishing, 2010. 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Emerging Development of Agriculture in East Africa: Markets, Soil, and Innovations. Springer, 2011. Read More