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Business Strategy - Essay Example

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Business Strategy

The distribution networks handle yogurt as one of the most interesting products in fresh food division.
The consumers have also their own preferences where market and product development are also hinged on. An adult consumer is particularly interested in the health/nutrition component of the product thus she chooses yogurt with added probiotics, or natural yogurt. She consumes the product as a breakfast or a main meal of the day. While the young consumers eat yogurt mainly as a snack for self-indulgence though they still consider health and nutritional value. For the children consumers, they have mothers who choose the product, are considers self-gratification and at the same time the nutritional aspect.
The dominant competitors in this sector which have a national scope are the incumbent players such as Sitia Yomo, Danone, and Parmalat; and the new entrant Muller. Other firms operating in the dairy industry (Nestle, Granarolo, Lactis, A.L.A., Milkon, Latteria Sociale Vipiteno) had also their share in the yogurt industry, including the importers (Ehrmann, Stuffer) which caters a multi-regional market.
There were emerging challenges among competitors because of the entry of new players in the industry. This has reduced the amount of display space allocation to market leaders and brands. Also, the overcrowding of the sector has increased the discretional power of distribution. The growth in commercial brands and price brackets (from average to medium price) has reduced the linear shelf space available and thus has increased the referencing costs of the major companies.
The emergence of modern distribution channels has also raised the level of competition among players with regard to the economic crisis and the development of distribution formulas, e.g., hard discount stores. This has caused major distributors to take actions aiming to improve price perception of the end consumers. They inserted commercial brands in the market and introduced premium prices. Development of new products was done by traditionally marketing oriented companies.
On the part of product developers, there are also challenges that can be considered to better compete in the industry. These concerns the choices and evolving values of the end-consumers: the emerging culture of valuing low calorie and health aspects of foods; the fact that proper meals are becoming less popular; because of fast-paced life, there was less time spent for breakfast.
1.2 Changes and reasons
Thus, the intense competition among major players in the industry, the not-so-fast paced growth rate, and highly price sensitive consumers have contributed in the structure change. On the part of Yomo, Danone, and Parmalat, they have opted to maintain substantial investments in advertising of their products as well as improving their trade investments. While Yomo has continued to give a high retail price positioning, Danone, Parmalat and Muller has opted to become aggressive in determining and enforcing their pricing policies.
The creation of new refrigerated sections and reduction of linear shelf space given to other fresh products such as pre-packed salami, butter or margarine has expanded the display shelf space allotted ...Show more


The structure of the yogurt industry is composed of the following industry players: major suppliers of raw materials, the producers, the distribution networks/channels and the consumers. The major suppliers in the sector are: the milk producers (since yogurt is a fermented semi-fluid milk product); the manufacturers of packaging materials such as cartons, cups, plastic and glass containers among others; and those that provide flavoring substances such as cereals and fruits.
Author : vallieabbott
Business Strategy
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