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Develop Marketing Strategies for Milk - Dairy Farmers Company - Example

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The paper "Develop Marketing Strategies for Milk - Dairy Farmers Company" is a great example of a business plan. Dairy Farmers Company is one of the oldest and largest dairy processing firms in Australia. The company was established in 1900 and supplies products both at the local market and international markets…
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Developing a Business Plan for Daily Farmers Company Product (Milk) Name Course Name and Code Instructor’s Name Date Executive Summary This report has focused on developing a business plan of the Dairy Farmers Company for their milk. Dairy Farmers Company is one of the oldest and largest daily processing firms in Australia. The company deals with a number of brands, which include selection of milk varieties, cheeses and flavoured milk. Dairy Farmers provide milk products that not only enhance the consumers’ protein requirements but also cater for the overall physical development. The external environment in which the company operates is favourable enough, and abiding by the set environmental and legal regulations is one of the factors that are highly considered by Diary Farmers. Although there are various companies in the dairy industry that are a threat to the dairy farmers, the companies uses its strengths and opportunities to build a competitive advantage whilst formulating strategies to overcomes the weaknesses and threats. Dairy Farmers milk targets everyone be it a child, a teenager, elder, female of male and for every use such as tea, coffee, for shakes, for cereals or as plain milk; and the companies employs competitive marketing mixes for its product. Besides, implementing an action plan and a control program are major considerations that are efficient for the successful attainment of the product objectives. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 5 Firm’s mission 6 Situation analysis 7 External environment 7 Political/legal analysis 8 Economic analysis 8 Social analysis 9 Technological analysis 9 Environmental 10 SWOT Analysis 10 Product objectives 11 Product strategy 11 Core product 11 Actual product 12 Augmented product 12 Marketing mix 12 Product 13 Price 13 Promotion 15 Place 15 Target market 15 Market segmentation 16 Demographic segmentation 16 Behavioural segmentation 17 Psychographic segmentation 18 Marketing channel strategy 18 Zero level channel: 18 One level channel: 18 Two level channel: 19 Three level channel: 19 These are analyzed herein: 19 Competition 19 Action plan 20 Control program 20 References 20 Action plan 22 Milk FAB Analysis (features, advantages and benefits) 22 Introduction Dairy Farmers Company is one of the oldest and largest daily processing firms in Australia. The company was established in 1900 and supplies products both at the local market and international markets. In the years, it has marketed its products in Europe especially Eastern Europe, Asia and even the Middle East. A Japanese company by the name Kirin Holdings acquired the ownership of the daily farmers company in the year 2008. It was created by a group of 65 shareholders from the region of New South Wales for the main purpose of marketing the farmer’s milk product and butter products to the urban customers. For more than a century the company has been owned entirely by Australian dairy farmers and has 11 processing facilities all based in Australia. Dairy Farmers Company deals with a number of brands, which include selection of milk varieties, cheeses and flavoured milk. Micronutrient and protein malnutrition have immense effects on the productivity and development of the people. In most cases, they account for a significant number of deaths and poor health, reducing the general productivity of the populace. The company’s products are meant to fill this gap and provide milk products that not only enhance the consumers’ protein requirements but also cater for the overall physical development. This report will focus on developing a business plan of Dairy Farmers Company regarding their product milk. The business plan will encompass various elements including external environment, the SWOT analysis, target market, marketing segmentation and the marketing mix, brand positioning, action program and control program. Firm’s mission Dairy Farmers Company strives to be among the leading milk companies. It is committed to selling consistent, best quality world-class milk. The company suppliers are dedicated at producing high quality milk which is thereafter processed to generate some of the country’s best dairy brands. Company objectives Dairy Farmers Company aims at offering quality milk to its consumers. Being one of the major dairy companies in Australia, Dairy farmer’s product serves the majority of Australian citizens and in order to remain competitive, quality is put into consideration. Since 1900, the company has been offering quality milk. In order to ensure extra quality guarantee of its product, the company has introduced a freshness seal to its bottled milk. Market overview Over the last one decade milk production in Australia has surpassed the domestic consumption. This means that quite a huge proportion of the output is meant for export. In last one year more than 40 per cent of the milk produced in the country was exported (Dairy Australia: http://www.dairyaustralia.com.au/Statistics-and-markets/Exports-and-trade/Export-markets/International-market-overview.aspx). Australia milk production accounts for about 2 per cent of the world milk production. Most of the milk products exported from the country is meant for the Asian market with Japan being the most significant market. This is not a surprise bearing in mind that a Japanese company acquired the ownership of Dairy Farmers Company in 2008. This has been contributed majorly by the fact that these markets are closer to the country than European market. There is even more potential for growth of the Asian market especially China with the economic progress they are witnessing and as the populace become more diet conscious. The American and Middle East market is also growing and exporters are yet to make significant impact in this market as they offer great potential for milk consumption. In a nutshell milk market in the country recorded annual growth of about 3 per cent from 2003-2010.The leading company in milk production in the last one year was Kirin Holdings and the fresh milk subsector accounted for about 75 percent of total milk production. It is worth noting that this company acquired the ownership of dairy farmers company in 2008. From this data it is quite evident that the fresh milk market is growing and shows signs of achieving even more growth. The market seems to be expanding and with the company having more resources after been acquired by Kirin Company of Japan it is expected it will navigate even to more virgin markets especially in Europe and America. The milk industry in Australia is a competitive market and this means that the company must consider its pricing system of competitors to remain competitive in the market. More competition especially in the global market is expected to increase especially from New Zealand, India and Russia. Situation analysis External environment This will include the analysis of a pestle, which is simply a framework that classifies environmental influences as political, economic, social, technological, legal and environmental (David, 2010). The analysis scrutinizes the effects of these factors and their relationship with each other on an industry. Political/legal analysis Certainly, there are various legislations, which influence how businesses are conducted, and such legislations may either restrict or give opportunity to such businesses (Lawrence & Carl, 2008). Milk is one of the major products that are processed, packaged and sold by the daily farmers company. As such, the packaging and sale of milk must be in accordance with various rules and regulations in Australia related to the sale, packaging and labelling of foodstuffs. Such legislations may include FoodWorks Labelling Edition and FSANZ Food Standards Code. Besides, there are different set environmental laws, which include safe disposal thus the Daily Farmers Company has to come up with measures to deal with this issue to make certain that it keeps in line with Australian legal requirements. In addition to this, adhering to the set code of practice and temperature and cleanliness control are other factors that are a requirement whilst dealing with the milk product. The Daily Farmers Company has considered these factors and this has enabled the milk business to prevail in the Australian market. Economic analysis The stable macroeconomic environment has favoured the production and sale of the majority of products including Dairy Farmers milk (David, 2010). This encompasses general stability, low interest rates, stable currencies, and international and global competitiveness, which have formed a basis for the firm’s growth (Lawrence and Carl, 2008). The company’s product has recorded an upward growth in terms of the sales made and profits accrued. Nevertheless, the company experiences low sales of milk during times of recession and depression (Walters, 1994). This growth can also be linked with the innovative strategies that are employed by the company as well as product quality. Social analysis This includes consumers’ tastes, preferences and demand and usually varies with disposable income (Kotler and Kevin, 2006). Milk is a product that is suitable to individuals of all ages and gender and it is a core constituent for protein, a major nutrient that is essential for human growth. This implies that the target market for milk is large enough and its diverse uses are an added advantage for the company. Technological analysis The rapid technological growth in the modern society is influencing greatly various products sold by companies (Thomson and Strickland, 2003). This is based on the fact that companies have to adopt the new technologies and combine them with the existing ones in order to remain competitive in the highly competitive market and respond positively to the amplifying technological development (David, 2010). For instance, the processing, packaging, labelling and sale of the Daily Farmers milk must keep up with the latest technologies. This means that such factors as the quality of milk, how it is packaged and labelled will trigger its sales. Other factors such as installing customer-serving computers with the latest technology are essential, as it will assist in quick customer service. In addition to this, the use of social Medias such as Facebook, Twitter, Flickr, and You Tube can also assist greatly in advertising Daily Framers Company milk, as currently; most people have gone online (Lawrence and Carl, 2008). Environmental The Daily Farmers Company must ensure that the sale of milk abides by the set environmental protection standards. SWOT Analysis This will involve the analysis of strengths, weaknesses, opportunities and threats of Dairy Farmers Company milk. The SWOT analysis is essential as it assist the Dairy Farmers company focus on its strengths and opportunities whilst finding ways of minimizing the weaknesses and overcoming the threats. Strengths Opportunities Efficient packaging Reasonable and affordable price for milk High quality milk Owns a packaging plant Increased usage Customers are preferring hygienic milk Weaknesses Threats Farmers are offering low quality milk High costs incurred for milk collection and distribution Promotion requires heavy capital Increased competition from other companies in the dairy industry. Perceptions and differentials Product objectives The objectives of Dairy Farmers milk include the following: To increase the company’s market share by 10 Percent within one year To amplify the coverage of shops within one year by 20 percent To increase product knowledge amongst consumers To boost the processing capability of milk over time Product strategy Dairy Farmers product strategy takes into account the capacities in terms of production, and sales. It evaluates the expectations of clients during delivery. Dairy Farmers product strategy will be evaluated in terms of core product, actual product and augmented product. Core product The core benefit offered by the company’s product is good health. Customers who buy the product buy more than merely milk, but they are buying health. Actual product Dairy Farmers has differentiated its product from that of its competitors. The company offers quality milk, differential packaging and branding which makes consumers to purchase. Augmented product In order to remain competitive, Dairy Farmers Company offers non-tangible benefits to its customers. These encompass delivering the product to its customers, and after sale services aimed at attracting customers. Product positioning The company customers perceive the product to be of high quality and lowly priced, a factor which attracts and retains it clients. The company sells its product both at the local market and international markets. Marketing mix Marketing mix is defined as the combination of marketing tools, which are used to satisfy the customers and meet the company goals. Customers refer to the marketing mix as offering and they are typically controlled by the four P’s; price, product, promotion and place (Hoover, G. and Hoover's Incorporated, 2005). A company using these elements for its products is capable of reaching different clients within its chosen target market. It is more efficient to make use of a combination of these elements as it has proved to be efficient than depending merely on one element (Henry, 2009). Product Milk is one of the major products that are processed and packaged by the Daily Farmers Company. The product (milk) is a major constituent of proteins and it can be used in the preparation of various foodstuffs. The company product targets people of all ages and gender and this is a major advantage. By ensuring the milk is of high quality, the Daily Farmers Company will be able to compete with other companies in the daily industry, in addition to ensuring growth, both for the product and the company in general. Dairy Farmers Company is dedicated to stringent quality standards in its entire operation. High hygiene and standards are maintained all through the process of milk collection to the supply of the processed milk to the consumers. Main emphasis is serving the consumers in the best way possible by offering quality product at a reasonable price. Price Effective marketing takes into consideration the pricing strategies (Thomson and Strickland, 2003). Pricing decisions of Dairy Farmer’s products usually take into consideration pricing responses of main competitors and the company’s profit margins; and actually it includes the list price, discounts and financing among others (Lawrence and Carl, 2008). The prices of milk are generally market driven. This implies that the forces of supply and demand are used to determine the prices of the product. When the demand is strong, the company will tend to increase the price of milk whilst low demand means that the price will tend to be lower. The fact that Daily Farmers is producing premium quality milk implies that the company will use premium-pricing strategy for the product. Producing high quality product (milk) in spite of the prices set will attract customers as studies have indicated that, customers prefer quality and valuable products irrespective of their prices (Hill et al., 2004). This will definitely give the company a competitive advantage for the sale of milk over its competitors. According to research, price is an essential factor, which sways consumer demand (Lawrence and Carl, 2008). For this reason, in order to be marketable, the company must price its milk competitively. This signifies that such costs as processing, procurement, storage, packaging, distribution and marketing necessitates to be maintained as low as likely. In general, the price of milk will entail the costs of purchasing raw milk, transportation costs, processing costs, packaging costs, distribution and marketing costs, tariffs and taxes and profit margins. In this case, cost accounting will be necessitated in order to reach reasonable product cost. Ensuring that the milk is not overpriced or underpriced will enable the Dairy Farmers Company to remain in the market successfully as it will continue being competitive. Important cost elements that should be considered by Dairy Farmers Company whilst setting price of its milk encompass the following: Market function Cost element Raw milk procurement Cost of raw milk; materials and labour Transportation Cost of labour, transport, equipment’s and materials Processing Raw materials; equipments and machinery; packaging; labour; taxes; energy; distribution and marketing Marketing and distribution Transport; materials; labour; rent; and retail margin Promotion Promotional strategies represent all communications employed by the marketers in the market place (Koichi, 2009). Some of the examples of promotional strategies include advertising, public relations, personal selling and sales promotions (David, 2010, pp. 60-72). The Dairy Farmers Company uses a combination of these promotion strategies whilst promoting its milk. Besides, other advertising strategies such as the use of social websites such as Facebook, Twitter, Flickr, and You Tube; print press as well as radios and Televisions have also turned out to be very efficient, as currently, the majority of persons have gone online (Koichi, 2009). Through advertising, customers become aware of the existence of the company’s product (milk) and where they can obtain it. Place The Dairy Farmers Company distributes its milk through wholesalers, jobbers, retailers and resellers. Besides, the company sells its product to its customers directly. This is a great advantage to the company as less costs are incurred thus resulting to high profitability. Target market Basically, target marketing involves dividing the prospective customers into various groups, which makes it easy for the company to reach such groups (Armstrong and Kotler, 2000). In addition, it is a very effective method of marketing the company’s product to the targeted and the correct groups of individuals. There are various ways of dividing the customers and this is based on market segmentation. For instance, in this case, the potential customers will be grouped based on demographic and psychological segmentation. It should be very clear that the milk product is for everyone and can be used for every purpose. The product should target everyone be it a child, a teenager, elder, female of male and for every use such as tea, coffee, for shakes, for cereals or as plain milk (IDF/FIL, 1990). Market segmentation It is a gargantuan task for one company to participate in large-scale production, mass distribution and extensive promotion of its product. Major setbacks arise from the increase of distribution and advertising channels that to a large extent result to increase in the operating costs in the pursuit of reaching mass audience. In a bid to mitigate against these increasing costs firms segment their market (David, 2010).This is also meant to adequately meet the wants and demands of the respective target group. The milk sector depicts a market that is characterized by homogenous preferences in the sense that consumers have similar preferences. Consumers simply want milk that is white, milk that is meticulously processed and which is good for health and bones. Considering this important requirement milk’s market can be segmented as follows. Demographic segmentation Milk as a product is not limited to any group, individual of particular age or even gender. It is a product that cuts across the board meaning it is meant for all users be it those of higher class, those of middle class or those who can be described as poor. Although the product requires an individual to commit a proportion of their income the product can be put into quantities that caters for their different members in the financial ladder (Campbell, et al., 2009). All the same, when the milk is processed its price may go up far beyond the reach of the poor, who may be described as price sensitive. In addition, consumers who belong to the lower class may prefer lose milk as compared to processed milk. It is also important to note that consumers who accesses loose milk may prefer it to processed milk due to its nutritional composition. The main challenge to the Dairy Farmers Company as a milk-processing firm is its move to convince consumers to buy processed milk and change their attitude toward it as being non-nutrionist (IDF/FIL, 1990).In this regard milk product will primarily target individuals in the society that are health conscious and attach great importance to their weight. By understanding this, Dairy Farmers will be able to set prices, which are affordable to its target market and find efficient strategies of convincing consumers to buy processed milk. Behavioural segmentation Milk product based on consumer behaviour can be segmented depending on the benefits that buyers seek to get as a result of purchasing the product. Consumers look for milk product that will be suitable for most if not all of their drinking purposes. The ads may be formulated to promote consumer loyalty in the product. Dairy Farmers should emphasize on the importance of consumers increasing their consumption of the product in the morning, every day and for their pets (IDF/FIL, 1990). To create a hardcore loyalty in the product the milk should be in state that best serves the interest of the target group and caters for the consumer expected satisfaction from consuming the product. This implies that the milk should be of high quality. Psychographic segmentation Basing market segmentation on psychographics elements such as lifestyle, personality traits and values are used to segment the market (Armstrong and Kotler, 2000). In this respect, the segmentation of this target group for the milk product should approach achievers who are focused on their careers. It should also aim at bringing on board experiences who may want to try new milk product in the market. Advertising should also target believers, people who are conservative and who have solid beliefs. It should create a belief of a healthier life if this specific milk product is consumed. Marketing channel strategy The main purpose of a market channel is to move products from the producer to the consumers. It bridges the gap of space, time and possession that are between the goods and services and the prospective consumers (Cadogan, 2009). The consumer and the respective producer are part of every market channel. This channel can be categorized as: Zero level channel: The Daily Farmers Company can use zero level channels by selling the milk product directly to the consumers through the internet, television selling and via the company stores. One level channel: The company can also use one level channel by selling their product to retailers who then sell to the final consumers. Two level channel: This involves two intermediaries. The Company sells its milk product to the wholesalers who then sell to the retailers who finally sell to the final consumers. Three level channel: This type of channel involves three intermediaries. These are the jobbers, the wholesalers and the retailers. These are analyzed herein: Manufacture customers Manufacturer retailers’ consumers Manufacturer Wholesalers Retailers Consumers Manufacturer jobbers Wholesaler Retailers Consumers (Cadogan, 2009) Competition The company observes the activities of the competitors in the industry and tries to maintain its competitiveness in the global market. This has been achieved through monitoring and measuring the market trends and responding accordingly. For example due to the inefficiencies that inflicted the company in the early years of the last decade, the company was acquired by a Japanese company. It has also been expanding its global markets by reaching areas that it never used to serve before. For instance after the acquisition, its Asian market has been growing. Action plan There is a need to implement an action program that is congruent with the strategies and objectives of the Dairy Farmers Company. This encompasses carrying out specific actions that will facilitate the execution of the company’s strategies. It involves gathering solutions for the following questions: what activities shall be done? How much will be spent on that activities? Who will do the work? The action plan should also clearly show the role and responsibility of each department in the company. Control program Such a program is meant to act as a control mechanism if the situation deviates from what was expected. Constant monitoring and evaluation is carried out to measure whether the action plan produces the desirable effects and if not a corrective program is applied. Some of the activities that can be done may include: Closely monitoring the performance regularly to confirm whether the action plan is on the right track or not, (Every month) Conducting market survey to evaluate the performance of the milk product and collect consumers view for implementation of effective action plan.(Every 6 months). Comparing the actual costs of marketing promotion with the budgeted costs for readjustment Exhaustive review of the marketing plan as changes occur in the market for proper reassessment of the planned objectives and mitigate against any shortcoming, (Yearly). References Armstrong, G. & Kotler, P. 2000. Marketing: An Introduction, 5th ed. Singapore : Person Cadogan, J.W. 2009, Marketing Strategy: Marketing-mix strategies. London, SAGE. Campbell, D.Stonehouse, G. and Houstone, B. 2002, Business strategy- an introduction, 2nd Ed. London: Elsevier Butterworth- Heinemann. David, R. Strategic management: concepts and cases, Upper Saddle River, Pearson Prentice-Hall, 2010. Henry, J 2009. Marketing: An introduction (9th ed.). Upper Saddle River, NJ:  Hill, C.W.L., Jones, G.R.and Galvin, P., 2004, Strategic management: an integrated approach, Milton, Queensland: John Wiley & Sons. Hoover, G. and Hoover's Incorporated. 2005. Hoover's handbook of world business, (12th Ed). California: University of California. IDF/FIL, 1990.Handbook on Milk Collection in warm Developing Countries.IDF Special issue No. 9002. 1990. Koichi, S. 2009. Advertising Theory and Strategies,"16th  ed, Souseisha Book Company Lawrence, J. G, & Carl, M. 2008. The Future of Business: The Essentials (4thed). London, Cengage Learning. TECHNOSERVE, 1995. Mala Manual: A Guide for Establishing and Operating Small Scale Enterprises for the Production of Cultured Milk. Publ. Technoserve, Inc. 1995. Thomson, A. A. Jr. & Strickland, A. J. 2003.  Strategic Management Concepts and Cases. 13thed. New York: McGraw-Hill Publishing Company Ltd. Walters D. 1994, The Impact of the Recession on Retailing Management Decisions and Performance, International Journal of Retail & Distribution Management, 22(4), 20-31. Appendix A Action plan Action Responsibility Budget Deadline Establishing and expanding linkage with customers Logistic manager Average Ongoing Establishing more shops in the cities Marketing manager minimal Future Product promotion on media; radio, television and company’s website Marketing manager marginal ongoing Expand product lines Sales manager Average Appendix B Milk FAB Analysis (features, advantages and benefits) Appendix C (Dairy Australia: http://www.dairyaustralia.com.au/Statistics-and-markets/Exports-and-trade/Export-markets/International-market-overview.aspx) Read More
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