Marketing: Milk and Products Essay

1, Identify macro and micro environmental factors which influence marketing decisions and explain how they apply to your chosen company. You should use analysis tool to apply to the company: SWOT, PEST, and Five-Forces analysis. (Outcomes 2a) – Micro environment: the market comprises all aspects of a market which affect the company’s relationship with its customer and the patterns of competition. It includes suppliers, competitors, publics, marketing intermediaries. – Macro environment: the macro environment can be described in terms of four keys components: political/legal, economic, social/cultural, and technological (PEST factor) [According to Business Essentials Books -Marketing, (Part B: segmentation, Targeting and Positioning, Chapter 2: The marketing environment, p93 – p96)]. |SWOT | |Strengths |Opportunities | |Strong brands, large market share |The preferential policies of the government of the dairy industry | |Distribution network throughout Vietnam |(2000 billion approved for dairy development project to 2020) | |Diversified products, competitive prices |Supply of input raw material – fresh milk – is relatively stable (e. g. | |Production line of international |have dairy cow plantation, farms etc.) | | Leadership capacity of good management |Joining the WTO: market expansion, business and learning experience | |Diversified product lines (150 products) | | |Sustainable relationships with partners | | |Talent and professional of marketing and product | | |Marketing research experience is good | | |Very attractive advertisement and promotion campaign. | | |Weaknesses |Threats | |Products primarily focused on domestic market. |Vietnamese economic instability (inflation, economic crisis†¦) | | Marketing activities of the company focused on southern of Vietnam |WTO: appears several competitors | | |Uncertainty worldwide political situation | |PEST | |Political/Legal |Requirements on food hygiene and safety very strictly regulation | | |Economics stability to facilitate the business of the company | | |The preferential policies of the government of the dairy industry | |Economic |Fast-growing economy of Vietnam (i. e.having a positive impact on the domestic purchasing power) | | | Join WTO pressure to compete for business | | |Dairy import tax reduction, creating favorable for imported dairy products increased conditions | | |Inflation, increased fuel, increased cow prices | |Social/Cultural |Increasing living standards | | |Need to improve health and beauty | | |Proportion of malnourished children remains high | | |Most Vietnamese people do not have the habit of drinking milk | |Technological |Improve and modern technologies | | |Milk powder extraction technology | | | Modern equipment in the field of packaging | | |Technology quality management according to ISO | |FIVE-FORES Analysis | |New Entrants more | For milk production, the costs are not high to join so the potential rivals to participate easily in this| |competition |segment. On the contrary, entry costs for fluid milk products and yogurt is quite high. More importantly, to | | |establish distribution networks require a large expenditure. Currently, Vinamilk has a big advantage in | | |distribution. However, the conversion cost of consumer products is almost equal to 0 so Vinamilk remain | | |competitive pressure in the average. | |Substitute products or | Milk products are not currently available substitutes. However, given the broad needs of consumers, dairy| |services |products can compete with many health care items such as soft drinks †¦ So, Vinamilk is at risk from | | |substitute products. Today, Vinamilk is developing several products of drinking water for health benefits to | | |expand market share. | |Customers bargaining power| Vinamilk is not pressured by any distributor. The company has two distribution channels: (1) the | | |traditional channel (240 distributors and more than 140,000 points of sale, make the distribution more than | | |80% of Vinamilk total production, (2) distributed through modern channels (such as supermarkets †¦). For dairy | | |products, when the cost of materials is high, Vinamilk can sell at high prices that customers still have to | | |accept. Therefore, Vinamilk can transfer the disadvantages from the outside supplier to the customer. | |Suppliers bargaining power| Vinamilk has advantage when they bargain with farmers in the purchase of raw milk because the purchasing | | |company is the largest, accounting for 50% of dairy country. Moreover, Vinamilk disadvantage as dependence on | | |milk imported from abroad. However, from talking to Vinamilk, cost of production 1 kg of liquid milk from milk| | |powder is lower than from fresh milk. Therefore, this is not too big drawback for Vinamilk. | |Rivalry amongst current | Also VNM is highly competitive as in the domestic dairy Hanoimilk Companies, foreign companies word such | |competitors |as Abbott, Mead Johnson; Nestle, Dutch Lady †¦ In the future, Vietnam’s dairy market continues to expand and | | |the level of competition is getting higher. | (Source: http://www. slideshare. net/nguyenvanti1991/lap-ke-hoach-marketing-cua-vinamilk [accessed 24 October 2011]) (Source: http://tintuc. xalo. vn/00885566846/Phan_tich_co_phieu_VNM_cua_Vinamilk. html [accessed 24 October 2011]) 2, Propose major segmentation criteria that are used for two products targeting two different markets. (Outcomes 2b) Vinamilk has much kind of products. We choose two products of Vinamilk are liquid milk and yoghurt. Both of products are targeted common people who have low or medium income. For milk, there are two segmentations for adults and children. The company makes many kinds of liquid milk such as sweetened, unsweetened, chocolate flavor, vanilla flavor, strawberry flavor†¦ depends on interest of each people. The company has three types of packaging for liquid milk products such as small carton, big carton, and bag. It is appropriate for each person and for each region. For yoghurt, the product is segmented the preference of the customers. Some people like eat yoghurt with spoon but some people drink it. Some people do not care about eating or drinking yoghurt, they think that it is good for their health. It is depend on different regions. |Liquid Milk | |For adults |100% fresh milk | | |Vinamilk 100% fresh milk is made from 100% pure milk, containing all essential nutrients from nature, giving you a | | |sense of vitality to enjoy life to its entirety. | | | UHT Milk Flex | | |High-calcium and low-fat milk, Flex is the ideal source of nutrients to help you keep in shape, healthy, active and | | |energetic. | |For kids |UHT Milk Kid | | |UHT Milk Kid is produced from fresh cow milk, rich in calcium and minerals, and treated by a modern UHT technology. | | |i. e. fresh milk is treated in at high temperature in a very short time (3 seconds) to retain all essential vitamins | | |and minerals (including calcium content in milk at an optimal proportion of D/Ca). The supplement of DHA is added to | | |assist children’s growth and development, keeping them healthy, agile and intelligent. | |Yoghurt | |Drinking yoghurt | There are two lines of drinking yoghurt products, including Vinamilk Drinking Yogurt and SUSU Drinking Yogurt Milk| | |with various flavors. Yoghurt is beneficial for health of digestion system and brings you a healthy nutrition source | |Spoon yoghurt | Being made from 100% fresh milk with various flavors such as aloe vera, strawberry, etc, yoghurt products are rich| | |in proteins, vitamins, minerals and calcium, which are essential for your body. Spoon yoghurt assists to improve the | | |daily digestion, reinforce the body immune system, consolidates bone structure and helps to bring a fine and fresh | | |complexion as well as a body in shape. | |Probi fermented | Vinamilk Probi is the yoghurt product fermented from billions of Lactobacillus Casei, working well in digestive | |yoghurt |system that helps to reinforce the resistance of digestive system, purify toxin from food and surrounding environment | | |and absorb nutrients at maximum capacity. Consuming Vinamilk fermented yoghurt Probi every day keeps digestive system | | |healthy from the inside naturally. | Source:http://www. vinamilk. com. vn/uploads/Download_E/VNM_Annual_report_FINAL_ENG. pdf [accessed 24 October 2011]) (Source: http://vinamilk. com. vn/ENG/? vnm=product&id=2 [accessed 24 October 2011]) (Source: http://vinamilk. com. vn/ENG/? vnm=product&id=57 [accessed 24 October 2011]) (Source: http://vinamilk. com. vn/ENG/? vnm=product&id=7 [accessed 24 October 2011]) 3, Outline the factors which influence the choice of targeting strategy for two products in two different markets. (Outcomes 2c) There are many factors to consider when choosing the targeting strategy; those are geography, demography, buying behavior, psychographic and social culture. – Geography and Buyer behavior: Vinamilk has to segment the market such as North, Central, South because each region has different habits such as taste, smell, packaging†¦. Liquid milk has many kinds of products (sweetened, unsweetened, chocolate flavor, vanilla flavor, strawberry flavor†¦) with three types of packaging (small carton, big carton and bag). Yogurt has the same with three kinds of products (spoon yogurt, drinking yogurt, Probi yogurt). – Demography: Vinamilk can divide the market into groups such as age, gender, social position, religion, or income. Liquid milk has two segmentations for adult and children. – Psychographic and Social culture: Vietnamese does not have habit drink a lot of milk. They like to change and something is new. Therefore, Vinamilk improve the products (liquid milk and yogurt) with many kinds of taste, design†¦. With two products in two different markets, Vinamilk has the different strategy to attract the customers and get money for company. 4, Explain how end-consumer or buyer behavior as marketing activities for two products of the company and its retailers. (Outcomes 2d) â€Å"Buying behavior† is made up of the internal and external factors that explain why consumers buy and use certain products or services. This type of behavior can affect the marketing strategy that a business employs to promote its products, and when this behavior is analyzed, it can guide a business toward better marketing strategies and methods that it might not have originally used. The University of Delaware states that the best way to gauge what marketing strategy to use is to create a â€Å"marketing mix† of different types of ads and promotions that can appeal to the different types of buying behavior. (Source: http://www. ehow. com/info_8749189_buyers-behavior-affects-marketing-activities. html [accessed 24 October 2011]) The buyer behavior has influence on marketing activities. There are some factors, which influence on marketing activities of the company such as: psychological, social cultural, situational. – Psychological: each people have each personality, lifestyles, thinking and nobody is not same anybody. They also have different beliefs, attitudes and motivations in life. Therefore, everyone has different needs. If Vinamilk just has one kind of products, the consumer will not have many choices. When they feel boring with the product, they cannot buy it more. Moreover, they think that the quality of product has to worth with the money that they spend. Therefore, if they use the product and feel it bad, they will not buy it more. To sum up, the consumer’s psychological affect strongly the sales of product. If the company does not grasp the consumer’s psychological, they cannot get profit. – Situational: the income of the consumer influence marketing activity. If the price is too high, the consumer will consider carefully before making decision. Therefore, if the price is not suitable, they will not accept and exclude the product. The previous buying experiences and the purchase task itself also have a big influence on consumer decision. – Social cultural: Vietnamese cultural also affect marketing activity. First, Vietnamese like the foreign products especially milk. They think that the foreign products are always better than the domestic product. Therefore, they tend to choose the foreign products firstly. Second, Vietnamese tend to follow the mass because they think that the products have many people to use is good. It is advantage or disadvantage. If the vinamilk has the best marketing, many people will buy their products. but if not, it is difficult for them to sell products. Part 2: Identify and analyze the individual elements of the extended marketing mix: 1, Describe and analyze how products of your chosen company are developed to sustain the company’s competitive advantage. Vinamilk has many products from milk such as liquid milk, yoghurt, power milk, condensed milk, ice cream, cheese, etc†¦ In the competitive environment, Vinamilk always develop and improve their products to satisfy their consumers. Besides, they always create new products to expand the market. Thus, they can sustain the company‘s competitive advantage. Now, we choose and analysis two products of Vinamilk so that we can see how products of Vinamilk are develop. First, it is liquid milk. The liquid milk is shared two segmentations and it is for family and for children. In the family segmentation, Vinamilk has two products such as 100% fresh milk and Flex. With Vinamilk 100% fresh milk, the company has pasteurized milk in carton. After a period of selling, Vinamilk changes packaging with pasteurized milk in bag. It is more convenient to use and bring. Some people like to drink milk with sugar, immediately the company improve product with sweetened milk. After that, they do variety of product with some flavor such as chocolate, strawberry, etc†¦ They capture the market very quickly and they always develop their products to satisfy consumer. They see that Long Thanh milk has developed with autoclaved milk so they also manufacture autoclaved milk with sweetened and no sweetened. In the modern life, people eat many kind of food, which has a lot of fat. Therefore, Vinamilk launch a new product, Vinamilk Flex. It has high-calcium and low-fat milk. It is a good step by Vinamilk. It really attracts people because everyone always wants to keep in shape, healthy, active and energetic and it is difficult when eating a lot of fat. Nowadays, Vinamilk see that child obesity is increasing in Vietnam, combined with the milk market research weight loss, Vinamilk find less competition involved in this market, which has created the impetus for launching Vinamilk new product – â€Å"Vinamilk milk to lose weight† and immediately received the support of consumers. With the research objectives and provide effective solutions to weight loss, safety, consistent with the state of Vietnam, this product is a breakthrough to help bring practical benefits to consumers. Recognizing this trend, Vinamilk immediately jump into this exciting market. Besides, Vinamilk also develop products that are reserved for children. That is UHT MILK MILKKID and VNM FORTIFIED UHT MILK. Fresh milk is treated in at high temperature in a very short time (3 seconds) to retain all essential vitamins and minerals (including calcium content in milk at an optimal proportion of D/Ca). The supplement of DHA is added to assist children’s growth and development, keeping them healthy, agile and intelligent. The parents like it because they always want everything are the best for their children. Second, it is the yoghurt. Vinamilk has three type of yogurt. This is yogurt with spoon, drink yogurt, probi yogurt. Each type of yogurt suits each different preference. Some people like eat yogurt with spoon but some people like to drink yogurt. It is very easy for consumers to access it when there are many choices. Now, probi yogurt is popular because it there are many good things such as reinforces the resistance of digestive system, purify toxin from food and surrounding environment and absorb nutrients at maximum capacity. It really attracted people because it is aimed the consumer’s psychological about health. It is really effective because everyone want a good health. 2, Explain how your chosen company’s products are distributed in order to provide convenience to customers. According: http://vinamilk. com. vn/? vnm=market&id=28 [accessed 24 October 2011] For Manufacturer Company, the distribution is very important. The company has good products and services, good price but their product cannot be delivered to customers. It is failure. Therefore, the company should build the best distribution systems. It is very helpful when the company sell their products. There are many method of getting products to customers such as supermarket, agents, wholesalers, retailers, virtual store, franchise, etc†¦ Vinamilk has two channels to distribute goods. This is direct channel (supermarket) and indirect channel (wholesalers, retailers). Vinamilk do not choose franchise, on-site store, and virtual store to distribute their goods because some reason. Firstly, Vietnamese does not have hobbits to drink a lot of milk so the quantity of milk that the customers buy is low. Secondly, the products of Vinamilk sell everywhere in Viet Nam so it is difficult to deliver if the customers order direct from manufacturer. Thirdly, Vinamilk is manufacturer so they just want to make products and distribute them. They entrust the other people to buy goods and manage them. It is easier if the company spend a large of money to build a chain of sale in the whole country. In direct channel, Vinamilk has products in all supermarkets in Viet Nam such as Big C, Metro, Coopmart, etc†¦ The customer can find the products of Vinamilk at all supermarket in Viet Nam. The supermarkets just distribute 20% products of Vinamilk and the retailers in indirect channel distribute 80% products of Vinamilk. Because the percent of Vietnamese go to supermarket is not high and the supermarket system is not much. In addition, the customers like to buy milk near their house. In indirect channel, Vinamilk’s products were sold through 240 wholesalers with more than 140,000 retailers in all 64 provinces of Viet Nam. It is convenience for customers. They can buy products everywhere. They just go the nearest retailers to buy milk or they can stay at home and call for the nearest wholesales. The good is delivered in a few minutes. It is easy to buy products of Vinamilk. Although it is hard for Vinamilk to manage all retailers, they can go to some places and make survey from the customers to know how to the retailers do with their goods. Vinamilk also is using the most modern application of IT technology in management such as Customer Relationship Management (SAP), Oracle E Business Suite 11i, and Enterprise Resource Planning (ERP). Everything just solve the problem how to the goods is distributed the customers quickest and the most effective. 3, Explain how prices of your company’s product are set to reflect company’s objectives and market conditions. Price is an important factor when the company wants to attract many people to buy their products. Therefore, making the appropriate price policy is especially important significant, it helps Vinamilk have effective business strategy. First, Vinamilk want to choose price for products (liquid milk and yogurt), the company has to modify the price of product at breakeven points. After that, they should consider some factor which affect purchase of market such as customer behavior, habits, income, market volatility, quality, and quantity†¦ from that, they can choose the markup for products (low or high). Then, they continue to investigate the price of competitions and they can consider their price of products is suitable and can be competitive. Thus, they can make decision for final prices of products. For two products (liquid milk and yogurt), Vinamilk has some strategy. To achieve the goal of becoming the dairy and food companies have health benefits for rapid growth and most stable market in Vietnam with the product line with long-term competitive advantages, Vinamilk accept to decrease the extent possible price to achieve maximum market range. Besides, Vinamilk try to improve their product has high quality, secure and they create the customer’s confidence. Later, they can increase their prices but the customers will not respond much about that. Moreover, more and more people interested in their health care, so the milk is preferred. The trend of the expensive purchase (psychological attached between price and quality) also contributed to higher milk prices. General psychology of the customers often compares the prices of the same product of the other companies to make decisions. Therefore, Vinamilk research the cost and selling price, quality of products of competitors and then they adjust their price so that it is reasonable. Despite the race of the profits with foreign milk company, Vinamilk maintains the stabile price since 2008. The price of Vinamilk on the market only has about one-thirds of the price of foreign company. In the domestic, the prices of products of Vinamilk are always equal or less compared to the price of products of the other companies. With current milk prices, Vinamilk accept lower interest or compensation from the operation of many different product lines to share the burden of consumer spending. When the product value has high in the mind of the customers, it is easy for the customer to accept the new products of Vinamilk. Beside, the product value has lower in the mind of the customer, Vinamilk keep the old price and improve the quality of product. Moreover, Vinamilk try to invest modern technology and economize the input materials and the costs of sales so that they can have the best price for the customers. Vinamilk has quite reasonable policy in the price. 4, Illustrate how promotional activity is integrated to achieve marketing objectives in your chosen company. The products cannot buy more every time and everywhere. The customers do not always know new products. The company is same. Therefore, the company has to have many promotional activities to make the customer know: What is the company? What are the company’s products? They are good or bad †¦. Thus, the customers will know the company and their products. The company can sell more products and get a lot of money. It is good for the company. Vinamilk choose two ways: First, it is advertising. Vinamilk always understand the important of advertising in promotion strategy, so they always focus and create highly and constantly. They have achieved big success in improving sales. Vinamilk is a company specialized in manufacturing of milk products, which mainly milk from dairy cows, so the image of dairy cow is considered specific, the core of each Vinamilk advertising. Vinamilk responds the strict requirements that advertising message to be achieved. The customers can see it on TV, on billboard on the street, when they go to Vinamilk website or read on the magazine. The advertising campaign is replicated throughout many the mass media with dairy cow image: cute dairy cow on the beautiful natural, full on life. With the purpose of bringing their products to the majority of consumers, Vinamilk use all forms of advertising such as television, radio, newspapers, outdoor advertising, etc†¦ Besides, Vinamilk do charity to enhance the reputation of the company. For example, â€Å"8 millions cups of milk for poor children†, â€Å"Vinamilk incubating young talent†, â€Å"help poor or disabilities people†, etc†¦ Second, it is promotion. With the purpose of attracting many people and selling many products, Vinamilk has many interesting promotion activities. The customer will be discounted or has more products of Vinamilk when buying a large quantity. For children, they can drink and collect the paper in the bottle and then they can change the presents or school supply. Sometimes, in the supermarket, the customers can get same free samples (old products or new products) to trial. Sometimes, the customers will buy products with presents (toys for kid, glass or new products of Vinamilk). Everything is promotional strategy so that they can attract more the customers and sell more products. 5, Analyze the additional elements of the extended marketing mix (People, Physical evidence and Process) in your chosen company. ? People Vinamilk understand that training and human resources development is the strategy of investment for the company’s success in the future. Therefore, Vinamilk is focused on training and improving the staff. They work out a plan of career development for the staff and bring the staff suitable training programs to help them improve working effects. In the period of developing and expanding, Vinamilk make opportunity for the staff who will have more chances to deal with new roles and new challenge. This also helps the staff raise potential and creativeness . Vinamilk creates a professional, friendly and open-hearted environment. Vinamilk always respected, listened and shared ideas with the staff. The staff’s efforts and achievements are recognized and highly commended. There are many activities for the staff such as sports, travelling, camping, etc†¦ It helps them enjoy happy and useful moments. The staffs also have a chance to understand each other and promote teamwork spirit effectively. The staff will get a satisfactory salary according to working capacity and competitive salary. Besides, Health Insurance Program and transport assistance are also one of distinguishing benefits we give to the staff. ? Physical evidence The company’s factories are equipped with modern technological lines imported directly from countries such as France, Germany, Denmark, Sweden †¦ the criteria for creating high-quality products, low power consumption, have the ability to recover and reuse of products and energy sources. In addition, the company gradually converts and invests processing lines from low-power performance to high-power performance. The application of modern machine will contribute to significant savings in production costs, reduce water consumption, fuel and energy. Vinamilk has 80 trucks, they are used to deliver the products from the company to the distributors. Each truck has a black box mounted to monitor the status of the vehicle. The factories of Vinamilk are designed modern, HACCP standards, creating a clean working environment, ensuring occupational health and safety for workers and do not affect the residential area around. All sources of noise are located away from residential areas and are completely separate. There are many partner companies and each company has a separate function. It helps the company to produce and supply the goods in time on the market. Nowadays, the customers like beautiful design of product packaging, many companies have not hesitated to invest costs on designing new the packaging. Although they can take disadvantages of the cost and price, the customer will remember more the products. It is important to make decision by the customers. Vinamilk tries to fulfill the criteria packaging such as beautiful, convenience, safety products, friendly environment †¦ In addition, it is difficult to maintain these criteria because the business environment and customer preferences always change. Therefore, the company will invest heavily in packaging costs to attract the customers. ? Process There are two resources of raw materials in Vinamilk: milk is collected from farm and milk is imported from foreign country. Vinamilk produces milk in facilities and then the company distributes their products in two ways: one, they provide products in supermarkets such as Metro, Big C, Coopmart†¦ two, they distribute for the wholesalers and then the wholesalers provide goods for the retailers. Finally, the retailers sell them for the customers. It is very convenience for the customers. They can buy the products of Vinamilk everywhere. After few times, Vinamilk goes to research the market and get feedback from the customers. Thus, they research and develop their products according to the customer preference. Therefore, their products will attract more the customers and they can get more profits. Bibliographies Textbook: BPP Learning Media Staff (2007), Business Essentials – Marketing, BPP House, London, BPP Learning Media Ltd. Online resources: http://vinamilk. com. vn/ http://www. slideshare. net/nguyenvanti1991/lap-ke-hoach-marketing-cua-vinamilk [accessed 24 October 2011] http://tintuc. xalo. vn/00885566846/Phan_tich_co_phieu_VNM_cua_Vinamilk. html [accessed 24 October 2011] http://www. vinamilk. com. vn/uploads/Download_E/VNM_Annual_report_FINAL_ENG. pdf [accessed 24 October 2011] http://www. ehow.com/info_8749189_buyers-behavior-affects-marketing-activities. html [accessed 24 October 2011] [pic]. CONTENT Part 2: 5, Analyze the additional elements of the extended marketing mix (People, Physical evidence and Process) in your chosen company PAGE NO. 17 Part 2: 1, Describe and analyze how products of your chosen company are developed to sustain the company’s competitive advantage PAGE NO. 11 Part 1: 4, Explain how end-consumer or buyer behavior as marketing activities for two products of the company and its retailers PAGE NO. 10 Part 1: 3, Outline the factors which influence the choice of targeting strategy for two products in two different markets PAGE NO. 9 Part 2: 2, Explain how your chosen company’s products are distributed in order to provide convenience to customers PAGE NO. 13 Part 2: 3, Explain how prices of your company’s product are set to reflect company’s objectives and market conditions PAGE NO. 14 Part 1: 2, Propose major segmentation criteria that are used for two products targeting two different markets PAGE NO. 7 Part 1: 1, Identify macro and micro environmental factors which influence marketing decisions and explain how they apply to your chosen company PAGE NO. 3 Part 2: 4, Illustrate how promotional activity is integrated to achieve marketing objectives in your chosen company PAGE NO. 16