MKT5000_A1_S3_2010_Group_3-1

DUTCH LADY MILK INDUSTIRES BERHAD

MARKETING AUDIT MKT 5000 – Marketing Management Assignment 1 Semester 2, 2010 Date Submitted: 06 October 2010

Prepared by

:

Name

Student Number

Kalana Dias 0050110879 Chamath Athukorala 0050107490 Kanishka 0050107488

Weerasooriya

MKT5000 - Assignment 1: Marketing Audit

1

Executive Summary

This marketing audit evaluates the current business strategies practised in the Dutch Lady marketing process and its business environment in Malaysia with specific to its yogurt products. Company has identified that manufacturing a low fat yogurt which is enriched with high vitamins and low calories will be a very attractive segment in the future revenue generation process. As per the current marketing programs, company is looking forward to increase its low fat yogurt revenue by 20% and introduce new low fat eating and drinking yogurts with four new flavors by end of 2010 financial year while increasing their product awareness by 30%. In addition, it plans to introduce a non fat yogurt range in 2011. Dutch Lady Low fat yogurt positions itself as a delicious and healthy snack that provides good nutrition for the whole family. Been as a subsidiary of Royal FrieslandCampina NV and having net worth of RM 180 M are the main strengths of the Dutch Lady. Company’s main weakness is that it has limited dairy product range compared to its competitors. It has identified that Malaysians are becoming more health conscious on nutritious food and changing their eating/drinking habits. Hence it will create new opportunities in non fat yogurt segment. A major threat for the company is to compete with global competitors such as Nestle and Cocoaland. In the PESTEL analysis, it covers economic, political, legal and socio-cultural aspects of the Malaysian market. Malaysia has a booming economy with majority of Muslim population who have growing enthusiasm towards health consciousness. The country’s culture and

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traditions are based on Shariya law and political and social stability is deemed high. These findings reveal a suitable environment for a product like non fat yogurt. Company’s major stakeholders are highly important and will make a high influence. The future prospects are based on its stakeholders such as management, customers, competitors, mother company FrieslandCampina and most importantly the shareholders. Company’s main strategies are based on cost leadership and product differentiation. Within those strategies, it then considers more precise strategies such as pricing, promotion and distribution strategies. Product differentiation will be done in different forms by combining in aspects of brand image, production technology and distribution channels. The Dutch Lady’s vision is to make natural and nutritious dairy products that fulfil customer needs and to have healthier and more enjoyable life. Selling high quality natural and healthy dairy products to satisfy its customers are the core values of the Dutch Lady. Double the existing yogurt products, maintain a gross margin of 20%, increase its net profits by 15% are the long term objectives of the company which it expects to achieve by 2015. To achieve the long term objectives Dutch Lady should launch more product promotions, and make new investments for brand building and to improve the distribution channels to distribute products to different suppliers to sell them efficiently.

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Table of Contents 1 Executive Summary...............................................................................................................i 2 Introduction...........................................................................................................................1 3 Organisational Objectives....................................................................................................2 4 Positioning..............................................................................................................................3 4.1. Company positioning..................................................................................................................3 4.2. Brand positioning........................................................................................................................3 4.3. Competitive positioning..............................................................................................................3 4.4. Strategic Positions ......................................................................................................................4

5 Current Environment and Operation.................................................................................6 5.1. SWOT Analysis..........................................................................................................................7

6 PESTEL Analysis..................................................................................................................9 6.1. Political Environment.................................................................................................................9 6.2. Economic Analysis...................................................................................................................12 6.2.1. Inflation...............................................................................................................................................12 6.2.2. Gross Domestic Product .....................................................................................................................13 6.2.3. Monthly Income Levels.......................................................................................................................15 6.2.4. Unemployment Rate............................................................................................................................16 6.2.5. Future Economic Prospects and Future Risks.....................................................................................17

6.3. Socio-cultural Environment......................................................................................................19 6.3.1. Demographic Factors ..........................................................................................................................19 6.3.2. Composition of Household Expenditure.............................................................................................20 6.3.3. Urban and Rural Composition.............................................................................................................21 6.3.4. Age Distribution..................................................................................................................................21

6.4. Technological Analysis.............................................................................................................23 6.5. Environmental Factors..............................................................................................................25 6.6. Legal Factors............................................................................................................................27

7 Stakeholder Analysis...........................................................................................................28 Dutch Lady Milk Industries Berhad

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8 Strategic Assessment ..........................................................................................................31 8.1. Vision ......................................................................................................................................31 8.2. Mission ....................................................................................................................................32 8.3. Corporate Values .....................................................................................................................32 8.4. Business Objectives .................................................................................................................32

9 Recommendations .............................................................................................................34 9.1. Market Audit Checklist ............................................................................................................34 9.2. Strategic Action Programs .......................................................................................................35 9.3. Future Strategies ......................................................................................................................35

10 List of references..............................................................................................................37

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Table of Figures and Tables Figure 1: Malaysian CPI and Inflation Rate: 2004 – 2015 ................................................13 Figure 2: Malaysian GDP ($ Billions): 2006 - 2012 ............................................................14 Figure 3: Malaysian GDP Growth Rate...............................................................................14 Figure 4: Malaysian GDP Composition by Sectors in 2008 ..............................................15 Figure 5: Malaysian Monthly Income (US $): 2005 - 2010 ................................................16 Figure 6: Malaysian Unemployment Growth Rate: 2005 - 2015.......................................17 Figure 7: Malaysia's Composition of Household Expenditure in 1998/99........................20 Figure 8: Malaysian Urban Population: 2005 - 2015 .........................................................21 Figure 9: Malaysian Age Distribution between 30 – 50 years: 2005 - 2010 ....................21 Figure 10: Dutch Lady's Key Stakeholders.........................................................................28 Table 1: Dutch Lady Current Positioning.............................................................................4 Table 2: Dutch Lady Aspects of Positioning..........................................................................4 Table 3: Dutch Lady Environment Types..............................................................................6 Table 4: Dutch Lady SWOT Analysis....................................................................................7 Table 5: Malaysia's Political Environment............................................................................9 Table 6: Future Economic Prospects and Risks..................................................................17 Table 7: Malaysia's Demographic Factors...........................................................................19 Table 8: Malaysia's Technological Developments...............................................................23 Table 9: Malaysia's Environmental Factors........................................................................25 Table 10: Malaysia's Legal Environment............................................................................27 Table 11: Impact on Stakeholders of Dutch Lady..............................................................29

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2

Introduction

Dutch Lady Milk Industries Berhad established in 1963 in Malaysia, is a subsidiary of the Royal FrieslandCampina, a Dutch multinational corporation and one of the largest milk companies in the world. This marketing audit evaluates the current business strategies practised in the Dutch Lady marketing process of and its business environment in Malaysia, which the organization is operating. Report evaluates and focuses fully on Yogurt product range, manufactured and marketed in Malaysia by Dutch Lady.

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3 Organisational Objectives Dutch Lady manufactures healthy yogurt which is enriched with high vitamins, low calorie and low fat as well as flavoured with natural fruit flavours. Company has identified its low fat yogurt segment as a very attractive segment in the future revenue generation process. Based on the current marketing programmes, the following marketing objectives are focused on low fat yogurt product segment. •

Increase the low fat yogurt revenue by 20% by end of 2010 financial year.

•

Expand the low fat eating and drinking yogurt product range by 4 new flavours each by end of 2010 financial year.

•

Introduce a non fat yogurt range in the coming year (2011 January onwards).

•

Increase the low fat yogurt product awareness by 30% in the coming year.

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4

Positioning

‘Positioning is the process of influencing perceptions by specifying the attributes, benefits or images which represent differentiation’ (Sheinin, 1998). It is what the customer believes about the product's value, features, and benefits and is largely shaped with the experience customer gets. Positioning can be analysed on following three levels. 4.1.

Company positioning

For generations, Dutch Lady positions itself being in the business of supplying quality dairy and infant nutrition products to the nation. 4.2.

Brand positioning

The brand Dutch Lady Low fat yogurt positions itself as a delicious and healthy snack that provides good nutrition for the whole family. In addition it is the only yoghurt and yoghurt drink with vitamins A, C & E which also contains active live culture that will enhance the absorption of nutrients, ensuring digestive system and stays healthy. Consumers prefer Dutch Lady low fat yogurt since it contains vital vitamins and DHA+, it keeps consumers fit and healthier. 4.3.

Competitive positioning

Dutch Lady ranks among the top three dairy producers in Malaysia. It sponsors campaigns such as ‘World Milk Day’ event which educated the public about the goodness and benefits of milk. This enables the company and its brands to position itself more favourably among the other competitors’ brands. Dutch Lady Milk Industries Berhad

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4.4.

Strategic Positions

Following table illustrates how Dutch Lady is using its strategies to position itself in the market. Table 1: Dutch Lady Current Positioning Present state

Positioning level Company positioning

Emphasising continuously in all marketing means that company is in the business of supplying quality milk products.

Brand positioning

Launching of new brands such as “Shine” and “Yes!” which is focused to young energetic target consumer market. Promoting the brand to the health conscious consumers who prefer drinking and eating low fat yogurt.

Competitive positioning

Presently enjoying a 30% market share in Malaysia and active involvement in public events which other competitors are not focusing on.

In positioning company’s product in the market, a variety of positioning strategies could be used. These are categorised as follows: Table 2: Dutch Lady Aspects of Positioning Dutch Lady Milk Industries Berhad

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Positioning strategy based on Product attributes

Explanation Dutch Lady focuses on the nutritional attributes (E.g. Vitamins) of its yogurt range.

Price and quality

Company uses a low price and good quality strategy.

Use or application

Provides good nutrition for the health conscious consumers.

Product user

Mainly for Consumers between 30 to 50 years, who are increasingly becoming health conscious.

Product class

There are no close substitutes for Low Fat Eating Yoghurt. However low Fat Drinking Yoghurt may be a better alternative for milk.

Competitor

Company seeks to be the preferred brand of milk products in Malaysia with competing based on “goodness for life”

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5

Current Environment and Operation

This is analysed as follows: Table 3: Dutch Lady Environment Types Environment type Internal environment

Examples •

Staff of all product lines

•

Employees working for FrieslandCompina in other regions

•

Technology presently used (E.g. collecting raw materials such as milk)

Micro environment

Macro environment

•

Funds available as equity and ability to borrow at cheaper

•

rates. Malaysian consumers

•

Malaysian General public

•

Agents and distributors of the company’s yogurt products.

•

Malaysian competitors such as Nestle , Fraser & Neave

Holdings, Cocoaland Holdings etc. This will be analysed in the PESTEL analysis

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5.1.

SWOT Analysis

SWOT analysis summarises the key issues from the business environment and the strategic capability of an organisation (Johnson, Scholes, & Whittington, 2008, p.119). The Dutch Lady SWOT Analysis as follows: Table 4: Dutch Lady SWOT Analysis

Strengths •

Weaknesses

Company is lead by a well experienced

•

Limited dairy product range compared

and a committed Board of Directors with

to other direct competitors such as Nestle

executive and non-executive directors.

Malaysia, Fraser & Neave holdings and

•

Cocoaland Holdings.

Continuous product innovation and

new product launches.

•

•

programmes/campaigns

Subsidiary of Royal FrieslandCampina

Only limited number of awareness carried

out

NV, which is a world renowned dairy

annually.

manufacturer in Netherlands.

•

•

warehousing capacity resulting in a higher

Despite the global economic down turn,

Dutch Lady achieved the highest Profits

Very

limited

manufacturing

and

outsourcing cost incurred for logistics.

before tax in 2009 in the company history of RM82.4 million. This was a growth of 42% from the previous year. •

Having a net worth of RM 180 M

which

is

relatively

higher

than

its

competitors.

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Opportunities •

Threats

Increasing awareness and need on

6. Increase in raw material prices, due to

healthier and nutritious dairy products

adverse weather conditions.

resulting in high demand.

•

•

Cocoaland causing threats in non fat

Malaysians being more aware and

Global competitors such as Nestle and

health conscious on nutritious food and

yogurt

changing their eating/drinking habits.

product developments.

•

Development of new manufacturing

•

segment

by

continuous

new

Threats from substitute products such

technologies with regard to the dairy

as frozen foods, instant snacks, soft

industry.

drinks.

•

Further

Expansion

of international

market by using the reputation of Royal FrieslandCampina NV •

Investment

Suppliers)

and

on

backward forward

(E.g.

integration

(E.g.distribution channels) will have an opportunity to control the supply sources and distribution channels and in addition have a cost advantage in the long run.

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6

PESTEL Analysis

PESTEL is a macro environment model which uses Political, Economic, Social, Technological and Environmental factors in order to analyse the company’s external environment (Association of Chartered Certified Accountants 2009, p.34). It can be analysed as follows: 6.1.

Political Environment

Political events and amendments play an important role in any economy and enormously influence business decisions. Hence the following sections focuses on the past, current and future direction of Malaysian politics in terms of its political stability, government regulation on economy, trade policy and taxes, influence on religion and cultural factors within the country and it position on marketing ethics. Table 5: Malaysia's Political Environment Historic Milestones of Malaysian Politics •

Gained independence in 1957 from

Recent Changes in Government Policy •

To

attract

foreign

investors’

British

government increased the Cap on equity

•

holding for foreign investor from 49% to

Dr. Mahathir Mohammad ruled the

country for 22 year enabling Malaysia to

70%.

achieve dramatic economic and social

•

improvements and promising political

the Settlement of Investment Disputes

stability within the country.

allowing parties to a dispute over an

•

investment to go to the International

Mr. Najib Razak was appointed as the

Dutch Lady Milk Industries Berhad

Signed and ratified the Convention on

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Prime Minister in 2009, under the Barisan

Centre for Settlement of Investment

Nasional (BN) alliance, a coalition which

Disputes (ICSID)

is favouring Malay nationalism, Islamism

•

and Capitalism as policies. However

2009 to 25% and personal income tax

trying to minimise the ethnic and religious

rates to 27%, which was at 28% in 2008

division in the country.

•

•

Government’s effectiveness in terms

obtain the Import Licenses, issued by the

of performance has increased from 78.7%

Veterinary Services and Ministry of

to 83.9 from 2005 to 2008.

International Trade and Industry for every

•

Corporate tax rates were reduced in

Dairy Imports to Malaysia must to

consignment of dairy products imported, Main

political

pressure

groups within 30 days of importing.

operating in the country are Bar Council (Electoral Reforms Coalition) and the Muslim NGO Coalition.

•

Certification of “Halal” from the

Malaysian Religious authorities is a must for dairy products. •

Investment

Guarantee

Agreements

(IGA), were concluded with number of countries including China, India, United Kingdom and United States of America. •

A

member

of

the

Asia-Pacific

Economic Cooperation (APEC) group. •

Became a member of the ASEAN

Free Trade Agreement (AFTA), with the objective of reducing trade barriers and to reduce the import duties within the

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member countries. •

Malaysian cabinet passed a law, that

70% of the advertisement aired must be made in Malaysia and should apply the same percentage in using the actors, locations, equipments and facilities in making the advertisement Future Prospects of the Policies •

Government is targeting to reach per capita income level of $15,000 to $20,000 by

2020. From the current level of $7,000. •

Improve the quality of human capital, rural infrastructure of the country under the

Government Transformation Program. •

Introduction of Tenth Malaysian Plan (10MP), promoting tourism, private healthcare

which are among the 12 key areas. •

Minimise corruption in the country and set an efficient public sector within the

country. As per the above facts, it is clear that Malaysia is having a stable political environment with a futuristic view in improving its trading capabilities of Malaysian businesses.

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6.2.

Economic Analysis

In undertaking the marketing audit for Dutch Lady Non-fat Yogurt, it is essential to identify the main economic factors in Malaysia, which will significantly influence the direction of the company’s marketing strategies. Following section is focussed in identifying the main economic factors such as interest rate, inflation, Gross domestic product, monthly income of consumers which will affect the viability of promoting our product. 6.2.1. Inflation Inflation is another key indicator of economic fluctuations of Malaysia. Inflation is calculated with regards to the changes in the Consumer Price Index (CPI) of a country. CPI signifies the deviations in prices of consumer goods in the country’s ‘shopping basket’ over a period of time. Malaysian CPI and Inflation values during last four years and the predicted values till 2015 are visualized in the below chart (Source: DataMonitor 2010).

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Figure 1: Malaysian CPI and Inflation Rate: 2004 – 2015 According to the chart it is evident that Malaysia will contain its inflation rate below 3% till 2015. Predicted low inflation rates will minimise the risk of financial markets and enable better business environment. 6.2.2. Gross Domestic Product Gross Domestic Product (GDP) is considered to be a primary indicator of the wealth of Malaysian economy. Private and Public sector spending, goods and services produced and exports in the country is considered and adjusted for imports and inflation to generate an accurate GDP figure. Below charts envision the Malaysian GDP value and its growth rate during last four years and predicted values in upcoming three years (Source: DataMonitor 2010).

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Figure 2: Malaysian GDP ($ Billions): 2006 - 2012

Figure 3: Malaysian GDP Growth Rate Malaysian economy experienced gradual growth of GDP from 2006 to 2008 due to strong domestic demand, export growth and high rate of investment activities within the country. However due to the global economic down turn during the last few years, Malaysia experienced a negative GDP growth rate of 3.5% in 2009, which is expected to become positive in 2010 and improve from there onwards till 2012, as per the current speculations. Dutch Lady Milk Industries Berhad

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Following pie chart shows sector wise contribution towards the Malaysian GDP in 2008 (Source: DataMonitor 2010).

Figure 4: Malaysian GDP Composition by Sectors in 2008 It is evident that Industry and Service sectors are the major driving forces of Malaysian economy. The main forces of the service sector were finance, real estate and information and telecommunications services. In addition, wholesale and retail service sector also has shown rapid growth during recent years. 6.2.3. Monthly Income Levels Following chart visualizes the monthly income of Malaysians during the last five years and predicted values in the next five years (Source: DataMonitor 2010).

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Figure 5: Malaysian Monthly Income (US $): 2005 - 2010

Currently Malaysia is said to be a middle income country. As per the above chart Malaysia will remain its monthly income level at US $ 3,000 till 2015 without any major deviations. 6.2.4. Unemployment Rate Below charts exhibits the growth rate of Malaysian unemployment during last five years and the predicted values till 2015 (Source: DataMonitor 2010).

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Figure 6: Malaysian Unemployment Growth Rate: 2005 - 2015 As per the chart the unemployment growth rate will change around 3.3% till 2015. This is an improvement from the current rate of 3.68%, which was resulted mainly due to the economic down turn. 6.2.5. Future Economic Prospects and Future Risks Following table reveal the Malaysia’s future economic prospects and risks. (Source: DataMonitor 2010). Table 6: Future Economic Prospects and Risks Future Prospects •

Future Risks

Long term needs on large energy

generation

projects

and

•

Rising debt burden. World bank has

plants.

warned that Malaysia could reach 70% of

Government is planning to build a Nuclear

debt against its GDP by 2015. Hence this

Plant by year 2021.

might affect Malaysia negatively on its

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•

Major

growth

in

industrial

manufacturing activity. •

ties with its trade partners such as China

and

in

the

international

market.

Strengthen the country’s economic

Singapore,

competitiveness

other

Asian

partners. Thereby bringing better growth

•

Capital

inflow

controls

by

the

Malaysian government may reduce the attractiveness of foreign investment into the country.

prospects for the future.

Finally in analysing the above economic factors, it could be identified that due to the positive domestic market conditions, rising disposable incomes and sustained consumer confidence will support the expansion of low fat yogurt product segment and launch of the Non Fat Yogurt successfully in Malaysia (as stated in the organisational objectives above).

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6.3.

6.3.1.

Socio-cultural Environment Demographic Factors

Following table demonstrate the socio-cultural snap shot of Malaysia in 2009 (Source: Malaysia Country Forecast, 2009) Table 7: Malaysia's Demographic Factors

Population

Work Force Distribution

Ethnic Groups

Languages

Religions

Dutch Lady Milk Industries Berhad

•

Annual Growth 1.7%

•

Infant Deaths per 1,000 births is 17

•

Persons Under Age 15 years is 32%

•

Urban Population is 67% of the population

•

Urban Population Growth is 1.7%

• •

Literacy rate is 89% Agriculture based 12%

•

Industry-Commerce based 36%

•

Services based 52%

• •

Unionised work force 9% Malay and indigenous people 61%

•

Chinese 24%

•

Indian 7%

• •

other 8% Malay, English, Chinese dialects, Tamil

•

Muslim 60%

•

Buddhist 19%

•

Christian 9%

•

Hindu 6%

•

Confucians and Taoist 3%

•

Other 3%

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With 61% of the population being practitioners of Islamic religion in Malaysia, the political, judicial and religious systems are closely intertwined and religious leaders hold prominent positions in the country. 6.3.2. Composition of Household Expenditure Below pie chart exhibits that 23% of household expenditure is spent on food, which is the highest proportion spent of the total expenditure. (Source: Malaysia Household Expenditure Survey Report 1998/1999)

Figure 7: Malaysia's Composition of Household Expenditure in 1998/99

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6.3.3. Urban and Rural Composition (Source: Malaysia 2009)

Figure 8: Malaysian Urban Population: 2005 - 2015 It is evident that Malaysian population experienced dramatic urbanization during the last few years and will continue in the future, though the rate is not as high as the last few years. 6.3.4. Age Distribution

Figure 9: Malaysian Age Distribution between 30 – 50 years: 2005 - 2010

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The above graph (Source: Malaysia 2009) reveals that the age group between 30 to 50 is increasing and they are the age group which is increasingly becoming health conscious, due to the very busy and industralised life style. Further it is evident that this age group is having a very open mind towards foreign brands and is not hesitent to consume such prominent brands.

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6.4.

Technological Analysis

Developments in the technological arena accounts to better performance for companies to a extent when companies are competing for differentiation and to offer superior product to its customers. Following table identifies the key milestones and developments in terms of technology in the Malaysian market. (Source: DataMonitor, 2010) Table 8: Malaysia's Technological Developments Key Milestones • In 2009, Malaysia Technology Development Corporation (MTDC) approved grants totalling over US $ 40 million to 95 companies. • Malaysia is ranked 27th in the world on the network readiness index. • As per a 2010 reprot by the Internattional Interlectual Property Alliance, malaysia was ranked 22nd in the owlrd in terms of Internet penetration. • By the end of the third quarter of 2009, malaysia had over 1.4 million broadband subscribers, which was an increase of about 200,000 subscribers in one year. • Mayasia’s ICT industry accounted for 9.8% of the GDP in 2009. This comprised hardware, software and telecommunications industries. Future Developments • The Ministry of Science, Technology and Innovation (MOSTI) is focussed on promoting innovative and encouraging research and development and its commercialization, to improve the usage of ICT in businesses • Govenrment is targeting to increase the contribution from ICT to its GDP to 10.2% by 2015.

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In analysing the above facts it is evident that Malaysia is very much focussed in improving its technological usage in the manufacturing process as well as in the customer relationship management process to change the traditional methods and to introduce more efficient and effective high tech methods to suit different customer needs.

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6.5.

Environmental Factors

In the modern context of business environment is one of the key factors that should be taken good care of by any business organization. Consumers are much reluctant to purchase any good that is harmful or produced via a harmful process to the environment. Following table identifies the key milestones achieved by Malaysia in term of moving towards a greener environment and future targets focussed by authorities. (Source: DataMonitor, 2010) Table 9: Malaysia's Environmental Factors Key Milestones •

On the 2010 Environmental Performance Index (EPI) Malaysia, with a score

of 65, was ranked 54th among 163 countries. •

The international treaties to which Malaysia is a signatory include

o

The 1982 United Nations Convention on the Law of the Sea

o

The International Convention for the Prevention of Pollution from Ships (1973)

o

Convention on Biological Diversity (CBD)

o

International Convention on the Trade in Endangered Species of World Flora and Fauna (1973).

•

The National Forestry Policy (NFP) 1978 duly recognized the need for

sustainable forest management in national programs and activities. Malaysia ratified the Kyoto Protocol in 2002. Future Developments •

The Malaysian government intends to reduce its carbon intensity by 40–45%

by 2020 from 2005 levels. •

A target of generating 9% of the country's electricity from renewable energy

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by 2020, from current levels of 0.9%

Dutch Lady is fully committed towards achieving and promoting an environmental friendly manufacturing and operational policies in all its functions. It has combined the corporate strategies to social responsibility strategies through “ISO 14001 Environment Management System”, which promotes a systematic management process to the environment.

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6.6.

Legal Factors Table 10: Malaysia's Legal Environment

Current Key Features •

Registration at the Malaysian Audit Institute is a must for any Accountant who

wishes to practise audit or taxation services. •

Greater flexibility in labour laws. According to the Wall Street Journal’s 2010

index of Economic Freedom, Malaysia has a score of 71.4 which is above the regional average of 62.1 •

Certification of “Halal” from the Malaysian Religious authorities is a must for

any dairy products in Malaysia. •

Public quoted companies in Malaysia are required to submit quarterly income

and balanced sheet within 2 months of the quarter end, and the annual audited reports within 4 months of the year end for public scrutinity. Future Developments •

Malaysian tax authorities are working towards enforcing better transparency in

corporate reproting, which will require companies to disclose more financial information in the future. •

A Price Control and Anti-Profiteering Bill was presented to the parliament

early this year, which proposes to establish a Fair Trade Commission to improve consumer protection. •

Developments in the Patent Law is expected by 2020, which is very weak in

Malaysia when compared to the other countries in the region.

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7 Stakeholder Analysis ‘A well-accepted definition of a stakeholder is any group or individual who can affect or is affected by the achievement of an organization’s purpose’ (Fiedler & Kirchgeorg, 2007). It is very important to identify each stakeholder and their influence on the company as Dutch Lady is very closely associating with each of them depending on the importance and influence of each stakeholder on the company. In the context of Dutch lady, below matrix identify the different stakeholders of the company with regards to their level of interest and the level of influence on the company operations.

Influence of Stakeholders

Importance of Stakeholders

High Influence

Low Importance

High Importance

Box C

Box A

• Government and Relevant Authorities • Religious Leaders

• • • • •

Management of Dutch Lady Customers Direct Competitors Dairy suppliers Mother Company (Royal FrieslandCampina) • Major Shareholders

Box D Low Influence

• General public • Minor Shareholders

Box B • • • •

Employees Indirect Competitors Distributors Banks and Fund providers

Figure 10: Dutch Lady's Key Stakeholders

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‘Corporate relations with various stakeholders, corporate citizenship, responsibility, and accountability are becoming as vital to the bottom line as an effective business model’ (Kooskora & Kujala, 2009). It is very important that Dutch Lady develops a comprehensive stakeholder analysis in order to enhance the relationship it has with each stakeholder. Hence it is important to identify the impact of each stakeholder on the operations of the company. Stakeholders who are of high importance with high interest are the Primary Stakeholders; hence they should be fully engaged and evaluated in preparing the marketing plans and objectives. Secondary Stakeholders are found in Box B and C. They should be effectively managed through the marketing plan. (Docstoc, 2010) Following table identifies the impact on each stakeholder by Dutch Lady’s decisions and strategies. Table 11: Impact on Stakeholders of Dutch Lady Stakeholder Management

Impact on each stakeholder •

Performance of the yogurt product segment with regard to

revenue, cost, and finally profits. •

Setting specific, measurable, attainable, realistic and time

bound targets, and year-on-year Growth. Customers

• •

Compensation for the achievement of targets. Value for money from the product.

•

Assurance on the Quality from all aspects of the product

offerings. •

Customer Care and responsibility.

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Direct Competitors

• •

Ethical and socially accepted products. Product features, price, and image created on the consumer’s

mind. • Dairy suppliers

Different management methods and strategies used in order

to market the product. • Providers of products and services used to manufacture the end product for the Customer.

Major Shareholders

Employees

• •

Equitable business opportunities. Profit and dividend paid by the company.

•

Performance on the day to day business.

•

Strategic direction and the Reputation at the market place.

• •

Truthful Reporting methods used. Rates of salary and wages pay.

•

Level of job security.

•

Respect received by the management and the other

stakeholders. Distributors

• •

Truthful communication from the management. Rates of commission paid for the service.

•

Assistance provided by the management to market the

products. •

Government and Relevant Authorities

Truthful

and

futuristic

communication

from

the

management. • Payment of accurate and on time Taxation. •

Adherence to Legislation.

•

Truthful Reporting methods used.

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MKT5000 - Assignment 1: Marketing Audit

8 Strategic Assessment This section analyzes the potential strategies for the Dutch Lady. The main strategies are derived based on cost leadership and product differentiation. Within those strategies, it then considers more precise strategies such as pricing, promotion and distribution strategies. Based on the Dutch Lady’s ability to control its operating costs, the cost leadership strategy is defined. This will enable the company to price its products more competitive manner while maintaining significant competitive edge in the Malaysian yogurt market and gain high profit margins. The differentiation strategy uses to offer a non fat yogurt which is unique when it’s compared with Duty Lady Competitors’ products in the market. Product differentiation will be done in different forms by combining in aspects of brand image, production technology and distribution channels. Based on above strategies, company has defined its Vision, Mission Statement, Cooperate Values, Business Objectives and Major Goals. Following subsequent sections describe those in more detail. 8.1.

Vision

The Dutch Lady’s vision is to make natural and nutritious dairy products that fulfil customer needs to have healthier and more enjoyable life. Its products capture the significance of health and wellness, but it also embodies all the ways customers can eat and live better while getting value for their money. Accomplishing its vision requires superior and frequently improving performance in every aspect and at every level of the organization. Its performance will drive by comprehensive Dutch Lady Milk Industries Berhad

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MKT5000 - Assignment 1: Marketing Audit

strategic statement for each business unit and by an ongoing pursuit for excellence within all operational and staff functions. This requires recruiting, developing and retaining a diverse workforce of the highest competence. 8.2.

Mission

“To bring sustainable dairy goodness from the heart of Shropshire for the good of everyone." Over the last 10 years company has been the market leader and doing just that. It believes that this effort has led to stronger relationships with our happier customers and Dutch Lady Yogurts. 8.3.

Corporate Values

Dutch Lady core values are used to derive the company principles and to transcend company size and its growth rate. Following are the core values of Dutch Lady: •

Selling high quality natural and healthy dairy products to satisfy our customers

•

Build team member excellence and happiness to create a work environment where team members can grow and succeed to their highest potential. Dutch Lady values effort and reward results.

•

Committed to integrity, timeliness and transparency in communicating with our valuable suppliers which enable Dutch Lady to remain as a market leader, by creating new, unique and innovative dairy products.

8.4.

Business Objectives

Long Term business objectives

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MKT5000 - Assignment 1: Marketing Audit

•

Continue to be the market leader in the Malaysian dairy products market by primarily concentrating on growth, profitability and milk valorization

•

To double the existing yogurt products sales by 2015

•

By 2015 to maintain a gross margin of 20%.

•

By 2015 company to increase its net profits by 15%.

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MKT5000 - Assignment 1: Marketing Audit

9

Recommendations 9.1.

Market Audit Checklist

The following marketing audit checklist represents necessary and strategic thinking that is required to implement successful marketing plan for the Dutch Lady. MARKETING

AUDIT CHECK LIST

YES

NO

ENVIRONMENT Is Target Market Identified? Yes Did Customer wants and needs identified Yes Did Company strengths, weaknesses, opportunities and potential threats have been Yes External

Internal

analyze? Did Industry analysis complete? Yes Did company identify future customer prospects Yes and customers? Did company analyze customer purchasing Yes behaviors? Did Company analyze Product Life Cycle? Yes Are there any new Product Developments? Yes Did Company identify Pricing Strategies? Yes Does Company has effective distribution Yes channels Is company getting its marketing communication Yes right? Are there enough human resources? Are there enough budget for Marketing Yes Are there enough production plants for product Yes development? Are there sufficient numbers of Milk Suppliers? Yes Is there a realistic timeline to achieve company Yes goals?

Dutch Lady Milk Industries Berhad

No

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MKT5000 - Assignment 1: Marketing Audit

9.2.

Strategic Action Programs

The growing demand for yogurt products is driven mainly by consumers' belief in the high quality and nutrition contained in these products. Hence it is important to execute following strategic action programs to understand the current Malaysian Yogurt Market.

•

Marketing Department should conduct a survey to identify demographic characteristics of the people who would fall in to the non fat yogurt market within next 6 months.

•

Product development team should invest in existing low fat yogurt product range to use high quality ingredients by doing extensive research and development to improve it within 12 months.

•

Hold Monthly meeting with each department representatives to stay abreast of changes in the market place.

9.3.

Future Strategies

•

Increase profits by increasing sales and make a small margin on each unit

•

Launch Promotions which includes coupons, in-store price promotions, in-store demonstrations, or premiums to increase the customer awareness about company products.

•

Make new investments in brand building

•

Make new investments to improve the distribution channels to distribute products to different suppliers to sell them efficiently.

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MKT5000 - Assignment 1: Marketing Audit

•

To introduce the concept “Dutch Lady Shop” focusing on urban cities.

•

To carry out a piggybacking strategy with fast food outlets.

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MKT5000 - Assignment 1: Marketing Audit

10 List of references Association of Chartered Certified Accountants 2009, Business Analysis, official text for the professional qualification, Kaplan Publishing, Wokingham, Berkshire, UK. Bank Negara Malaysia 2010, Foreign Exchange Administration, viewed September 10, 2010, Baxi, P 2010, Defining long-term business objectives, Helium Ink, viewed September 11, 2010, Bernama 2008, Dutch lady eyes market leader position in yoghurt, CBS Interactive Inc, viewed September 10, 2010, Datamonitor 2010, Malaysia: Country Analysis Report – In-depth PESTLE Insights, viewed 19 September 2010, Denis, W 2010, A marketing audit checklist, CBS Interactive, viewed September 11, 2010, Department of Malaysian Statistics 2010 , Gross Domestic Product / Gross National Income, viewed September 10, 2010,

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Docstoc 2010, Stakeholder Analysis and Stakeholder, viewed September 13, 2010, EarthTrends 2003, Economic Indicators – Malaysia, viewed September 11, 2010, Fiedler, L & Kirchgeorg, M, 2007, The Role Concept in Corporate Branding and Stakeholder Management Reconsidered:Are Stakeholder Groups Really Different?, Corporate Reputation Review ,vol 10, no.3, pp.177–188, viewed 26 September, Palgrave Macmillan Ltd, Business Source Complete database, item 26605699. FrieslandCompina 2010, Indulge without the bulge, FrieslandCompina , viewed September 05,

2010,

Gegner, L 2001, Value Added Dairy Options, Appropriate Teachonlogy Transfer for Rural Areas,

viewed

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11,

2010,

Gourvennec, Y 2004, Strategic Assessment Working Session, VisionaryMarketing.com, viewed

September

10,

2010,

Johnson, G, Scholes, K & Whittington, R 2008, Exploring Corporate Strategy, 8th edn, Pearson Education Limited, Edinburgh Gate, England.

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Kooskora, M & Kujala, J, 2009, Corporate Moral Development and Stakeholder Relations: An Empirical Analysis of the Estonian Business Community, EBS REVIEW , pp.26-38, viewed 26 September, Business Source Complete database, item 41563493 MarketingTeacher 2010, How to conduct Marketing Audit, MarketingTeacher.com, viewed September 11, 2010, Muller,

D

2010,

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Approach

to

Life,

viewed

September

10,

2010,

Perner, L 2008, Food Marketing, Marshall School of Business, viewed September 11, 2010, Planware 2009, Strategic Business Plan & Market Assessment, viewed September 10, 2010, Political Risk Services 2009, Malaysia Country Forecast , PRS Group, viewed September 11,

2010,

Ronald, W & Lawrence E 1994, Market Strategies in Branded Dairy Product Markets, University

of

Connecticut,

viewed

September

11,

2010,<

Sheinin, D 1998, Positioning brand extensions:implications for beliefs and attitudes. Journal of Product & Brand Management, vol. 7, no.2, pp.137-149, viewed 22 August, MCB UNIVERSITY PRESS.

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Skills, L 2010, Sample Vision Statements, Skills 2 Lead, viewed September 10, 2010, Summers, J, Gardiner, M, Lamb, CW, Hair, JF, McDaniel, C 2009, Essentials of Marketing, 3rdEdition, Thomson, Victoria, viewed September 25, 2010, The Edge Malaysia 2008, House Hold Income, viewed September 11, 2010,, < http://www.docstoc.com/docs/DownloadDoc.aspx?doc_id=28004183> Trading Economics 2009, Malaysia Inflation Rate, viewed September 11, 2010, < http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=MYR> U.S. State Department 2010, Background Note Malaysia, viewed September 10, 2010, Varadarajan, R & Jayachandaran S 1999, Marketing Strategy: An Assessment of the State of the Field and Outlook, Academy of Marketing Science Journal, Vol 27, No 2, pp 120-140. Wholefoods 2010, Our Core Values, Whole Foods Market IP, viewed September 10, 2010,

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