WAC Andec Hi Calcium Milk

Written Case Analysis A.

Statement of the Problem Given, the unsuccessful market penetration by year 2000, which incurred a loss of P60

million, Andec’s management must decide on a new marketing strategy that would differentiate its product from the other competitors’ brands such that it is able to reenter and successfully penetrate the Philippine market. B.

Objectives a.

Financial Objectives

The unsuccessful market penetration in 2000, lead to a loss of P60 million, and Andec must recover this loss as it reenters the market with a new marketing strategy. Sales performance continued to decline as well during its two years in the market despite the heavy promotions for the brand; thus, Andec must make sure its new marketing strategy prevents the reoccurrence of the decline in sales. Lastly, Andec has to maximize its profitability and take sufficient market share from the market challengers which take up 5% of the industry, as well as the market follower which accounts for 25% of the industry size. b.

Non-Financial Objectives

Based on Andec’s product, which is a high-calcium milk formula, management must identify the appropriate market segment for its company. Management must also repositioning its brand based on a SWOT analysis as well as its planned 4P’s strategy so that it successfully penetrates the market and avoid more losses. Andec must successfully relaunch its product in the Philippine market with its new marketing strategy.

C.

Situational Analysis

a.

Areas of Consideration

Strengths Andec’s product is a vanilla flavored milk with high calcium, and it contains the highest calcium content among all brands in the growing-up milk category. Furthermore, it also has other important vitamins in its product. Andec is the leading full cream, milk brand in other Asian markets like Singapore, Thailand, and Indonesia. In fact, it captured 90% of the Indonesian market. With 5,500 retail customers strategically located nationwhide, Andec has a strong network distribution system that allows it to sell its product to its target market with consistency. Lastly, Andec has two variants of milk product, and is capable of catering to another category, which is the 1-3 year old group. This shows that Andec can serve 3 of the 4 categories or classifications of age groups that drink milk. Weaknesses Nido, Andec’s leading competitor in the Philippine market, has been in the market for so long that it has already solidified its brand within the market. The industry’s market follower, Anchor, as well as other forms of milk products also hinders market penetration as they offer different choices and substitutes to milk products. Andec’s 15% price premium over leading competitors, due to having a higher calcium content, hinders its product attracting price sensitive consumers. Andec, as it is, has not yet found its proper market segment; thus, it is unable to bring attract consumers and obtain sufficient market share. Finally, its product is not suitable for infants, and cannot cater to the remaining category to which milk products cater to. Opportunities The importance of calcium is continually stressed, and awareness for such an importance is being generated. This brings forth a demand as well as a trend of introducing more calcium-

associated products into the Philippine market. With such an awareness, the milk industry is still continually growing despite its already enormous size. Threats A big threat to Andec and its market penetration is Nido, the market leader with 70% market share in the Philippine market, as well as Anchor, which is the market follower owning 25% of the market share. Andec also has indirect competitors, which are milk products in different forms like fresh or skimmed milk. Furthermore, the consumers may opt to purchase substitutes to milk like calcium beverages, supplements, and even fortified juices. b.

Alternative Courses of Action

1. Andec may produce a swack pack which is already prevalent in the Philippine market. By providing such a size of its product, Andec would be able to attract consumers who prefer the swack pack over bigger sizes of milk products. This would allow Andec to obtain market share from its competitors that provide such a variant. 2. Study and develop an infant formula for its Hi-calcium milk product so that it caters to all categories of consumers of milk products. This would allow Andec to cater to a bigger portion of the Philippine milk market; thus, allowing them to increase profitability. A wider or larger market share will be covered and this would allow Andec to stand against its competitors more firmly. 3. Redevelop or modify Andec’s current formulation such that it is able to maintain its edge of having more calcium and vitamins than other milk products, but be able to lessen its cost, differentiate its product from other full cream milk products, and create an overall stronger marketing strategy. By considering to modify its current formulation, Andec would also support

its search for identifying its proper market segment, as it would now market itself to have other qualities that fit its new market segment. D.

Recommendation In order to successfully reenter and penetrate the market, Mr. Gonzales should

recommend the 3rd alternative course of action, which involes modifying Andec’s formulation. With its modification, management must also enhance its 4P’s marketing mix so that the price of its product is aligned with what the remodeled product offers. Customers of milk products also consider affordability when purchasing milk products. They do consider calcium content, which Andec has an edge on, but is often associated with price. A reasonable price must be given by Andec, while still maintaining calcium and vitamin content. During the modification of the product, Andec may opt to increase the vitamin content depending on which age group the product caters to. By checking the Dietary Reference Intakes (RDA) of the age groups which it caters to, Andec should market its product to contain more of such vitamins, like Vitamin D for growth, or other micronutrients to successfully market its product. Its wide distribution network must be effectively utilized by enhancing the efficiency of its promotional strategies that generate awareness in its chosen market segment. By also reconsidering its packaging design in order to easily distinguish which age bracket the product caters to, Andec would be able to generate more awareness and differentiation for its product. E.

Conclusion With proper consideration for its strengths, weaknesses, opportunities, and threats, Andec

would prevent its previous failure of penetrating the market. Furthermore, by enhancing its 4P’s of marketing strategy, Andec would be able to identify its appropriate market segment, spread awareness for its product in the market, and position its brand more firmly; thereby, successful

reentering the market and taking sufficient market share so that it maximizes its profitability and regain its previous losses.