INTI INTERNATIONAL UNIVERSITY

MARKETING STRATGEY IN PRACTICE FOR DANONE DUMEX (M) SDN.BHD

INDIVIDUAL ASSIGNMENT MKT 7205 STRATEGIC MARKETING IN PRACTICE

NAME : VIKNESWARAN VIJAYARATHNAM I.D NUM: I10005346

11/21/2011

Table of Contents

1.0 INTRODUCTION ............................................................................................................... 2 2.0 PRODUCT LINE ................................................................................................................. 5 3.0 MARKET SEGMENTATION ............................................................................................ 7 4.0 BRAND POSITIONING ..................................................................................................... 9 5.0 COMMUNICATION MIX ................................................................................................ 13 6.0 CONCLUSION .................................................................................................................. 15 7.0 REFFERENCE .................................................................................................................. 16

1.0 INTRODUCTION
1.1 Company Background Danone Dumex (M) Sdn.Bhd. has been in operation since 1958. Ever since then, the company has changed hands via acquisition by 3 different food and beverage giants in the world market. From EAC Nutrition to Numico and now it is part of Danone Groupe, a Fortune 500 company and one of the most successful healthy food companies in the world. Danone is headquartered in Paris, France with market share in dairy, child nutrition, waters and medical industry through-out the world via acquisition of several different local company form different parts of the world in each industry which are doing well in their own regional market. These acquisitions of new subsidiaries allow Danone Groupe to grow their wing effectively in the European, Middle Eastern as well as in the Asian region. Danone Dumex manufactures infant and child nutritional products at its state-of-theart Nilai plant, and these products are then distributed in Malaysia and Singapore with exports to other countries in Southeast Asia such as Thailand, Vietnam, Myanmar and Indonesia. But priority production is for local Malaysia market which takes up 80% of production order with only 20% of production order which are exported. This is mainly due to the acquisition strategy of Danone Groupe which has acquired local well known baby Nutrition Company within those countries to start their own manufacturing. Hence the export manufacturing volumes done by Malaysia to the specified country above are speciality products which is unable to be produced by the local Danone manufacturer there due to unavailability of the production technology and capability. In Nilai, the close to 500-strong Danone Dumex team places top priority on maintaining quality standards in terms of product and services. With their dedication to quality, Danone Dumex has been able to sustain its position as the market leader. It ranked 2

number one in overall customer satisfaction in a study conducted among medical professionals and the retail trade by AC Nielsen. Danone Dumex was also named a Top Three Brand Family by AC Nielsen in 2002 and 2003, as well as Best Employers in Malaysia 2003 and 2005. To meet todays sophisticated market demands, Danone Dumex is proud to showcase Nilai as the groups first production facility in Asia to be halal-certified by JAKIM.

1.2 Company Mission and Vision Mission Company seeks to ensure that the interests of its key stakeholders; from shareholders, investors, consumers, customers and employees to the larger community are looked after. The Company seeks to be socially responsible and hope to make a difference in the society that it operates in. Vision 1. To create value for their owners, in short and long term, by means of profitable infant and pregnant woman nutritions value chain activities. 2. To develop, produce and market a broad range of reliable, natural and nutritious infant and pregnant women nutrition products that contribute to well-being and vitality of life. 3. To recognise that know-how, quality, dedication and leadership of their employees are the most crucial assets to achieve their targets. Both the mission and vision of the company is tied down to their goals and financial goals that the corporate management want to achieve which is stated below:

Goal To regain position of market leader in infant and growing up formula with image as the highest quality conscious product line in the industry by 2015. Financial Goal To obtain annual increase of 2% in market growth for premium segment of the product while an annual increase of 5% of market segmentation for standard product segment in Malaysian market To achieve the ambitious goal that has been set, several different strategies has been employed by Danone Dumex at various different location of the manufacturing value chain of the company. For this report, the analysis focus would be on strategies that have been implemented and recommendation for future strategies that can be implemented from the marketing perspective of the companys value chain.

2.0 PRODUCT LINE

(FIGURE 1 :Products

(source: primary data (Danone Dumex Financial Report Quarter 1 ,2011))

New Packaging (After Quarter 3, 2011)

Standard Product range

Premium Product range (source: primary data (Danone Dumex Financial Report Quarter 3 ,2011)) (FIGURE 2 :New Design of Products

Danone Dumex offers milk powder products to infant/ child from 0 years till 10 years old and also pregnant women. The milk powder acts as supplementary nutrition to ensure health growth of the infant/child. The company strongly agrees to governments policy in encouraging breast feeding to infants and Danone Dumex product act as conjugate supplement and not to replace breast feeding. The milk powder for pregnant woman act as essential nutrition provided for future mother and baby inside the womb. Hence, it can be seen that the core benefit of the product is to provide all essential nutrition supplements to infant/child and pregnant woman for a healthy growth. 5

The next level of product augmentation by Danone Dumex is their branding of the product with brand name Dugro to focus on standard income market and Mamil Gold to focus on high income market. In addition, the products are also augmented in different sizes ranging from sachets of 100g to 1.1 kg pouch/tin of their product. The size variant is to allow consumers to purchase the product at compatible sizes which is convenient and affordable by customer. For instance, the 100 g sachet is produced to allow convenience of travelling parents to carry the sachet to prepared milk for their child rather than carrying heavy pouches/tin. Another augmentation of the product can be seen in term of flavour of the milk product which also has been varied with chocolate, honey, strawberry and regular flavour. In comparison with plain milks, flavoured milks tend to have slightly higher sugar content, however studies have suggested that they are still a favourable option for infant and children as they provide a wide range of beneficial nutrients. One study has shown that children consuming flavoured milk are not actually likely to have higher sugar or energy intakes as children consuming flavoured milk would likely, consume fewer less healthy sweetened drinks. Flavoured milk is also less likely to cause damage to teeth than sugary foods and drinks. Interestingly recent studies have suggested that chocolate flavoured milk can be used as an effective recovery aid after intense bouts of exercise.

3.0 MARKET SEGMENTATION

Market Segmentation vs competitor market share

Market Segmentation vs racial market share (source: primary data (Danone Dumex Financial Report Quarter 1 ,2011)) (FIGURE 3:Market Segmentation

Baby food posted strong growth in 2011, despite the falling birth rate in Malaysia. Malaysias birth rate is expected to continue on a downward trend in 2011 and beyond, as consumers delaying marriage and the difficulties of juggling work and family remain major issues. However, with rising disposable incomes and parents desire to give their children the best, more parents are trading up to premium products for their superior quality, which has offset the impact of the falling birth rate. Hence with the current market requirement, purchasing power and desire of current customer with increased disposable income with the aid of prime increase in Malaysia socioeconomic for the coming years with the increase in Malaysian economy, Danone Dumex (M) Sdn Bhd has strategically divided the baby nutrition market into two different segment which corresponds to Standard Product Market which target middle and low

disposable income customer which earn from RM 1000 RM 3000 and Premium Product Market which targets higher disposable income customer earning from RM 3000 and above. Hence, with the appropriate segmentation, Danone Dumex was able to be the leader in the standard/affordable range product, with a 43% market share value. Meanwhile the company is in second place for premium range product with market share rising slightly as it invested heavily in product development and advertising campaigns. For example, it ran a comprehensive branding campaign in July 2011 to drive awareness of its new packaging of the premium product as well as the added nutrition contents of the premium product, in order to stay relevant to its consumers and maintain a competitive edge. The company launched a Dumex Dugro Adventure as part of the branding campaign, which was a fun edutainment for parents and children. The road show was held at major supermarkets/hypermarkets nationwide.

4.0 BRAND POSITIONING

Consumers choose brands because the brands make a promise about the provenance of the product they are buying: where it was produced, what it is made from, who made it and the conditions they worked in, and how it was brought from its place of manufacture to the place of sale. One of the constituents of a strong and trusted brand is the consistency of its attributes and ingredients over time. For food and beverage brands, distinctive ingredients and taste will be paramount whilst service brands will be primarily based on the consistency and distinctive nature of their customer service delivery. Brand trust is given by customers to a brand as a result of brand promises being faithfully delivered over time with the up most quality. Brand trust has a value in building the intangible asset value of a brand or its brand equity. Brand equity refers to the value of the brand measured as an intangible asset using financial and / or measures of its market strength such as market share which, in turn, is derived from attributes that commonly include quality, vision, differentiation, innovation and dynamism. A company can differentiate a product by strengthening a brands current position in the mind of the consumer and by emphasising the benefits that consumers value. In the case of Danone Dumex, it has unveiled a new look for the brand, as well as addition of nutritional value to the product to enhance the brand positioning and to capitalise on opportunities to remain top-of-mind with consumers. Fresh and modern in look and feel, the revamped logo features a double heart design to signify the love and bond between a mother and her child, at the same time reflecting its heritage and history as the trusted name in child and toddler nutrition with its signature red and white Dumex word mark. While the additional new nutrition added in benefits the consumer in terms of healthier growth of the infant. This is supported by the high amount of investment spend into Research and Development

emphasize that was put in place by the company to obtain a higher competitive advantage for the brand in the market. Core to the success of a differentiation strategy is market research. Marketers for the company are advised to look for a gap. The company applied findings from the Asian market to the Malaysian and found an unoccupied gap for nutritional value perseverance of parents in this era as well as a catchy packaging which is attractive to consumers. The consumers of the product took their childs health really seriously and at the same time they also took into consideration of the taste of the product used for easier and appealing for their kids to drink. In consumer minds healthy was perceived not equalling with tasty as how current products in the market are. The company saw that many consumers wanted healthy products for their infants and believed they should taste good.

(source: primary data (Danone Dumex Financial Report Quarter 1 ,2011)) (FIGURE 4: Positioning Map

Since consumers are bombarded with information they often simplify their purchasing decisions by defining brands relative to other brands. Consumers can see food as healthy or unhealthy, a detergent as gentle or powerful or a car as an economy or a luxury model. They 10

also remember the number one product or service in a market. Therefore, the company looked into an appropriate positioning strategy to find out and build on what consumers feel they need and want. The Dugro and Mamil Gold have highlighted a number of very distinctive features that differentiate it from other products in the consumers mind for both market segmentation. These features are the product attributes including technical excellence which allows for the Dugro and Mamil Gold product to be positioned as a clearly differentiated product for their respective market segment and include: Immunofortis Immune system enhancing supplement to build and support a strong immune system for infants. Supporting Research Danone Dumex has its own research centre which is concerned with new developments and with ensuring that what is discovered is also scientifically substantiated. By supporting claims with credible research, the company ensures that it can support, and build upon, its positioning and differentiation strategy. Usage Occasion and customer interaction The company emphasizes to current and future customers on how to prepare the milk for a baby in the correct way as well as having nutritional/advisory clinics for mothers and future mother to guide them on pregnancy and infant growing up processes. Awareness Creation emphasis of combining health benefits of a product with a great taste. By combining these two concepts, Danone Dumex hopes to bring about a revolution in the infant milk market whereby a healthy infant formula can be created with good taste that suits the infant/child appetite and desire.

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An additional recommendation that can be given to the company is to look into aspect of promoting their consumers from the affordable range product to the premium range product as to be able to increase the sales volume of this premium product while attracting new customer to the affordable segment as not to lose the volume margin from the promotion transition of the customer. This will require a proper communication mix to be able to successfully implement such strategy.

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5.0 COMMUNICATION MIX

As part of a differentiated strategy it is imperative that Danone Dumexs message is clearly communicated to the target audience. The Dugro and Mamil gold both deliver both a scientific and a popular message. If the communication is too scientific it can lose people and yet it has to get across the brands key benefit (defence), the research that supports the products and the usage occasion. The market wants a product that offers them specific benefits. Both brand names offer the benefits of health, taste and good packaging to these consumers. This is clearly shown in advertising campaigns. By showing the nutritional value in television and newspaper commercials, combined with a loving mother and child touch which emotionally moves the consumer enables the brand name to be attached in the mind of consumers as a loving product to the family. On the packaging point of view, they have fixed the outline of the packaging with a heart shape for the Dugro range product for the caring effect of a mother to the child and the emphasis on the nutritional content of the Mamil Gold range products on the outer packaging with a distinctive gold colour so that the brand is able to adhere in the consumers mind. This reinforces the main selling point that Danone Dumexs products are close to all parents heart with high nutritional value. Danone Dumex has spent RM 1.2 million on communications campaign to let consumers know that the Dugro and Mamil Gold product are healthy as well as delicious, meanwhile for the coming year, the company has planned to set forward a budget of RM 1.5 million for consumer education strategy and sampling campaign. Whilst advertising is successful in raising awareness, one of Danone Dumexs product strengths is its taste. To make sure that consumers are convinced by the taste benefits of the product a process of allowing potential customers sample the product accompanies the

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communications campaign. This is based on the principle that trying is believing. This is aided with constant booths set up at all retail location which allows consumers to sample the product and interact with the customer service agents at the location regarding the product. The company has emphasized strong on providing training to this customer service agent on the correct preparation method of the products as well as nutritional information of the product. This will allow them to communicate effectively on the product strength and other related matters which may be asked by consumers who visit the booths. Hence these customer service agents are not seen only as promotional individual but more of a nutritional advisor onsite. In terms of recommendation to build a stronger communication mix, the company should look into giving out Cents-off Coupons. These coupons can be distributed in newspaper insert, on-pack coupons & direct-mail milk coupons, which will not only increase awareness of consumers but also will prompt new customers to purchase the product with the coupon as it will seem to be an attractive option. They can also design contest to select a winning slogan with entry requirement would be to purchase a bottle of the milk product and send in the cap. This communication strategy would increase the number of sales volume as it would encourage the current consumers of the product to purchase more but may not be a very effective strategy to capture new customer. But this strategy would be effective when brands in both market segmentation has already obtained a high number of consumer and is an applicable retaining strategy of the consumer.

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6.0 CONCLUSION
Baby food will continue to enjoy steady growth over the forecast period. This will mainly be due to rising affluence and growing awareness of the nutritional benefits of various types of baby food, which often have ingredients such as DHA, vitamins, minerals and probiotics added. In the past, many parents fed their older children normal dairy milk, because formula milk powder was much more expensive than fresh milk. However, as the disposable incomes of Malaysians rise, milk formula will become more affordable for parents. Hence, more parents are expected to give their children milk formula. With the current strategies that has been placed by the company as well as the included recommendation taken into consideration, the Dugro and Mamil gold brands of the company will be able to conquer the large market share of both affordable and premium market segment of the industry.

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7.0 REFFERENCE

Dumex, D. (2011). Danone Dumex Quarterly Financial Report. Kotler P and Armstrong G (2005). Principles of Marketing. 11th Ed.Prentice-Hall of India, New Delhi. Pp. 467-500. Perreault D and McCarthy J (2002). Basic Marketing. 14th Ed. McGraw-Hill, New York. Ubic-consulting. (2011). Ingredients For The World Infant Formula Market. Retrieved October, 2011, from UBIC Consulting: www.ubic-consulting.com Yin, Robert. Case Study Research: Design and Methods (Applied Social Research Methods). Sage Publications, Inc. 2003. Zou, Shaoming and Cavusgil S. Tamer. The GMS: A broad conceptualization of global marketing strategy and its effect on firm performance. Journal of Marketing 2002; 66(4): 4056.

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