1.

Introduction

Marketing is about creating and keeping demand for products and services which is produced.
Marketing helps to create gaps with competitors as well as satisfy its stakeholders.

This Assignment as the Individual Assignment of the Marketing management module, focuses on
an in depth analysis of Lakspray Milk Powder as a brand, including its current marketing
strategies used in Sri Lanka. Then, it is needed to provide come recommendations based on the
findings.

2. Introduction to the Company Lanka Milk Foods (CWE) PLC

Lanka Milk Foods (CWE) PLC is a group of companies which consists of five subsidiary
organizations.

1. Lanka Dairies (Pvt) Ltd

2. Ambewela Livestock Company Ltd
3. Pattipola Livestock Company Ltd
4. Ambewela Products (Pvt) Ltd

Lanka Dairies (Pvt) Ltd involves with the brands Daily and MyJuicee. They Manufacture
and distribute Ultra Heat Temperature (UHT) Full Cream Milk Powder, A non-fat liquid milk,
UHT Treated flavored milk and fruit drinks. Further, they do co-packing for UHT treated
international beverage brands. Ambewela Livestock Company Ltd or Ambewela Farms provides
pure cows milk exclusively for group companies. New Zealand Farm known as Pattipola
Livestock Company Ltd supplies pure cows milk for group companies while offering farm
excursions to both domestic and foreign tourists. Manufacturing and distributing, flavored milk,
yoghurt and Edam, Gouda, and parmesan cheese flavor range, cheese spread under Ambewela
brand is done by Ambewela Products (Pvt) Ltd.

Lanka Milk Foods (CWE) PLC is a dynamic group engaged in importing, packing,
manufacturing, marketing and distributing some of Sri Lankas best-known dairy and beverage
brands. It involves in packing and distributing whole milk powder and skim milk powder
importation (Lakspray, Lakspray Non Fat) and distribution of energy drinks (BLU energy Drink)
in the local market. Most of the companys famous brands are household names in the country
and have been nourishing generations of Sri Lankans over decades. The companys flagship
 brand is Lakspray. In addition the company markets many other leading brands including
Ambewela, Daily, Lakspray Non Fat, My Juicee, Dairy Farm etc.

3. Introduction to the brand Lakspray Milk Powder

Lakspray as a pioneer milk powder brand in the country, has a well-known recognition and a
trust attached with the brand. It is known as the flagship brand of the Lanka Milk Foods Group,
which has a history of more than 45 years. It is now second only to Anchor milk in Tea
Whitening Category terms of sales volumes, having relinquished its leadership position not long
ago.

Under Lakspray brand, there are two main products. Lakspray Full Cream Milk Powder is a
natural milk powder prepared from 100% pure cows milk. It is free from chemical additives and
preservatives. Lakspray Non Fat is an instant milk powder with vitamins and minerals
targeting health conscious consumers.

Lakspray has enhanced its brand value through the years. While it started out strongly as a
product that literally feeds the nation, Lakspray is today trusted by people to provide their
families with basic nutrition. The brand has, in other words, been personified as a proverbial
mother who cares for the nation at large. It is also very much a favorite in the marketplace.

4.
5. Situation Analysis

In order to identify the external and internal environmental factors to grow the business, a SWOT
analysis is carried out.

Opportunities and Threats are identified as the external factors which helps a business to grow.

Opportunities

1. Rapid growth in the industry. Greater innovation can help to produce unique products and
services that meet customers needs. Innovation has a significant impact.
2. Increase service points to help customer needs. It helps to diversify the customer base.
3. New market opportunities. Can increase the market base through reaching new markets.
4. New product development to address diversified customer needs
5. Export Potential
6.

Threats

1. Competitors in the business with huge variety of products. It can lower profits, because
competitors can entice consumers away with superior products.
2. Bad economic condition such as volatile currency rates can affect consumer buying
behavior.
3. Mature markets are competitive. In order to grow in a mature market, has to increase
market share, which is difficult and expensive.
4. Changes to government rules and regulations can negatively affect
5. Fluctuating milk prices, a tight milk supply and intense competition

In order to overcome above mentioned external factors internal factors of the organization,
strengths and weaknesses, should be fully utilized.
 Strengths

1. Well established experience of more than 40 years

2. Strong Brand Image
3. Low prices of the products rebel against price wars by limiting switching to competing
products.
4. Economies of scale. The greater the volume, the greater the advantages.
5. Uniqueness of the products.
6. Established Distribution channels

Weaknesses

1. Narrow focus limited on local market.

2. Low credit margins than other competitors.
3. Perishability of products. Pasteurization has overcome this weakness partially.
4. Lack of control over gain.
5. High Cost of Production.

6. Segmentation

A market segment consists of a group of customers who share similar sets of needs and wants.
Lakspray do segment marketing for the products where, different groups are identified based
on their demand characteristics and served better. When it comes to the segmentation there are
four bases for identifying the consumer market. Geographic segmentation is where the total
potential market is divided into sub groups based on geographic variables. Further, market can be
divided based on demographic variables which are known as demographic segmentation. Science
of psychology and demographics can be used to identify segments via psychographic
segmentation. Through behavioral segmentation, consumers are divided into subgroups based on
the basis of their knowledge and the attitudes towards the product.

When it comes to the life style of the consumer, Lakspray targets health conscious consumers
via Lakspray Non Fat which is an instant skim milk powder. It contains vitamins and minerals
catering nutrition needs of the consumer. Since this is instant milk, it dissolves in water at any
temperature.
 Lakspray Milk Powder, on the other hand being rich in milk proteins, vitamins and minerals,
are for both kids and adults for their well-being. Further, it enables consumers to prepare a larger
volume than other semi instant powdered milk, because of its rich creamy nature.

Moreover, Lakspray uses Socio-Economic Classification (SEC) to classify the households,

through identifying the social groups based on their consumption levels. Lanka Milk Foods PLC
has introduced different packaging techniques for their products. Lakspray is available in
multiple pack sizes including 50 g, 100 g, 200 g, 400 g & 01 kg while Lakspray Non Fat,
previously named as Lakspray Trim comes in a 400 g pack size.

7. Targeting

A target market is the qualified available market the company decides to pursue. Target market
can be determined through the careful evaluation of market segments. Segments overall
attractiveness and company objectives and resources can be evaluated using the five forces
which Micheal Porter has introduced.

New Zealands Anchor and Raththi brands control 60% of Sri Lankas milk powder
consumption market. The balance comes from Lakspray (12%) and Nespray (8 %).
Highland is also there as under state-owned milk processing company MILCO, which engages
in milk collection from farming areas. Hence, Anchor, Raththi, Highland and Nespray
becomes the key competitors of Lakspray. Specially, when it comes to Fonterras Anchor they
have changed their brand focus to other dairy products rather than focusing only in Milk Powder.
Therefore they have a huge market penetration. But Lakspray is the only local brand that
competes with international milk foods in Sri Lanka.

The informal milk market plays a larger role than assumed in dairy industry. It is an important
outlet for many smallholder farms and is critical for ensuring economic viability of dairy
production for many producers because it typically provides higher prices. It also delivers many
feasible income-generating opportunities for small entrepreneurs. The public health risks in
informal market channels, however, are uncertain, and will depend on consumer practices, such
as boiling of milk before consumption. Growth in the informal market is likely when retail
 powder prices increase and fresh liquid milk becomes more competitive. Hence, price controlling
will be needed for Lakspray to retain in their market position.

New entrants to the market are less because of the high cost of milk production. But there can be
new foreign based entrants for the market. Hence, Lakspray needs to make their brand stronger
in value.

Suppliers bargaining power will not be a problem to Lakspray because of their own supply
chain. Although there is a less supplier bargaining, since there are competitors and substitutes
available, buyers bargaining power can be a threat on current market.

When targeting the market, Lakspray has achieved full market coverage through
differentiated marketing via Lakspray full cream milk powder and non-fat milk powder. It is
where they attempt to serve all customer groups with what they need through different offers.
They designs different product for identified segments. Lakspray target full cream milk
powder for both kids and adults. Packaging will be available in different sizes. Lakspray Non
Fat targets on health conscious people.

8. Positioning

Positioning is the act of designing the companys offering and image to occupy a distinctive
place in the mind of the target market.

8.1 Competitive frame of reference

The key competitors are Anchor, Raththi, Highland and Nespray. They all are into dairy
industry and in a higher market position in Sri Lanka, placing Anchor in the first place. Fonterra
(Anchor) has changed their brand focus to Milk Drink. Not only for tea whitening. Hence it
has a higher market share.
 8.2 Optimal Points-of-Parity (POPs) and Points-of-Difference
(PODs)

8.2.1 Points of Difference

Household Sri Lankan brand. One of the best local milk powder brands
Low price than other milk powders
Maintains highest quality standards and hygiene throughout the value delivery process
Promotes optimum bone density and builds resistance to a number of serious health
problems
sophisticated and well enriched distribution network covering 80,000 outlets in urban and
rural areas

8.2.2 Points of Parity

Considered as a family nurturer where the whole family can consume Lakspray. No
separate milk powder for children etc.
One of the Tea Whitening Brands.

8.3 Best Differentiator

Low Price of the milk product than other products

Creaminess of milk allows its user to create additional cups of tea

8.4 Memorable Promise

Naturally Excellent

Vision Lanka Milk Foods PLCs mission is To become the most desired entity and
leader in the Sri Lankan dairy industry
Mission Provide high-quality dairy products to all with a focus on safety and nutrition
 8.5 Positioning Map

Price

PediaPro

Anchor 1+, 2+

Value Addition
Tea Whitening Milk Drink
Anchor

Nespray Everyday Nespray Enrich

Raththi Maliban

Lakspray

9. Marketing mix analysis

9.1 Product

Lakspray is a Full Cream Milk Powder (FCMP) product with a 26% fat content, sold in packages
ranging from the largest 1kg pack to 400 g, 250g and 100g, and the smallest 50g pack. Its rich
and creamy nature enables consumers to prepare a larger volume than other semi instant
powdered milk.
Lakspray is marketed as a product that promotes optimum bone density and builds resistance to a
number of serious health problems. There is strong awareness in the country about potential
health risks of low-calcium diets and osteoporosis, colon cancer, high blood pressure and
cardiovascular diseases. Identifying the opportunity, Lakspray came up with low fat milk
which is known as Lakspray nonfat or Lakspray trim. It contains less than 1% fat content,
providing the body with its daily nutrients taking into account the fact that a healthy diet and
regular exercise are the secrets to a healthy life.

Lakspray does not contain any additives or preservatives that may disrupt the natural formula of
cows milk. Cows milk is first spray-dried, then subjected to high-tech quality control processes
twice over. These processes adhere to the strictest international regulations and thus ensure
absolute quality. In a nutshell, Lakspray produces fresh, quality cows milk in a pack.

Researches are conducted as consumer research and manufacturing research bases in order to
identify product developments and maintain quality. The continuous research encompasses the
product, keeping them upgraded to suit the changing life style of the consumer.

9.1.1 Price

Pricing decisions are affected by both internal factors like companys objectives, marketing mix
strategy, cost and organizational considerations and external factors like nature of the market and
demand, competition and other environmental elements. Product is mostly quality oriented.
Hence price is lesser than other competitive brands. When taking decisions on pricing of
Lakspray, overall efficiency is considered in the processes and benefits are passed to
consumers. They try to cut down the production, distribution and advertising costs and passing
the benefit to consumer to increase turnover. It has been identified that advertising has less to do
in rural areas. If an organization gets the price point right, then it can work on rural market.
There are two main pricing strategies used by Lakspray upon pricing its product.

Value Based Pricing - Value-based pricing is the setting of a product or service's price based on
the benefits it provides to consumers. Lakspray targeting the rural markets has provided same
product for different price ranges with different sized packaging.
Competitive Pricing - prices are set according to the competition in the industry in which you
operate. Since the market leaders like Anchor, Raththi are in the play Lakspray has to
consider them in pricing because , the action of them might be the ones driving your profit.

9.1.2 Promotion

In most of the promotion campaigns Lakspray focuses on mothers. Lakspray has pursued a
strategy of connecting with its audience at a grass-root level. As for media activity, Lakspray was
the first to introduce innovative promotions such as the scratch-and-win campaign a first for a
consumer brand. Lakspray has also done its fair share when it comes to social responsibility,
actively sponsoring school sporting events by offering free milk and supporting blood donation
campaigns. Lakspray also participates in local and cultural events such as Vesak dansalas.

Even with no advertising at all, the brand has been able to mark its existence in the industry with
an increase of its brand value. This is indeed a remarkable performance of the brand amongst
many more local brands as well as multinational brands as the message of the brand has been
clearly communicated to its target audience.

The latest promotion embarked was an extremely daunting CSR project. The company took on
the task of offering Free cups of milk to over a million devotees visiting Kandy to see the famed
Tooth Relic of the Lord Buddha.

9.1.3 Place

The company has one of the most extensive distribution networks in the country with over 40
distributors and 90 company and distributor sales personnel scattered across the
country. Lakspray has a sophisticated and well entrenched distribution network covering 80,000
outlets in urban and rural areas ranging from institutions to schools. The product is available at
CWE and co-operative outlets, at reputable dealers and leading supermarkets in the country.
10. Recommendations

Communicate salient Benefit

Lakspray cannot compete with the consumer market due to low margin it has. Continuing in
brand strategy will help it to dominate in market of corporate sector. It can be done via
communicating its point of difference to the consumers proving a point to trust for them. Further,
sales promotions can be conducted to corporate sector, via sponsorships.

Exploration of possible market segments

Currently Lakspray focuses on full market without dividing it further into small segments. If
the possible target groups for these milk powder products are identified correctly, Lakspray
can expand their market and grow their earning potential.

For an example, they can introduce a separate milk powder product for small kids. With a low
price assigned, it will have a high market share.

Product Development

Lakspray can introduce readymade milk packets targeting the work force of Sri Lanka. Due to
their busy schedules most people tend to buy instant drinks from retail shops. With having a large
distribution channel, Lakspray will have a good market share.

11. Conclusion

Lakspray brand has been in existence for almost 40 years. With the well established brand
value and the maintained promise Naturally Excellent, it is the only local milk food competing
with international brands in Sri Lanka. Lakspray has gained a considerable market share in the
milk powder industry by maintaining quality in the products and establishing effective marketing
strategies. They will be able to add more value to their products by having good promotional
strategies and product developments as suggested.