MARKETING AUDIT CHECKLIST

I. EXTERNAL (OPPORTU NITIES AND THREATS) A. BUSINESS AND ECON OMIC ENVIRONMENT ECONOMIC
As of July 2010, the unemployment rate in the Philippines runs at about 6.9%. Though there are incremental bouts of improvement, there is no indication regarding the improvement of job stability. There are still many Filipinos who shuffle in-and-out of different jobs, in the event that they do manage to find suitable employment opportunities. Self-rated poverty, whether or not one considers oneself poor, matched a recordlow over the past two decades, a sign that many Filipinos paradigms have shifted towards accepting substandard living conditions. This is an alarming observation considering the record number of citizens who experienced involuntary hunger over that time. The inflation rate for 2010 was also pegged at 3.2%, substantially better than the figure for 2009, which was 9.3%. In congruence with the country s recovering economy and the availability of more affordable products aimed at increasing household penetration and market share, many Filipinos have, as a result, increased their consumption of nonessential food products. The ice cream industry, for example, has reflected improved volume sales and value sales, estimated to increase by nearly 3% and 5% respectively, in 2010 compared to the previous year. It must be noted, however, that due to inflation brought about by the global recession, the industry is expected to see a 2% marginal increase in unit prices (in light of manufacturers have tried to maintain their selling prices in order to sustain demand). Another concern would be the Philippines economical relationships Because there are very few dairy farms in the Philippines due to the high prices of these enterprises, in addition to the fact that cows do not thrive in warmer climates, milk, an essential component of ice cream, is imported from Australia, New Zealand, or the USA, among others. Import tariffs may prove to be a concern, but Philippine trade policies are generally open (free market economy, with little barriers to the entry of foreign goods). Currently, the Philippines maintains generally stable relationships with the currencies of these countries.

POLITICAL/LEGAL
The Philippines has a generally free market economy, and as such, there is little barrier to the entry of foreign goods. Most companies in the ice cream industry are from the private sector, signifying relatively low levels of nationalization and consequently, little government intervention. As a result, a number of foreign products are easily imported and made commercially available to the Filipino market, including Haagen Dazs, Blue Bunny, Ben & Jerry s, etc., who can easily reach their target markets with minimal efforts thanks to the hype connected to their international brand names. In response, various groups are clamoring for the increase in trade restrictions, in order to protect local industries. For example, in 2009, the Dairy Confederation of the Philippine sought the extension of the import tariff on milk (an essential component of ice cream) from Australia and New Zealand, saying, the local industry is in dire straits and needs some protection while working to become competitive. This may have both positive and negative repercussions on the industry itself, in that this may be seen as an opportunity for the local industry to grow, or be an indication of market instability due to external factors.

SOCIO-CULTURAL
Filipinos have always placed great importance in the ideals of familial ties and hospitality. Embedded in our culture, these values serve as the foundation for many Filipino homes, particularly exhibited in the way parents raise their children or when entertaining friends and guests. It can be said that these fundamentals, to a certain degree, influence the way in which Filipino families regard ice cream, equating it with gatherings and celebrations whether it be simple family bonding over dinner, big birthday parties, or holiday celebrations. It must be noted, however, that over the past few decades, the idea of the conventional Filipino family has been continually challenged. The influence of more liberal societal mindsets combined with many economical and political limitations have resulted in family structures and dynamics which no longer fit the age-old mold and have been separated or broken, whether merely geographically or otherwise. This includes single-parent families, families of OFWs, and extended families. As a result, communal values may have been skewed from what they once were. It can also be said that geography plays a highly integral role in Philippine cultural behaviors and preferences. The tropical climate almost makes Filipinos more inclined to enjoy cold food, and in addition to this, our fondness for sweets and desserts makes ice cream the perfect dessert to satisfy any Filipino s sweet-tooth and refresh him/her on a warm summer day. In more modern times, many Filipinos, especially the youth and young professionals, have, over the past few years, become more fitness-oriented as a result of prevailing trends and shifts in lifestyles towards healthy living. This change in mindsets has affected the ice cream market through the entrance of frozen yoghurt, which may serve as a healthier alternative to ice cream. It must be noted, however, that the consumption frozen yoghurt may simply be a passing trend, at the end of which ice cream will still be the go-to frozen dessert for many Filipinos.

TECHNOLOGICAL
Aside from Mangolia s recent adoption of a new cooling system that preserves ice cream better thus keeping it fresher longer, there have been no significant breakthroughs over recent years in the commercial manufacturing of ice cream; the technological equipment and processes have more or less stayed the same since the introduction of industrial freezers in the 1960s. The basic steps in the manufacturing of ice cream are as follows: 1. 2. Blending - an ice cream mix is created by incorporating and blending the necessary ingredients based on a certain recipe or formulation Pasteurization - the ice cream mix is pasteurized in order to eliminate pathogenic bacteria, and more importantly, serves as a means to preserve the mixture by reducing the number of spoilage organisms. Homogenization - the mix is then subjected to homogenization, which reduces the size of fat globules in the milk; doing this helps to create a smoother richer ice cream with higher resistance to melting. Aging - the mix is left to settle overnight to allow the fat crystals to stabilize, which improves ice cream body and texture, and makes it easier to whip. Freezing - various other flavors, toppings, and colorings are added to the mixture at this point before it is frozen. The freezing process itself takes a very short time, as the mixture passes through a steel tube where air is whipped into it, and comes out 30-seconds later, 50% frozen (consistency similar to that of soft-serve ice cream). Packaging and Hardening - the half-frozen mix is pumped into its respective packaging and is blast frozen to its final texture and consistency.

3. 4. 5.

6.

B. THE MARKET AND TH E CONSUMER TOTAL MARKET

SIZE, GROWTH AND TRENDS (VALUE, VOLUME) According to Euromonitor, the total ice cream market size is 8.7433 billion pesos in 2010. FORECAST SALES OF ICE CREAM (2010) GENERAL Volume: Value: ICE CREAM PARLOR Volume: Value: BULK ICE CREAM Volume: Value:

61,745,200 litres 8,743.3 Million pesos 130,800 litres 186.5 Million Pesos 53,957,700 litres 7,141.1 Million Pesos

MARKET TRENDS
In connection with the contexts presented and analyzed in the PEST analysis above, the following trends were identified for the local ice cream industry: 1. Recent years have seen manufacturers seek to cater to polar market segments and socio-economic brackets primarily through the introduction of gourmet and limited edition product lines while still promoting their cheaper, value-for-money lines. For instance, Unilever-RFM Ice Cream Corporation introduced a new flavor to its premium series, Selecta Gold Vanilla Almond, while still heavil y advertising the affordable Selecta 3-in-1 plus 1, which contains four classic flavors in one affordable pack. 2. There has been a distinct improvement in the economic situation due to the availability of more affordable products which prompted higher overall household penetration. This has led to a 3% increase in 2010 for volume sales of ice cream -- one percentage point faster in contrast to the previous year. This sparked an even higher increase in value sales reaching nearly 5% accompanied by the growing popularity of more premium variants. 3. Due to economic recovery in the Philippines, more frequent social gatherings and special occasion celebrations are being held, where ice cream is more often than not, a staple part of the dessert selection - a result of Filipinos becoming more open to spending on nonessential food products. It is also important to note that since ice cream is highly associated with gatherings, bulk ice cream (tubs) sales outpace impulse ice cream sales in the Philippines. 4. Chocolate and Vanilla ice cream have remained the top choices amongst consumers due to the Filipino s preference for more familiar flavors and their general aversion to trying new ones. Because of this, manufacturers use these two flavors as bases in their development and release of new flavors into the market. In early 2010, Unilever-RFM Ice Cream Corp extended its successful Selecta Gold, adding Vanilla Almond as the fourth flavour in the series. 5. Other grocery retailers, particularly convenience stories as well as including street vendors, remain a significant distribution channel for single-portion ice cream, as it promotes impulse buying. The concept originated from dirty ice cream (local unbranded and unpackaged ice cream) sellers who push their carts from street-to-street and ring their bell to announce their arrival. Nestl Philippines Inc and Unilever -RFM Ice Cream

Corp took a more modern approach to this tactic by using pedal carts with freezers and creating a unique instrumental jingle to attract consumers, especially young children who are home from school in the afternoon. In contrast, Filipinos purchase their take-home ice cream in supermarkets/hypermarkets, which has a dominant 70% value share so far in 2010, and independent small grocers. 6. There has recently been a proliferation of frozen yogurt brands in the market, indicating a consumer inclination towards more healthy food products and alternatives. Capitalizing on the health aspects and benefits of these products such as lower levels of fat, and pro-biotic properties, frozen yogurt franchises like Yoh-gurt Froz, Red Mango, and White Hat have captured a significant market, particularly families and groups of friends who visit malls. 7. Although an increasing number of industries have, over recent periods, sought to become greener in their operations, undertaking more environmentally conscious advocacies, this trend has not extended to the local ice cream industry. A key example of an ice cream brand that has gone into implementing greener policies in their production is Ben & Jerry s, using sustainable products and methods of production, and donating profits of certain flavors to environmental causes. 8. A final trend in the ice cream industry is co -branding, a strategy that is used to stimulate the growth of two franchise systems. These brands mutually benefit from each other by combining their equities and resources by garnering higher market shares and profits. One example of this is the co-branding of Coldstone Creamery and Tim Horton s in 2009 whose evening and daytime traffic grew through Coldstone Creamery and Tim Horton s respectively.

MARKET CHARACTERISTI CS COMPETITION

Various ice cream products and alternatives are available in the local frozen dessert market. Below is a list of classifications based on specific characteristics and standards regarding ingredients and composition, along with examples of competitors and brands which fall under each class, where appropriate. A. BULK ICE CREAM: Frozen desserts containing at least 10% milk fat and 20% total of milk solid. These are priced at around Php 16 - 23 per 4 ounces.

y y y y y

Selecta Nestle Magnolia Arce Dairy Fruits in Ice Cream

B. SUPER PREMIUM ICE CREAM: contains a low amount of air and high fat content, usually made with highest quality ingredients. These are priced at around Php 85 - 150 per 4 ounces.

y y

Ben and Jerry s Haagen Dazs

C. NOVELTY ICE CREAM: Single-serving items bought for immediate or impulse consumption. They are prices at around Php 5 - 10 per 4 ounces.

y y y y y y y y

Cornetto Selecta Drumstick Twin Popsies Nestle Haagen Dazs Pinipig Crunch Jelly Tongue

D. SORBET: A frozen dessert similar in composition to actual ice. It is a non-dairy product with relatively high sugar content, generally containing fruit, fruit puree or fruit juice. These are prices at around around Php 12 per 4 ounces. E. FROZEN YOGURT: low or no fat alternative using milk and yogurt in place of cream. It contains the microorganisms and probiotics present in yogurt, and is typically soft-serve. These are priced at around Php 80 per 4 ounces.

y y y y

BTIC Yoh-gurt Froz White Hat Red Mango

F. HEALTHY FRO ZEN DESSERTS: there exists a wide range of health conscious options on the market, such as reduced fat ice cream, light ice cream, low fat ice cream, nonfat/fat free ice cream and no added sugar ice cream. A number of existing ice cream brands have their respective fat-free product lines. These are prices at around 30 - 45 per 4 ounces.

CHANNELS AND DISTRIBUTION

Special delivery trucks equipped with freezers are used to distribute ice cream products to prevent the said products from melting in any way, as the slightest refreezing of ice cream from a melted state largely impacts its taste and consistency. The channels through which ice cream is delivered, traded, and purchased are listed below.

           

Store-based retailing Grocery retailers Supermarkets/Hypermarkets Small Grocery Retailers Convenience Stores Independent small grocers Foodcourt retailers Other grocery retailers Non-grocery retailers Health and Beauty retailers Other non-grocery retailers Vending

   

Internet retailing Direct selling Ice cream carts Restaurants

COMMUNICATION
Many local ice cream companies employ tri-media advertising television, radio, and print advertisements. They attempt to publicize their products and services through these media in order to reach the widest number of people possible, often commissioning local celebrities and other influential people to act as a brand spokesperson and endorse their products. The more premium brands, on the other hand, utilize cause marketing (sponsoring worthwhile causes that at the same time supports their brand), guerrilla marketing (branded freezers in food retail stores), and sponsorships of cultural events, and other below the line promotions which cater to their higher SEC market.

KEY INDUSTRY PRACTICES

Most, if not all, major practices in the ice cream industry involve gaining an edge over competitors by seeking to shut them out of various consumer channels. A primary example would be lockout deals that certain companies enter with retailers, such as Nestle and Selecta with the convenience store 7 - 11. In this particular case, 7 - 11 is not allowed to carry products from other ice cream brands, such as Magnolia. Another practice would be using restaurants to promote and sell their products exclusively, as seen in the Pinoy Sorbetes of Selecta sold in Mang Inasal, or the Nestle Ube and Melon ice cream used in Chowking s halo -halo.

MARKET POSITION
Magnolia currently ranks third in terms of brand share in the Philippines, following Selecta and Nestle. Brand Selecta Nestle Magnolia Company Unilever RFM Ice Cream Inc Nestle Philippines Inc San Miguel Pure Foods Co Inc Brand Share 38.0 30.3 8.3

Unilever-RFM maintains its market leadership because of its diverse brand architecture with variants catering to different market segments. Over the course of the last eight months, Selecta simultaneously and aggressively advertised its Gold Series (for the A and B market who want gourmet ice cream), Selecta 3-in-1 Plus 1 (for the C and D market who want value for money), Selecta Creations/Double Supreme (for the B and C middle income family market) and Selecta Cornetto (for impulse indulgence buyers), capturing a large part of the overall market. Each commercial effectively communicates to its target market and all commercials end with the same words - Selecta Number One! Aside from this, it has an extensive distribution network that allows it to be readily available all over the country. The integration of highly effective advertising and efficient logistical distribution systems has skyrocketed Selecta to the top of the industry. Nestle, on the other hand, successfully took advantage of the manong sorbetero culture in the Philippines. It has extended its distribution strategy by creating a modern version of the sorbetero and his cart with a sound system that plays a catchy playful jingle to attract attention. This strategy encourages even more impulse purchases on their novelty lines. Nestle also focuses heavily on its campaigns, particularly seen in its aggressive promotion of the Pinoy Sorbetes Line, with celebrity endorsers Pokwang and Santino. Moreover, this line was made the official ice cream available in Mang Inasal, an extremely fast -growing food chain.

Unfortunately, Magnolia lacks both effective advertising and widespread distribution. Although it has been a familiar name for decades and has grown its equity in the Filipino, it does not communicate this through their advertisements. Magnolia is not able to differentiate itself from competitors Nestle and Selecta. Magnolia Ice Cream commercials are always featured alongside other products such as Magnolia Fresh Milk, with an emphasis on having grown up with the Magnolia brand - thus the tag line Magpakailanman . Distribution is also very lacking since Magnolia is available in limited supermarkets (with non-exclusive freezers) but not in convenience stores (Magnolia is currently locked out from 7Eleven) and roving ice cream carts. Aside from other ice cream brands, Magnolia Ice Cream also competes with other frozen desserts such as ice cream parlors, sundaes from fast food chains and convenience stores and the recent boom of yogurt and ice scramble establishments.

PROFITABILITY
The current market size of Ice Cream in the Philippines is P8.743 billion and has been growing steadily over the past 5 years. Because of the improving economic condition, special occasions and gatherings have been more frequent thus giving consumers more reasons to purchase tubs. In general, the improved economy gave consumers more confidence to purchase nonessential food items thus increasing volume sales. Value sales increased due to higher consumption of premium editions of ice cream. Volume sales are expected to grow at a CAGR of 1% while value sales will grow at CAGR of 1.5% for 2010 -2015.

KEY CONSUMER INSIGHT

Magnolia ice cream targets Families, particularly parents belonging to SEC B & C, whose genuine concern lies in the relationships shared within and among the family members and who value the traditions passed on from one generation to another. In essence, these families value the bond they have as a family. For them, family is the only constant thing in life, but in these fast -paced and changing times, it has become difficult to keep the family s togetherness intact, thus they seek ice cream as a way for them to establish and strengthen this bond.

II. INTERNAL HISTORY

In 1925, Magnolia Ice Cream Company was established by San Miguel Corporation, to serve as their division in the frozen foods industry. In the 1960s-1990s, Magnolia captured the hearts of the Filipinos and became the top-of-mind brand for ice cream; its Ice Cream Parlor formerly located along Aurora Boulevard exposed the brand to many children whose parents brought them there during weekends or family outings. However, in 1996, Magnolia was acquired by Nestle Philippines, Inc., which included the Ice Cream Parlor as part of the deal. Nestle phased in Magnolia in their products, branding these as Magnolia Nestle Ice Cream, then Nestle Magnolia Ice Cream, then eventually just Nestle Ice Cream, now a main competitor, after their split. It would seem that Nestl e leveraged on Magnolia s equity and strong brand name to catalyze its way into the market, leaving Magnolia in the dust. San Miguel relaunched Magnolia Ice Cream in 2004 after a five-year hiatus, reintroducing well-loved flavors such as Double Dutch, Rocky Road, Dulce de Leche, Cookies and Cream as well as Gold Label products. Last year, they opened a new, state-of-the-art, 1.4-hectare Ice Cream facility that has the capacity of 5 million gallons of ice cream per year. This finally allowed them to have their own factory, instead of tolling from Nestle, also creating an opportunity for Magnolia to finally veer away from bulk ice cream market and tap the

novelty ice cream market. Through this, Magnolia hopes to become the market leader in the ice cream business, but it is not without its many shortcomings. Many improvements need to be made if Magnolia is to dominate both the market and the hearts of entirely new generations of Filipinos.

COMPANY VISION / MIS SION

VISION: Become the No.1 food company in the country and a strong regional player in Asia. Mission: Give its customers a complete range of products that are differentiated by quality, freshness, and guaranteed safety. VALUES: Integrity, Customer and market focus, teamwork and respect for the individual, strong competitive spirit, passion for excellence TAGLINE: "NOURISHING AND NURTURING FAMILIES WORLDWIDE"

SALES (TO TA L, BY G EO G RAPHI C LO CA TIO N, BY INDUS TRIA L TY PE, BY CUSTO M E R, BY PRO DUCT)
Total Sales 2005 2006 2007 2008 2009 310.8 million 441.5 million 531.9 million 628.6 million 667.3 million

The total market for ice cream is currently valued at around P8.7 billion. Magnolia is the third largest in terms of sales volume, lagging behind Unilever-RFM (Selecta, Cornetto) and Nestle Philippines Inc. However, it is continuously growing.

MARKET SHARES
COMPANY SHARES (SAN MIGUEL PUREFOODS CO. INC.) 2005 4.9% 2006 6.5% 2007 7.3% 2008 8.1% 2009 8.3% Specifically: IMPULSE ICE CREAM SHARES COMPANY SHARES PART OF "OTHERS" 2005 12.4%* 2006 12.1%* 2007 12.3%* 2008 12.3%* 2009 12.5%* *actual figure is an unknown portion of this TAKE HOME ICE CREAM SHARES COMPANY SHARES PART OF "OTHERS" Company shares 2005 5.9%

2006 7.8% 2007 8.8% 2008 9.8% 2009 10.0% Based on the given information on market shares, we can see that Magnolia Inc. is the third largest company. It currently lags behind Unilever-RFM (Selecta, Cornetto) which has 42.7% and Nestle Philippines Inc with 35.2%. It is weak when it comes to impulse ice cream shares due to the dominance of Unilever -RFM s Cornetto and Selecta Cup. Nestle is also relatively strong with Drumstick and their own ice cream cups. However, Magnolia is slowly gaining ground with the take-home ice cream shares. Since its re-introduction to the market last 2004, it has slowly been eating the share of Nestle.

PROFIT MARGINS
Gross Profit Margin in millions (65.5% of sales) 2005 2006 2007 2008 2009 203.6 289.2 348.4 411.7 437.1

Operating Profit Margin in millions (10% of sales) 2005 2006 2007 2008 2009 31.08 million 44.15 million 53.19 million 62.86 million 66.73 million

Net Profit Margin in millions (5% of sales) 2005 2006 2007 2008 2009 15.5 22.1 26.6 31.4 33.4

As we can see in the profit margins, Magnolia enjoys a pretty large gross profit margin of 65.5%, meaning that its raw materials are inexpensive. However, we can see that its operating profit margin pummels to 10%, meaning that its administrative and selling expenses are very high. It finally enjoys a net profit margin of 5%, with its 2009 figures estimated around 33.4 million. Based on its profit margins, Magnolia relies on volume or asset turnover in order to earn.

MARKETING PROCEDURES
Like any other organization, Magnolia begins with gathering market and consumer data and trends.. Then it analyzes this in order to determine its current market position, which it then compares its desired position (goal). From there, it develops objectives and strategies in order to reach their target profits and market share.

MARKETING ORGANIZATI ON

Magnolia, Inc. has an overall Marketing Manager for all the brands under it. The brand Magnolia Ice Cream has a General Manager, Brand Manager, and Brand Assistant working for the division.

PRODUCT DEVELOPMENT
Product Development is one of Magnolia s centerpiece programs. They have stated that they want to launch at least 5 new flavors per year. Through its new plant, they plan on strengthening their frozen novelty portfolio with new formats and flavor combinations.

PRODUCT RANGE BULK ICE CREAM

Magnolia Classic (Vanilla, Chocolate, Mocha, Strawberry, Ube, Mango) Magnolia Gold Label (Double Dutch, Rocky Road, Cookies N Cream, Dulce de Leche, Creamy HaloHalo, Macapuno Ube Swirl, Buco Salad Royale, Quezo Primero, Choco Chip Cookie Dough, Coffee Vienna, Buttery Sweet Corn) Magnolia No Sugar Added (Vanilla, Chocolate) Magnolia Sorbetes (Ube, Tsokolate, Keso) Magnolia Chocolait Ice Cream

FROZEN NOVELTIES
Magnolia Spinner (Chocolate, Vanilla) Magnolia Party Cups (Vanilla, Chocolate, Ube and Mango)

OTHER FROZEN DELIGHTS

Magnolia Pop-a-Cup (Chocolate and Raspberry) Magnolia Rainbow Bar King s Cookie Monster

OPPORTUNISTIC PRODUC TS
Magnolia Limited Edition (Seasonal) SUMMER 2009 Fruit Fruzion Chocolate Creme Brulee Cotton Candy DECEMBER 2010 Apple Strudel Caramel Cheesecake Vanilla Praline King's Regular Tub (Chocolate, Vanilla and Neapolitan)

SAN MIGUEL GOLD LABEL (FOR EXPORT)

SMGL Mellorine - USA SMGL Frozen Dessert - Canada SMGL Ice Confectionery - Australia Magnolia s current bulk ice cream products are divided into four main categories: Classic, Gold, Sorbetes, and No Sugar Added. Sorbetes include the Filipino flavors made famous by the Mamang Sorbeteros and is the cheapest line. Classics include the plain products, or those that consist of only one flavor, such as Chocolate and Vanilla. It is the middle line and the second least expensive. The Gold line is composed of several mixed flavors, both locally and internationally inspired, such as Double Dutch, Rocky Road, and Halo-Halo. Lastly, there is a No Sugar Added line for those that are health conscious, which is the most expensive line. They also offer Magnolia Chocolait ice cream in tubs. The company also offers a few novelty ice cream products to capture the impulse buying market. Moreover, they come up with Limited Edition products that are only available for a specific season which are mostly foreign-themed.

PRODUCT QUALITY
Magnolia Inc. has always prided itself with its product quality and safety. Its new facility in Santa Rosa has ISO and HACCP certification.

DISTRIBUTION
Magnolia is distributed through retailers and grocers. However, some convenience stores enforce a lock-out, which is why it isn t available in stores such as 7-Eleven, Shell Select, etc. It also doesn t make use of ice cream carts, which is dominated by Nestle because of its catchy jingle. The brand has, however, recently put up ice cream parlors near SM Mall of Asia and in SM Fairview.

PRICING
Magnolia Ice Cream products are priced within the same range as other local competitors, lower than Selecta, but similar to Nestle.

PACKAGING
Magnolia is well-known for its packaging. It makes use of modernized, in-mold labeling, a first in the local ice cream industry. The labels are scratch-proof and are in vibrant colors with textured finish to attract the attention of potential buyers. They are the first to introduce a tub that is microwaveable after seeing mothers fond of reusing these as food containers. They also make use of different colors for different types: classic as dark blue, sorbetes as orange, gold as gold, and no sugar added as light blue.

PROMOTIONS
Previous commercials feature Tropical Ice Cream endorsed by ordinary people (Feb 8, 2008), the message Real Ice Cream. Real People. (Dec 2, 2008) and Magnolia. Gawang Pinoy. Kasama sa Kalusugan at Sarap ng Pinoy. Magpakailanman (July 25, 2009)

According to General Manager Alcon, We have done some advertising and consumer promotions to reinforce our ice cream equity, but we didn't need to spend so much since it's a very strong brand. In other markets, we focused mainly on consumer promotions and merchandising. In recent advertisements (2010), Magnolia sought an omnibus strategy which features not just the Magnolia Ice Cream but the whole Magnolia Line of products in a single commercial to reinforce Magnolia s overall image of pureness and freshness.

MARKETING STRATEGIES TO ACHIEVE MISSION A ND GOALS

Manny Pacquiao, Aling Dionisia, Jinky Pacquiao and their children are the current endorsers of the Magnolia product line. Instead of focusing on the family bonding aspect, members of the Pacquiao family are featured enjoying different Magnolia products. The campaign objective is to associate Magnolia Ice Cream with other Magnolia products such as Magnolia Fresh Milk, emphasizing the brand s quality and freshness. Its message is to instill into Filipino families that Magnolia is their family s companion as they go through the years, utilizing their brand heritage and status as an industry pioneer to appeal to the youth who missed the existence of Magnolia Ice Cream for 10 years. The goal of Magnolia is to retain their loyal following while connecting to the younger generation (Magnolia Ice Cream recently launched a blog writing competition). Magnolia also aims to expand its market beyond Philippine shores. Our main market is of course the domestic market but we are likewise growing our export markets. Magnolia basically follows the concentration of Filipino Expats abroad especially in the Middle East and North America.

SWOT ANALYSIS STRENGTHS

y
Association with other Magnolia dairy products and Magnolia brand equity o Magnolia dairy products have always been associated with quality and freshness, and this association may reflect positively on its ice cream products. Experience as a market leader o Magnolia has been in the ice cream industry for over 80 years, and the market experience gathered over this period may serve as a vital asset and give the company an edge over competitors Brand is under San Miguel Corporation; Access to its resources and brand equity o Having been purchased by San Miguel Corporation, Magnolia Inc. has access to a larger array of resources and also shares in its parent company s equity, possibly becoming more attractive to investors. Filipino flavors o Included in Magnolia s array of ice cream flavors are those which are inspired by traditional Filipino taste preferences and desserts (such as Sweet Corn, Macapuno, and Halo-halo), all at competitive prices. Newly constructed Laguna Plant; Increased Production Capacity o A newly constructed plant in Laguna allows for dramatically increased production capacity for the company. New Freezing Technology o Magnolia recently adopted a new freezing technology that preserves ice cream more efficiently thus keeping it fresher longer

WEAKNESSES
y
Limited distribution channels o Magnolia ice cream is not available in many retailers due to the prevalence of lockout strategies from competitors, and is also a result of ineffective marketing strategies. Absence in the market for 10 years o The company s absence from the market as a result of its non-compete clause with Nestle may prove to be detrimental to their competitive advantage. o Due to its absence from the market, the youth of today is not familiar with the brand and its flavors.

OPPORTUNITIES
y
The kids who adored Magnolia Ice Cream in the 80s are now the purchase decision makers of today s households. o Magnolia, being the premiere ice cream brand in the 70s and 80s was a household name to children of that time; they have grown to become today s heads of households who play the role as primary purchase decision makers. Effectively communicating and firmly re-establishing brand equity o By re-establishing equity in its ice cream line through an effective marketing campaign that is relevant and relatable to today s consumers, Magnolia can hope to regain its market leadership Increased family purchasing power and disposable income o Increased purchasing powers and disposable incomes have led Filipinos to spend more on nonessential foods such as ice cream for their occasions and gatherings Global warming, tropical climate o Increasing global temperatures combined with a tropical climate will further entice Filipinos to seek frozen delights to cool off

THREATS
y
The market is saturated by strong competitors, like Selecta and Nestle who have established themselves with newer generations o With Selecta and Nestle s combined market share of 68.3%, Magnolia has to face two ice cream giants in its quest of market leadership Other Celebratory Desserts o Many stores and fast-food chains carry soft-serve ice cream which serves as a direct and more convenient substitute to typical ice cream o The yoghurt trend boomed by providing a healthy alternative

REFERENCES
Euromonitor International, 2010 http://www.foodscience.uoguelph.ca/dairyedu/novelties.html http://www.platformmagazine.com/article.cfm?alias=Noteworthy -Work-Past-Campaigns-That-Deserve-a-Second-Look http://www.matchstick.ca/buzzPDFs/Building_BuzzHBR.pdf http://www.franchisedirect.com/foodfranchises/icecreamfranchises/icecreamtrendspart3/78/256 http://www.foodscience.uoguelph.ca/dairyedu/novelties.html