MKT5000_A1_S3_2010_Group_3-1

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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 Weerasooriya 0050107488

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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 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

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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.

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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

Positioning level Present state

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:

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Positioning strategy based on

Explanation

Product attributes 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 Examples

Internal environment • Staff of all product lines

• Employees working for FrieslandCompina in other regions • Technology presently used (E.g. collecting raw materials

such as milk)

• Funds available as equity and ability to borrow at cheaper rates.

Micro environment • 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. Macro environment 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

• Company is lead by a well experienced and a committed Board of Directors with executive and non-executive directors. • Continuous product innovation and new product launches.

• Subsidiary of Royal FrieslandCampina NV, which is a world renowned dairy manufacturer in Netherlands.

• Despite the global economic down turn, Dutch Lady achieved the highest Profits 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.

Weaknesses

• Limited dairy product range compared to other direct competitors such as Nestle Malaysia, Fraser & Neave holdings and Cocoaland Holdings.

• Only limited number of awareness programmes/campaigns carried out annually.

• Very limited manufacturing and warehousing capacity resulting in a higher outsourcing cost incurred for logistics.

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Opportunities

• Increasing awareness and need on healthier and nutritious dairy products resulting in high demand.

• Malaysians being more aware and health conscious on nutritious food and changing their eating/drinking habits.

• Development of new manufacturing technologies with regard to the dairy industry.

• Further Expansion of international market by using the reputation of Royal FrieslandCampina NV

• Investment on backward (E.g. Suppliers) and forward 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.

Threats

6. Increase in raw material prices, due to adverse weather conditions.

• Global competitors such as Nestle and Cocoaland causing threats in non fat yogurt segment by continuous new product developments.

• Threats from substitute products such as frozen foods, instant snacks, soft drinks.

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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 British

• Dr. Mahathir Mohammad ruled the country for 22 year enabling Malaysia to achieve dramatic economic and social improvements and promising political stability within the country.

• Mr. Najib Razak was appointed as the

Recent Changes in Government Policy • To attract foreign investors’ government increased the Cap on equity holding for foreign investor from 49% to 70%.

• Signed and ratified the Convention on the Settlement of Investment Disputes allowing parties to a dispute over an investment to go to the International

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Prime Minister in 2009, under the Barisan Nasional (BN) alliance, a coalition which is favouring Malay nationalism, Islamism and Capitalism as policies. However trying to minimise the ethnic and religious division in the country.

• Government’s effectiveness in terms of performance has increased from 78.7% to 83.9 from 2005 to 2008.

• Main political pressure groups operating in the country are Bar Council (Electoral Reforms Coalition) and the Muslim NGO Coalition.

Centre for Settlement of Investment Disputes (ICSID)

• Corporate tax rates were reduced in 2009 to 25% and personal income tax rates to 27%, which was at 28% in 2008 • Dairy Imports to Malaysia must to obtain the Import Licenses, issued by the Veterinary Services and Ministry of International Trade and Industry for every consignment of dairy products imported, within 30 days of importing.

• 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.

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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

• Long term needs on large energy generation projects and plants. Government is planning to build a Nuclear Plant by year 2021.

Future Risks

• Rising debt burden. World bank has warned that Malaysia could reach 70% of debt against its GDP by 2015. Hence this might affect Malaysia negatively on its

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• Major growth in industrial manufacturing activity.

• Strengthen the country’s economic ties with its trade partners such as Singapore, China and other Asian partners. Thereby bringing better growth prospects for the future.

competitiveness in the international market.

• Capital inflow controls by the Malaysian government may reduce the attractiveness of foreign investment into the country.

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. Socio-cultural Environment

6.3.1. 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

• 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%

Work Force Distribution

• Agriculture based 12%

• Industry-Commerce based 36% • Services based 52%

• Unionised work force 9%

Ethnic Groups

• Malay and indigenous people 61% • Chinese 24%

• Indian 7% • other 8%

Languages • Malay, English, Chinese dialects, Tamil

Religions

• 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)

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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

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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.

• The Malaysian government intends to reduce its carbon intensity by 40–45% by 2020 from 2005 levels.

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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.

• 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.

Importance of Stakeholders

Low Importance High Importance

In fl u en ce o f S ta k eh ol d er s High Influence Box C

• Government and Relevant Authorities

• Religious Leaders

Box A

• Management of Dutch Lady • Customers

• Direct Competitors • Dairy suppliers

• Mother Company (Royal FrieslandCampina) • Major Shareholders Low Influence Box D • General public • Minor Shareholders Box B • Employees • Indirect Competitors • Distributors

• Banks and Fund providers

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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 Impact on each stakeholder

Management _• 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.

• Compensation for the achievement of targets. Customers _• Value for money from the product.

• Assurance on the Quality from all aspects of the product offerings.

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• Ethical and socially accepted products.

Direct Competitors _• Product features, price, and image created on the consumer’s mind.

• Different management methods and strategies used in order to market the product.

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

• Equitable business opportunities.

Major Shareholders _• 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.

Employees • Rates of salary and wages pay. • Level of job security.

• Respect received by the management and the other stakeholders.

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

• Assistance provided by the management to market the products.

• Truthful and futuristic communication from the management.

Government and Relevant Authorities

• Payment of accurate and on time Taxation. • Adherence to Legislation.

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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

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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

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• 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%.

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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 ENVIRONMENT

AUDIT CHECK LIST YES NO

External

Is Target Market Identified? Yes

Did Customer wants and needs identified Yes Did Company strengths, weaknesses, opportunities and potential threats have been analyze?

Yes Did Industry analysis complete? Yes Did company identify future customer prospects

and customers? Yes

Did company analyze customer purchasing

behaviors? Yes

Internal

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 channels

Yes Is company getting its marketing communication

right? Yes

Are there enough human resources? No

Are there enough budget for Marketing Yes Are there enough production plants for product development?

Yes Are there sufficient numbers of Milk Suppliers? Yes Is there a realistic timeline to achieve company

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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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• 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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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, <http://www.bnm.gov.my/microsites/fxadmin/01_fea.htm>

Baxi, P 2010, Defining long-term business objectives, Helium Ink, viewed September 11, 2010, <http://www.helium.com/items/855998-defining-long-term-business-objectives>

Bernama 2008, Dutch lady eyes market leader position in yoghurt, CBS Interactive Inc, viewed September 10, 2010,

<http://findarticles.com/p/articles/mi_8082/is_20080822/ai_n51594211/>

Datamonitor 2010, Malaysia: Country Analysis Report – In-depth PESTLE Insights, viewed 19 September 2010,

<http://www.marketlineinfo.com.ezproxy.usq.edu.au/library/DisplayContent.aspx? Ne=4294669662&N=211+4294669496>

Denis, W 2010, A marketing audit checklist, CBS Interactive, viewed September 11, 2010, <http://findarticles.com/p/articles/mi_qa5331/is_199810/ai_n21427882/>

Department of Malaysian Statistics 2010 , Gross Domestic Product / Gross National Income, viewed September 10, 2010, <http://www.statistics.gov.my/portal/index.php?

option=com_content&view=article&id=53%3Agross-domestic-product-gross-national-income-updated-24022010&catid=35%3Akey-statistics&Itemid=53&lang=en>

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