Marketing of Dairy Products Made - Essay Example

marketing of dairy products made Key Issues: The key issue in this case is to market yak milk to a consumer base that has one of the lowest rates of milk consumption in the world, and where the market is dominated primarily by diary products made of cow’s milk. List of Alternatives: 1. Market yak’s milk on a mass level, using its unique selling point of being a traditional diary product regarded as nutritious from ancient culture. It has been developed in areas where there is minimum pollution and is therefore a truly ‘green’ product. 2. Market yak’s milk as a niche product catering exclusively for those with the acquired taste. Analysis of the alternatives: 1. Further to this, milk consumption is very low in China, with 50% of liquid milk being used to make powdered milk. Further, yak milk has a distinct flavor and caters only to a niche market therefore; marketing, the category of yak milk will be more important than marketing this particular brand. Any marketing campaign will need to set the groundwork for yak milk benefits rather than Land ‘o Lake branded yak milk features. The advantages of alternative #1: i. The team of professionals working on the project is experienced, and has the expertise required. Simultaneously, the local Chinese team of Dr Wu and Mr. Dongzhou is a very suitable partner, as they have the government contacts; the local perspective and the experience of working in the country that the team can count on to formulate a successful and far-reaching campaign. Further to the fact that Dr. Wu and Mr. Dongzhou have good government contacts, the political structure of the country is such that if the right officials are on board and are agreeable to the project, the campaign has better chances of success. ii. The government is interested in developing the Tibetan region and has been working on developing the infrastructure to empower the impoverished herdsmen. Thus the team will have the government’s support on its side if the team and the local partners lobby it with the officials as being a tool to improve the lives of the poor in that region. The team can promote the idea to the government that by selling their cattle’s milk, the herdsmen will be provided a viable opportunity for conducting business and raising the standard of living in the region. The disadvantages of alternative #1 i. Even though the team from Land ‘ o Lakes has local partners, the team itself has relatively little experience of working in developing countries and therefore it will be difficult for them to truly grasp the nuances of local culture. ii. The advertising campaigns currently being undertaken are well developed and sophisticated, given this context, the yak milk project will have a very slight to nil margin of error in depicting local tastes and selling the brand as a foreign product, given that consumers view foreign goods as being of better quality. 2. The advantages and disadvantages of option 2 are: Advantages : i. Catering to a niche market is simpler and will allow for testing the viability of the brand with advantage of having lower losses in case the product fails to make an impact. ii. As it is an acquired taste, yak milk, if catered to such a market will not need marketing or sales push as much as it would need if it was catered to the mass consumer. Disadvantages i. Niche market consumers will be hard to target as their demographics and geography are not restricted to a certain class of households. Given this, targeted marketing campaigns pertaining to consumers’ tastes will be difficult through conventional means therefore the campaign will have to be restrictive and yet catering to common tastes. ii. Targeting niche consumers will limit the brand’s potential as there might be prospects for yak’s milk for the general market. Recommendations: Recommend alternative #1, because catering to the mass market will also target consumer with the acquired taste and will also help create mass awareness about the nutritional value of the milk being superior to that of cow’s milk. Further to the alternative, targeting the niche market would require advertising expenditure similar to that in the mass market. Therefore mass market targeting will be more cost-effective. Again in lobbying to the government the potential of yak milk business for the underdeveloped Tibetan region, a bigger, large-scale business will be more of an attractive option for the communist government. This is because a large scale industry would mean that more of the population will be benefitted and that is largely the aim of a communist government. Case 2 Key Issue: The main issue here is that XL currently caters to an exclusive elite market with high quality, expensive products that are not in the reach of the masses. Therefore, in order to cater to the middle-level classes, and to counter the knock-off and substandard brands present in the market, a less pricey product is needed. This product will not only cater to the growing outdoor sports clothing needs of the middle class population, but will also be of a good quality and will not hamper the growth of the current product line catering to the elite. List of Alternatives: According to the case, the GNP of China has been on the rise, indicating more purchasing power with the masses. A the same time, clothing expenditure has risen by 6.66% between 2000 and 2001 while expenditure on recreational services has risen by 9.9 percent indicating a changing lifestyle which entails more outdoor sports. And while the level of participation has been rising in such activities, desired participation is higher indicating that future trends might be higher than current levels. Therefore, in order to take advantage of the growing market it is imperative that a new less costly product be introduced to garner a portion of the growing ‘pie’. Some alternatives in this regards are 1. Introduce a new brand into the market rather than a line extension with a different name and do not endorse it with X-L’s brand name. 2. Use a different distribution channel, where instead of direct selling; an intermediary such as a common retail chain of stores can be used to sell the brand. 3. Introduce a line extension of X-L and endorse it strongly as a line catering to the middle-class consumers’ needs. 1. The advantages and disadvantages of option 1 are: Advantages: i. Urban income rose by 41% from 1998 to 2002 while rural income rose by 14.5 percent. As X-L has a largely urban, elite class of consumers, this bodes well for the sales of X-L. But at the same time, as X-L caters only to the elite class another brand with a different brand name and no endorsement will not cannibalize sales of the original product. ii. A new brand can be promoted through the same channels and will help counter competition iii. If the brand picks up in the long run, it will be an entirely different entity, and with focus on quality and keeping the needs of the local population in mind, the brand will be able to garner a staunch consumer base. iv. It will have a better potential of sales than knock-off as their substandard commodities will have direct competition from a good product and the new product will be able to take away market share from such contenders. Disadvantages: i. More expenditure will be required to push the new product, and without endorsement of X-L’s high quality products, sales might be low in the short term. ii. Sales people will either have to be outsourced or contracted as training the current sales force will not only be time consuming, but it will also be costly. 2. One prerogative of this option is that the brand name of the store should be strong where it will help sell the new product without the backing of the sister brand. Advantages: i. Original distribution channels are not appropriate as the company could loose out on existing customers who might switch to a less costly brand. ii. Retraining of the existing sales force will be more expensive and time consuming therefore a new channel or a store with an existing consumer base will be more effective to sell the brand. iii. The store’s goodwill will be able to carry the product to its existing consumers who will be more open to try the product if they see it at the store they are loyal to. Disadvantages: i. Developing an entirely new distribution chain will take time and market research and many deals will have to be made and the legalities will have to be laid out before indirect selling can begin. This again might prove to be expensive. 3. The advantages and disadvantages of option 1 are: Advantages: i. It could have a name such as X-LR with R for regular. And with the background and goodwill of the X-L brand, the brand will not need a very extensive campaign. Disadvantages: i. It could be perceived as a low class product and might not be very popular as people from all classes aspire to be similar to that of the higher classes. ii. Exclusivity image of the brand will be tarnished. Recommendations: Recommend a combination of alternative #1 and #2 because this will not only prevent any cannibalisation of sales of the X-L brand, it will also prevent any repercussion from the possible failure of the new brand tarnishing the image and the exclusivity of the X-L brand. Also a new brand with a different distribution channel will be able to target and cater to a different market, without people associating one with the other. Speciality stores are more suitable for elite classes and retail chains will be more suitable for a mass consumer product. Thus, for the key issue to be addressed in this case a combination of the first two alternatives will be ideal. Bibliography Dr. Susan Peters, D. D. (n.d.). Yak milk: niche or nightmare? California state Polytechnic University. Nastanski, D. M. (n.d.). X-L Clothing. Saint Leo University. Read More