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Marketing strategy of Danone Essay

Summary

After the market research of manufacture and generic yoghurt brands in Spain we came to a conclusion that the best three brands are Carrefour, Danone and Carrefour Discount in the given order. One of the main attributes for the Carrefour’s first place was the balance between low price and good quality with attractive packaging even though Danone was the market leader when concerning the market share. The aim of the marketing strategy for Danone is to gain back the market share it has lost during the years 2007 to 2013 and how Danone can adapt to the economic situation without damaging its premium brand position.

SWOT of Danone in Spain

We decided to make Danone’s SWOT to determine its strengths, weaknesses, opportunities and threats in Spain. By the analysis we named action that can be done in the future in order to increase the market share of Danone.

Strength

– quality (packaging, structure of the yoghurt,
– variety of product line
– well known for its good quality and healthy products
– development of new products & innovation
– advertising (attracts kids)
– known brand
– web page discount + agreements with the shops
– strong financial situation
– a number of CSR activities and initiatives to benefit and support the stakeholders Weaknesses

– high pricing strategy (premium brand)
– competition from big competitors in every segment, which means limited market share for Danone
– presence of many competitors means high brand switching

Opportunities

– the market of healthy products is growing
– using discount coupons
– street marketing & viral marketing
– cooperation with Kellogg’s
– renewable packaging
– acquisitions and mergers
– new placement of healthy products

Threats

– economic crisis
– rising popularity of generics
– increase in cost of raw materials
– acquisition by competitor
– though competition

3 Strengths

As a market leader in terms of market share, Danone’s products present many strengths, and the brand continues to improve those strengths all the time. Indeed, in terms of quality, Danone’s products are the best in Spanish market with healthy, tasty and good structured products. Moreover, with a unique attractive packaging, Danone stands out from the other brands on the market. The variety of its product lines give Danone the strength to meet perfectly the demand. In this way the brand can respond to all the customers’ needs, in accordance with the different target groups, wants and customers’ tastes.

All the products can be seen on the web page: http://www.danone.es/Producto/danone/#.UxzBm3kh5GM

Moreover, the company is focused on research and development, and in this way concentrates a large part of its work on development of new products and innovation. This aspect makes Danone a brand concerned about the future and its consumers’ future needs. This is why today Danone is a brand with a worldwide reputation, well known by most of the people, and an example for other food-processing industry brands. In addition to that, Danone has webpage discounts and agreements with shops which push new clients to buy and current clients to buy more.

Finally, Danone’s advertising represents an important strength for the company because they have strong marketing campaigns. This way, the brand catches all customer’s attention depending on the target endorsed. Advertising variates depending on the product line and the main target market. For example, many of the brand’s advertisings are focused on kids and their needs, which is making the products for kids very attractive. At the same time Danone is giving valuable attributes for parents to make the final decision to actually buy the product especially when it comes to the healthiness or a daily need of certain vitamins and calcium. Moreover, their advertisements are brilliant to attract new clients for their different product lines.

4 Weaknesses

High pricing strategy can be considered as a weakness for Danone when considering the economical situation. As a premium brand Danone has a “label” of a better and more expensive product that can drive customers to consume generic brand products. Moreover, Danone has permanent competition from big competitors, like Kraft Foods or Nestlé, in every segment, and Danone’s sales decline compared to those competitors. Finally, the presence of many competitors means high brand switching, which can represent an important weakness for Danone.

5 Opportunities

Danone is a well known brand with a great reputation worldwide that implies plenty of opportunities in the Spanish market. People are more health concerned than ever, and this trend is making its way to the Spanish culture as well. As mentioned before, Danone has a large product line where healthy products such as Actimel and Pro yoghurts with added protein. Especially in Spain where the weather is good and the so called bikini season is longer because of the warm weather, people tend to take more care of their body shape and healthiness, which enables Danone to promote and sell its innovative and health concerned products to Spanish people. In addition as shown in the graft below, the demand of yoghurt is increasing year by year meaning that customers are willing to consume such products.

5.1 Discount coupons

One of the main weaknesses of Danone is the high pricing strategy that can make customers turn away to consume generic brand products. Thereby Danone could start using discount coupons temporarily. The coupons would be placed as part of the packaging with a 10% discount. Discounts will not be able to be combined with other discounts and it could be used in the next purchase of any Danone products. The main idea is to give a small discount to lower the threshold for purchase without actually decreasing the real price. At the same time this kind of discount coupons creates a continuous circle of purchase and creates stronger customer relation for the products.

The real difference of the price would not be significant regarding to the loss of revenues of Danone but would give added value for the customer to consume Danone products. Since Danone would not lower the real prices but use this kind of discount, it would not harm Danone’s premium brand status.

5.2 Street and viral marketing

Spanish culture is used to the street marketing and handing out flyers especially in the bigger cities as Madrid. Instead of giving tasting of the Danone products in the supermarkets, it could be a great opportunity for Danone to place a stand into a centric place of a big city, give tastings and share information especially about the healthy products. Thereby Danone can make its most innovative and special products familiar to the new customers. In addition, Danone could advertise its loyalty club that offers plenty of discounts.

To use all the sources of street marketing it would be effective to create something catchy that people would be able to make viral. It could be a small competition, flash mob or a game where customers can be active and be part of Danone.

In addition, it is often forgotten or unknown that Danone is paying high attention to environmental issues and acts socially responsible. Therefore street marketing gives Danone an opportunity to communicate with customers and show the great work behind its products. This kind of positive information is likely to leave a mark to the customers and make them consume Danone’s products in the future.

5.3 New placement

Danone offers healthy products and concentrates its promotion on that aspect. This is why we decided to gather some healthy products in specific places, on the first hand. For example, we want to place healthy products, especially products with extra protein, in sport clubs, to familiarize sport-people who like having a snack after their training, with the brand, and to convince them to eat healthy products. On the second hand we want to establish special machines in private universities to spread Danone’s products. In this way, we distribute healthy product to young people, who are more concerned by the “healthy trend” than people of the older generations.

5.4 Recyclable Packaging

It is true that recyclable packagings may be seen as a new concept. Nevertheless, it is a necessary one. Materials such as plastic, glass, metal, cardboard or paper may be reduced. To replace this, some alternative products may be used but still maintaining stability and quality. It is an economic benefit, every stage of the recyclable packaging offers potential savings that can make a great contribution to the environmental protection. Besides the economic factor, it also encourages low energy production technologies, reduced transportations and waste minimization.

After this analysis we may ask ourselves, what about Danone? We recommend a packaging in green color, which will have a resemblance with the environment. In this packaging the consumer will be able to visualize written facts about the ecosystem, as well as quotes about nature. To increase the interest in the product an extra souvenir will be provided, a disposable spoon in the shape of a leave, this will be attractive to our customers’ eyes. In this way we can differentiate ourselves from the market and mostly, from our direct competitors.

5.5 Association with Kellogg’s

5.5.1 Kellogg’s Brand diagnosis

Parent Company : Kelloggs

Category : Food processing

Sector : Food and beverages

Tagline/ Slogan : Bring out best to you

USP : First company to enter into readymade cereal breakfast segment

Segment : Food- cereal breakfast and beverages

Target Group : Family and children looking for healthy tasty breakfast

Positioning : Healthy and tasty breakfast

Product Portfolio – Brands :
1. Corn Flakes
2. Coco Pops
3. Chocos
4. All-Bran
5. Krave
6. Frosted Flakes
7. Froot Loops
8. Special K
9. Eggo
10.Fiber Plus
11.Crispix

Kellogg’s main competitors
1. Quaker
2. Post
3. General mills
4. Torto
5. Tilo
6. Uncle Sam
7. Nestle
8. Cadbury
9. Familia

5.5.2 Kellogg’s SWOT Analysis

Strengths:
1. Geographic Diversity: The company’s products are marketed and sold in more than 180 countries around the world; the company will not be seriously hurt by economic problems exclusive to one market or country
2. Great marketing initiative through various campaigns
3. “Kellogg’s small changes big differences” earth day celebration
4. “Fighting hunger” initiative with Walmart
5. Kellogg’s “heart healthy selection”
6. Has a global workforce of over 30,000
7. High brand awareness and top of the mind breakfast cereal brand globally 9. Solid Revenue Growth: Kellogg reported revenue representing year over year annual growth of 3.89%, a stable and secure rate that is projected to sustain into the future 10. Brand Loyalty: Kellogg’s iconic red logo can be found on the majority of the cereal boxes in your local supermarket, and drives customers back again and again

Weaknesses:
1. Saturation of Market: Kellogg’s products are already in nearly every market around the world, so there is little room left for geographical expansion 2. Some products are high in sugar content

Opportunities:
1. Development of distribution channels in other countries with help of other company
2. Change in lifestyle of consumers , lack of time increase consumption of ready-made-food
3. Tie-up with restaurants and hotels
4. Product Innovation: Kellogg has for years innovated and created new brands and products, and further product innovation is probable and should fuel sales growth

Threats:
1. Increasing competition in readymade breakfast segment
2. Food regulations by government
3. Due to the increase of white labels and store brands, consumers have a lot more choices and a lower price segment to choose from.
4. Strong competitors

5.5.3 Description of the strategy consisting in associating with Kellogg’s

After this wide market research of Kellogg’s company, we came to a conclusion that an association with Kellogg’s to launch a new product would be a great enrichment for both Danone and Kellogg’s. Indeed, Kellogg’s believes that with every morning comes a new beginning. The company believes that when we start with a great breakfast, great things can happen. That’s why they make more of the foods that we and our family know, trust and enjoy. A variety of great-tasting, good for our favourites that get us going so that we can make the most of every moment. That is how Kellogg’s will bring additional quality, taste and power to our brand.

5.5.4 Marketing mix of the new product

Product:
4-pack Danone yoghurt with Kellogg’s cereals attached to the yoghurt. On one side, Danone yogurt, on the other, Kellogg’s cereals. It offers cereal lovers an alternative to milk.

People:
This product is directed towards health-conscious consumers, family and
children looking for healthy, tasty and quality breakfast.

Price:
~2,30€ / 4-pack yoghurts

Place:
Danone’s distribution strategy is to always be available to everyone. This means the products are distributed widely, in a variety of stores and locations so that it’s easy for customers to purchase it, everywhere. Danone guarantees easy accessibility thanks to a great network of distributors. Their products are available in numerous supermarkets all over spain such as Mercadona, Dia, Carrefour, Eroski, Super core, etc….

Promotion:
For the promotion of this new product, Danone (and Kellogg’s) will penetrate the consumer’s mind using the following means:
1) Television Commercials
2) Social Media (Facebook and YouTube)
3) Discount coupons
4) Radio
Danone’s promotion strategy is also known for using strategic ways to expose their products in supermarkets, so this strategy will of course be used as well for the new product.

5.5.5 Conclusion

With this strategy, the launching of a new yoghurt/cereal product, Danone wants to contribute to the development of the consumption of ultra-fresh products at breakfast. This product will be introduced as a trial in the first place. If this product turns out to be a success, we will widen this product line by introducing new flavors of this type of yoghurt with cereals, such as strawberry, vanilla, chocolate, etc. Another expansion of this new line could as well be Kellogg’s classic cereals coated with Danone yoghurt.

Threats

As mentioned before the economic crisis give a challenge for premium brand as Danone. There can be seen a change of consumption where the low price goes over the quality of the product. Therefore generic brand are gaining more and more market share. Year by year there the prices of the raw materials tend to increase which gives an extra challenge for producers to keep the final price customer friendly but still get revenues.


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