Marketing Strategy of Milk

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					Marketing Strategy
General Mills Project, Part B: Milkbuds Product Launch
Professor Christine Moorman
Monday, November 19, 2001

Team 6, Section 202




                                                         James Aschberger
                                                           Federico Cánepa
                                                               Julio Cubillán
                                                          Javier Dominguez
                                                          Mikael Granstrom
                                                             Aqualyn Laury
Marketing Strategy                     Milkbuds Product Launch


Agenda
• Market Trends 2001-2005
• Market Overview Nutraceuticals
• „MILKBUDS‟
          –   Product Strategy
          –   Product Concept
          –   Company Analysis
          –   Distribution Analysis
          –   Communication Strategy
          –   Financial Projections




                                                        Page 2
MARKET TRENDS

  2001–2005
Marketing Strategy                 Milkbuds Product Launch


Global Trends in Food and Drinks




                                                    Page 4
Marketing Strategy                                  Milkbuds Product Launch


Drivers of Innovation I
• Health issues
          – functional and pro-biotic ingredients
          – freshness
          – organic
• Pleasure issues
          –   flavor
          –   indulgence (guilt-free)
          –   „eatertainment‟
          –   positive enhancements (stimulation)
• Presentation issues
          – packaging
          – convenience
          – format




                                                                     Page 5
Marketing Strategy                                                  Milkbuds Product Launch


Drivers of Innovation II
• Convenience and „One-stop nutrition‟
• Blurring boundaries between breakfast, lunches, dinners, and snacks
          – Size
                 • Varying single serve options
          – Timing
                 • As an appetizer, a meal, a snack, or a dessert
          – Location of consumption (portability)
                 • Anywhere the consumer goes – always fresh
• Desire for additional variety and flexibility




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Marketing Strategy                  Milkbuds Product Launch


Health, Drivers, and Implications




                                                     Page 7
Marketing Strategy                    Milkbuds Product Launch


Pleasure, Drivers, and Implications




                                                       Page 8
Marketing Strategy                                                     Milkbuds Product Launch


Presentation Issues
• Convenience as the main driver
          –   Variety (increased individuality)
          –   Flexibility (amount of consumption, timing)
          –   Availability (less planning, more different locations)
          –   Portability
          –   Storage
          –   Handling (less experts)
          –   Disposal




                                                                                        Page 9
MARKET   OVERVIEW

NU TRACEU TICALS
Marketing Strategy                                                                    Milkbuds Product Launch


Definition of Nutraceuticals



„Functional foods and drinks that provide benefits beyond basic nutrition by way
     of added components and may prevent disease or promote health. These
      benefits can range from the prevention of osteoporosis through calcium
    fortification, to the use of omega-3 in fats and spreads to lower cholesterol
   levels and added ingredients in soft drinks that stimulate or promote muscle
                                       growth.‟


                      Neil Broome, Datamonitor Consumer Markets Practice Area, 2000




                                                                                                      Page 11
Marketing Strategy     Milkbuds Product Launch


Nutraceutical Trends




                                       Page 12
Marketing Strategy       Milkbuds Product Launch


Key Product Categories




                                         Page 13
Marketing Strategy    Milkbuds Product Launch


Key Consumer Groups




                                      Page 14
Marketing Strategy                                                        Milkbuds Product Launch


Demographic Note
• 35+ age group is growing faster than the total population
          – Incidence of conditions such as congestive heart failure and cancer increase
            despite advances in medicine
          – Prevention preferable to cure
          – Maintain general well being
          – Increasing demand for digestive products


• Women as a good target audience
          –   Often family decision maker
          –   Weight-consciousness and skincare
          –   Pregnancy and new mothers
          –   Solutions for osteoporosis and menopause as two potential market
              opportunities




                                                                                          Page 15
Marketing Strategy         Milkbuds Product Launch


Key Geographical Regions




                                           Page 16
Marketing Strategy     Milkbuds Product Launch


Key Success Criteria




                                       Page 17
Marketing Strategy              Milkbuds Product Launch


Key Consumer Attitude Factors




                                                Page 18
Marketing Strategy                                                    Milkbuds Product Launch


Key Consumer Attitude Factors: Consequences
• Consumers need to trust a brand so that health claims will be easily accepted
          – Advantage of food and drinks manufacturers compared to pharmaceutical
            companies
          – Use of branded ingredients to defend market positioning
• Use of a food and/or drink format, where benchmarking against non-
  functional products is more difficult
• Use active ingredients with proven effectiveness that address important health
  concerns that are not addressed by other products
• Increased legal liability and regulatory issues




                                                                                      Page 19
       MILKBUDS



      The snack you drink

A revolutionary nutritious product
           By Yoplait
Marketing Strategy                                                        Milkbuds Product Launch



                                 Product Strategy
• Leveraging General Mills‟ business knowledge into a high-growth market
          – Process knowledge of Yoplait (milk, yogurt, fruits)
          – Distribution knowledge of General Mills‟ subsidiaries
          – Brand equity (track record, General Mills #1 position in the U.S. yogurt market)


• Introduction of a new, innovative multifunctional drink, based on milk, yogurt
  and fresh fruit chunks to meet various customer needs
          – Health and prevention
                 • bone support, digestion, immune system
          – Increased mental fitness
          – Quality and taste (no artificial flavors)
          – Flexibility




                                                                                          Page 21
Marketing Strategy                                              Milkbuds Product Launch


Industry Analysis
• Food and drinks companies are under big innovation pressure due to high
  level of competition in a largely stagnant market

• Pharmaceutical companies face stiff competition in their core markets and are
  looking to expand their range of businesses

• Increased intensity of the „fight for the share-of-stomach‟ between food and
  drinks companies, pharmaceutical companies, restaurant, fast-food chains,
  weight-loss programs and other players




                                                                                Page 22
Marketing Strategy                              Milkbuds Product Launch


U.S. New Product Launches by Health-Positioning (1999)




                                                                Page 23
Marketing Strategy                              Milkbuds Product Launch


U.S. New Product Launches by Age Group (1999)




                                                                Page 24
Marketing Strategy                                                           Milkbuds Product Launch


Consumer Lifestyle Trends 2001 - 2005
• Increasing importance of health issues
• Taste and quality of food as main decision variable
• Market areas for nutraceuticals
          – Standard plus (fortification with vitamins and minerals)
                 • Standard plus for everybody
          – Lifestyle (support mentally or physically demanding lifestyle activities)
                 • Lifestyle more for younger consumers
          – Medical (competition with OTC and even prescription drugs)
                 • medical more for older consumers
• Image-led consumption
          – Brand influences lifestyle and vice-versa




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Marketing Strategy                                                      Milkbuds Product Launch


Nutraceutical Market Trends 2001 - 2005
• Fast growing market
• New market entrants into the food and drink industry
          – Pharmaceutical companies
          – Ingredient manufacturers
• Increased volatility
          – Uncertain consumer acceptance of functional food and genetically modified
            products
• Increasing regulatory pressures and uncertainty
          – Biotechnology and genetically modified organisms
          – Declaration of ingredients




                                                                                        Page 26
Marketing Strategy                                                               Milkbuds Product Launch


What kind of product are consumers longing for?
• Focus Group and additional one-on-one interviews suggest
          – Snack-drink solution that meets specific needs
                 • health, disease, energy
          – Natural, organic, fresh, non-fat
                 • Milk or juice as recommended solutions
                 • Not too sweet (should be more refreshing)
          – Appealing, indulgent
                 • Premium product (reward mentality)
                 • Real fresh fruit chunks to chew
                 • High degree of autonomous portability (cupholder, bag etc.)
          – Function
                 •   Bone support
                 •   Energy provider (mental energy)
                 •   Vitamins and minerals are regarded as givens
                 •   Improved digestion




                                                                                                 Page 27
Marketing Strategy                                    Milkbuds Product Launch


           Drink Market Forecast - Fruit and Vegetable Volume
                                (million liters)




                                                                      Page 28
Marketing Strategy                                          Milkbuds Product Launch


                     Drink Market Forecast - Functional Volume
                                      (million liters)




                                                                            Page 29
Marketing Strategy                                            Milkbuds Product Launch

              Drink Market Forecast - Functional Sales   (million liters)




                                                                              Page 30
Marketing Strategy                             Milkbuds Product Launch


                     Dairy Market Forecast
                        Yogurt Volume
                            (million liters)




                                                               Page 31
Marketing Strategy                                                              Milkbuds Product Launch



                                  Product Concept
• Name of the Product
          – Milkbuds by Yoplait
• Unique Selling Proposition
          – Nutraceutical-enriched, shelf stable milk-yogurt-mix smoothie
• Premium Positioning
          – All natural, real fruit drink
          – Room temperature or cold consumption satisfaction
• Description
          – One size: 10.5 oz
                 • 10.5 oz: $1.39 single, $7.29 six-pack, $ 13.99 twelve-pack
          – Food/Drug/Mass/Club retailers, convenience stores, drink machines, K-12
            schools




                                                                                                Page 32
Marketing Strategy                                           Milkbuds Product Launch


Our Product
• Refreshing milk-yogurt-mix drink
          – Creamy and smooth
•   No artificial flavoring
•   Contains real fruit chunks to boost flavor sensation
•   New technology allows shelf stable positioning
•   Three flavors to start (Strawberry, Banana, Blueberry)
•   Four specific targets
          –   Mental power
          –   Bone support
          –   Improve immune system (prevention)
          –   Improve digestion
• Use of a branded bacteria ingredient (positioning)




                                                                             Page 33
Marketing Strategy                                                Milkbuds Product Launch


Product Benefits
• Consumer realizes benefits from:
          –   liquids
          –   carbohydrates
          –   protein
          –   fibers
          –   vitamins
          –   minerals
          –   Dextrose to supplement energy and hydration level
• Milkbuds delivers:
          – Nutrition with sole or complementary usage
          – Refreshment and hunger mitigation
• Probiotic to aid digestion (bifido bacterium)
• Includes several cereal fibers




                                                                                  Page 34
Marketing Strategy                                                            Milkbuds Product Launch


The Bottle
• New functional form
          – Easy-grip bottle, small enough for child‟s hands, twist-off cap
• Appropriateness
          – Will fit in car cup holder and standard bottle/cup holders
• Special aluminum seal
          – Freshness sealed, quality promise
• Trendy design (brand + coolness + fruits)
          – Playing of the incarnation idea of an actual milkbud
• Easy disposal
          – Recycle-friendly
• Promotional bottle packaging
          – Co-marketing with GM cereals and desserts




                                                                                              Page 35
Marketing Strategy                                                      Milkbuds Product Launch


Targeted Market
• Multi-stage roll-out
          – Stage one: U.S. (prime market, second highest growth potential)
          – Stage two: E.U. (newer to market, highest growth potential)
• Timeline
          – 2002 roll-out for U.S.
          – 2003 roll-out for E.U.
•   U.S. ready, education needed in E.U.
•   Focus on families with kids, empty nesters, exercisers
•   Infiltrate yogurt and confectionary market – ease of use
•   Usage patterns
          – Product can be consumed anytime, as a drink, as a snack or even as a light
            lunch




                                                                                        Page 36
Marketing Strategy                                             Milkbuds Product Launch


Macroeconomic Competitive Pressures
• Limited population growth in the U.S.
• Aging population
• Internationalization of Trade
          – Frequent and aggressive cross-border competition
• Retail pressure
          –   Consolidation
          –   Better information
          –   Decreasing customer loyalty
          –   Fight for shelf space
• Higher pace of working life




                                                                               Page 37
Marketing Strategy                        Milkbuds Product Launch


Categorical Forecast - New Market Entry




                                                          Page 38
Marketing Strategy     Milkbuds Product Launch


Competitive Analysis




                                       Page 39
Marketing Strategy       Milkbuds Product Launch


Competitive Groupings
• Direct competitors




• Indirect competitors




                                         Page 40
Marketing Strategy                                                         Milkbuds Product Launch


The Business Opportunity
• Mathematical Equation:

          – 18% growth in Functional products
                 • Resulting from increased focus on health, lifestyle +


          – Busier single and family lifestyles
                 • Leading to more on-the-go consumption +


          – Uniquely branded GM ingredient
                 • Leveraging existing strengths in food portfolio =


                 Milkbuds by Yoplait: America‟s first drink snack




                                                                                           Page 41
Marketing Strategy                          Milkbuds Product Launch



               Company Analysis of General Mills




                                                            Page 42
Marketing Strategy                                               Milkbuds Product Launch


General Mills’ Growth Outlook
• To catch up with some of its competitors GM suggests growth by:

• Product Innovation
          – Enhances unit volume growth and market share gains
• Channel Expansion
          – Look beyond traditional grocery stores
• International Expansion
          – Target fast-growing markets
• Margin Expansion
          – Through productivity innovation




                                                                                 Page 43
Marketing Strategy                                                         Milkbuds Product Launch


Capabilities of General Mills
• Distribution and marketing skills
          – Great relationships with retailers enhances a better product fit in the market
• Since taste and quality are of paramount importance, advantage of GM over
  several competitors (dairy, food, pharma)  yoplait
• Proven track record in new product development
• Able to leverage the strong brand equity
          – Yoplait is one of GM‟s star brands right now, and has overtaken Dannon in
            yogurt category




                                                                                           Page 44
Marketing Strategy                                            Milkbuds Product Launch


Risks for General Mills
• Need for partner (ingredients) joint ventures with pharmaceutical company,
  because GM can provide process technology, distribution and marketing
  capability (plus customer knowledge)
• Constant product and research innovation can make consumers switch to
  other substitute products and decrease demand for Milkbuds




                                                                              Page 45
Marketing Strategy                                                      Milkbuds Product Launch



                          Distribution Analysis
• Have to identify the consumers‟ needs and make the product available to
  them
• Two different consumer needs:
          – Impulsive – high availability, e.g. convenience stores and drink machines
          – Planned – part of every supermarket‟s offering and available for home shopping
• Leverage the superior GM sales force‟s relationship with retailers




                                                                                        Page 46
Marketing Strategy    Milkbuds Product Launch


Distribution Trends




                                      Page 47
Marketing Strategy                                                Milkbuds Product Launch



                     Communication Strategy

•   Address the health conscious part of the population
•   Stress convenience, preventive health care and improved life style
•   Target women since they are the main decision makers at home
•   Reach her by lifestyle magazines, television advertisements and in-store
    promotion




                                                                                  Page 48
Marketing Strategy                                                       Milkbuds Product Launch



                          Revenue Projections
• Launch in 2002
• Target to reach 5% of US households the first year (2002)
          – A successful product is usually tested by 10% of the US households, and
            Milkbuds will target 50% of these households
• Repetition ratio of 40%, but loss in volume will be offset by international
  expansion.
          – Europe and Asia are two fast-growing markets that are able to offset the
            decline of US sales
• Assumes that every household, on average, consumes 1 Milkbud per day
• Assume to sell six 1-packs for every one 12-pack and 6-pack sold
          – This makes the average price $1.234
• Since it is a new product, we assume that the competitors will apply a “wait
  and see”-tactic
          – Leads to low competition the first year
• Due to first mover advantages and the strong Yoplait brand name, we assume
  the switching rate to be low


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Marketing Strategy   Milkbuds Product Launch


Revenues 2002-2004




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