Fonterra Co-operative Group Limited - A Multinational Dairy Essay.

The purpose of this assignment is to engage the student in conducting secondary research from various sources of data on a New Zealand business The student will be expected conduct a brief situational analysis on the chosen brand or business. In addition to synthesizing and analysing the information collected, the application of marketing concepts and theories will be evident. You will select, research and describe an existing brand, company or business of your choice that is based in New Zealand. Your task is to undertake a strategic analysis of the current situation for the selected entity. 

Section one: overview of the selected NZ business 

• State the purpose and scope of the report. • Outline the type of analysis conducted

• Summarise the key highlights and any significant conclusions. 

Background 

• A brief overview of the business — its vision, mission, and brand value.

• Describe the product/ service — its current product offering including product features and benefits, and customer value proposition.

• Lastly, briefly state its current situation in the marketplace, and any other relevant background information (core competency, core competitive advantage, and corporate culture). 

Section two: environment scanning 
P.E.S.TE.L

• A critical examination of any four of the political (including legal & regulatory), economic, social-cultural, technological and natural environment (if relevant) that potentially would impact the business positively or negatively.
• Also, consider the competitive environment and the role of social-responsibility and ethics in the business.

Section three: impact of emerging technologies and trends 
• Assess the role of digital media and electronic marketing on the business, and evaluate the influence of consumer-generated information for effective marketing. 

Section four: segmentation and targeting 

• Selection of the four segmentation bases and application of relevant variables for each, in the chosen market.
• Develop two market segment profile(s) for the selected product/ service. 

About Fonterra Co-operative Group Limited

Fonterra Co-operative Group Limited is a New Zealand multinational dairy company, it was founded in 2001 after the merging of two big dairies corporative in New Zealand Dairy Group and Kiwi Co-operative Dairies. The merging of the two dairy firms reduced competition of dairy firms in the New Zealand domestic market.The Fonterra Co-operative Group Limited is responsible to produce an estimation of 30% of the world dairy exports, this has earned New Zealand foreign exchange (Havea, et al., n.d.). The company is owned by10, 500 formers, with a revenue of over exceeding NZ$17.2 billion making it be the largest company in New Zealand. The company has an annual turnover of NZ$ 17 Billion, its core business activities consist of exporting dairy products under the NZMP brand (Andaleeb, 2016). However, the company also operates a fast moving goods for dairy products, these are called the Fonterra Brands. Fonterra Co-operative Group Limited has a number of joint ventures and subsidiaries that operate in the world market.

Fonterra Co−operative Group is guided by the vision and mission statements, “Our vision is to be the natural source of dairy nutrition for everybody, everywhere, every day. We have generations of dairy expertise behind us and generations of dairy innovation to come. Every day, our knowledge, people and products combine to bring the best of dairy to the world and the best returns back to our farmers.” The source of creating value to products is based on the confirming the competitive advantaged approaches that are relevant to the company. The company has a strong brand that is recognized in both the external and internal market (Havea, et al., n.d.).

Anchor Brand is one of the primary brands that are produced by Fonterra Co-operative Group Limited. After the merging of two big dairy cooperatives in New Zealand, Fonterra Co-operative Group decided to make a strategic decision of producing a strongest domestic brand. Anchor brand is a dairy product founded in 1886, it is owned by Fonterra Co-operative Group. Anchor Brand has the strongest image in both the internal and external market. Anchor Brand is currently marketed based on the market demand, the product is currently exported to new markets such as Australia and Sri Lanka.

Fonterra Co−operative Group is a company that operates in a competitive market environment. The market environment is outlined as the factors and forces that affect the organizational ability to maintain and build successful customer relationships, internal and external market environment are categorized to be the main types of market forces and factor (Armstrong, et al., 2015). The two categories of market environment are considered to be the critical factors that affect the company able to serve its customers.  The electronic industry in New Zealand is more competitive requiring the organization to implement the essential strategies which will help them to gain the competitive edge (Dibb & Simkin, 2016). PESTEL analysis tool is a strategic management tool that is used by the company to define the external market environmental factors that affect the ability of the firm to service its customers (Babin & Zikmund, 2015).

Core Business Activities

Fonterra Co−operative Group is operating in a segmented market, it is exposed to many political problems where this has failed the company to serve its customers. Fonterra Co−operative Group sales are coming outside the US market, New Zealand is one of the external markets that the company sales are generated (Nilsson, et al., 2017). Generally, the political insurgence originating from the countries like New Zealand affect the company positions (Heinemann, 2016).

The economic factors outline the recession issues such as country GDP, company revenues, and income. The impact created by the revenues is due to the pricing strategies and policies that are installed by the company management. The rising USD has greatly affected the operations of Fonterra Co−operative Group NZ market. The GDP of New Zealand in 2014 was recorded to be 0.3% and increased to 0.6% in September 2015, this outlines that the country economic growth has improved for 0.3%. According to the economic modeling, that was commissioned by New Zealand Government states that the country TPP is anticipated to be $2.7 billion to New Zealand Gross Domestic Product by 2030 (Heinemann, 2016).

Globalization is one of the essential elements of strategic management tool. Change in lifestyle in the world business market has enormously affected the Fonterra Co−operative Group business activities. The potential market in developed countries such as New Zealand creates the possibility of company expansion (Malmgren, et al., 2017).

Technology has stood to be an essential element to all the dairy manufacturers in New Zealand market. Technology has aided in reducing the marketing expense of Anchor brand in the market, Fonterra Co−operative Group management has embraced technology as a vital element to the company. New Zealand is a developed country where new technology is experienced in every dawn, Fonterra Co−operative Group is ensuring that it is well versed with the emerging technologies that will create a positive portfolio to their products.

The dairy industry in New Zealand heavily depends on the health as well as the availability of animals. Epidemics and plagues affect the industry by reducing the quality of products received from the animals. Climate is also another critical factor that defines environmental factors relating to the dairy industry.

The legal factors also act as the key issues that affect the operation of dairy industry in New Zealand, led by Fonterra Co−operative Group. The Fonterra Co−operative Group and New Zealand are implementing strategies legal measures of promoting the sustainable and world-class dairy products (Anema & Lee, 2004).

Joint Ventures and Subsidiaries

Consequently, Fonterra Co−operative Group is playing a critical role in implementing its social responsibilities. Anchor brand is supplied by Fonterra Co−operative Group to the famine affected nations. The competitive advantage of Anchor brand is gained by its market position in both external and internal market (Tercinier, et al., 2017).

Technology is an essential factor in business, it entails how the business organization uses information communication technology to improve its performance. The changing technology in different markets may create a negative or a positive impact on the existing products (de Graaf, et al., 2016).

The technological trend and changes in New Zealand have created a positive platform of increasing the Anchor brand in the market. The use of social media and other websites has been considered to be the components of technology that has led to increasing in company sales in the market (Ryan, 2016). Brand packaging is also an element that embraces the use of technology as the implementation of the digital market, Fonterra Co−operative Group has used technology to innovate new product designs that persuasive to the consumers in the market (Shortt & O'Brien, 2016). Currently, dairy farmers in New Zealand are employing technologies such as Batt-latches (Babin & Zikmund, 2015).

Marketing is defined as the management process where goods are moved from their original context to consumers. Technology has acted as the primary factor that has enabled the achievement of company marketing objectives. Digital marketing used by, Fonterra Co−operative Group is to build its product online (Nilsson, et al., 2017). The company has created social media walls in Facebook and LinkedIn. Consumers use social media to access the company product as they also learn about new products released to the market (Gray & Le Heron, 2010).

The producing process of fluid milk is considered intensive to the company, it consumes high energy and high financial cost. The dairy industry in New Zealand is working towards reducing the GHG emissions and other environmental impacts associated with milk processing (Ryan, 2016). Fonterra Co−operative Group is taking the opportunities of using the emerging technology to improve its production activities in the market (Singh & Verma, 2017).  The company is working towards replacing high temperature-short time (HTST) and ultra-high temperature (UHT) pasteurization with the lower energy usages and the greenhouse gas emission (Sun, 2016).

Market segmentation is embraced as marketing management process of dividing a broad business market, this division entails the procedure of dividing the existing and potential consumers. Fonterra Co−operative Group is currently segmenting its market based on the implementation of strategic marketing principles. The company is focusing on the marketing principles such as considering the marketing maps, the market size estimation and comparing its operation with those of the competitors (Mikkola & Colantuono, 2017). Marketing segmentation

Vision and Mission Statements

reduces the risk that relate to unsuccessful and  irrelevant marketing campaigns. The organization-marketing department divide and segment their market based on the essential characteristics, they are obligated to implement on the required marketing strategies that will get-up with the specific market segmentations. The importance of marketing segmentation to a company is based on creating generic marketing campaign that are conducted across all the marketing segments (Armstrong, et al., 2015). Fonterra Co−operative Group is mandated to prioritize capitalize on relevant marketing strategies including prioritizing their target audience in the market. The company is required to ensure that they meet the customer needs and demands by show-casing fundamental marketing approaches (Dibb & Simkin, 2016).

Fonterra Co−operative Group has employed the essential market segmentation types for anchor brand in the market. Geographical market segmentation entails segmenting market based on the geographic position of the consumers ( Duncan, & Shadbolt, 2014). Anchor brand is distributed mostly on the towns and cities. Psychographic segmentation is considered to be a marketing segmentation that is used by company to divide its market based on the lifestyle of people in a particular market, Fonterra Co−operative Group divided their market by considering the people lifestyle as well as understanding their demands (Banerjee, 2009). Dairy consumers in New Zealand are understood to demand for latest products. Anchor Brand is a product that is nutritious to the children, there are some region in New Zealand that are considered to be highly populated with children (Bebe, et al., 2017). Due to high population of children, the company is implementing on the behavioral market segmentation. However, the Fonterra Co−operative Group may implement marketing segmentation by understanding the consumer behavior in different market, especially on the highly populated areas.

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