Product Life Cycle, Marketing Strategy, And Challenges In The Australian Dairy Industry Essay.

Discuss the product life cycle (PLC) of cheese and butter and the issues that need to be addressed by the marketers of these two products. In addressing this question you must include a discussion on the marketing strategies that could be used by dairy producers at each stage of the PLC.
2. Using the information provided in Exhibit 4 and 5,elaborate and interpret a portfolio matrix for the dairy producer DP A. In responding to this question it is recommended only milk sales for 2008-09 and 2009-10 periods are used.
4. How do the major supermarket pricing strategies affect the attractiveness of the dairy industry? What steps can dairy producers take to best deal with the market power of the major supermarkets?

PLC of Cheese

The study is intended to discuss on the PLC which are needed to be addressed by Beyond the Dairy Farm Gate. In order to address this, the study has included the discussion on the marketing strategies which may be used by diary producers at every stage. The next section of the sturdy has referred to exhibits provided with the study to elaborate and determine the portfolio matrix pertaining to the dairy producer DP A.

in response to this the main question is concerned with including only the milk sales for 2008- 2009 and 2009-2010. The latter part of the study has discussed the manner in which is concerned with the pricing of the major supermarket which are seen to affect the attractiveness of the dairy industry. In order to address this, the study shown the steps which the diary producers take for dealing with market power (Ulubasoglu et al. 2016).

1. PLC of Cheese

It needs to be discerned that GFC of 2008 has led to reduction in the process and demand of the Australian dairy products. Therefore, cheese and butter are no exception to this. From Appendix 1, the production for Cheddar cheese went down from 195,000 to 164,000 tonnes during 2004 to 2010. The total production of the cheese has been further seen to go down from 388,000 to 349,000 tonnes. The reducing sales, changes in trends and production has led to diminishing stage of PLC (Accorsi et al., 2016).

2. PLC of Butter

In terms of consideration of the consumption of butter, it can be seen that pure butter consumption in Australia is decreasing. Additionally, the customers are more concerned about consumption of margarine which is reducing in terms of demand, thereby paving the way for the dairy spreads the over margarine (DairyAustralia, 2015). Despite of this, the daily based on vegetable oil are particularly appealing to the customer with a low level of saturated fat. This has enabled the product to have a stimulus position in the market in the last two decades. This is seen after a sustained decline since 1970 and 1980s. Based on the PLC curve there is a consistency in the production level of butter and curve is ranging between maturity and decline phases (Golley et al., 2015).

3. Challenges which needs to be overcome by the marketer of cheese and butter

As per the assertions made in the research, the consumption per capita of the major dairy products such as cheese and butter seen to be relatively stable. However, researchers have also concluded that this constant change may also affect the consumption and demand pattern of products such as cheese and butter. This is due to various types of causes such as multicultural influences, developmental initiatives with the new dairy products, health perceptions, innovations in packaging and low-fat varieties (Wu et al., 2015).

The use of cheese can be used as an example for demonstrating the changes in consumer preferences and tastes. Several types of previous research have revealed that cheddar still remains among prime importance among production and consumption of cheese and there has been a significant shift in the non-cheddar varieties. This is due to the fact that the tastes of the consumers have diversify and develop. This has affected the level of production in different types of cheeses (refer to appendix 1). The information the depicts production of four main types of cheese hard grating, Cheddar, Fresh and semi hard grating. This has led to the decline in overall production of cheese from 2004-2010. Despite of this, production cheese has gone up from 4,833 to 8,660 tonnes. This is almost 200% increase over the time period of six years. This also shows the growth potential of cheese market in general (Sinning & Hasan, 2016).

PLC of Butter

The consumption of butter products on the other hand is depicted to be nearly decreasing among Australian consumers. Therefore, the marketers need to explore the opportunities of bringing in vegetable oil based dairy blends which are more attractive to the customers pertaining to minimum level of saturated fat and other perceived health benefits. This is the main reason why the production level of butter has remained constant (Henchion et al., 2017).

4. Marketing strategy suggested at each stage of PLC

4.1 Development Phase

This phase is seen to commence with companies developing and introducing a new idea for cheese and butter products. In this stage, the product has to go through several modifications which needs to consider a considerable amount of time and money at the developmental stage. In case of butter and cheese product, the market is often produced in a real marketplace and the introduction phase is seen to begin with the product itself. This is seen as the time of spending with minimum sales, no return and negative revenues for the company (Murphy et al., 2017).

4.2 Introduction stage

This stage considers the period of cheese and butter when initial acceptance of both butter and cheese in the market is doubtful in nature. The profits are designed to be almost non-existent due to increased marketing and other expenses. The objective of butter and cheese in the introduction stage is identified to attract many customers by creating awareness and interest for people trying and buying the products.

If the company is assured about gaining a considerable market share of cheese and butter, then the marketers can combine promotion and price variables for generating heavy promotion with low price. This will reduce the overall price and put stronger emphasis on promotion of the products despite of reducing the amount of profit. This may be also compensated with high volumes and at times there may be no profit in this stage however if the market share is a cash cow tomorrow then should be accepted (Gale, Hansen & Jewison, 2015).

4.3 Growth stage

At the time of the growth period, there may be a substantial improvement in the profit of cheese and butter companies. In this phase, the marketing strategy may shift from the customer acquisition and retention and brand loyalty. The main objective in this case is seen with maximising the market share and focusing on advertising and promotion which may not be like the introductory phase as it is not focused towards taking advantage of increased consumer demand of the product. It is also a suitable stage for building intensive distribution so that the forms can tend to incorporate the strategies in UK shops and supermarkets for convenience of the customers and ensuring the availability of better cheese and butter products (Hogan, 2017).

4.4 Maturity stage

The stage comprises of intense rivalry pertaining to the mature market. The firms are having the scope of obtaining high profit and low cost per customer. However, there is a scope for peak sales to occur in the state. The maturity phase is seen as the period where there is a decline in sales growth and margins reduces leading to decreasing profit. Thus, the strategies of butter and cheese is often pushed forward by the marketers by introducing new marketing channels, attractive advertising and granting price concessions for varied users of the product (Benkerroum, 2016).

Challenges which needs to be overcome by the marketer of cheese and butter

4.5 Decline Stage

It can be final in four that the butter and the sales tend to go downwards and it is sometimes difficult for the firms to conceptualize declining trend of the product. In this phase, the main objective of the marketing is identified with reducing overall expenditure on branding of milk. Despite of this, the exit barrier may restrict the forms for easy exit due to costs associated to labour settlements and contingent liabilities for land uses. Therefore, all benefits need to be thoroughly analyzed with respect to marketing objectives of the decline phase (Valin et al., 2014).

5. Sales growth rate of the products

Based on the calculation in Table 1, the sales growth of the product for UHT, flavored, non-fat, reduced fat and regular fat has been 7.7%, 2.4%, 0.8%, 3.7% and (0.3)%. In addition to this, in the second table can be clearly seen that the market share of DP A 4 to 5 different types of milk products are 0.43, 0.74, 1.88, 0.51, and 0.23. Hence, the information from the product sales and market share the portfolio matrix DP A can be inferred from figure 3 (Sim & Suntharalingam, 2015).

The regular milk can be used as an example for growth in sales (.3) % and DP A market share of milk 0.43. Therefore, it can be inferred that the regular milk position of DP A is depicted to be placed in dog phase and the overall size in market is seen to be 15%. This position of regular milk for DP A the pits that the milk in low market share has produced low growth situation in the market. This is the consequence of increasing consumption level of milk which is seen with reduced fat, flavored milk and non-fat milk (Cortez-Arriola et al., 2016).

It needs to be further seen that the UHT is the highest product sales among different variants of milk, which is identified with increasing apartment culture and urbanization leading to overall growth in the demand of milk. The weakening global economic conditions are however another factor which is enhancing the UHT milk consumption and a greater number of consumers are switching to such a variant at a reduced price. Despite of this, the combination of related market share has led to UHT positioned in question marks phase, which shows that the products are growing in the market but was able to obtain a low share of 10%. Therefore,

UHT has a good opportunity if it can be funded for increasing market share. There is a possibility for it to become a star at later stages when there is a drip in the growth and it becomes a cash cow. It may be requiring more amount of cash in the short run and an plenty of the same may be included in the question mark Phase for winning the majority of sharing the market. However, in the long run strategy will pave the way for developing a sound business (Matthews et al., 2016).

Marketing strategy suggested at each stage of PLC

7. Supermarket pricing affecting the attractiveness of their industry

It is depicted that the supermarkets have showed continued effort for most of the import channels existing in Australia for the purpose of selling milk products. This is accounted for 51% sales in 2009 to 2010. There have also focused on marketing campaigns which are aimed at lowering the prices for avoiding any dicey move.

The usage of private level branding can be regarded as an example for the supermarkets in setting a low price which has created a big gap in terms of price difference among the operating brands. From the viewpoint of customers, the pricing psychology has suggested a direct relationship among the customers for the make with the price and quality. This can result in customers feeling doubtful about the quality of milk and impact on the attractiveness of other dairy products. This also suggests that the customer valuing by high-quality milk needs to perceive the quality of private label as poorer in nature. In addition to this, the supermarkets have set milk price to as low as $ 1 milk per liter and the customers those who are price sensitive are able to easily compare the prices of two products which has resulted in increased sales of lower priced private label milk similar to regular and reduced fat (Yantcheva et al., 2016).

8. Connection between dairy farmers, supermarkets and dairy producers

The relationship of dairy farmers, supermarkets and dairy producers is intricate in nature. The Australian dairy farmers have warned about running short of milk supply is soon and the industry may face severe deregulation. The farmers have also accused the supermarkets and processors responsible for such a dispute.

An appropriate example of complexity in the industry is evident with the price war which occurred between Coles and Woolworths in 2011 and lead to reduced prices. This particular case has confirmed our farmers aware of the considerable imbalance in the market power and weakening bargaining position. In addition to this, the processors often, under pressure from the export market competition and supermarkets for using relative bargaining power and shifting risks on the dairy farmers (Wu et al., 2015).

Due to this incident, the farmers get paid same for milk whether it was sold as private label or under a more expensive branding. The increase in the retail milk prices showed the probability of likely results of supermarkets in earning higher profits and creating no difference for the struggling farmers as processor would have been set for farm gate prices just to the level which would have been significant to secure the milk which they needed. Additionally, the imbalance of power was seen among the farmers by entering into supply contracts pertaining to an unclear pricing terms which discouraged them from changing a rival processor. Henceforth, measures need to be taken for addressing such poor positioning of dairy farmers in the country (Golley et al., 2015).

9. Strategies recommended for increasing market power among the farmers

farmers are identified different strategies for winning the market power. These may be ranging from individual or collective. The collective strategies are considered the statements like market discipline which are ordering to managing the supply, in production for negotiating the sale is collectively and bringing in cooperative indication of value chain. The individual strategies aim at searching market niche is having a gaining direct access for the customers. Strategies are further classified as for the level of intervention as stated in table 3.

Strategies which can be implemented on the market level like water production and Supply Management. These are considered as exclusively collective strategy among the farmer groups.

1. The strategies which are implemented by the farmers will be adopted to be with merchants and firms. For instance, this will result in contractual sales and terms of negotiation taken collectively. In addition to this, the pulling production for negotiating the sale collectively and farmers indication of value chain can be also seen under processing and distribution. Such strategies can be covered as individual or collective depending on a situation.
2. The farmers may adopt a strategy at an individual farm level and farm as per specific quality standards and practices through short circuits (Mehta & Deeth, 2016).

The main advantage of this is depicted with that testing the internal prices of market as per the desired level to stabilize the overall market situation. This has allowed the farmers for making certain deviations in prices covered the cost of production and guarantee certain amount of stability. Furthermore, the supply management is also characterized by the fact that it considers farmers in all the geographic areas such as country, region and the province. Therefore, it can be beneficial for the entire group.

10.2 Collective Marketing Approach

It acts as a definite strategy for strengthening the farmers position as a collective force in the market and even increase the demand. The benefit of this belief to better sales price in terms of collective bargaining which will be conducive in reducing imbalance among the buyers and sellers and including respective opinions on trade negotiation.

The contract farming is inferred different types of potential advantages however it is typically associated to reduce the challenges link sales of the crops by ensuring sufficient market outputs. The long term and medium-term contracts can be beneficial in stabilizing the overall income of the farmers and including different clauses on pricing thereby improving the planning. This is especially evident in case of investment planning. The contracts are the more advantageous with respect to fluctuating prices of the milk (Ngo, 2018).

Conclusion

As per the findings of the first part it can be concluded that stage of butter is placed at the position amid maturity and declining stage as per the analyses of the data. In terms of the second part, the findings have revealed that DP A is leading the market for non-fat milk ready variant. This is evident with holding a 45% of total market share. Despite of this, the firm has only gained a minuscule market share of which UHT, which is considered as the fastest progressing milk market when compared with other types of milk. It is recommended for DP A to put more focus on UHT, and introduce more strategies for analyzing the UHT gains in the market. Lastly, the individual and collective strategies are predicted to be effective whereas it should have been considered with situations.

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