Bega Cheese Market Segmentation, Competition Analysis, And Strengths And Weaknesses Essay.

Overview of Bega Cheese

Question:

Discuss about the Market Segments and Decision Making.

This report is discussing the company ‘Bega cheese’ major market segments such as primary and secondary segments. It also discusses the primary segment involvement in terms of decision-making in the company. It also identifies the primary and secondary market segments of the company like business customers and household customers. It briefly explains the nature of competition of Bega cheese in the market that includes Porter’s five forces. The various strength and weakness are also analyzed by the company. It also analyses the strength and weakness of the company as well as its competitor. This report also explains the positioning map of the company in the market.

Bega Cheese is the Australian dairy company that is located in the town of Bega, New South Wales. It was founded in 1899 and headquarter is located in Bega Village. It produces products such as cheese, milk powder, butter and cream products. It was owned by the dairy suppliers and founded as the agricultural cooperative. Its major segments include core dairy ingredients like cheese, cream cheese, and the powdered milk. Bega cheese has the strong position in the Australian consumer goods market and it includes one-third share of the AU$550 million market is spread (Bega Cheese, 2016).

Bega cheese is producing high quality of value-added products for the customers throughout the country Australia as well as fifty countries all over the world. Its mission statement is to “Embracing the challenge, driving change, building for the future”. The company’s vision is to build pillars of people, customers, heritage, and community in order to become logo throughout Australian dairy industry (Bega Cheese, 2016). Bega cheese has a current trend that is strong growth as it has announced 9.9% that the profit is increased after tax. The revenue is $263.6m (A$366.8m) in 1H FY 2016 and it has EBITDA of $23.6m (A$32.9m). Its current trends also include its profitability of Bega cheese and it scores 4.00.

Political: The government has imposed the corporate tax of Australia that is 30% which is not able by the company to register revenue from the trading of 250gm of cheese. If there is an imposition of the tax by the government in the context of the milk products then it lowers the production.

Economic: The Company is also affected by the economical factor that is inflation rate in Australia is 1.7% that is in 2014 that decreased 2.3%. So, it is beneficial for the companies to increase the sale of the cheese. Hence, the price of the cheese remains unchanged by the company as the power of purchasing of the customers.

Social: The country is also affected socially as today the people are more health conscious as the fatty food is avoided by most of the people. Therefore, the cheese of 250gm helps in reducing the fat as it contains 65% low fat that enhances the increasing sale of the cheese and helps in reaching the huge number of customers.

Bega Cheese Market Segmentation

Technology: The country is also affected technically as the advanced technology is used like food processing technology that is used to transform raw material into finished goods. Additionally, Bega cheese uses cheese processing machinery, industrial mixer grinder for the production of the company.

Legal: The Australian companies are also affected legally by the consumer laws so that there can be a delivery of best cheese products in the country by different companies like Bega cheese. In order to acquire good health for the people, different laws like safety standard are applicable in the country before delivering it into the market.

Environment: The country is also affected by the environmental factor for bringing sustainability in the environment. The 250 gram of organic packing is used by the Bega cheese so that it can be reused. It helps in attractive the environment.

 Market segmentation includes the market segment as the consumers are taken into consideration as homogeneous. It is identified by geographic, demographic as well as the buying behavior and psychographic that includes lifestyle, interests, and personality. The major market segment of Bega cheese is core dairy ingredients that include cream, cheese cream, and powdered milk. The Bega cheese target market consists of household customers and business customers. Business customers are included in the primary market. Household customers are included in the secondary market (Zolfani, et al., 2013). The Bega cheese market segment includes the manufacturing of natural cheese, processed cheese. Today, the market segment includes kid snacking segment.

The primary target market includes the cluster of customers that the company is focused on. It mainly comprises the target customers that are targeted by the company. Many of the companies are unable to determine the primary target market because of inefficient marketing strategies. These can be identified through the needs of the customers, lifestyle factors, and demographics.  The Bega cheese company includes business customers as the primary target market.

Moreover, business customers include the restaurants in, which cheese is needed on the regular basis and it is required mostly in the fast food items. Primary buyer’s all over revenue is from their selling of the products or services and it comes from the primary target market. On the other hand, the secondary target market is the second essential customer segment but it does not include primary customer base. It includes buying at the rate higher that is a small market segment by which the buyers are influenced (Lei, and Moon, 2015). It is different from the primary target market. It includes primary future buyers. The secondary target market includes household customers as today most of the peoples, as well as young children, have their snacks or breakfast by applying cheese and in the families, it is required daily.  

The primary target market includes the segment of the place in the market. The Bega cheese involves business customers as the primary segments. In the company decision making, is very important and the primary business customers make unique decisions in terms of requirement of information. It also includes the taken time in making the decision and the types of people involved in the buying of decisions.

Primary and Secondary Market Segments

In the Bega cheese, the primary customers are involved in the decision making of the company as it can help in the identifying the quality of the product. The primary business customers also help the company in labeling and packaging of the product as for how it can be labeled. The business customers also involve in measuring the price of the dairy products so that all types of customers may purchase their product (Huang, and Sarigöllü, 2014).

Decision making is important for the future as the needs of the customers are to be identified. The business consumers can advise the company to satisfy the customers by fulfilling their needs. The decision making involves both individuals as well as needs of the company (Wedel, and Kamakura, 2012). The primary business customers include expanding the brand of the business as it is included as the company’s assets. The business customers promote the brand of the company so that it can attract many customers.

The ‘brand fit’ has become the major requirement of every company. The business customers are accountable for the judgments to the company towards their successful implementation of the product. For the decision making it requires careful attention that includes shapes and surroundings in the product. The business customer’s involvement is high in the decision making in the Bega cheese (Paul, and Rana, 2012). It includes communicating the message that uses to support the brand of the company. The high involvement is better for communicating as well as marketing by promoting the features of the brand.

The business customers are the people who provide the information for the criteria of the buying process. The important consideration includes output, quantity, quality, the cost of production, as well as maintainability. It includes the theoretical concepts as explained below:

• Recognition of the problem: Firstly, the problem can be carried out by identifying the needs that what the customers want. If the business customers identify the needs of the customers by determining the demographic as it develops the needs or wants. It can be advertised to an ideal time.
• Determination of specification and quantity needed item: It includes the requirement by describing what is required for the company. It is essential for engaging the sales team in the buying process (Yoon, C., et al., 2012).
• Search and qualification of potential sources: The buyer possesses communication is the important process for the business (Solomon, et al., 2013). It is important for the decision maker that the suppliers should be in touch with the purchasing
• Acquisition and analysis of proposals: With the help of primary business customers it helps in the decision-making the process as the company that is qualified to the supply of the product are chosen.
• Evaluation of proposal and suppliers selection: The proposal of suppliers are evaluated for the criteria of choice in order to reach to the members of the decision-making
• Order routine selection: The payment details are important and the purchasing department conducts this responsibility.
• Feedback performance and evaluation: The feedback is given by the users in the department. Feedback from the user department is important in order to have the good feedback from the users.

The Bega cheese is an Australian dairy industry which is a medium attractive industry. It consists of various competitors in the market such as Kraft that is a food manufacturer that provide a variety of brands of its product. Fonterra is the other competitor of Bega cheese who also supplies cheese and deals in marketing and retailing. Its product cheese is the number one brand of Australia. The large customer circle is engaged in its company (Solomon, 2014). The main competitor of Bega cheese is Fonterra is a multinational dairy co-operative company and it produces cheese. It deals in retailing and marketing.

The nature of competition includes Porter’s five forces of Bega cheese that are as follows:

Supplier Power – The supplier power of Bega cheese is low as there is the supply of cow milk is limited. It also includes local capacity in order to manufacture and store the milk dairy products (Spicka, 2013).

Buyer power: The buyer power is high for purchasing the product as the people are conscious of their health. The product is purchased by the buyer in large volume in order to assure profit for the supplier. They have the contract with the large manufacturers.

Potential entrants: The Bega cheese has a low to moderate potential entrants. The exchange rate is low and it is opened to the imported markets. The leaders become highly efficient by making new entrants.

Competition Analysis

Substitute products: It is moderate as the substitute product price is lower and has a good quality (Collier, 2015). The other products of Bega cheese-like yogurt or soy are alleged as a healthy snack alternative.

Rivalry among Competitors: The competition is high as due to the unique innovations the product is produced by the rivals at the lower cost.

Bega Cheese has its various strength and weaknesses that allow competing with others in the market. Its strength is that it is cost effective and easily available in the market. Secondly, the strength is the sales network as well as the distribution of products to the different markets. The competitors are dynamic or merge with this industry. It is enabling to accommodate the risk. Its strength is that it can also manage the high production demand (Vecchiato, 2012). On the other hand, there are various weaknesses that include as the company is unable to create high production due to the climate instability. Its service delivery is slow as it takes too much of time in delivering 250 gm cheese in the market.

Fonterra is the company that produces cheese and deals in marketing as well as retailing. It competes with Bega cheese. The company carries out manufacture, processing, and milk products distribution. It also has various strengths such as group scale that is a power of producing 30% global dairy product. It also has the flexibility and capability of producing different products at the dominating market (Fonterra, 2016).

It is the main supplier at the Chinese market. It maintains the quality of the product and is responsible for the maintaining the customer’s trust. It produces high quality of products for the customers. It’s another strength is that its non-stop development for improving the products quality. On the other hand, there is certain weakness such as negative publicity and highly competitive market. The other weakness is cost structure of the future as well as its market size. It also lacks strategic relationship. Its weakness is rising of the dairy prices (Fonterra, 2016).

The Fonterra and Bega cheese can be compared as well as contrast with each other as the Bega concentrates on its strength of producing high quality of cheese for the families of Australia while Fonterra concentrates on its strength for marketing its dairy brand all over the world. The Bega cheese produces high quality of products while, Fonterra concentrates on brand that is expanded all over the world.

Positioning is the essential element in every organization like Bega cheese as it helps in driving the targeting strategy. From the above positioning chart, it has been analyzed that the Bega cheese current position in respect of cheese is 500 g with 50% less fat in the customer's mind as it is healthy for their health. In comparison with the other competitors of Bega cheese, it is quite expensive. The decreasing price can make it repositioning of the product of Bega cheese as well as affordable for the customers.  The above positioning map shows the Bega cheese and how it is repositioned (Muhamad, Melewar, and Faridah Syed Alwi, 2012). It is focused on the primary business customers as well as its competitors in the market. The family is the main influence by, which the market is affected.

Conclusion

From the above discussion, it can be concluded that the company Bega cheese has to expand its business for protecting itself in the risk of failure. It should design unique products in order to compete with its competitors like Fonterra, Murray Goulburn, and Kraft.  The research in different markets should be carefully established in the new markets. It has been analyzed that the primary business customers have a high level of involvement in the industry. The company has high competitors so, to overcome them it has to produce unique products like low-fat cheese. It can be recommended to the company that it should produce an affordable product so that every kind of customer might purchase for their daily use.

References

Bega Cheese (2016) Bega Cheese.  Retrieved from https://www.businessreviewaustralia.com/company/29/Bega-Cheese-Ltd

Collier, P.M. (2015). Accounting for managers: Interpreting accounting information for decision making. USA: John Wiley & Sons.

Fonterra (2016) Weak Dairy Products   Retrieved from   https://www.nbr.co.nz/article/weak-dairy-prices-raise-doubts-about-fonterras-forecast-payout-b-184929

Huang, R. and Sarigöllü, E. (2014). How brand awareness relates to market outcome, brand equity, and the marketing mix. New York: Springer.

Lei, N. and Moon, S.K. (2015). A Decision Support System for market-driven product positioning and design. Decision Support Systems, 69, 82-91.

Muhamad, R., Melewar, T.C. and Faridah Syed Alwi, S. (2012). Segmentation and brand positioning for Islamic financial services. European Journal of Marketing, 46(7/8), 900-921.

Paul, J. and Rana, J. (2012). Consumer behavior and purchase intention for organic food. Journal of consumer Marketing, 29(6), 412-422.

Solomon, M.R. (2014). Consumer behavior: Buying, having, and being .  UK: Prentice Hall.

Solomon, M.R., Russell-Bennett, R. and Previte, J. (2013). Consumer behaviour: Buying, having, being. USA: Pearson.

Spicka, J. (2013). The competitive environment in the dairy industry and its impact on the food industry. Agris on-line Papers in Economics and Informatics, 5(2), 89.

Vecchiato, R. (2012). Environmental uncertainty, foresight and strategic decision making: An integrated study. Technological Forecasting and Social Change, 79(3), 436-447.

Wedel, M. and Kamakura, W.A. (2012). Market segmentation: Conceptual and methodological foundations .Germany:  Springer Science & Business Media.

Yoon, C., Gonzalez, R., Bechara, A., Berns, G.S., Dagher, A.A., Dubé, L., Huettel, S.A., Kable, J.W., Liberzon, I., Plassmann, H. and Smidts, A. (2012). Decision neuroscience and consumer decision making. Marketing Letters, 23(2), 473-485.

Zolfani, S.H., Aghdaie, M.H., Derakhti, A., Zavadskas, E.K. and Varzandeh, M.H.M. (2013). Decision making on business issues with foresight perspective; an application of new hybrid MCDM model in shopping mall locating. Expert systems with applications