Currently, the market situation of a2 Milk Company is very good in New Zealand and in other markets. It holds 10% market share in New Zealand dairy industry. In the year 2017, the global market of a2 Milk has reached to a value of US$ 4,410 million. As of 2016, the revenues of this organization are AS$337.3 million that has been increased from previous year (The a2 Milk Company 2018).
The a2 Milk Company possesses various key competencies which assist the organization to attain sustainable competitive advantage. The major competencies of this company are stated below:
Product innovation is one of the major competencies. It is developed an innovative process to produce the milk and other related products. Considering the needs and demands of targeted market, it is making changes in its manufacturing process. The company proposes to become very innovative and smart choice for dairy nutrition (Byrne et al 2016).
Additionally, The a2 Milk Company has a powerful workforce that is properly trained to produce high quality milk and other related products with the available resources. It has an effective learning and training program for its workers (The a2 Milk Company 2018).
The chosen organization has established strong relationships with the suppliers which sell raw materials to a2 milk. Due to this, the company is able to bargain the prices of raw materials. It helps the company to attain competitive advantage in global dairy industry.
For this, the key competitive advantage is that it is able to attract more customers by working on the above core competencies. The a1 protein free and quality products assist it to gain more competitive edge over others. Under branding, the company states that its products are pure and naturally occurring milk of cows that is free from preservatives and additives (The a2 Milk Company 2018).
The government regulations and policies are said to be an effect on the decisions of farmers. In New Zealand, some of the policies are in the favor of dairy and milk production. The company’s operations are affected by import laws and foreign relations of New Zealand. In the country, the a2 Milk needs to comply with the laws and regulations imposed by government (Lees-Marshment, 2018).
There are various economic factors which can affect the growth and operations of a2 Milk Company in New Zealand. The a2 Milk is operating its business in mixed economy that runs on free marketing principles. In the country, dairy and agribusiness sectors are the major contributors to its economy. Milk and other related products are the basic need of customers and people buy milk regardless to financial position. There is an increase in the disposable income and people’s purchasing power. So, people are spending in buying quality milk products. It has enhanced the business of a2 Milk in international market (Kelsey, 2015).
Upgraded and advanced technologies have made this possible for the a2 Milk Company to promote its milk products at lower costs. Considering the changing trends in the market, the company is using new and innovative technologies in its manufacturing and farming practices. However, it can increase the costs of production for the company but it is very profitable for the company as it can make its manufacturing process faster than traditional methods (Spreer 2017). Thus, it can be stated that technological factors have both positive and negative factors on business of a2 Milk Company.
The business of this company is highly dependent on the availability and health of cows. Epidemics and other diseases can affect the cattle that will reduce the milk quality. It has adverse impact on the supply of a2 milk according to demands of customers. Considering the environmental impacts, the company owns the cows which are certified to produce only A2 protein make unique milk products (Grant, 2015). It ensures that it provides highest quality and freshest delicious milk to its customers. Nowadays, people are becoming very much concerned about environmental protection so a2 milk needs to focus on this.
In this way, these external factors have both positive and negative impact on the business operations and growth of The a2 Milk Company. The company needs to focus on these factors so that it can stay profitable in changing external environment.
The a2 Milk is facing intense competition in the dairy industry in New Zealand. There are various players which are offering similar products with higher quality. Competitors of a2 Milk are divided into two categories i.e. direct and indirect competitors:
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Competitive Analysis |
Competitors’ actions |
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Direct Competitors |
Synlait Milk Ltd: It is one of the biggest competitors of a2 Milk Company. Same as a2 milk, Synlait is also a producer of value added and nutritional dairy products. Recently, it has generated the revenues of $397.3m.
Bellamy’s Australia: Bellamy’s Australia is also a rival brand to a2 Milk as it is also engaged in offering infant formula for the babies. The company has its operations in producing other organic products as well. |
The company is able to generate more revenues than a2 milk company as it offers its products on affordable prices. It owns eight farms and now it is shifting to dairy product manufacturing from dairy farming. This is the reason that it is highly competitive for a2 milk (Kelsey, 2015). Bellamy’s is engaged in supplying its products directly to the customers. It is eliminating the interference of distributors. |
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Indirect Competitors |
Nestle: Nestle is an indirect competitor to a2 Milk Company. It is engaged in developing nutritional milk products but major focus of the company on chocolate and food segments (Chappell 2018). |
This poses competition to a2 Milk as it is transforming its brand portfolio to show the changing needs of customers in dairy products (Cescau & Laszlo 2017). |
Ethics and social responsibility plays a significant role in the business as it assists the organization to attract more customers (Carroll 2015). Nowadays, people are very much concerned towards social responsibility and ethical efforts of any organization. They expect from businesses that they work for their benefits also. Considering this, a2 Milk Company supports the Australian non-profit organizations like The Children’s Book Council of Australia, The Song Room, Landcare grants program etc. (The a2 Milk Company 2018). It assists the organization to enhance its brand presence among more people of society. By behaving ethically, a2 Milk Company is able to pass its morals, values and beliefs to its employees and consumers. It plays a critical role in making the customers more loyal towards its a1 protein free milk products (Shenkar Luo & Chi, 2014).
The below-table showcases the impact of emerging technologies and changing trends on the business of a2 Milk Company.
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Role of Digital Media and Electronic Marketing |
· The a2 Milk Company is using digital media and electronic marketing for effective promotion of its products to targeted customers. · It posts advertisements on different social media sites like Facebook, Twitter and Instagram that helps it to approach a larger population all over the world. · Through electronic marketing, a2 Milk is reaching to the people who are not familiar with the quality milk products of a2 Milk Company (Popali 2017). · To showcase its integrity, the company has introduced a promotional campaign that assists it to attract more customers. |
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Influence of consumer-generated information for effective marketing |
· Consumer generated information can have positive impact on the marketing of a2 Milk Company. The testimonials and reviews of customers help the company to make positive changes in its products accordingly. · Company stores the information that is processed or entered by the customers on a2’s official website and e-commerce site so that it can offer the products accordingly. · It is the biggest opportunity for the company’s marketers to understand the interests and choices of customers regarding milk and milk products like yoghurt, milk powder, milk etc. · The information generated by customers supports the company to market its milk products effectively (Contò et al 2017). |
The a2 Milk Company is operating its business operations considering different segmentation characteristics of customers. Targeting and segmentation variables are discussed in the below-table:
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Bases |
Primary Customers |
Secondary Customers |
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Demographic |
· Under this, a2 Milk Company determines its customers considering their age and income. · It is offering products on premium prices so company focuses on medium and higher income level people. · It is selling milk related products so it is targeting the people from every age group. · The most innovative product of company is infant formula, so it targets babies and new mothers also. |
· In addition to this, this company is targeting the customers on the basis of gender like females as they use dairy products in making different dishes. · In the festive season, it provides discounted offers by targeting lower income people.
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Geographic |
· Under geographic segmentation, the company is focusing on the customers of Australia, Singapore, USA and United Kingdom (Tidd, 2014).
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· Secondary geographical areas of this firm are Hong Kong and China. |
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Psychographic |
· The a2 Milk Company considers the personality and lifestyle characteristics of customers under this segmentation. · The company focuses on the people who are facing the medical conditions of heart diseases, diabetes, schizophrenia and autism. |
· Under secondary segment, the organization develops its marketing strategies emphasizing on the people who like to live healthy life. |
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Behavioural |
· Behavioural segmentation targets the customers considering different variables like usage rates, user status and buying power. · Milk is a basic thing for the people so company targets the regular customers. |
· Additionally, a2 Milk Company emphasizes on the calorie conscious and health conscious people (Wheelen et al 2017). |
The below are the two target market profile for the products and services of The a2 Milk Company New Zealand. The company is targeting babies for infant formula and adults for other products.
Conclusion
It is hereby concluded that the a2 Milk Company is the organization that offers its products in New Zealand and other countries. The above report includes the situational analysis that is conducted by using different strategic frameworks like PESTLE analysis. The company is facing intense competition from some well-established brands. From the discussion, it is found that company is targeting on its customers considering their segmentation characteristics. Digital media and e-marketing plays an important role in promoting the products among targeted customers.
The above analysis shows that New Zealand market is advantageous for a2 Milk Company as it offers positive economic conditions to the company. By using updated techniques, the company can enhance its operations. Changes in the government laws and regulations can have adverse impact on the business operations of a2 Milk in New Zealand. The competition is intense in the market but this company is offering healthier and a1 protein free milk products that can differentiate it from other firms. To enhance its position and overcome the potential issues in New Zealand, this company should use effective strategies and expand its business in other markets. Moreover, it should comply with all the policies and health standards and focus on distinguishing itself from others.
References
Byrne, TJ, Santos, BFS, Amer, PR, Martin-Collado, D, Pryce, JE & Axford, M, 2016, New breeding objectives and selection indices for the Australian dairy industry, Journal of dairy science, 99(10), 8146-8167.
Carroll, AB 2015, Corporate social responsibility, Organizational dynamics, 44(2), 87-96.
Cescau, PJ & Laszlo, C 2017, The new competitive environment. In Sustainable Value, Routledge, UK.
Chappell, T 2018, Nestle Competition Dents A2 Milk Shares, viewed 29 August 2018 < https://edairynews.com/en/nestle-competition-dents-a2-milk-shares-58994/>
Contò, F, Del Nobile, MA, Faccia, M, Zambrini, AV & Conte, A 2017, Advances in Dairy Products. John Wiley & Sons, US.
Erdman, K 2018, Culture’s Consequences: Comparing Values, Behaviors, Institutes and Organizations across Nations. Macat Library.
Grant, R 2015, Sacred cows: The secret to A2 Milk’s success, viewed 29 August 2018 < https://www.marketingmag.com.au/hubs-c/sacred-cows-secret-a2-milks-success/>
Kelsey, J 2015, The New Zealand experiment: A world model for structural adjustment?, Bridget Williams Books.
Lees-Marshment, J 2018, Introduction: Political Marketing and Management in New Zealand, In Political Marketing and Management in the 2017 New Zealand Election (pp. 1-5). Palgrave Pivot, Cham.
Popali, S 2017, What is the Impact of Social Media on Your Marketing, viewed 29 August 2018 < https://www.ronsela.com/impact-of-social-media-marketing/>
Shenkar, O, Luo, Y, & Chi, T 2014, International business, Routledge, UK.
Spreer, E 2017, Milk and dairy product technology, Routledge, UK.
The a2 Milk Company 2018, About Our Products, viewed 29 August 2018 <https://thea2milkcompany.com/about-us/about-our-products/>
The a2 Milk Company 2018, Supporting Our Community, viewed 29 August 2018 < https://thea2milkcompany.com/about-us/our-community/>
Tidd, J 2014, Open innovation research, management and practice, Imperial College Press.
Wheelen, TL, Hunger, JD, Hoffman, AN & Bamford, CE, 2017, Strategic management and business policy, Pearson, Australia.
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