Dutch Lady Milk Industries Berhad is a leader in the quality branded dairy business in Malaysia. Dutch Lady Industries Berhad was incorporate in 1963 and was the first milk company in Malaysia to be listed on Bursa Malaysia. Royal FrieslandCampina, the parent company in the Netherlands is a Dutch multinational corporation and one of the largest milk companies in the world that produces and markets natural, nutritious and high-quality dairy products and ingredients.
Dutch Lady Malaysia first established itself as a manufacturer of sweetened condensed milk. The company products are all “Halal” certified. Every product innovation in our rapidly developing infant and child formula range is backed by extensive research both locally and internationally. Now, Dutch Lady expands their market of growing up milk products. Dutch Lady is the first company introduces a growing up milk powder specifically formulated for children from ages one to three. Dutch Lady 123 and 456 aids in expanding child attention span for better learning experience, it can also helps in brain development because it with five times more docosahexaenoic acid (DHA).
The vision of the corporate is “To further strengthen our position as the leading dairy company, driving growth”. Besides, the mission of the corporate stated as “Helping Malaysians move forward in life with trusted dairy nutrition”. This means that Dutch Lady will provide the best nutrition milk in a wide range. Besides, corporate spent more than 50 years in Malaysia, growing up with the nation and helping the nation to growth up healthy. The objective is to offer the best self and career advancement to all families by using the key to their phenomenal growth. The target customers are children and families because they are concern on health.
2. THE MARKETING MIX STRATEGIES
Product is a bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and needs. Dutch Lady products are consider as consumer products as they are destined for the use by ultimate consumers. This several product are consider as a convenience products that consumer want to purchase frequently, immediately and with minimal effort. Dutch Lady have different products such as Low Fat Yoghurt, UHT milk, sterilized milk, pasteurized milk, creamers, joy juice, and growing up milk. (REFER PICTURE 1)
In 1984, the brand name was changed from Dutch Baby to Dutch Lady for product positioning reasons. Besides, brand has powerful influence on consumer behavior. In 2002, Dutch Lady won the brand equity awards for liquid milk. This increase likelihood customer will recognize firm’s product and also can facilitate expansion into international markets. The type of brand Dutch Lady used is manufacturer’s brand which the brand name owned by manufacturer itself. Dutch Lady has high brand equity since there a high level of consumer brand awareness and loyalty. (REFER PICTURE 2)
Packaging definitely plays a vital role to form part of the product, other than serving the basic function of protecting the product. Dutch Lady has bear in mind that they must serve the cost-effective packaging, this is the reason why they use biodegradable and recyclable materials to respond to customer preferences as well as reducing the cost. Dutch Lady always ensures that nutrition for vitality through healthy lifestyles. So, Dutch Lady changed its brand image and packaging with the new corporate tag line “Get ready for life”. (REFER PICTURE 3)
As a market leader, Dutch Lady has to put in effort to create and market high quality products to satisfy consumers’ need. The company believes that in product innovation, they put more effort strives to improve its processes in order to deliver nutritious products of high quality to its consumers. The quality of the company’s products is paramount. Therefore, a quality control and quality assurance are prime considerations.
Every product being launched in Dutch Lady has to experience product life cycle. There are four stages such as introduction, growth, maturity and decline. Although the product are not wanted to be long lasting in the market, but it is require to earn at least some profits. If the product is in decline stage, promotion strategy is very important to maintain it in the market. If the sales drop continuously after the effort put, then it should be taken out from the market and launch a new product.
Dutch Lady involve in new product development by adding new product in order to continue prospering as other items reach the later stages of product life cycle. Innovation has been the driving force behind the growth of Dutch Lady Malaysia for the past fifty years, and it will continue to be that way as they lead the team into the next generation of consumers.
Price is the most important to achieve goals in an organization. According to Kurtz and Boone (2012), pricing strategy deals with the procedures of setting profitable and justifiable prices. Pricing objectives is used to give direction to set pricing of product in a company. Pricing is important so that it must consider some factors and the objectives of products or brands. Marketing manager decide the pricing objective before the actual price was set because it is a guideline to develop and manage marketing strategies. Dutch Lady used volume objective as their pricing objective. Dutch Lady main objective is to maximize their sales and get a high target return in their business since they are the market leader. Dutch Lady applied cost-plus pricing which set price that cover cost with target profit. Dutch Lady should continue to increase and expand their sales as long as with their total profit do not drop lower the minimum return acceptable which as to their profit objective.
Demand and supply in the market also the determination of setting the market price. The environmental factors must be discovered and it must understand likely the competitor actions and understand the legal constraints. There are three pricing strategies such as skimming pricing strategy, penetration pricing strategy and competitive strategy. Dutch Lady used penetration pricing strategy. Dutch Lady set relatively low price of their product in the market so that it secured market acceptance. They also wish to attract a large number of buyers so that it can “penetrate” into the market deeply and quickly.
Dutch Lady used psychological pricing like odd pricing. This type of pricing policy based on the belief that certain price or odd number just under round numbers to make goods more appealing than others to buyers. Dutch Lady used promotional pricing strategies in selling their products. The products are sold under a lower-than-normal price temporarily as type of marketing strategy. This type of strategy must be managed carefully so that consumers satisfy with it. This pricing strategy is to maximize sales at a short period of time or to position their product in consumers’ brain. Dutch Lady applied discount strategies such as trade discount to the retailers and wholesalers.
Placement strategy is known as distribution strategy. It shows the distribution channel of how the products or services getting to final consumers. Dutch Lady products are Fast Moving Consumer Goods (FMCG). Dutch Lady Milk is categorized under staples goods which is necessity for human. Dutch Lady sells their products using intensive distribution. It is distribution of product through all available channels. This type of distribution is convenience for consumers and the price is kept low.
Manufacturer ƒ Retailers ƒ Consumers
Retailing includes all the activities that involved in selling products or services directly to the final consumers for personal or non business use. In product line classification, Dutch Lady distributes products through supermarkets, hypermarkets, and convenience stores. These retailers usually sell variety of goods, available of high volume goods, low cost and convenience. The examples are Cold Storage, Tesco and Giant, 7-Eleven and 99 Speedmart.
For instance, Tesco acts as the retailer and they get products from Dutch Lady. Tesco get the products in large quantities from manufacturer. So they will set a relatively low price in the market for sales since discount is given by manufacturer. They play an important role to bulk-breaking the product and sell in small quantities in the market. So this is more convenience to the targeted customers and can satisfy their needs and wants. The retailing channel helps to generate higher profit. It is also very important for the retailer to understand needs and preferences of target market. The retailers need to have follow-up steps because they are the intermediaries between manufacturer and final consumer.
Manufacturer ƒ Wholesalers ƒ Retailers ƒ Consumers
Wholesaling includes all activities involved in selling goods or services to those buying for resale or business use. Dutch Lady did not provide wholesaler function such as warehousing, providing services and creating utility.
Promotion plays an important role in boosting up a product image and creating demand for it in the market. Promotion is producing a quality product, pricing it attractively and making it available for the target consumer Promotion is the communication with customers, provide information to assist consumer to assuring customer satisfaction, demands for personal or non-personal communication with the target customers to build up a relationship with them. Dutch Lady used different types of promotion strategies in order to attract customer.
Firstly, Dutch Lady used advertising strategy. It is non-personal communication paid for by a clearly identified sponsor promoting ideas, products or organizational which can be done through television, radio, newspapers and magazines. Current advertising slogans states that Dutch Lady is “trust, healthy and happiness”. Customers will have strong brand positioning, they remember slogan easily in mind.
Next, sales promotion being used by Dutch Lady to promote their products which it represents a set of different promotional activities that has the goal of customers for purchasing. The most common form of sales promotion is the product sold at promotion prices. Dutch Lady has designed it in a way to encourage the company’s sales. They can attract more customers since they get more benefits from the product they purchased.
Public relation is the least obvious but most effective method of used by Dutch Lady. This is because information is spread to the media to generate news coverage. Dutch Lady distributes its newsletters, annual reports, donation for charitable and civic events. For example, Dutch Lady do sponsor the athletes for Olympic in London this year. They sponsor the athletes and also their mother as a contribution to our country.
Besides, give sampling and free trials to customers let them have the opportunity to experience products which in small quantities for a short duration and without to purchase the product. Dutch Lady will distribute sampling in a suitable placement such as hypermarket to give chances customer has a try on the product. It can encourage people to try and understand the advantages of product without any purchasing made.
3. MARKET OPPORTUNITIES
Dutch Lady has the market opportunity to expand its business by offering healthier product to the market. According to Rahul Calaco, managing director of Dutch Lady, they made a commitment to reduce the consumption of sugar and will make most of their product without sugar or in low sugar level. Dutch Lady wants to improve the nutrition intake of children include all Malaysians. Milk is the beverage with the most nutrition and is good for health. However, the market faces a challenge which the average consumption of milk by Malaysians are less than the recommendation average consumption by World Health Organization.
Dutch Lady will create public awareness of their products because most people have misconception that milk only benefits babies, but milk has sufficient nutrition to adult too. Dutch Lady wants to understand the reason of low consumption milk in consumer and want to communicate with them about benefits of milk. So, Dutch Lady involve in promotion such as held campaigns to promote the goodness of milk to public. Dutch Lady also involve in government’s 1 Malaysia School Milk Programmes so that the children will bear in mind about the benefits of milk for their health.
The second market opportunity is to expand their business to other countries such as Thailand and India in order to earn more profits. Since Dutch Lady products are “Halal”, then it is not a problem for them to go into those countries. Dutch Lady show good image to the public and hope to get more market acceptance from more people. In 2012, Dutch Lady leveraged on London’s Olympics to promote its “2 a Day” campaign. Dutch Lady signed up with Olympic Council of Malaysia and sponsored four athletes in our country.
They sponsor the athletes’ mother to London for watching their children performance because mothers always playing important role in bringing up their children to have so high achievement in sports. There is a television commercial showcased that Miss Pandalela Rinong who won bronze in diving event drink Dutch Lady milk since youth in bring potential to her. Athletes can be the public role model since they drink milk and get benefits from the milk consumed. With the exposure of Dutch Lady brand name in public, many people started to recognize it. Public awareness about the dairy product produced by Dutch Lady also increases. Campaigns help a lot in boosting up Dutch Lady sales.
Dutch Lady used different promotion strategies to promote their products. Although Dutch Lady is the market leader, but they just use a few of strategies in promoting their product. However, Dutch Lady is recommended to promote their products through online marketing strategy. This is a company effort that Dutch Lady can build a direct and good relationship with the customers. Most of the business in world today is carried out through digital network that connect companies and people. Therefore, online marketing brings many benefits to them. Online marketing is less time consuming and easier way to promote the product to the public. The manufacturer can contact with their customer without face to face in order to explain all those information, they can use webcam to have a conference.
Besides, Dutch Lady is advised to come out with some new product development strategy. Launching of a new product is to increase sales and also earn more profits. The new product innovation can help Dutch Lady to maintain its loyal customers who are always look for innovated product. Dutch Lady can launch some products which focus on elderly. In the last few years, osteoporosis has become recognized as major health problem. Dutch Lady company can create more milk that contain nutrients such as calcium, magnesium, fluorine, strontium, copper, zinc, manganese, boron, vitamin C, D and K. These nutrients play a role in bone acquisition. This can make more consumption of milk in the elderly market because these types of milks will be a good nutritional solution in keeping bones strong and healthy.
Dutch Lady can expand their business to other countries. Currently, Dutch Lady only exports their products to Hong Kong, Singapore and Vietnam. So, Dutch Lady is recommended to exports their products to some other countries like India, Iran or Pakistan. Dutch Lady products are “Halal”, so it will not meet any problem to be sold in these countries. They can penetrate into the market easily. These countries citizens milk consumption are quite high. So there is a market opportunity for Dutch Lady to sell the products over there. They know the benefit of milk brings to them. Since Dutch Lady sponsor athletes in London Olympic, then the high brand equity of Dutch Lady is set in people’s mind.
Overall, Dutch Lady Milk Industries Berhad fully utilizes the marketing mix strategy. In the price strategy, they use penetration strategy, psychological strategy, promotional strategy and discount strategy. Advertising strategy, sales promotion strategy, public relation strategy and sampling strategy as the promotion strategy. Besides, they use retailing channel and wholesaling channel as the distribution strategy. Dutch Lady has to put in effort to create and market high quality products to satisfy consumers’ need in the product strategy. However, every coin has two sides. An organization has their positive and negative impacts, so that they need to take consideration to their development and management. In conclusion, nowadays Dutch Lady is the market leader in the market.