Danone Dumex competitive edge

How does a Danone Dumex (Malaysia) Sdn Bhd SHAMSUDIN, SITI AKMAZNI maintain the brand’s competitive edge?

1.0 Introduction

1.1 COMPANY BACKGROUND

Danone Dumex[1] is part of Groupe Danone, a Fortune 500 company which was operate since 1958, one of the most successful healthy food companies in the world. Its headquartered is in Paris, France. Besides, Danone Dumex manufactures infant and child nutritional products and these products are then distributed in Singapore and Malaysia with exports to twenty countries in Asia, Middle East, Africa and Europe. It is the market leader and ranked number one in overall customer satisfaction in a study conducted among medical professionals and the retail trade by AC Nielsen. Then, it is also named as a Top Three Brand Family by AC Nielsen in 2002 and 2003, as well as Best Employers in Malaysia for 2003 and 2005.

1.2 Justification of the topic

In this assessment, I have choose Danone Dumex company because it has higher market share that lead it become a market leader in infant growing milk formula industry. As a manufacturer of infant and child nutritional products, all its products provide the right nutrition for optimum growth and development especially support a good digestive system of children at different stages.

Besides, this company has an international relationship with Singapore, Brunei, Middle East and Africa in exporting its products. Thus, here, we can say that it is a multinational company in this industry. So, because of this, I want to investigate and do research about this company in this assessment.

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2.0 Findings

2.1 New logo and packaging

Recently, Danone Dumex (Malaysia) Sdn Bhd is thinking to rebrand its products. In this rebranding, Danone Dumex change logo and packaging[2]. The packaging was modern, dynamic and contemporary look and feel according to the Danone Dumex’s sales director, Joris Bernard and GCH Retail (M) merchandising director, Ian Cruddas[3].

2.2 Long-relationship with Malaysian parents and children

Danone Dumex also want to communicate and commemorate long-term relationship with Malaysian parents, children and with the people outside. As it has a new brand identity, this will lead to customer’s loyalty to its products[4]. Hence, this sale of new product of Danone Dumex will boost its market.

2.3 Price

Usually, as a market leader, the price of the products will be increase. But, for this company, Danone Dumex products are expected to not increase in price. It thinks and confident that the sales of its products will boost the markets and thus, cover its probably loss[5] from the cost of production, promotion and cost to advertise the products.

3.0 ANALYSIS OF THE ISSUES

3.1 Current Situation

Product life cycle[6] is used in this analysis to show points at which businesses may need to consider launching new products, as older ones are in decline, allow a business to plan different styles of marketing, help a business to manage its product portfolio and identify points at which extension strategies may need to be introduced or should no longer sell a product. (Dave Hall, page 179).

Hence, in this situation, Danone Dumex products now in maturity stage because its products have become established with a stable market share, as a market leader (Dave Hall, page 116 and 117) and the sales are clearly higher than any competing businesses in the same market (Peter Stimpson, page 135).

Introduction Growth Maturity Saturation

3.2 New logo and packaging

As a market leader and its products are at maturity stage, the competitors will enter the market to take advantage of profits. Thus, Danone Dumex decided to rebrand its products because it wants to maintain the brand’s competitive edge[7] where it is one of the advantages of rebranding. (Dave Hall, page 204 and 205). These can allow people and customers outside alert quickly with its products and expected the new sales will boost the sales of the products[8].

3.3 Long-relationship with Malaysian parents and children

The launch of its new brand identity had cause Danone Dumex to both communicate and commemorate their long-term relationship with Malaysian parents and children[9]. When having a long-relationship with Malaysian parents and children, this will help this company to get back in track and the new sales of the products will boost the sales.

3.4 Market leader

From the article[10], Danone Dumex is the market leader in infant milk formula in Malaysia, which also has a market share about 40.9% in the year-to-date June period 2009 in the Standard Growing up Milk (GUM). It is also currently sells and exports its products to Malaysia, Singapore, Brunei, Middle East and Africa[11] that cause it to have higher market share and growing in market. Being a market leader, it will achieve the competitive edge because competition has become stiff for players in the growing up milk formula industry and this will not be a risk faced by this company.

3.5 Price

The products can be expensive to promote and maintain the brand. An establishing a successful brand in a competitive market can be very costly. Small business may not be able to afford this. (Dave Hall, page 202). Cost of production, promotion and market the product will be higher as it is a new looks product. But in this situation, Dumex does not plan to increase prices of its products[12]. As a result, Danone Dumex’s products are remaining in gaining the profit because of the loyalty customer in buying Danone Dumex’s products[13]

3.6 SWOT Analysis of Danone Dumex

To see the problem faced by this company clearly, I use SWOT analysis to access the present position of this company, the future or expected possible changes.

Strength

Weaknesses

* Market leader[14] in milk formula industry (S1)

* Loyalty customers (S2)

* Healthy product for infants and children (S3)

* Costly because has invested more than RM4 million in its new look venture (W1)

* The prices for the new-look products are remains unchanged that will provide quite high loss and need more money to back up back the invested money for the new-look products. (W2)

* Danone Dumex use above the line promotion (W3)

Opportunities

Threats

* Long-term relationship between Danone Dumex and Malaysian parents and children. (O1)

* Loyalty customers (O2)

* Many competitors (T1)

* Economic downturns (T2)

* The resources and raw materials expensive (T3)

Table 2 shows the SWOT analysis, the current and expectation of Danone Dumex

SWOT analysis shows the current and expectation of Danone Dumex’s product. Danone Dumex is a market leader (S1) in infant and growing – up milk formula industry that can be strength of this company in its market. This is because there will be no strong competitive edge where can cause this company get loss. Besides that, although it is a market leader and rebranding its products, it does not expected to increase the price of its new rebrand product. Hence, all these are the strength of Danone Dumex besides it has loyalty customer (S2) to its products and its products are prove as a healthy product[15] (S3) for infants and children.

However, this company also has a few weaknesses likes it has spent a lot which is more than RM4 million in its new look venture[16] (W1). So, this is the most risky ways of Danone Dumex to be faced as the prices for the new look products are remain unchanged[17] (W2) and used above the line promotion (W3) that is quite costly and expensive as its promotional method to advertise the new look product.

The threats, the opportunities are the expectation that will face by this company in the future whether it will gain more profit or loss. The opportunities that will face by this company are the long-term relationship between this company and Malaysian parents and the children[18] (O1) and the loyalty customer (O2) for its new rebrand products. As these opportunities are faced by Danone Dumex, its expectation to not increase the price for the new look product will boost the market that can back up the invested money and prevent more loss for this new look product.

Then, lastly is the threat or the bad expectation that will be face by this company. The first threat is there will be many competitors (T1) enter into the same market as Danone Dumex. Then, if there is economic downturns (T2) in any country, the unemployment will be increase, the buying power of the customers will be decreases and hence, causing Danone Dumex to has loss. Besides, the other threat is the resources and raw materials are expensive (T3) in the future as the raw materials are difficult to get and find.

CONCLUSION

With the commitment and willing to take the risks, it is believed that Danone Dumex will boost its sales as it rebranded its new-look products. This is because it is a market leader in this industry, has high market shares and the sales are also clearly higher as it exports its products to the other countries likes to Malaysia, Middle East, Singapore, Brunei and Africa. Even though its price is remaining unchanged, the loyalty customer and the well-established product of Danone Dumex in this milk formula industry have made its sales boost the market and gain profit. This is the strength of Danone Dumex as the market leader and has high market share[19] as shown and explained in SWOT analysis. Hence, for me, there will be no problem for Danone Dumex in get profit and maintain its competitive edge.

In addition, from my survey[20], it is proven that Danone Dumex’s products are healthy for infant and growing-up milk formula industry, has higher percentage of the loyalty customer to its products and most of the customers are afford to buy and spent for the reasonable price for the new look products. So, even though Danone Dumex is still market leader, has loyalty customer towards its products, it cannot stop or avoid the expectation and coming threat that will influence its sales in the future. Hence, does Danone Dumex still can maintain its competitive edge in the future?

BIBLIOGRAPHY

General Texts

1) Dave Halls @ Rob Jones @ Carlo Raffo @ Ian Chambers and Dave Gray, 2004. Business Studies (Third Edition) Legoprint, Italy. Waring Collins Ltd.

2) Peter Stimpson. AS Level and A Level Business Studies. Oxford New York.

3) Andrew Gillespie. AS Level and A Level Business Studies. Oxford New York.

4) About us – Danone Dumex retrieved from http://www.dumex.com.my/about_us

5) Danone Dumex’s article, ‘Danone Dumex Quality Assurance’ retrieved from http://www.dumex.com.my/whats_new_2009/article/2009_Quality_Assurance

6) Unknown author, ‘Danone Dumex Melamine-Free Shanghai Regulator Says’ retrieved from http://www.bloomberg.com/apps/news?sid=aSE8M3rTXulw&pid=20601080

7) Unknown author, the other research regarding the rebranding process http://www.google.com/hostednews/afp/article/ALeqM5h7VgLkRxkbLdTKu21W3Y6KGIH1Q

8) Unknown author, ‘Global Baby Food Market’ retrieved from http://www.bharatbook.com/Market-Research-Reports/Global-Baby-Food-Market.html

9) Unknown author, ‘Breaking The Rules, Stretching The Rules 2004′ retrieved from http://www.ibfan.org/english/pdfs/btr04.pdf

10) Lenny, Bernama, ‘Players in growing up milk formula market face stiff competition’ retrieved from http://besonline.rtm.gov.my/details.php?id=2468&pageno=3&field=bu_Title&order=ASC&title=Business/Economy

11) Unknown author, ‘About Us-Danone Dumex’ retrieved from http://www.dumex.com.my/about_us

12) http://www.hotfrog.com.my/Companies/Dumex-M

13) Unknown author, ‘About Us- Danone Dumex’ retrieved from http://www.dumex.com.my/

14) Unknown author, ‘Danone Dumexs products sport a new look’ retrieved from http://biz.thestar.com.my/news/story.asp?file=/2008/7/8/business/21761434&sec=business

Title of the article: Business Leaders say Rebranding is Key to Recovery

Sources: Article from website of Britannica Online

Date: 14th February 2009

Website:

Author: Tom Banks

Business Leaders say Rebranding is Key to Recovery

Design Week, February 12, 2009 by Tom Banks

Summary:

The article focuses on importance of rebranding and design to fight against economic recession and assist business recovery in Great Britain. It states that rebranding helps business leaders to achieve a competitive line and commitment to its services and businesses. It also notes that rebranding builds a new relationship with the customers and the businesses.

Excerpt from Article:

News in Depth

Business leaders say rebranding is key to recovery By Tom Banks A majority of UK companies see a successful rebrand as a key way of weathering the recession, according to new research. Implementation, Rebranding and Design, a report commissioned by branding consultancy the Principle Group, surveyed 250 marketing directors of blue chip companies and UK business owners, and found that the majority recognise the importance of rebranding in a downturn and acknowledge the role of design in assisting business recovery. Levels of confidence varied across the survey, but it found that 65 per cent of business leaders and managers believe rebranding will help large corporate institutions get back on track, and 85 per cent say design will play an important role in generating a recovery for some, or all, brands. A successful rebranding was seen by 64 per cent of UK business leaders as a route to gaining ‘a competitive edge in a downturn’. Similarly, 63 per cent agreed that a new identity signified ‘a bold embracing of change’. Commenting on the research, Ron Cregan, business strategy director at consultancy Navyblue, says, ‘Any brand with the appetite to develop its brand identity in a recession demonstrates a willingness to challenge the market and a commitment to its businesses, services and products.’ But he adds that many companies will ‘restrain their brand and marketing spend’, for fear of being seen to be ‘spending while people are …

Supporting Document 5

(Primary Data)

Survey: Awareness of the Malaysians Towards Danone Dumex’s Products Especially Its New-Look Products.

Date: 25th October 2009

I am an IB student of MARA College Seremban and I am doing research about the awareness of the Malaysians towards Danone Dumex’s products especially its new-look products. Thus, I need your help in filling out these questionnaires. Tick the box with √ and answer the questions.

1) Gender :

Male Female

2) Status

Married Single

Widow/ widower Others………………………….

3) What are the instant milks for baby that you know in our industry?

………………………………………………………………………………………

4) What kind of instant milk for baby that you or your family had chosen before this?

Fernleaf Danone Dumex

Nestle Others …………………………….

5) Why you use the same instant milks for your whole family?

………………………………………………………………………………………………………………………………………………………..

6) Annual household income :

Less than RM1000 RM 5001 – RM 10000

RM 1001 – RM 5000 RM 10,001 and above

7) Usually, how much you or your family (mom or dad) spent for the instant milks?

………………………………………………………………

For these questions, tick √ for your answers for these statements.

Statements

Strongly know

Know

Not sure

Doesn’t know

Strongly doesn’t know

8) Do you know any products from Danone Dumex?

9) Have you try to any its products?

10) Do you notice that Danone Dumex has a new-look products?

11) Danone Dumex products contained DHA (docosahexaenoic ) and AA ( arachidoinic acid ) that were important for brain cells. Do you know with these statements?

12) Danone Dumex contains 1c-FOS (long-chain fructo oligosaccharides) dietry fibre and essential nutrients that help support a good digestive system.

13) Danone’s Dumex milk is melamine-free.

14) For all the advantages of having Danone Dumex products that I have listed above, do you and your family want to try and use Danone Dumex products?

………………………………………………………………………………………………

FINDINGS

1. 78% buyers are married person and the other 22% is bought by widow/widower and single person who are the siblings of the child.

2. 69% buyers bought Danone Dumex’s products which is 57% is the old customers and another 12% is the new customers.

3. Most of consumers loyal to Danone Dumex’s products because they know the ingredients and contents in the instant milk that will help for sufficient nutrient and growing to their babies.

4. 93% of the customers are from the female’s customers.

5. Most of the customers said that they afford to buy and spent their money to buy the affordable price of Danone Dumex’s products.

[1] Retrieved from http://www.dumex.com.my/about_us

[2] Supporting document 1- Danone Dumex Products Sport a New Look

[3] Supporting document 2 – Giant Spotted in Shah Alam Company Unveils Huge Logo as Part of Rebranding Exercise

[4] Supporting document 1 – Danone Dumex Products Sport a New Look

[5] Supporting document 3 – Players in Growing Up Milk Formula Market Face Stiff Competition

[6] Product life cycle shows the different stages that a product passes through and the sales that can be expected at each stage.

[7] Supporting document 2 – Giant Spotted in Shah Alam Company Unveils Huge Logo as Part of Rebranding Exercise

[8] Supporting document 1- Danone Dumex Products Sport a New Look

[9] Supporting document 1- Danone Dumex Products Sport a New Look

[10] Supporting document 1- Danone Dumex Products Sport a New Look

[11] Supporting document 3 – Players in Growing Up Milk Formula Market Face Stiff Competition

[12] Supporting document 3 – Players in Growing Up Milk Formula Market Face Stiff Competition

[13] Supporting document 5 – Survey: Awareness of the Malaysian Towards Danone Dumex’s products Especially Its New-Look Products

[14] Is a business which makes decisions which tend to be followed by other businesses in the market.

[15] Supporting document 3 – Players in Growing Up Milk Formula Market Face Stiff Competition

[16] Supporting document 1- Danone Dumex Products Sport a New Look

[17] Supporting document 1- Danone Dumex Products Sport a New Look

[18] Supporting document 1- Danone Dumex Products Sport a New Look

[19] Supporting document 1- Danone Dumex Products Sport a New Look

[20] Supporting document 5 – Survey: Awareness of the Malaysian Towards Danone Dumex’s products Especially Its New-Look Products