Group Danone Product – Yogurt UK Market

Group DanoneProduct – Yogurt

UK Market

Harsh RuiaLin Qi

Mathis CohenQian Cheng

Wang Xiao nanYang Yang

Yogurt

Yogurt seems to be paid more and more attention

Global United Kingdom

Why do we choose yogurt?

Google Trend

Group Danone is in the 7th place in global food companies, and the Danone yogurt (Activia)

has second largest market share in UK.

Rank of food companies In global market (by Oxfam)

Top 10 Yogurt Companies in UK

24.3323.95

4.982.87

1.68

2.76

1.45

1.83

1.390.92

14.2318.27

The food companies competition in global market and UK

POLITICAL/LEGAL ECONOMIC SOCIAL/CULTURAL TECHNOLOGICALTREND

• Political stable.• Law protecting from

takeover.• UK government has

taken a proactive stance towards rising obesity levels.

• More strict regulations of food safety

• Inflation rate falls down

• Cash-strapped consumers

• Recovery from the recession

• Unemployment stabilized at7.7%

• GDP growth 0.8% last term

• Higher awareness about health

• High level of obesity• Busy lifestyle• Increasing consumer

spending & confidence

• Increasing interest in sports club among kids

• Healthier ingredients• Innovation of flavor

IMPLICATION

• Steady domestic market• Supporting activities

held by the government enhance the domestic demand

• Increasing willingness to spend

• More price-sensitive consumers intensify price competition between companies

• Obesity & increasing health consciousness affect demand positively

• Increasing demand of yogurt as a healthy and convenient food

• Natural foods and exercise are strong substitutes

• More enjoyable and innovative products stimulate consumers’ demand

+3 +2 +4 +1

PEST Analysis: Describing a framework of macro-environmental factors

Factor Trend Implication Evaluation

Physical Resources

Production of Yoghurts is made in larges factories in a short amount of time due to the raw material characteristic (milk). Warehouses have to be high quality standard and close to places of sales (nature of the product

Danone owns its yoghurts factories . But all Yoghurts are not made in the UK (Oykos are produced in France) Warehouses and distribution sub contracting to two UK companies

+ 3 majorstrength

Human Resources

Three very different types of employees : worker, administrative employee (marketing, supply chain, finance), scientist (R&D labs).

Danone created three graduate programs to attire new employees. It has a learning and development center and offers the possibility to do sabbaticals.

+1 minor strength

Financial Resources

Access to capital is crucial for launch of new product and large marketing campaign

Strong financial position with parent Danone Group making EBITDA £2,445m

+ 2significantstrength

Intangible Resources

High brand awareness and customer trustworthiness essential in the mass market competition Innovation and R&D are very important to produce new fashionable Yoghurt

‘Danone’ has a strong brand awareness and reputation for quality and innovative produceLarge portfolio of products not all present in the UK Global Danone R&D for new product worldwide and UK lab to product adaptation to local taste

+ 4 significant strength

The internal environment– The strength and weakness Making assessment in order to develop a realistic and achievable strategy for Danone yogurt in UK

Ext. Opportunities and risks

National campaign against obesity Global trend to more healthy food Emergence of new ingredients Changes in consumer lifestyle (healthier behaviour) UK shows sight of recovery (0,8% from July to Sept, strongest growth since 2010)

Internal Strengths

very innovative R&D labs Excellent brand reputation for quality and taste Among of cash available to launch of new productsLarge portfolio of products not all present in the UK

External Threats

Strong competition in the adult Yoghurt market n°2 behind Muller Price-sensitive buyer High substitution possible in desert and snack segments Increasing price of raw materials

Internal Weaknesses

New distributor (after a massive failure in June 2013) Lack of flexibility (huge organisation)Decrease in internal efficiency

The Strategic SWOT analysis – Achievable goals or objectives to be setInforming later steps in planning to achieve the objective

??? Consultants

7

Differentiation Strategy Create a close relationship with consumer (Yoghurt day, fidelity program,…)

Product development strategy Extend portfolio kids productsCreate a pleasure focus products (less healthier, better taste) Create man focus recipe Make vegetarian range

Market Penetration Strategy Negotiate larger space in Yoghurt section in super marketIntegrate Danone Yoghurt in lunch deal (Costa, Market Place, Food Truck,…)

Cost Leadership Strategy ‘Low-price/price promotions’ to increase market share thus strengthen position

3. The Strategic SWOT analysis – identifying the alternatives for future success

8

Product development : Launch a yogurt designed for kid• Low cost of development as the product already exist in the Danone portfolio in other

country.• A very strong brand image in the children market on sport and healthy food (Danone

World cup for kid, in 2013 in Wembley London).• Less intensive competition in comparison with that of adult market.• National awareness on the importance of a vary alimentation for children as a method to

struggle against obesity.• Good understanding of the importance of Calcium and vitamine D for growth of kids.• A very good way to educate children and their mother on the important of Yoghurt in the

healthy diet

Focus on the importance of nutrition (e.g calcium) for kids.

Strategy choice: Product development strategy

% boys % girls

5 to 10 years old 87.8 82.9

11 to 15 years old 97 91.9

The percentage of children who did sport in the last 4 weeks, by age and sex, 2010/1

The percentage of children who need calcium and vitamin D to grow

% boys % girls

5 to 10 years old 100 100

11 to 15 years old 100 100

Segmentation: How to segmenting a kid market? – Yogurt for kid 1/2It is hard to segment kids

Segmentation: How to segmenting a kid market? – Yogurt for kid 2/2The solution : family behavior (with a focus on mother) !

14%

19%

15%17%

19%

16%

Segmentation of UK familyCluster 1Cluster 2Cluster 3Cluster 4

Cluster 1: lack time, money and knowledge Cluster 2: lack the knowledge and parenting skills to improve their family’s lifestyle

Cluster 3: affluent, overweight families who over- indulge in unhealthy foods Cluster 4: live healthily

Cluster 5: strong parenting skills but need to make changes

Cluster 6: plenty of exercise but too many bad foods

??? Consultants

11

4. Segmentation: How segmentating a kid market ? - Yoghurt for kid 3/3More details on our main cluster.

Sources: Source: TNS Childhood Obesity Consumer Segmentation Research

Custer 4 Custer 5 Custer 6Family diet Strong interest

in healthy diet. Strong parental control but diet rich in energy-dense foods and portion size an issue.

Eating motivated by taste, diet includes both healthy and unhealthy foods.

Physical Activity

Family active although believe children not confident doing exercise.

Know they need to do more: time, money, self-confidence seen as barriers

Activity levels are high

Social class AB C1 C2Intent of change

Low intent to change but already leading a healthy lifestyle.

Low intent on diet but significant intent to change on physical activity.

Highest among the clusters for both diet and physical activity.

Cluster1

Cluster2

Cluster3

Cluster4

Cluster5

Cluster6

‘Differentiated’ Targeting: Focus on the most promising segments!

Targeting strategy: Differentiated Targeting

Cluster 4: living

healthily

Cluster 5: strong

parenting skills but need

to make changes

Cluster 6: plenty of

exercise but too many bad

foods

Distinct: Strong interest in healthy diet, active but not focus on sport

Significant intent to change

on physical activity and diet rich in energy-dense foods

Activity levels are high and diet drove by

taste

Accessible

through multi-platform

advertising campaign on importance of

yoghurt in children

healthy diet



yoghurt for healthy sport

performance / store promotion



yoghurt for healthy sport

performance / store promotion

Measurable

through age groups of

mums(mainly 45-64-year-olds) and the social class

(AB)

through age groups of mums

(mainly 45-64 and 17-24-year-

olds) and the social class (C1)

through age groups of mums(mainly 17-24-year-olds) and the social class

(C2)

Profitable

segment stands for 17%

of consumer market

segment stands for 19,1% of consumer market

segment stands for

17% of consumer market

52% Potential consumer

Typical Values Per

100gTiny-Tims Muller Little

StarYeo Valley – Little Yeos Yoplait Kids

Energy 405kJ/97Kcal 411kJ/98Kcal 457kJ/109Kcal 405kg/96kcal

Carbohydrate(of which sugars)

11.7g (of which sugars 10.8g)

13g (of which sugars 12.1g)

11.9g (of which sugars 10.4g)

12.6g(of which sugars 12.2g)

Protein 4.7g 3.7g 5.1g 5.3g

Fat(of which saturates)

3.5g (of which saturates 2.2g)




Fibre 0.1g 0.1g Trace 0.1g

Sodium 0.08g 0.1g 0.1g

Calcium 140mg 108mg 200mg 150mg

Positioning: Developing the image of our product in consumer’s mind

Nutrition information of our main competitors


Nutrition-Age Axes – Where are our competitors and Where do we want to be

0-5yrs 5-10yrs

Nutrition

Age

Focusing on kids from 5-10Offering nutrimental LifestyleDeveloping energetic kids


Nutrition-Price Axes – Where are our competitors and Where do we want to be

Nutrition

Price

HealthyPositive

Optimistic

We worth it !

SMARTT

Long term and Short term objectives for our strategy

Long-term objectives• Increase Danone’s market share in the UK

to and better market penetration. , brand loyalty and equity ,and increase in the total turnover by 10%.

Reenforce the R&D lab on nutrition

raising number of products in the uk from 5 to 6

Be the first kid yoghurts company (aiming to 50% of the market share)

Increasing the Product Awareness in the uk through market penetration and marketing

Maintenance / increase in the market share by 40-50%

Short-term objectives

Achieved through product development and segmentation as the quality leader by targeting 1. Kids

2. Mothers

Cluster 4: living healthily Cluster 5: strong parenting skills but need to make changes

Cluster 6: plenty of exercise but too many bad foods

Productdrinkable yoghurts (30g) Rich nutrition (high quality)Natural flavour

classic yoghurts (50g)Rich nutrition (high quality)New flavour

In large batch Rich nutrition (high quality)Generous flavour

Price Premium Pricing Market Pricing Competitive Pricing

Place Increase stores presence (on street and on line)

Increase stores presence (on street and on line)

Increase stores presence (on street and on line)

Promotion

Create a trendy brand for the children (“you’re cool if you have it”) with advertising campaign to support itTV& online ads

Partnership with primary school. Take the Danone kids yogurt as a break time dessert

Public Relationship campaign on the importance of yoghurt to children healthy diet (campaign in children medical centre, special web site to help mother to cook healthy diet, specialized press )

Sales promotion of “family packs”(yogurts for all family members, including parents and kids) and 3 for 1 discount.

Public relationship on the importance of a daily yoghurts for kids to practice sport (explicative tv/radio spot with a moral support)

Provide free trial yogurt in Parks, sports club etc.

Public relationship on the importance of a daily yoghurts for kids to practice sport (explicative tv/radio spot with a moral support) and in sport club (which are frequently use by the mother.

Marketing Mix: What does our product offer

Product – Price – Place – Promotion

Implementation Control: Assessment of the overall strategy

Continuously questions the basic direction of the strategy

Type of Control Prime Responsibility Purpose of Control Approach

I. Annual-plan control Top management; middle management

• To examine whether the planned results are being

achieved

• Sales analysis• Market-share analysis

• Sales-to-expense ratios• Financial analysis

• Market-based scorecard analysis

I I. Profitability control Marketing controller

• To examine where the company is making and losing

money• To evaluate and improve the

spending

Profitability by:• Product• Territory• Customer• Segment

• Trade channel• Order size

III. Efficiency control Line and staff management; marketing controller

• Efficiency and impact of marketing expenditures

Efficiency of:• Sales force• Advertising

• Sales promotion• Distribution

IV. Strategic control Top management; marketing auditor

• To examine whether the company is pursuing its best opportunities with respect to

markets, products, and channels

• Marketing effectiveness rating instrument

• Marketing audit• Marketing excellence review• Company ethical and social

responsibility review

Appendix

1919, Barcelona, Spain, Isaac Carasso, · Named after his son Daniel. · Manufacturing Yogurt

1929, Daniel Carasso launched Danone in Paris and business was good.

1941, entrusted Danone France to Norbert Lafont and Danone Spain to Luis Portabella · Founded Dannon US

1945,rebuilding French and Spanish businesses. · Lost interest in the US market; · Back to BSN Gervais Danone in 1981.

1967, fusion with Gervais, · Gervais-Danone company.

1972, Daniel Carasso and Antoine Riboud. · Merged their two companies.· Making Danone into a world brand

Danone: History of the group

Fresh Dairy Product --- Yogurt

Water

Baby Nutrition

Danone : some information over the range of brands

Segmenting more information on the Cluster

Positioning : price information

Documents

Group Danone Product – Yogurt UK Market