Mamee of Malaysia: Strategy of Marketing Future

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Mamee of Malaysia: Strategy of Marketing Future

Executive Summary

This paper seeks to examine a Malaysian FMCG company as executive management to

solve a problem that the company might be facing, after doing a PESTEL and SWOT

analysis of the firm to determine the marketing environment and propose a strategy to

help the FMCG firm in its future efforts. The firm Mamee Double Decker was selected as

a FMCG player in Malaysia. Mamee is a FMCG firm with 50 products in 11 lines. The

company is an international exporter and holds up to 65% market share of instant snack

foods with good taste and nutritional quality (Mamee, 2016, Mamee, 2010). Its main

products are potato chips, juices, soft drinks, milk products, and instant noodles of great

variety and tastes. The firm is highly innovative with a sound management body (Mamee

Double-Decker, 2016). The firm has one many innovation awards for its products (Frost

and Sullivan award 2014, for food product Malaysia (PR Newswire, 2014).

The problem proposed is what is the health of the firm? and how can it gain more market

share in International as well as domestic market. The marketing strategy that needs to be

developed will be discussed after complete PESTEL and SWOT analysis is conducted for

Mamee Double Decker.

Mamee Double-Decker Malaysia Berhad., has been a large player in Malaysia since

founding in ‘71 by Datuk Pan Ching Hin with its headquarters in Malacca (Bloomberg

2016). Mamee Double Decker has been in the business of food processing, snack and

dairy products with competition from nestle, Unilever and Munchies. Mamee is ranked

mainly for selling instant noodles, snack, confectionery and beverages to Malaysia,

China, Indonesia and other countries. It Imports most of it raw materials processes it and

makes products with HACCP certificate and Halal certificate which it got 45 years ago.

So among halal market which is growing at 5% in Malaysia, Mamee is well placed.

Mamee Double Decker has also managed to sell internationally to Europe and Australia-

asia, but recently the revenue from overseas sales has dipped unexpectedly. The

International market spans 100 markets. Mamee had revenue of 420 Million Ringet with

profit of about 12%. They can do better. The company was valued at 57 Million dollars.

Recently in 2012 it was delisted from the stock market to sell as a private holding

company. The company hired Rothschilds to help in the sales of an independent stake in

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the firm. The hope was to gain cash and put it into good use as expansion conduits.

Recently Headland made an agreement to help in the marketing. The finances are not

known. In Malaysia it faces competition from Munchies, Brahims and Unilever products.

This is mainly due to the pricing. Recently the firm had a slight fall in revenue due to fall

in sales of it potatoe chips Mr. Potatoe in Europe. Recently a product Mamee Chef

(premium better tasting noodles) gave the firm 115 M Ringet in profits; so the firm does

innovate and produce revenue but how can it sustain the market? How can Mamee regain

its share as a market leader in the competitive world of Pepsicos, Campbels and Nestles?

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ContentsIntroduction..........................................................................................................................5PESTEL Analysis................................................................................................................5SWOT Analysis...................................................................................................................7Conclusion...........................................................................................................................9References…………..……………………………………………………………………10

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Introduction

Mamee is a fully private FMCG company now after it was delisted. The marketing

requirements are different with the new structure. It would be advised to conduct research

into what is required by the firm by examining the external and internal environment and

stressors. For this purpose a PESTEL and SWOT analysis have been conducted to

understand the marketing needs of the firm currently.

PESTEL Analysis

PESTEL: Stands for Political Economic Social Technological Environmental and Legal.

It is the basic environmental external and internal conditions that can affect a firm. This is

an analysis of Mamee as a whole.

Political: When examining the political issues that can affect the firm internally it would

be the structuring of the firm’s management is family based mostly. This means any in

fighting in the family would affect management. The relations with other countries in

western world and Malaysia are on and off not too cozy. This would affect sales as

Malaysia would pop up on the eye of the consumer. This would be an external stressor.

So Political would get -1.

Economic: Malaysia is doing well economically with a GDP of 340 Billion dollars,

growth of 7% with 2.1% Inflation and a Annual average income of 12,000 dollars (The

World Bank, 2016; IMF, 2014, Highbeam, 2004). This means the economy is thriving,

making residual income available by consumers to purchase extra food products like

snacks. Malaysia is 65% of the market for Mamee (Mamee, 2016c). The other markets

are also doing well Oceania and Australia have picked up in sales and launch of new

products have been well received. Malaysia is doing well currency wise with good

returns on exports, as part of the various International trade bodies. Hence exports are a

good option for Mamee. Since it has a halal license it can export and expand to Islamic

countries to increase its market share as it has a known brand license since 45 years. It

should capitalize on this investment. A problem with Mamee is it imports raw materials

from outside the country making production expensive. Hence margins are thinner with 5

the rise in Forex costs, as Ringet is less in value. This puts enormous pressure on Mamee

to produce in a price range, and reap profits; perhaps it should look to obtain raw

materials from local and near suppliers in Asia to offset this incurring burden. Also sales

in China are not doing that well more advertising and competition of local players has

been putting great pressure on Mamee in the market. Economic would get +1.

Social: Socially it has been venturing in promotion through Facebook and making

advertisements that are halal with local entertainers. With Manchester United it launched

a successful campaign of Mr. Potatoe. I feel the Halal license should be used more

stressing on these markets as it has potential to grow 20% in these markets (The star,

2016). The Halal market consumers are gaining in residual income and in festivals the

products both High end and low end have potential to be picked up in huge volumes. It

needs to work on its web site and CSR initiative more to promote its products. It needs a

bigger advertising budget internationally. I would give Social +1.

Technological: Technologically it has innovated a lot to lock special flavours produce

products of particular texture colour and taste. It can do more to find other conventional

flavours and produce more products perhaps some noodle varieties. It has invested in

technology to help lock greater nutrition in its food, which I think is a bold step and

should continue. They can look to expand their units for more production currently they

have on 7 units to manufacture (Mamee, 2016a). They can possibly expand to meet

demand and cut production costs. Hence reap higher profits. I would give Technology +1.

Environmental: They follow HACCP norms and Halal manufacturing. This should be

certified and renewed to give the company a good outlook. They follow all environmental

norms. No stressors externally or internally on this front. I would give it neutral.

Legal: The company does not face any legal threats externally or internally. I would give

it neutral.

Analysis: Legal and environmental got neutral points. Technology, social and economic

got +1, political got -1. So the Total is 3 on 4 which is very good.6

SWOT Analysis

Strengths: Mamee has started with economic packing with Mamee monster. The

packaging allows 10 noodle squares with good flavor prawn, Chicken and cheese. It has

always been picked up well as it is priced the same (ADIL) throughout the world with no

Gharr (no misleading writing or advertising) and its products are halal nutritious and well

accepted. In the higher market it has launched perfecto and Mamee chef. The products

too are doing well from their flavours and quality. In milk products and soft drinks the

company also has a good name and should capitalize on this benefit (Mamee, 2016a;

Mamee, 2016b). The firm Makes products catering to their market; internationally it has

other products based on survey of taste. In Malaysia it produces other products only for

the local market which makes it a strength. They can capture more market share and have

done studies to support their product.

Mamee Double Decker reported 57.3% growth of PAT 9.6 million. Mamee has ability to

expand with innovation (example Mamee Chef) (Mamee, 2016d). They can penetrate

into exports. Since 2002 exports grew at 6.2 %. Their reputation among customers is

high. It is a household name in Malaysia. Mamee provides the consumer the best, with

good distribution throughout the world, availability best packaging and labeling (The

Ramen Rater, 2015; and 2016).

Mamee has won several awards. 2 local awards are "Promising local Company Awards"

in recognition of Mamee Double Decker, and an award from Manufacturer packaging

Council of Malaysia, for Nutrigen Liteyo. Internationally, it is recognized ISO 9002 with

China Awards Certificates (Mamee, 2016).

Weakness

Mamee has internal and external problems. It has not yet succeeded in capturing the share

of Chinese market. Mamee Double-Decker (Suzhou) Co. Ltd. Has incurred losses due to

low sales volumes. Another external problem is dependency of raw material from

Europe. Euro/USD forex is expensive and Mamee Double-decker earns less if raw

materials or currency goes up and fluctuates. Mister potataoe crisps are imported from

Europe for example (Mamee, 2008).

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Internally Mamee Double Decker has only small manufacturing facilities. It needs to

reaffirm its infrastructure and manufacturing to meet the international demand. It needs to

invest in R and D and infrastructure to compete. It faces threat from Giants like Nestle,

Pepsico foods, Unilever foods, who have huge multinational sourcing and production

units. These giants can control cost cut cost very efficiently. Hence pricing the product

and production of the right amount will have to be considered by Mamee.

Opportunity

Today consumers are on the look for healthy foods. They are more health conscious.

Mamee makes very nutritious snacks (The Star, 2014). It can capitalize on this and make

a huge fortune. Its nutrigen, cornitoz, Cheers and noodle brands can earn it huge profits if

marketed well, in the right areas. It can improve on its packaging and distribution to

make the product more visible in the market. The halal certificate is another good omen

for Mamee. It can ride the halal avenue and earn huge profits in the right markets. It

needs to advertise and make sure the brand becomes well known. Once established like in

home Malaysia it can turn good fortune for the company. Halal growth throughout the

world is at 20% which is quite a good margin. It can negotiate with the right distributors

and supply to these two growing markets to earn more revenue and capture greater

market share (The star, 2016). These two markets are growing rapidly and a large

investment in market research to place Mamee’s products will do the firm good.

Threat

Consumers are getting ever aware of the right brands and choices they make in terms of

food products. Mamee does not have a huge advertising budget that multi nationals have.

They can outstrip the competition with huge promotional prizes events and free products

as part of their sale. Mamee must try to build a budget to counter this smartly. The budget

will have to be pinpointed to reach a large mass of people. It can stick to its brands and

promote it good reputation that it has build over the years. It can promote the fact that in

2008 its sight was given world heritage status in Malaaca. The competitors are Brahim’s,

Jack N Jill, nestle, Unilever, Pesico, Nabisco foods. These brands are well known to the

consumer. They also maintain good quality and advertising. These brands are promoted

throughout the world at big budgets to promote their sales. Hence, Mamee will have to be

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innovative to come out with the right marketing mix to help it sell its products in these

markets as Malaysia is opening up and these newer products of repute come to the

consumer. Mamee will be forced to compete at lower margins and have to work harder to

survive in the market both locally and internationally.

It is obvious that it will have to do something about its china business which is not doing

well at all. China is one of the biggest markets for noodle preparations. It will have to do

market research to find out what exactly is wrong with its strategy in China. A revamping

of marketing, taste studies and product placing will have to be looked into to stall the

failing market scenario in China, so it can face competitors with greater confidence.

Conclusion

The study of FMCG producer Mamee of Malaysia showed that it is facing threats to its

domestic and international markets. It needs to revamp it marketing mix and improve

upon certain manufacturing and promotional activities in order to capture the market lost

and gain a larger share of the instant food market that is growing. The fact that there is

triple growth prospect in halal market, health and need for instant food; Mamee is well

placed if it plays the situation correctly it will definite grow at least 7 to 10 % being very

modest in the calculation. It needs to pursue it halal and health food reputation to put

together better products and reach out to the right consumers. It also needs to work on R

and D and infrastructure purposes if it is to survive the recent competition in the market.

For this expansion it will have to make investments and looks for some sort of investment

partnership (Pr Web, 2016).

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References

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A Report by the Monetary and Capital Markets Department on Market Developments and

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2016].

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http://www.worldbank.org/en/country/malaysia [20 June 2016].

Mamee (2010) Mamee 1Q10 revenues jump 26% year-onyear to RM115 million,

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http://www.investor.net.my/pdf/5282_Mamee_1Q10_PR_FINAL_100522_letterhead.pd

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http://www.jobstreet.com.my/en/companies/610433-mamee-double-decker-m [20 June

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Mamee (2016) Website [Online], Available: http://www.mamee.com/ [20 June 2016].

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