Since its inception, Silk soy milk has maintained its status as
the most widely recognized soy milk product in the United States.
Following the 1990s, which the media often referred to as the Fat
Decade, consumers became more attracted to healthier food products.
Despite success with health-conscious consumers and efforts for
greater household penetration, Silk has failed to become a
mainstream product, penetrating only 11.5 percent of households in
2006. So, Silk is forced to decide whether they should continue
trying to penetrate the mainstream households that they have so far
been unsuccessful at, or take this time to extend the Silk brand
into more products which targets the ultra-healthy consumer.
The first scenario revolves around a continued effort to
penetrate the mainstream market. In order to penetrate the average
household, Silk must gain appeal to the grocery shoppers of the
family. For me, the only logical way for Silk Soy Milk to become a
mainstay product in the average household is to reduce the per-unit
cost of their product. At Kroger, for example, the store-brand 2%
milk costs $1.99 for a half-gallon. On the other hand, a
half-gallon of Silk costs $3.59. We have seen that consumers are
conscious of healthier products, yet they often arent willing to
incur such an extreme excess cost. The only way to combat this is
for Silk to exploit one of the major advantages they have over
regular, dairy milk: its lengthy shelf life. Silk publishes on
their website that their product stays fresh usually up to 8 whole
months from the date of purchase (Silk.com). Silk should package
their non-refrigerated gallons in bulk (say 2 or 4) which would
drive down the per unit cost. I believe a consumer would be more
enticed to buy 2 gallons for $5.50 or 4 gallons for $10. Consumers
wouldnt have to worry about their product spoiling. They could have
a few gallons waiting to be used in their pantry at home. The major
flaw with this plan is that it removes the Silk product the
refrigerated milk section, which is the most attractive place for
consumers. This being the case, Silk would have to figure out how
to get the mainstream consumer to focus on purchasing their
milk-product away from the milk aisle.
The second possibility is for Silk to continue focusing on the
niche market they currently target and growing that market as the
country continues to become more health-conscious. The obvious path
for success when utilizing this strategy is to focus more heavily
on the health benefits that their products have to offer. In 2006,
the top reason consumers purchased the soy milk product was because
it was healthy. Increased advertising and product labeling which
focus on these health benefits will increase sales. I would suggest
partnering with global, health conscious businesses. Smoothie King,
for example, is a prime candidate to collaborate with. A Silk
Smoothie line could be beneficial to both businesses. The potential
downside of this strategy is that Silk risks conceding potential
mainstream market to a competitor soy mild product. Some may think
this vision is too conservative, and just prolongs a slow death for
Silk.
In my opinion, the second option is a better choice for Silk.
Though they may not be reaching the huge market they want to right
now, consumer preferences are changing rapidly throughout the
world. As time goes on, more and more people will be drawn to the
benefits their product has to offer. I would focus on building
awareness of their product and the health benefits it offers. As
the younger generation grows, they will slowly see their market
share grow. There is no need to go away from their core
competencies now, while risking the established brand they have in
their current niche market.
