Australian Dairy Industry: Product Life Cycle Essay

Questions:

1. Explain on the product cycle of cheese and butter and the issues need to be addressed by the marketers of these products.
2. Interpret a portfolio matrix for the dairy producer DP A using sales for the 2008-09 and 2009-10.
3. what factors to consider when elaborating on the multifactor portfolio matrix?
4. How do the major supermarkets pricing strategies affects on the attractiveness of the dairy industry? What Steps the dairy producers to deal with market power of major supermarkets?

Answers:

Introduction

As the farm sector in Australia, the milk-processing sector is undergoing rationalization that has been continues. [1]This has resulted from the improvement of the capacity of the factory, as the large operations have improved on the efficiency and the economies of the scale. Previous there was lack of growth in the production of the milk due to relying of the pressure that resulted from the pressure of Australian dairy organizations to put resources into the expanding preparing limit. The test had been to expel the surplus limit and approaches to use on the current limit as productivity (Doidge, James, Leonie Segal and Elena 2012). The Australian dairy fabricating division is extremely various and it incorporate the rancher claimed, cooperative, and private and the public companies. Nonetheless, there was a global economic downturn back in 2008, which has resulted to decrease in the demand and the prices of the daily products in Australia. This greatly affected the market in Australia and the farmers suffered a lot (Hubbard and Drake 2013). In 2010, there was a momentum recovery of the economy as the products were gradually doing well in the market. The prevailing view in this industry is that if there is no overlay of both financial and economic downturn there will be a return to the fundamental aspects of the dairy market (Smith, Shana, Gregory, Roger and Chih-Hsing 2013). This industry has employed a huge number of individuals as they solely depend on their livelihood especially the rural people in Australia. This case study will address various questions in regards to different phenomenon related to the Australian dairy farming on the various products.

1. The product is one of the part of the marketing mix. In order for the marketing mix to be very effective, a business should be aware of the aspect of the product life cycle. On this strategies shows on the different stages that the product passes over a time and the sale, which can be expected at every stage. If the business uses the life cycle, they will be able to plan (Burch, David, Geoffrey and Libby 2013). In regards to cheese butter, they will pass through stages these stages are; development, the introduction, growth, the maturity, saturation, and the decline. On the first stage development, the cheese and butter products are researched and designed. Marketers should choose Suitable ideas to investigate, develop and then test. If the idea is suitable then a prototype or the model of the products are produced. On the second stage is introduction (Barber, James, Scott, and Evgenia 2015). This stage entails the launching of these products to the market. The sales at first are initially low and there are cost, which are incurred when the products are launched. The next is the growth that entails the rapid grow of the products, the cost are expected to fall as the production of the products increases. At the maturity and saturation, the growth of the sales of these products is expected to level off. The goods are built up with a steady piece of the overall industry now. The offers of the items are high and the contenders have entered the business sector to take the benefit of the benefits (Clarke, Harindra de Silva and Steven 2015). The last is the decline, like any other product the sales of cheese and butter are expected to decline. The decline is because of the consumer taste changes, introduction of new technology or even perhaps introduction of new products. The marketers need to find new markets for the existing products. This may be due to the increase of the number of competitors who want to have a market share of the profits. Moreover, they need to change on the appearance, the format and the packaging of these products (Australia 2014). Cheese and the butter should have various packaging in order to enable to gain more consumer preferences over other similar products.

2. On the dairy producer, DP A there is a decline in the sale of the regular product in year 2008-2010 by 3 million litter. There is also a decline an increase in the fat product between the periods of 2008 to 2010. On the non-fat product, it shows there is an increase in the consumption of these products as compared to the fat products (Charman, Neil, Rodney, Andrew, Natalie and Sarah 2012). This shows that the Australian people are shifting to the non-fat products. On the flavored product, there is an increase of the consumption of the product by 5 million liters from the period 2008-2010 this shows a 20% increase. On the DP A on UHT product, the sales for the products have significantly between the same period by 40 million litres.

3. The multifactor portfolio Matrix is also referred to as the Business Attractiveness Screen. A 3 by 3 matrix rate each of SBU against two critical variable, attractiveness of the industry and the business strategy. This matrix measures the market attractiveness on a number of factors, these factors are; the profitability, intensity of competitiveness, and the technological requirements. On the intensity of competitiveness, the model helps to decide as to whether the company is competence enough to be able to compete in a given market (Hubbard and Drake 2013). Moreover, the various factors that are within the organization such as assets, holdings and the shares the company holds in the market can determine this (Shortt, Colette, and John O'Brien 2016). The technological requirement factors determines on the business strength. This matrix was designed based on the business strength and in any business it tends to do well if the technological aspect are in order and operational. Another factor the matrix employ is the profitability of the organization. On the design it looks at the attractiveness of the industry on an aspect to look at is the profitability of the organization.

4. The decisions to cut the price of the dairy products is essentially driven by the desires to expand on the market share of the domestic retail in Australia at the expense of the competitors. This reduction permanently may strip many millions of dollars of value from the supply chain in Australian on the milk a chain that account around twenty five percent of the milk production and the main stay to the dairy industry (Bartlett, Dean, and John Twineham 2013). Moreover, the effect on the dairy industry is that there will reduce on the sales revenues and this will likely impact on the flow off the regional profitability of the farm and the production. Supermarkets have played an increasing role in the development of agriculture sector especially. They are creating a challenging environment for the dairy producers and supplier.[4] Some of this are the Cole and Woolworth supermarket in Australia who are making it so hard for Australian farmers and suppliers to operate (Dharma, Surya, Walter and Mark 2012). Nonetheless, various steps should be taken to deal with the market power of these supermarkets. One of the step is to create an appropriate level of protection in order to allow on the continued operation of the small producers and the medium sized agri-business. This will help to promote on the competition in the agricultural sector (Douphrate, David, Matthew, Christina, Stephen, Martina and Mark 2013). Secondly, there is need to encourage on the smaller producers in order to promote a wide diversity on the current food systems. There is also need for the establishment of the code of conduct.

Conclusion

The Australian dairy industry has faced economic downturn in 2008, but gradually this has significantly improved and the dairy producers are still optimistic over the future. On the case study, it has analyzed on the impact the supermarket have influenced on the dairy producer, the product life cycle of the butter and cheese and how the marketers are influencing at each stage. Moreover, it has explored on the multifactor portfolio matrix and the factors that influences on it. There is also recommendation in regards to supermarket power on the dairy producers.

Recommendations

On recommendation, the enforcement of the voluntary code of code should take place in order to deal with this aspect of market share. Moreover, there is need to have transparency that a virtual that should co-exist between the supermarket and the dairy producers. An effective communication channel with all the parties involved will help to explicitly stipulate honesty between the parties.

Bibliography

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