Implementation Of A Sustainable Business Cycle Essay

Question:

Discuss about the Implementation of a Sustainable Business Cycle.

Answer:

Introduction

This study has been aimed to the marketing fundamentals of the Australian dairy industries. The background of the Australian dairy industry has been discussed. The review of the marketing macro model and the forces of the selected industry are beneficial in order to identify the opportunities and threats presents in the markets. The performance of the consumer audit for each of the segment is important to understand the level of involvement. In this essence, the buyer decision process has been discussed (Svensson and Wagner 2012).

The range of the Australian dairy industry is approximately $13 billion along with the manufacturing and the export industry as stated by Barnes and Toma (2012). The farm gate value is $4 billion and it can be assumed that this dairy industry is useful to enhance the regional Australian societies. In addition, nearly 6000 Australian dairy producers manufacture approximately 9.7 billion of litres milk within a year. Therefore, Australian dairy businesses recruit 40,000 Australians in their organisations as well as in their businesses. Fa?‚kowski (2012) mentioned that Dairy business is growing day by day in the rural sectors of Australia.

Situation analysis

Industry (Company)

Murray Goulburn Co-op is a popular dairy products manufacturing company in Australia. As per the company’s background, it can be observed that this company has the power to control completely by the dairy farmers as well as by the suppliers under the cooperative operations. Murray Gouldburn Co-op gives the opportunities to the farmers and the shareholders the competitive milk pricing strategy to southern region as well as to the Sydney market region simultaneously.

Size

The financial statement of this dairy manufacturing company is also helpful to identify the financial position of this organisation among the overall Australian dairy industry. As per the annual report of 2015 of this business, it can be seen that the net profitability is $21.2 million (Cicconi-Hogan et al. 2013).

Growth

The growth of this business has been increased by 29% from the previous year and the present growth rate of Murray group is $1.13 billion (Cicconi-Hogan et al. 2013). Therefore, it can be predicted that Murray Goulburn Co-op would be increased in the future. As a result, the revenue and the profitability earned by the company would also be increased.

Industry trends

It can be observed that the trend of the per capita consumption of dairy business have effectively increased over the periods. The per capita drinking milk consumption is presently evaluated by 105 litres and it has been reached to the highest level compared to the past periods.

Competition

Major competitors

Two of the competitors of this mentioned Australian dairy company are such as Fonterra and the Burra Foods. Burra foods is one of the eminent dairy manufacturing organisation in Australia and is one of the tough competitors of Murray co-op. It mainly focused to the development of the relationship with the suppliers as well as with the consumers. Henceforth, it framed a strong business structure. (Boniface, Gyau and Stringer 2012) stated that Fonterra is aimed to the sustainability in the Australian dairy industry. The net profitability earned by Fonterra is $409 million, which is higher than Murray Co-Op. As a result, the growth rate of this company has also been increased (Ho et al. 2013).

Burra foods

Strengths

Weakness

Over the periods, the earnings of this organisation has been increasing.

Lack of further improvement

It has greater scope to manufacture dairy products

Lower infrastructure of the market

Lower cost of production

Lack of the adaptation of updated technologies.

Large numbers of cattle within this particular dairy manufacturing organisation.

Per capita production has been decreased.

Fonterra:

Strengths

Weakness

Good financial performance and good financial position

Lower variety of the dairy products

Higher infrastructure and greater management

Focused on the taste of the products. Do not focus about the effect of the health.

Export of higher amount of dairy products

Lack of taking of group decision

Adaption of new technologies and increasing of sales

Poor quality of the products

Market shares

Figure 1: Market share of Australian dairy organisations

(Source: Berthon et al. 2012)

From the above figure, it can be observed that the market share of Murray Goulburn is higher compared to other competitors. Therefore, the consumers are looking for the products of this company than the other dairy manufacturing organisations.

Explanation of the audit

Burra foods:

Ansoff matrix

Market penetration

Burra foods manufactured four types of manufacturing products such as Milk powder, Bulk liquid etc.

The existing market can be recognised as Korumburra, Victoria.

Product development

Planned to manufacture more new dairy products.

Market development

Burra foods aimed to expand its product in the market of south Gippsland operations.

Diversification

Burra foods is willing to enhance its market in the south Gippsland operations with the specialisation of butter, milk, cheeses.

BCG matrix:

Cash cows

Full cream milk powder

Cream cheese

Skim cheese

Stars

Frozen cream

Cream powder

Question marks

Milk proteins

Skim milk powder

Dogs

Standardised milk

Instant milk powdered

Fonterra

Ansoff matrix

Market penetration

Specialises in the products of western star butter, ski yogurt etc. In Australia, Fonterra acquired the companies like Bonland dairies, Murrumbidgee dairy.

Product development

Aimed to manufacture new palm products

Market development

Tried to expand their products to the another parts of Australia.

Diversification

Fonterra aimed to manufacture new palm products to the other regions of Australia.

BCG matrix

Cash cows

Western star butter

Cream cheese

Cream, beverages

Stars

Perfect italiano cheese

Market development

Mainland cheese

Dogs

Ski yogurt

Customer

Consumer behaviour is the choice, taste and preferences of individuals. More specifically, with the help of this concept of consumer behaviour, the buying behaviour of the customers can be identified.

Decision making process

High involvement

Low involvement

Cheese, butter

Other milk made products

From the above table, it can be stated that consumers are highly looking for cheese and butter of Murray co-op. In these two products, this company is specialised. It maintain the quality of the products

Customer audit

In order to make a consumer audit based on the review from the consumers, it can be stated that Murray co-op is specialised in the manufacturing of cheese and butter. It has the comparative advantage on these two products. Murray co-op tried to maintain the quality of the products. This will significantly enhance the market share in the dairy industry. The organisation can earn higher profitability and the total revenue of the company will also increase.

Explanation of the audit

As the profitability of the company has been increased, this will try to maintain this financial position and want to hold this profitability. In this order, this company aimed to the production of these two products. Murray co-op also wants to improve the production of the other milk made product that it can acquire the first position in the Australian dairy industry. As a result, the profitability statement will be effectively enhanced.

Climate

Political

Sometimes government policies as well as regulations for the dairy business will affect the decisions of the farmers in case of making of decisions. In this context, it can be observed that sometimes do not give the permission for the export of the manufactured dairy products. It will reduce the sales of the company.

Economic

The economic instruments can affect the dairy business and the purchasing power of the organisation. The rise of the purchasing power will significantly enhance the spending. Therefore, it can be concluded that this increase in the purchasing power will increase the sales of the dairy products of the company.

Social

As per the taste and preference of the different consumers, the sales of the dairy products may be fluctuated. In case of the vegan consumers, the purchasing of the milk made products will be reduced. This will affect the overall sales of milk and the milk made products.

Technological

Technological adaption or the uses of the new technology will effectively increase the production and the sales of the manufacturing products. This will increase the price of the products. However, the quality of the manufacturing will be significantly increased.

Demographic

Based on the demographic choices, the organisation aimed to produce varieties of dairy foods. This will be helpful to manufacture different types of foods for different level of customers.

Natural

In this context, it can be stated that different harmful gases may hamper the manure, which is necessary for the feed production. This in turn reduces the total production of a dairy industry.

Opportunities and threats

Opportunities

Threats

In order to evaluate the opportunities of this mentioned dairy business, it can be mentioned that the financial position and the growth rate of Murray Goulburn co-op is quite appreciable. Berthon et al. (2012) suggested that these would effectively reflect the Murray Co-op to include the innovations in their business.

Palupi et al. (2012) argued that over the time, the competition has increased within the industry. It has been already observed that Fonterra earn profitability compared to its competitors. Therefore, the growth rate and the financial position are comparatively higher from Murray Goulburn Co-op.

Collaborators

Intermediaries

In order to manufacture dairy products, the company has several intermediaries. They also play the important role in case of the production. Likewise, after the production, the company has to go through several stages, where the intermediaries play important steps. They transfer the products from the farm gate to the target customers.

Suppliers
The suppliers are the milk collectors, distributors or other raw materials providers. They are the retailers or the wholesalers. In order o accomplish the overall procedure or the supply chain, these suppliers perform the crucial part.

Segmentation

Figure 2: Market segmentation

(Source: Bardhan, Sharma and Saxena 2012)

It is known that several procedures can be adapted when divide the larger industry into smaller segments. Each procedure is important to yield several information in order to concern the target market.

Demographic

This approach of the segmentation is depending upon the factors such as gender, occupation, age, income level and the family status. These information are beneficial to recognise the regions of the interest and the requirements (Khoi and Van Dung 2014). In this purpose, the requirement of the age group of 20-30 years would be differed from the age group of 50-60 years. Therefore, Murray Goulburn has set out the prices of the manufacturing products based upon the income level or the standard of living. Higher the level of income, greater will be the price of the products of specific regions and vice versa.

Geographic

It is the common strategy and it is served to the consumers to a particular region. On the other hand, sometimes targeted audience has several preferences depend upon the position of the business. This marketing process is common in terms of the small sized business and it serves a wider range of the demographic consumers within the regional territory.

Psychographic

This type of market segmentation focused to the lifestyle of the consumer behaviour. Therefore, this method can be evaluated by the willingness and the activities. This type of segmentation is able to identify the several group of customers, who are looking for powdered milk and who are willing to avail box milk (Khoi and Van Dung 2014).

Behaviour

As per this segmentation, the dairy business would base on the group’s willingness for the service offered by the company. Boniface, Gyau and Stringer (2012) mentioned that the knowledge, frequency of the usage as well as the loyalty is the key measurements of this particular segmentation. Therefore, complete knowledge is the important factor in order to understand the valuation of the service offerings by the organisations, total sales and the marketing process.

Target markets

Based on the above four segments, the geographic and the demographic segmentation have been considered in this study. In this order, it can be stated that the large sizes business is able to operate its business across different countries. It is easier to include the regional and the cultural differences and can easily adopt the taste and preferences of the consumers

Primary/ secondary target markets

In order to make decision, the primary and secondary segment is important to consider. Henceforth, Murray Goulburn has identified some requirements. In this context, Zoeteweij-Turhan (2012) opined that the consumers are used to purchase the manufacturing products of Murray Co-op, as most of them drink milk once or twice in a day.

According to Fuller and Beghin (2015), it is come to know that consumers are very much worried about their health and therefore, they are not reluctant to purchase milk regularly. As a result, it can be stated that the requirement for the products would not decrease. Moreover, on the based on the secondary segment, it can conclude that consumers depend upon the reputation, brand loyalty. They always want to purchase the milk made products in turn of the affordable prices.

Buyer decision procedure for the segments under investigation

In this section, the influential factors, which reflect the consumers to purchase the products, have been analysed. In the points of Cakir and Balagtas 2012), it can be identified that the necessity for the products is the primary requirement, which would fetch the customers to purchase the products. The consumers focused whether they would afford the price of the products. In order to make higher profit, if the manufacturing company set out higher price for their products, then the consumers may reluctant to take the products and may switch to the other company (Douphrate et al. 2013). There is several numbers of suppliers within the dairy industry of Australia. Henceforth, the price of the products is also the key factor to determine whether the consumer would purchase the products or not.

Strategic chosen for different segments

Market segmentation is helpful to identify the differences as well as the similarities between the customers of the different regions. This will reflect to the organisation to understand the taste and the preferences. In case of the demographic segmentation, the strategy followed by this, is assumed to be helpful to estimate the advantage of the provided benefits of the manufacturing products. It is beneficial to apply the business to business approach in the markets. Under this strategy, the target market can be segmented depend on the size of the market.

The strategy of the psychographic segmentation can be evaluated with the measurement of the functions, interests etc of the organisations and the consumers respectively. On the other hand, the strategy of the behavioural segmentation can divide the customers into some groups as per their knowledge, rate of usage etc.

Segmentation in terms of benefit:

This stage indicated the advantage of the consumer’s seeking whether to maintain the product of the particular organisations. The customer perceive the advantage of purchasing the manufacturing products, and it is helpful to estimate the relevancy of the organisation as well as it will be easier to develop the marketing messages.

According to Svensson and Wagner (2012), market segmentation is significant to enhance the focus on the mentioned dairy organisation. With the increase of focus on Murray co-op, it can predict that the return from the business will also increase. As a result, the profitability from the business will effectively increase. With the raise of the focus on Murray co-op, the competition will increase. Hence, it can anticipate that the market share as well as brand loyalty of the existing organisation will increase (Bardhan, Sharma and Saxena 2012).

Positioning map

Figure 3: Positioning map

(Source: Created by author)

The above figure shows the for positioning map Murray Goulburn co-op. In addition, it is also helpful to recognise the competitive advantage of the same organisation. From the above figure, it can be clearly seen that Murray Goulburn is focused to the different income group and their living standard. This proves that this dairy manufacturing firm is interested to the ability of the consumers. Most of the organisations set the prices of the product in order to higher profit and in order to survive in the dairy industry (Khoi and Van Dung 2014).

Therefore, Murray Co-op set affordable prices in turn of the manufacturing products. On the other hand, Murray always tried to manufacture good quality of products that the consumers want to maintain a long term relationship with them and this organisation can develop it’s business fruitfully in the future (ABC News. 2016).

Conclusion

The overall study is helpful to establish the market scenario of the dairy industry of Australia. In this purpose, this study is helpful to Co-op. The size of the company, growth rate, and financial statement has been discussed. In this respect, it can be seen that the financial performance of the company is quite appreciable and the growth rate has also been increasing from the previous year. On the other hand, this study is also helpful to measure the industrial size of the Australian dairy market. Comparing with this industrial valuation, It is easier to understand the position of the mentioned dairy manufacturing company.

Moreover, this study is also helpful to measure the market segment. In this connection, the study has discussed the different steps of this market segment. There are four steps such as geographical, behavioural, demographical and psychographic segments. These four segments are helpful to measure and discuss the four different techniques. Relation with this, this study is beneficial to establish the specific market strategy, which is followed by Murray Goulburn Co-op. The advantages of the uses of the market segment have also been measured.

Recommendations

After analysing the overall study, it can be observed that Murray Goulburn Co-op is at good position in the dairy industry of Australia. However, Burra food is at greater position in the industry. In order to retain the number one position in the market and make growth, Murray Goulburn Co-op is required to follow some business strategies. Moreover, the management of the Murray Co-op can consults the field expertise, who can guide the company to improve. The management can construct a waste management structure. The wastage of the daily manure can be utilised significantly, which can be used up in the other cropping program.

In order to enhance the development of this business, the dairy business is required to invest a large amount. The workers connected with this business; need to provide higher salary that they want to work with this company. Moreover, the cost of the raw materials, the foods of the cattle is higher. Without strong financial structure, the production cannot be occurred. Lastly, the management needs to perform efficiently that under the existing infrastructure of the organisation, the workers can perform optimally and the business can get its success.

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