Report on Entrepreneurship The A2 Milk Company

Step 1 – Marketing Analysis of The A2 Milk Company

            The A2 Milk Company started its operations in 2000, and it has earned a lot of success since then. The company is involved in the production of cow milk, but the specialty of this milk is that there is no protein in it, which is called A1. The distribution of milk by the company is done for various countries such as Australia, China, New Zealand, Singapore, Hong Kong, United Kingdom, as well as, the United States. This expansion to several countries shows that the company is doing a great job with its marketing activities, which are helping the company to get good recognition in the market (Bloomberg, 2020). It is important to conduct a SWOT analysis to see the overall marketing progress of the company, so the following elements are explained:

Strengths of The A2 Milk Company:

            The value of the company in 2018 was $5.89bn, and it has been said that by 2026, the company is expected to get a growth figure of $21.39bn. It means that CAGR is going to be increased with a percentage of 17.03%. This is great news for the company as they can get a lot of opportunities in the future by working on their strengths (GlobeNewswire, 2020). According to the annual report of 2019, the total revenue of the company was $1.3bn and net profit was $287.7mn (See Appendix A). The marketing strategy of using social media in an extensive amount has been great, and the message is reached to more and more customers in a short span of time. The company has also done heavy advertising in Australia, and other locations to get the attention of people towards healthy milk, which is produced by the cows, who only have a protein named A2 (National Australia Bank Limited, 2020)

Weaknesses of The A2 Milk Company:

            Regardless of enjoying a lot of success in its A2 milk industry, the company has a weakness of limited options other than its core business. That’s why; they have not been able to achieve much success in other product categories. The product range is very limited (Fern Fort University, 2020)

Opportunities of The A2 Milk Company:

            The shipping and transportation prices are decreasing, which is a great opportunity for the company to lower prices for its products so that more potential customers can afford their products. Innovation is one of the biggest opportunities for them to get more growth & success.

Threats of The A2 Milk Company:

            The company is dealing with an evident threat of extensive competition from other competitors. Moreover, pay levels are rising, which may force the company to increase its costs, and it will have a direct impact on its profits. The lack of innovation is another major threat faced by the company (Fern Fort University, 2020)

Step 2 – Economic Analysis of The A2 Milk Company

            It is vital to have a look at microeconomic factors to conduct a brief economic analysis for the A2 Milk Company. This analysis is vital to understand the overall economic situation of the dairy market in Australia. It has been observed that this year, the start of the dairy industry has been a difficult one. The milk production has decreased as compared to the previous year, but this decline was moderate, so there is nothing to worry about in this regard. But the biggest challenge for the industry is the current situation developing due to Coronavirus pandemic all over the globe. The virus has affected every part and every industry of the world in so many ways. That’s why, the dairy products’ supply and demand has been badly affected, and if the situation remains the same, then things can get even worse. There is no impact on prices, but due to lockdown and other emergency initiatives, it has become difficult to balance supply and demand, because business activities and logistics have been disrupted. So, under this Coronavirus outbreak, the future economic outlook is not encouraging for the A2 Milk Company and the dairy industry (Dairy Australia, 2020)

            It is important to mention here that the economic situation will impact all other competitors of the A2 Milk Company because the whole world is under the threat of Coronavirus. But the company has to face threats from its competitors in the future as some of them already have a good position in the market, and some others are quickly catching up. The biggest threat is coming from one of the giants of the world in this business, Nestle. The alarming thing for the company is that they were the ones, who took the initiative of producing a2 milk, and no one else was trying this idea. But now, Nestle has made a major step by introducing a2 milk with infant formula. If Nestle gets a good response from the market in this regard, then it is going to be a red signal for the A2 Milk Company. It means that competition is heating up, and the company will have to remain proactive to deal with its competitors, otherwise, they may lose their competitive advantage (Westbrook and Greenfield, 2018)

Step 3 – Problem Identification of The A2 Milk Company

            After doing brief market research with relevant aspects, it was found that the company has been doing well overall, but this success is not going to be sustained with the same strategy. It was clearly observed that the company is lacking in the essence of innovation. It is not only a weakness of the company, but it is also a threat. They are relying on the product of a2 milk, but this competitive advantage will not stay any longer as Nestle has already stepped in with infant formula of a2 milk. So, the major problem for the company is to bring innovation in its product range so that they can sustain their position in the market.

Step 4 – Innovation of a “Big Idea”

            Keeping the above problem in context, it can be said that the company is slowly moving towards a situation, where they will be in trouble, if they don’t adopt a proactive approach, and if they don’t innovate with their existing products category. The company will have to look up for a variety of options, but one of the best options for them is to increase their product range. Earlier, they captured the attention of customers by innovating with a2 milk, which is said to be easily digested as compared to other types of milk. But, they can’t rely on this single product line for a longer period of time. So, it is the right time for them to capture the opportunity by introducing two more product categories. The people who want to use a2 milk, because of its light and easy to digest, they will love to have other dairy products prepared with a2 milk.

            So, the first big idea of a new product category is introducing yogurt prepared with a2 milk. The diet conscious people will like this product, especially the ones, who are already using a2 milk. It will also allow them to increase their customer base, as there is a possibility that one customer may buy a2 milk, but when he looks for the yogurt, he does not find it with a2, and purchases yogurt of some other brand. If a2 based yogurt will be available, the same customer will be buying both milk and yogurt. The second product to be added to the list is butter. The company should prepare butter, which is also based on a2 milk. Both of these products will capture the attention of more customers, and new potential customers will be taking interest in buying the company’s products. So, they should continue with this big.

Step 5 – Marketing Mix Strategy of The A2 Milk Company

            So, the big idea of innovation has been generated, where the company will have to produce two new products at the same time. Here is the proposed marketing mix strategy for the company to consider for these products to be launched in the Australian marketplace:

Product of The A2 Milk Company:

            The company is going to add two new products in its range; yogurt and butter, both prepared by using a2 milk and protein. Earlier, the company is just providing a2 milk and nutrition for the customers. The new products will be made with the same high quality so that customers can trust the company with its new products. The quality of products will not be compromised in any given circumstances.

Price of The A2 Milk Company:

            It is one of the key points for the company to decide because the price is always a touch point for consumers in so many ways. The majority of consumers do make choices on the basis of products’ prices. It is proposed that the company should come up with average prices for both products, keeping the prices of competitors in mind for the same products. The marketed price will be the key to attract various potential Australian customers.

Place of The A2 Milk Company

            The placement of the product is going to be the key to the marketing strategy. A product may be marketed well for the awareness of the public, but when they reach a store to buy the product, the product is not available. To avoid such a situation, the company will place its new products across Australia, and products will be available at all retail chains of 7 Eleven and Woolworths. In the second phase, the company will launch online placement of the products, giving consumers an opportunity to buy online.

Promotion of The A2 Milk Company:

            It is the most critical and crucial part of the marketing mix strategy, how products will be promoted. For this purpose, the company will use a mixed approach as a print, electronic and online media will be used to promote new products. The television ads will be broadcasted heavily at all prime channels of the country, and ads will also be published in all major newspapers. The majority of the focus will be given to the promotion of products through social media. New social media pages will be created, and consumers will be engaged before launch of the products.

References of The A2 Milk Company

Bloomberg (2020) a2 Milk Co Ltd, [Online], Available: https://www.bloomberg.com/profile/company/ATM:NZ [4 May 2020].

Dairy Australia (2020) Dairy Australia Situation and Outlook March 2020, [Online], Available: https://www.dairyaustralia.com.au/industry/dairy-situation-and-outlook/situation-and-outlook-march-2020 [4 May 2020].

Fern Fort University (2020) The A2 Milk Company Limited SWOT Analysis / Matrix, [Online], Available: http://fernfortuniversity.com/term-papers/swot/nyse/4861-the-a2-milk-company-limited.php [4 May 2020].

GlobeNewswire (2020) Global A2 Milk Market Is Expected to Reach USD 21.39 Billion by 2026 : Fior Markets, [Online], Available: https://www.globenewswire.com/news-release/2020/03/02/1993846/0/en/Global-A2-Milk-Market-Is-Expected-to-Reach-USD-21-39-Billion-by-2026-Fior-Markets.html [4 May 2020].

National Australia Bank Limited (2020) A2 MILK'S MARKETING FORMULA FOR EXPANSION IN CHINA, [Online], Available: https://www.nab.com.au/business/moments/grow/international/a2-marketing-strategy [4 May 2020].

Westbrook, and Greenfield, (2018) Competition heats up for controversial a2 Milk Company, [Online], Available: https://www.reuters.com/article/us-a2-milk-company-strategy-analysis/competition-heats-up-for-controversial-a2-milk-company-idUSKCN1IH0T9 [4 May 2020].

Appendices

Appendix A:

Source: https://thea2milkcompany.com/wp-content/uploads/The-a2-Milk-Company_FY19-Annual-Report_double-pages-1.pdf