Marketing study and business strategy (PHBS, 2018)

1. Just YoghurtJust Yoghurt

2. • 6 RMB (200g);
• Normal temperature;
• Pasteurized yogurt (UHT);
• Tetra pack packaging;
• Lightly sweet;
• Lactose-intolerance friendly (probiotic);
• Launched in 2013;
• Current target: all customers;
• Not sold globally;
JustYoghurt
Product:

3. • China Mengniu Dairy Company Limited
• Inner Mongolia;
• Founded by Mr Niu Gensheng (Yili);
• Started in 1999;
• Mission : “bring happiness to consumers with dedication to
health and nutrition”;
• 38 plant in China, 1 in NZ, JV with Danone (Activia)
JustYoghurt Company profile:

4. JustYoghurt
Dairy Industry

5.  A fast growth for the yogurts’ market is expected
JustYoghurt
Dairy Industry

6. JustYoghurt
82.4
100.6
119.8
13.5
21.6
35
2015 2016 2017
yogurt industry (in billion) normal temperature yogurt industry (in billion)
Y-O-Y growth 2015-2016 2016-2017
Normal temperature
yogurt
60% 62%
All yogurts 22.1% 19.1%
Yogurt Industry

7. Monchilovsti by Guangming Ambrosial by Yili
Three-year sales history for the top3 products (Billion RMB)
JustYoghurt
Competiton

8. Assumptions:
• Euromonitor: 14% CAGR (2017-2021) for yogurt industry;
• Launched in 2013: near end-growth of its lifecycle;
• Past (2015-2017) sales’ evolution;
JustYoghurt
Forecasted sales of the product

9. JustYoghurt
Political & Legal
•Melamine Incident in 2008
•Stricter regulations and policies with
food safety of dairy industry
•Mengniu is required to pay more
attention to the quality of their
products
Economic & Social
•The increase of Per Capita Disposable
Income & Change in people’s
consumption concept
•Consumption upgrading
•Tier-3 and tier-4 cities are becoming
potential market because of increasing
consuming capacity
 More population than tier-1 and tier-2
cites
 Less fierce competition
Environmental Factors

10. Technological
•The development of cold chain may
enable low temperature yoghurt to
replace normal temperature yoghurt
• Cold chain is developing fast with a
CAGR of 14%; infrastructure will catch
up with Japan by 2020
Natural Environment
•Extreme weathers will have adverse impact
on cows and herbage, and thus influence
the normal supply of raw milk
•Modern Farming——biggest, stable and
high-qualified supplier of Mengniu:
- 230 thousand cows in 26 large-size pastures
- abundant management experience to resist
extreme weathers
JustYoghurt
Environmental Factors

11. Technological
•The development of cold chain
Natural Environment
•Extreme weathers will have adverse impact the
normal supply of raw milk
Political & Legal
•Stricter regulations on safety of dairy products
Economic & Social
•Consumption upgrading & potential market in
tier-3 and tier-4 cities
Opportunity
•A growing market for
normal temperature
yoghurt in the near
future
Threat
•Normal temperature
yoghurts may be
substituted by low
temperature yoghurt
overtime
JustYoghurt
Key Opportunity & Threat

12. Price
• Similar Prices:
- Just Yoghurt: ¥ 6/package; ¥48.8/box
- Competitors:¥ 5-6.5/package; ¥50/box
• Price discrimination:
- Prices are different in different cities
- Tier-1 cities: ¥48.8/box; Tier-2 cities:¥56/box;
Tier-3&4 cities: ¥65/box; other cities: ¥68/box
Product
• Diversity of flavors:
- Just Yoghurt: only plain flavor till this year
- Competitors: more diversified flavors
• Optimized packaging:
- Just Yoghurt: improved straw; creative facial expressions
on package
- Competitors: bottled packaging; different in volume
Place
• Distribution network:
- Just Yoghurt: nationwide distribution network:
- Competitors: Yili: nationwide; Guangming: east China
• International expansion:
- Just Yoghurt: sold in HK, Macao and Southeast Asia
- Competitors: only sold in domestic China
Promotion
• Intensive sponsorship & advertisements:
- Just Yoghurt:
“Run For Time- season1 & 2”; “Our Challenge”
·Increasing TV advertisement hours, 58%
between 18pm-22pm
- Competitors:
Yili: “Running Man-season 1-5”; 70% of
advertisements between 18pm-22pm
Guangming: “Go Fighting!-season2”
JustYoghurt
Marketing Efforts Comparison

13. Marketing Objectives
(what to achieve)
- Beat Ambrosial, to be No.1
Primary Marketing
Concerns
( what to start with)
- Product
- Promotion
Barriers
( what to overcome)
- Diversity
- Promotion
- Sale channel
Marketing Strategies
(what to do & how to do)
Comparison of
current efforts
Environmental factors (feasibility)
JustYoghurt
The interaction between key factors

14. • Extending product line
 5 flavors v.s. 2 flavors
• Redesign package for children
 more colorful, with famous
cartoon/comics characters
• Improve formula
 adjust the formula (vitamins, probiotics)
Product Price
• One price policy
 Avoid price arbitrage
 Improve sales in 3 & 4 tier cities
• Differentiation can be applied to new
product line
JustYoghurt
Possible Marketing Strategies

15. • Innovation in distribution channel
 one distributor in one region→
multilevel distribution
 Penetration matters more than scale
• International expansion
 Prolong product life-cycle
• Partnerships with e-commerce
platform
 Keep current advantage
Place Promotion
• Use direct & clear keyword in
advertising
 Not differentiated enough from
competitors now
• Choose the sponsored programme
wisely
 Only what matches brand image
 High quality but limited number
JustYoghurt
Possible Marketing Strategies

16. JustYoghurt
Which strategy do you think is the
most important ?

17. JustYoghurt
The answer is…Promotion
Reason 1: Promotion can benefit Just Yogurt in both short run and long
run
 Short term: boost sales, increase market shares
 Long term: Improve image, enhance brand awareness
Reason 2: The normal temperature yogurt industry has its limits
 Threat from low temperature yogurt- more healthy ( as cold chain
transportation developed)
 Promotion can take effect faster than product strategy
Reason 3: New flavors may dilute brand image/ easy to fail
Reason 4: Place strategy is money and time consuming

18. JustYoghurt
Drawbacks of current promotion:
• lack efficiency -- didn’t emphasize enough the product benefits as health and
purity
• Limited advertisements quantity, advertising medias, and publicity expenses
Short Term- aggressive promotion

19. JustYoghurt
Few TV channels
Limited streaming platforms
The message is often unclear
 By using major social media, such as Weibo (similar to
twitter), douban；and new, popular ones, like kuaishou.
 By performing local events in third and fourth-tier cities, in
order to stimulate terminal sales,
 By focusing on the brand image and the message in
advertising (sport, health, purity…),
Current channel is: May be improved by:
Short Term- aggressive promotion
Reinforce channel

20.  Due to its healthy characteristics, it can
sponsor parent-child shows, where to
plug in contextual advertising.
 invite popular stars and their children as
spokespersons
 Participate in subsequent derivative
programs or promotional activities.
sponsored multiple
shows like Run for Time,
Go Fighting season 3,
and Our Challenges
Superficial cooperation
Lack celebrity effect
JustYoghurt
Current TV sponsorship
is:
May be improved by:
Short Term- aggressive promotion

21. long-term memory effect
• shorten the distance with
the customer and build
trust.
• fasten the speed of new
product introduction and
further promotion.
JustYoghurt
Diversification and segmentation: Once Just Yogurt image is strong enough, it may split
into independent sub-segments with diversified product line (tastes, kids, elders…).
Emphasize promotion and
communication effectiveness
Liking effect
• Created by focusing on
positive and relaxing
messages.
• Customers are more likely
to construct a preference
and positive attitude
Behavior effect
• Customers will pay more
attention and prefer our
product when making a
choice
Long Term-build strong brand image

22. JustYoghurt
Long Term-build strong brand image
Implementation
 Rethink about marketing position
• Redesign advertising slogan and stay coherent with it during Ad campains
• Associate the brand with sport, health, nature and family
 Find an endearing advertising method
• Promote and participate to cultural events.
 Public relations and communication :
• communicate with customers online with games and surveys
• keep a positive image / create emotions
• Promote endeavors like charities, environmental protection, help schools
and poor children may reinforce the positive image of the product

23. JustYoghurt
References
China to roll out new taxes cut to fuel economic growth (28 March 2018), Xu Wei, Chinese government
website
http://english.gov.cn/premier/news/2018/03/28/content_281476093011612.htm
Consumers’ confidence in China’s economy of 2017, Y. Kuo, Boston Consulting Group
Insight into global dairy industry, Royal DSM, Retrieved from http://www.cnki.com.cn/Article/CJFDTotal-
SPAQ2015Z1038.htm
Mengniu official website http://www.mengniuir.com/html/
Mengniu annual reports, 2013 to 2017 http://www.mengniuir.com/html/ir_reports.php
Normal temperature yogurt market can still increase by 30% in 2017, Yili is expected to be the king, Q.
Wang, X. Wen, Ping An Securities
Promising yoghurt market: Yili takes the leading position, G. Dong, Y. Yang, China Merchant Securities
Research on dairy industry of China; the competition between Yili and Mengniu, M. Chen, Guosen
Securiteis

24. Thanks For Your
Attention!