Parul answered on May 07 2020
The Australian Dairy Industry: Beyond The Dairy Farm Gate
Q1) Discuss the product life cycle (PLC) of cheese and butter and the issues that need to be addressed by the marketers of these products. In addressing this question you must include a discussion on the marketing strategies that could be used by dairy producers at each stage of the PLC.
Ans1) As per the case “The Australian Dairy Industry: Beyond The Dairy Farm Gate”, (Valenzuela F. & Hall A.) Cheese as a product is at its maturity stage, with an average per capita consumption of cheese is 12.1 kg. Refe
ing to Exhibit 1, per capita consumption of cheese is 12.9 kg in the 2009-10, which is like 11% increase from the per capita consumption in the 2001-02. However, Year on Year (YoY) consumption of cheese has been slowed down indicating staggering sales since the demand has stabilized. Overall consumption of cheese has been maintained at 12.9 kg from last two years.
Table 1.1 Analysis on per capita Cheese production
Consequently, it poses strong challenges to the marketers and urges for careful selection of marketing strategies because Cheese is at matured stage. Main goal of marketers at this stage should be to maximise the profit by defending the market share.
As we can observe from the facts mentioned in the Table 1.1 per capita sales consumption of cheese is constant as the market for the product has become saturated. Marketers at this stage can benefit from the reduced cost of production due to economies of scale and experience. However, increasing competition can severely
ing down the profits all across the industry. Hence, marketers can essentially employ strategies to enhance the lucrativeness during this stage. Marketers can either differentiate cheese as a
and through marketing or introduce new features to the establish products like Moulds, Fresh & Semi-Hard.
As a marketer we need to deep dive into cheese product to analyse in order to achieve this goal. We can discern a continuing trend in production that is moving away from cheddar cheese and towards non-cheddar cheese types. On an average Year on Year (YoY) production of cheddar has reduced by 3.4% from 2004-05 to 2009-10. While on the whole the production of cheese has grown by only 2% from 2008-09 to 2009-10. This increase is due to growth in the production of non-cheddar cheese varieties particularly Mould, Fresh & Semi-Hard.
Table 1.2 Trend in Cheese production
Marketers can attempt to stimulate sales and defend their market share by modifying the product's characteristics by introducing newer flavours that appeal to customers. For instance, refer to Table 1.2, in this scenario, we can observe that production of cheddar type of cheese has reduced over the period of years, however production of non-cheddar, mould and Semi-Hard type of cheese has increased subsequently. This is the result of consumers’ consumption pattern. Consumers tastes are changing and are diversifying in newer type of cheese. They are more inclined toward non-cheddar and mould cheese, hence marketers should utilize the existing
and name and promote this new variety with improved quality. Also, they can focus on enhancing the aesthetics of the product by packaging it uniquely such that it amplifies the style of the existing product.
As per the case “The Australian Dairy Industry: Beyond The Dairy Farm Gate”, (Valenzuela F. & Hall A.) Butter as a product is at its declining stage with average consumption of 3.8 kg per year. According to Exhibit 1, per capita consumption of butter is 3.8 kg in the 2009-10, which is like 5% decrease from the per capita consumption in the 2008-09. Moreover, Year on Year (YoY) consumption of butter has been decreasing since people are prefe
ing healthy dairy based products.
Table 1.2 Analysis of per capita butter consumption
Essentially, butter as a product is in its declining stage because the consumption of pure butter products is reducing among Australians since they are becoming more health conscious. However, we can observe that because of the induction of vegetable oil based dairy blends that interests to the consumer since they perceive dairy blends products like vegetable oil to be much healthier option, overall production of butter remained constant.
As we have mentioned butter is in its declining stage because the sales have decreased and stabilized. In this situation, demand decrease of butter as a product will lead in acutely lower price margins. This typically makes it difficult to profits from this product. Therefore, at this point, it's organizations call, if they cannot make margins then the organization should terminate their product and concentrate their resources on newer products like vegetable oil which is getting popular in the wider public. However, if the organization can produce the product at a profit then marketers should sell these products like a commodity product. Organization should spend little on marketing because the product is
inging in small profits on slight margins.
Interesting views were expressed on similar subject in an article, “Marketing Strategy and the Product Life Cycle”, (Clark, W., 2017). Consumers purchases millions of products every year depending upon their needs, desire, perception about the products &...