Student ID : Rafaitia
Business : international marketing strategy
Word count : 2671
In this raport we will study the Danone’s international strategy. Danone’s turnover increased in 2012 to 21 million euro (+8%) for the third consecutive year. The most dynamic sector is the baby nutrition and all the group’s poles supported the growth. The turnover also increase in 2012.
I’ve divided my report intro three parts with an introduction and a conclusion.
In the first part I studied the global marketing strategy of Danone.
Firstly at an international level, secondly at a local level with the exemple of its development in the United States.
In the second part I made an external and internal analysis of the group . I used the SLEPTS analysis for the external environment. For internal environment I used the SWOT method and the 4P. To define precisely its environment, I studied its competitors and I used the Porters five forces.
The third part is about danone’s implications on international organizations.
I divided this part between the implications of segmentation, targeting and the positionment of Danone and its strategy to acquire and to retain customer.
Then, I will finish with a conclusion.
Danone was set up in 1919 in Spain by Isaac Carasso. In 1967 the company merged with Gervais and in 1973 it merged with BSN. They set up the first French agribusiness. In 1994 the company “Groupe Danone” become “Danone”. In 1997 Danone realigned its strategy, by focusing its business on high-growth categories where it had a leading position. It also had an ambitious development policy and tried to develop its international activities worlwide, through bothgrowth and acquistions. It expanded its business to reduce the risks and increase its profits. In 2007 Danone realigned its business on healthy food. Nowadays the company focuses its business around four strategic sectors which are: Fresh dairy products (N° 1 worldwide)
Waters (N° 2 worldwide)
Baby nutrition (N° 2 worldwide)
Medical nutrition (N° 3 worldwide)
I’ve divided my work into three parts. Firstly I am going to present the marketing and global strategy of the company at an international and local level. Secondly I will make an external and internal analysis of Danone and its positions compared to its competitors. Then I will introduce the implications of segmentation, targeting, and the positioning of Danone at an international level and what it does to acquire new customers and retain them. I will conclude my report by explaining what projects and ambitions it has for the future.
I. Global marketing strategy of Danone
A. At an international level
Danone is present in more than 120 countries
With a turnover of 20,9 billion euros, Danone is one of the worlwide leader in the food-processing industry. In 2012, 60% of sales were in international market, in emerging and high growth countries. Only 40% of sales were in Europe. Europe no longer produces the highest part of its turnover. The
company is present in four sectors (annexe 1): Fresh dairy products
To differenciate itself and enhance its positions Danone follows its strategy of growth by innovation. Its commitment is to growth and to strengthing the health aspect of its brand awareness. To release its goal Danone invests heavily in research and development, approximately € 190 million in 2007. 100% of the proposed projects are dedicated to health and nutrition. The company has launched a lot of products in each of its activity. Moreover it multiplies product differentiation in various geographical areas (annexe 2); by adapting them to the specificity of local demand.
The global strategy of Danone is to focus on health and nutrition and indeed it is one of the few agribusinesses group totally centred on the health
B. At a local level
With a workforce reaching 2086 employees and a plant production of 9 firms, the United States is one of the most important markets of Danone. The United States has now became one of its largest markets (8% turnover). The group is present in three sectors in United States: dairy products (Activia, Oikos, Light & Fit, Danimals), medical nutrition (Neocate, Lophlex, Pro-stat, Periflex, KetoCal, Nutrison, FrotiFit) and waters (Evian, volvic, Badoit, Bonafont). In 2012 the group launched a greek yogurt with its brand Oikos. According to Danone’s consumer and market research, Danone based its strategy on “fight againt obesity”. Consumers were alerted to the fact that they needed a healty diet and the number of yogurts bought rise from 9% in 2010 to 47%. This growth based on household consumption remains the main driver of economical activity.
II. External and internal analysis
A. External analysis
To define the external environment of Danone we can use the SLEPTS analysis
in order to understand step by step the different criterias. Social
Everyone needs to drink water so everyone is likely to buy water. Nowadays the alimentation is transformed by industrial process which is willing to develop metabolic deseases and cancer. The lack of food safety is growing and there is an urbanization of population sedentary lifestyles in developed countries at an international level. If Danone respects each culture it has a lot of opportunities to expand its business in dairy products and baby nutrition. But it is difficult for the company to know what each country are seeking and it is difficult to recruit people in some country, especially in Asia. More over The development of “snacking” is growing and the time devoted to eat is reducing year by year. Legal
A lot of laws are present in the production of products on the supply chains, exportation, packing, false advertising. There are corruption risks in developed countries and also a bad supervision of counterfeit such as China. Danone has to adapt its strategy of the law of different countries if it doesn’t want to be in trouble and give a pejorative image of its brand. Economic
Danone needs to have enough information about the country it wants to enterbefore to start its business. Before setting corporative objectives the company has to consider some factors which are the growth rate, the inflation rate and national capital income per person. Global economic turmoils influence Danone business because behavior customer’s is different, they are spending less. The group has to adopt its strategies. It is sure that Danone’s products are essentially supermarket products likewise , it’s easier for its to overcome hard time (security of distribution). However the emergency of low cost markets and MDD are a threat. Politic
Government imposing the law and regulation on the company and it set standard laws as taxation requirement, new tax laws, tax laws interpretations. Danone depends on these political considerations and its business is highly influenced by the government. The politic of free-trading promote the competition on the French market but this is also an opportunity to earn market shares abroad. The internationalization is an opportunity to earn
market shares on a global scale but this is also a risk according to the countries, depending on the politic and economic stability of each. Technological
Technological change creates opportunities for new products and product improvements. These changes are persistent, quick and have profound effect. New marketing such as internet or e-commerce creates opportunities for product improvements or new products. The research and development division enables the group to define which nutrients our body really needs. Danone then concentrates them in its products. Technology highly influences overall decisions and business operations. Sustainable:
The success of danone is due to the quality of its products. It has to be careful with its dairy suppliers, its manufacturers and its liabilities concerning health. Today there is a rise in “BIO” trends., it is a good point for Danone. The group has high CO2 emission levels thus financing projects of environmental protection.
B. Internal analysis
In order to evaluate the internal environment of Danone, the SWOT analysis will give us an overview of the strengths and the weaknesses as well as the opportunities and the threats.
Market leadership in various categories enhances the group’s brand image strong position in the segment of high value-added products health / wellness establishment of growth areas in geographic terms (USA, emergent countries) and products terms (medical nutrition) high notoriety brand (internationally known)
Corporate social responsibility activities and initiatives to benefit the media and stakeholders Diversified revenue streams reduces business risk
Different ways of communication (internet, tv, pub, ..)
Strategy to adapt their product to the local demand
Innovate faster than the competition with a strong R&D division. Innovative efforts/ try to innovate in sustainable development (recyclables bottles)
Sales lower than others giants such as Nestle, Unilever.
Competition between brands in each segments, means limited market share and high brand switching. Very exposed to the volatility of raw materials (milk, sugar, fruit…) and the exchange rate. Strong market position on lifestyle and health products
Increasing concerns about health and diet roles of their consumers Growing awareness of consumers health and their concern about the role of alimentation Demographic development in favor of baby nutrition (high fertility) and medical (population ageing) Development of middle classes in emergent countries
The need for developing countries to have access to safe drinking water Introducing additional flavored water products
Difficult for growth on the mature market due to intense competition Degradation of the economical and social situation in southern Europe (Spain, Greece, etc..) Increase of own brand (marque de distributeur) in industrialized countries The tightening of European reglementations on health assertions Rise in price of main raw materials
Knowing, we can define the 4P which will give us information about what Danone sells (products), the price politic it uses (Prices), which kind of distributions it uses (Places) and which mode of communication the group uses(promotion). Product
Considerable adaptability of danone products in each market
Constant innovation of Danone products due to a research center and a R&D
budget Health products well known
Constant evolution of its brands
Failure of some products
High price politic
“affordability program” to enable accessibility of its product in developing countries This politic may be a risk for the company because of the competitivity
Introduce their products in the vending machine of US schools Partnerships with local market’s actors in order to facilitate the geographical area distribution They are present in 120 countries all around the world
Distribution strength is not good enough to be a leader in water American market
Culturel identity of the brand
High level of communication concerning the social aspect and values of the brand Health program for its customers
Maybe too much commnucation can be boring
Politic communication is expensive
To define the competitors we can use the Porters five forces analysis which summarize the factors affecting the performance of a company. 1) Competition bewteen brands :
The competition bewteen brands is really important. The main companies are Danone, Nestlé, Unilever. They are huge companies with an international reputation. Each of them try to be the leader, and they invest a lot in innovation. 2) Bargaining power of suppliers :
It is not considered as a threat. Indeed the main actors are multinational firms with a considerable power. They use a huge volume of raw material and they usually control all of the production cycle, especially the supply of provisions. 3) Bargaining power of customers :
The main customers are large retailers. Large and medium retailers can be a threat for Danone, due to their bargaining power and their importance on the market. However, they can not keep their activites without Danone’s products. The final customer could be the biggest threat. Indeed, the externe analysis showed us how transigent and volatile the customer is. However the customer is usually loyal to the brand
4) Threat of substitute product :
This threat is not really important, particularly in the developed countries, where the law is really strict. However, the threat can be more important in some countries like China where there is a lot of counterfeit, and it is difficult to stop it. 5) Threat of new entrants :
This threat can be high, due to the entrance on the market of store brands. Moreover, the innovations war of Danone competitors can be dangerous for the company.
III. Danone’s implications on international organizations
A. The implications of segmentation, targeting and positioning Segmentation
Nowadays Danone has focused its activities on four strategic businesses which are : Fresh dairy products (Danone, Actimel, Danette, Activia, Taillefine, …) Waters (Evian, Volvic, Badoit, La Salvetat, Aqua, …)
Baby nutrition (Blédina, Gallia, Nutricia Nutrini, …)
Medical nutrition (Nutricia, SHS, Fortisip, Neocate, …)
Fresh dairy products have always been the most important sector of Danone. The waters market is also really important. Danone is expecting an important growth of this market in the coming years. By doing this it confirms the desire of the brand to move towards health and healthy food and its positioning on sustainable development Targetting :
Danone has based its strategy on the cultural identidy of the brand, its social aspects and its values. The group has focused its market development on healthy products. The level of diversification of the brand is really high because Danone targets everybody (men, women, social categories) who care about their health with its fresh dairy products and its waters. The company is really implicated to the demand of its customers. It targets children with its baby nutrition branch and especially old people with its medical nutrition branch. To develop new products Danone has a research and development division and to penetrate the market the group does a lot of advertising. Positioning :
Nowadays the consumer society forces big companies such as Danone to be really careful about what customers are seeking. They have become really transigent and the competition is hard. Nestlé is the main competitor of Danone. But customers are connected to brands, which are for them security and responsabilty value. Danone has understood this and puts its strategy on “feel better and healthier”. The group has facilities to adapt its products to the trends and the tastes of customers. Answering the fluctuating demand is one of the biggest advantages of the company and we have seen that each new product has been successful. Because Danone’s products are accessible, easy to buy, and improve the quality of life. Danone has rapidly expanded internationally by using existing commercial relationships to introduce its products in certain international markets and therefore accelerate its own geographic expansion as well as the international development of its brands. B. Customer acquisition and retentions
To match consumer expectations the first responsibility of Danone is to provide safe nutrition products. It encourage healthy eating habits by working with schools, consumers, media, authorities and healthcare professionals. Danone communicate a lot with consumers and the company has established procedures for validating nutrition and health-related advertising. It has also encouraged physical activity and developed educational programs. Danone has focused its strategy on quality. The company has managers who are capable of analyzing and anticipating customer needs. The brand has a high capacity to innovate. The nutritional value of a product must be balanced against consumer expectations in terms of flavor and pleasure. The second point is that Danone wants to reduce its packaging volume therefore taking action on three places: Innovation
Reduction at source (reducing the weight of packaging)
Danone also sells affordable products for low-income consumers. It launched Danone’s affordability initiative. It developed its products for local needs at an affordable price because these kind of consumers wil only buy what they need each day and will choose the cheapest products. Products still have their nutritional value and their quality.
Danone has developed its business internationally especially in economically emerging countries and has focused its brand awareness on health and well-being. It has established its strategy around 5 mains factors. Danone’s growth :
Organic growth and acquisitions
Establishing its business in developing countries (India, Mexico, China) due to their economic and demographic potential. Supplying the local population and receiving subsequent market expansion. Innovation and communication
Supporting the commercial development of the company brands such as Danone, Activia, Evian carrying on its high level of communication such as marketing and advertising investments. Politic of innovation, especially regarding health and well-being. Quality security and environment :
Maintaining its efforts in terms of food safety, and its communication around safety rules. Assuring supplies give a better quality to the final product (Aquadrink) Respecting the environment.
Focusing its strategy on sustainable growth
Sharing as much as possible market risks and continuing the hands on
management of the company Health
Giving great importance to health and well-being in the company’s strategy and its long-term vision The main question is, will Danone be able to follow its strategy ?
Cite this Marketing analysis of danone
Marketing analysis of danone. (2016, Jul 16). Retrieved from https://graduateway.com/marketing-analysis-of-danone/