Marketing Case study Essay - Part 2
Problem statement: TetraPak had an objective of winning it’s increasing competition and improving the declining market that had seen it’s market share drop greatly in the year 1999. To attain this, the company must re-brand and reinvent new products and packaging modes methods that reflect people’s tastes and preferences.
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Situation analysis: The following is a situation evaluation that exhibits a clear exploration into the company by considering it’s strength, weaknesses, opportunities and the available threats that fall in it’s quest to achieve the main objective.
l TetraPak company founded in 1952 formed the world largest producer of aseptic cartons for food packaging materials like fruit drinks, juices, milk and other liquid food.
l TetraPak company was built on a culture of entrepreneurial and centralized system where freedom in accountability and strong partnership especially with suppliers, customers and colleagues was highly valued.
l Long term perspective, creativity and vast innovation was emphasized for higher production that was realized in the earlier years after introduction. Commitment and fun was also considered for the employees and the staff which formed major keys in the company’s success.
l During the year 1999, milk consumption worldwide had increased to 236 billion liters from 213 billion liters in the year 2005 representing a 2.5% growth. However, TetraPak sales declined during the same period from 32 billion liters to 30 billion liters.
l After experiencing a huge drop in it’s market share, the management decided to consult their key customer in search for a lasting solution that would maintain their relationship and thus the major market share.
l Unexpectedly, their offer was turned down in the midst of their immediate competitors who were eager looking for a minor crack to capture market with Pontero company (Shaner & Kashani, 2005).
l TetraPak held 80% of the market share in the global aseptic packaging field with it’s technology being far much superior to the others in the market. 35% of the liquid food products were packaged in plastic containers while 14% were packaged in cartons.
l The company is established in 165 countries and it’s consumers and customers well spread through out the the world.
l Consumer based consultation and intimacy has been adopted by the company as the main culture of retaining customers in the market. Branch independent management is greatly exercised as indicated by the Italian branch consultation with their main consumer Pentero company.
l Top main consumers in the Italian market were Andina, Pontero and Filo. However, unlike Pontero, all the other main consumers also bought from other companies.
l The main competitors of TetraPak were Cambiblock, Elopack, International paper, Sidei and Crown Cork which were all international companies and therefore demanding excellent marketing to maintain the high level competition.
l The competitors were waiting and fueling for breaking of TetraPak break with Pontero in order to acquire the rich niche of solely supplying to Pontero Company which was the largest in Italy.
l Marketing approaches: Marketing with greater care to retain the highly sought market by the immediate giant competitors.
l Introduction of new ideas that were peculiar to the market through innovations and therefore outdoing the other competitors in the market.
1 - Marketing Case study Essay introduction. Total abandonment of enriched milk.
TetraPakcould have chosen this option to retain the Pontero Company as it gave it a great market share being the largest consumer with 70% and considered as the best quality brand in Italy. Pontero expressed it’s discontent with the idea of enriched milk claiming that the competitors already were in the business and thus could not afford to risk getting in that line. The ideology would help the company to fast get to the line of action as indicated by the consumer thereby guaranteeing them the market (Shaner & Kashani, 2005).
l Guaranteed market with large scale consumer who entirely depends on TetraPak and disregarded other suppliers in the market.
l Cutting down other competitors from gaining an added advantage in the business that would result from the immediate breakup.
l Disregard to the extra market apart from the main consumer (Pontero).
l Possible continued decline of sales due to inhibition to venture into the new options that TetraPak feels is viable to them.
l Hindrance to innovation therefore going against the company’s culture of promoting invention for increased returns into the company.
This option is highly driven by single consumer requirements and fails to take into account the increasing and changing market base in the world. Though the consumer will be maintained and competition kept low, the long term effects would be continued decline as even Pontero company itself was facing a decline in its market share. Pontero had lost equivalent of 2.2 million liters of shelf space in the year 1999 (Shaner & Kashani, 2005).
2. Reintroducing new products and Enriched milk with various changes.
This option was better as it would create space by injecting new life into the declining market for the TetraPak and Pontero companies. Accompanied with ample marketing strategies, the ideas would go well with Pontero company as it wanted a new idea and product that was not being used by other companies. Helping to retain the company as a major consumer would serve as a great model and lure more consumers which meant increased sales for the company.
l Continued relationship with the main consumer for the TetraPak company.
l Increased market and better positioning for business compared to other competitors
l Better company image for having an enhanced relationship with the largest supplier of milk products in Italy.
l Presence of other players in the same market who made Pontero to fear venturing into the same business.
l Increased costs for the new products that would increase the overall cost of production for the company.
Changed form of enriched milk would help in capturing the increased swelling market which was appealing to all the age groups. The idea would also appeal to Pontero as the labels were difficult to copy by other companies. The idea would enhance the company’s ability to compete and raise the number of the total products available to the market for higher sales and increased profits. However care should be taken to enhance long term profits that the company would achieve.
Chosen option: Reintroducing new products and Enriched milk with various changes. Since TettraPk market is complex and is applied alongside giant competitors, present market should never be abandoned and new avenues should be explored simultaneously. Besides, the company main goal is increasing the sales and its profitability in the market, therefore it’s reputation must be safeguarded especially in relationship to major consumers like Pontero company.
Product: Increased focus to the consumers preferences to increase the demand for the products. It would remove unnecessary competition from other related products.
Promotion: Enhance increased partnership with more consumers like pontero to guarantee long term profitability of the company. Besides, solidifying the international base, an enviable niche would be created for the company’s products.
Price: Establishment of the correct price would ensure that all the target consumers could afford the products while maintaining the overall international benefits for the company.
Shaner, J. & Kashani, K. (2005). TetraPak (A): The challenge of intimacy with a key customer. Lousane: International Institute for Management.