South Africa’s income inequality gap was significant, with its market situated at the bottom of the pyramid. More than half of the population, in the 4-5 tier range, had a purchasing power parity of less than $1500 in US dollars. Danone aimed to target this market segment by introducing a low-priced product specifically designed for low-income individuals. Extensive research conducted by local universities and the SA Medical Research Council yielded promising results regarding the benefits of Danimal. Specifically, it was discovered that probiotic cultures found in yogurt were advantageous for children. Additionally, it was determined that the product could be manufactured using existing equipment.
Addressing nutritional deficiencies, particularly in children from impoverished families, was a priority for Danone. Their production of yoghurt had multiple benefits, as it not only aided society by ensuring that children from disadvantaged backgrounds received essential nutrients like vitamin A, iron, and zinc, but also created employment opportunities and fostered entrepreneurial skills among the uneducated and impoverished through their distribution networks of Danimamas, Daniladies, and Danimen.
Regarding social benefits, Danone SA provided instruction in business principles to individuals who lacked employment opportunities and prospects. Additionally, they offered support during the initial stages of these individuals’ businesses and rejoiced in their successes. Ultimately, this would lead to increased brand awareness and a positive image for Danone, aiding their expansion into other developing nations. The general population benefited from access to an affordable, tasty, nutritious product of high quality. Danone recognized that by nourishing hungry children, they fostered a stronger brand loyalty in them.
The company also recognized the significance of experiencing the brand firsthand, such as through scent and taste, as an effective marketing strategy. It was challenging to quantify the exact performance benefits of the Danimal initiative, but it undeniably led to increased brand awareness in the lower market segments. Are Danone’s efforts to meet the needs of the bottom of the pyramid successful? How can they improve? Pretorious considered the 4P’s during product development. In 2005, the price was initially established at R1.00.
Danone benefited from the transaction, which involved only one coin interaction, making it simple and valuable for the targeted children’s market. To ensure there were no additional margins on the final price, the lid of the product was printed with its price. Danone did not make any profits from this. The company aimed to address nutritional deficiencies in underprivileged children’s diets by enriching the yogurt with vitamin A, iron, and zinc. Additionally, due to limited access to electricity and refrigeration, the yogurt needed a longer shelf life.
Danone utilized the name “Danimal” as a clever marketing technique to promote their product. By combining “Danone” and “animal”, they created a name that instilled a sense of pride in Africa. To cater to children, they incorporated a vibrant leopard logo, while also providing nutritional information to attract adults. The initial introduction of this product took place in Gauteng province, but it later expanded into Kwazulu-Natal and the Free State provinces, targeting the bottom of the pyramid market segment. In my opinion, Danone effectively met the needs of this market segment without requiring significant investment or additional marketing efforts due to their utilization of existing equipment.
They created a product that was both attractive to children and beneficial for their long-term health. Their pricing approach involved targeting lower-income individuals with affordable prices that excluded any added margins. Instead of conventional distribution methods, they relied on local individuals to sell their products as “franchise” units. Danone’s objective with this product is to generate a profit. One possibility could be expanding the product range and offering higher-priced options for different consumer segments. Alternatively, Danone could develop other dairy products that cater specifically to this market. Another option would be to promote the product in schools or hospitals, where dietary and nutritional considerations are particularly significant.
When Maria Pretorius departs from her current position in S. Africa, the implications for sustaining the Danimal yogurt project and product line need to be considered. Additionally, recommendations need to be made regarding this matter. The main issue at hand is that Pretorius was the only individual with shared values and a mission. Consequently, she bore the brunt of the workload. To address this concern, it is advisable to establish a training program for the top management. This program should have a clear objective and outline expectations for the upcoming 5-year period. As mentioned in the case, each business unit is given a budget that they can allocate as they see fit. However, this financial allocation could pose a challenge for the new replacement.
Joelle Berry should be hired to take over, as he is the only person, along with Pretorius, who has knowledge of the product and business model. Additionally, more employees should be trained on the product and all management should be aligned with future expectations and goals. To further expand the Danaimal product, Danone could introduce new flavors and consider producing a product targeted at adults. Distribution should also be expanded to include traditional grocery stores or small local convenience stores. Furthermore, it is suggested that Danone should establish a connection with a local school district or hospital.
