Executive Summary
This report provides an extensive overview of the market of skim powder milk in Australia, and specifically the product of the company Devondale. The report provides the statistics regarding the market share, brand share, and the main competitors of the Devondale brand in that segment. Additionally, the products, as well as the target customers, were identified, providing a brief marketing mix of the results.
Market Background
The market of skim powder milk can be defined as the group of the product’s buyer, existent or potential. The researched product is Devondale’s Skim Milk Powder, and thus the market of this product is the groups buying or intending to buy this category of products. A definition could be derived from the needs of the customers, and in that regard, these needs would be as follows:
- Low-fat milk
- Expenses saving
- The ability for longer storage
- All-natural elements of fresh milk
Thus, the market can be defined as the population of Australia that wants to consume low-fat milk, without the concern of storage, and being concerned for their health and the nutritional benefiting products. Being part of the dairy industry, dairy production was one of the major industries in Australia, where the average annual consumption was estimated at 100 litres (Trewin, 2004).
The main direction taken in the manufacturing of powder milk in Murray Goulburn started with the purchase of Devondale Cream Company in 1972. The latest developments in milk powder manufacturing in Murray Goulburn include the investment in carbon monoxide monitoring technology, which reduces the risk of powder combustion during manufacture (MURRAY GOULBURN, 2008).
Market Statistics
The size of the milk powder market, irrespective of type, i.e. skim and full cream, is estimated at A$30, 33 million, with a volume of 4,596 tonnes. The size of the skim powder milk is estimated at 51% of the overall market of powder milk, which is approximately A$15.45 million, and accordingly, the volume of the skim powder market is approximately 58,1% of the overall market of powder, constituting 2,670 tonnes (2008b).
The share of the Devondale skim powder milk constitutes 1.1% in value and 0.9% in volume from the total skim milk powder market in Australia, which is estimated at A$1, 7 million and 240 tonnes respectively (2008b). It can be seen that Devondale is the only business unit manufacturing powder milk in Murray Goulburn, and thus the share of the market is related to Devondale’s only brand of skim powder milk. The volume numbers slightly differently, based on statistics provided by the Murray Goulburn, where it constitutes 250 tonnes, showing a decline of 0.3 %, which continues since 2005 (Murray Goulburn, 2009).
The company’s main competitors in the skim powder market are represented through the first position in the market, the Fonterra Company, specifically the Diploma brand, which has a share of 29.9% in value and 19.7% in volume of the skim powder market, which constitutes A $ 4, 62 million and 525 tonnes respectively. The rest of the market, i.e. approximately 69.1% in value and 79.5% in volume belong to private label brands.
Business Environment
The factors influencing the macro environment of the powder milk market are partially related to the factors influencing dairying, being a part of this industry. In that regard, the geographical and natural factors are related to the areas enabling low-cost milk production, i.e. “high rainfall coastal fringe areas” (Pink, 2008). The economical and financial factors revolve mainly around the global increase in powder milk prices, leading to that, many companies with spare capacities switched from cheese production into powder milk production and thus increasing the area of competition (2008a). The political and legal aspects are mainly concerned with the deregulation of milk prices, where the Dairy Industry Adjustment Act 2000, and the Dairy Produce Legislation Amendment (Supplementary Assistance) Act 2001, provided the framework by which the industry was deregulated, and the prices are influenced by the natural forces of supply and demand, which in turn are affected by the world prices (Trewin, 2004). The latter is true for the fresh milk market, where the manufacturing market was deregulated prior to the aforementioned acts. Nevertheless, such deregulation can be considered as influential for the powder milk market.
The micro factors influencing the company Murray Goulburn include the availability of 2,500 suppliers, as well as the company’s nine manufacturing sites. The skim powder milk is manufactured under the brand name Devondale, which is a separate business unit belonging to the Murray Goulburn, which has its separate six factories and 26 trading stores in Victoria.
Product
The identification of the product Devondale Skim Milk Powder can be seen in the table below:
The target market of the skim powder milk can be identified through the following table:
The pricing mix can be defined as the mixture of factors, over which the organisation has a particular control (Adcock, 2001) The main categories under which the factors can be groups include the 4 Ps, i.e. product, price, place, and promotion. In terms of product, Devondale is selling a one kg package of skim powder milk, which reconstitutes 10 litres of creamy fat-free milk, the main characteristics of which is being free of preservatives and additives, healthy, and having a convenient bag. The selling place is chosen through retail stores and supermarkets, where the product is placed within dairy products in the low-fat section. The choice of such a place emphasized health awareness in the same category of products. The pricing strategy implies putting the product in the range of affordability, where one of the targeted segments’ needs emphasizes the saving feature. Thus, the pricing category is established within a reasonable range. The promotion factor can be seen through the direction taken by the company, where examples of the ads can be seen on their website. The advertising implies promoting health awareness and nutrition.
The packaging of the product has an important role, being the first thing the customer sees during the process of making a decision. In that regard, the packaging is held within the distinct style of the Devondale product, i.e. using a mixture of white and blue patterns, with a strongly pronounced label with the words skim. In that regard, the packaging reflects the main idea of the promotion, low fat (on the packaging- front), saving (on the packaging – front), healthy and natural (on the packaging – front).
Branding is an important aspect of marketing, which makes the product distinguishable from its competitors. Additionally, through branding, the customer will be able to see the main features of the product through which consistency can be traced. Taking, Levondale’s skim powder milk, it can be seen that the branding of the milk, as well as several other products of the company such as skim milk, are consisted within their area of focus, fat-free, and no preservatives or additives.
References
ADCOCK, D. (2001) Marketing : principles and practice, Pearson Education.
ARMSTRONG, G. & KOTLER, P. (2007) Marketing : an introduction, Pearson Education Australia.
MURRAY GOULBURN (2008) 58th Annual Report. MGC.com. 2009. Web.
MURRAY GOULBURN (2009) Facts at a Glance 2007/08. MGC.com. Web.
PINK, B. (2008) Year Book Australia 2008. Australian Bureau of Statistics.
(2008a) Prices a-whey! Dairy Industries International, 73, 25-25.
(2008b) Retail World’s Australasian Grocery Guide 2008, ADSHEl.
TREWIN, D. (2004) Year Book Australia 2004. Australian Bureau of Statistics.