Nov 19, 2020 in Case Studies

New Zealand Dairy Board Case Study Analysis
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25 July 2013

 

New Zealand Dairy Board A Successful Export Marketing Strategy

Introduction

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Marketing products is a complex endeavor that encompasses various elements and presents companies with diverse promotion challenges. Needless to say, different companies perceive the essence of marketing in completely different ways. Nonetheless, in all marketing strategies, the importance of the marketing mix (4P's) cannot be ignored. Product, Place, Price, and Promotion are equally vital for the continued success and competitiveness of every product and service. Companies must understand what products the customer wants, and what the customer expects from these products. They must know where the customer is looking for the product and how much he/she is willing to pay for it. Promotion comes as the last but not the least important element of a marketing strategy. The case of the New Zealand Dairy Board suggests that product differentiation, global expansion, and organizational growth are possible only in the presence of a well-developed marketing strategy based on 4P's.

Summary of Problems

According to Sampson, the history of the New Zealand Dairy Board dates back to the 1920s, when the organization was formed to reestablish the conventional monopoly on dairy products production and distribution (1). The basic intent behind the creation of the Board was to make overseas expansion attempts more organized and structured (Sampson 2). However, at the beginning of the 1980s, the traditional approach to overseas growth was no longer valid. Monopolies were becoming obsolete, while customers were seeking to diversify their product choices and tastes. Therefore, the central challenge the New Zealand Dairy Board was facing at the end of the 1980s was to restructure its traditional approach to overseas growth and replace its emphasis on organic growth with a new marketing approach that would be consumer-centric and responsive to the changing consumer needs.

At a deeper level, NZDB was facing a number of structural and organizational challenges that made the implementation of new product strategies extremely problematic. On the one hand, NZDB had numerous subsidiaries in different parts of the world, whose aim was to support the organization's expansion overseas (Sampson 2). However, they did not operate as a cohesive system of organizational units, and the supply of quality milk products often took place through separate and malfunctioning arrangements, which did not allow NZDB to utilize the benefits of synergies (Sampson 2). For many years, the marketing focus of NZDB had been local, not global, but it no longer responded to the new global expansion priorities imposed on the organization (Sampson 2). That was the problem of "place" in marketing, when the location of customers and the low effectiveness of the existing channels made the distribution of its products in the target consumer segment very difficult and costly.

On the other hand, Britain had been a historically prevalent business partner in New Zealand's dairy business, and the bulk of dairy products exports was traditionally sent to Britain (Sampson 2). However, when Britain joined the European Economic Community in 1973, NZDB faced the problem of product diversification and differentiation. British consumers no longer needed New Zealand's milk, and the organization had to find new markets for its products (Sampson 2). Again, a new marketing strategy had to be developed, based on the new "place," demanding new "price" and "promotion" approaches.

Options

A company in a tough marketing situation always has several options to choose from. NZDB could keep using its organic growth strategy against all odds. It could also give itself away to its competitors or simply dissolve, letting other companies and organizations capture its share of the dairy products market. However, the strategic planning approach used by the company became a strong basis for its future success, turning New Zealand into one of the world's leading providers of high-quality dairy products. NZDB is an example of a company that turned a crisis situation into a successful business, using marketing strategy and the 4P's as the foundation for its global market growth.

 
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The case of NZDB is a perfect example of how the 4P's benefit companies, when used thoroughly and responsibly. The company decided that it could solve its global expansion problems by establishing the product, place, and price constituents, followed by an effective promotion strategy. First, the product element of the marketing strategy was addressed, and NZDB chose to solve the butter vs. margarine dilemma, providing consumers with a new and exceptionally useful high-quality spread product (Sampson 4). Second, pricing decisions were made to satisfy the diversity of consumer groups in the target market. Third, the place for strategy implementation was established: Australia became the central target market for NZDB. Finally, when all those issues were addressed, a complex promotion campaign was developed.

Apparently, NZDB chose the most challenging marketing option, based on the 4P's. The challenge was in finding the most suitable product for expansion, followed by its location and price. Sampson states that it took NZDB more than one year to establish the product, its most desirable tastes, and the initial market place (6). Pricing was, probably, one of the greatest difficulties in meeting the overseas expansion targets of NZDB. The new spreadable butter product became an instant success in Australia, but it took years for NZDB to realize its expansion strivings. Now the biggest question is how the organization will work to secure its position in the global marketplace.

Opinion of the Best Option

NZDB has proved to be a remarkable success, due to its strong commitment to the 4P's of the marketing strategy. However, one of the biggest problems is that it took years for NZDB to enter and regain its position in the global marketplace. In my opinion, as NZDB is trying to preserve its current position in the market, it can no longer afford spending years to develop new products and promotion campaigns. The success of any marketing strategy is in being speedy and faster than competitors. Therefore, the company should establish a marketing research and developing board, which will monitor changes in consumer tastes and anticipate their impacts on the dairy products market. Marketing campaigns should be regularly adjusted to fit in the changing customer demands. The organization cannot afford spending another year and a half to pick up and conquer the target market. Speed and quality will keep playing the fundamental role in dairy companies' success.

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Conclusion

Present-day markets constantly change, and only companies that can respond to these changes will have a chance to survive the toughest competition. How exactly NZDB will implement its strategy to preserve the global market share is difficult to define, but it is clear that it will not stick to its current marketing strategy for years. By relying on the 4P's, NZDB has managed to turn its disastrous situation into a major source of success, but it will have to become faster and more future-oriented in its analysis of the 4P's components in the future. Sampson is right: a growth-oriented company must always pursue new products, markets, and strategy solutions (8). Establishing a place in the global market is not enough for continuous success; NZDB must confirm its place among multinational dairy products manufacturers (Sampson 8). To make it happen, it will have to develop faster approaches to product development and implementation at a global scale.

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