2. This document will provide research on a particular company from a marketing perspective.
I. SITUATION ANALYSIS
(SWOT) Analysis
Strengths:
Lewis Road Creameries milk is made with the highest standards with ‘Whittaker’s 5 Roll Refined Creamy
Milk Chocolate’ as a merged acquisition partnership with ‘Lewis Road Creamery’. It is also organic, non-
homogenised, (PKE) ‘Palm KernelExpeller’ free,and permeate free. The Creamery has plenty of
testimonials, reviews, and multi awards reinforcing the good reputation (Euromonitor, 2014).
Weaknesses: The Creamery is not multinational and is only available on New Zealand’s North
Island. According to research, scarcity of the product and the rate of demand has outweighed the
supply in past operations (Euromonitor, 2014). Although they are not the monopoly mass market
leaders of the industry such as Fonterra Brands (NZ) Ltd, they do have a major stake in the quality and
reputation of the organic market through their offered premiums.
Opportunities: An opportunity to export to New Zealand’s South Island and possibly Australia, while further
expanding product mix; cost reduction, further innovation, increase value-added and continual improvement is
a current opportunity (Euromonitor, 2014). Examples could be to either start to export or continue to
add products such as cheese, yoghurt, custard, ice cream and other milks. Trading and improving
products need to be separated as individual goals because Lewis Road Creamery is still developing.
Threats: The environment affects the production and livelihood of the livestock, along with expenses
and liabilities. The off season can also decrease efficiency in the supply chain because of climate
change and an increasing demand burden (Euromonitor, 2014). The economic rates and fluctuations
are a factor that impacts the stocks and shares of the agricultural market (Grewal, Levy, Matthews,
Harrigan, Bucic, 2015). The technology is important to develop the rate of production whilst
minimizing waste (Grewal, et al, 2015). According to a press release on Peter Cullinanes (founder)
Lewis Road Creameries; almost 50% of the total organic farms has dropped, since 2013 (Scoop
Independent News, 2015).
3. The Ansoff matrix, published in the Harvard Business Review 1957, named after an American Russian
Economist Igor Ansoff, includes 4 growth strategies:
1: Market penetration;
2: Market development;
3: Product development;
4: Diversification.
The Ansoff matrix clarifies the dimensions in the market and the brand position that best fits the appropriate
strategy, which are mentioned above (Pringle, Field, 2008). Ansoff’s focus is on tangibles of products and
services, rather than intangibles and brands. (Pringle, Field, 2008).
For Lewis Road Creamery,the penetration dimension and
parts of the development dimensions are both viable. To
outsource further by sending products to the south island and
Australia will need further research and development. If
other products are to be produced, such as multiple
flavoured milks and yoghurts, then the incorporating
requires further research. After the market and product have
been developed, there is a need to penetrate the consumers’
wants.
4. CDSTEP:
Cultural factors: New Zealand has a great country culture; with quality of livestock and environment.
New Zealand is definitely a green market; and does not require green washing (Grewal, et al, 2015).
New Zealand is one of the cleanest countries in the world, and has a great level of corporate social
responsibility. They have been described as carers of their environment and rightly so (Euromonitor,
2014).
Demographic factors: The demographics are mixed aged; more adults; mixed incomes; mixed
genders and races mainly in North Island, with less in south island but more Māori (NZ.NET, 2012,
para. 2).
Social factors: According to statistics, 64.8% of NZ was reported obese in 08-09, and in 06-07,
29.2% of children were reported obese (Marketline, 2014).
Technological: The technological advances include further production of milk efficiency and RFID
of commodities (Grewal, et al, 2015).
Economic factors: New Zealand has a higher dollar than Australia, with more debt share of GDP
than Australia; but larger population density for area (Euromonitor, 2014). (Refer to appendices for
more economic data).
Political factors: New Zealand has a single parliamentary democracy with a Constitutional Monarchy
(Euromonitor, 2014).
Fig2 Fig3
5. II. MARKETING GOAL
According to Lewis Road Creamery, “We are on a mission, to create the best dairy produce right here in
New Zealand” (Lewis Road Creamery,2015).
This is their current marketing goal; however, a benchmark goal could be to increase market share by 5-10%
more points in the commodity sector.
III. MARKETING STRATEGY
The target market is families of all ages but mainly mothers, fathers and teenagers (Marketline,
2014). Children are direct consumers but are not the customers. The mothers are the customers that
purchase the premium product for their children’s lunch boxes at school. Teenagers work and do
choirs to purchase the chocolate milk and so do the fathers, however the mothers would buy in bulk
on a regular basis, making them the target customers.
Fig 1
Segmentation profile: Sample segments;
Geographic; North Island New Zealand;
Demographic; Between 25-50, mothers; any income.
Psychographic; City slickers and farmers;
Benefits; Taste,and quality;
Behavioural. Customer loyalty.
Figure 1 displays
the
segmentation
profile of the
particularfirm.
6. Fig 1.2
Oak
Dare
Breaka
Lewis Road Creamery;
Horizon;
Nature’s Valley
Chocolate Milk Butter;
Organic Chocolate milk.
Value proposition: Target customers will want the product because of the quality and reputation.
Positioning statement: The frame of reference for the customer needs is the satiety of the milk, the
taste, the nutrients, and the hydration. The competitive offerings are the other brands such as Oak
and Dare which are multinational conglomerates. The primary reason for the choice of Fresh Road
Creamery Chocolate Milk is the taste. The secondary benefits are the environmental contribution; the
extended quality, the accessibility and convenience, and the cost benefit. A non-comparative
statement for Lewis Road Creamery is that Lewis Road Creamery is the best chocolate milk for
people of all ages because of its quality and process. Comparatively; Lewis Road Creamery is a
better product of milk, chocolate milk, and butter, than other mass marketed products such as Oak
and Dare because it is organic. It is additionally a safer alternative with the plastic manufacturing
than the traditional glass bottles. This further contributes to the recycling processes which benefits
the environment, promotes the industry standards and ensures health safety policies. Lewis Road
Creameries products are undifferentiated for the mass market. However the premium chocolate milk
is a concentrated target strategy (Grewal, et al, 2015).
Lessnatural Healthy
Lighttaste
SweetTaste
As depictedinfigure 2,
competitorsandproductshave a
commonality.The circles
representthe marketsize andthe
dimensionsrepresentthe quality.
7. Competitor
offering
Company
offering
Customer
needs and
wants
Fig 1.3 (Circles for a successful value proposition)
Fig 1.4
Figure 1.3 shows that the best situation is when a firm’s product offering overlaps with customer
needs and wants. It must not overlap with the competitor’s offerings (Grewal, et al, 2015).
The value proposition indicates the chasm between the firm and the customers. There are also certain
patents and copyrights that prevent customers from deceptively marketing the proposition. Only
Monopolistic competitors can sustainably maintain their propositions longevity (Grewal, et al, 2015).
As can be depicted in figure 1.4 above, there are 7 spaces that are inclusive of the positioning
strategy between the focal firm, the firm, and the needs of the customers (Grewal, et al, 2015).
Competitor
benefits
Firm
benefits
Customer
needs
The value
proposition
#1
#2 #3
4#
#5 #6
#7
#1: Value proposition:Qualitychocolate milk.
#2: Customers’unmetneeds(marketingopportunity):Expandto
New ZealandSouthIslandandAustraliatoensure optimal
augmentation.
#3: Firm’sbenefitsthatare not required –educate customeror
redesignproduct:Educate childrenandfamiliesinformingthem
of dairyprocessesandoperations.
#4: Keybenefitsthatboththe firmandcompetitorprovide that
customersrequire-carefully monitorperformance relative to
competitoronthese benefits:Greattastingproducts.
#5: Competitor’svalueproposition-monitorandimitate if
needed:Exportsandmassmarket.
#6: Benefitsbothfirmsprovide thatcustomersdonotappearto
need: None;
#7: Competitorbenefitsthatare not required: Investand
educate furtheraboutthe needandbenefitof organicproducts
to promote andadvertise further.
ProfessorRonaldGoodsteinfrom
GeorgetownUniversitydeveloped the
circlesof successmarketingmetrics
(Goodstein,2013).
8. This strategy provides reasons as to why the product is desirable, and it also helps to blueprint further
promotion and advertising ideas (Grewal, et al, 2015).
Depicted below in the exhibit is the hierarchy of needs model. This model was developed by
Abraham Maslow more than 30 years ago, and it is beneficial for consumer decision processes and
psychological factors that a product can influence.
Fig 1.6
Adaptedby(Maslowand
Fraser,1987)
Figure 1.6 showsthe value fromthe
productby itsprice and benefit
(Grewal, et al, 2015).
9. IV. MARKETING TACTICS
There is more to a product than its physical characteristics or its basic service function (Grewal, et al, 2015).
Fig 1.7 indicates that the core customer value defines the problem- solving benefits that consumers are
seeking (Grewal, et al, 2015). E.g. When Lewis Road Creamery makes their organic milk, the consumers are
sceptical about the taste,but the taste is less artificial and still creates market value. “Marketers convert core
customer value into an actual product” (Grewal, et al, 2015). According to Lewis Road Creamery,“It all
started with a desire to create the world’s best butter. We set up our little Dutch churn in a converted shipping
container at Lewis Road, Bay of Plenty, New Zealand” (Lewis Road Creamery,2012). The quality of the
product is substantial, and the packaging is clear plastic bottles with coloured caps on the plain milks. The
associated services also referred to as the augmented product, include the non-physical and intangibleness of
the product (Grewal, et al, 2015). Lewis Road Creamery has a Facebook, instagram, and twitter account. This
can be utilized for reviewing and rating the quality of the product which can also be an associated service.
Perishable items can be faulty or distributed unequally which should not occur. When it does the customer is
entitled to a refund or a replacement under consumer laws. Consumers are the ideal supporters of the product
through the social media campaigns and activities (Grewal, et al, 2015).
Actual Product
Brand name Packaging
Qualitylevel Features/design
Core CustomerValue
Associatedservices
Financing
Productwarranty
Productsupport
Productsupport
Fig1.7
10. The product mix and line of Lewis Road Creamery is not a mass market, because the products are
premium and exclusive. There is a five cents difference in the price of organic full cream and light 750
ml milk bottles (Euromonitor, 2014). The cream has more competitors in the market with the same
300 ml for $1.45 cheaper because they aren’t organic (Euromonitor, 2014).
“Firms often add new product lines to capture new or evolving markets and increase sales” (Grewal,
et al, pg. 244, 2015). Product lines are increased or decreased in depth depending on consumer behaviours
(Grewal, et al, 2015). E.g. the firm can make other dairy products, or eliminate products; however there is no
reason to decrease the depth of the products. Some of the organic products are seasonal, such as the cream.
The supply of certain products depends on the climate patterns (Grewal, et al, 2015). A firm can use its own
corporate name to brand all its products (Grewal, et al, 2015). Lewis Road Creameries chocolate milk is a
family brand (Grewal, et al, 2015). It is also co-branded with Whittaker's 5 Roll Refined Creamy Milk
Chocolate.
Brand repositioning through advertising could be an effective product branding change. The logo could also
be designed differently to attract and create awareness,perceptibility, and relativity.
Through innovation, firms often create a broader portfolio of products, which help them diversify
their risk and enhance firm value better than a single product can (Desai and Keller, 2002). This
reference reinforces the need for more than chocolate milk, which the firm has done. If the premium
milk does not sell as well as the organic milk, the firm can still maintain profitability amongst
changing consumer preferences and competition (Grewal, et al, 2015).
The diffusion of innovation is “the process by which the use of an innovation, whether a product, a service or
a process spreads throughout a market group, over time and across various categories of adopters”, this is
referred to as the diffusion of innovation (Grewal, et al, pg. 276, 2015). The theory helps marketers
understand the rate which consumers are likely to adopt the new product while also giving them a means to
Milks Butter Creams
Chocolate Milk Artisan Pure organic single cream
Premium non-homogenized Premium Seasonal organic double
cream
Homogenized
Light
Calcium enriched low fat
Permeate free
Product Line Fig1.8
11. find potential markets for the new products and to predict their potential sales, even before the innovation is
introduced (Grewal, et al, 2015). Tremendous value is added to firms when they introduce new to the world
products that create new markets (Chandy, Prabhu, and Antia, 2003), such as the chocolate milk and the
artisan butters of Lewis Road Creamery. Studies have found that market share is greater through first mover
advantage products (Oakley, Duhachek, Balachander and Sriram, 2008).
The curve shows the innovators i.e. (buyers who want it first), early adopters i.e. (reviewers), early majority
i.e. (approximately 34% of consumers, less risk taking), late majority i.e. (34% also, being the last group,
waiting for a movie to be rentable), and the laggards i.e. (similar to an unsought product) (Grewal, et al,
2015).
The product life cycle defines the stages that products move through as they enter and progress through the
marketplace. The stages indicate market place trends like a healthy lifestyle variable within an organic product
stage being within a growth level (Grewal, et al, 2015). The four Ps can also be adapted through the product
life cycle model (Grewal, et al, 2015). The diffusion of innovation can be used also as consumers within the
product life cycle, e.g., innovators at the introduction stage.
Fig1.9
12. None of Lewis Road Creameries products are at a decline stage; however, with the seasonal demand of the
organic products such as the milk, it can decline over time but resurrect each season. The firm’s products
would not exit the market due to lack of demand because they are positioned effectively.
The (five Cs) of pricing formulate good pricing policies that have significant contribution and strategy.
(Dolan, 2000)
The company objectives are similar to the marketing goal. They can be either profit orientation, sales
orientation, competitor oriented, or customer oriented (Grewal, et al, 2015). Examples of costs could be profit
as a margin of revenue minus expenses. Sale prices should be as low as possible for the premium less
expensive products, and if profits suffer from the premium products, the organic specialty products can cover
an undesired loss. Competitors such as the larger conglomerates that don’t provide organic ranges can’t enter
the market because of their positioning and targets. The customer oriented dimension is the most suitable for
Lewis Road Creameries organic range because it targets specific customers at the premium price level.
Value
Costs
Company
Objectives
Customers
Competition
Channel
Members
Fig2.0
Fig2.1
13. P2
P1
A demand curve graphically indicates units of production matched with units demanded, which differs during
periods (Grewal, et al, 2015). The laws of supply and demand are economically measured on a curve graph as
depicted in the graph figure 2.2 below.
Price elasticity is a measurement that finds the difference between price and demand changes, which equals
quantity divided by price (Grewal, et al, 2015). It is inelastic when a 1% margin is changed both ways.
The cost factor in the pricing strategy model expands on the customers dimension with the total, variable, and
fixed costs (Grewal, et al, 2015). The variable costs for a firm like Lewis Road Creamery would involve
expenses of the distribution throughout the year, such as the operations and electricity expenses,and any other
pre-paid costs that are to change monthly or yearly. The fixed costs would be the rent or smaller expenses
such as agreed insurance payments. Total costs include both variables and any other costs, such as animal
food, machinery, water,and maintenance. The break even analysis is also a measure of cost that finds the
breakeven point between profits and losses that help calculate decisions based on figures (Grewal, et al, 2015).
(Refer to appendices for calculations).
Demandincreasesasprice
decreases
$P
50
40
30
20
10
5
5 10 15 20 Q Demanded
The supplyof the premium
productscan be hard to reach
equilibriumwiththe rate of
demandthroughoutthe
productionratesof each season.
Fig2.2
14. Competition as the 4th
strategy has a profound impact on pricing strategy and how consumers react to those
strategies (Bolton and Shankar). There are four levels of competition in marketing, and they are monopoly i.e.
(dominated control, less threats),monopolistic competition i.e. (many firms, differentiated, differing prices),
oligopoly i.e. (handful of firms controlling the market with more price competition), and pure competition i.e.
(many firms selling commodities at same price), (Bolton and Shankar). The firm offers its milk in 750 ml
bottles which differentiates them from others (Euromonitor, 2014).
Less price
competition
Monopoly
Monopolistic
competition
More price
competition
Oligopoly
Pure competition
Fewer
firms
Many
firms
Fig2.3
Fig2.4
15. Channel members are manufacturers,wholesalers, and retailers (Grewal, et al, 2015). Lewis Road Creamery
bypasses wholesalers by distributing from the manufacturer, direct to the consumer retailer stockists.
The customer oriented costing strategy is the most effective dimension for Lewis Road Creameries premium
and organic range; therefore,this should be used first.
The distribution channel that the firm currently uses is the indirect intermediary channel with the retailer
between the consumer and the manufacturer (Grewal, et al, 2015). The distribution of the chocolate milk in
New Zealand’s north island is amongst retailers such as New World supermarkets which is an intensive
distribution. The firm could adopt an exclusive distribution channel to some locations in New Zealand’s South
Island, such as Christchurch and Dunedin.
If the exclusive characteristic continues to thrive it could then be tuned to a selective channel distribution.
(RFID) ‘Radio Frequency Identification Device as a technological advancement for (R&D)
‘Research and Development’ helps track products and commodities such as barcodes and branding,
no matter what stage of the distribution system or production level, therefore monitoring products in
transit or trade (Friedlos, 2013). Limited assortment supermarkets that may stock only organic products
could also be an option for the firm (Grewal, et al, 2015). Conventional supermarkets will also stock organic
sections of all brands and products, whereas the firm distributes to both conventional and convenience stores.
When there is a limited range of the product and less choice, then the customer will eventually recognize the
product’s quality when it experiments substitutes.
The promotion of test results helps the firm determine strategic (IMC) ‘Integrated Marketing
Communications’ (Kahn, 2004). Exposing buyers can be through trade shows, introductory price promotions,
and trade promotions (Grewal, et al, 2015). The objective of the promotion would help to promote the
product quality further through IMC, advertising, and (PR) ‘Public Relations’. This would in turn aid
the communication process and channel the product with a greater message through the (AIDA)
model of ‘Awareness, Interest, Desire, and Action’ (Strong, 1925). Advertising rarely provides the
only means to communicate with target customers, therefore a natural connection occurs with sales
promotions (Grewal, et al, 2015). Firms use a vast array of methods to map there market
communication budgets. All the methods have limitations and benefits and are advisable not to be
used in isolation (Levy, 2012). This method will be on the objective and task method. The first step
in the ‘objective method’ is the establishment of communication objectives, the second is to
determine which media is the best to reach the target market, and the third and final step is to budget
the cost of the communications (Grewal, et al, 2015). Television, billboards, and magazines would
be most useful for this firms product development and expansion. Spending all the money on these
advertisements will promote the products and communicate to the public.
16. After the objective and task method has been implemented, it is necessary to measure the progress
through the rate of awareness (Halscheid, 2009). This is done through careful observation, planning,
implementation, and evaluation of the IMC and advertising (Grewal, et al, 2015). Without the
number of ‘impressions’ from the advertisement (i.e., amount of times the advertisement appears),
the (CTR) ‘Click Through Rate’ (i.e. the number of clicks divided by number of impressions) and the
(ROI) ‘Return On Investment’ (i.e. the revenue and advertising costs), the firm will not be able to
identify the marketing metrics (Grewal, et al, 2015). (Refer to appendix for full explanation). The
more clicks for the chocolate milk advertisement the better and the greater the profit percentage from
the CTR also.
Advertising through school projects and campaigns will be one option. Sponsoring and hiring athletes and
other celebrities is the second option. Communicating with larger companies is a third option for advertising
together and sharing the goals. These PR strategies will promote Lewis Road Creamery further into the market
to ultimately satisfy the consumer experience and behaviour.
Sender;
Encoding;
Channel;
Noise;
Receiver;
Decoding;
Feedback.
Advertisingworksthrougha
frameworkof channelsand
has influence onconsumer
behaviour(Vakratsasand
Ambler,1999).
Fig2.5
17. V. REFERENCES
Works Cited
New Zealand Demographics. (2012). Retrieved 05 16, 2015, from NZ.NET:http://www.new-zealand-
nz.net/new_zealand_demographics.html
Ambler, D. V. (1999). How Advertising Works: What Do We Really Know? Journal of Marketing,, 63(1), 26-
43.
Bromley, R. (2006). Class Notes. pcecon.com. pcecon.com.
Bucic, D. G. (2015). Marketing (Special ed.). Sydney: McgrawHill.
Chandy, R. K., Prabhu, J. C.,& Antia, K. D. (2003). What Will the Future Bring? Dominance, Technology
Expectations, and Radical Innovation. Journal of Marketing, 67(3), 1-18.
Creamery,L. R. (2012). Our Creamery. Retrieved 05 16, 2015, from LewsiRoad Creamery New Zealand:
http://lewisroadcreamery.co.nz/ourcreamery
Dolan, R. J. (2000). Not On Marketing Strategy. Harvard Business Sxhool, 1-17.
Friedlos, D. (2013, 03 04). 'RFID Scores High at Australian Open'. RFID Journal.
Goodstein, R. C. (2013). Marketing Metrics: How Can CLE Professionals Measure the. Georgetown
University, 1-12.
Halscheid, M. S. (2009). beyond the laSt click. Journal of Integrated Marketing Communications, 43-50.
J Hall, G. S. (2006, March). The role of R&D in productivity growth: The case of agriculture in New Zealand.
MONTH,06(01), 1-64.
Kahn. (2004). The PDMA Handbook of New Product Development. Product Development Management
Association.
Kalpesh Kaushik, D. a. (2002). The effects of ingredient branding strategies on host brand extendibility.
Journal Of Marketing, 66(1), 73-93.
Maslow, A. H.,& Frager, R. (1987). Motivation and personality (3rd ed.). NY,NY, USA: Harper and Row.
Oakley, D. S. (2008). Order of entry and the moderating role of comparison brands in brand extension
evaluation. Journal of consumer research,34(5), 706-712.
PR,D. (2015, 05 15). Lewis Road Creamery supports new organic dairy co-operative. Lewis Road Creamery
supports new organic dairy co-operative, p. 1.
18. Ruth N Bolton, V. S. (2003). An empirically derived taxonomy of retailer pricing and promotion strategies.
Journal of Retailing, 79(4), 213-224.
Strong, E. (1925). The psychology of selling and advertising. New York: McGraw-Hill book Company.
WEITZ, B. A. (2012). RETAILINGMANAGEMENT. NY: Irwin & McGraw-Hill.
19. VI. APPENDICES
From the text of (Grewal, et al, 2015) the impressions are analysed with the clicks of the ad. E.g. If a sponsored link was
delivered 100 times and 10 people clicked on it, then the number of impressions is 100, the number of clicks is 10 and
the CTR would be 10%.
ROI = Sales revenue – Advertising cost/ Advertising cost.
RFID: “RFID Tags are tiny computer chips that automatically transmit to a special scannerall the information about a
container’s contents orindividual products.Approximately as large as a pinhead, each of these RFID tags consist ofan
antenna and a chip that contains an electronic product code that stores far more information about a product than
barcodes or UPC codes can. The tags also act as passive tracking devices, signalling their presence over a radio
frequency when they pass within a few yards of a special scanner.The tags have long been used in high -cost
applications, such as automated highway toll systems and security identification badges.A key advantage of RFID is that
it eliminates the need to hand;e items individually by enabling distribution centres and stores to receive whole truckloads
of merchandise without having to check in each carton. Anotheradvantage is that manufacturers and distributors are able
to reduce overall inventory thanks to greater supply chain efficiency.
(Euromonitor, 2014)
In 2014; ‘Fonterra’ had 38% market sharein
the dairy industry of New Zealand.Lewis Road
Creamery is not mentioned amongst the top
25 but the privatelabel and others category
makes up 24% of the market (Euromonitor,
2014).
As can be depicted in the graph; the stock
market index of New Zealand has increased
exponentially each year for the past5 years
(Euromonitor, 2014).
20. As mentioned in the report; the economic formulas are listed here in the appendices above (Bromley, 2006).
Displayed below is an example of a SWOT analysis.
Strengths: Weaknesses
Opportunities Threats
As the graphs display below, the population density per sq km is much larger for New Zealand because it has a smaller
land mass, however, if the cities of Australia were matched accordingly, then Australia would be denser.
