Business Strategy For Actimel

Opportunities exist for Actimel to boost its sales and market share by launching new flavours, advertising campaign and repackaging. However the most promising way for Actimel to protect its status as the market leader and also to increase its sales is to achieve EFSA approval for its health claim; this however is not as easy as it sounds because Actimel claims to improve the body’s natural defences (the immune system). DANONE states that there is not a very clear measurement of immunity and hence it is very difficult to prove to the EFSA that Actimel has an effect on it.

Because of the EFSA’s tightened regulations the position of the big companies in the market will be re-enforced while the arrival of new small companies will be prevented due to the high costs of scientific research required to produce a product with a health claim. Therefore any threat to the market leader position and sales of Actimel will either come from a new product launched by a big multinational company or from products already on the market; which manage to acquire an EFSA approval for a health claim they have made.

For example Benecol yogurt drink is such a product and has managed to increase its sales and market share in the past few years; this puts Benecol yogurt drinks as the major competitor and threat to Actimel’s sales value and market position.

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Yakult is also another threat to Actimel’s position but its health claim was also rejected by the EFSA. The grid below highlights some of the factors that affect the market presently and therefore gives an idea on the way forward in the present market environment.

Government policy

Political factors have a vast impact upon the regulation of Danon’s yogurt drink market. The UK Coalition Government’s ‘Responsibility Deal’ is being developed with an objective to enable, encourage and incentivise consumers to adopt a better diet and to increase their levels of physical activity as part of a positive decision to lead a healthier lifestyle eg. Five a day.

The issues such as how stable the political environment should be in different countries, how government policies affect tax on the company, what the government’s policy on marketing ethics and economy is, and how long the payment cycle works in certain countries has always been the matter of consideration by Danone. Economic Economics factors include interest rates, taxation changes, economic growth, inflation and exchange rates which can effect on companies profitability. Actimel market environment is highly competitive. Multinational Brands such as Yakult, Benecol and stored own brand with their superior stature are the major competitors in the ambient grocery market.

Retailers are pressurizing FMCG (Fast-Moving Consumer Goods) producers to reduce prices of their products. This in turn has adverse effects of the Premier foods profits. Consumers also do not want to buy expensive product or brands due to current economic tide. The UK economy analysis in 2011 indicates that UK had a difficult year according to the high unemployment, spare capacity and government borrowing.

UK gross domestic product (GDP) in volume terms decreased by 0.3 per cent in the fourth quarter of 2011 and a further 0.2% in the first quarter of 2012, causing concerns for a ‘double-dip recession’.?(21) Output of the production industries fell by 1.3 per cent, within which manufacturing fell by 0.7 per cent. Inflation picked up again during 2011. CPI inflation was running at 5.2% in September, building on the recent increases to give the highest rate since September 2008. The Bank of England left the base interest rate at 0.5% despite high inflation, but the recovery in the UK economy in the short term will continue to be modest and gradual.

Social

Other economical factors such as Unemployment, Advert withdrawal and Migration could also affect the market. Social factors DANONE has a number of manufacturing facilities and suppliers all around the world which represent a substantial portion of its marketing plan. Therefore, considering the aforementioned, DANONE needs to contemplate the following factors:

1. Age distribution and population
2. Cultural aspects
3. Attitudes towards foreign products and services.
4. Effect of language upon the distribution of products onto markets

Knowing the social factors and trends in each country could help DANONE to make the best decisions on the methods of operating the products.

In 2008 DANONE started to built a yogurt factory in Bangladesh with a difference - what Professor Yunus calls a social business. This project is not profitable and mainly benefits the local children who have very poor diet.The scheme is not designed to make a profit, but it does have clear benefits for DANONE. It is a good way for the company to learn how to market food in South Asia - a valuable lesson as it considers whether to enter the huge and lucrative market of neighbouring India.

Technology

Technological factors can influence production speed, quality costs, and it might lead to innovation. Research and development is important for companies as to apply technological advances to create opportunities for new, or to improve existing products and/or processes; and to improve service to customers in order to achieve a higher market share, to compete with new entrants or to reduce operating costs.

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