Danone Case Preparation

5 C Analysis

Customer

Needs What needs does the product fulfill? How does it help build their identities? 80% want it cheap, moderately priced Health and fitness is a very strong need among feamles Need to look good and feel good Identity: sports and fitness, healthy, selling the image of the trim and fit girl

Decision making process Problem recognition: there is a gap in the market, health and body conscious females want a new drink that is uniquely balanced by naturalness, flavour/pleasure and with clear diet Information search: what media, sources of information do consumers use? Opinion leader? Evaluation of alternatives: which attributes or features of the product are most important to consumers? how do consumers weight the importance of different attributes Purchase decision: what physical situational factors affect consumer decisions most, how is their purchase experience like Post purchase evaluation: satisfied? How they access good after

Context (external factors)

Demographic-

Economic Poor economy in 2001 fueled emergence of B-brand beverages this is probably cyclical rather than structural (case written in 2010 where economy rebounded) Product can be considered a luxury because it is not a necessity even though substitutability is low

Socio cultural fashion and taste: consumption growth after 2001 due to concern over health, fitness and search for natural food Overall soft drink consumption has decreased, with powdered juices being the only one that increased Water products perceived as higher quality than soft drinks in general

Political/legal Increased safety concerns regarding running water and improved legal conditions

Technological Nutritional information is more readily double-checked/available on the internet for concerned consumers availability of such health information will affect the ways that consumer shop as they are easily able to compare products based on personal benchmarks Proliferation of social media/influencers can affect advertising strategies Emergence of new water-producing technologies (unimportant as target audience going for natural products, not reverse osmosis)

Natural Water sources: are they running dry? Impacted by climate change with differing affects depending on the region of Argentina in question. A declining trend in precipitation may be observed, stress on water availability and quality has been documented where lower precipitation and/or higher temperatures occur. For example, droughts related to La Nia create severe restrictions for water supply and irrigation demands in central western Argentina. Additionally, glaciers in Latin America have receded dramatically in the past decades, and many of them have disappeared completely. Long term concerns that water availability and hydropower generation will be affected Plastic bottles have a adverse impact on the environment Glass bottles are more environmentally friendly and can look classier in line with healthy, natural image if environmentally friendly, in line with companys goal of improving collective wellbeing

Company

Business model how does it make money: acquire brands with global/national scope in its bid of global strategy

Competitive strategy Compete by high quality products Compete by good/premium quality/all natural water with health benefits from pure sources Companys genuine interest in creating individual and collective wellbeing Compete with image as health promoter? Low cost low price, unique superioir, small segment niche market, superior performance in some attributes. Is strateygy easuly replicable?

Competitive advantage analysis 45% share in bottle water industry Both acquired brands Villa del Sur and Villavicencio are leading mineral water MANUFACTURERS Technology and expertise Sustainable? Area unmatched by competition. Cost advantage in manufacturing Existing relationship with logistics network operator and supply chain network Marketing advantages (?) Established brand with brand equity value R&D? Core competencies

Collaborators and Complementors

Collaborators 2 production plants High reliance on two logistic network operators who helps firm market products Distribution centers at ADA factories that were managed by another modern distributor center located in Argentinas capital city Relationship with plastic bottle producers

Complementors Health foods like fat free crackers, fitness Plastic/glass bottle producers relationship will not be affected

Competitors

Product competitionSoft drinks (Coca cola, 7UP)

Other water brands

RTD Juices, powdered juices

PORTERS 5 FORCES

1) Industry competitorsa. Many different companies and drink productsb. Nestle, UNILEVER2) Potential entrantsa. Market is saturated with both B-brands and international brandsb. High costs of entry: water sourcing/manufacturing facilities, 3) Availability of substitutesa. Yes, but they are not perfect subtitutesb. If Danone is appealing to a niche market (selling a lifestyle, not just the drink), then its new product will unlikely be substitutable given it is filling a current market gapc. However, in the broader sense, Pinta might seem like JUST ANOTHER BEVERAGE4) Buyer Powera. End consumers high power, low switching costs also due to poor economy, food and beverages would be a large proportion of income and and buyers will be price sensitive, switch to cheaper alternativesb. Middle consumers e.g. retailers like hypermarts have high buyer power as well because they are able to affect shelving decisions5) Supplier Powera. Bottles: highb. Water: Self-produced, lowc. 6)

SWOT ANALYSIS

Internal Strength Experience and economies of scale from various acquired brands Strong customer base and high market share Strong existing brand awareness and equityInternal Weakness Brand confusion (merging both Ser and Villa del Sur) Might be overly focused on female market, marginalizing male populationExternal threat Falling demand for water products Economic instability and increased populatons going below the poverty lineExternal Opportunities Changes in lifestyle: demand for fitness (structural force that will drive demand for danone)

A* Talk Research should contribute to manufacturing sector Funded in 5 year trenches Talent, economic outcome, support tech commercialization, future innovation what can we do for commercialsisation? 2 sector science and research BMRC Capture economic vLUE VIA INTELLECTUAL AND HUMAN CAPITAL FROM NBASIC AND APPLIED RESEARCH Integrative programmes across core capabilities Consumer car technology, (mature, ready for commercialization) P&G, Clarin sensors and transducers (mature, ready for commercialization) Materials at molecular level, sensing of noise in HDB, structural faults in airplanes etc Economic factors one of the biggest barriers

IMREMaterials Centre of Innovation Translating solutions into business Collaboration between IMRE and SPRING SPRING: help sg enterprices grow, SME sector Centres of Innovation Materials Innovation: bring new functions and add value to products/ using existing materials in a new way INNOVENT: design thinking workshop MCOI: Translate materials technologies and solutions Materials benefit application, enhance user experience Interact with designers How do we let material properties inspire a use/application 4 application areas healthcare and wellness sensors and diagnostics consumer and lifestyle (protecker, pH facemask- potential for licensing? Opportunities to integrate new technologies into facemask. Why pH? Why not something else? Isit better to deliver a solition to a certain problem? Isit dry skin, pimple, pigmentation? What do people usually use masks for? Can uou have multiple purpose, multiple zone? Room for expansion, can the scope be wider?) 3 months: what is the question you are trying to answer? energy and environment

Do more secondary research Industry and market research Look for sweet spots for market opportunities Pick out 3 interviews per person

CE ADVOCATE- Lee chuan Company: Looking for market partners Consumer: market is small Competition: no local ebook for braille, not producing due to some other reasons? Other physical braille books Collaborators:Porters Competitive: fight conventional way e.g. audio softwares tht read out internet Threat of new entry: depends on IP right Buyer power: Real threat of substitutionSWOT Strength: first mover, strong A*backing Opportunities: Gov increasing funding, small market need to go regional Weakness: Yet to be mass produced and tested No financially viable model Threat: Easily replaced

Implications: target to become indisposable productPorters: social media is significant force, 3 new forces: digitalistion, globalisayion, deregulation

Librarian session1) Market research database: Passport (Euromonitor) consumer based2) Secondary: Analysing of some source of data, if data is not original = secondary source3) Company website is primary, news article is secondarya. Secondary sources of infomraton back your primary sources4) Academic sources: business soruce premier5) Market research reports: Frost and Sullivan (more high tech based than Passport)6) News database Factiva7) Research reports are dated even if they date 2014, take long time to collect data8) If company is in SG, MUST do Factiva search for both company and market 9) Only way to determine biases is to compare

Email: kahwei@nus.edu.sg for an advisory session