'Whey-Ing' Up a Milky Mess

8/9/2019 'Whey-Ing' Up a Milky Mess

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'Whey-ing' Up a Milky Mess

December 2013 Examination

Post Graduate Diploma in Marketing

Sri Lanka Institute of Marketing

Prepared ByS.A. Rathnayake

Reg. No. 17881

SubjectIndividual Integrated Assignment - Operational Level


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DECLARATION

I declare that this Assignment is of my own creation of the programming that contains as its

main content work, which has not been submitted previously for a diploma or a degree at any

territory education institute.

Where I have used conceptual material or work of others, I have, to the best of my understanding

and particularly given the parties concerned due acknowledgement for using or adapting such

material or work.

S.A. Rathnayake


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ACKNOWLEDGEMENT

Predominantly, I wish to place on record my sincere thanks to the Management of Sri Lanka

Institute of Marketing (SLIM) for allowing me to carry out this study.

I wish to express my special gratitude to, all the lecturers of SLIM in Postgraduate Diploma in

Marketing programme, for the kind and willing guidance and constant interest and

encouragement given to me during this study.

I am greatly indebted to the lecturers of SLIM who gave me a wealth of knowledge and shared

their experiences, who made this study a truly valuable experience and made me well equipped

with the necessary competencies to complete this assignment in a meaningful manner.


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Contents

DECLARATION ........................................................................................................................1

ACKNOWLEDGEMENT ...........................................................................................................2

Executive Summary ....................................................................................................................6

Introduction ................................................................................................................................7

Background of the Problem .........................................................................................................8

Task 01 .......................................................................................................................................9

1.1 Popular Milk Powder Brands in Sri Lanka .........................................................................9

1.2 Types of Milk powder products comes under Highland ....................................................... 10

1.3 Effects of the issue of the Micro Environment.................................................................. 11

1.3.1 Internal ...................................................................................................................... 11

1.3.2 Marketing Channel Firms .......................................................................................... 11

1.3.3 Customer Markets ..................................................................................................... 11

1.3.4 Competitors ............................................................................................................... 12

1.4 Macro Environment ......................................................................................................... 12

1.4.1 Demographics ........................................................................................................... 12

1.4.2 Economic .................................................................................................................. 13

1.4.3 Natural ...................................................................................................................... 13

1.4.4 Technological ............................................................................................................ 13

1.4.5 Political ..................................................................................................................... 13

1.4.6 Cultural Forces .......................................................................................................... 13

1.5 Situation Analysis ............................................................................................................... 14

1.5.1 SWOT Analysis ............................................................................................................ 14

Strengths ............................................................................................................................ 14

Weaknesses ........................................................................................................................... 14


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Opportunities ......................................................................................................................... 14

Threats .................................................................................................................................. 14

1.6 Segmentation, Targeting and Positioning ......................................................................... 15

1.6.1 Segmentation ............................................................................................................. 15

1.6.2 Demographic Analysis .............................................................................................. 15

Geographic Analysis .......................................................................................................... 16

1.6.3 Targeting ...................................................................................................................... 16

1.6.4 Positioning .................................................................................................................... 16

1.7 Corporate Objectives ....................................................................................................... 17

1.7.1 Marketing Objectives .................................................................................................... 17

1.8 Marketing Mix .................................................................................................................... 17

1.8.1 Product Strategy............................................................................................................ 18

1.8.2 Pricing Strategy ............................................................................................................ 18

1.8.3 Promotional Strategy .................................................................................................... 18

1.8.4 Distribution Strategy ..................................................................................................... 18

1.9 Recommendations and Suggestions ................................................................................. 19

Task 2 ....................................................................................................................................... 20

2 Customer value, satisfaction and retention .............................................................................. 20

2.1 Customer Value ............................................................................................................... 20

2.2 Customer satisfaction ....................................................................................................... 21

2.3 Customer retention........................................................................................................... 21

2.4 Brand Personality ............................................................................................................ 22

2.5 Perceptual Map ................................................................................................................ 22

2.6 Consumer Attitude ........................................................................................................... 23

2.7 Recommendations and Suggestions ................................................................................. 24


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Task 3 ....................................................................................................................................... 25

3.1 Introduction ......................................................................................................................... 25

3.2 Consumer Protection ........................................................................................................ 25

3.2.1 Why we need regulations? ......................................................................................... 25

3.2.2 Few Regulations of Internal Trade ............................................................................. 25

3.3 Consumer Affair Authority and Act ................................................................................. 26

3.4 Food Act No. 26 of 1980 ................................................................................................. 26

3.5 Sri Lanka Standards Institution ........................................................................................ 26

3.6 How Legal Factors affecting to Highland ......................................................................... 26

3.6.1 political ..................................................................................................................... 26

3.6.3 Government Institutions and Agencies ...................................................................... 27

3.6.4 Pressure groups ......................................................................................................... 27

3.6.5 Policies and Procedures ............................................................................................. 28

3.7 Recommendations & Suggestions .................................................................................... 28

Conclusion ................................................................................................................................ 30

References ................................................................................................................................ 31

Annexes .................................................................................................................................... 32


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Executive Summary

In the midst of controversy over the imported milk powder, overall consumers demand for the

milk powder category decreased. However, consumers attention and trustworthiness went on to

the local dairy manufacturers while increasing of the demand for the local dairy products.

By considering the current hazardous over the milk powder category, Highland, has done in

depth analysis with reference to the company's micro and macro environments to understand the

current market situation. Highland, identified its strengths, weaknesses, opportunities and also

threats which can be affected. In such situation makes threat for whole industry. Hence, correct

segmentation, targeting, positioning and strategic marketing mix are important to develop the

Highland as a brand and a dairy food product. Recommendations and suggestions are given to

further more development of the milk powder market.

Considering the aforesaid situation Researcher closely looked on the change of the customers

perception on milk powder brands and behavioural and attitudinal change of this regards.

Furthermore discussed, due to industry crisis situation how Highland can deliver customer

values, how can satisfy them and finally how can retain customers for future.

After identifying of DCD contamination in imported milk powder brands, CAA banned several

milk powder products as concerning health factors of the consumers. Due to hazardous situation

and consequences of negative publicity, questioned were raised by individual consumers,

Political parties, government institutions, pressure groups and other consumer protection

institutions over the suspected importers and manufacturers. In current situation how legal

factors are affecting to the Highland evaluated and given recommendations and suggestions to

overcome present market conditions.

In the latter part of the report given conclusion to suggests a major implementation of initiatives

in brand building with the recommendation for the training in production employees,

professional selling and consumer handling for sales & marketing employees.


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Introduction

This institution was established in 1956 as “The National Milk Board” under the purview of the

Ministry of Agriculture. It commenced operations with a single Factory in Colombo

commissioned under the Colombo Plan.

Today it boasts of a wide network of milk collection, production and sales centres administrated

throughout the island and continue to contribute towards the enhancement of the rural economy

while providing the much needed nutrition to the entire nation.

In 1986, the “National Milk Board” was converted into “Milk Industries of Lanka Company

Limited” as a government owned company. After several confrontations in 2001 it was named as

“Milco (Pvt) Ltd.”, which now stands as a 100 % government owned company.

Milco dairy products are sold in the market under the trade name of “Highland “. These products

are produced using only local milk that is produced by local dairy farmers. These products are

mainly categorized into two varieties, namely liquid milk and dairy products. Liquid milk such

as pasteurized and sterilized are very natural products and no any additives or chemicals are

added to these milk to extend their shelf life. Therefore these milk products are very close to the

nature. Other products named as value added products, such as yoghurts, ice cream, cheese and

butter are also very natural products and no any additives or chemicals are added for extending

the shelf life. In addition to the main raw materials, other raw materials which we use for

producing these products are sugar, gelatin, glucose syrup, stabilizers, emulsifiers etc., are

purchased from well reputed organizations the quality of these products can be guaranteed

without any doubt. Therefore, our product quality is superior than the other dairy products in the

market.

Our products are natural, high nutrition and very fresh. This guarantee is given to our valuable

customers.


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Background of the Problem

In Sri Lanka packed milk powder consumption is high compare with fresh milk consumption.

Packed milk powder consider as fast moving good and majority of Sri Lankan consumers are

used to consume imported products. As a result there are many multinational companies

importing and distributing milk powder products within the Sri Lanka. New Zealand giant of

diary product, Fontera, is the leading market share holder while Nespray is the next. Other than

that there are several re-packeters whose importing milk powder as a bulk and distributing

products under their own brand names. eg: Lakspray, Maliban, Kotmale, Diamond, Candy.. etc

In May 2013, Health Ministry of Sri Lanka announced that they found Dicyandiamide (DCD)

contamination while in the testing of several Milk Powder brands importing to the Country. In

August 2013, After tests conducted by ITI (Industrial Technology Institute) had indicated

presence of DCD from testing of random samples of Milk Powder products which produced

under the brand names of Anchor milk powder, Maliban non fat and Candy milk powder.

The Health ministry has immediately called to remove the product from the trade which are

identified as contaminated. Court issued order preventing on the advertising of DCD

contaminated milk powder in print and electronic media. Even the supplements which contain

large amounts of whey protein also tested for the presence of the Clostridium botulinum.


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Task 01

1.1 Popular Milk Powder Brands in Sri Lanka


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1.2 Types of Milk powder products comes under Highland

Full Cream Milk Powder

Ingredients

Manufactured With rich creamy fresh milk only. No chemicals are

added to make Highland full cream milk powder instantly soluble.

Price Rs. 350.00

Pack size 400g

Non Fat Milk Powder

Ingredients

Manufactured with rich creamy fresh after removing fat milk only. No

chemicals are added to make Highland Non Fat milk powder instantly soluble.

Price Rs 375.00

Pack Size 400g

Full Cream Milk Powder

Ingredients

Manufactured With rich creamy fresh milk only. No chemicals are added to

make Highland full cream milk powder instantly soluble.

Price Rs 750.00

Pack Size 1Kg


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1.3 Effects of the issue of the Micro Environment

1.3.1 Internal Demand for the production will be increased as many milk powder brands dry out from

the market.

Customers trustworthiness on the Highland will be increased and they will be more

encourage to consume the product.

As per the sudden changes of market conditions company will not able to match the

demand.

Production capacity depends on collection of the milk from the suppliers and government

farms.

Suppliers more motivate to supply the requirement.

Shareholders will be invested more assets to increase production capacity.

New innovative products need to be introduced to the market to attract the customers.

New marketing plan, more marketing activities need to be implement to capture the share

of the lost competitors while facing to the existing competitors.

When the demand goes up, market for the production will be expanding. Thus revenue

and the profits of the company will be increased. According to that wages will be

increased and employees will be motivated to increase production.

1.3.2 Marketing Channel Firms

As per increase of demand distributors are motivating to buy more highland products to

earn more profits

Whole sellers will keep the more profit margin when selling to the traders

Traders/Super markets will identify Highland as a substitute for other brands and try to

match the demand by filling more products in the shelf

1.3.3 Customer Markets

Highland is a home grown brand which is using local milk to produce milk powder.

Hence customers’ trustworthiness on the brand is high and demand for the product will

be increased.


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1.3.4 Competitors

There are 3 types of competitors can be identified within the Milk powder market.

Direct Competitors

Direct competitors are closest competitors. Anchor, Nestle, Lakspray, Kandy, Pelawatte

and Maliban...etc are the competitors for Highland milk powder. However, two main

brands (Anchor and Maliban) have tarnished their images due to DCD contamination.

Hence, competition among other brands will be high to obtain the places of Anchor and

Maliban in the trade.

Indirect

These are the subtitle products suppliers. In milk powder market Viva, Nestomalt,Horlicks.. etc can be identified as a substitute for Highland.

Due to DCD issue these products demand will be increased.

Potential Competitors

These are brands which filling need gap of customers in another way. These products

included Kolakenda, Juice, Plain tea, plain coffee, cereal.. etc

1.4 Macro Environment

1.4.1 Demographics

Market can be divided into groups based on variables such as Age, Stage of the life cycle,

Occupation, Education, Income, Race, Nationality and Gender.

Age - According to the age distribution age between 20 -60 people are the customers of milk

powder products.


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1.4.2 Economic

Sri Lanka is a third world country which is having low GDP income. According to the data Sri

Lanka importing... Millions worth of milk powder from the several countries. At the

controversial of DCD contamination people are more concern to buy Sri Lankan home grown

products for their day to day consumption. Thus Sri Lanka able retains the money which is

flowing to other countries to import milk powder. However, Government imposed and controlled

tax on imported milk powder avoids the unnecessary price and quantity fluctuations.

1.4.3 Natural

The situation caused due to following unnatural conditions in a milk powder processing. There

for it’s really necessary to have a better Milk farm conditions to prevent this kind of farm

chemical contamination situations.

1.4.4 Technological

Technology is more essential to reduce the amount of wastage and increase the quality of the

product. Tetra pack is another option Highland should be focus to provide sterilized milk to

customers.

1.4.5 Political

Contamination of harmful chemicals in the milk could be resulted to deadly reactions. (eg.

Melamine issue in China 2008) Government and other institutions are bearing the consequences

of the foods importing to Sri Lanka. Hence, imposing the regulations on the milk powder will

cause to protect the consumer, Industry and control imports.

There for Government impose following food act & regulation on import products and local

products in 2005.

Food (Labeling & Advertising) Regulations 2005

1.4.6 Cultural Forces

DCD contamination made hassle on the society. Cultural forces are the people who within the

population that influencing mechanism to guide business practices. As contamination of DCD

made burden issue on the society many of cultural forces involved and pressured on the

government to impose new practices on importing milk powder.


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1.5 Situation Analysis

1.5.1 SWOT Analysis

Strengths

Strength of home grown brand name and brand image

Quality of products

Trustworthiness of Consumers

Supported by Government

1700 chilling centres around the country

70,000 dairy farmers who supplying their products to the chilling centres directly

Wide range of products (Milk Powder, Pasteurized Milk, Sterilized milk, Yogurt, Ice-

cream, Butter, Curd, Gee and Condensed milk etc.)

Weaknesses

Consumers perception on Highland products ( increasing phlegm)

Milk powder not mixing properly with hot water

Less marketing activities done in past years

Low capacity of the production

Less technology using for production

Less innovation on production

Opportunities

Vacuum to be filled in the market

More innovative products can be added under the Highland brand name

More marketing activities to grab the market share of the Anchor and Maliban

Threats

As per the situation customers are moving from the milk powder consumption.


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Local competitors are highly motivated on current market conditions. Hence, competition

within the local manufacturer's high to grab the Fontera's market share.( Pelawatte,

Ambewela, Lak cow.. etc)

Threat of the substitute products becoming high (Nestomalt, Viva, Milk maid.. etc)

Potential product manufacturers are actively entering to the market and driving existing

customer to the different way (Eg: Kolakenda, Samaposha, Cereal.. etc)

1.6 Segmentation, Targeting and Positioning

1.6.1 Segmentation

Market segmentation is a strategy that involves dividing a broad target market in to sub sets of

consumers who have similar needs and wants.

Under the segmentation author analyzed market by using 2 dimensions of demographically and

geographically.

1.6.2 Demographic Analysis

This has been done using dimensions of Class, Income level and Age.

Class and Income Level

Class Classification Income Level

A Top end 100,000 above

B Upper middle 50,000 - 100,000

C Middle 25,000 - 50,000

D Lower middle 10,000 - 25,000

E Lower Below 10,000

Age Classification

Age Limits Category group

0 - 2 Infants

3 - 5 Nursery

6 - 12 Kids

13 - 19 Teens

20 - 35 Young Adults

35 - 50 Adults

50 above Senior Citizen


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Geographic Analysis

Under this segmentation market divided to 3 subsets according to geographic criteria.

Geographic Classification

Urban

Semi Urban

Rural

1.6.3 Targeting

Product Income Classification Age Classification GeographicClassification

Full Cream 400g D,C,B Nursary to SeniorCitizen Urban, Semi urban &Rural

Full Cream 1 Kg D,C,B Nursary to Senior

Citizen

Urban, Semi urban &

Rural

Non Fat Milk Powder C,B,A Adults to Senior

Citizen

Urban and Semi urban

According to the data's Highland's Full Cream Milk primary target market is consumers who in

age of 35 to 50 and living in a semi urban and rural areas.

Secondary target markets are Nursery, kids and Senior citizen who do not have a purchasing

power but consuming the product and people who are looking for healthy life.

1.6.4 PositioningBrand Positioning is how a product is perceived in the mind of consumer in relation to

competitors’ brand in the market. Positioning is act of placing a company’s brand in consumers’

minds over and against competitors in terms of characteristics and benefits that the brand does

and does not offer,

Attribute or Benefits

Quality or Price

Use or User

Competition

Milco is a government own company which manufacturing milk base products by using Sri

Lankan resources. Since 1956 Milco has been come long way keeping the trustworthiness by


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ensuring the standard of the products it produced. Highland, always delivered the promise it

made to the consumers. As a Sri Lankan milk powder manufacturer, Highland always liable to

keep the guaranteed quality of the products.

According to above Highland can be used Product attributes and benefits as their positioningstrategy.

Highland milk powder will be positioned as a,

Authentic Sri Lankan originated, Natural and Healthy milk powder product which has

been kept generational trustworthiness providing dairy products to the Sri Lankan

consumers.

1.7 Corporate Objectives

Objective of the Highland is to establish come up to the number one position to the Milk powder

industry within next 3 years.

1.7.1 Marketing Objectives

Increase market share of milk powder category from 25% within 02 years

Increase penetration by over 30% within next 02 years

Increase revenue from 40 % within next 02 years

Increase number of Distributors from 25% within next 02 years

1.8 Marketing Mix

To communicate to the consumer in the target market that the right product is available at the

right price at right place is called Marketing mix. It's include 4 elements as such Products, Price,

Promotion and Place.

Marketing mix is the strategy company used to achieve its marketing objectives. According to

the current situation Highland marketing mix should be implement as follows.


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1.8.1 Product Strategy

Highland products are refusing customers at the trade because of some defaults with

current products. (eg: increasing phlegm, not diluting with water) Hence over come to

this situations Highland need to develop existing products to the higher level to give

better customer satisfaction.

Introduce new products to the existing product portfolio. (new products focusing on

infants, pregnant mothers, elder customers.. etc)

Increase production capacity from over 25% to by increasing milk collecting centres and

suppliers.

1.8.2 Pricing Strategy

As a brand which originated from locally, Highland will keep the cost driven pricing strategy for

existing products while value based pricing strategy for new products which we are suppose to

introduce in near future.

1.8.3 Promotional Strategy

Educational program to be operated to increase the positive attitude towards while

increasing the awareness of the product.

Advertising on TV and Radio the increase awareness, Brand Image and Brand

acceptability

There will be many programs do under the PR building, Sponsoring events (chidren's

day...etc) to build relationship with stakeholders.

Press Issue with indicating company history and its responsibility grab attention of

audience

1.8.4 Distribution Strategy

There will be new appointed distributors to increase the distribution network to reach

penetration of 100,000 outlets within 02 years

Increase the depth and the width of the stock level in the outlets


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1.9 Recommendations and Suggestions

According to observation that carried out negative factors on the product is high as it

increase phlegm. Hence, there should be development program on products to overcome

this situation. After that Highland need to run the educational program to change the

perception of people regarding Highland milk powder.

There was seen that production of the milk powder is low as result of capacity of the

machines and supply of the production quantity low. Hence, recommending increasing

milk production by 50% by installing new machines and increasing supply chain.

Product portfolio under the Highland is lower compare with other milk powder

manufacturing companies. Recommending introducing new products targeting Infants,

Pregnant mothers, elder citizens to increase the market by catering different needs of

different segments in the market.

The distribution of the Highland is so low. Increasing distribution is must to increase the

sales. Recommending increasing distribution network to increase the reach.

Recommend to do marketing pull by doing advertising and promotions while increasing

the awareness.

Brand need to be repositioned as consumers trustworthiness increase on local

manufacturers. New repositioning need to be communicated by using 360 marketing

campaign.

Recommend to do press release by saying Highland is a local manufacturer which is

producing milk powder under quality standard.


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Task 2

2 Customer value, satisfaction and retention

2.1 Customer Value

Customer value is can be define as the different between what a customer gets from a product in

order to what he has to give to get it. There can be identified two aspects of customer values as

desired value and perceived value.

Desired value refers to what customer’s desire in a product or service. Perceived value is the

benefits that a customer believes that he or she received from a product after it was purchased.

Customer value can be examined at different levels. At a low level, customer value can be

viewed as the attributes of a product that a customer perceives to receive value from. At a higher

level, customer value can be viewed as the emotional payoff and achievement of a goal or desire.

When customers derive value from a product, they derive value from the attributes of the product

as well as from the attribute performance and the consequence of achieving desired goals from

the use of the product.

Customers assessing values in two stages, called before purchase and after purchase. Under the

circumstances of the DCD contamination in Fonterra, Maliban and Candy milk powder,

customers hesitant to buy all imported milk powder brands. As a result of non delivering the

promise what they have made, customers rejected to buy above mentioned products as they

haven't delivered the customer value.

In this situation help to increase the customers positive perception on local dairy manufacturers.

Hence, Highland need to be focused on delivering the customer value in all the stages of

customer involved to increase the customer value on regards to Highland.


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2.2 Customer satisfaction

Is a measure of how products and services supplied by a company meet or surpasses the

customer expectations. Customer satisfaction provide leading indicator of consumer purchase

intension and loyalty. As per the below circle business companies continuously seeking

feedbacks to improve the customer satisfaction.

Before the DCD contamination incident happened Fontera's milk powder brand "Anchor" was

the number one brand in the market with high satisfaction rates. After the incident Anchor

consumer satisfaction rates came down. As a result of purchase intension and loyalty of Anchor

consumer's have been come down while consumer satisfaction of Highland other local dairy

brands increased.

2.3 Customer retention

Customer retention is the activity that a selling organization undertakes in order to reduce

customer defections. Successful customer retention starts with the first contact an organization

has with a customer and continues throughout the entire lifetime of a relationship.

Customer retention is more than giving the customer what they expect; it’s about exceeding their

expectations so that they become loyal advocates for the brand. Anchor was failure on customer

retention and brand loyalty was shattered as DCD found in their milk powder. In such situation

Highland having good potential to increase the customer retention by attracting new customers

and retaining existing customers by giving good service and making better reputation across the

marketplace. Other than giving the guaranteed quality product Highland need to consider on

increasing brand values to make life time loyal customers under the customer retention.


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2.4 Brand Personality

This is the added value which brand gains other than from its functional benefits. Those are set

of human characteristics that are attributed to a brand name. An effective brand will increase its

brand equity by having a consistent set of characteristics.

Customers are more likely to purchase a brand if its personality is similar to their own. Anchor

established their brand personality by using traits of "Trusted mother" which was shattered after

found of contamination DCD in milk powder.

Highland need to reform brand personality by using brand positioning under recognized areas of

authentic Sri Lankan originated, Natural and Healthy milk powder product which has been kept

generational trustworthiness providing dairy products to the Sri Lankan consumers. Hence,

Brand personality of the Highland is a typical Sri Lankan mother who serves her all children

with giving similar attention and care.

2.5 Perceptual Map

By tracing or plotting consumer's view with regards to the milk powder products we can identify

the current perception of consumer on milk powder brands.

Import Milk powder

Perception- Negative Perception - Positive

Local Milk Powder

Anchor/Maliban

Highland

LAKSPRAY/NESPRAY


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According to current situation, Perception of the Anchor and Maliban moved Positive to

Negative while Highland moved Negative to Positive perception. Lakspray and Nespray were

able to increase their positive perception on product.

2.6 Consumer Attitude

Consumer attitude represent the like or dislike of consumer on product or service. Consumer

attitudes are long lasting but changeable.

Consumer attitudes composite on 3 things as follows.

Beliefs - On Anchor/Maliban consumer's had positive belief before the incident.

Affect - Consumer's hold feelings towards the brand. Sometimes those are based on

beliefs.

Behavioral Intentions - Is what consumer plan to do with respect to the brand.

According to the data's, Anchor was the market leading milk powder brand before it was banned

by the government. It had the positive attitude of consumer's with regards to its predisposition on

learning.

After the DCD contamination found in a Anchor milk powder Consumer attitudes completely

changed. Their beliefs on brand became negative. based on that they were feelings towards

Anchor was negative and finally their behavioral intention was not to buy the Anchor.

However, Consumer's belief and feelings on Highland alternated to positive. Hence, consumer’s

behavioral intension became positive on Highland.


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2.7 Recommendations and Suggestions

As a result of the DCD controversial, customer’s positive perception on Highland

increased while increasing its demand on the products. Now it is time to Highland to

focus on maintain the customer positive perception and keep the demand for its products.

For that Highland need to make the satisfied customer. Attributes of the product need to

be changed with identifying changing of consumers’ new emerged need and wants.

Brand building is a one way to keep customer retention and increase customer

satisfaction. To build the brand, Highland need to increase communication and customer

involvement with brand by advertising, sponsoring suitable events for brand,

participating exhibitions, doing promotions and CSR projects.

When consumer satisfaction increases, it will help to increase the consumer loyalty.

Consumer loyalty makes the long lasting valuable consumer for brand.

In such situation Highland having good opportunity to grow in the full cream milk

powder market. Increasing a PR with stake holders is essential. Providing a good service

to the Customer will make the long lasting bond with customer and brand. Hence,

Highland need to focus on to provide better service by providing better products,

distribution, handling customer complaints, ..etc

Now it is time of changing consumer's perception on local dairy products. As a main Sri

Lankan originated dairy product brand, Highland, need to keep and maintain the emerged positive insights of the consumers. Ensuring the brand values by delivering brand

promise Highland will be able to maintain positive perception on its products.

Developing the brand personality will help to increase the brand identity and recognition.

Highland's brand personality of "Typical Sri Lankan mother" should be communicated

through the communication campaign to establish and position brand personality on

consumers mind.

Consumers’ attitude positively changed on Highland. Consumer’s beliefs make affections

and finally positive customer behavioural intension will make the purchasing decision.

Hence, Highland's center of attention should be to keep and increase positive consumer

attitude on brand.


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Task 3

3.1 Introduction

After the implementation of "Free Open Market Economic Policy" foreign brands flowing to the

Sri Lanka increased. It had been drastically effect to the political, social and economical pattern

of the country. Due to result of arrived foreign products and companies, challenges faced by

consumers have been greatly increased.

Thus, adoption and implementation of new measures and safeguards to protect consumers are

crucially important. Different legislation on consumer protection had to declare in Sri Lanka to

shield the consumers from being exploited by unfair trading practices.

3.2 Consumer Protection

Consumer protection is a group of laws and organizations designed to ensure the rights of

consumers as well as fair trade competition and the free flow of truthful information in the

marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair

practices from gaining an advantage over competitors. Consumer protection laws are a form of

government regulation, which aim to protect the rights of consumers.

3.2.1 Why we need regulations?

To Protect Consumers

To Protect Industry

To Control Imports

3.2.2 Few Regulations of Internal Trade

Price marking, labeling and other issues

Determining standards and specifications relating to goods and services

Specified goods


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3.3 Consumer Affair Authority and Act

The current Law as to consumer protection in Sri Lanka is primarily found in the Consumer

Affairs Authority Act No. 9 of 2003. The Act has established the Consumer Affairs Authority

(CAA), the apex government organization authorized to protect consumers’ interests and to

ensure that there is fair and effective market competition within Sri Lanka.

Consumer Affair Authority is vested with wide ranging powers from an overall supervisory

power to regulate trade, to entering in to written agreements with manufacturers concerning the

various specifications and conditions of trade. Basically, CAA is the place where have power to

investigate the matter and may determine matters relating to anti-competitive practices.

To ensure further protection of consumer, the authority may issue warning in writing to person of

contravened any of provisions of the Act.

3.4 Food Act No. 26 of 1980

Prohibits manufacture, import or sale of commodities which are unfit for human consumption or

commodities that are adulterated. It prohibits manufacturing, preserving, packing, and storing for

sale of any food under unsanitary conditions.

3.5 Sri Lanka Standards Institution

Provides minimum standards to be maintained in specified commodities marked in Sri Lanka,

whether they are imported or manufactured locally.

3.6 How Legal Factors affecting to Highland

3.6.1 political

Milco is a 100% government owned dairy product manufacturing company. Hence, government

support on the Milco comparatively high with other milk powder manufacturers. A controversy

has arisen with the DCD contamination found in a imported milk powders. Government and its

consumer authorities tested the products to identify the hazardous. Consumer authority banned

the several milk powder brands as a result of they found traces of the DCD in the samples.

Consequences of the milk powder controversy consumers’ demand for the local dairy

manufacturer's increased. Government trustworthiness increased on regarding locally producing

milk powder products as they found those are as a consumer protecting brands. However,


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government is advised to launch an Island-wide program by the Ministry of Health in

collaboration with other relevant stakeholders to promote breast feeding and consumption of

locally produced liquid milk. Thus, present situation will be helpful Highland to increase brand

recognition and ultimately build the brand.

3.6.3 Government Institutions and Agencies

With passing of the Consumer Affairs Law No.9 of 2003 and the appointment of the Consumer

Affairs Authority, the general awareness of the consumer rights has become important for the

benefit of the general public. Now consumer protecting activities are becoming major public

section in the country.

CAA is the main authority which established for consumer protection. To ensure consumer

protection, the authority inquires and investigates matters relating to ill practices of

organizations. Food Act No. 26 of 1980 is another law institution which has ability to prohibit

manufacture, import or sale of commodities which are unfit for human consumption. Sri Lanka

Standard Institution providing minimum standards to be maintains consumer protection.

Though, Highlands milk powder products less consumer expert but more on following regulation

of the consumer protection, CAA and other government institutions and agencies are highly

recommending for human consumptions which is positively affecting to the brand recognitions.

3.6.4 Pressure groups

Pressure group is a group or an organization which tries to influence the government but does not

hold power in the government. Groups representing broad interests of a group may be formed

with the purpose of benefiting the group over an extended period of time and in many ways.

At the controversy of the DCD contamination pressure group influenced individual consumers,

media, political parties, government and government institutes against the suspected brands to

take legal actions. However, same time they influenced to buy local dairy products that can trust

on Sri Lankan originated dairy than the imported milk powder. Pressure groups approach

positively affected to the Highland as increasing the demand for the products. There can be


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identified Consumer organizations, Professional associations, Trade associations, and Trade

unions..etc as some of pressure groups which actively engaged in the milk powder controversy.

3.6.5 Policies and Procedures

A policy is a principle or protocol to guide decisions and achieve rational outcomes. A policy is a

statement of intent, and is implemented as a procedure or protocol. Policies are generally adopted

by the Board of or senior governance body within an organization whereas procedures or

protocols would be developed and adopted by senior executive officers.

Government policies and procedures are clear on dairy product manufacturing. Government

willing to help, develop and motivate local dairy manufacturers as it decrease the money flowing

to foreign countries for importing milk powder products. As a local dairy manufacturer and

government owned company, Milco doing huge work on retaining the local currency in Sri

Lanka.

3.7 Recommendations & Suggestions

Milco is a government owned dairy manufacturing company. Hence, support of the

government always behind the Milco. Consumer's trustworthiness, supplier’strustworthiness and employee’s trustworthiness on Government Company always high.

Highland need to understand the opportunity of becoming the government own dairy

manufacturer and need use in effective way to capture market.

Government developed the regulations to protect the consumer and industry while

controlling the imports. Highland as a Sri Lankan originated dairy product manufacturer

which serves its consumers over the years well, government institutional support can be

easily obtained. Highland should have to use support of these governments institutional

to convey its goodness to the customers. (eg:- Recommendation of CAA, Health ministry

or any other consumer protecting government institution)

Milco is following Food act No 26 of 1980 and Sri Lanka standard institutional

regulations in the process of milk powder manufacturing. Hence, Highland needs to


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communicate to its consumers these quality standards to increase the brand recognition in

the trade.

Most of the pressure groups are non profitable organizations which work to develop and

protect local manufacturers. Hence, support of the pressure groups need to be kept as they

have ability of influence government and community.

Under the policies and procedures of the government providing specialized knowledge,

land for farms and financial benefits to improve the dairy manufacturing sector. Highland

need to take the benefits of government policies to develop the brand and company by

improving production to match the demand.


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Conclusion

Highland as a Sri Lankan originated dairy brand positive perception of consumers is high. But in

the trade off take was low compare with imported products. Imported milk powder brands

segmented whole milk powder market to subsets and catering different products to each segment

to full fill their needs. Highland need to develop its products with identifying emerged consumer

needs to satisfy them.

However, as a result of DCD controversy consumers are switching to imported brands to local

dairy brands. Although Government, pressure groups and government institutions are giving

their support to the Highland, capacity of the manufacturing process will not be able to match the

demand of the milk powder consumption of the country. Hence, Highland need to increase the

farm lands, amount of milking cows, number of suppliers and obtain of efficient machineries to

match demand.

Furthermore to keep the acceptance of the brand, Highland need to focus on brand building

process to make the loyal customers. Motivating employees, efficient client service management

and effective marketing communication programs will be helpful to develop the brand to

Number one brand in the milk powder category in the Sri Lanka.


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References

1. Kotler Philip, “ Marketing Management”, 10th Edition, Prentice Hall of India, Pages 135 – 162

2. Martinesz Rienzie, “Marketing Management, a New Approach”, Ceylon Daily News, 14

December 2001, Page 11.

3. Milko Official Web Address, Accessed on 11.11.2013

4. http://en.wikipedia.org/wiki/Customer_retention

5. http://en.wikipedia.org/wiki/Customer_satisfaction

6.

Fontera Official web site, Accessed on 11.11.2013

http://www.fonterra.com/

7. http://www.nation.lk

8. http://en.wikipedia.org/wiki/Policy


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Annexes


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'Whey-Ing' Up a Milky Mess

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