Assessing the Causes of Declining Market Share in Fonterra, New Zealand

This report assesses the causes of declining market share of Fonterra New Zealand due to competition, customer handling, and technology. It recommends solutions to improve the market share such as innovation, word of mouth, and acquiring a rivalry strategy.

Running head: RESEARCH ENQUIRY
To assess the causes of declining market share in case of Fonterra, New Zealand

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Abstract
The main aim of this report is to assess the causes of declining market share of Fonterra New
Zealand. This report illustrated that Fonterra Co-operative Group Limited, NZ has reduced their
market share by 96% to 87% in 2017. It is also evaluated that company faces higher competition
level that is complex to keep their position at the marketplace. Furthermore, there are different
cause of declining the market share such as advance technology, customer handling and
competition level. For conducting research, an investigator has used secondary data collection
method, content data analysis technique and qualitative research design. It is addressed that there
are three possible solutions to resolve the research issue such as technology, word of mouth and
acquiring a rivalry strategy.

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Table of Contents
Abstract.......................................................................................................................................................2
Introduction.................................................................................................................................................4
Potential Problem statement / research statement / research question..........................................................4
Research question....................................................................................................................................4
Research objectives.................................................................................................................................4
Introduction of report..............................................................................................................................5
Literature reviews on the research problem.................................................................................................5
Data Collection Method...........................................................................................................................6
Research Design......................................................................................................................................7
Data Analysis..........................................................................................................................................7
Data Analysis and Discussion.....................................................................................................................7
Article 1: Fonterra to lose more market share..........................................................................................7
Article 2: Fonterra Losing Market Share to Chinese Processors in New Zealand....................................9
Article 3: Difficult year for Fonterra indicated........................................................................................9
Solutions to the research problem..............................................................................................................10
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12

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Introduction
In the current era, it is mandatory for the organization to improve their understanding about ways
to improve the market share and being successful at the marketplace. Market share demonstrates
total sales of industry, which could be earned by an organization. Furthermore, modification in
the market share could directly impact on the company’s performance (Foote, Joy, & Death,
2015). In addition, it is evaluated market share is key indicators of an organization that
demonstrates the company’s growth. From the market share, managers of an organization can
determine their actual situation. Moreover, it is evaluated organization could determine the
behavior of the consumer and get the opportunity for the firm. Organization can also use
different approaches for increasing their market shares such as management personnel,
promotions, consumer perception, and price strategy, modern technology (Marsh, et al., 2016).
Potential Problem statement / research statement / research question
In the current era, it is evaluated that Fonterra Co-operative Group Limited, NZ has declined
their market share by 96% to 87% in 2017 due to certain factors. In addition, it is examined that
Fonterra has got 96% of market share in 2001. Thus, this organization has been declining their
market share since 2001.
Research question
 What is the meaning and concept of market share
 What are the causes of declining market share in the context of Fonterra New Zealand
 Which strategies can improve the market share of Fonterra New Zealand
Research objectives

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The primary aim of this report is to address the causes of declining market share of Fonterra New
Zealand. There are certain objectives that could be used by the researcher to meet main aim of
research:
 To comprehend conceptual understanding about market share
 To explore the causes of declining market share in the context of Fonterra New Zealand
 To recommend strategies for improving the market share of Fonterra New Zealand
Introduction of report
This report presents an introduction section that discusses certain elements named research aim
and objectives, research questions, research background, and research statement. It discusses the
literature review section which leads to getting conceptual information about the research matter.
This section could facilitate to get some specific causes that decline the market share such as
competition, handling consumers, and technology. It also demonstrates the research
methodology and findings that could be imperative for the accomplishment of the desired goal.
Literature reviews on the research problem
According to Mawdsley Murrayn Overton Scheyvens & Banks, (2018), nowadays, the company
confronted higher competition level that is difficult for maintaining their position in the
marketplace. It could decline the market share of an organization. Further, it is evaluated that
competition level could decline the monopoly of the firm and that could increase the switching
cost of consumers. Higher switching cost could directly impact on overall demand for product
and services. Furthermore, it is evaluated that the competition level directly influences the
overall financial situation of a firm.
In contrast to this, Zhang & Roberts (2016) stated that consumer handling could be a major task
for an organization as it influences the overall market growth and share of the firm. The

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consumer handling creates a challenge for an organization. It is evaluated that if the company is
failed to handle the situation of consumer and do not understand their perception and feelings
then it would decline the overall market share of a firm. It could create frustration among
existing workforces and ultimately decline their market share. Hence, it could be compulsory for
the organization to use training and development method and effectively deal with customers and
make a favorable decision.
According to Jakobsen et al. (2015), in the current era, it is also a major task for the organization
to implement modern technology in the marketplace and sustain their position effectively. Lack
of understanding towards the application of technology could decline the opportunity to get a
favorable outcome. Apart from this, it is evaluated that the technology becomes a major part of
the business hence it has needed to understand new tools and technology and implement it in the
business process and get a reliable result in lower cost and time.
Research methodology
Data Collection Method
Data gathering technique enables an investigator to accomplish the aim as well as objectives of
an investigation by using the feasible sources for collecting information. It is assessed that
secondary data gathering technique will be implemented in this research. This technique would
be practiced for obtaining theortical information associated with research concerns. In addition,
secondary data will be collected through literature reviews and relevant articles. This would be
effective for pooling the authentic and genuine information with less time and expenses
(Mawdsley, Murray, Overton, Scheyvens & Banks, 2018). These secondary sources would be
gathered through several sources such as textbooks, journal articles, online and offline websites
as well as academic publications.

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Research Design
Research design will enable a researcher to assess overview of investigation framework. There
are different kinds of research design such as quantitative, qualitative and mixed research design
that can be used by an investigation (Kelsey, 2015). Under this research, qualitative research
design will be practiced by an investigator as this emphasizes on conceptual facts associated with
research concerns. This research design would be significant to obtain the secondary data
regarding the causes of declining shares in Fonterra. This would lead to attaining the objectives
of Fonterra (Marsh, et. al., 2016).
Data Analysis
Under the research methodology, analysis of data is significant as it aids to deliver the reliable
and valid research result. There are several tools of data analysis like statistical data analysis and
content data analysis techniques. It could be beneficial to comprehend the gathered data (Moyer
& Josling 2017). In this investigation, content data assessment technique will be used by an
investigator to evaluate the collected conceptual data. In addition, online articles can be used to
demonstrate the collected data via figures (Foote, Joy, & Death, 2015). This tool is beneficial to
capture the objectives of investigation in specified cost and time.
Data Analysis and Discussion
Article 1: Fonterra to lose more market share

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(Sources:Tipa, 2017).
From the above chart, it can be stated that market share of Fonterra of milk processed in New
Zealand has declined from 96% to 82% as well as number and scale of its rivalry has gained
effectively. The above chart shows the change in the market share of milk collection amid 2001
and 2017. According to TDB Advisory, and financial and economic advisors, the market share of
Fonterra could fall from 84% to 79% over the next 5 years. It is found that genetically modified
is one of the key concerns that are dealt with by the corporation in the dairy products. These
cultural differences involve a diverse range of product in order to attain the requirement of
products. The company faces cultural differences concerns to maintain the wide product range
(Tipa, 2017).
This finding is supported by the view of Chobtang McLaren Ledgard & Donaghy (2017), as it
was evaluated that the alteration in customer’s preferences and behaviors towards buying may
affect the products purchasing. It was found that demand of consumer market is increasing and
labeling standard of product is improving that can favorable impact on the corporation.

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Moreover, it is evaluated that there is expansion in nutrition and bio markets that facilitates the
benefits and profits to corporation. In contrast to this, the company faces cultural differences in
different sectors with regards to awareness of milk.
Article 2: Fonterra Losing Market Share to Chinese Processors in New Zealand
It is addressed that in the year of 2001, Fonterra had a 96% of market share before New Zealand
deregulated its dairy market. In contrast to this, when Fonterra milk production has expanded by
more than 20% in the last five years, then its total market share was 87%. It is assessed that the
decline in market share is caused primarily by penetrating of four new investor-oriented
companies. These are Dairy Trust, Open Country Cheese, New Zealand Dairies, and Synlait.
Furthermore, the regional Westland Dairy Co-operative has been increasing faster than Fonterra
as well as now includes about 4% of the national industry. The Tatua Co-operative in Waikato
has a market share of about 1%. There is an emerging small player like Kaimai Cheese (Dickrell,
2018).
Article 3: Difficult year for Fonterra indicated
It is addressed that food service markets and global dairy consumers remained good looking,
however, the rivalry was intense. The ingredients business demonstrates the performance
enhancements and Fonterra was getting the higher rates for some products. Along with this, the
uncertain return can materially enhance as well as decline the performance. This is entailing the
making alteration in a procedure that would support the consumers to return products because of
different causes. It is found that Fonterra should extend their provision to customer post-delivery
(Mackenzie, 2018). It is found that online technology is used to register complaints as it could be
effective for both customers and company. There are four phases required in the supply chain
such as schedule returns, issue returns, receive returns and authorize returns individually. It is

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addressed that Fonterra focuses on the target of reducing both on the farm and on-site emissions.
Along with this, net-zero emission of global operation is targeted to decline 30% by 2050 from
the year of 2015 (Fonterra, 2018).
Solutions to the research problem
It can be recommended that innovation is a key technique through which Fonterra can gain the
market share. While Fonterra expands the market with new technology then it should identify the
competitor’s strategy. Furthermore, consumers are wishing to buy this new technology from
Fonterra even if, they had previously purchased with the rivalry. But, there are different
consumers who are loyal customers that help in increasing or decreasing market share for the
corporation (Sun, Huang, & Yang, 2014).
It is suggested that companies keep their current market share by avoiding existing consumers
from moving towards competitors in case of offering a new topic. Corporations can expand
market share by using simple strategies because satisfied consumers will frequently speak of
their favorable experience to their relatives and friends who can become new consumers.
Fonterra can increase the market share through word of mouth with minimum marketing costs. It
can also hire talented and skilled employees to gain their market share (Lagrange, Whitsett, &
Burris, 2015). It is stated that bringing the best workforces on board declines costs associated
with training and turnover. It can also enable the corporations to devote more resources in order
to emphasize core competencies. Moreover, offering benefits and competitive salaries could be
effective for influencing the best workforces but, employees in the 21st century looking towards
intangible profits such as casual working atmosphere and flexible scheduling (Holland, & Olson,
2017). This would lead them to perform better and making a good image in the mind of
customers as it may gain the market share. Furthermore, one of the key technique is to gain

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market share is acquiring a rivalry strategy. A corporation attains two things such as taps into the
newly acquired existing customer’s base and also assesses the strategies of rivalry. This may lead
to increase market share of Fonterra Company (Sneddon, et. al., 2016).
Conclusion
With respect to the above table and chart, it is evaluated that there are many causes that could
influence the overall market share growth of the organization. It could decline the opportunity of
the firm to get a positive response. These are customer handling, technology, and competition
level. It can also be summarized that the organization could use a digital marketing strategy for
increasing their market share.

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References
Dickrell, J. (2018). Fonterra Losing Market Share to Chinese Processors In New
Zealand.Retrieved from: https://www.agweb.com/article/fonterra-losing-market-share-to-
chinese-processors-in-new-zealand-naa-jim-dickrell/
Mackenzie, D. (2018). A difficult year for Fonterra indicated.Retrieved from:
https://www.odt.co.nz/business/difficult-year-fonterra-indicated
Tipa, P. (2017). Fonterra to lose more market share? Retrieved from:
https://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/fonterra-to-lose-more-market-
share
Fonterra (2018).Fonterra partners with the government on the roadmap to low emissions
future.Retrieved from: https://www.fonterra.com/nz/en/our-stories/media/fonterra-
partners-with-government-on-roadmap-to-low-emissions-future.html
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The case of dairy products. China Agricultural Economic Review, 6(1), 21-37.
Lagrange, V., Whitsett, D., & Burris, C. (2015). The global market for dairy proteins. Journal of
food science, 80(S1), A16-A22.
Sneddon, N. W., Lopez-Villalobos, N., Davis, S. R., Hickson, R. E., Shalloo, L., Garrick, D. J.,
& Geary, U. (2016). Responses in lactose yield, lactose percentage and protein-to-
protein-plus-lactose ratio from index selection in New Zealand dairy cattle. New Zealand
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Holland, P., & Olson, S. (2017). Ledgers and landscapes: Indicators of rural landscape change in
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