Marketing Strategies for Fonterra Co-operative Group

This assignment content focuses on marketing research, specifically exploring products with added value, cooperatives, and dairy-related topics. It includes various journal articles, book chapters, and patent applications from 2002 to 2017. The content highlights the importance of product differentiation, advertisement, packaging, and branding in marketing products with added value. Additionally, it touches on the concept of cooperatives, including their formation, sizes, and scope. Specifically, it mentions Fonterra Co-operative Group as an example of a cooperative that has grown through the merger of two dairy cooperatives.

Marketing Practices and Principles 1
Marketing Practices and Principles
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MARKETING PRACTICES AND PRINCIPLES
Executive Summary
Marketing management is an essential part of the organizational administration. It is
defined as the management through which goods and services move from its original concept to
the consumer, it involves the coordination of four main strategies of marketing that includes
price, product, promotion, and place. Marketing entails the process of coordinating all the
marketing strategies and principles with an aim of ensuring that there is an adequate supply of
the customer needs.
The primary objective of this paper is to explain the concepts of marketing that relate to
existing products in a particular market. The study will explain on essential elements of
marketing as well as the principles components that need to be considered while coordinating
marketing mix strategies. Environmental analysis, market segmentation and impact of
technological trends will form the basis of the paper.

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Table of Contents
MARKETING PRACTICES AND PRINCIPLES..........................................................................2
Executive Summary.........................................................................................................................2
Section 1..........................................................................................................................................4
BACKGROUND.............................................................................................................................4
Business overview...........................................................................................................................4
Fonterra Co−operative Group..........................................................................................................4
Section 2..........................................................................................................................................6
ENVIRONMENTAL SCANNING.................................................................................................6
Political factors................................................................................................................................6
Economic factors.............................................................................................................................6
Social factors...................................................................................................................................7
Technological factors.......................................................................................................................7
Environmental factors......................................................................................................................7
Legal factors....................................................................................................................................8
Section 3..........................................................................................................................................9
IMPACTS OF EMERGING TECHNOLOGIES TO FONTERRA CO−OPERATIVE GROUP. .9
Section 4........................................................................................................................................11

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MARKET SEGMENTATION......................................................................................................11
References......................................................................................................................................13
Appendix 1.....................................................................................................................................16
Appendix 2.....................................................................................................................................18

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Section 1
BACKGROUND
Business overview
Fonterra Co−operative Group.
Fonterra Co-operative Group Limited is a New Zealand multinational dairy company, it
was founded in 2001 after the merging of two big dairies corporative in New Zealand Dairy
Group and Kiwi Co-operative Dairies. The merging of the two dairy firms reduced competition
of dairy firms in the New Zealand domestic market.The Fonterra Co-operative Group Limited is
responsible to produce an estimation of 30% of the world dairy exports, this has earned New
Zealand foreign exchange (Havea, et al., n.d.). The company is owned by10, 500 formers, with a
revenue of over exceeding NZ$17.2 billion making it be the largest company in New Zealand.
The company has an annual turnover of NZ$ 17 Billion, its core business activities consist of
exporting dairy products under the NZMP brand (Andaleeb, 2016). However, the company also
operates a fast moving goods for dairy products, these are called the Fonterra Brands. Fonterra
Co-operative Group Limited has a number of joint ventures and subsidiaries that operate in the
world market.
Fonterra Co−operative Group is guided by the vision and mission statements, “Our vision
is to be the natural source of dairy nutrition for everybody, everywhere, every day. We have
generations of dairy expertise behind us and generations of dairy innovation to come. Every day,
our knowledge, people and products combine to bring the best of dairy to the world and the best
returns back to our farmers.” The source of creating value to products is based on the confirming

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the competitive advantaged approaches that are relevant to the company. The company has a
strong brand that is recognized in both the external and internal market (Havea, et al., n.d.).
Anchor Brand is one of the primary brands that are produced by Fonterra Co-operative
Group Limited. After the merging of two big dairy cooperatives in New Zealand, Fonterra Co-
operative Group decided to make a strategic decision of producing a strongest domestic brand.
Anchor brand is a dairy product founded in 1886, it is owned by Fonterra Co-operative Group.
Anchor Brand has the strongest image in both the internal and external market. Anchor Brand is
currently marketed based on the market demand, the product is currently exported to new
markets such as Australia and Sri Lanka.

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Section 2
ENVIRONMENTAL SCANNING
Fonterra Co−operative Group is a company that operates in a competitive market
environment. The market environment is outlined as the factors and forces that affect the
organizational ability to maintain and build successful customer relationships, internal and
external market environment are categorized to be the main types of market forces and factor
(Armstrong, et al., 2015). The two categories of market environment are considered to be the
critical factors that affect the company able to serve its customers. The electronic industry in
New Zealand is more competitive requiring the organization to implement the essential strategies
which will help them to gain the competitive edge (Dibb & Simkin, 2016). PESTEL analysis tool
is a strategic management tool that is used by the company to define the external market
environmental factors that affect the ability of the firm to service its customers (Babin &
Zikmund, 2015).
Political factors
Fonterra Co−operative Group is operating in a segmented market, it is exposed to many
political problems where this has failed the company to serve its customers. Fonterra
Co−operative Group sales are coming outside the US market, New Zealand is one of the external
markets that the company sales are generated (Nilsson, et al., 2017). Generally, the political
insurgence originating from the countries like New Zealand affect the company positions
(Heinemann, 2016).

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Economic factors
The economic factors outline the recession issues such as country GDP, company
revenues, and income. The impact created by the revenues is due to the pricing strategies and
policies that are installed by the company management. The rising USD has greatly affected the
operations of Fonterra Co−operative Group NZ market. The GDP of New Zealand in 2014 was
recorded to be 0.3% and increased to 0.6% in September 2015, this outlines that the country
economic growth has improved for 0.3%. According to the economic modeling, that was
commissioned by New Zealand Government states that the country TPP is anticipated to be $2.7
billion to New Zealand Gross Domestic Product by 2030 (Heinemann, 2016).
Social factors
Globalization is one of the essential elements of strategic management tool. Change in
lifestyle in the world business market has enormously affected the Fonterra Co−operative Group
business activities. The potential market in developed countries such as New Zealand creates the
possibility of company expansion (Malmgren, et al., 2017).
Technological factors
Technology has stood to be an essential element to all the dairy manufacturers in New
Zealand market. Technology has aided in reducing the marketing expense of Anchor brand in the
market, Fonterra Co−operative Group management has embraced technology as a vital element
to the company. New Zealand is a developed country where new technology is experienced in
every dawn, Fonterra Co−operative Group is ensuring that it is well versed with the emerging
technologies that will create a positive portfolio to their products.

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Environmental factors
The dairy industry in New Zealand heavily depends on the health as well as the
availability of animals. Epidemics and plagues affect the industry by reducing the quality of
products received from the animals. Climate is also another critical factor that defines
environmental factors relating to the dairy industry.
Legal factors
The legal factors also act as the key issues that affect the operation of dairy industry in
New Zealand, led by Fonterra Co−operative Group. The Fonterra Co−operative Group and New
Zealand are implementing strategies legal measures of promoting the sustainable and world-class
dairy products (Anema & Lee, 2004).
Consequently, Fonterra Co−operative Group is playing a critical role in implementing its
social responsibilities. Anchor brand is supplied by Fonterra Co−operative Group to the famine
affected nations. The competitive advantage of Anchor brand is gained by its market position in
both external and internal market (Tercinier, et al., 2017).

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Section 3
IMPACTS OF EMERGING TECHNOLOGIES TO FONTERRA CO−OPERATIVE
GROUP
Technology is an essential factor in business, it entails how the business organization
uses information communication technology to improve its performance. The changing
technology in different markets may create a negative or a positive impact on the existing
products (de Graaf, et al., 2016).
The technological trend and changes in New Zealand have created a positive platform of
increasing the Anchor brand in the market. The use of social media and other websites has been
considered to be the components of technology that has led to increasing in company sales in the
market (Ryan, 2016). Brand packaging is also an element that embraces the use of technology as
the implementation of the digital market, Fonterra Co−operative Group has used technology to
innovate new product designs that persuasive to the consumers in the market (Shortt & O'Brien,
2016). Currently, dairy farmers in New Zealand are employing technologies such as Batt-latches
(Babin & Zikmund, 2015).
Marketing is defined as the management process where goods are moved from their
original context to consumers. Technology has acted as the primary factor that has enabled the
achievement of company marketing objectives. Digital marketing used by, Fonterra

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Co−operative Group is to build its product online (Nilsson, et al., 2017). The company has
created social media walls in Facebook and LinkedIn. Consumers use social media to access the
company product as they also learn about new products released to the market (Gray & Le
Heron, 2010).
The producing process of fluid milk is considered intensive to the company, it consumes
high energy and high financial cost. The dairy industry in New Zealand is working towards
reducing the GHG emissions and other environmental impacts associated with milk processing
(Ryan, 2016). Fonterra Co−operative Group is taking the opportunities of using the emerging
technology to improve its production activities in the market (Singh & Verma, 2017). The
company is working towards replacing high temperature-short time (HTST) and ultra-high
temperature (UHT) pasteurization with the lower energy usages and the greenhouse gas emission
(Sun, 2016).

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Section 4
MARKET SEGMENTATION
Market segmentation is embraced as marketing management process of dividing a broad
business market, this division entails the procedure of dividing the existing and potential
consumers. Fonterra Co−operative Group is currently segmenting its market based on the
implementation of strategic marketing principles. The company is focusing on the marketing
principles such as considering the marketing maps, the market size estimation and comparing its
operation with those of the competitors (Mikkola & Colantuono, 2017). Marketing segmentation
reduces the risk that relate to unsuccessful and irrelevant marketing campaigns. The
organization-marketing department divide and segment their market based on the essential
characteristics, they are obligated to implement on the required marketing strategies that will get-
up with the specific market segmentations. The importance of marketing segmentation to a
company is based on creating generic marketing campaign that are conducted across all the
marketing segments (Armstrong, et al., 2015). Fonterra Co−operative Group is mandated to
prioritize capitalize on relevant marketing strategies including prioritizing their target audience
in the market. The company is required to ensure that they meet the customer needs and demands
by show-casing fundamental marketing approaches (Dibb & Simkin, 2016).

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Fonterra Co−operative Group has employed the essential market segmentation types for
anchor brand in the market. Geographical market segmentation entails segmenting market based
on the geographic position of the consumers ( Duncan, & Shadbolt, 2014). Anchor brand is
distributed mostly on the towns and cities. Psychographic segmentation is considered to be a
marketing segmentation that is used by company to divide its market based on the lifestyle of
people in a particular market, Fonterra Co−operative Group divided their market by considering
the people lifestyle as well as understanding their demands (Banerjee, 2009). Dairy consumers in
New Zealand are understood to demand for latest products. Anchor Brand is a product that is
nutritious to the children, there are some region in New Zealand that are considered to be highly
populated with children (Bebe, et al., 2017). Due to high population of children, the company is
implementing on the behavioral market segmentation. However, the Fonterra Co−operative
Group may implement marketing segmentation by understanding the consumer behavior in
different market, especially on the highly populated areas.

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References
Duncan,, A. & Shadbolt, N., 2014. Fonterra as a case study of co-operative capital structure
innovation. International Summit of Cooperatives, Quebec, Canada, pp.6-9.. s.l.:s.n.
Andaleeb, S., 2016. Market Segmentation, Targeting, and Positioning. In Strategic Marketing
Management in Asia: Case Studies and Lessons across Industries (pp. 179-207).. s.l.:Emerald
Group Publishing Limited..
Anema, S. G. & Lee, S. K., 2004. Fonterra Co-Operative Group . Dairy Ingredient-Preparation
and Use. U.S. Patent Application 11/722,687.. s.l.:s.n.
Armstrong, g., Kotler, p. & Harker, m., 2015. Marketing: an introduction.. s.l.:Pearson
Education..
Babin, B. J. & Zikmund, G. W., 2015. Essentials of marketing research. s.l.:Nelson Education.
Banerjee, S., 2009. Marketing communication through brand placement: A strategic roadmap..
Journal of Marketing & Communication, 5(2), pp. 4-22..

Marketing Practices and Principles 15
Bebe, B. O., Rademaker, C. W. & Tonui, C., 2017. Sustainable growth of the Kenyan dairy
sector (No. 1021).. In: s.l.:Wageningen Livestock Research..
de Graaf, s. et al., 2016. Determinants of consumer intention to purchase animal-friendly milk.
Journal of dairy science, 99(10), pp. 8304-8313..
Dibb, S. & Simkin, L., 2016. Market segmentation and segment strategy. Markefing theory: A
student text, Sage, Los Angeles, pp.251-279.. s.l.:s.n.
Gray, S. & Le Heron, R., 2010. Globalising New Zealand: Fonterra Co
‐operative Group, and
shaping the future. 66(1), pp.1-13.. s.l.:New Zealand Geographer.
Havea, P., Grant, J. E., Hii, J. M. & Wiles, P. G., n.d. Fonterra Co-Operative Group Limited,
2016. Dairy product and process. U.S. Patent Application 15/362,216. s.l.:s.n.
Heinemann, M., 2016. Leveraging Data Mining and Market Segmentation to Gain Conservation
Opportunity Intelligence (Doctoral dissertation).. s.l.:s.n.
Malmgren, B., Ardö, Y., Langton, M. & Altskär, A., 2017. Changes in proteins, physical
stability and structure in directly heated UHT milk during storage at different temperatures..
International Dairy Journal, Volume 71.
Mikkola, M. & Colantuono, F., 2017. Consumer Insight and Approaches in New Dairy Products
Development. Advances in Dairy Product Science & Technology, p.404. s.l.:s.n.
Nilsson, L., Hansson, H. & Lagerkvist, C. J., 2017. Motivational factors for remaining in or
exiting a cooperative. Agribusiness, 33(2), pp.209-225.. s.l.:s.n.
Ryan, D., 2016. Understanding digital marketing: marketing strategies for engaging the digital
generation.. s.l.:Kogan Page Publishers..

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Shortt, C. & O'Brien, J. e., 2016. Handbook of functional dairy products.. s.l.:CRC Press..
Singh, A. & Verma, P., 2017. Factors influencing Indian consumers’ actual buying behaviour
towards organic food products.. Journal of Cleaner Production..
Sun, D., 2016. Handbook of frozen food processing and packaging.. s.l.: CRC Press..
Tercinier, L., Ye, A., Anema, S. & Singh, A., 2017. Characterisation of milk protein adsorption
onto hydroxyapatite.. International Dairy Journal, Volume 66, pp. 27-33..
Wijnands, F. G. & Sukkel, W., 2002. Certification: bringing the added value to the market. In
VEGINECO-workshop 20-21 June 2001. s.l.:s.n.

Marketing Practices and Principles 17
Appendix 1
Products of added value are known to be the additional services to the core values of
products that are needed by the customers. These products give the consumers to pay extra up to
the extent that they remark them as valuable in sense of better value for money. Product
differentiation, advertisement, packaging and branding are the marketing strategies that are used
by the manufactures to market products with added value (Wijnands & Sukkel, 2002).
However, the products with added value are also considered to have additional nutrients
that are added on them. For instance, Anchor brand is a value added product produced by
Fonterra Co−operative Group. The product has its nutrient values as follows:
Nutrition Facts of Anchor Milk Brand
Serving Size: 1 serving (5 g)

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per serve
Kilojoules 113 kj
Calories 27 kcal
Protein 0.1 g
Fat 3 g
Saturated Fat 1.1 g
Carbohydrate 0.1 g
Sugar 0.1 g
Sodium 20 mg

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Appendix 2
Cooperatives are the associations that are formed by individual farmers with an objective
of gaining commercial benefits. The formation of corporative organization allows individual
farmers to gain more success more than when they stand as individuals.
Cooperatives ranges in different sizes and scope, their sizes depends on small groups that
have informal agreement to large groups that have the formal agreement, some are mult-product
business cooperatives with thousand owners. For instance, Fonterra Co−operative Group was
formed by the formation of two dairy cooperatives: New Zealand Dairy Group and Kiwi Co-
operative Dairies. The board of director are the top executive that defined the policies and
management strategies that facilitate the success of the stakeholders.