Case Study Analysis: a2 Milk Company and the Dairy Industry

This case study report analyzes the a2 Milk Company (a2MC), a dairy processing firm specializing in A1 protein-free milk and infant formula. The report begins with an executive summary highlighting the company's success through competitive strategies and marketing models. The introduction provides background information on a2MC and its strategic relationship with Fonterra. The report then delves into the competitive factors driving a2MC's success, focusing on its intellectual property, research and development, and strategic partnerships. The analysis explores the Australian dairy processing industry, including its structure, major players, and market dynamics. The report then applies two key marketing models: the First Marketing Principle Model, addressing customer differentiation, changing needs, competitor reactions, and resource limitations; and Porter's Generic Marketing Model, focusing on cost leadership and product differentiation. The conclusion summarizes the key findings, emphasizing the importance of competitive factors and marketing models for a2MC's continued growth and success within the dairy industry.

AUSTRALIAN DAIRY PROCESSING INDUSTRY
A CASE STUDY OF A2MC
STUDENT DETAILS
[Company name]
[Company address]
JANUARY 1, 2020

A2MC 1
Executive Summary
Success for every business is crucial. Companies keep on undertaking different changes
and adopting varied strategies so as to attain and retain their growth and success. The a2
Milk Company is one of such companies, which adopts different strategies to do so. Its
competitive strategies have particularly worked in its favour. The applicability marketing
models further helps in understanding all the aspects working out for the company. This
report covers a discussion on the two competitive strategies for the company, along with the
application of two key marketing models, to get a better understanding of the given case
study.

A2MC 2
Table of Contents
Introduction............................................................................................................................ 3
Competitive Factors of a2 Milk Company...............................................................................3
Marketing Models................................................................................................................... 4
First Marketing Principle Model..........................................................................................4
Porter’s Generic Marketing Model......................................................................................5
Conclusion............................................................................................................................. 5
References............................................................................................................................. 6

A2MC 3
Introduction
The a2 Milk Company (a2MC), a dairy processing firm that deals in both drinking milk and
infant formula. Recently, the company had announced a new strategic relationship with
another group and has also seen progressive growth. This growth is attributed to the
competitive factors which work in favour of the company. Apart from this, the company also
adopts certain marking models to ensure it continues on a growth path, by undertaking
correct approaches. These very factors and models have been discussed in the following
parts.
Competitive Factors of a2 Milk Company
The company’s major competitive factor within the industry is focusing on developing
intellectual properties and providing licensed technologies to other manufacturers. The
organisation focused on providing its customers with A1 protein free milk and conducted
research on A2 protein and its effectiveness within the drinking milk. The organisation’s IP
position within the industry ensures that the organisation competitors within the industry do
not have a freedom to advertise or sell the A1 protein free product within the industry.
The strategic partnership of a2MC with Fonterra, a New Zealand based cooperative group,
resulted in promoting the organisation to being the most valuable company on the New
Zealand Stock Exchange. A2MC was different from the conventional dairy processors, as it
focused on the R&D activities along with the production. It contracted with the farmers, and
also contracted with the dairy processors to produce A2 protein milk and infant formula.
The Australian Dairy Processing Industry constitutes about the per capita dairy consumption
of around 100 litres. Australia is the world’s third largest exporter of the dairy products, as it
exports the 50% of the dairy production. The Australian dairy processing industry is handled
by the major “Big 6” firms that controlled around 95% of the industry. Also, the main
attraction of the industry is that the industry focuses on the full range of dairy products, and
the processing industry was more focused on generating revenue through the exporting of
the dairy products (PWC, 2011). As within the nation, due to limited number of distribution
chains and high competition among them, the products are offered at a very low price and
sometimes they even offer the product even at a loss, to attract customers and generate
store traffic (Esty, 2019).

A2MC 4
Marketing Models
First Marketing Principle Model
The first marketing principle model; provides with the framework to develop marketing
principles and effective strategies to address the marketing issues within the organisation.
The model provides the solution to the four major marketing issues through which the
organisation can ensure its market competitiveness. The issues involve; all customers differ,
all customers change, all competitors react and all resources are limited. As the customers
within the industry differs in terms of their needs and requirements and requires that the
products and services are being provided accordingly (Palmatier & Crecelius, 2019).
The second issue represents that the customers needs and requirements change after a
time period, as they never remain constant over the time period, with the market innovation
they require that the organisations provide them with innovative products to meet their
expectations. The first marketing principle model defines that the competitors within the
industry reacts whenever the organisation introduces a new technology or the product with
the industry. As the organisations within the industry focus on developing a competitive edge
therefore, they focus upon developing and introducing a product that is better from that of
customers. The organisation has a limited resources and effective allocation of the
resources is required to ensure that the organisation will be able to compete within the
industry (FSB, 2019).
The a2MC, has a competitive edge within the Australian Dairy processing sector, to ensure
that the organisation competitive edge is sustained within the industry it is required that the
organisation focus on implementing R&D activities within the organisation, so that the
competitors within the organisation can be deal with by providing the customers with
innovative and required products. As the customers within the Australian Dairy industry
requires that the organisation provides them with the A1 protein free milk, as they find it
difficult to digest, but with the time the requirements of the customers within the industry will
change, therefore a2MC should focus on developing strategies so that it can meet the
changing requirements of the customers in future (Esty, 2019).
The competitor of a2MC is the Nestle who has launched its A1 free dairy products within the
China, and is planning its expansion in Australian Industry; therefore a2MC should focus on
customer satisfaction within the industry along with ensuring the introduction of competitive
products so that it can compete with Nestle within the industry. The key resource that a2MC
requires in production of diary products is the availability of the cattle that produces milk
containing A2 protein within the milk so that the customer need can be satisfied. Therefore,

A2MC 5
the organisation is required to continuously focus on the genetic tests and creating an A1
free supply chain so that the products free from A1 protein can be produced.
Porter’s Generic Marketing Model
The organisation is required to be competitive within the industry, such competitiveness can
be achieved by providing the customers with satisfactory products or service, and also the
products should have a competitive feature that would be different from that of its
competitor’s product within the industry. The Porter’s generic model defines that the
organisation can effectively operate within the industry and can lead towards maintaining its
competitive edge if it focuses upon either cost leadership or on product differentiation within
the industry (Teeratansirikool, et al., 2013). The supermarkets and retailers play a major role
within the Australian Dairy Industry, as to attract the customer traffic within their stores they
even offer the dairy products at a loss up to 33%. Therefore, it indicates that the industry is
highly competitive, and to be within the industry it is required that a2MC provides its
customer with quality products at low price.
The model indicates that the organisation can also sustain its competitive edge within the
industry, if it provides a product that has a different or unique feature as compared to its
competitor (Pulaj, et al., 2015). A2MC produces A1 protein free dairy products which are a
positive and competitive factor for the organisation, within the industry, but the organisation
is required to compete with Nestle if it launches its A1 free products in Australia. Therefore,
the organisation should focus upon product differentiation and introduce products that have
a competitive factor. Also, a2MC is required to focus upon analysing the customers’ needs
and requirements, so that it can effectively include innovations within its product range.
Conclusion
This discussion helped in shedding light on the competitive factors which work in favour of
the company. The development of intellectual properties and the company providing
licensed technologies to other manufacturers are the factors working for the company, which
have also resulted in the company attaining good revenue. Apart from that, its association
with different groups makes the situation even better. The discussion also highlighted the
use of first marketing principle model and Porter’s Generic Marketing Model by a2MC.

A2MC 6
References
Esty, B. C., 2019. The a2 Milk Company, s.l.: Harvard Business School.
FSB, 2019. First Principles of Marketing Strategy. [Online]
Available at: https://foster.uw.edu/centers/center-for-sales-and-marketing-strategy/first-
principles-of-marketing-strategy/
[Accessed 28 January 2020].
Palmatier, R. W. & Crecelius, A. T., 2019. The first principles of marketing strategy. AMS
Review, 9(1), pp. 5-26.
Pulaj, E., Kume, V. & Cipi, A., 2015. The Impact of Generic Competitive Strategies on
Organizational Performance.. European Scientific Journal, 11(28), pp. 273-284.
PWC, 2011. The Australian Dairy Industry. [Online]
Available at: https://www.pwc.com.au/industry/agribusiness/assets/australian-dairy-industry-
nov11.pdf
[Accessed 28 January 2020].
Teeratansirikool, L., Siengthai, S., Badir, Y. & Charoenngam, C., 2013. Competitive
strategies and firm performance: the mediating role of performance measurement.
International Journal of Productivity and Performance Management, 62(2), pp. 168-184.