A Strategic Marketing Case Study of A2 Milk Company in Australia

This case study provides a comprehensive strategic analysis of A2 Milk Company within the Australian milk market. It delves into key aspects such as market segmentation (geographic, demographic, behavioral, and psychographic), consumer changes related to health consciousness and alternative milk products, and competitive responses to companies like Fonterra and Nestle. The analysis utilizes frameworks like PESTEL to assess the external environment, covering political, economic, social, technological, environmental, and legal factors. Furthermore, the marketing mix (4 P's - Product, Price, Place, Promotion) is evaluated to understand A2 Milk's strategic positioning. The study concludes with recommendations focused on partnerships and technological improvements to enhance the company's competitive advantage and market position.

Running head: A2 MILKS MARKETING STRATEGY
A2 MILKS MARKETING STRATEGY
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1A2 MILKS MARKETING STRATEGY
Executive Summary
The significant objective of the report is to provide an analysis of the marketing strategies
adopted by A2 Milk Company in Australia. The study provides a strategic analysis focusing
on the internal and external factors affecting the operations of the company. Additionally, the
marketing of the company has been evaluated using the model of 4 P’s of Marketing mix.
Furthermore, recommendations have also been provided to establish how the current
marketing of the company can be improved. In conclusion, it has been mentioned how A2
Milk Company can retain its position in the market and gain a competitive advantage.

2A2 MILKS MARKETING STRATEGY
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Strategic Analysis...................................................................................................................3
Market Segmentation.........................................................................................................4
Consumer Change..............................................................................................................5
Competitive Responses......................................................................................................5
Prioritization of Limited Resources...................................................................................6
Analysis of External Environment.........................................................................................7
Marketing Analysis using 4 P’s.............................................................................................8
Recommendations......................................................................................................................9
1. Partnerships..............................................................................................................9
2. Improvements in technology...................................................................................9
Conclusion................................................................................................................................10

3A2 MILKS MARKETING STRATEGY
Introduction
The milk and dairy industry in Australia has underwent rapid growth and
development in the recent years owing to the availability high quality resources and a
favorable climate for the production of several farm-based products. A2 Milk Company
(a2MC) is one of the leading milk producing companies in Australia. In the recent years, the
company has underwent a rapid growth owing to its distinguished dairy processing methods
to manufacture the a2 category of milk, suitable for the consumption by infants. This a2
category of milk is processed in a manner to contain only beta-casein protein and not the a1
proteins that were proven to be harmful for human health in the long run. Strategizing means
to develop and enhanced product features and quality has induced increased sales for the
company, therefore positively impacting its productivity and profitability. The following
sections of the report will provide a strategic analysis of the company along with the analysis
of the external environment of the A2 Milk Company.
Discussion
Strategic Analysis
The strategic analysis of A2 Milk Company can be performed using the frameworks
that help in the identification of the internal and external factors that determine the successful
operation of the company in the Australian milk and dairy industry.
Market Segmentation
The process of market segmentation involves the division of the market of the
organization into segments or groups of potential customers. Such segmentation can be
demographic, behavioral, geographic and psychographic. The market segmentation of A2
Milk Company can be evaluated as follows:

4A2 MILKS MARKETING STRATEGY
 Geographic segmentation – Milk is a product that is demanded by individuals and
households irrespective of their geographic location. The geographic segmentation of
A2 Milk Company therefore targets customers living in both urban and rural areas in
Australia. Furthermore, A2 Milk Company also sells its products in several other
countries like China and Singapore.
 Demographic segmentation – Milk, as a dairy product, can be consumed by
individuals of any age group. Moreover, as the products offered by the Company are
of premium quality, the target customers are moderate to high income groups.
Additionally, the special a2 milk product of the company caters to the requirements of
new mothers and infants.
 Behavioral segmentation – Milk is a widely used product and can be considered as a
necessity good. The high quality of the products further attracts the loyalty of the
customers. Therefore, the behavioral segmentation of the company can be described
to consist of loyal and regular customers who are health conscious.
 Psychographic segmentation – In this segmentation, the preferences and lifestyle of
the customers are considered by the A2 Milk Company. Milk, being a healthy
beverage, is consumed by people who are active or health conscious like athletes,
young individuals and children in their formative years, or working individuals. For
this purpose, the products manufactured by A2 Milk Company is targeted to such
young, active and health conscious individuals. Additionally, the company also
targets its unique a2 milk product to the individuals who suffer from health issues like
diabetes or heart problems.
Consumer Change
The rising trend of health consciousness and awareness among the global consumers
have resulted in the growth of alternatives for milk and milk products. It is so because certain

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categories of milk products have been proven to be harmful for the health of consumers
especially those individuals, suffering from diabetes and heart issues. The change in the
preferences of the consumers for healthier alternatives has propagated the emergence of
substitutes like oat milk, flax milk, dairy free butter and margarine and other products which
do not cause harmful effects to human health in the long run. This change in consumer
preference has presented a huge threat to the milk producing companies, who are in turn
required to innovate and develop products that meet the interests of the customers changing
tastes. A2 Milk Company has therefore come up with a healthy alternative for the regular a1
category of cow milk which is not only difficult to digest but also unfit for consumption by
infants and children. The a2 category of milk produced by the Company therefore creates the
scope of expanding its customer base and thereby their loyalty. Furthermore, the positive
brand image of the Company also acts as an additional boost for sales, thereby positively
affecting their business operations and providing them with a competitive edge in the market.
Competitive Responses
Owing to the rapid growth and development of the milk and dairy industry 9in
Australia, there has been a steady rise of competition faced by the A2 Milk Company. One of
the major competitions faced by the Company is from the New Zealand based dairy
producing company Fonterra Cooperative. Fonterra Cooperative is one of the largest dairy
producing and exporting companies in the world. However, due to partnership formed
between
Fonterra Cooperative and A2 Milk Company, the company has gained several advantages
like improved sales with the help of the combination of the distribution and sales expertise
offered by Fonterra cooperative and the strong brand image and identity of A2 Milk
Company. Apart from the partnership with one of the world’s leading milk and dairy
producers, A2 Milk Company has also gained a competitive edge in the market through the

6A2 MILKS MARKETING STRATEGY
development of the a2 category of milk. This product offered by the company is fit for
consumption by infants as well as individuals who are health conscious or suffering from
health problems like diabetes or heart issues. However, due to the recent developments by
Nestle, recognized as the largest dairy producing company in the world, has provided a
severe threat of competition to the organization. However, such a threat can be overcome
with the help of improvements in cost effectiveness and promotions.
Prioritization of Limited Resources
The several resources used in the milk and dairy industry include the fodder for the
cattle, water, land, technology for the extraction of water from the milk, technology for
preservation and the like. Such resources are to be efficiently prioritized in order to ensure
their efficient allocation and utilization. The quality of the milk and milk products directly
depends on the nutrition given to the cattle. Therefore, the quality of the fodder given to the
cattle is of high priority. In order to ensure cost effectiveness in the production process, the
technology used in the company must also ensure that the milk is processed in a way that
causes minimum wastage of resources. Another priority in the business operations of the A2
Milk Company is the management of human resources, as immense significance is given to
the performance and efficiency of the employees. All these factors combine together to
ensure a competitive advantage for the Company through reduced costs of production and
improved performance.
Analysis of External Environment
The external environment of A2 Milk Company can be analyzed with the help of the
PESTEL framework, which identifies the political, economic, social, technological,
environmental and legal factors that influence the business operations of the Company.

7A2 MILKS MARKETING STRATEGY
 Political factors – These factors include the regulations set by the government of
Australia regarding the standards of food and beverages. Regulations pertaining to
trading rights for food and beverages, along with taxation rates and wage legislations
also influence the operations of A2 Milk Company.
 Economic factors – The economic factors affecting the operations of A2 Milk
Company include the economic growth rate and per capita income levels of the
customers as it determines their buying power. The quality of infrastructure available
in the country additionally determines the level of technological resources and capital
that can be utilized in the company. Furthermore, the exchange rates and stability of
the Australian Dollar also determines the operations of the Company overseas.
 Social factors – These include the tastes and preferences of the customers and their
general awareness and consciousness about their health. The milk and dairy industry
is highly dependent upon the preferences of the customers for healthier alternatives of
milk. For this, the company has come up with healthy alternatives in the form of the
22 category of milk.
 Technological factors – The recent developments in the field of research and
development for product innovation and diversification is an important technological
factor influencing the operations of A2 Milk Company. Apart from this, the rate of
technological diffusion in the industry also determines the utilization of such
resources by the company.
 Environmental factors – These factors include the regulations adopted by the
Australian government regarding waste management and environmental pollution.
Furthermore, the weather and climate of the country also plays an important role in
determining the amounts of production.

8A2 MILKS MARKETING STRATEGY
 Legal factors – Legislations on customer rights, employee rights, health and safety
standards e-commerce and data protection are the legal factors that influence the
business activities of A2 Milk Company in Australia.
Marketing Analysis using 4 P’s
The 4 P’s of marketing mix is a tool used to determine the various kinds of products
offered by an organization at different prices in places with appropriate means of promotion.
Such an evaluation further helps the Company to strategize means to improve the scope of its
operations.
 Product – A2 Milk Company provides a varied range of products to its customers
that caters to the needs of different types of customers. For the regular customers, the
company has a range of milk products of the a2 category, which are healthy and
suitable for the consumption by new mothers, infants and individuals with health
issues also. For the customers who are lactose intolerant, the company produces plant-
based milk like milk made from soy, oats, almonds and rice.
 Price – A2 Milk Company provides milk and milk-based products of a very high
quality. Furthermore, the Company faces stiff competition from global giants like
Nestle who offer high quality goods at low prices. For this purpose, the company has
adopted the strategy of competitive pricing. Using this strategy the Company is able
to offer a wide range of high quality products at low prices, which has in turn resulted
in its positive brand image in the market.
 Place – Milk being a widely consumed product across the globe, has always remained
in high demand among the customers. For this purpose, the placement of the products
produced by A2 Milk Company is not restricted by geographical factors. The milk
and milk-based products sold by the Company are placed in urban areas as well as the
rural regions. However, it is also observed that the packaged and preserved products

9A2 MILKS MARKETING STRATEGY
are more popular in the urban areas where there is a scarcity of fresh farm based
products.
 Promotion – A2 Milk Company enjoys a positive brand image and identity in the
Australian milk and dairy industry. Furthermore, its partnership with the New Zealand
based dairy producing company Fonterra cooperative has further boosted the
efficiency of its business operations. Due to this, the products produced by the
company has been able to be promoted to make the customers aware about the
benefits of the a2 category of milk offered by them.
Recommendations
There are certain recommendations that can be provided to A2 Milk Company in
order to improve its marketing strategies and enhance sales and profitability. Such
suggestions can be listed as under:
1. Partnerships – The strategy of partnership with Fonterra Cooperative has proven to
be successful for a2MC. Therefore, the Company can engage in future partnerships
with the supermarket chains present in Australia and in the countries of its operations
for the purpose of improved sales. Such partnerships will also aid in promotions of the
products offered by the company, thereby helping in the expansion of the customer
base and inducing their loyalty.
2. Improvements in technology – Another strategy that can be adopted by the
Company is improvements in the use of technology. This process will help the
company to diversify their products, which will in turn help them to cater to the
requirements of the customers. Furthermore, such developments towards cost
effectiveness and product diversification can help the organization to gain a
competitive advantage over global players like Nestle.

10A2 MILKS MARKETING STRATEGY
Conclusion
From the above analysis, it can be concluded that there are several opportunities and
threats present in the milk and dairy industry in Australia. On the one hand, the milk industry
is subject to persistent growth. However, due to the increase in the health consciousness of
the customers, there is an identifiable emergence of substitutes and alternatives for the regular
milk products. A2 Milk Company has been able to use this opportunity for the development
of a healthier category of a2 milk. However, to overcome the stiff competition faced by the
Company in this respect, it can further engage in development and innovations in its products
to obtain a competitive edge in the market.