Strategic Marketing for Fonterra: Mix and Resource Allocation

This report analyzes Fonterra's strategic marketing, focusing on their powdered milk products. It begins with an introduction to Fonterra and its market position, followed by a detailed examination of the marketing mix (product, price, place, and promotion). The product section discusses quality, ease of use, and benefits of consumption. Price strategies include premium and psychological pricing. Placement emphasizes online marketing and accessibility in supermarkets. Promotion explores a 360-degree approach, including digital marketing and social media engagement. The report then delves into resource allocation strategies, utilizing Ansoff's matrix (market penetration, product development) and Porter's generic strategies (cost leadership). The conclusion summarizes the recommendations, emphasizing premium pricing and digital marketing for growth, supported by Ansoff and Porter's frameworks.

RUNING HEAD: MARKETING STRATEGIES
Strategic Marketing
Name of Student:
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Introduction:
The Fronterra Company is known throughout the world because of its dairy products.
Based in Auckland, New Zeeland, the company is reputed for the production of pure dairy
products from their own farms. The company has a vast global supply chain and at present it is
catering to the dairy needs of over 140 countries.
The farmer-owned New Zealand supportive is the largest processor of milk in the planet,
producing more than two million tonnes of dairy ingredients, worth added dairy ingredients,
specialty ingredients and consumer goods every year. Representation on generations of dairy
qualifications, Fonterra is one of the largest investors in dairy based investigate and advance in
the world.
Background:
The Front Erra Company is one of the richest dietary sources in New Zealand. The company has
over 100 years of expertise in developing nutritious dairy products. One of their most demanded
product is their powdered milk product. This product from the brand has a great demand in the
market and with a large range of varieties; it has been one of the most popular product with a
physically powerful product range. This company is at present aiming at a growth in their market
and developing a strategic marketing process in order to position their dairy products in the
market of New Zealand. Their range of dairy products has been successful in serving to the
customers who seek to manage household budget and at the same time do not want to
compromise with the nutrition value. New Zealand is a strong market that has quite a rich

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economy. The milk powder market of New Zealand is relatively independent that influence the
performance and the growth of companies. In order to succeed Front Erra Company can thus
focus on their powdered milk product in order to grow independently in the market. (Barney, J.
B. 2014).
Marketing Mix:
The company needs to articulate their marketing strategy for achieving their desired
result within the market. The principle of marketing mix generally includes various areas of main
focus that helps in developing a comprehensive marketing plan. Effective marketing touches on a
broad range of area as opposed to the fixation on one message. This helps the company in
reaching to a wider range of audience. Making a strategy for the product, price, placement and
promotion of the offerings of the company, the company can have the advantage of focussing on
things that actually matter. This classification of the 4 Ps was introduced by E. Jerrom Mc Carthy
in 1960. After considering the main target of the marketing plans and examining the industry the
marketing managers since then applied various approaches to each of the 4 Ps.
An analysis of the four elements of this marketing mix as used by Front Erra and giving
recommendation on the same may help the company to understand the ways by which they can
improve their growth strategies. (Fan, Lau. & Zhao 2015)
1. Product-The Front Erra Resource Corporation generally sells their product by broadly
categorising them where each of them has distinct and separate product lines. The Kari care milk
powder has been divided in three parts namely the Infant gold milk powder, Infant ordinary milk
powder and the Infant sheep milk powder. All the products are sold under the name of Front
Erra. The milk powder by the company is projected as the packaged powdered milk that has all

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the goodness of milk without any added colours or flavours. Thus, they project their product as
equally nutritious as regular milk and contain all the elements of milk. The non-fat emulsifiers
and the rising agents add to the nutritional benefits of the product. The companies generally tend
to sell products that are highly differentiated so that various features can attract various
customers. This helps them in gaining a competitive advantage over their competitors. The
powdered milk produced by the company is perceived to be of a superior quality than their
competitors, which make their customers willingly, pay higher price. In their poduct they
maintain the projection of the following things.( Prasad,2014)
A. Quality- Front Erra Company emphasizes on maintaining the high quality of their powdered
milk. This is generally done by the process of adding valued in the different level of their value
chain. Front Erra generally procures their raw materials from reliable suppliers, which are mainly
the dairy farms of New Zealand (Baker, & Saren, 2016)..
B. Ease of use- The powdered milk produced by the company can be sold with packagings that
contain details of food ingredients, user manual and a help line number for the consumers. Going
with the latest trend as pointed out in the analysis of the macro environment the company can
also identify opportunities within the market for the introduction of new varieties in their
powdered products. The packaging can also be made visually appealing for attracting the
customers. (Valvi, & West,2013)
C. Benefits of consumption- The Company can project their product in the lens of the benefits
that the product will render on consumption. It can for example focus on how it addresses the
problem of lactose intolerance in their powdered milk or how it will help the growth of children.

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2. Price- In their pricing strategy the Company can use either psychological pricing or premium
pricing method.
A. Premium pricing- By introducing the premium pricing the Front Erra Company can encourage
favourable product as well as brand perception among their target group of consumer. It will also
encourage a favourable quality perception of their powdered milk, which is comparatively a new
product portfolio of theirs. This will also help the company in maintaining significantly a high
profit along with a consistent growth in business.
B. Psychological pricing- Any milk product is something that is attached with the psychological
satisfaction of the consumers. As it has been perceived as one of the major health provider, since
ages. Thus applying psychological pricing on powdered milk product will be beneficial. It can
add more value to the products from the point of view of the customers. In this way the company
has been successful in increasing their target audience and at the same time broadening their
target group of purchasers.
3. Placement- The powdered milk is considered as a beneficial item for a particular class of
target customer who are mainly from the urban area where the company has mainly centered
their strategy on properly delivering the service. In this case, thus the online marketing approach
by the company will be significantly beneficial. Informations regarding the locations of various
stores as well as online purchasing will be of great help in determining their placement strategy.
Interacting directly with the consumers in the company operated stores will give the consumers
an assurance that any kind of health queries will be addressed. Since the main consumer of
powdered milk products are the urban based families, online retailing will help the company to
increase the accessibility of the product. Placing the products in super markets and hyper markets

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will be also effective in increasing the accessibility as well as improving the cost efficiency.
(Tanwar,2013).
4. Promotion- In general Front Erra uses a 360 degree approach in their activities in their
promotions. The use of digital marketing and having a presence at the social media will help to
engage with the consumers. The main target segment of the milk powder will come from the
background that are working professionals and technologically advanced. Generally, pregnant
women, parents, children of old parents etc are focussed on quality and nature of product of the
powdered milk. These categories are more likely to interact via social media and thus the
company will understand the needs and demand of the segments. (Harmeling, Moffett, Arnold, ,
& Carlson,2017)
Resource allocation strategy
The concept of resource allocation is the process by which an organization generally determines
their best approaches towards the various productive activities, which will make use of their
available resources for the further growth of the company. In allocating resources, the company
can focus on the two growth strategy theories that will help them in allocating and coordinating
the resources. It is essential for the company to understand how their resources will work under a
variable organizational condition and environment. The Ansoff’s matrix and Porter’s generic
strategy will be helpful in understanding how the company can allocate their resources.(Hussain,,
Khattak, Rizwan, & Latif. 2013)
1. Ansoff Matrix-

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In order to achieve the marketing mix as recommended in the first part the company can use the
process of diversification and value creation.
The Ansoff matrix is known for giving a direction towards growth strategy for both current
markets and new markets. The four strategies of Ansoff matrix are (Kinyuira,2014)
Market Penetration- This strategy mainly focuses on the increase of sales of the existing product
in the existing market. The packaged powdered milk produced by front era focuses on the
existing market primarily. In such case, the resources can be allocated focusing on the needs of
the existing market. This will require the allocation of mainly the pricing strategies and the
promotional strategy. The company can make a policy of low price from the outset of their
serving as an active agent for their agenda of market penetration. At present, the company has
different customer segment that have differing incomes, different social status and different price
sensitivities. Price skimming will thus work effectively in this case. Front Erra can on the other
hand make province for spending on research and development for their product. In this way,
they can come up with a more value added product to their already existing market. Also by
following the penetration strategy, the company can actualise the pricing element as focussed in
the marketing mix above. Moreover, the company is facing a large and growing market, which
renders them a strong and financial resource. In this way, they can protect their resource of brand
equity and their loyal customer base. By applying the psychological price, the company can also
gain on the monetary resource. (Kozlenkova, Samaha & Palmatier, 2014).
Product development- The powdered milk pack is an already existing product. However, the
company can develop new product for the existing market by offering varieties to the packaged

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milk. In these new products they can adjust price, allocate resources for promotion and capital
resources like machineries etc. (Kisman,2016).
Porter’s Generic strategies
In allocating the resources, Front Erra Company can use the cost leadership as their strategy in
order to develop the above-mentioned marketing mix. This growth strategy will focus on the
objective of production of a large-scale business and enabling the business to exploit the
economies of the scale. Since Front Erra is a large-scale company with little diversification, it
can effectively use the cost leadership theory by allowing discounts to its products and in a way
maximising the sale. For the achievement of this strategy, the company needs to allocate its
maximum resource in productivity and technology. The access to the most accessible distribution
channels as pointed out in the promotional strategy needs its focus on digital business and online
retailing. (McDONALD, 2016)
Conclusion:
The solution as recommended in the discussion focuses in the marketing strategies that
the company can undertake for their strategy of growth and for the development of a market for
their exixting product. The discussion mainly revolves round their suitable pricing and
promotional strategy that will give them the maximum reach. it has been showed after analysing
the market and the product offered by the company, the premium pricing scheme and the digital
or online marketing tactic will be most beneficial for their growth strategies. In the application of
the strategies for resource allocation, the Ansoff Matrix and Porter’s generic theories have been
idealised for understanding the growth opportunities and allocating the resources accordingly.

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