Singapore University: BUS489 Report on Indofood Competitive Analysis

This report provides a comprehensive strategic analysis of Indofood, an Indonesian food company, examining its competitive environment, customer segments, and market position. The analysis includes a detailed look at Indofood's competitors, such as PepsiCo, Mars, Mondelez, and Hershey, and assesses the company's strengths and weaknesses through a SWOT analysis. The report explores customer analysis, including segmentation, preferences, and satisfaction, and proposes a cost leadership strategy for Indofood to effectively compete. The report emphasizes the importance of market analysis, highlighting Indofood's focus on the middle class and its expansion strategies. Furthermore, the report incorporates in-text citations and references to support its findings, making it a valuable resource for understanding Indofood's strategic challenges and opportunities in the food industry.

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Contents
Introduction...........................................................................................................................................2
Competitive Analysis for Indofood.......................................................................................................2
Competitive analysis..........................................................................................................................2
Customer Analysis.............................................................................................................................3
Competitor analysis...........................................................................................................................5
Market analysis..................................................................................................................................6
Strategy.................................................................................................................................................7
SWOT Analysis.....................................................................................................................................7
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10

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Introduction
Strategic Management is the process of analyzing the environment in order to develop
strategies. The companies develop the strategies to achieve the objective but it required to
analyze the market for the effective strategies. This process helps the company to evaluate the
current situation in the market. In this report, the discussion is made on the competitive
analysis of the company in order to develop an effective strategy. Indofood has been taken
into consideration in order to analyze the competition. Indofood is an Indonesian company
which operates under the food industry. It was established in the year 1968.
This report is classified into three parts with a common purpose. In the first part, the
competitive analysis will be done as per the customer and competitor analysis. In the second
part, effective strategies of the company will be analyzed. SWOT Analysis will be used to
identify the strength, weakness of the competitors.
Competitive Analysis for Indofood
Competitive analysis
Competitive analysis is a critical part of a marketing plan which is developed to achieve the
objective of the company. It helps the company to develop its product or services different
from the other companies. The food industry is growing in the current days as per the high
demand of the consumer. In 2019, the annual growth rate of the market is 12.3% in 2019 and
it is expected that it increases with 17%. It has been seen that most of the revenue is
generated in China due to the high quality of services with a large number of variety. The
company is growing by entering the online market in order to deliver the services at a large
number of people. The food market sales the fresh and packaged food in the market. The
market segment covers the sale of fruit, snacks, sweets, soft drinks, and the other food items.
PepsiCo, Mars, Mondelez, and Hershey are the main competitors of the company. As per the
statistic report, it has been seen that Hershey held a market share of about 30.6 percent of the
confectionary sale. Hershey and Mars are the two competitors which compete for each other
and give the high competition to the consumers. The net revenue of Mondelez International
was amounted in 25.94 billion in US dollars in the year 2018. It is one of the largest operating
companies in the snack business and produces many products such as Oreo, Milka chocolate
and Cadbury. The company generate the revenue every year with the amount of 100 million.

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As the companies have the high market shares in the same industry that is the food industry.
As per the statistical report, it has been seen that the only 27% of companies are involved in
the packaged industry. It reflects that the only famous companies operate and gain a high
market share.
Customer Analysis
Customer Analysis is a critical process which helps to identify the customer target, demand,
and satisfaction. The company targets different customers in order to sale a large number of
services to earn a high profit. The company targets the customer on the basis of different
factors such as age, taste, prices and many others.
Customer segmentation
Consumer segmentation divides the market into the small group that has a common profile,
marketing strategies that can be adapted to target the specific type of consumers. The
company analyze the market and then target a different customer. It has been seen that the
consumer lifestyle is the ideal criterion for market segmentation (Berman, 2017). The

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company provides different types of food material that is why the target segment is also
different as per the product. There are different types of segment factor in which Indofood
target the customer in order to provide the services.
The company target all age of people because the food is a necessary item for the survival of
each and every people.
The company target the middle and high-class people due to the high cost of the product
which cannot be afforded by poor people.
Price is the factor by which the company targets the customer. As the price conscious
consumer are not included in the target segmentation.
It mainly targets the families and the health conscious consumer as per the product delivery.
Customer preferences
As per the statistical report, the old age of people above 65 living longer in different
countries. It has been founded that the demand of the senior population is more towards the
marketing campaigns of vitamin supplement. The taste of the average age of people is
changing towards the health and fitness products. Nowadays, the taste of the consumer is
changing with the passage of time. As per the collection of data, it is observed that healthy
products have more demand in the market such as vitamin, B6, fiber, calcium, and protein.
The demand of the children and the youth is increasing towards the noodles, pasta, and many
other fast foods. Different people have different taste such as old age people prefer healthy
food, youth also attracting towards healthy food and the children prefer fast food. Culture is a
factor which affects the preferences and taste of the consumer towards the food (Wheelen, et
al. 2017).
Customer satisfaction
Consumers have grown with the information, which spread the awareness towards the
healthy product. The company must contend with the global population growth that will
increase the demand for healthy, fast and convenient foods. The company is able to provide a
healthy product to the senior age of people and the fast food for young age people. Providing
the services as per the taste of the consumer satisfy the demand of consumers. The company
also uses and delivers the branded products which can easily satisfy the demand of

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consumers. The satisfaction level of consumer is observed by the customer reviews
As per the customer review, the company completely satisfy consumer needs and wants.
Consumer analysis is divided into two parts behavioral analysis and consumer demographics.
It has been seen that the demand for the consumer is completely relying on the demographics
area (Bonacchi & Perego, 2019). Demographic is the other factor which affects the taste of
the consumer towards the goods and services. The demand of the consumers is changing with
the change of demand of consumers towards the goods and services.
Competitor analysis
It has been seen that the food industry has a large number of companies which operated with
a high brand image. Mars, Hershey, and Mondelez are the top competitors of the company
and these companies compete with the Indofood. There is an increase in the number of
competitors of Indofood on the regular basis because of increasing demand for instant food.
The company is comprised of perfect completion. As per the perfect competition, other

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companies are compulsory to become followers in product pricing. Indofood has become
quite extensive due to its market share (Vera, et al. 2016).
The numbers of competitors are pretty much. The main competitor of Indofood is companies
producing Mie Sedap. The growth rate of the food industry shifts the position of the existing
companies. Indofood competes with the existing companies by making use of the price wars
in the form of product promotion. Mie Sedap is a famous leading instant noodle brand. The
superior quality ingredients used by the company has attained widespread acceptance. The
company has gained differentiation in new exciting flavors. It has even attained recognition
from ISO 22000. The ground breaking good taste approach has helped to accomplish
acceptance.
The companies such as Mars, Hershey, and Mondelez give competition to Indofood in the
dairy products. These companies have gained wide acceptance in dairy products. These have
attained huge market share on a global basis. The company needs to improve its product
portfolio when it comes to compete with international players (Innofood, 2017).
Market analysis
Indofood in its market analysis targets mainly to the middle class. Indofood is maintaining
product lines for packaging, ice-cream, milk, instant noodle and palm oil. The expansion of
the company will be funded from the capital expenditure of 9.1 trillion rupiahs. Indofood will
continue to increase its market share by pushing sales and exporting in the region. The market
potential is huge due to the emerging middle class. The company even exports to new and
emerging countries (Indonesia Investments, 2018). The market of the company comprised of
exports more than 8% of the revenue. This proportion is aimed to increase by 9-10%.
Indofood has gained 72% market share in Indonesia. It is the highest market share. The
company is in the position of determining the prices of the products. The prices of the
company are followed by competitors. A small hike price in the instant noodles does not
decline the market share but improve the earnings.
In 2013, the company attained the highest market share due to the wide range of the product's
launch. From 2013-2019, the company went up and down, now the company has again
maintained its position in the market. Although the condition of the Indofood was challenging
in 2018. The rising trend of crude palm oil has impacted positive on the earnings of the
company (Noe, Hollenbeck, Gerhart, & Wright, 2017). Indofood has even planned to

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enhance its distribution and logistics network by increasing the number of stores and outlets
mainly in the rural areas.
Strategy
Cost leadership strategy
Indofood can effectively compete with the competitors by making use of the cost leadership
strategy. It is a method to increase efficiencies and reduce production costs. Nowadays
business environment is complex and sophisticated and the customers are aware of only the
choices available to them. In such a scenario, competitive pricing is the only option to
differentiate itself. The organizations having the least production costs can offer the product
quality compared to the competitors for a lower price (Indofood, 2016).
The customers look to enhance their purchasing power and it is possible by purchasing more
at a lower price (Phadermrod, Crowder, & Wills, 2019). The cost leadership strategy objects
to utilize the scale of production by good purchasing strategy and producing standardized
products. On the other side, maintaining lower prices have a role in higher profit margins.
SWOT Analysis
SWOT Analysis
Strength
 Market leadership position
 Talent management
 Track record of innovations
 Catered various segments
Weaknesses
 Low loyalty
 Declining market share
 Fewer investments into the customer-
oriented services
 Less gross margins and operations
margins
Opportunity
 The rapid expansion of the economy
 Local collaboration
 Online space
 The increased customer base in the
lower segments
Threat
 Growing technological expertise
 Changing demographics
 Competitive Pressures

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Strength
Market leadership position: Indofood has gained a strong market leadership position in the
food processing industry. It has assisted the company in the scaling success of the products
rapidly.
Talent management: Indofood has a pool of skilled employees in the organization. The
human resources are vital to the success of the company in the food processing industry.
Track record of innovation: There are most players in the food processing industry struggle to
innovate the products. On the other side, Indofood has created a successful record of
innovative products (Bull, et al. 2016).
Caters various customer segments: The extensive product offering of the company has
assisted to penetrate on the various customer segments in the food processing industry. It has
even helped in diversifying revenue streams.
Weaknesses
Loyalty: The company has gained low loyalty among the suppliers. The history of Indofood
is introduced with the innovations which drive down the prices in the supply chain.
Declining market share: The market share of Indofood is declining along with the increased
revenues. The speed of the growth of the company is slower than the growth of the food
processing industry (Salavou, 2015).
Fewer investments into the customer-oriented services: The fewer investments by the
Indofood lead to competitors gaining an advantage in the coming years. The company needs
to invest more in the research and development concerning customer service oriented
applications.
Gross margins and operations margins: Both gross margins and operations margins are less
which puts pressure on the financial statement of the company (Chang & Taylor, 2016).
Opportunity

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Local collaboration: Indofood can collaborate with the local players to gain opportunities for
growth in the international markets. The local expertise is helpful in attaining opportunities of
increasing the customer base (Sawhney, et al. 2017).
The rapid expansion of economy: the U.S is growing at an improved rate than other
developed economies. It is a huge opportunity for Indofood to expand its operations in the
U.S. food industry.
Online space: Indofood can embrace online services by customers. It can enable the company
to offer new products on the regular basis.
The increased customer base in the lower segments: The customers migrate from un-
organized operators in the industry to licensed players. It has a role in providing an
opportunity to penetrate the entry level market (David, & David, 2016).
Threat
Changing demographics: The changing demographics find hard to replace their purchasing
power. It leads to higher profits in the short term but leads to reduced margins in the long run.
It is because people have attained less loyalty toward brands and are exposed to the
experiments (Seifbarghy, Nouhi & Mahmoudi, 2015).
Growing technological expertise: Indofood is losing international public relations due to tie
up with the local players. The framework such as intellectual property rights is not much
strength in emerging markets like China.
Competitive pressures: The reduced new product launch cycles in the industry has put
pressure on the Indofood. The company is not capable of responding quickly to the needs of
the niche market (Frambach, Fiss, & Ingenbleek, 2016).
Conclusion
Indofood is successfully conducting operations in the local as well as global economy. The
company is capable of competing efficiently by its extensive product range. The company has
also attained competitors in noodles and dairy segment. Indofood has a large segment of the
customers mainly belonging to the middle class. The competitors of the company give the
motive to maintain its position in the market. The market share is maintained on the regular

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basis by the company. The cost-effective strategy is capable enough to increase the number
of customers. Indofood has attained more of strength and opportunities than the weakness and
threats.

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References
Berman, C. (2017). What Type of Segmentation Is Used by Food Companies?. Retrieved
from: https://smallbusiness.chron.com/type-segmentation-used-food-companies-
72664.html
Bonacchi, M., & Perego, P. (2019). Customer Accounting: Creating Value with Customer
Analytics. Springer.
Bull, J. W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C.,
& Carter-Silk, E. (2016). Strengths, Weaknesses, Opportunities and Threats: A
SWOT analysis of the ecosystem services framework. Ecosystem services, 17, 99-
111.
Chang, W., & Taylor, S. A. (2016). The effectiveness of customer participation in new
product development: A meta-analysis. Journal of Marketing, 80(1), 47-64.
David, F. R., & David, F. R. (2016). Strategic management: A competitive advantage
approach, concepts and cases. Pearson.
Frambach, R. T., Fiss, P. C., & Ingenbleek, P. T. (2016). How important is customer
orientation for firm performance? A fuzzy set analysis of orientations, strategies, and
environments. Journal of Business Research, 69(4), 1428-1436.
Indofood. (2016). Brief History of the Company. Retrieved from:
http://www.indofood.com/company/history
Indonesia Investments. (2018) Outlook on the Food Service Industry in Indonesia. Retrieved
from: https://www.indonesia-investments.com/business/business-columns/outlook-
on-the-food-service-industry-in-indonesia/item9001?
Innofood. (2017). Segmentation in the Food Industry. Retrieved from:
http://www.innofood.es/en/segmentation-in-the-food-industry/
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill
Education.
Phadermrod, B., Crowder, R. M., & Wills, G. B. (2019). Importance-performance analysis
based SWOT analysis. International Journal of Information Management, 44, 194-
203.