Marketing Case Study #1
The key issue here is the marketing of yak milk to a consumer base which has one of the lowest milk consumption rates in the world and where the market is largely dominated by everyday goods made from cow’s milk.
List of Alternatives:
- Mass-level market yak milk, using its unique selling point of being a traditional diary commodity considered nutritious from ancient culture. It has been produced in areas with low emissions, and is therefore a genuinely ‘ green ‘ product.
- The milk of market yak as a niche product catering exclusively for those with the obtained taste.
Analysis of the Alternatives:
- Further to this, milk consumption is very low in China, with 50% of liquid milk being used to make powdered milk. Further, yak milk has a distinct flavor and caters only to a niche market therefore; marketing, the category of yak milk will be more important than marketing this particular brand. Any marketing campaign will need to set the groundwork for yak milk benefits rather than Land ‘o Lake branded yak milk features.
The Advantages of Alternative #1:
i. The professional project team is experienced, and has the skills required. At the same time, Dr Wu and Mr. Dongzhou local Chinese team is a very suitable partner, as they have contacts with the government; the local perspective and the country work experience that the team can count on to formulate a successful and far-reaching campaign.
Further to the fact that Dr. Wu and Mr. Dongzhou have good contacts with government, the country’s political framework is such that if the right officials are on board and agree with the idea, the campaign has better chances of success.
ii. The government is interested in developing the Tibetan region and has been working on developing the infrastructure to empower the impoverished herdsmen. The team will thus have the support of the government on its side if the team and the local partners lobby it with the officials as a tool for change the lives of the poor in that region. The team can promote the idea to the government that by selling their cattle’s milk, the herdsmen will be provided a viable opportunity for conducting business and raising the standard of living in the region.
The Disadvantages of Alternative #1
- Even though the team from Land ‘ o Lakes has local partners, the team itself has relatively little experience of working in developing countries and therefore it will be it’s hard for them to understand the complexities of local culture really.
- The advertising campaigns currently under way are well designed and advanced, as the yak milk project will have a very small to zero margin of error in this context to represent local tastes and to market the brand as a foreign commodity, as consumers find foreign goods to be of better quality.
2. The Advantages and Disadvantages of Option 2 are:
- Catering for a niche market is easier and will require testing of the brand’s viability with the advantage of having lower losses in the event that the product fails make an impact.
- Since it is an acquired taste, yak milk will not need advertisement or sales drive as much as it would need if it were to be catered for in such a market was catered to the mass consumer.
- Customers in niche markets will be hard to target because their demographics and geography are not limited to a certain class of households. Because of this, targeted consumer-related marketing campaigns will be difficult by conventional means, so the campaign will have to be stringent and yet cater for popular tastes.
- Targeting niche markets could restrict the growth of the brand as there could be opportunities for the general market for yak’s milk.
Recommend alternative # 1, as mass market catering will also target customers with the taste they have developed and will also help to raise awareness of the nutritional value of the milk being superior to that of cow’s milk.
Further to the alternative, targeting the niche market would require advertising expenditure similar to that in the mass market. Therefore mass market targeting will be more cost-effective.
Again in lobbying to the government the potential of yak milk business for the underdeveloped Tibetan region, a bigger, large-scale business will be more of an attractive option for the communist government. This is because a large scale industry would mean that more of the population will be benefitted and that is largely the aim of a communist government.
Marketing Case Study # 2
The main issue here is that XL currently caters to an exclusive elite market with high quality, expensive products that are not in the reach of the masses. Therefore, in order to cater to the middle-level classes, and to counter the knock-off and substandard brands present in the market, a less pricey product is needed. This product will not only cater to the growing outdoor sports clothing needs of the middle class population, but will also be of a good quality and will not hamper the growth of the current product line catering to the elite.
List of Alternatives:
According to the case, the GNP of China has been on the rise, indicating more purchasing power with the masses. A the same time, clothing expenditure has risen by 6.66% between 2000 and 2001 while expenditure on recreational services has risen by 9.9 percent indicating a changing lifestyle which entails more outdoor sports. And while the level of participation has been rising in such activities, desired participation is higher indicating that future trends might be higher than current levels.
Therefore, in order to take advantage of the growing market it is imperative that a new less costly product be introduced to garner a portion of the growing ‘pie’. Some alternatives in this regards are
- Introduce a new brand into the market rather than a line extension with a different name and do not endorse it with X-L’s brand name.
- Use a different distribution channel, where instead of direct selling; an intermediary such as a common retail chain of stores can be used to sell the brand.
- Introduce a line extension of X-L and endorse it strongly as a line catering to the middle-class consumers’ needs.
1. The advantages and disadvantages of option 1 are:
i. Urban income rose by 41% from 1998 to 2002 while rural income rose by 14.5 percent. As X-L has a largely urban, elite class of consumers, this bodes well for the sales of X-L. But at the same time, as X-L caters only to the elite class another brand with a different brand name and no endorsement will not cannibalize sales of the original product.
ii. A new brand can be promoted through the same channels and will help counter competition
iii. If the brand picks up in the long run, it will be an entirely different entity, and with focus on quality and keeping the needs of the local population in mind, the brand will be able to garner a staunch consumer base.
iv. It will have a better potential of sales than knock-off as their substandard commodities will have direct competition from a good product and the new product will be able to take away market share from such contenders.
i. More expenditure will be required to push the new product, and without endorsement of X-L’s high quality products, sales might be low in the short term.
ii. Sales people will either have to be outsourced or contracted as training the current sales force will not only be time consuming, but it will also be costly.
2. One prerogative of this option is that the brand name of the store should be strong where it will help sell the new product without the backing of the sister brand.
- Original distribution channels are not appropriate as the company could loose out on existing customers who might switch to a less costly brand.
- Retraining of the existing sales force will be more expensive and time consuming therefore a new channel or a store with an existing consumer base will be more effective to sell the brand.
- The store’s goodwill will be able to carry the product to its existing consumers who will be more open to try the product if they see it at the store they are loyal to.
- Developing an entirely new distribution chain will take time and market research and many deals will have to be made and the legalities will have to be laid out before indirect selling can begin. This again might prove to be expensive.
3. The advantages and disadvantages of option 1 are:
- For normal purposes it could have a name like X-LR with R. And with the X-L brand’s history and popularity, the brand won’t need a particularly comprehensive campaign.
- It could be perceived as a low class product and might not be very popular as people from all classes aspire to be similar to that of the higher classes.
- Exclusivity image of the brand will be tarnished.
Recommend a combination of alternative #1 and #2 because this will not only prevent any cannibalisation of sales of the X-L brand, it will also prevent any repercussion from the possible failure of the new brand tarnishing the image and the exclusivity of the X-L brand. Also a new brand with a different distribution channel will be able to target and cater to a different market, without people associating one with the other. Specialty stores are more suitable for elite classes and retail chains will be more suitable for a mass consumer product.
Thus, for the key issue to be addressed in this case a combination of the first two alternatives will be ideal.
- Dr. Susan Peters, D. D. (n.d.). Yak milk: niche or nightmare? California state Polytechnic University.
- Nastanski, D. M. (n.d.). X-L Clothing. Saint Leo University.