Danone Yoghurt UK Consultants 2 Capturing Marketing Insights

Danone Yoghurt UK

? ? ? Consultants 2. Capturing Marketing Insights – the internal environment The most relevant Strategic Capabilities – a resource audit of Danone Yogurt UK Factor Trend Implication Evaluation Physical Resources § Production of Yoghurts is made in larges factories in a short amount of time due to the raw material characteristic (milk). §Warehouses have to be high quality standard and close to places of sales (nature of the product §Danone owns its yoghurts factories. But all Yoghurts are not made in the UK (Oykos are produced in France) § Warehouses and distribution sub contracting to two UK companies +3 major strength Human Resources §Three very different types of employees : worker, administrative employee (marketing, supply chain, finance), scientist (R&D labs). §Danone created three graduate programs to attire new employees. It has a learning and development center and offers the possibility to do sabbaticals. +1 minor strength Financial Resources § Access to capital is crucial for launch of new product and large marketing campaign Strong financial position with parent Danone Group making EBITDA £ 2, 445 m +2 significant strength § High brand awareness and customer trustworthiness essential in the mass market competition §Innovation and R&D are very important to produce new fashionable Yoghurt § ‘Danone’ has a strong brand awareness and reputation for quality and innovative produce §Large portfolio of products not all present in the UK § Global Danone R&D for new product worldwide and UK lab to product adaptation to local taste + 4 significant strength Intangible Resources 2

? ? ? Consultants 3. The Strategic SWOT analysis – identifying the alternatives for future success Ext. Opportunities and risks § National campaign against obesity § Global trend to more healthy food § Emergence of new ingredients § Changes in consumer lifestyle (healthier behaviour) § UK shows sight of recovery (0, 8% from July to Sept, strongest growth since 2010) External Threats § Strong competition in the adult Yoghurt market n° 2 behind Muller § Price-sensitive buyer § High substitution possible in desert and snack segments § Increasing price of raw materials Internal Strengths § very innovative R&D labs § Excellent brand reputation for quality and taste § Among of cash available to launch of new products §Large portfolio of products not all present in the UK Internal Weaknesses § New distributor (after a massive failure in June 2013) § Lack of flexibility (huge organisation) §Decrease in internal efficiency 3

? ? ? Consultants 3. The Strategic SWOT analysis – identifying the alternatives for future success Differentiation Strategy Product development strategy § Create a close relationship with consumer (Yoghurt day, fidelity program, …) § Extend portfolio kids products §Create a pleasure focus products (less healthier, better taste) § Create man focus recipe § Make vegetarian range Market Penetration Strategy Cost Leadership Strategy § Negotiate larger space in Yoghurt section in super market §Integrate Danone Yoghurt in lunch deal (Costa, Market Place, Food Truck, …) § ‘Low-price/price promotions’ to increase market share thus strengthen position 4

? ? ? Consultants 4. Strategic choose Strategy choice : Product development and penetration strategy Product development : Launch a yoghurt specialy design for kid • Low cost of development as the product already exist in the Danone portfolio in other country • Use the very strong brand image in the children market(Danone World cup for kid, in 2013 in Wembley London) • Small number of competitor on the segment only two in comparison of the adult market • National awareness on the importance of a vary alimentation for children as a mean to struggle against obesity • Good understanding of the population of the importance of Calcium and vitamine D to help the growth • A very good way to educate people to yoghurt (parents, habit in the childhood) Focus on the importance of calcium for kids during growth and the healthy food 5

? ? ? Consultants 3. Segmentation: How segmentating a kid market ? - Yoghurt for kid 1/3 Kid market can sometime difficult to segment The percentage of children who did sport in the last 4 weeks, by age and sex, 2010/1 % boys % girls 5 to 10 years 87. 8 82. 9 11 to 15 years 97 91. 9 The percentage of children who need calcium and vitamin D to grow % boys % girls 5 to 10 years 100 11 to 15 years 100 Sources: Office for National Statistics, National Records of Scotland Northern Ireland Statistics and Research Agency 6

? ? ? Consultants 3. Segmentation: How segmentating a kid market ? - Yoghurt for kid 2/3 The solution : the family behavior (with a focus on mother) ! Cluster 1: lacking time, money and knowledge Cluster 2: lack the knowledge and parenting skills to improve their family’s lifestyle Cluster 6 16% Cluster 1 14% Cluster 3: affluent, overweight families who overindulge in unhealthy foods Cluster 4: living healthily Cluster 2 19% Cluster 5: strong parenting skills but need to make changes Cluster 6: plenty of exercise but too many bad foods Cluster 4 17% Cluster 3 15% Sources: Source: TNS Childhood Obesity Consumer Segmentation Research 7

? ? ? Consultants 4. Segmentation: How segmentating a kid market ? - Yoghurt for kid 3/3 More details on our main cluster. Custer 4 Custer 5 Custer 6 Family diet Strong interest in healthy diet. Strong parental control but diet rich in energydense foods and portion size an issue. Eating motivated by taste, diet includes both healthy and unhealthy foods. Physical Activity Family active although believe children not confident doing exercise. Know they need to do more: time, money, selfconfidence seen as barriers Activity levels are high Social class AB C 1 C 2 Intent of change Low intent to change but already leading a healthy lifestyle. Low intent on diet but significant intent to change on physical activity. Highest among the clusters for both diet and physical activity. Sources: Source: TNS Childhood Obesity Consumer Segmentation Research 8

? ? ? Consultants 4. ‘Differentiated’ Targeting: Focus on the most promising segments! A targeting strategy: Differentiated 1 Mix Kids Yoghurt g ketin r a M g Mix 2 in t e k r a M Marketing Mix 3 Marke ting M ix 4 Mar keti ng M Ma ix 5 rke tin g. M ix 4 Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5 Cluster 6 76% of potential customers 9

? ? ? Consultants 4. ‘Differentiated’ Targeting: Focus on the most promising segments! A targeting strategy: Differentiated Cluster 4: living healthily Distinct: Accessible Measurable Profitable Cluster 5: strong parenting skills but need to make changes Cluster 6: plenty of exercise but too many bad foods Strong interest in healthy diet, active but not focus on sport Significant intent to change on physical activity and diet rich in energy-dense foods Activity levels are high and diet drove by taste through multi-platform advertising campaign on importance of yoghurt in children healthy diet through multi-platform advertising campaign on importance of yoghurt for healthy sport performance / store promotion through age groups of mums (mainly 45 -64 -year-olds) and the social class (AB) through age groups of mums (mainly 45 -64 and 17 -24 -yearolds) and the social class (C 1) through age groups of mums (mainly 17 -24 -year-olds) and the social class (C 2) price premium for superior quality segment stands for 19, 1% of consumer market Strong wiliness of change their diet 10

? ? ? Consultants 5. Defining the Marketing Mix – the 7 Ps. Cluster for achieving success 5: strong parenting skills but need Cluster 4: living healthily to make changes Cluster 6: plenty of exercise but too many bad foods §In large batch §Rich nutrition (high quality) §Generous flavour Product §drinkable yoghurts (30 g) § Rich nutrition (high quality) §Natural flavour § classic yoghurts (50 g) §Rich nutrition (high quality) §New flavour Price §Premium Pricing § Market Pricing §Competitive Pricing Place § Increase stores presence (on street and on line) § Create a trendy brand for the children (“you’re cool if you have it”) with advertising campaign to support it §TV& online ads Promotion Partnership with primary school. Take the Danone kids yogurt as a break time dessert Public Relationship campaign on the importance of yoghurt to children healthy diet (campaign in children medical centre, special web site to help mother to cook healthy diet, specialized press ) Sales promotion of “family packs”(yogurts for all family members, including parents and kids) and 3 for 1 discount. Provide free trial yogurt in Parks, sports club etc. Public relationship on the importance of a daily yoghurts for kids to practice sport (explicative tv/radio spot with a moral support) and in sport club (which are frequently use by the mother. 11