The case at hand is indicative of what will happen to a brand if the marketer failed to do diligent market segmentation. Clearly, the brand manager of Andec missed the opportunity with a product of such an enormous potential .
He priced his brand 15% higher banking on its high calcium content and its good flavor. He failed to understand that parents decide on what to buy for their children base on what their money can afford, which is why Nido brand is very successful. He look at where to place his brand based only on the scale of the market segment. Obviously in this case, since full cream milk market is the largest segment in the milk industry, this could precipitated the marketer to place Anlec in this segment.
The picture could have been different if Anlec was priced 15% lower than Nido and use its high calcium content and taste as differentiators and as a competitive advantages. Another consideration that should have been taken is the the fact that Nido has been in the market for so long and has already become a household name.
To arrest the declining sales of Andec , to recover the loses of P60M, to regain its composure in the milk industry and to maximize profitability, identification of the appropriate market segment and repositioning of the brand should be done immediately with high accuracy and great precision.
Background Of The Case
Andec, the first high-calcium full cream milk powder with vanilla flavor for kids in the Philippines, with the highest calcium content among all the brands in the growing up milk category was launched in the Philippines in 1998. Campaigns on the need for calcium for prevention of osteoporosis and other calcium deficiency illnesses created a trend of introducing calcium-associated products in the market, such as Anlene and Anmum. The nutritional content of full cream milk shown in Exhibit 3 shows that compared to Nido, which is the leading brand in the full cream milk category, Andec has nutrient content of thiamen, Riboflavin and folate which are not found in Nido and Birch Tree. Nido is number 1 in the full cream milk category with 70% market share followed by anchor, a sister brand of andec, with 25% market share and the remaining 5% is shared by andec and other brands. The average local sales for all milk brands was approximately $55M. Anlene got 60% share in the milk for women category while Anmum got 75% share in the pregnant market category. Both brands are sister brands of Andec. Andec has two variant targeting 4 t0 8 years old and 9 year old and above market group. 60M was already spent on marketing campaigns such as taste test on children, television ads and promotional activities during product launching. 8 out of 10 children chose Andec because of its highly palatable taste. Andecs continued decline in sales despite massive marketing campaigns opted the company to stop its marketing activities pending good and highly viable marketing strategies.
Listing of Problems
The failure of Andec to create a strong market niche was due to Wrong Consumer market segmentation. The brand failed to create value for targeted customers simply because it missed to select the appropriate customers to serve and to decide on what value proposition to use and capitalize on, which resulted in:
• wrong targeting
• less competitive pricing compared to Nido, the leading brand in the category
• Inappropriate promotional campaign and advertising
• Poor product positioning
Alternative Course Of Action
Since Andec has 2 variants, both variant should be sold in 2 different market categories:
• The 1st variant should be promoted to women 25 years and above group capitalizing on its high calcium content for protection against osteoporosis. Here the opportunity for growth is huge because 40% of the market is still enjoyed by the competitor.
• The 2nd variant should be targeting...