Marketing Analysis of Mengniu Dairy Co.

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  • Topic: Milk, Dairy product, Powdered milk
  • Pages : 5 (1261 words )
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  • Published : September 17, 2012
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Company Philosophy/ Mission Statement
The company strives for creating natural dairy products, especially milk, trying to meet its aim “For a Better Life”. Mengniu believes that healthy developments is primary social obligation to an enterprise and as an excellent corporate, it should also actively undertake responsibilities for the nature and the society.

Background
In 1999, Inner Mongolia Mengniu Dairy (Group) Co., Ltd. founded by Mr Niu Gensheng, a former employee of Yili, another Inner Mongolian dairy giant which is now Mengniu's largest competitor. It headquarters in the core of China Dairy Capital Shengle Economic Zone in Helingeer County of Huhhot, Inner Mongolia. Mengniu Dairy (Group) Co., Ltd. (Mengniu Dairy Group) has a total asset of RMB 8 billion and 30,000 employees, and the production capacity of dairy products reaches 5 million metric tons per year. So far Mengniu Dairy Group has established over 20 production bases including Helin base in 15 provinces of China and owned 5 major series of products which are liquid milk, yogurt, ice cream, dry milk and cheese in which are incorporated over 200 categories. Relying on the supreme quality of its products, Mengniu’s products cover all Chinese market and are exported to overseas market such as America, Canada, Mongolia Republic, Hong Kong, Macao and other Southeast Asian countries.

Nature of Market
The group mainly engages in producing and distributing ultra-high-temperature sterilized milk (UHT milk), milk beverage, yogurt, ice-cream products and milk-powder (see Fig.1). Largest segment is the UHT Milk, producing 60% of total sales in 2010. Compared with sales in 2009, Mengniu got 17.7% more profit. However, 2008 Chinese milk scandal still has effect on the company, although they recalled tainted milk powders and apologized to the public.

Figure 1

Competition
According to the Figure 2, we see that main competition for Mengniu is the Yili, another Inner Mongolian dairy giant, and Mengniu and Yili almost have the same position in dairy market in China. Other dairy companies are not comparable. But, here is a fact that Mr Niu Gensheng, the owner and founder of Mengniu, was a former employee of Yili. So, Yili looks like a big brother of Mengniu. Also, early in August 15, 2002, Mengniu lost many customers who are Halal. Therefore, Mengniu tries to focus on product innovation, which can throw his “little brother” title.

Figure 2

Resources
* Advanced technology such as ultra-high-temperature sterilization and innovative packing that can make dairy storage for a long time * Dairy cow breeding base
* Legacy Executives

Corporate Policy
Mengniu management master Peter F Drucker once said, “Enterprises should do things well first, and then do good things.” Mengniu firmly believes that a real big brand must take the lead to shoulder social responsibilities. Mengniu will lead natural and green era through low carbon measures.

SWOT Analysis

Strengths
* Advanced technology guarantee dairy products can keep fresh, healthy, and nutritive * Extremely united team
* Appropriate awarding policies to customers
* Natural grassland as dairy cow breeding base
* One of National Top 500 Companies
* In 2003, after strict test, inspection and certification by China Manned Space Program, Mengniu milk was authorized to be the exclusive products for cosmonauts. * In 2004, Mengniu’s products further became the exclusive supply for Training Bureau of General Administration of Sport of China.

Weaknesses
* Lacking of innovation, so most products are almost same as Yili’s * Do not compete in the international market
* Because of 2008 Chinese milk scandal and controversy about the safety of using osteoblast milk protein (OMP) in Mengniu's Milk Deluxe In February 2009, Mengniu has weak food quality and safety

Opportunities
* Rebuilt milk powder market for infants, because almost all of the dairy companies...
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