Strategies Used by Yili Groups

Topics: Milk, Dairy product, Dairy Pages: 16 (5278 words) Published: September 16, 2008
The Yili Group----how it functions and strategizes in the Chinese Dairy Marketplace

5.0 Introduction

This chapter critically reviews the findings and analyses of the data collected from the company’ report, secondary data and interviewer opinions towards the strategy adopted by the company. Unstructured telephone interviews and face-to-face interviews with the company’s marketing director – Mr. Wang, revealed what the company implements and the problems faced by the company.

5.1 Findings and Analysis

From the data collected, the Yili has implemented a number of strategies to improve their market share and profitability. The Yili’s marketing strategy is based on the innovation. Innovation is the successful exploitation of new ideas.

In China’s dairy industry, innovation is an important issue that considered a major driver of the company towards success. It linked to performance and growth through improvements in efficiency, productivity, quality, competitive positioning, market share and so on. For the moment, China dairy’s companies are mostly aiming in the first line of market; targeted markets are still putting towards the well-developed cities, for instances, Beijing, Shanghai, Guangzhou. Sadly, companies have left out the wider market in the outskirt of China. The main reason for it is the cities sales points are not centered; investment of exploitation for new market and promotion is higher. Besides, one of the risky of the investment is the effect of the responses and return is slow compare in the well-developed cities. A creative marketing strategy is needed to enter into a new market.

The Yili has realized that being a leader in the industry, they need to be creative in thinking in order to survive in the competitive market. The opportunity that gained by the Yili was the first company who entered to less developed cities, which provide wider market and profit return to the company. For instance, in 2005, the company has targeted the north side of ‘Zhejiang’ as their sample of targeting market. Through the franchise way of marketing, the company has gained a good effect of return in between two months time. The new marketing strategies in less developed cities have provided a good result to the company with the improved 20% of sales.

Koh (2005) stated that China biggest suppliers are lending money to farmers and building dairies to meet demand for cheese, yoghurt and other foods growing at 14 percent a year. In China’s Inner Mongolia region, where the two companies are based – Yili and Mengniu, plans to import heifers from Australia to increase dairy cattle numbers by 14 percent to 2.5 million in the next six months. Dairy farming is the main way for farmers to get rich. Selling heifer calves from imported cows to other farmers is as lucrative as producing the milk.

In past several years, China dairy industry has developed very fast. However, there are many companies facing management problem due to the reasons of the companies are not paying attention to their production line, sales and supply areas. Undoubtedly, the growth of company is depends on the speed of development, but the stability of the management should be taken in to consideration too. Based on the data collected, total quality management has adapted in the Yili. Total quality management is a management style based upon producing quality service as defined by the customer. It defined as a quality-centred, customer-focused, fact-based, team-driven, senior-management-led process to achieve an organization’s strategic imperative through continuous process improvement. The new distribution network flow adopted in the company is Five Fix Points: fix starting point, fix ending point, fix time consume, fix routine of the work and fix product volume. This has enabled the distribution of the Yili’s product to Guangzhou, Shanghai, and other places smoothly. Thus, the deliver time is faster and the company can able to control the...
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