Vitasoy Marketing Theory

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In 2003/2004, the Group’s production plants in Massachusetts and California generated HK$442 million in revenue, a drop of 5.2%. The segment result for the year was an operating loss of HK$44 million, compared to HK$35 million a year ago. This was partly due to the increased spending of HK$12 million in marketing and promotional activities to support the launching of new products, and partly due to intensifying competition in the Tofu and Soymilk markets. The operating loss was partially offset by improved production efficiency and cost reduction. In New Zealand, we recorded little growth in sales and our market share dropped as a result of a change in retailers and the need to re-focus our marketing and promotion strategy. Regaining market share will be a major focus for us in the coming year. 2004-2005

The Group’s share in these markets also continued to rise, reaching nearly 19% in Australia and 36% in New Zealand. The encouraging performance of the Group in these markets reflected the success of a product innovation programme implemented since last year and our effective marketing and promotion campaigns. 2005-2006

Profiting from the relatively positive market environment and continuing with our proactive and innovative approach in product development, marketing and brand building as well as process improvement, we were rewarded with higher sales. In terms of growth, the Group’s operation in Australia and New Zealand was the star performer of fiscal 2005/2006. Riding on its growth momentum since the previous year and driven by intense marketing efforts, our revenue and profit derived from these two markets soared by 37.2% and 160.0% respectively.

We remain committed to maximising shareholder value and being customers’ preferred choice. To ensure higher value for our shareholders and consumers, we will continue to pursue a market-driven and customer-oriented strategy by focusing on brand building, product innovation, aggressive marketing and promotion as well as the exploration of new business opportunities as a means for generating higher revenue and profit. We will also maintain disciplined cost control by achieving higher cost- efficiency across the board, not least in production and distribution. In the coming year, our focus in Hong Kong is on achieving steady growth in both sales and profit by capitalising on our brand portfolio and investing in further strengthening of our brands in order to capture a bigger market share. Our attention will be devoted to product and packaging innovation as well as marketing and promotion. We will continue to invest in innovative and effective advertising campaigns to drive sales and support the launching of new products. At the same time, in view of looming inflationary pressure, we will exercise prudent cost management on a continuous basis. The soymilk market in Mainland China is likely to remain soft due to the fierce challenge from the dairy milk segment that has been engaging in a nationwide price war in recent years. The Chinese Government’s policy of supporting rural development would, however, imply more opportunities for penetrating into the smaller cities and big towns. Our focus will be on capturing these new business opportunities by capitalising on our existing sales and marketing capabilities. On the other hand, we will continue to profit from our success in the co-packing business to ensure better utilisation of our two production plants in Mainland China. We have already taken the first step forward to make use of the opportunities arising from CEPA (Closer Economic Partnership Arrangements) by starting to import some products from Hong Kong in the past few months. We will keep exploring such opportunities in the coming years. Given our successful marketing and pricing strategy as well as the encouraging results achieved last year, we are confident that Vitasoy Australia will sustain healthy growth in sales, profitability and market share in the...
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