Milo Chocolate Malt Beverage Company Case Study

Introduction

Milo is a brand that leading the world chocolate malt beverage that can be prepare with hot or cold milk or water. In Asia, Africa, and Oceania, Milo is consider as “must have” product for food service operators. Parents and kids loved Milo because this product contains many vitamins and minerals such as calcium, iron, vitamin A, vitamin B1and B2 and vitamin C.

Milo is considered as a product of monopolistic competition market because they have many competitors such as Vico, Ovaltine, Horlicks, Dutch Lady and Nutrilite. Monopolistic competition market has free market entry and exit. This is why Milo have many competitors, and also force Nestle to spend more money on advertising the product to convince customers to buy their products.

1) Environmental forces

The term “Environmental factors” have numbers of meanings, depending on whether the theme is business, science, human behaviour, geographical and others. In the world of business, it refers to all the identifiable elements in economic, political, regulatory, technological and demographic environment that affect how a company operates grows and survives. As a big company such as Nestle, there will be few environmental factors will influence their product.

Demographic Force

Demographic segmentation is market segmentation according to race, age, religion, gender, family size, ethnicity, income and education. Demographics can be segmented into several markets to help Milo target its consumers more accurately. Milo marketer can track their market closely to predict the changes in market so they can find solution for the problems before it getting worse or else their competitor such as Vico, Cadbury and Ovaltine chocolate drink takes advantage on the situation. As example, their competitor will introduce themselves into the market. This is because they know the demand for chocolate drinks with reasonable price. So when a customer buy Milo, they will fill satisfied with the quality level of the Milo sold by Nestle. They will have to conquer certain market in demand of chocolate drinks before other major players join them in the market.

Economic Environment

Economic environment consist of factors that affects the purchase power and spending patterns. Marketer of Milo must focus on the market’s purchasing power to identify how the market actually spends their money on buying product for daily basis. This is to know whether they tend to spend extra money to buy Milo. With this, the Milo marketer would identify the price they can charge on the products and aim their buyer, also known as target market. There is no point in price war on market if the buyer don’t have any purchasing power. Not all the market will afford to buy something with certain price. At this point, Milo’s competitor will come and begin their price war which will accidentally kills Milo in certain market.

Natural Force

Natural environment includes natural resources that needed by a company to produce a product as shortage of it can affect their marketing activities. Milo needs cocoa as main raw material to produce it chocolate drinks. These are difficult to grow as they only grow well in humid tropical climates with regular rain and short dry season. As there is not every place can grow cocoa, they will have to find specific country that met the requirements to grow it. The high cost of running the plants that produce cocoa can also affect the price of the cocoa. Limited space may affect the production capacity of cocoa.

Technological Environment

Technology is changing every day, it’s the most dramatic force that can shape an organization. Every year company must update itself to keep up with the competition; if the company fail to do so they will falls behind. Technology enable us to work faster than before, however it costs a lot of money to implement into the company and the training cost of the employees will increase the budget. Nestle Milo is now able to get order from anywhere around the world mostly Asian country. With this they can produce and transport their product anywhere; only matter of days. This also enables them to increase sales much faster than before, maximising profits and produce.

Political Environment

The political situation of a country affects its economic setting. The economic environment affects the business performance. The influence factors like taxes set for imported products in certain country can affect Milo’s sale, this excludes the advantage given by government to the locals to run their own products. With this, Milo have to fight with quality and price with the local product that also sell chocolate drinks.

2) Segmentation, Targeting, and Positioning Strategies

Segmentation of Milo

Every product has its market segmentation and similar to that milo also has a wide range of group of market segmentation. These segments are defined by demographic and psychographic segments. In Malaysia, Milo demographic segments are,

1. Age                - 6th years of person

2. Sex                - Male and Female

3. Religion        - All religion

4. Income        - Everyone who has an income

5. Life Cycle        - Single, married and with children

Milo psychographic segment

1. Education        - All degree of students

2. Attitude        - Every type of person with any attitude

3. Opinion        - Everyone who craves for chocolate and fast foods

4. Lifestyle        - Ordinary lifestyle

Target of Milo

Milo also has a wide range of target market throughout Malaysia and these are the few target which Milo mainly focus on.

1. Children        - Children’s are highly addicted to chocolate types of drinks and can easily get attracted with Milo which is a chocolate drink.

2. Teenagers        - Students or teenagers which are highly proactive and love sports will also get attracted with this drink as it also a type of energy drink which boost up the energy level of them

3. Adults        - Adults which are health conscious of themselves will get attracted with its nutrition as it is a drink with high nutrition and also taste very good and addictive.

Positioning of Milo

• Milo is a drink which is malt based energy drink
• Milo which originates from its company Nestle has an effective way of advertising their product Milo
• The product has an attractive packaging style which motivates children’s and adults to choose Milo rather than other products
• The product qualities and nutrition which convinced customers to buy them and maintain a good relationship with them
• Milo also in many ways satisfy customer needs

3) Packaging Strategy

For Nestle, packaging has a key role to play in brand recognition. With more products vying for attention in competitive market, maintaining a strong link between brand and packaging is important to share secure market share, but at the same time companies must constantly update their packaging line with consumer trends, regulatory compliance issues and evolving technology.