Peak Dairy Products are produced by FrieslandCampina WAMCO Plc. It is one of the most popular dairy product brands in Ghana. Its top competitor is the Ideal Full Cream Milk brand which are produced by Nestle Ghana Limited.
Nestle Ghana Limited started business in Ghana in 1957 under the trading name of Nestle Products Limited with the importation of Nestle products such as milk and chocolates. In 1968, it was incorporated as Food Specialties Limited to manufacture and market well-known Nestle brands, The shareholders are Government acting by the National Investment Bank (49%) and Nestle SA (51%). In 1971 the production of the Ideal Milk started at the Tema Factory. The company became Nestle Ghana Limited in 1987. The main objectives of the company are the development of the local and regional West African market; the company already owns seven factories on the continent. At present the Ideal Milk brand holds the biggest market share with competitors such as Peak Milk lagging behind. Therefore, FrieslandCampina WAMCO aims to target more customers and eventually increase its market share. Recently the company introduced sachet versions of the popular Peak Milk. The aim is to reach more budget-conscious consumers. In the hopes of increasing its market share, the company offered an affordable category of Peak Milk without sacrificing the quality. In increasing the market share of a company, there are generic strategies that Porter (2000) suggests. These are:
1. Cost Leadership – this generic strategy calls for being the low cost producer in an industry for a given level of quality. The firm sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share. In the event of a price war, the firm can maintain some profitability while the competition suffers losses. Even without a price war, as the industry matures and prices decline, the firms that can produce more cheaply will remain profitable for a longer period of time. The cost leadership strategy usually targets a broad market. Some of the ways that firms acquire cost advantages are by improving process efficiencies, gaining unique access to a large source of lower cost materials, making optimal outsourcing and vertical integration decisions, or avoiding some costs altogether. If competing firms are unable to lower their costs by a similar amount, the firm may be able to sustain competitive advantage based on cost leadership. Firms that succeed in cost leadership often have the following internal strengths:
· Access to the capital required to make a significant investment in production assets; this investment represents a barrier to entry that many firms may not overcome
· Skill in designing products for efficient manufacturing
· High level of expertise in manufacturing process engineering
· Efficient distribution channels
2. Differentiation – differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The value added by the uniqueness of the product may allow the firm to charge a premium price for it. The firm hopes that the higher price will more than cover the extra costs incurred in offering the unique product. Because of the product’s unique attributes, if suppliers increase their prices the firm may be able to pass along the costs to its customers who cannot find substitute products easily. Firms that succeed in a differentiation strategy often have the following internal strengths:
· Access to leading scientific research
· Highly skilled and creative product development team
· Strong sales team with the ability to successfully communicate the perceived strengths of the product
· Corporate reputation for quality and innovation
3. Focus – the focus strategy concentrates on a narrow segment and within that segments attempts to achieve either a cost advantage or differentiation. The premise is that the needs of the group can be better serviced by focusing entirely on it. A firm using a focus strategy often enjoys a high degree of customer loyalty, and this entrenched loyalty discourages other firms from competing directly. Firms that succeed in a focus strategy are able to tailor a broad range of product development strengths to a relatively narrow market segment that they know very well.
Credit:ivythesis.typepad.com
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