Marketing Audit: Dutch Lady Milk Industires Berhad

DUTCH LADY MILK
INDUSTIRES BERHAD
MARKETING AUDIT
MKT 5000 – Marketing Management

Assignment 1
Semester 2, 2010
Date Submitted: 06 October 2010
Prepared by :
Name Student Number
Kalana Dias
0050110879
Chamath Athukorala
0050107490
Kanishka Weerasooriya
0050107488
MKT5000 - Assignment 1: Marketing Audit
1 Executive Summary
This marketing audit evaluates the current business strategies practised in the Dutch Lady
marketing process and its business environment in Malaysia with specific to its yogurt
products. Company has identified that manufacturing a low fat yogurt which is enriched with
high vitamins and low calories will be a very attractive segment in the future revenue
generation process.
As per the current marketing programs, company is looking forward to increase its low fat
yogurt revenue by 20% and introduce new low fat eating and drinking yogurts with four new
flavors by end of 2010 financial year while increasing their product awareness by 30%. In
addition, it plans to introduce a non fat yogurt range in 2011. Dutch Lady Low fat yogurt
positions itself as a delicious and healthy snack that provides good nutrition for the whole
family.
Been as a subsidiary of Royal FrieslandCampina NV and having net worth of RM 180 M are
the main strengths of the Dutch Lady. Company’s main weakness is that it has limited dairy
product range compared to its competitors. It has identified that Malaysians are becoming
more health conscious on nutritious food and changing their eating/drinking habits. Hence it
will create new opportunities in non fat yogurt segment. A major threat for the company is to
compete with global competitors such as Nestle and Cocoaland.
In the PESTEL analysis, it covers economic, political, legal and socio-cultural aspects of the
Malaysian market. Malaysia has a booming economy with majority of Muslim population
who have growing enthusiasm towards health consciousness. The country’s culture and
Dutch Lady Milk Industries Berhad Page i

traditions are based on Shariya law and political and social stability is deemed high. These
findings reveal a suitable environment for a product like non fat yogurt.
Company’s major stakeholders are highly important and will make a high influence. The
future prospects are based on its stakeholders such as management, customers, competitors,
mother company FrieslandCampina and most importantly the shareholders.
Company’s main strategies are based on cost leadership and product differentiation. Within
those strategies, it then considers more precise strategies such as pricing, promotion and
distribution strategies. Product differentiation will be done in different forms by combining in
aspects of brand image, production technology and distribution channels.
The Dutch Lady’s vision is to make natural and nutritious dairy products that fulfil customer
needs and to have healthier and more enjoyable life. Selling high quality natural and healthy
dairy products to satisfy its customers are the core values of the Dutch Lady. Double the
existing yogurt products, maintain a gross margin of 20%, increase its net profits by 15% are
the long term objectives of the company which it expects to achieve by 2015.
To achieve the long term objectives Dutch Lady should launch more product promotions, and
make new investments for brand building and to improve the distribution channels to
distribute products to different suppliers to sell them efficiently.
Dutch Lady Milk Industries Berhad Page ii

Table of Contents
1 Executive Summary...............................................................................................................i
2 Introduction...........................................................................................................................1
3 Organisational Objectives....................................................................................................2
4 Positioning..............................................................................................................................3
4.1. Company positioning..................................................................................................................3
4.2. Brand positioning........................................................................................................................3
4.3. Competitive positioning..............................................................................................................3
4.4. Strategic Positions ......................................................................................................................4
5 Current Environment and Operation.................................................................................6
5.1. SWOT Analysis..........................................................................................................................7
6 PESTEL Analysis..................................................................................................................9
6.1. Political Environment.................................................................................................................9
6.2. Economic Analysis...................................................................................................................12
6.2.1. Inflation...............................................................................................................................................12
6.2.2. Gross Domestic Product .....................................................................................................................13
6.2.3. Monthly Income Levels.......................................................................................................................15
6.2.4. Unemployment Rate............................................................................................................................16
6.2.5. Future Economic Prospects and Future Risks.....................................................................................17
6.3. Socio-cultural Environment......................................................................................................19
6.3.1. Demographic Factors ..........................................................................................................................19
6.3.2. Composition of Household Expenditure.............................................................................................20
6.3.3. Urban and Rural Composition.............................................................................................................21
6.3.4. Age Distribution..................................................................................................................................21
6.4. Technological Analysis.............................................................................................................23
6.5. Environmental Factors..............................................................................................................25
6.6. Legal Factors............................................................................................................................27
7 Stakeholder Analysis...........................................................................................................28
Dutch Lady Milk Industries Berhad Page iii

8 Strategic Assessment ..........................................................................................................31
8.1. Vision ......................................................................................................................................31
8.2. Mission ....................................................................................................................................32
8.3. Corporate Values .....................................................................................................................32
8.4. Business Objectives .................................................................................................................32
9 Recommendations .............................................................................................................34
9.1. Market Audit Checklist ............................................................................................................34
9.2. Strategic Action Programs .......................................................................................................35
9.3. Future Strategies ......................................................................................................................35
10 List of references..............................................................................................................37
Dutch Lady Milk Industries Berhad Page iv

Table of Figures and Tables
Figure 1: Malaysian CPI and Inflation Rate: 2004 – 2015 ................................................13
Figure 2: Malaysian GDP ($ Billions): 2006 - 2012 ............................................................14
Figure 3: Malaysian GDP Growth Rate...............................................................................14
Figure 4: Malaysian GDP Composition by Sectors in 2008 ..............................................15
Figure 5: Malaysian Monthly Income (US $): 2005 - 2010 ................................................16
Figure 6: Malaysian Unemployment Growth Rate: 2005 - 2015.......................................17
Figure 7: Malaysia's Composition of Household Expenditure in 1998/99........................20
Figure 8: Malaysian Urban Population: 2005 - 2015 .........................................................21
Figure 9: Malaysian Age Distribution between 30 – 50 years: 2005 - 2010 ....................21
Figure 10: Dutch Lady's Key Stakeholders.........................................................................28
Table 1: Dutch Lady Current Positioning.............................................................................4
Table 2: Dutch Lady Aspects of Positioning..........................................................................4
Table 3: Dutch Lady Environment Types..............................................................................6
Table 4: Dutch Lady SWOT Analysis....................................................................................7
Table 5: Malaysia's Political Environment............................................................................9
Table 6: Future Economic Prospects and Risks..................................................................17
Table 7: Malaysia's Demographic Factors...........................................................................19
Table 8: Malaysia's Technological Developments...............................................................23
Table 9: Malaysia's Environmental Factors........................................................................25
Table 10: Malaysia's Legal Environment............................................................................27
Table 11: Impact on Stakeholders of Dutch Lady..............................................................29
Dutch Lady Milk Industries Berhad Page v

2 Introduction
Dutch Lady Milk Industries Berhad established in 1963 in Malaysia, is a subsidiary of the
Royal FrieslandCampina, a Dutch multinational corporation and one of the largest milk
companies in the world.
This marketing audit evaluates the current business strategies practised in the Dutch Lady
marketing process of and its business environment in Malaysia, which the organization is
operating. Report evaluates and focuses fully on Yogurt product range, manufactured and
marketed in Malaysia by Dutch Lady.
Dutch Lady Milk Industries Berhad Page 1

3 Organisational Objectives
Dutch Lady manufactures healthy yogurt which is enriched with high vitamins, low calorie
and low fat as well as flavoured with natural fruit flavours.
Company has identified its low fat yogurt segment as a very attractive segment in the future
revenue generation process. Based on the current marketing programmes, the following
marketing objectives are focused on low fat yogurt product segment.
• Increase the low fat yogurt revenue by 20% by end of 2010 financial year.
• Expand the low fat eating and drinking yogurt product range by 4 new flavours each
by end of 2010 financial year.
• Introduce a non fat yogurt range in the coming year (2011 January onwards).
• Increase the low fat yogurt product awareness by 30% in the coming year.

4 Positioning
‘Positioning is the process of influencing perceptions by specifying the attributes, benefits or
images which represent differentiation’ (Sheinin, 1998). It is what the customer believes
about the product's value, features, and benefits and is largely shaped with the experience
customer gets.
Positioning can be analysed on following three levels.
4.1. Company positioning
For generations, Dutch Lady positions itself being in the business of supplying quality dairy
and infant nutrition products to the nation.
4.2. Brand positioning
The brand Dutch Lady Low fat yogurt positions itself as a delicious and healthy snack that
provides good nutrition for the whole family. In addition it is the only yoghurt and yoghurt
drink with vitamins A, C & E which also contains active live culture that will enhance the
absorption of nutrients, ensuring digestive system and stays healthy. Consumers prefer Dutch
Lady low fat yogurt since it contains vital vitamins and DHA+, it keeps consumers fit and
healthier.
4.3. Competitive positioning
Dutch Lady ranks among the top three dairy producers in Malaysia. It sponsors campaigns
such as ‘World Milk Day’ event which educated the public about the goodness and benefits
of milk. This enables the company and its brands to position itself more favourably among
the other competitors’ brands.

4.4. Strategic Positions
Following table illustrates how Dutch Lady is using its strategies to position itself in the
market.
Table 1: Dutch Lady Current Positioning
Present state
Positioning level
Company positioning Emphasising continuously in all marketing means that company
is in the business of supplying quality milk products.
Brand positioning Launching of new brands such as “Shine” and “Yes!” which
is focused to young energetic target consumer market.
Promoting the brand to the health conscious consumers who
prefer drinking and eating low fat yogurt.
Competitive positioning Presently enjoying a 30% market share in Malaysia and active
involvement in public events which other competitors are not
focusing on.
In positioning company’s product in the market, a variety of positioning strategies could be
used. These are categorised as follows:
Table 2: Dutch Lady Aspects of Positioning

Positioning strategy Explanation

based on
Product attributes Dutch Lady focuses on the nutritional attributes (E.g. Vitamins)
of its yogurt range.
Price and quality Company uses a low price and good quality strategy.
Use or application Provides good nutrition for the health conscious consumers.
Product user Mainly for Consumers between 30 to 50 years, who are
increasingly becoming health conscious.
Product class There are no close substitutes for Low Fat Eating Yoghurt.
However low Fat Drinking Yoghurt may be a better alternative
for milk.
Competitor Company seeks to be the preferred brand of milk products in
Malaysia with competing based on “goodness for life”

5 Current Environment and Operation
This is analysed as follows:
Table 3: Dutch Lady Environment Types
Examples
Environment type
Internal environment • Staff of all product lines
• Employees working for FrieslandCompina in other regions
• Technology presently used (E.g. collecting raw materials
such as milk)
• Funds available as equity and ability to borrow at cheaper
rates.
Micro environment • Malaysian consumers
• Malaysian General public
• Agents and distributors of the company’s yogurt products.
• Malaysian competitors such as Nestle , Fraser & Neave
Holdings, Cocoaland Holdings etc.

Macro environment This will be analysed in the PESTEL analysis

5.1. SWOT Analysis
SWOT analysis summarises the key issues from the business environment and the strategic
capability of an organisation (Johnson, Scholes, & Whittington, 2008, p.119).
The Dutch Lady SWOT Analysis as follows:
Table 4: Dutch Lady SWOT Analysis
Strengths Weaknesses
• Company is lead by a well experienced • Limited dairy product range compared
and a committed Board of Directors with to other direct competitors such as Nestle
executive and non-executive directors. Malaysia, Fraser & Neave holdings and
• Continuous product innovation and Cocoaland Holdings.
new product launches. • Only limited number of awareness
• Subsidiary of Royal FrieslandCampina programmes/campaigns carried out
NV, which is a world renowned dairy annually.
manufacturer in Netherlands. • Very limited manufacturing and
• Despite the global economic down turn, warehousing capacity resulting in a higher
Dutch Lady achieved the highest Profits outsourcing cost incurred for logistics.
before tax in 2009 in the company history of
RM82.4 million. This was a growth of 42%
from the previous year.
• Having a net worth of RM 180 M
which is relatively higher than its
competitors.

Opportunities Threats
• Increasing awareness and need on 6. Increase in raw material prices, due to
healthier and nutritious dairy products adverse weather conditions.
resulting in high demand. • Global competitors such as Nestle and

• Malaysians being more aware and Cocoaland causing threats in non fat
health conscious on nutritious food and yogurt segment by continuous new
changing their eating/drinking habits. product developments.
• Development of new manufacturing • Threats from substitute products such

technologies with regard to the dairy as frozen foods, instant snacks, soft
industry. drinks.
• Further Expansion of international
market by using the reputation of Royal
FrieslandCampina NV
• Investment on backward (E.g.
Suppliers) and forward integration
(E.g.distribution channels) will have an
opportunity to control the supply sources
and distribution channels and in addition
have a cost advantage in the long run.

6 PESTEL Analysis
PESTEL is a macro environment model which uses Political, Economic, Social,
Technological and Environmental factors in order to analyse the company’s external
environment (Association of Chartered Certified Accountants 2009, p.34).
It can be analysed as follows:
6.1. Political Environment
Political events and amendments play an important role in any economy and enormously
influence business decisions. Hence the following sections focuses on the past, current and
future direction of Malaysian politics in terms of its political stability, government regulation
on economy, trade policy and taxes, influence on religion and cultural factors within the
country and it position on marketing ethics.
Table 5: Malaysia's Political Environment
Historic Milestones of Malaysian Politics Recent Changes in Government Policy
• Gained independence in 1957 from • To attract foreign investors’
British government increased the Cap on equity
• Dr. Mahathir Mohammad ruled the holding for foreign investor from 49% to
country for 22 year enabling Malaysia to 70%.
achieve dramatic economic and social • Signed and ratified the Convention on
improvements and promising political the Settlement of Investment Disputes
stability within the country. allowing parties to a dispute over an
• Mr. Najib Razak was appointed as the investment to go to the International

Prime Minister in 2009, under the Barisan Centre for Settlement of Investment
Nasional (BN) alliance, a coalition which Disputes (ICSID)
is favouring Malay nationalism, Islamism • Corporate tax rates were reduced in
and Capitalism as policies. However 2009 to 25% and personal income tax
trying to minimise the ethnic and religious rates to 27%, which was at 28% in 2008
division in the country. • Dairy Imports to Malaysia must to
• Government’s effectiveness in terms obtain the Import Licenses, issued by the
of performance has increased from 78.7% Veterinary Services and Ministry of
to 83.9 from 2005 to 2008. International Trade and Industry for every
consignment of dairy products imported,

• Main political pressure groups
within 30 days of importing.
operating in the country are Bar Council
• Certification of “Halal” from the
(Electoral Reforms Coalition) and the
Malaysian Religious authorities is a must
Muslim NGO Coalition.
for dairy products.
• Investment Guarantee Agreements
(IGA), were concluded with number of
countries including China, India, United
Kingdom and United States of America.
• A member of the Asia-Pacific
Economic Cooperation (APEC) group.
• Became a member of the ASEAN
Free Trade Agreement (AFTA), with the
objective of reducing trade barriers and to
reduce the import duties within the

member countries.
• Malaysian cabinet passed a law, that
70% of the advertisement aired must be
made in Malaysia and should apply the
same percentage in using the actors,
locations, equipments and facilities in
making the advertisement
Future Prospects of the Policies
• Government is targeting to reach per capita income level of $15,000 to $20,000 by
2020. From the current level of $7,000.
• Improve the quality of human capital, rural infrastructure of the country under the
Government Transformation Program.
• Introduction of Tenth Malaysian Plan (10MP), promoting tourism, private healthcare
which are among the 12 key areas.
• Minimise corruption in the country and set an efficient public sector within the
country.
As per the above facts, it is clear that Malaysia is having a stable political environment with a
futuristic view in improving its trading capabilities of Malaysian businesses.

6.2. Economic Analysis
In undertaking the marketing audit for Dutch Lady Non-fat Yogurt, it is essential to identify
the main economic factors in Malaysia, which will significantly influence the direction of the
company’s marketing strategies. Following section is focussed in identifying the main
economic factors such as interest rate, inflation, Gross domestic product, monthly income of
consumers which will affect the viability of promoting our product.
6.2.1. Inflation
Inflation is another key indicator of economic fluctuations of Malaysia. Inflation is calculated
with regards to the changes in the Consumer Price Index (CPI) of a country. CPI signifies the
deviations in prices of consumer goods in the country’s ‘shopping basket’ over a period of
time.
Malaysian CPI and Inflation values during last four years and the predicted values till 2015
are visualized in the below chart (Source: DataMonitor 2010).

Figure 1: Malaysian CPI and Inflation Rate: 2004 – 2015
According to the chart it is evident that Malaysia will contain its inflation rate below 3% till
2015. Predicted low inflation rates will minimise the risk of financial markets and enable
better business environment.
6.2.2. Gross Domestic Product
Gross Domestic Product (GDP) is considered to be a primary indicator of the wealth of
Malaysian economy. Private and Public sector spending, goods and services produced and
exports in the country is considered and adjusted for imports and inflation to generate an
accurate GDP figure.
Below charts envision the Malaysian GDP value and its growth rate during last four years
and predicted values in upcoming three years (Source: DataMonitor 2010).

Figure 2: Malaysian GDP ($ Billions): 2006 - 2012
Figure 3: Malaysian GDP Growth Rate
Malaysian economy experienced gradual growth of GDP from 2006 to 2008 due to strong
domestic demand, export growth and high rate of investment activities within the country.
However due to the global economic down turn during the last few years, Malaysia
experienced a negative GDP growth rate of 3.5% in 2009, which is expected to become
positive in 2010 and improve from there onwards till 2012, as per the current speculations.

Following pie chart shows sector wise contribution towards the Malaysian GDP in 2008
(Source: DataMonitor 2010).
Figure 4: Malaysian GDP Composition by Sectors in 2008
It is evident that Industry and Service sectors are the major driving forces of Malaysian
economy. The main forces of the service sector were finance, real estate and information and
telecommunications services. In addition, wholesale and retail service sector also has shown
rapid growth during recent years.
6.2.3. Monthly Income Levels
Following chart visualizes the monthly income of Malaysians during the last five years and
predicted values in the next five years (Source: DataMonitor 2010).

Figure 5: Malaysian Monthly Income (US $): 2005 - 2010
Currently Malaysia is said to be a middle income country. As per the above chart Malaysia
will remain its monthly income level at US $ 3,000 till 2015 without any major deviations.
6.2.4. Unemployment Rate
Below charts exhibits the growth rate of Malaysian unemployment during last five years and
the predicted values till 2015 (Source: DataMonitor 2010).

Figure 6: Malaysian Unemployment Growth Rate: 2005 - 2015
As per the chart the unemployment growth rate will change around 3.3% till 2015. This is an
improvement from the current rate of 3.68%, which was resulted mainly due to the economic
down turn.
6.2.5. Future Economic Prospects and Future Risks
Following table reveal the Malaysia’s future economic prospects and risks. (Source:
DataMonitor 2010).
Table 6: Future Economic Prospects and Risks
Future Prospects Future Risks
• Long term needs on large energy • Rising debt burden. World bank has
generation projects and plants. warned that Malaysia could reach 70% of
Government is planning to build a Nuclear debt against its GDP by 2015. Hence this
Plant by year 2021. might affect Malaysia negatively on its

• Major growth in industrial

competitiveness in the international
manufacturing activity.
market.
• Strengthen the country’s economic

• Capital inflow controls by the
ties with its trade partners such as
Malaysian government may reduce the
Singapore, China and other Asian
attractiveness of foreign investment into
partners. Thereby bringing better growth
the country.
prospects for the future.
Finally in analysing the above economic factors, it could be identified that due to the positive
domestic market conditions, rising disposable incomes and sustained consumer confidence
will support the expansion of low fat yogurt product segment and launch of the Non Fat
Yogurt successfully in Malaysia (as stated in the organisational objectives above).

6.3. Socio-cultural Environment
6.3.1. Demographic Factors
Following table demonstrate the socio-cultural snap shot of Malaysia in 2009 (Source:
Malaysia Country Forecast, 2009)
Table 7: Malaysia's Demographic Factors
• Annual Growth 1.7%

• Infant Deaths per 1,000 births is 17
• Persons Under Age 15 years is 32%
Population
• Urban Population is 67% of the population
• Urban Population Growth is 1.7%
• Literacy rate is 89%
• Agriculture based 12%
Work Force Distribution • Industry-Commerce based 36%
• Services based 52%
• Unionised work force 9%
• Malay and indigenous people 61%
Ethnic Groups • Chinese 24%
• Indian 7%
• other 8%
Languages • Malay, English, Chinese dialects, Tamil
• Muslim 60%
• Buddhist 19%
Religions • Christian 9%
• Hindu 6%
• Confucians and Taoist 3%
• Other 3%

With 61% of the population being practitioners of Islamic religion in Malaysia, the political,
judicial and religious systems are closely intertwined and religious leaders hold prominent
positions in the country.
6.3.2. Composition of Household Expenditure
Below pie chart exhibits that 23% of household expenditure is spent on food, which is the
highest proportion spent of the total expenditure. (Source: Malaysia Household Expenditure
Survey Report 1998/1999)
Figure 7: Malaysia's Composition of Household Expenditure in 1998/99

6.3.3. Urban and Rural Composition
(Source: Malaysia 2009)
Figure 8: Malaysian Urban Population: 2005 - 2015
It is evident that Malaysian population experienced dramatic urbanization during the last few
years and will continue in the future, though the rate is not as high as the last few years.
6.3.4. Age Distribution
Figure 9: Malaysian Age Distribution between 30 – 50 years: 2005 - 2010

The above graph (Source: Malaysia 2009) reveals that the age group between 30 to 50 is
increasing and they are the age group which is increasingly becoming health conscious, due
to the very busy and industralised life style. Further it is evident that this age group is having
a very open mind towards foreign brands and is not hesitent to consume such prominent
brands.

6.4. Technological Analysis
Developments in the technological arena accounts to better performance for companies to a
extent when companies are competing for differentiation and to offer superior product to its
customers. Following table identifies the key milestones and developments in terms of
technology in the Malaysian market. (Source: DataMonitor, 2010)
Table 8: Malaysia's Technological Developments
Key Milestones
• In 2009, Malaysia Technology Development Corporation (MTDC) approved grants
totalling over US $ 40 million to 95 companies.
• Malaysia is ranked 27th in the world on the network readiness index.
• As per a 2010 reprot by the Internattional Interlectual Property Alliance, malaysia was
ranked 22nd in the owlrd in terms of Internet penetration.
• By the end of the third quarter of 2009, malaysia had over 1.4 million broadband
subscribers, which was an increase of about 200,000 subscribers in one year.
• Mayasia’s ICT industry accounted for 9.8% of the GDP in 2009. This comprised hardware,
software and telecommunications industries.
Future Developments
• The Ministry of Science, Technology and Innovation (MOSTI) is focussed on promoting
innovative and encouraging research and development and its commercialization, to improve
the usage of ICT in businesses
• Govenrment is targeting to increase the contribution from ICT to its GDP to 10.2% by
2015.

In analysing the above facts it is evident that Malaysia is very much focussed in improving its
technological usage in the manufacturing process as well as in the customer relationship
management process to change the traditional methods and to introduce more efficient and
effective high tech methods to suit different customer needs.

6.5. Environmental Factors
In the modern context of business environment is one of the key factors that should be taken
good care of by any business organization. Consumers are much reluctant to purchase any
good that is harmful or produced via a harmful process to the environment. Following table
identifies the key milestones achieved by Malaysia in term of moving towards a greener
environment and future targets focussed by authorities. (Source: DataMonitor, 2010)
Table 9: Malaysia's Environmental Factors
Key Milestones
• On the 2010 Environmental Performance Index (EPI) Malaysia, with a score
of 65, was ranked 54th among 163 countries.
• The international treaties to which Malaysia is a signatory include
o The 1982 United Nations Convention on the Law of the Sea
o The International Convention for the Prevention of Pollution from Ships (1973)
o Convention on Biological Diversity (CBD)
o International Convention on the Trade in Endangered Species of World Flora and
Fauna (1973).
• The National Forestry Policy (NFP) 1978 duly recognized the need for
sustainable forest management in national programs and activities. Malaysia ratified
the Kyoto Protocol in 2002.
Future Developments
• The Malaysian government intends to reduce its carbon intensity by 40–45%
by 2020 from 2005 levels.
• A target of generating 9% of the country's electricity from renewable energy

by 2020, from current levels of 0.9%
Dutch Lady is fully committed towards achieving and promoting an environmental friendly
manufacturing and operational policies in all its functions. It has combined the corporate
strategies to social responsibility strategies through “ISO 14001 Environment Management
System”, which promotes a systematic management process to the environment.

6.6. Legal Factors
Table 10: Malaysia's Legal Environment
Current Key Features
• Registration at the Malaysian Audit Institute is a must for any Accountant who
wishes to practise audit or taxation services.
• Greater flexibility in labour laws. According to the Wall Street Journal’s 2010
index of Economic Freedom, Malaysia has a score of 71.4 which is above the regional
average of 62.1
• Certification of “Halal” from the Malaysian Religious authorities is a must for
any dairy products in Malaysia.
• Public quoted companies in Malaysia are required to submit quarterly income
and balanced sheet within 2 months of the quarter end, and the annual audited reports
within 4 months of the year end for public scrutinity.
Future Developments
• Malaysian tax authorities are working towards enforcing better transparency in
corporate reproting, which will require companies to disclose more financial
information in the future.
• A Price Control and Anti-Profiteering Bill was presented to the parliament
early this year, which proposes to establish a Fair Trade Commission to improve
consumer protection.
• Developments in the Patent Law is expected by 2020, which is very weak in
Malaysia when compared to the other countries in the region.

7 Stakeholder Analysis
‘A well-accepted definition of a stakeholder is any group or individual who can affect or is
affected by the achievement of an organization’s purpose’ (Fiedler & Kirchgeorg, 2007).
It is very important to identify each stakeholder and their influence on the company as Dutch
Lady is very closely associating with each of them depending on the importance and
influence of each stakeholder on the company. In the context of Dutch lady, below matrix
identify the different stakeholders of the company with regards to their level of interest and
the level of influence on the company operations.
Importance of Stakeholders
Low Importance High Importance

Influence of Stakeholders
Box C Box A
• Government and Relevant • Management of Dutch Lady

Authorities • Customers
High • Religious Leaders • Direct Competitors
Influence
• Dairy suppliers
• Mother Company (Royal
FrieslandCampina)
• Major Shareholders
Box D Box B
Low • General public • Employees

Influence • Minor Shareholders • Indirect Competitors
• Distributors
• Banks and Fund providers
Figure 10: Dutch Lady's Key Stakeholders

‘Corporate relations with various stakeholders, corporate citizenship, responsibility, and
accountability are becoming as vital to the bottom line as an effective business model’
(Kooskora & Kujala, 2009).
It is very important that Dutch Lady develops a comprehensive stakeholder analysis in order
to enhance the relationship it has with each stakeholder. Hence it is important to identify the
impact of each stakeholder on the operations of the company.
Stakeholders who are of high importance with high interest are the Primary Stakeholders;
hence they should be fully engaged and evaluated in preparing the marketing plans and
objectives. Secondary Stakeholders are found in Box B and C. They should be effectively
managed through the marketing plan. (Docstoc, 2010)
Following table identifies the impact on each stakeholder by Dutch Lady’s decisions and
strategies.
Table 11: Impact on Stakeholders of Dutch Lady
Stakeholder Impact on each stakeholder
Management • Performance of the yogurt product segment with regard to
revenue, cost, and finally profits.
• Setting specific, measurable, attainable, realistic and time
bound targets, and year-on-year Growth.
• Compensation for the achievement of targets.

Customers • Value for money from the product.
• Assurance on the Quality from all aspects of the product
offerings.
• Customer Care and responsibility.

• Ethical and socially accepted products.

Direct Competitors • Product features, price, and image created on the consumer’s
mind.
• Different management methods and strategies used in order
to market the product.

Dairy suppliers • Providers of products and services used to manufacture the
end product for the Customer.
• Equitable business opportunities.

Major Shareholders • Profit and dividend paid by the company.
• Performance on the day to day business.
• Strategic direction and the Reputation at the market place.
• Truthful Reporting methods used.

• Rates of salary and wages pay.
Employees
• Level of job security.
• Respect received by the management and the other
stakeholders.
• Truthful communication from the management.

Distributors • Rates of commission paid for the service.
• Assistance provided by the management to market the
products.
• Truthful and futuristic communication from the
management.
• Payment of accurate and on time Taxation.
Government and
Relevant Authorities • Adherence to Legislation.
• Truthful Reporting methods used.

8 Strategic Assessment
This section analyzes the potential strategies for the Dutch Lady. The main strategies are
derived based on cost leadership and product differentiation. Within those strategies, it then
considers more precise strategies such as pricing, promotion and distribution strategies.
Based on the Dutch Lady’s ability to control its operating costs, the cost leadership strategy is
defined. This will enable the company to price its products more competitive manner while
maintaining significant competitive edge in the Malaysian yogurt market and gain high profit
margins.
The differentiation strategy uses to offer a non fat yogurt which is unique when it’s compared
with Duty Lady Competitors’ products in the market. Product differentiation will be done in
different forms by combining in aspects of brand image, production technology and
distribution channels.
Based on above strategies, company has defined its Vision, Mission Statement, Cooperate
Values, Business Objectives and Major Goals. Following subsequent sections describe those
in more detail.
8.1. Vision
The Dutch Lady’s vision is to make natural and nutritious dairy products that fulfil customer
needs to have healthier and more enjoyable life. Its products capture the significance of
health and wellness, but it also embodies all the ways customers can eat and live better while
getting value for their money.
Accomplishing its vision requires superior and frequently improving performance in every
aspect and at every level of the organization. Its performance will drive by comprehensive
strategic statement for each business unit and by an ongoing pursuit for excellence within all
operational and staff functions. This requires recruiting, developing and retaining a diverse
workforce of the highest competence.
8.2. Mission
“To bring sustainable dairy goodness from the heart of Shropshire for the good of everyone."
Over the last 10 years company has been the market leader and doing just that. It believes that
this effort has led to stronger relationships with our happier customers and Dutch Lady
Yogurts.
8.3. Corporate Values
Dutch Lady core values are used to derive the company principles and to transcend company
size and its growth rate. Following are the core values of Dutch Lady:
• Selling high quality natural and healthy dairy products to satisfy our customers
• Build team member excellence and happiness to create a work environment where
team members can grow and succeed to their highest potential. Dutch Lady values
effort and reward results.
• Committed to integrity, timeliness and transparency in communicating with our
valuable suppliers which enable Dutch Lady to remain as a market leader, by creating
new, unique and innovative dairy products.
8.4. Business Objectives
Long Term business objectives

• Continue to be the market leader in the Malaysian dairy products market by primarily
concentrating on growth, profitability and milk valorization
• To double the existing yogurt products sales by 2015
• By 2015 to maintain a gross margin of 20%.
• By 2015 company to increase its net profits by 15%.

9 Recommendations
9.1. Market Audit Checklist
The following marketing audit checklist represents necessary and strategic thinking that is
required to implement successful marketing plan for the Dutch Lady.
MARKETING AUDIT CHECK LIST YES NO
ENVIRONMENT
Is Target Market Identified? Yes
Did Customer wants and needs identified Yes
Did Company strengths, weaknesses,
opportunities and potential threats have been Yes
analyze?
External
Did Industry analysis complete? Yes
Did company identify future customer prospects
Yes
and customers?
Did company analyze customer purchasing
Yes
behaviors?
Did Company analyze Product Life Cycle? Yes
Are there any new Product Developments? Yes
Did Company identify Pricing Strategies? Yes
Does Company has effective distribution
Yes
channels
Is company getting its marketing communication
Yes
right?
Internal
Are there enough human resources? No
Are there enough budget for Marketing Yes
Are there enough production plants for product
Yes
development?
Are there sufficient numbers of Milk Suppliers? Yes
Is there a realistic timeline to achieve company
Yes
goals?

9.2. Strategic Action Programs
The growing demand for yogurt products is driven mainly by consumers' belief in the high
quality and nutrition contained in these products. Hence it is important to execute following
strategic action programs to understand the current Malaysian Yogurt Market.
• Marketing Department should conduct a survey to identify demographic
characteristics of the people who would fall in to the non fat yogurt market within
next 6 months.
• Product development team should invest in existing low fat yogurt product range to
use high quality ingredients by doing extensive research and development to improve
it within 12 months.
• Hold Monthly meeting with each department representatives to stay abreast of
changes in the market place.
9.3. Future Strategies
• Increase profits by increasing sales and make a small margin on each unit
• Launch Promotions which includes coupons, in-store price promotions, in-store
demonstrations, or premiums to increase the customer awareness about company
products.
• Make new investments in brand building
• Make new investments to improve the distribution channels to distribute products to
different suppliers to sell them efficiently.

• To introduce the concept “Dutch Lady Shop” focusing on urban cities.
• To carry out a piggybacking strategy with fast food outlets.

10 List of references
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Marketing Audit: Dutch Lady Milk Industires Berhad

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DUTCH LADY MILK

MKT 5000 – Marketing Management

Name Student Number

compete with global competitors such as Nestle and Cocoaland.

Dutch Lady Milk Industries Berhad Page i

mother company FrieslandCampina and most importantly the shareholders.

distribution strategies. Product differentiation will be done in different forms by combining in

aspects of brand image, production technology and distribution channels.

distribute products to different suppliers to sell them efficiently.

Dutch Lady Milk Industries Berhad Page ii

4.1. Company positioning..................................................................................................................3

4.2. Brand positioning........................................................................................................................3

4.3. Competitive positioning..............................................................................................................3

4.4. Strategic Positions ......................................................................................................................4

5 Current Environment and Operation.................................................................................6

5.1. SWOT Analysis..........................................................................................................................7

6.1. Political Environment.................................................................................................................9

6.2. Economic Analysis...................................................................................................................12

6.2.2. Gross Domestic Product .....................................................................................................................13

6.2.3. Monthly Income Levels.......................................................................................................................15

6.2.4. Unemployment Rate............................................................................................................................16

6.2.5. Future Economic Prospects and Future Risks.....................................................................................17

6.3. Socio-cultural Environment......................................................................................................19

6.3.1. Demographic Factors ..........................................................................................................................19

6.3.2. Composition of Household Expenditure.............................................................................................20

6.3.3. Urban and Rural Composition.............................................................................................................21

6.3.4. Age Distribution..................................................................................................................................21

6.4. Technological Analysis.............................................................................................................23

6.5. Environmental Factors..............................................................................................................25

6.6. Legal Factors............................................................................................................................27

Dutch Lady Milk Industries Berhad Page iii

8 Strategic Assessment ..........................................................................................................31

8.1. Vision ......................................................................................................................................31

8.2. Mission ....................................................................................................................................32

8.3. Corporate Values .....................................................................................................................32

8.4. Business Objectives .................................................................................................................32

9.1. Market Audit Checklist ............................................................................................................34

9.2. Strategic Action Programs .......................................................................................................35

9.3. Future Strategies ......................................................................................................................35

Dutch Lady Milk Industries Berhad Page iv

Table of Figures and Tables

Figure 1: Malaysian CPI and Inflation Rate: 2004 – 2015 ................................................13

Figure 2: Malaysian GDP ($ Billions): 2006 - 2012 ............................................................14

Figure 3: Malaysian GDP Growth Rate...............................................................................14

Figure 4: Malaysian GDP Composition by Sectors in 2008 ..............................................15

Figure 5: Malaysian Monthly Income (US $): 2005 - 2010 ................................................16

Figure 6: Malaysian Unemployment Growth Rate: 2005 - 2015.......................................17

Figure 7: Malaysia's Composition of Household Expenditure in 1998/99........................20

Figure 8: Malaysian Urban Population: 2005 - 2015 .........................................................21

Figure 9: Malaysian Age Distribution between 30 – 50 years: 2005 - 2010 ....................21

Figure 10: Dutch Lady's Key Stakeholders.........................................................................28

Table 1: Dutch Lady Current Positioning.............................................................................4

Table 2: Dutch Lady Aspects of Positioning..........................................................................4

Table 3: Dutch Lady Environment Types..............................................................................6

Table 4: Dutch Lady SWOT Analysis....................................................................................7

Table 5: Malaysia's Political Environment............................................................................9

Table 6: Future Economic Prospects and Risks..................................................................17

Table 7: Malaysia's Demographic Factors...........................................................................19

Table 8: Malaysia's Technological Developments...............................................................23

Table 9: Malaysia's Environmental Factors........................................................................25

Table 10: Malaysia's Legal Environment............................................................................27

Table 11: Impact on Stakeholders of Dutch Lady..............................................................29