THE WEAKNESS OF DUTCH LADY AND RECOMMENDATIONS

1) The competitor sells same products as the company

There are some of firms that sells the same products as Dutch Lady such as F&N
Dairies Malaysia, Coca Cola, Nestle, Pepsico, Fernleaf and many more. For example;
Nestle and Fernleaf also produce milk same like Dutch Lady, which is varies in the
quality and taste but not so much in price. Dutch Lady sells their products with high
price. This will lead consumers to choose a product that is cheap but high in quality
The higher the price, the lesser the consumers to buy their products. So, it is clearly
that consumers will choose other companys that sells same product with high quality
and affordable.

2) Financial statement decreases compare with last year

Based on annual report of Dutch Lady, we found out that the company have low ratio
of net profit income which is 26.2% drop in to RM 17.03 million or 26.6 sen a share
for its first quarter ended March 31 (1QFY15), from RM 23.07 million a year ago, on
lower revenue and increased marketing investment to support relaunch activities of
Dutch Lady Children Formula Milk. The revenue for the quarter fell 13.5% to RM
196.89 million, from RM 227.68 million for 1QFY14. The company’s earning per
share also decrease by 11% last year. And over the longer term in 3 years earnings per
share have decreased 7.9% annually. This could justify a low P/E. Since Dutch Lady
hold net cash or RM 32 million, it can spend on growth, justifying a higher P/E ratio
than otherwise. The company trades on a P/E ratio of 28.4, which is above its market
average of 14.6. The recent drop in earnings per share would make some investors
cautious, but the net cash position means the company has time to improve.

3) Price of Dutch Lady

The first half of financial year of Dutch Lady company in 2017 net profit of RM 64.2
million was below their expectations, making up 44% of our full-year estimate. The
negative deviation was a result of stronger than expected impact from rising
commodity prices, led by unfavourable exchange rates. Besides, no dividend was
declared this quarter. This is a result of higher prices of their products and the the lack
of buying power of their consumers.

4) No direct market experience

Dutch Lady only sold in big shops such as supermarket, grocery store, hypermarket
and convenience shop but the company did not have direct market experience.This
point is important because direct market could improve relationship between
consumers and suppliers and also the company could understand consumers needs
and wants. In addition, Dutch Lady does not have feedback section in their company
website so they are unable to get any information from their consumer.
Recommendations

In my opinions, to overcome the weakness of Dutch Lady for a better future are the
company should have increase the quality of their products and make market
competitive. Dutch Lady should also produce continuous innovation in product
offerings to help strengthen presence in market. The new products with different
variety and unique will able to attract more customers to buy their products.
Despite that, Dutch Lady to increase the financial of the Dutch Lady company’s is
they should have imporoved in the terms of packaging, reduce the price of products,
variety flavor, taste, and quantity. This is because to strengthen innovation and
operational efficiency to ensure food safety and towards a more balanced resource and
efficient management.
Another solution to overcome the weakness is Dutch Lady should have be having
promotion strategy. The company suppose to promote their products through media
social. This is because the more the effective of the idea of promoting products, they
products will be known worldwide. This will ensure that the company will gain more
customers, build a direct and good relationship with the customers and keep maintain
in the market.
In addition, as a price of the products of the Dutch Lady company is increasing
which will lead to less customers to buy their products, the company should change
their marketing strategies so that the company could boost visibility and increase sales
and to fuel the company’s growth, churning a profit and staying afloat in the market.
Last but not least, Dutch Lady should conduct a survey to public to know which
products or flavors customers prefer more so that the adjusments can be done
accordingly to their preference. The purpose of this matter is to ensure the company to
understand more of consumers needs and wants in their products.
References

1. https://www.malaysiastock.biz/GetReport.aspx?file=AR/2019/3/28/3026%20-
%201048279854451.pdf&name=DLMi-2018%20Annual%20Report%20(Part
%201).pdf

2. https://www.theedgemarkets.com/article/dutch-lady-sees-months-weak-consumer-
sentiment

3. https://www.ukessays.com/essays/marketing/the-marketing-mix-strategies-
marketing-essay.php

4. https://educheer.com/essays/recommendations-dutch-lady/