BUS 1010 - GROUP 8:

A. INTRODUCTION / OVERVIEW
In order to determine the marketing strategies for Mama Mia Milk Company to be incorporated in
Nairobi, Kenya, as the owners of the prospecting company we would primarily employ the services of a
consumer market surveyor and a marketing manager with the following qualification and to provide
guidance/leads:

1. 1.1 Identify Company’s Core Values - Value-Based Leadership:

 Your behavior and operation can be a real competitive advantage and the rise of information
technology has made good behavior more important because it has become increasingly hard
to hide bad behavior.
 Therefore, the only way to enjoy a good reputation is to earn it by operating with integrity as
one is constantly on candid camera.
 Globalization has made it increasingly difficult for companies to differentiate themselves
based on their products or services alone as chances are that someone on the other side of the
world can copy and sell it for less money (generic companies). If money is the only bond
between you and your employees, they will quit the moment another firm offers them more
cash. All the more important then for companies to compete at the level of behaviors:
crucially, how they treat customers and employees-it’s about who has the most trust in their
relationships and where most people want to work. This will be the soft currency of the 21st
century.
 By doing the right things you create a brand that lasts forever rather than a few years!
(Maxwell, 2010).

1.2 Re-governing Markets In Kenya-Trends in growth of modern retail and wholesale chains
and related agribusiness. Key points:
 Market changes taking place in subsectors of the dairy industry
 Key drivers of market changes are consumer “pull”, policy “push”, urbanization, commercial
opportunity, food standards, foreign investment, tourism, changing urban habits, environmental
awareness and social welfare.
 Key demands and issues of the dynamic markets are consistent supply, quality standards, freshness,
hygiene, quantity, variety, reliability, traceability, safety, sanitary and phytosanitary standards and
maximum residue levels.
 The standards set by local private sector and the international markets are more or less the same, an
indication that the formally clear distinction between the local and export markets is becoming
blurred/slim.
 High value markets tend to procure from medium or large-scale farmers or from organized small-scale
farmers thereby minimizing transaction costs.
 For small-scale dairy farmers to meet the conditions of high value dynamic markets, they require
technology, financial capital, human capital and organization.

B. THE HUMAN RESOURCE:

1. Qualification

 Marketing products locally, regionally and internationally.

 Identification of target markets and growth strategies to ensure targeted levels of profit are
achieved in the region for the company including the annual budgets (through preparing
monthly, quarterly and annual business statistics for the company products and markets).
 Planning and implementing overseas marketing research activities by creating partnerships
and alliances with local and overseas dairy firms to ensure maximum market share.
  Responsible for high profile branding of the company’s regional destinations and the products
through preparation of and timely publication of the company’s marketing materials and
organization company promotional activities to showcase company products as well as profile
the organization favorably in the market e.g. trailer promo, posters or daily advertisements of
day’s or week’s offers
 Work with the government of Kenya to increase focus on dairy products consumption.
 Develop strong business relationships through well developed networking skills and grow
existing clients as well as coming up with strategies and tactical campaigns.

2. EDUCATION
 MBA/B.Com/Bus.-Marketing.

3. COMPETENCIES
 Demonstrate excellent understanding of the dairy industry in Kenya, the region and globally.
 Excellent negotiation, interpersonal and communication skills.
 Team leader and player.
 Computer literate.

4. THE DAIRY INPUTS AVAILABLE IN KENYA:

 Dairy herd: Cow, goat and camel.

C. MARKETING STRATEGIC PLAN

1. ANALYSIS OF CURRENT MARKETING SITUATION OF THE DAIRY PRODUCTS IN
KENYA

1.1 Industry structure/overview (require background data on market situation):

Macro-economic situation: macroeconomic trends- economic (GDP and its growth 
etc) ,
technological (packaging, processing):

Market situation - dairy market's size and growth:

 Production stands at 3.1 billion litres per annum; sufficient for domestic consumption but
more required for the export market. Kenya has an estimated cattle population of 13 million
(mainly grade cows 3.3 million and 9.7 million beef).

 Kenyan dairy industry based mostly on smallholder milk production. 600,000 smallholders
produce some 70% of the country’s marketed milk, approximately 56% of this milk is sold
raw in the unregulated informal market leading to public concerns about hygiene and safety).
 KDB states the dairy sub sector has grown at a record 179 per cent in the past five years.

 Most of packaging manufactured by Tetrapak Kenya Ltd.

 The total inbuilt capacity of Kenyan processors is estimated at 2.5 million litres per day.
 Currently high raw milk yield leading to wastage due to alleged under-processing from lack of
technological facilities by existing processors.

Customer needs and perceptions and buying behavior trends:

 Consumer preferences-give the market the right product: The price a dairy farmer is paid for
his or her milk is to a large extent determined by its quality. Farmers should therefore know
how to produce milk of the required quality gauging the fat levels. Milk consist of about 88%
water and 12% solids of which 5% is sugars and salts; 3.7% butterfat and 3.3% protein. The
 feed intake directly affects the cow’s ability to produce milk solids. A rule of thumb is that as
the quality of the diet increases, so does the volume of milk and percentage of solids.
 Consumer purchasing power highs and lows (e.g. mid-month and end-month; during season holidays
like Christmas, Easter, Idd, etc.) and whether in urban and rural areas.

 The Kenyan market wants milk of appropriate quality that includes taste, appearance, hygiene and
solids. Most of Kenya’s dietary appreciation is that an edible must taste well i.e. sugary or salty.

Competitive situation:
 The major competitors are New Kenya Co-operative Creameries Ltd., Brookside Dairy, Tuzo,
Fresha, Eldoville, Limuru Milk, Bio, etc.) and their size, market share, types of products and
product quality, distribution, etc.

Size and Market Share:

 At December, 2009, KDB statistics show that Brookside, receiving under 600,000 litres of
milk per day were the market leaders. New KCC and Brookside have a combined processing
capacity of 1.4 million litres per day or 90% of the processed milk.
 Ten years ago, there were about 1,500 licensed informal milk traders in the country. Four
main categories of traders are recognized by the KDB-producers, milk bars, mini-dairies and
cottages.
 According to KDB, only 34 processors were operating in 2004, processing 1 million litres of
milk per day.
 Fresh milk prices are formed as a result of market demand and supply. When there is a
shortage of milk, prices increase. Farmers then produce more milk at the higher producer
prices and, as a result, a surplus of milk develops, with a subsequent decrease in producer
prices.

Dairy Products in Kenya:

 Fresh Milk (Low Fat Milk, Standardized and Full Cream); Powder milk; Ultra Heat
Treatment (UHT); Sour milk; Yoghurt-flavored/sugar; unflavored/diabetic; Milk shake; Ice
Cream; Whipped Cream; Ghee; Butter; and Cheese.

Distribution channels:
 See Figure 1 for the different marketing channels for milk and milk products in Kenya.

Quality:

 Licensed informal milk traders pay an annual licence fee ranging from KShs.1,000 to KShs.
5,000.
 Kenya Bureau of Standards is the statutory body charged with enforcement of standards and
certification of quality standards of all products and services in Kenya. Mama Mia should
ensure they target ISO-certification.

1.2 Government regulations in the dairy sector:

 Investor-friendly: In recognition of the role of private sector in spearheading

industrialization, GoK has put in place a policy framework to foster the creation of a conducive
environment for private sector participation in economic development. The Kenyan dairy industry
has potential for spurring substantial growth in the economy. Some of the investment
opportunities available include artificial insemination services, dipping services, clinical services,
rearing of livestock for dairy products and milk processing for local and regional markets.
Attractive incentives are available to investors.
  Property Rights: Kenya is a member of most major and regional World Intellectual Property
Organization (WIPO), the African Regional Industrial Property Organization, the Paris
Convention of the Protection of Industrial Property and the Berne Convention on the Protection of
Literary and Artistic Works, so Mama Mia should strategize and capitalize on milk products
research for trademark and patent protection
 Legal - how are disputes resolved and where:

-Through the main regulatory body, Kenya Dairy Board established under the Dairy Industry
Act., Cap 336 of the Laws of Kenya. KDB’s main functions are the enforcement of national
standards for the dairy industry, training for the industry; facilitation of stakeholders’
activities; maintenance of databank for the dairy industry and regulation of imports.

-Commercial courts also handle disputes brought before them by the dairy sector players.

2. KENYA’S DAIRY SECTOR OPPORTUNITIES AND THREATS ANALYSES

 
2.1 Threats: Unfavorable government regulations on imports, etc.
-Established producers due to government’s liberalization of the dairy industry from
1992.
-Prior to liberalization, the dairy industry was under government control and Kenya Co-
operative Creameries (KCC) enjoyed a protected monopoly in the marketing of the
milk and other dairy products. Biggest market player New KCC still has the financial
backing of the government and as such has some competitive advantage edge due to its
national product loyalty.
-Illegal/irregular milk powder imports. Mama Mia Milk Company should engage in the
production of dry milk to avert such imports.
-Main regulator KDB has largely been a reactive institution that has concentrated its
efforts in policing the activities of milk hawkers and other unlicensed operators in the
industry to safeguard the cess, which provides nearly 80% of its revenue rather than
acting in the interests of all consumers.

2.2 Opportunities:
 Infrastructure: Stable political climate; strategic location having the port of
Mombasa and Kisumu for access to East and Central African market. Also regional
hub for airlines allowing for easy access from and to any part of the world.
Kenya’s high population of about 39 Million majority of who require or in need of
dairy products and the trend of eating healthy is unnoticeable as most are not obese
and a large population is starved. Purchasing power of the majority is inclined
towards poverty-Mama Mia Milk Company should ensure to package product
according to (predictable) hot or cold/rainy weather and in complimentary offers e.g.
small pack of Standard pasteurized milk with medium-sized KETEPA tea leaves
(affordable & favorite consumer good) or Cadbury’s or Nestle’s Drinking Chocolate
during cold season with the former offer to the rural consumer and the latter to the
urban consumer as a seasonal one week or a month-long promotion.

 Conduct research from renowned national chefs like Susan Kamau of Let’s Cook
local TV show and magazine to identify which menus (confectionery, African and
European and Western dishes) can be prepared with milk products and use the
feedback as part of the marketing campaign ad for Mama Mia Milk products.

 Investor-friendly arrangements: Such as EPZ (Export Processing Zone) program

which offers attractive incentives to export-oriented investors. EPZ Authority
provides one-stop-shop service for facilitation and aftercare; IPC (Investment
 Promotion Centre) promotes all other investments in Kenya including Manufacturing
under Bond (MUB) program; Tax Remission for Export Office (TREO), a program
for intermittent imports for export production; generous investment and capital
allowances; double taxation, bilateral investment and trade agreements
 Exports from Kenya enjoy preferential access to world markets under a number of
special access and duty reduction programs such as EAC, COMESA, AGOA, IGAD,
EU-African-Carribean-Pacific/Lome Convention and Mama Mia would greatly
benefit from regional and international product export.
 In Kenya, only 30% of the raw milk is processed into end products with reliance on
fresh milk market being a key challenge. Cheese, butter and ghee has not been
developed much.
Strategy: Diversify.
 High yield: Kenya is a milk surplus producing country while neighbors like southern
Sudan, Rwanda and Zambia are deficient. Supply to New KCC has increased by
280,000 litres to 680,000 litres in January, 2010 due to high production following the
heavy rains.
 Wastage: Milk farmers have in recent pass suffered huge losses from lack of
sufficient processors to buy their milk that led to a spill of an estimated 1.4 million
litres of milk in the first weeks of February in Nyahururu and Eldoret. KDB
attributes the glut to the many people venturing into dairy farming and the embracing
of good dairy husbandry.
 Kenya Government in February, 2010 directed New KCC to process the milk into
powder form for storage in government strategic reserves and Mama Mia should
engage this strategy for supply to UN relief agencies aid programs.

 Overstretched New KCC has a full storage of 18 million litres of UHT milk and 1
million kilos of powder milk at February 21, 2010 and price reduction of milk was
meant to encourage consumption but they have to hire other storage facilities. Mama
Mia Milk Company should urgently become a player in the market and ease the glut
(over-supply/abundance).
 Look at the strengths and weakness of the investor to define what Mama Mia must
address/gap.

- Political influence/interference in established New KCC leading to its scandal and

other processors’ underperformance from alleged sabotage of management. Mama
Mia should target good PR with government through CSR and adhere to KDB’s
other functions of developing, promoting and advise on proper packaging, equipment
and materials and organization, regulation and development of efficient production,
marketing, distribution and supply of dairy produce required by different classes of
consumers.

 Strengths could be current processing technology in the dairy sector,

expertise/manpower, availability of funds, etc.

-Kenyan expertise, manpower, funding and investor insurance easily available.

Government encouraging private investments.

-Capacity expansion program: Need to invest highly in large processing technology

to handle the sustained milk supply since Kenya’s independence in 1963.

- Per Tegemeo researchers, most of Kenya’s install processing capacity has been
shrinking following the demise of some processors.
  Use of artificial intelligence marketing (AIM) is a form of direct marketing
leveraging database marketing techniques as well as AI concept and model such as
machine learning and Bayesian network. The main difference resides in the
reasoning part which suggests is performed by computer and algorithm instead of
human.
Behavioral Targeting: AIM provides a set of tools and techniques that enable
behavioral targeting whose principle is based on the Perception-Reasoning-action
cycle found in cognitive science. In marketing context this cycle is adapted to form
the collect, reason and act cycle.
-Collect: term relates to all activities which aims at capturing customer or prospect
data, whether online or offline, these data are then saved into customer or prospect
databases.
-Reason: This is the part where data is transformed into information and eventually
intelligence or insight. In this section, AI and machine learning in particular have a
key role to play. (Machine learning is concerned with the design and development of
algorithms and techniques that allow computers to “learn”. This is one of the
techniques that can be employed to enable more effective behavioral targeting.)
-Act: With the intelligence gathered from the reason step above you can then act. In
marketing context act would be some sort of communications that would attempt to
influence a prospect or customer purchase decision using incentive driven message.
Again, AI has a role to play in this stage as well. Ultimately in an unsupervised
model the machine would take the decision and act accordingly to the information it
receives at the collect stage.
Concerns: Many online users and advocacy groups are concerned about
privacy issues around doing this type of targeting. This is an area that the
behavioral targeting industry is trying to minimize through education, advocacy
and product constraints to keep all information non-personally identifiable or
to use opt-in and permission from end-users (permission marketing).
Source-http://www.investorwords.com/1967/firm.html

Update From: Lynnet Mwakha-ID607599

E-mail: lmwakha@usiu.ac.ke; lmwakha@yahoo.com
Office Tele: 3606429/3606000 Ext. 429

(TO PROPERLY CITE REFERENCE):

Daily Nation P.1, 4, 5 (Feb. 22, 2010) Nation Media Group, Nairobi
Business Daily P.1&4 (Feb. 17, 2010) Nation Media Group, Nairobi

Internet

EPZ….Dairy Industry In Kenya 2005

http://www.nda.agric.za/docs/MarketExtension/6Dairy.pdf (Retrieved 2010, February

17). Dairy Marketing.

Personal Communication
Kiarie, S. W. (2010, February 23). E-mail.

Nderitu, M. (2010, February 26). E-mail. TSL’s John C. Maxwell Leadership

Registration.

Figure 1: The different marketing channels for milk and milk products

PRODUCER/
FARMER

RETAILER (e.g. PROCESSOR/

PROCESS
Supermarkets, street DISTRIBUTORS
(add value)
vendors, café) (e.g. New KCC, Brookside)

RETAILER (e.g. RETAILER (e.g.

Supermarkets, street Supermarkets, street
vendors, café)
CONSUMER vendors, café)

CONSUMER CONSUMER