College of Business, Economics, Accountancy and Management

De La Salle Lipa

Distribution Strategy Plan for Magnolia Inc.

Distribution/Logistic Management

S.Y. 2021- 2nd Semester

Jacob, Rhodelyn Mae V.

Ladiana, Merwille II

Pia, Chrizstzel Faith

M2A
I. Company background

Brief company history

The company is one of the largest dairy companies in the country which was established
in 1925 with the Magnolia ice cream that makes this ice cream one of the oldest in the
country. In 1981 as Philippine Dairy Products Corporation before it became Magnolia
Inc. with its first products of butter, margarine, and processed cheese. In 1994, PDPC
(Philippine Dairy Products Corporation) developed its margarine brands of Star
Margarine and Dari Creme from Procter & Gamble Philippines Inc. which was formerly
known as Philippine Manufacturing Company. In 1996, Magnolia-Nestle Corporation
acquired a business involving ice cream and milk products, but in 1998 SMC (San
Miguel Corporation) withdrew from the joint venture and still owns the venture production
facility. By 2008, SMC sold the facility which was Aurora Boulevard to Robinson Land
Corporation. In 2002, the company’s name was changed to Magnolia Inc. and became a
subsidiary of San Miguel Food and Beverage Inc.

Nature of business
Magnolia Inc. is a food industry that offers consumers different types of food and
beverages. The company is part of the corporation that acts as a parent of magnolia
Philippine which is SMC. As time changes, magnolia continues to produce products and
is still on the grocery list of consumers.

Location
The company’s headquarters are located in ABD Avenue, Ortigas Center, Pasig City of
Metro Manila. The location of the other store and plants are in Laguna, Aurora Blvd in
Quezon City, and other places in NCR and CALABARZON.

Owners
SMC is the parent of Magnolia Inc. founded by Enrique Maria Barretto de Ycaza y
Esteban. Later owned by Eduardo M. Cojuangco, Jr, and according to CNN Philippines,
the current owner is Ramos S. Ang who is also the owner of Magnolia Inc. There are
stockholders in this company that owns shares in the corporation.
 Product, price, and promotion strategies.
The table below shows various products of Magnolia and their price, size, weight, and
appearance. Through the years they introduce many kinds of products that are new to
the taste and eyesight of the customers. Magnolia promotes these products using many
strategies that can catch and persuade the customers such as commercials on television
or on the big screen on the streets with a known artist, actor, and actresses, posters, ads
on the internet, newspapers, and radio broadcast.

TABLE 1.

PRODUCT PRICE PROMOTION

-Chicken  ₱222- whole

chicken
 ₱98- drumstick
 ₱93-breast
 ₱108- thighs
 ₱108-wings
 ₱132-ground
chicken
 ₱157-chicken
cheesy fingers
 ₱147- chicken
lumpiang
shanghai
 ₱160-brown
eggs
 ₱229- ready to
cook fried
chicken
 ₱151- ready to
cook chicken
bbq
  ₱164- ready to
cook chicken
tocino
 ₱164- ready to
cook chicken
teriyaki
 ₱196- chicken
liver

-Cheese, Butter, Margarine, and  ₱253-Premium

Ice Cream Classic Kesong
Puti Ice Cream
800 ml
 ₱279-Classic
Vanilla Ice
Cream 1.5L
 ₱299- Gold
Label
Wintermelon
Milktea 1.5L
 ₱299- Gold
Label Cookies
and Cream Ice
Cream 1.5L
 ₱299-Avocado
Macchiato Ice
Cream 1.5L
 ₱299-Taro White
Cheese Ice
Cream 1.5L
 ₱299-Tablea
Yema Ice Cream
1.5L
 ₱120-Cheezee
 Regular 440G
 ₱81-Quickmelt
165G
 ₱52.45- Dari
Creme Classic
200G
 ₱135-Gold
Butter Salted
225G
 ₱135-Gold
Butter Unsalted
225G
 ₱205- Queso De
Bola 350G
 ₱295- Queso De
Bola 500G
 ₱320- Gold
Edam Cheese
Ball 350G
 ₱410-Gold
Edam Cheese
Ball 500G
 ₱45.50-Cheeze
Regular 165G

-Milk and Chocolate Drinks  ₱85- Fresh Milk

1L
 ₱23.75-
Chocolait 250
ML
 ₱80.50- Full
Cream Milk 1L
-Oils, All-purpose MIlk, and Salad  ₱55.10- All
Dressing Purpose Cream
250
 ₱137.55- Nutri-
Oil Coconut Oil
950 ml Pet
Bottle
 ₱132.85- Nutri-
Oil Coconut Oil
950 ml Pouch

-Mixes such as pancakes.  ₱53-Pancake

and Waffle Mix
400G
 ₱40.25- All-
Purpose Flour
400G

II. The company’s distribution system

a. How the company makes its product reach its target market.
Magnolia products are a well-known brand in the country, and it is one of the long-
running brands in the market. The company enhances its strategy to reach the target
market as generation changes and the behavior of the customers. The researchers
 observed pre-pandemic and during the pandemic that Magnolia Inc. take advantage of
the strategies that include the influence of the internet and technology such as
advertisement of link posters and commercial on YouTube, Facebook, Instagram, other
social media platforms, on buildings like a billboard, and huge posters on walls.

b. The distribution policies

Magnolia Inc. has many different facilities in the country, with this they distribute
according to the protocols assigned to those facilities.

c. The distribution strategies

As said that the company has other facilities, production plants, and farms they used
this to distribute much faster to the markets, wholesalers, retailers, etc. to reach the
customers. The process of these products such as magnolia chicken products, and
dairies need a distribution strategy to keep the products fresh and safe which is why
facilities in a different part of the country are developed.

d. The institutions it uses in its distribution system (both vertical integration and
outsourced)
The company uses different institutions in its distribution system. Magnolia Inc. controls
their farm, retailers, suppliers, and distributors because they have facilities in many
places. They control this by delivering fresh products from production to the market with
a close-by facility within that certain area. Magnolia Inc. grows and sustains their
company through partnerships with different companies to a larger size of market.

e. Other pertinent practices related to distributing its products.

Aside from expanding distribution with the support of new technology, there is no other
pertinent practices related to distributing its products.
III. Problem areas/areas for improvement

SWOT Analysis

Strengths Magnolia Inc. is already a well-known established company that produces

dairy products, margarine, cooking oil, chicken products, ice cream, and non-
 alcoholic beverages. It has a strong brand name because of its long years of
operation, making it popular among the customers. Because of its popularity,
a lot of consumers are choosing this brand as their first option when it comes
to making foods and desserts. It also has multiple businesses operating under
the same brand name.

Weaknesses In the past years, Magnolia Inc. had instability management and ownership
that negatively impacted the management and operation of the brand.

Opportunities Because of its long years of operation, Magnolia Inc. has already proved that
it has the best quality and yet cheaper than the other brands that drives the
customers to trust the brand.

Threats Their annual revenue may reduce due to the TV show cancellation and the
newly established businesses that produce the same products as what
Magnolia Inc. produces.

PESTEL Analysis

Political The tax that was imposed by the government affects the cost of distribution
of the product that results in a price hike.

Economic The position of the brand in the economy was stable and it is still one of the
top brands that customers recognized, especially in holidays. But because of
the Covid-19, the employees are limited so the production and distribution of
the products of Magnolia Inc. was reduced.

Social The target customers of the Magnolia Inc. are from the lower to middle class
families. The brand distributed the product mainly in the supermarket and
grocery stores wherein a lot of customers go there especially teenagers and
adults.

Technological Magnolia Inc. should increase its uniqueness and innovate their products.

Environmental The Philippines are considered as a tropical country that results from
Magnolia Inc. to be more careful in making products to avoid spoiling
products.
Legal The company’s processes follow Good Manufacturing Practices and HACCP
(Hazard Analysis Critical Control Point) and regularly test the quality of
finished products in their own laboratories. In poultry, they have climate-
controlled houses to ensure that chickens are protected from diseases and
undesirable contact with wild birds and other stray animals. They also have
training and audit specialists, specialist visit farms to ensure they comply
with prescribed biosecurity, animal health, and food safety measures.