ALMARAI COMPANY: Milk and Modernization in the Kingdom of Saudi Arabia Case Study Solution
MARKET SEGMENTATION And POSITIONING STRATEGY
The market segmentation refers to the methodology brands used to divide its target market into different segments to optimize the marketing, and sales efforts.(Wilson)The Almarai Company has a wide range of products which indicates that the company needs to adopt a particular market segmentation strategy to implement and market its product so that the marketing for its different products get easier and the required demand of its products could improve.
The Four types of market segmentation helps in targeting the specific customers and meeting their demands.
Demographic Segmentation
The demographic segmentation divides the market in various variables which helps in targeting the specific market of consumers on the basis of their age, gender, income, education level etc.
The various products the company offers to its customers follows a demographic segmentation as;
The targeted age group of its products are infants and adults. The infant formula it offers is an attractive product and targets the infants the other dairy products it offers such as fresh milk, yogurt and cheese are the products mostly used by adults. The product it offers are not gender biased. Both male and females are targeted through its products. Almarai is a brand name and mostly educated people are concerned about the brands thus the targeted customers are educated. Also it’s an expensive brand which targets the consumer of upper income level.
Geographic Segmentation
Through Geographic segmentation the target customer are based on the geographic boundary i.e cities, states, and countries. Almarai Company offers its product in Egypt, Gulf region, and Jordan thus, targeting different markets in different countries at the same time with its diversified products.
Psycho graphic Segmentation
This segmentation focus on the intrinsic traits the customer has such as values, interests, attitudes, lifestyle, and opinions. The customers now are more cautious about the quality of food they consume. Almarai’s strong brand name comes with the quality of its products. the high quality of its products attracts the customers of different values, interests, attitudes and lifestyle.
Behavioral Segmentation
The way the customers make decision regarding the purchase of anything cover this type of segmentation. The attitude towards the brand, the knowledge of the brand, the way they use it covers the behavioral segmentation. Customers being quality conscious are also conscious about the price of the products they purchase. The purchasing behavior of customers is to have the best quality in less reasonable price.
MARKETING MIX
Marketing Mix is a tool a company could use to achieve its marketing objectives in the target market. Almarai Company owns a high brand image and various range of products which enforces the company to have a strong marketing strategy for its different products to compete in the highly competitive environment of food and dairy industry.
The 4P’s of marketing i.e. product, price, place and promotion may be used by Almarai Company while consider the sources of future growth in different markets with different products.
The Product consists of the brand offering the product, the services it offers and its packaging. Considering Almarai Company, it’s a recognized brand worldwide thus introducing a product under its brand name will be successful in any market. Further, Almarai is known for its quality of services, the brand offers a product with high quality. Therefore, Almarai should consider introducing a new product under its brand name with the same quality of service it provides now.
Considering the target market of Almarai company the consumers are now not willing to pay high prices for the products as they are more price conscious than before. Thus, the pricing strategy should be set according to the customers demand and their willingness to pay.
Further, the places its products are being sold (i.e. Bakala) are exposed to the threats as they’re facing difficulties in selling the products also the promotions for Almarai brand should be taken into consideration as the company is thinking of expanding in new places.
Alternative Solution
Alternative-1: Large Scale Dairy Farms in New Markets
Almarai Company may build a large-scale dairy farm in new markets such as in Iraq, Pakistan, and Turkey for long term benefits and in Indonesia, Malaysia, and Sri Lanka. As these markets are considered to have a high consumption of dairy products especially milk but the expansion may lead to some governmental issues among countries
Pros:
- High capital investment.
- Long term benefit in expansion.
- Could bring scale and efficiency in these markets.
Cons
- Political risk.
- May impact the locals business in these markets.
- Unfavorable weather conditions.
Alternative-2: Manufacturing in Other Markets
The other alternative available to Almarai Company is to manufacture in other markets but with the decentralized dairy sourcing. This will reduced the potential political risk that could arise while adopting the alternative-1 but at the same time it will also reduce the Almarai’s control on the dairy products which the company could not afford ast the core area of Almarai is its dairy products.
Pros:
- Reduces political risk.
- Expansion in different markets.
- Long term benefit.
Cons:
- Lost control over dairy products.
- May not be able maintain its quality.
- May reduces the sale of fresh milk.
Alternative-3: New Product Segments
Considering introducing new products such as ice-cream or farm, process and market fish products under the brand name of Almarai would be another alternative for the company. Almarai’s brand is recognized and it has a history of introducing successful new products in the market. Thus. This would be beneficial for the company in the long term also.
Pros:
- History of introducing successful products.
- Recognized brand name.
- Expansion through products will increase the market share.
Cons:
- Costly investment.
- First timers in introducing a novel product.
- Risky investment.
Recommendation
From the above alternatives it is recommended that Almarai Company should consider Alternaticve-3 (i.e.New Product Segments) as this alternative is beneficial in terms of the wide range of products it offers. Also Almarai has a history of introducing successful new products in the market. Further the introducing new products under its brand name will encourage its targeted customers to purchase as it offers quality product to its customers.
Conclusion
In a nutshell, Almarai Company is a market leader and a recognized brand in food and dairy industry as it offers wide range of products. The sudden changes in the governmental policies affecting the company in an unfavorable aspect could be managed by responding to the changes efficiently and expanding its share in the market through further expansion in new products market…………
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