Tetra Paks Opportunities In Italy

This report is designed to examine the marketing issues Tetra Pak faces and to recommend solutions to retain a dominating position in the worlds presentation industry. It summarizes Tetra Paks market position using the SWOT platform and then reviews the various challenges the company faces with focus on managing their marriage with Pontero, their major customer in the Italian market. A detailed marketing audit of Pontero is included in the appendix. Despite the fact that appropriate tips for Pontero are proposed to ensure their major client doesn't decline, Tetra Pak must also look to fortify their associations with Andina and Filo. A listing of advice for Tetra Pak is finally presented in the form of a TOWS matrix.

2 Introduction

Established in 1952 in Sweden, Tetra Pak is the world's most significant producer of aseptic carton product packaging for liquid foods with businesses in 165 countries creating an income of 7. 7 billion. However, there has been a decline in market show globally due to increasing competition offering similar products at attractive prices and because of development of clear plastic packaging. Dairy Packaging continued to be the most attractive market for Tetra Pak, but was declining in its biggest market, American European countries. Though aseptic carton packaging was the main business of Tetra Pak, they have diversified into non aseptic carton product packaging, plastic presentation and also food processing equipment.

3 SWOT Analysis

Strengths

· 80% market share in aseptic carton presentation and 32% market show in non-aseptic carton product packaging.

· Global businesses in 165 countries and earnings of 7. 7 billion

· Alfa Laval acquisition, accessibility into plastics

· Strong corporate culture that receives above-average payment and high loyalty from employees.

· Superior technology

Weakness

· Dependence on milk-packaging.

· Dependence on western Europe, competitors have gained large market show in Eastern Europe / Asia.

· Costing strategy is vulnerable

· Firm composition, inhibits learning

Opportunities

· Competition' expansion in Eastern Europe / Asia

· Development in enriched dairy segment - superior segment possibly demands better packaging.

Threats

· Aggressive competitive strategy - pricing, progressive sizes, technology

· Threat of substitutes - plastic material packaging

· Drop in milk intake in Western Europe, their main market.

4 Marketing Challenges

4. 1 Intense competitor strategy

Though Tetra Pak placed 80% talk about of world's aseptic carton packaging and 32% in non-aseptic packaging, it has been subject to significant competition within the last decade. Established as a pioneer in aseptic carton presentation, Tetra Pak's market position has dropped as rivals have been able to provide similar products at attractive prices.

4. 2 Substitutes

The emergence of plastic presentation as the most liked choice for packaging of liquid foods is another major matter for Tetra Pak. Tetra Pak have inserted this market through the acquisition of Alfa Laval and must continue to expand the forex market.

4. 3 Decrease in key bill - Pontero

One of the major problems with Tetra Pak is the decline of the total milk ingestion in Western European countries, a key market segment. On top of that, Tetra Pak seemed to be having problems their biggest customer in Italy, Pontero. Though Pontero was the greatest milk developer in Italy, their market position is at decline. This was largely related to the growth in the 'enriched milk' segment as the overall milk utilization was lowering. Pontero had quite strong key points however that milk must be natural and that artificial ingredients must not be added.

Marketing audit of Pontero (in Appendix) information regarding the progress in enriched milk and how this can be related to the decrease of Pontero's market talk about especially in large families with children. It is also noteworthy that Pontero has lost large amount of shelf space and this its competitors will have usage of important hypermarkets. They have got been able to target their circulation network on important outlets with large volumes as opposed to the sheer amount of shops.

Recommendations for Pontero

Product

Pontero when you are generally product centred and not customer centred, have already destroyed the opportunity to launch 'enriched milk. However, since there is evident development in this portion, Pontero must develop alternative products that treat the needs of customers in this section, e. g. Soy milk, Goat's milk, etc. They may possibly also further promote medical advantages of skimmed dairy.

Price

Pontero has been able to leverage a strong brand and so charge premium prices for its milk. Predicated on evaluation between prices in hypermarkets and other programs, there may be some information that competition might be offering better margins to sellers, thus resulting in more shelf space for them.

Place

An important indication for Pontero's decline is their reduction in shelf space. Pontero must improve its distributor network, work on retailer relationships and provide them better margins. Pontero may also want to focus their work on merchants with large amount compared to large numbers of small outlets.

Promotion

Pontero must acknowledge the market needs for enriched dairy and stop campaigning against it even if they don't produce enriched dairy. It could alternatively focus on alternate products they develop for this segment and further reinforcing the strong brand they maintain.

Tetra Pak's opportunities in Italy

Tetra Pak with 80% market share in Italy, must not be intertwined in its customers' problems. Though Pontero is Tetra Pak's biggest customer in Italy, they need to recognize that if Pontero does not adopt a customer driven strategy, it is likely that they might further drop. Tetra Pak thus should never only try to stop this decline, but also plan in advance and bolster its romance with other major players in Italy like Andina and Filo.

5 Conclusion of Referrals (TOWS Matrix)

xsds

Strength

· Market share

· Global Procedures and decentralized culture

· Financial Muscle

· Wide Product portfolio

Weakness

· Reliance on milk packaging

· Prone pricing strategy

· Corporation structure that inhibits learning

Opportunities

· Expansion in clear plastic packaging

· Progress in enriched dairy segment

· Globalization and growth in rising economies

SO strategies

The acquisition of new businesses allows Tetra Pak capitalize on the growing plastics product packaging market

Enriched milk, a premium product may need premium product packaging and Tetra Pak using its superior quality, might be the best choice

The acquisition of Alfa Laval allows Tetra Pak to capitalize on providing complete solutions to milk producers and additional increase switching costs for their existing customers.

WO strategies

Tetra Pak must improve their marketing efforts in plastics and enhance their product portfolio for the non-aseptic product packaging market.

Tetra Pak must treat the issue of competitive charges in two ways, i. e. continue steadily to innovate and produce high grade products with higher prices, but also match or better prices in products with higher amount of competition.

While retaining the decentralized framework, Tetra Pak must develop a business wide distributed marketing practice that helps build synergy.

Threats

· Decline in milk consumption in European Europe

· Aggressive competition

· Risk of substitutes

ST strategies

Tetra Pak has lost large market show in Eastern Europe and Asia to challengers, probably because of insufficient focus. Using the EUROPEAN market declining, Tetra Pak must give attention to market penetration in these marketplaces.

Tetra Pak must cross-sell products from its entire portfolio to customers throughout the world.

They could leverage their financial capabilities and help reduce switching costs for customers by offering complete presentation solutions over a rent with little up-front costs.

WT strategies

A wider profile (including plastics) permits Tetra Pak to concentrate on presentation for other products and in other market segments.

Tetra Pak may have been able to deploy advanced charges strategies while skimming the marketplace with the superior products. But with aseptic packaging reaching a more mature stage in the product life-cycle, they must adopt appropriate charges strategies.

Appendix - Marketing Audit of Pontero

Data over the last 18 months show that Pontero though still the major player in the Italian milk industry, has lost significant market share (down 2 %) while its two major competitors have both increased their market share by 2. 1% and 2. 7 % respectively.

Exhibit : Market Share

Attractiveness of milk categories in Italy

Exhibit 2 shows the appeal of the several milk categories in the Italian market. Full-fat dairy gets the highest market show, but is declining. Enriched milk is currently the tiniest section but shows significant development. Enriched milk also offers the highest margins amongst the several milk categories. Show 3 lists the margins on the various categories.

Exhibit : Appeal of milk categories in Italy Show : Margins on different dairy categories

Exhibit 2 and 3 show that enriched milk is unquestionably a segment with future expansion probable, however Pontero using their aggressive promotional initiatives against enriched dairy have completely botched the options of reselling enriched milk. That is one of the primary reasons for the decrease in Pontero's marketshare.

Market Segmentation and Consumer research

Exhibit : Market show by age

Exhibit : Market share by family size

Exhibit : Market share by children age

Further evidence relating to this can be drawn from consumer research in displays 4, 5, 6 that presents that Pontero is most popular amidst the the elderly and in small people without children. The attractiveness of enriched dairy might further expand as the younger generations get older. One can also dispute that children and adults are one of the most crucial segments of the milk industry which is hence very important for Pontero to own appropriate products for this segment.

Distribution

Another important observation made is the fact Filo and Andina have been increasing their usage of the various distribution channels. Display 7 shows that even though Pontero has usage of the greatest amount of merchants, Filo and Andina have been extending its distribution channel more frugally, concentrating on stores with large amount.

Exhibit : Access to retailers

Filo and Andina have thus been able to enhance the average sales per shop by almost 50% and 100% respectively during the last 18 months. It is fair to expect that since Filo and Andina have centered on a fewer more profitable suppliers, they might have had the opportunity to manage these human relationships better and also transfer some of the gains to the sellers themselves giving them better margins.

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