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Yakult and Its Marketing Strategy

Contents Executive Summary2 Section 1: Introduction2 Section 2: Current Situation2 Part 1: SWOT Analysis2 Strength:3 Weakness:6 Opportunities:7 Threats7 Part 2: PESTLE Analysis8 Part 3: USP Analysis9 Section 3: Recommendations11 Part 1: Segmentation, Targeting and Positioning11 Segmentation11 Targeting12 Positioning12 Part 2: Marketing Objectives and Goals – SMART Principles12 Part 3: Product, price, place and promotion13 Products13 Price14 Place14 Promotion14 Section 4: Conclusion14 Reference:15 Executive Summary Growing probiotic market has a potential value that every relevant firm wants to share profit in this market.

Collecting data from dependable source and thinking deeply to analyse the current market for Yakult, giving suggestions in marketing a new overseas market and concluding the primary points of this paper are the main methods in illustrating the whole paper. Section 1: Introduction This paper not only shows you the current situation of Yakult and the probiotic market, but also illustrates Yakult’s future market, Russia market. After reading the paper, you will learn how well the Yakult business is and how to develop its potential overseas market using market mix.

The map of this paper likes the following brief introduction. The first section of paper will give a current situation of Yakult through SWOT analysis in part, PESTLE analysis in part 2 and Unique Selling Proposition in part 3. In the second section, through STP method to segment market, target consumers and position the firm in part 1, after choosing the Russia market, an objective based on SMART principle is given in part 2 and in the final part, combining the market mix and the real situation, a marketing framework is produced.

The conclusion section is drawn according to the previous sections. The paper goes in a way of analysing the firm and the market and giving some recommendations based on previous analysis and target market. Section 2: Current Situation Part 1: SWOT Analysis Yakult has produced a range of products. The major products include fermented milk drinks, juice, tea, make-up products, skincare products, haircare products, ethical drugs, medical instruments and biochemical products etc. We choose the largest part, the functional food – fermented milk drinks. SWOT Table: Internal Factors: | |Strengths : |Weakness: | |Strong Brand Image and Sales Power |Decline in Margins and Returns | |Excellent R&D |Packaging size and Products size | |Fair Business Performance | | |The Yakult Information Services | | |Right Price | | |Unique Distribution Channel | | |Same Product Design | | |External Factors: | |Opportunities: |Threats: | |Growing Global Probiotic Market |More and more competitors and competition factors in the | |Demand for iversification |Probiotic Market | | |More and more beverage brands | | |Advanced Technology | Source: Based on MarketWatch: Global Round-up, ‘Company Spotlight: Yakult Honsha’, Aug 2010, Vol 9 Issue 8, p57 Strength: Strong Brand Image and Sales Power Yakult has operated its business in 31 countries and regions outside Japan with selling Yakult in an average amount of 17. 8 million bottles. [1] Such strong performance has built up its brand image.

Excellent R&D [pic] Source: Yakult Honsha Co. , LTD 2010, Annual Report 2010, p20 Billions of Yen have been used to its R&D. In May 2005, Yakult Honsha has established its Europe Research Centre for Microbiology ESV. In March 2010, Yakult Central Institute is equipped to tackle the development and joint research in an efficient way. [2] Fair Business Performance [pic]Source: Yakult Honsha Co. , LTD 2011 Yakult Company Profile 2010-2011, p29 The business performance of Yakult is fair. Due to the global finance, the dropping in sales results in falling in revenue. In 2010, it recovers soon with a satisfied performance. The Yakult Information Services

In Australia, in order to increase the awareness of health and Yakult brand, Yakult provides a series of free education activities to folks, including community groups, consumers and educational establishments. [3] Right Price Yakult sells its products at a right price. The price is about 2. 5 pound in 7-bottle packaging in UK. In China, the price is about 8 Yuan in 5-bottle packaging. The price is affordable. Unique Distribution Channel [pic] Source: Yakult Honsha Co. , LTD 2010, Annual Report 2010, p15 Yakult has its Yakult Ladies to distribute fermented milk drinks to every consumer, which is very convenient for consumers. Generally, consumers can purchase Yakult via supermarket, even the corner store. Same Product Design [pic] [pic]

Source: Yakult Honsha Co. , LTD 2010, Annual Report 2010, p18-19 Same product design helps to build up a strong Yakult image. The bottles have a same shape and same logo with printing different language text. Weakness: Decline in Margins and Returns First, due to the intense competition, Yakult should adjust its price to gain more customers. The more money investment in R&D and the lower price will reduce the profit margin. Second, due to the global finance crisis, the net income drops dramatically in 2009 compared with the performance in previous years. Although it has recovered in 2010, the condition is serious. Packaging Size and Product Size

The packaging size of five bottles or seven bottles sounds clearly that Yakult chooses the number according to the market research, but actually, the number is not suitable for all of the consumers. The product size makes Yakult like a cute brand. When compared with other large size foods and beverages, consumers will easily ignore Yakult bottle. Opportunities: Growing global probiotic market The global probiotic market is to grow to $ 31. 2 billion in 2014 at a Compound Average Growth Rate (CAGR) of 12. 6% from 2009 to 2014. European and Asia will account for approximately 42% and 30% of the total revenue respectively. The probiotic dairy products accounted for 70% of the probiotic market in 2009 with reaching a value of $ 24 billion by the end of 2014. [4] Demand for Diversification

Nowadays, the call for diversification is increasing heavily. People tend to choose different tastes, different design and even different functions. As foodstuff, especially as functional foodstuff, Yakult has a stable position in leading the food tastes and food functions. Threats Competitors and competition factors Like Meiji Dairies, American Dairy, Nestle, Mother Dairy and Amul, they are the global competitors, which decide Yakult should compete with them at a global level and under the regulation like WTO rules. Different competitors will create distinctive products to cater for newly demands from consumers, which is another big challenge for Yakult. 5] Other functional foods based on health-concern will be other major competitors. Other beverage brands The Coca-cola and other beverage giants will compete with Yakult to gain the customers who just take the Yakult as drinks. This competition will intensify because the beverage will increase its energy function to appeal to more young and energetic customers. Advanced technology The technology world has changed a lot from day to day, especially the biotechnology. People tend to consult a doctor rather than consume Yakult daily. More advanced technology such as the tablets will be produced to tackle the health problem. Part 2: PESTLE Analysis

Discussing Yakult from political, economic, sociological, technological, legal and environmental aspects will be a macro-perspective in trading its products in the international market. |Factor |Components | |Political |- Tax regulation. Like Australia Government has planned to impose a tax on carbon | | |dioxide. [6] | | |- More and more countries have set up strict regulation to measure the quality of | | |Japanese food due to the Nuclear crisis. | |-  the Goods and Services tax which is taken by Australia, Canada, India or other | | |countries will influence the purchasing power in the short term | | |- The middle east regime revolution maybe stop the plan of entering into the middle east| | |market | |Economic |- The global finance crisis (GFC) has passed and it begins to recover slowly now | | |- Due to the GFC and the later recovery, many people go through the process from saving | | |to spending, currently, the purchasing is not so strong compared with previous years | | |- the weak of dollar makes other countries a difficult in exporting | | |- The high inflation rate lead to increasing prices in raw material | | |- High CPI has reduced the purchasing power and influenced the sales | |Sociological |- Products are sold at various countries and regions which will add more difficulties to| | |the current management of Yakult | | |- People tend to care about health more in daily life | | |- More and more people have been educated about the health. | | |- Yakult has brought the knowledge about probiotic products and its brand image into | | |community and society group. | | |- Using the advertising campaign to strengthen its brand in public. | |Technological |- Yakult has invested much more in its R&D centre to take advanced technology | | |- The ways in which consumers make purchases | | |- Yakult connects nutrition and the liquid drinks, which is innovative. | |- Using updated Internet technology to intensify its communication with stakeholders. | | |  | |Legal |- The whole process of producing Yakult fermented milk drinks is inspected strictly. | | |- Yakult Honsha Co. , Ltd is a listed company which decides it should use the money | | |legally | | |- Foreign policy has stopped it to enter foreign market.

Yakult has to wait 17 years to | | |enter China market [7] | |Environmental |- Advanced water treatment system using Yakult container has been taken | | |- Participating in Team Minus 6% movement to reduce greenhouse gas emission [8] | Part 3: USP Analysis The best way to know customers is to communicate with them. The best service should be provided by people. The unique selling proposition (USP) asks to locate the uniqueness in selling or in marketing. Going through the whole process of producing, marketing and servicing, the distinctive point for Yakult is the marketing.

One element of all factors, like advanced biotechnology, top ranking and more, Yakult Lady is highlighted. Yakult ladies are well known as women distributors. Their responsibility is not just delivering the goods to the households, but also visiting them regularly to get some customer information, like their attitudes, needs or more. Over 80,000 Yakult ladies have operated their work in different market places. [9] This distribution system can be called as direct selling or door-to-door selling. It has brought many benefits to Yakult. Firstly, avoid culture difference. As a global giant in probiotic market, Yakult definitely will expand its foreign markets.

That asks Yakult should be in different management style under other culture systems. Hiring some qualified local ladies in selling product is a successful approach because consumers tend to communicate with locals with easy understanding. Secondly, be convenient. The convenience is one of elements everybody pursues. Households can order Yakult fermented milk drinks and Yakult lady will distribute drinks to their houses directly. It helps consumers to save the time apparently as well as enables Yakult to record its sale tracks. Thirdly, build up customer loyalty. Every company wants to retain customers nowadays. But just building up the corporate image is not enough, the company should take more actions to appeal customers.

Yakult use this unique distribution system to expand the timescale, the time that customers hold the Yakult order. Highlight the Yakult Ladies System After we have analyzed the unique selling point and its advantage, we should give some promises in highlighting this unique point. Here are some recommendations following. First one, operate the business activities with joint venture. Some business activities, like hiring the qualified people, turning the customer base of joint venture into Yakult’s, they should be operated under the cooperation between two firms. [10] Second one, broaden the activities. An example of educating locals about the probiotic is set in Australia. We can extract some ideas from this education programme.

For instance, a well designed magazine about probiotic knowledge can be brought to the households by Yakult ladies. Third one, well-educated Yakult ladies are needed. A basic principle, Yakult ladies just like the interface of Yakult, the consumers can judge Yakult by measuring Yakult ladies’ work. Their communication skills, their attitude towards the customers and their solving problems skills should had better exceed the customer expectation. Section 3: Recommendations Part 1: Segmentation, Targeting and Positioning Segmentation For Yakult, a multinational, it has segmented its global market in terms of geography and profitability. Table 1: the Yakult Business Overseas Europe |Asia |Oceania |North America |South America | |France |Taiwan |Australia |USA |Brazil | |Spain |Hong Kong |New Zealand |Canada |Uruguay | |Netherlands |Thailand | |Mexico |Argentina | |Belgium |Korea | | | | |Luxembourg |Philippines | | | |UK |Singapore | | | | |Ireland |Vietnam | | | | |Austria |Brunei | | | | |Italy |Indonesia | | | | | |Malaysia | | | | | |India | | | | | |China | | | | | |Japan | | | | Source: Based on Yakult Official Website, ‘the Yakult Business Overseas’. The above lists indicate that Yakult has great potential expansion ability in other undeveloped countries. Africa countries, Middle East countries and most of South America countries can be on the list. In recent years, Russia will be a new market. First, Russia has about 141. 9 million residents, [11] which is a huge market.

Second, the milk market in Russia is strong, especially the long-life milk and the total demand is expected to a value between 1279 to 1653 million Euros in 2012. [12] Targeting Yakult has their target consumers in different markets. In Australia, its target consumer is everybody. [13] In India, it targets on urban consumers with health conscious in metro. [14] In USA, Yakult even regards the military as its target consumers. [15] In Russia, the targeting strategy can follow the Australia pattern, targeting everybody in the country and bringing them about the products knowledge. Yakult can be consumed by everybody who can offer it. The advantages of fermented milk drinks are healthy, convenient and tasteful. The audience of Yakult can be everybody. Positioning

Yakult develops this functional food to keep everybody healthy in their daily life. Obviously, the probiotic technology helps Yakult to position easily. In Russia, many people tend to consume the long-life milk, this will be a challenge. Yakult can position itself as an expert of knowing the health and knowing what consumer likes. It can develop new technology to cater for the new taste. Part 2: Marketing Objectives and Goals – SMART Principles Yakult should have a specific, measurable, attainable, realistic and timely objective in the Russia market. This will be a motive for Yakult to move ahead. Table 2: Sales volume in different countries in 2010 in thousand Europe |Asia |Oceania |North America |South America | |Austria (20) |India (14) |Australia & |USA & |Argentina(36) | |Italy (36) |Vietnam (20) |New Zealand |Canada(89) |Uruguay& | |Luxembourg& Belgium (80) |Malaysia (170) |(184) |Mexico(3,128) |Brazil (1,444) | |Netherlands |Singapore (183) | | | | |& Spain (206) |HK (576) | | | | |UK & Ireland |Taiwan (834) | | | | |(228) |China 1286) | | | | | |Philippines (1,299) | | | | | |Indonesia (1,407) | | | | | |Thailand (2,226) | | | | | |Korea (4,176) | | | | | |Japan (8,625) | | | | Source: Based on Yakult Honsha Co. , LTD 2010, Annual Report 2010, p04-05 In Russia, in terms of the population of 141. 9 million, its attitude towards milk and its Gross national income per capita of $ 9,340. [16] The objective can be defined as following. Yakult can achieve at a sales volume of 12 thousand in its first year in Russia. This objective is specific with a 12 thousand sales volume. It is also measurable based on the population, attitudes and spending power. It is attainable because it is set after comparing with the data from other countries, like the sales volume in 2010.

Based on the R&D innovation and its unique selling channel, Yakult can cater for the demand for long-life needs and achieve at its sales, which is realistic. Here, the objective should be completed in one year, it is timely. Part 3: Product, price, place and promotion Products For Yakult, its fermented milk drinks are sometimes treated like soft drinks by some consumers. Thus, there are two functions here, one is for health and another one is for drinking, which means Yakult can target two consumer groups in terms of their buying behaviours. For health, Yakult has nutrition for everybody and its strong brand image enables Yakult to pioneer in probiotic market. For drinking, its small size and cute shape have attracted more young people, especially the girls. Price

Yakult has implemented the price discrimination plan in its global market. Like about 2. 5 pound in 7-bottle packaging in UK, about 8 Yuan in 5-bottle packaging in China and in US, it’s about 2. 99 dollar in packaging of 5 with 2. 7 ounce servings. [17] We can see the price of each bottle ranges from approximately 0. 3 dollar to about 0. 6 dollar. Russia’s gross national income per capita is ranked in the middle position between UK and China, so its price can be from about 0. 4 dollar to 0. 45 dollar each bottle. Place The Yakult lady distribution system is a bright feature in its selling channel system. Yakult can also bring this unique system to Russia market.

Besides that, the traditional selling like placing the bottles on the shelves in shops is also valuable. Linking the Internet technology with Yakult lady may be another good distribution channel. Consumers can place their orders through the Internet and the Yakult sales department will receive orders. Then, the delivery will be completed by Yakult ladies. Promotion Since there are two major ways to deliver the products, we can consider add some promotions in these two chains, the Yakult ladies and retail chain. Yakult ladies can be motivated to do the promotion work during their deliveries. For example, they can give the promotion brochures to the customers and give some discounts to customers within their power.

Retail chain will be complex due to the cooperation with retailers. Through empowering the retailers to do the promotion, the retailers can discount the Yakult bottles and free products brochures can also be sent by retailers. Section 4: Conclusion Without any doubt, Yakult do an excellent in performing its business. It has more advantages than disadvantage. Its leading position in global probiotic market, its Yakult ladies distribution system, its innovation in products and its strong brand image in the world, they are the bright features of Yakult. After all, Yakult needs to do better by continuing to highlight its features and expanding its overseas market, like Russia.

Reacting to the Russia market, the undeveloped market, population and spending power are two primary factors. Subsequently, marketing mix is given to prove that Yakult can do its business in Russia. In fact, the global probiotic market has a great of potential. Some details in marketing its overseas business should be considered accordingly. To my readers, if you have some doubts or some suggestions, you can contact me as you want to. I hope I could help you in such questions. Reference: [1] Yakult Honsha Co. , LTD 2010, Annual Report 2010,p13, Yakult Honsha Co. , LTD, retrieved 9 May 2011, . [2] Yakult Honsha Co. , LTD 2010, Annual Report 2010,p20, Yakult Honsha Co. , LTD, retrieved 9 May 2011, . 3] Yakult Honsha Co. , LTD 2011, ‘Yakult Education & Information’, retrieved 9 May 2011, . [4] AllAboutFeed. net 2010, ‘Report: Global probiotic market worth $31. 2 billion in 2014’, retrieved 9 May 2011, . [5] Afaqs! news bureau 2009, ‘Kajol gets probiotic with Yakult’, retrieved 9 May 2011, [6] Franklin, M & Uren, D 2011, Nestle, Yakult, ‘Bundaberg Sugar among food giants joining war on carbon tax’, retrieved 9 May 2011, . [7] Free Paper Download Center 2003, ‘Yakult, ‘functional’ lactic acid bacteria Lacbotacillus landing China Strategy’, retrieved 9 May 2011, . [8] Yakult Honsha Co. , LTD 2011, ‘Company Profile’, retrieved 9 May 2011, . [9] Yakult Honsha Co. LTD 2011, ‘Yakult Company Information’, retrieved 9 May 2011, . [10] Yakult Honsha Co. , LTD 2005, ‘Kirin Group and Yakult Honsha to Form Business Alliance’, retrieved 9 May 2011, . [11] Russian Federation – Dederal State Statistics Service 2010,’Redident population’, retrieved 9 May 2011, . [12] PRLog (Press Release) 2009, ‘The Growth Potential Of The Russian Milk Market Remains High’, retrieved 9 May 2011, . [13] Yakult Honsha Co. , LTD 2011, ‘Yakult Marketing Tools’, retrieved 9 May 2011, . [14] Sangita Srinivasa 2010, ‘Selling the Benefits of Bacteria’, retrieved 9 May 2011, . [15] Heller, L 2008, ‘Yakult targets military in US expansion efforts’, retrieved 9 May 2011, . 16] World Development Indicators Database, World Bank 2011,’gross national income per capita 2009, Altas method and PPP’, retrieved 9 May 2011, . [17] BestProbioticProducts. org 2011, ‘Yakult – Probiotic Product Review’, retrieved 9 May 2011, . [18] Bearden O. W. , Ingram N. T. & LaForge W. R. 2004, Marketing: Principle and Perspectives, 4th Edition, McGraw-Hill Education, New York. [19] Kerin A. R. & Peterson A. R. 1998, Strategic marketing problems: cases and comments, 8th Edition, Prentice-Hall, Upper Saddle River, New Jersey. [20] Keegan J. W. 1989, Global Marketing Management, 4th Edition, Prentice-Hall, Englewood Cliffs, New Jersey. [21] Cravens W. D. & Piercy F. N. 2003, Strategic Marketing, 7th Edition, McGraw-Hill Education, New York.

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