Tunku Abdul Rahman University College

TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

ACADEMIC YEAR 2014/2015 SEMESTER 1

BACHELOR OF CORPORATE ADMINISTRATION (HONOURS) YEAR 2

BBDT2073 MARKETING MANAGEMENT

GROUP WRITTEN ASSIGNMENT

TITLE: _____DUTCH LADY MALAYSIA_____

LECTURER/ TUTOR: ____MR. LIM CHIN HOCK____

DATE OF SUBMISSION: _______17 JUN 2014_______

TUTORIAL CLASS: GROUP: _____GROUP 1,8,9_____

Company Background

The story of the Dutch Lady was started from 50’s that is after the World War II. In year 1954, a trading company called Friesland (Malaya) Pte Ltd was formed to market sweetened condensed milk imported from its parent company of Holland in Malaya and Singapore. There are several brands that was a certain Dutch Baby brand. After came to 60’s, Pacific Milk Industries (Malaya) Sdn Bhd was incorporated in Malaysia. When year 1968, it was converted into a public company and it is the first milk company that successfully listed in the Bursa Malaysia also known as the Local Stock Exchange. After 7 years that is in the year of 1975, the name of Pacific Milk Industries Berhad changed to Dutch Baby Milk Industries (Malaya) Berhad in order to avoid confusion the name of company in the trade and marketplace and their main product was Dutch Baby Sweetened Condensed Milk. In 1984, the brand name was changed again from Dutch Baby to Dutch Lady for product positioning reason.

The mission of the Dutch Lady Milk Industries Berhad is to help the Malaysian move forward in life with trusted daily nutrition. With the vision is to further strengthen their position as the leading dairy company, driving growth. Apart from this, there are about 22,000 employees with 100 productions lines and sales locations in 25 different countries. Since the Dutch Lady Milk Industries Berhad is a part of Royal FrieslandCampina, therefore it will obtain support from the parent Company. Which mean Dutch Lady Malaysia can have the benefit of global procurement services while the Research and Development unit which has around 400 scientists help make sure the quality of the products and practices are good. There are some competitors of Dutch Lady Malaysia that are Giant Nestle and Fonterra. But, because of Dutch Lady Malaysia does hold a niche when it comes to milk, therefore they have more priority.

It was also the first company to launch the growing up milk formula range in 1988 and marketed as Dutch Lady 123, Dutch Lady 456 and Dutch Lady 6+. In 2011, Dutch Lady is leading the market share in the growing up milk segment with 40 percent of the market share. The dairy products manufacturer of Dutch Lady targets to secure its market share in the growing milk segment with the launch of the enhanced formulation of the Dutch Lady Growing Up Milk. They developed the improved formulation and make DHA more readily and easily available for contributing it to the children’s healthy diet. As a result, the new formula was projected to boost the company’s revenue because the milk segment was one of the biggest revenue contributors.

Besides that, Dutch Lady Milk Industries Berhad is on track to achieve its RM1 billion revenue target in the financial year ending December 31, 2013. The company also disclosed the revenue of RM810.65 million in the year ended December 31, 2011, while its revenue in the first quarter ended March 31, 2012 was RM214 million. In year 2013, Dutch Lady had achieved most of all years.

Lastly, the company had achieve a lot of awards, for example, NPC productivity 2004, ISO 9001:2000 that is Quality System Certification, The reader’s digest superbrands gold award 2007, Halal certification for local and international market, The Hazard Analysis and Critical Control Point (HACCP) certification, ISO 14001:2004 that is Environmental Management System (EMS) and OHSAS 18001:1999.

Analysis of marketing environment (PEST)

Political forces

Prime Minister of Malaysia Datuk Seri Najib Razak has informed to the public about the introduction of Good and Service Tax (GST) coming at 6% and will be effective on April 2015. (Liew, 2014), It will bring the bad effect to the public and business in Malaysia. Dutch lady product does not include in the list of exemption for GST. In addition, sales tax rate in Malaysia has decrease 4% from year 2010 to year 2014. The sales tax rate is a tax charged to consumers based on the purchase price of certain goods and services. Even though Dutch Lady Product does not included in the list of exemption of sales tax, the prices of the goods will not increase because of the decreases of sale tax rate 4 % from the year after 2010. Moreover, Prime Minister has also informed that the sales tax as well as the service tax now of 6%-10% which will be repealed once the GST is introduced. Therefore, the Economist expects that GST will be revenue neutral for the government because gains will be offset due to the termination of the sales and service taxes.

Economic Forces

 The inflation rates will affect the consumer’s purchasing power. The Statistic Department announced that the Consumer Price Index (CPI) measured the inflation rate has grown 0.1% from the previous four month of February. The inflation rate now has reached 3.5% in March 2014.( Thestar.com.my, 2014)

The cost of production increases as the price grows. If the price increased in a faster pace compared to the consumer income, the consumers have low purchasing power to purchase the product. As a result, Dutch Lady Sales will be declining because the consumer will look for other brand of substitute’s product (using low cost strategy) which the prices are lower than Dutch Lady.