• Subject Name : Management

Food Industry Structure in Norway and Denmark

Value Analysis

Value analysis is referred to as the systematic efforts geared to improving the performance of products and services either produced in-house or sourced from external vendors (Zohoori et al., 2019). The value analysis extensively examines the information systems, materials, the influx of materials involved, and the processes involved in the production. The product portfolio is a menu that shows the numerous goods and services a firm produces and offers to the market for sale (Hannila et Al., 2019). Its analysis gives nuanced and deep insight into the working of a particular company and its potential earnings.

Arla firm deals in dairy goods and products and is regarded as one of the biggest companies in Europe and holds a significant market share for its products both in Europe and internationally. In its product portfolio. The brands in the Arla portfolio include Castello, Lurpak, Dano, and Puck. Arla firm offers dairy products categories such as milk and powder, spreadable cheese, milk-based beverages, yoghurt, speciality cheese, butter and spreads, and mozzarella. All these products offer value for money to consumers, and they find them fit to be used time and again. In the portfolio, there are also some sub-brands s Arla® Lactofree, Arla® Protein, and Arla® Yoggi. The firm markets all these products in the portfolio through its marketing strategies.

Value positioning for Arla products depends on the quality of the products that the firm offers to the market for consumption by its consumers. The value-based positioning believes that the more expensive the product is, the better it is perceived to be. Value positioning fosters the value of Alar’s products in the minds of the consumers, and the product is perceived to be fair and of quality. The value-based positioning requires Arla first to establish value for its products, then price them high. The benefit of this positioning strategy is that it gives customers adequate information about the products in a unique way that resonates and stays in the consumer minds forever. The costs attributed to positioning are production costs $7177 in 2016, $7833 in 2015, and $8470 in 2014. Other costs included sales and distribution costs, administration costs, additional operating costs, financial costs, taxes, and minority interests’ costs.

Arla’s area of operation has many competitors who deal in the same line of products. Some of the competitors of Arla are the companies that offer alternative products to dairy products. Some of the firms that compete with Arla are Oatly and Alpro. These two companies deal exclusively with plant-based alternatives to dairy products. The discounters, hypermarkets, and supermarkets have recently ventured into the sale of dairy products and have dominated the market that deals in dairy products. Another great competitor to the firm is the e-commerce platforms. The e-commerce platforms call and motivate Alar also to run digital and execute digital media to ensure that it features and excels in the market. Other competitors in this field that Arla operates are the retailers. The retailers buy products from Arla, and they rebrand them to their names and sell them. Since the retailers’ products are more trusted, Arla faces steep competition in its area of operation.

Market Segmentation and Targeting

Marketing segmentation and targeting involves the identification of potential customers, and selection of the customer group to pursue, and investing in creating good value for the targeted customer groups. The process is achieved through appropriate segmentation, keen targeting, and positioning process. Precisely, the process helps companies in grouping customers based on location, demographic, and lifestyle. The segmentation process significantly influences the company’s strategies for communication, consumer management, and pricing (Klimek, 2017). Arla Foods is among the largest corporate companies in Europe and is also highly rated internationally. The company by merging two companies located in Sweden and Denmark at the beginning of the 1900s. The primary reason behind the merger was to co-invest in the production of dairy products. Also, they targeted turning natural milk to higher-quality products. Since the Merger, Arla has managed to secure the fourth largest milk -pool in the world. From 2007 to 2016, the company almost doubled its supply from approximately eight million to not less than 14 billion kilos. This doubling has enabled the company to pursue more customers globally.

The doubled production and marketing have enabled Arla to establish market positions in Europe by eventually expanding its services to Germany, the United Kingdom (UK), Finland, and the Netherlands through mergers and acquisitions. Over the past few years, the company has established six mergers in Europe, Sweden, and the United Kingdom (UK). Also, the companies have commenced establishing offices in China, the USA, and South-East Asia hence building a truly global service delivery. Although the company struggles to develop new mergers and customer bases daily, daily consumption is falling daily. The gradual fall in consumption has consistently resulted in to drop in annual income. For instance, according to marketing statistics 2015-2016, the revenue income declined by 6.9% in Europe. Contrary, in the same period, 2015-2016, the company experienced a revenue gain of 5.9% internationally. According to projection, the consumption of Arla’s dairy products is expected to fall with the rising competition from other dairy companies that are actively securing the market. The fall in the rate of consumption is directly attributed to changing consumer needs. Recently, consumers mostly choose dairy commodities depending on food’s content, production method, texture, and point of purchasing. Also, millennial health, convenience, and trust have directly affected the choice of dairy products in the market.

Arla Food company deserves a more significant market share and positive revenue income from all its customer bases. To attain this, the company ought to develop its role as aa global food company and significantly add value to its life through responsible operations and natural nutrition. The success of the company will result from excelling in its eight dairy categories and consistent focus in securing and maintaining six or more geographical regions. According to global statistics, the company should establish strength in the eight dairy categories: milk and powder, spreadable cheese, milk-based beverages, yoghurt, mozzarella, butter, and speciality cheese. The company should build the regions where it has established the most significant potential and grow a profitable business for its farmers. The regions include Northern Europe, Middle East, Nigeria, Russia, China, and the USA, where it’s the preferred dairy company.

References for Arla Food Company Analysis

Hannila, H., Tolonen, A., Harkonen, J., & Haapasalo, H. (2019). Product and supply chain related data, processes and information systems for product portfolio management. International Journal of Product Lifecycle Management12(1), 1-19.

Klimek, B., & Hansen, H. O. (2017). Food industry structure in Norway and Denmark since the 1990s: Path dependency and institutional trajectories in Nordic food markets. Food Policy69, 110-122.

Zohoori, B., Verbraeck, A., Bagherpour, M., & Khakdaman, M. (2019). Monitoring production time and cost performance by combining earned value analysis and adaptive fuzzy control. Computers & Industrial Engineering127, 805-821.

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