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Murray Goulburn Marketing and Business Report

by Suleman
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Murray Goulburn Co-operative has been increasing immensely since its establishment in 1950. With a share of about 35% in the industry, it is now the largest milk processor in the country. In addition, it is also the biggest refined food exporter in Australia. In order to keep its market share steadily rising, Murray Goulburn concentrated on its R&D of Nutraceuticals. Murray Goulburn is in direct rivalry with Fonterra Ingredients Ltd., Australia’s second-largest milk producer, with a market share of about 17 percent. (Murray Goulburn Co-operative Co. Limited, not dated and Dairy Investment WA, not dated)

            It has not been long since Murray Goulburn entered the retail milk market after getting the key brands licensed from National Foods. The growing section of Murray Goulburn’s domestic business is represented by an estimated 20% of MG’s turnover. This section covers a variety of products that are being offered to the Australian consumer. (Stock & Land, 2009 and Murray Goulburn, 2009)

            These products are either manufactured after signing contracts of packing arrangements with the Food Service wholesalers and key retailers, or marketed by Devondale, which is Murray Goulburn’s own brand. In last few years, this section has gone through lot of diversification and grown substantially. (Murray Goulburn, 2009)

Murray Goulburn Marketing and Business Report

            Devondale is one of the very few Australian daily brands that are distributed all over the country. Devondale products can be bought from any supermarket chains in Australia. Devondale’s main products are UHT Milk, Reduced Fat, Mild, and Tasty Cheddar Cheeses, and Soft Butter Spread. Devondale has also maintained a Value added range of products including the SMART, a range of Reduced Fat Devondale Light and UHT Milks. It also includes a range of 40% Fat Dairy Spreads with 50% less fat than margarines. These products are aimed at particular segments of the market.

            People who are health conscious find these products very beneficial. Devondale has been able to become the brand leader in Australian markets. Murray Goulburn also supplies to specialized segments of the market. These segments are formed after long term retail links and a history of working in close contact with the consumers in order to satisfy their exacting standards.

            Murray Goulburn works in collaboration with the major Australian Food Service wholesalers. This division has been growing year after year. Most of the sales come from UHT categories, Cheese, and Butter. However, the division has also introduced new products, for instance, Liquid Cheddar Cheese.

            The progress of Murray Goulburn in the consumer sector for dairy goods depends heavily on its research and production. Murray Goulburn continues to enhance procedures to render goods more innovative, with its primary focus being the happiness of its clients. It also manages to keep its place intact as a market leader by maintaining low cost production procedures. Close relations with the customers in order to enhance the product development, is the key to Murray Goulburn’s success.

Murray Goulburn has great capability of research and development of its own operations, and it manages to perform even better because of its collaboration with the global research facilities. This keeps Murray Goulburn at the forefront when it comes to dairy technology.

A 250 ml daily intake of milk can keep the bones strong, enhance energy levels, boost cardiovascular health, and improve immunity. In today’s day and age, in order to sustain growth in the market, Dairy companies need to go beyond this level. For this purpose, successful dairy companies have spent millions on research and development in order to maximize the benefits from milk. (Australian Government, 2008)

Murray Goulburn Co-operative Co Limited has a subsidiary Murray Goulburn Nutritionals (MG Nutritionals), which was established in 2002. This subsidiary is to find out the new ingredients which can be used in its specialised proteins and other nutritional supplements. (Australian Governement, 2008)

MG Nutritionals, based in Melbourne, Victoria, works in collaboration with the biotechnology firms, universities, and scientific research organizations to carry out clinical trials and fundamental research. With the collective efforts, Murray Goulbourn has been able to discover new ingredients that are dairy-based. These new ingredients can be used in infant formula, yoghurts, health supplements, bread, or even cosmetics. (Australian Government, 2008)

According to a government report published last year Murray Goulburn employees 2,300 people and makes revenue of about Australian dollars 2 billions per annum. The company also makes up about 10% of the global dairy trade. Market research is a salient feature of Murray Goulburn’s marketing mix. It spends over 6 million Australian dollars on product innovation, process improvement and other areas annually. (Australian Government, 2008)

Market segmentation is done by dividing the market into different parts or segments. The business may concentrate on one, or several or all of different segments. If the business concentrates on one segment only, this is its niche market. These markets are normally for specialist, or limited demand, items. This process assists the marketing department in attaining a better understanding of the market.

Market segmentation also allows businesses to target the product in each segment by establishing its USP i.e. Unique Selling Point, the feature that distinguishes this product from others; and also its advertising and other forms of promotion in the segment.

In case of MG Nutritionals, the focus is on market of functional foods. The aim is to encourage general wellbeing and health. This market is worth approximately US$70 billion and grows about 8% annually. MG’s business unit is dedicated to managing research and development and make sure that their product is backed with marketing and technical expertise at best. Moreover, MG Nutritionals also draws on the technical employees, manufacturing and corporate staff of its parent company. (Australian Government, 2008)

Mr. Peter Hobman, Genneral Manager for MG Nutritionals, was reported to have said that the company is positive about many new opportunities in the market for functional foods and wishes to avail them. He added that advance scientific researches about the benefits that can be extracted from milk have inspired the company to do further researches and investigations in this field. He said that in such a competitive market, it is challenging to make your space. He thinks that this can be done through commercialisation activities and accelerating the company’s R&. (Australian Government, 2008)

MG Nutritionals has been very successful as for its R&D is concerned. It has established a facility where lactoferrin is being extracted from milk. Lactoferrin is an anti-microbial component. This world-class facility uses best quality ion-exchange chromatography in the extraction process. (Australian Government, 2008)

This facility, located in Leongatha, Gippsland, is a huge success. Dr Michelle Rowney, the Research and Development Manager MG Nutritionals, is of view that the project is successful because pharmaceutical-based processes were used in the dairy manufacturing plant. He added that the technology-enabled them to refine what was extracted. They were able to attain 95% pure lactoferrin with its natural benefits. (Australian Government, 2008)

When MG Nutritionals was initiated back in 2002, a program was launched to discover new bioactives with the help of cell-based arrays, high-throughput screening, and other traditional pharmaceutical methods. This program was carried out with assistance of several Australian universities and research organisations. Now MG Nutritionals is focusing on attaining commercialisation opportunities. (Australian Government, 2008)

Dr Rowney had told media that some exciting discoveries were made during the research and the company is narrowing down its choices. It is going to incorporate three or four ingredients which are going to enable the company to achieve the highest potential for development. (Australian Government, 2008)

Australia enjoys its reputation of ‘clean and green’ and hence it is considered the best location for food-related R&D. When people buy an Australian dairy product, they don’t have to worry about the quality controls and manufacturing standards. MG Nutritionals also believes in supporting Australian farmers. It has a manufacturing facility in Tasmania and eight in Victoria. Moreover, distribution and sales networks are also very efficient. (Australian Government, 2008)

MG Nutritionals R&D is also backed by the government departments, CSIRO, and the industry bodies. MG Nutritionals also has licensed technology from biotechnology firms. They can use the extract for several applications and repair purposes when tissue is damaged. (Australian Government, 2008)

Dr Rowney was also reported to have said that people are generally very receptive and excited about the R&D carried out by the MG Nutritionals. It stimulates their imagination and adds to goodwill of the company. (Australian Government, 2008)

Because of its remarkable achievements in the field, MG Nutritionals received two grants from the government. One of these grants came from the Gardiner Foundation, which aims to boost the Victorian dairy industry. The other grant was a subsidy from the government under its National Food Industry Strategy. Both these grants amounted to several million dollars and were used for the funding of clinical trials, development of new manufacturing procedures, research, and animal studies. Dr Rowney expressed his gratitude for these funds and said that many of the company’s discoveries would not have been possible, had the company not received these funds. (Australian Government, 2008)

With its efficient marketing mix, backed with extensive research in accordance with the customer demands and focus on particular segments of the market, competitive prices, proper distribution and sales networking, and promotion, Murray Goulburn has earned its place in the dairy industry. This process of branding is about gaining consumers’ trust and guaranteeing the consumer that the next one bought will be virtually the same as the last one, or even better.

This encourages repeat purchases through brand loyalty. It also makes it easier to differentiate the product in a market amid presence of a huge variety of competitors. The business may also use its Unique Selling Point (USP) to boost its sales. The possibilities of mass advertising open up as well in case of branded products.

Devondale is very particular about its targeted market. It believes in catering to the sophisticated tastes of the Australian population. It also takes care of other factors like time constraints and that it is challenging for working people to take out time and prepare family meals. Moreover, Devondale also keeps track of the trends in society about diet and health awareness. (Devondale, not dated)

DEVONDALE Light’N Tasty Cheddar Cheese with 25% reduced-fat and DEVONDALE Extra Soft dairy blend table spread, and DEVONDALE Seven, which is a full flavored cheese with 7% fat; were introduced as the company’s market research revealed that consumers were eager to have low fat products and were keen about health awareness. DEVONDALE Smart Milk was also introduced, which is low fat long-life milk. Consumers facing time constraints may now have convenient and nutritious products. This happens after a long process when MG Nutritional’s support and sales staff monitors the market closely so that products can be designed according to consumers’ requests. (Devondale, 2008)

Devondale also caters to the hospitality industry with its highly specialised products. This industry does not merely consist of restaurants and hotels. It also involves air and shipping lines, isolated military camps and mining, hospitals, sporting and cultural events, bakeries, and special care homes. As a significant portion of the incomes is spent outside home, hospitality industry becomes an important market. (Devondale, 2008)

Devondale’s milk products include Full Cream Milk, Skim Milk, Semi-Skim Milk, Point One, Smart Milk, Smart Plus, Smart Omega-3s, Reduce TM, and Skim Milk Powder. Its Cheese range is also diversified and includes Moo Zoo TM, Organic Tasty, Mild, Colby, Tasy, Light’N Tasty, Vintage, sandwich Slices, Seven, and Cobram. Spreads and Butter range includes Butter, Dairy Soft, Extra Soft, Light, Light with Calcium, and Reduce TM. The cream variety includes three products, namely, Thickened, Long Life, and Sour Light. (Devondale, 2008)

Devondale’s promotional slogan ‘From our family to yours’ is very effective in creating the desired image. The farmers who work for Devondale feel like a part of a one big family. This concept is used to encourage the sales of Devondale products. The advertisements also emphasize on Devondale being “100% Australia Farmer Owned”, this also has psychological implications on the consumers and they are more motivated to buy the product. (Devondale, 2008)

The promotion is carried out through advertising using television, magazines and outdoor mediums. Photo promotions are also very crucial in case of Devondale. They have introduced different schemes and rewarding system for the consumers. For instance, on buying Devondale Spreads, and earning certain number of point, consumers can claim 50 free photo prints or a Classic Photo Book. Murray Goulburn has indeed hard-earned this place in the dairy industry.

References;
  • Murray Goulburn Co-operative Co. Limited, Overview, not dated, http://www.mgc.com.au/profile/index.asp, Accessed on September 8, 2009
  • Dairy Investment WA, Milk companies in Australia, not dated, http://dairyinvestwa.com/markets/milk-companies/, Accessed on September 8, 2009
  • Stock & Land, Murray Goulburn to enter retail milk market, April 2009, < http://sl.farmonline.com.au/news/nationalrural/dairy/general/murray-goulburn-to-enter-retail-milk-market/1476850.aspx, Accessed on September 8, 2009
  • Murray Goulburn, Retail, Corporate Brands & Food Service, not dated, < http://www.mgc.com.au/business/retailfoodservice.asp>, Accessed on September 8, 2009
  • Murray Goulburn, Research & Development, not dated, http://www.mgc.com.au/rd/index.asp, Accessed on September 8, 2009
  • Australian Government, Australian Businesses Global Markets, Murray Goulburn Nutritionals finds smart science in Australia, 2008, < http://www.austrade.gov.au/Murray-Goulburn-Nutritionals-finds-smart-science-in-Australia/default.aspx>, Accessed on September 8, 2009
  • Devondale, not dated, http://www.devondale.com.au/, Accessed on September 8, 2009
  • Devondale, Market, not dated, http://www.devondale.com.au/about/market.asp, Accessed on September 8, 2009

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