Tetra Pak Case studyThe challenge of intimacy with a key customer
Group 2David, Toichiro, Angela, Mansoor, Joe,
Andy
Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation
Proposition
Content
Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation
Proposition
Content
Tetra Pak – Company profile
Tetra Pak’s packaging products
Establishment: 1952.
Founder: Dr. Ruben Rausing.
Home country: Sweden.
World’s largest producer of
aseptic carton packaging
Swedish company
Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation
Proposition
Content
Buyer Power
Supplier Power
SubstitutionRivalry
New entrants
-1
1
3
5
Five Forces– Italian Packaging Industry
Strong competition and relatively high buyer power
Competitor Analysis – Italian Packaging IndustryTetra Pak Combibloc Elopak
Background • Market leader of carton package• Innovator of aseptic
Second largest of carton package
Vision to become the world leader in non-aseptic segment.
Market share
80% aseptic carton 10% carton share
Products Cartons, equipment, services
Cartons, packaging systems
Carton & plastic systems, plastic packaging
Sales 1999 (World)
7 bil EUR 767 mil EUR 483 mil EUR
Strategy Expand to plastics •Expand to plastics•Low price &
new design.
Expand to plastics
Potential threats from Combibloc in Cartons market with aggressive pricing strategy and new designs.
Tetra Pak’s SWOT Analysis
• Market leader in Italian carton (80% market share).
• Innovator of aseptic technology.
• Global knowledge base in liquid foods industry.
• Long history and sole partnership with Pontero.
• Key supplier for all biggest Italian milk companies
Strengths
• Primarily dependent on diary products.
• Declining sales in Western Europe
• Prices higher than competitors
• Weaker position in plastic market
• Potential crack with Pontero.
• Non-customer focused orientation.
Weakness
Tetra Pak’s SWOT Analysis
• Growing plastic pkg market
• Rise of new “enriched milk”
business.
• Increasing demand of space-
saving package.
• New private milk labels
Opportunities
• Trend of lower cost packaging.
• Reduction of full-fat milk demand.
• Relationship with Pontero in danger.
• Intense competition with new aggressive competitors.
• Drop of sales in Western market.
Threats
Tetra Pak’s Organizational structure
President & CEO
Chief Technology Officer
Legal Affairs
Chief Technology Officer
Legal Affairs
Legal Affairs
Plastic Division
Processing Division
Carton Division
Market CompaniesMarket CompaniesMarket Companies
AsiaAmericasEU & Africa
Traditional organizational structure which focuses on sales and profits.
Lack of focused customer-oriented marketing unit.
Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation
Proposition
Content
Tetra Pak’s Marketing Challenges
Challenge of intimacy with key customer (Pontero)
Pontero asks for marketing advice for growth
Combibloc waits for a chance to replace Tetra Pak
→ Potential crack with Pontero (KEY CHALLENGE)
Challenge of rising competition & declining market
Combibloc aggressively aims to cost reduction
Plastic market becomes more intensive
→ Potential threats from competition
What are the real problems
behind the drop of market
share?
Italian Milk Industry Overview
Milk Industry Segmentation
Full FatSemi-
skimmedSkimmed Enriched
57%
17%
19%
7%
Market share by segments
Full fat Semi-skimmed Skimmed Enriched 1995 1996 1997 1998 19990%
20%
40%
60%
80%
100%Market trend by segments
Full fat - Plain Semi skimmed - Plain Skimmed - PlainEnriched Milk - All
Mature and concentrated marketIncreasing trend of Enriched milk
Italian Milk Industry Overview
Oct/Nov 98
Feb/Mar 98
Oct/Nov 99
Feb/Mar 99
- 5,000 10,000 15,000
Shelf place trend in shops
Pontero Filo Andina
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%18.0%20.0%
18.0% 16.0%
10.9%13.0%
9.3%
12.0%
Market share evolution
Pontero Filo Andina
0
5
10
15
20
25Average Sales per shop
Pontero Filo Andina
Buyer Power
Supplier Power
SubstitutesDegree of rivalry
New entrants
0
5
Threats for Pontero from intense competition
Pontero Filo Andina0
10203040506070
60
2921
Number of outlets
-35 years old
35-49
+50 years old
1%2 people 3 45 &
5+
No child
ren
-6 years
6-15 years0%
10%20%30%40%50%60%
24%31%
45%
30%24% 27%
19%
52%
23% 25%26%
37% 37%
19% 21%30% 30%
40%23%
37%
Consumer research1999 Pontero 1999 Andina
Best quality perception
Today's buyer Spontaneous recall
Named as first brand
0%10%20%30%40%50%60%70%80%90%
Pontero Brand Profiles1998 1999
Pontero’s performance
Strong distribution network and brand perceptionBut losing advantages in some segments
Pontero’s SWOT Analysis
• Market leader in full-fat,
skimmed and semi-skimmed.
• Extensive national distribution.
• Diversified product portfolio.
• Strong relationship with leading
packaging company
Strengths
• Losing market share.
• Losing shelf space.
• Higher production costs.
• Declining margin in premium products.
• Narrowed brand positioning.
Weakness
Pontero’s SWOT Analysis
• Business expansion
opportunities
• Growing semi-skimmed segment.
• Potential enriched milk segment
• Growth of alternative beverages.
Opportunities
• Declining full-fat milk segment.
• Growing substitutions for milks.
• Brand damage if wrong move.
• Increasing private label milks
Threats
Reasons of falling market
share:
Less effective distribution.
Sales drops.
Ignore new market trends.
Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation
Proposition
Content
Advantages Disadvantages Eva
Abandon Enriched milk altogether
•Protect Pontero’s brand image.
• Ignore a new trend of market.•Do nothing to recover
market share.• Impact to Tetra Pak
business.
2.5
Reintroduce enriched milk with a twist
•Catch the trend of new market.•May recover share loss.•New business for Tetra Pak
•Potential risks to brand image.•Threaten relationship
of Tetra Pak and Pontero1
Aggressive plan to improve Pontero’s current operations
•Do not against Pontero’s philosophy.•Recover Pontero’s share
loss.•New business for Tetra Pak
•High investment in marketing
4
Addressing Solutions
Advantages Disadvantages Eva
Abandon Enriched milk altogether
•Protect Pontero’s brand image.
• Ignore a new trend of market.•Do nothing to recover
market share.• Impact to Tetra Pak
business.
2.5
Reintroduce enriched milk with a twist
•Catch the trend of new market.•May recover share loss.•New business for Tetra Pak
•Potential risks to brand image.•Threaten relationship
of Tetra Pak and Pontero1
Aggressive plan to improve Pontero’s current operations
•Do not against Pontero’s philosophy.•Recover Pontero’s share
loss.•New business for Tetra Pak
•High investment in marketing
4
Addressing Solutions for Pontero
Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation
Proposition
Content
Improving sales by aggressive marketing mix
PRODUCT
New packaging New multi-function design Develop milk substitutes
Skimmed milks to niche markets
Micro-filtered milk
Improving sales by aggressive marketing mix
PLACE
Increase trade discount New channels
Improving sales by aggressive marketing mix
PROMOTION
Promotional TV Ads Social responsibility activities
Social eventsCelebrity testimonial
Suggestion for “Enriched milk”
Enriched milk is new trend of the market but against Pontero’s philosophy.
Enriched Milk Acquisition
Develop in separated brands to avoid brand conflicts
Other actions for Tetra Pak in future
Evolve current organizational structure
Establish independent marketing department to work more
strategically with customers
→ Avoid another “Pontero” in the future
Align with customer’s business strategy
Implement a CRM system
Thank you