Dannon Case Analysis Essay

In 2007 and 2008, Dannon, the #2 yogurt provider, was losing valuable market share to its top competitor Yoplait. Despite the growth opportunity in the domestic U.S. yogurt market, Dannon’s growth had surprisingly slowed. At the end of 2008 Yoplait was the U.S. yogurt market leader with 35.4% of the market dollar share while Dannon only held 28.9% of the market. Yoplait held a competitive advantage over Dannon that gave it a huge leg-up. Dannon lacked the external CSR that had come to build Yoplait a valuable and loyal brand following. Most notably was the â€Å"Save Lids to Save Lives† breast cancer awareness campaign that Yoplait put on every year since 1997. Dannon had their own CSR initiatives; however, they were internally communicated. This ended up hurting Dannon’s exposure and community relations in the market place. To be a formidable competitor for Yoplait, Dannon must eliminate Yoplait’s CSR competitive advantage while customizing its own CSR initiatives to generate new sales opportunities. The U.S. is not a large consumer for yogurt. Comparatively speaking, France and Switzerland consume over four times as much yogurt as the United States despite being sizably smaller. If Dannon uses external CSR to show consumers that eating Dannon yogurt is an important staple in a healthy diet, this can generate new sales opportunities for Dannon. Externally communicating these messages to the public allows Dannon to show-off the time and money they spent researching the health benefits of yogurt. Not only can Dannon eliminate Yoplait’s competitive advantage but it can also grow new revenue streams by educating people that yogurt is a valuable and essential part of a healthy and well-balanced diet. Problem Statement Despite heavy marketing efforts in a growing U.S. yogurt market, Dannon was stagnant as the #2 Yogurt producer in the domestic U.S. and was unable to take over Yoplait for the #1 spot in 2009. Dannon was not only unsuccessful in leap frogging Yoplait to become the #1 yogurt producer, they were also losing market share at the same time. Data Analysis  In 2008, Yoplait stood as #1 in the market place with a 35.4% market dollar compared to Dannon who held a 28.9% market share. 67% of Yoplait’s sales were comprised of the Light and Staples segments. This number is staggering considering that Dannon’s overall company mission is â€Å"bringing health through food to as many people as possible.† Dannon also has â€Å"The Dannon Institute† foundation, which was active in research and education on healthy eating and dieting. Despite the mission of the company and the research that Dannon conducted, Yoplait was far more successful because of the external communication of their CSR. Since 1997, Yoplait has run its â€Å"Save Lids to Save Lives† breast cancer awareness campaign. It is well-known by consumers and this external CSR has allowed Yoplait to build a strong and loyal brand. Even though Dannon has done their own CSR initiatives, they were communicated internally as most consumers were unaware of the Dannon Institute and what is done there. According to a survey done by the branding company Landor Associates, 77% of consumers think that companies should engage in social responsibility. If people are unaware that Dannon is being socially responsible then this could explain why they are not competing as much as they could be in the Light and Staples segments. Alternatives 1. Dannon could externally communicate their CSR to make consumers aware of the internal CSR they were already doing. 2. Dannon could increase their marketing and advertising budget in the Light and Staples segments to attempt to pry-away market share from Yoplait. 3. Dannon could run special taste testing promotions at retail outlets to get people to try and hopefully like their yogurt. 4. The company could advertise as the corporate company of Dannon rather than focus the advertising on the individual brands like it already does. Key Decision Criteria 1. Increase sales and market share 2. Increase customer satisfaction and corporate image 3. Be consistent with corporate mission or strategy 4. Improve (or at least maintain) profitability 5. Within our present resources or capabilities 6. Within acceptable risk parameters 7. Ease or speed of implantation 8. Minimize environmental impact 9. Maintain and build employee morale and pride Alternatives Analysis 1. Even though Dannon has been partaking in CSR for quite some time it has always been done internally rather than externally. Because of this, consumers are unaware of the Dannon Institute, which has been active in researching and educating about healthy eating. If Dannon communicated this to its audience it could enlighten people on the benefits of healthy eating and how yogurt could be a healthy staple to people’s diet. This could potentially cause more people to purchase yogurt and also cause current yogurt buyers to purchase more frequent. The negative to this is that these CSR efforts could be seen as a copy-cat to Yoplait. People may not believe the findings, as they could think these findings are just a sales pitch to get them to believe that they should buy yogurt. Also, there is no measurable ROI for this strategy. 2. Increasing their marketing budget for the light and staples segments could give Dannon a lot more exposure that potentially could take away the huge market share that Yoplait holds. With Activia already a huge success, the increase in marketing is two-fold. It aims to generate new buyers as well as aiming to get current customers (such as Activia buyers) to purchase their products in other segments. The negatives of this are the cost. Dannon would be spending more money without having any differentiation or competitive advantage over Yoplait that would cause customer’s to switch. 3. The advantages to taste testing are self-explanatory because the hardest part of getting someone to buy a product is the fact that they need to be willing to try it first. Giving people a free chance to try it can give them a gauge to see if they like it. It also gives current Yoplait buyers the chance to see if they may like Dannon’s taste better. The biggest con is the cost because Dannon is giving away free product. For the promotion to have any chance of success, yogurt would need to be given free to thousands of retail outlets across America which is a huge initial hit on profit. Another con is that yogurt is not a staple of the American diet so new; non-yogurt eaters may not even be willing to try it in the first place. 4. Currently, Dannon advertises by their individual brand. By advertising on the corporate level it could give credibility to the Dannon brand altogether. This credibility could give a competitive advantage through engagement with the community and customers. The biggest problem with this is that Yoplait had been doing this for years with their â€Å"Save Lids to Save Lives† campaign. This gave Yoplait a sizeable competitive advantage. Because something like this was already being done by Yoplait the effects of Dannon mimicking Yoplait would barely yield, if any, competitive advantage. Recommendations  Based on the facts presented, I think it is important for Dannon to externally communicate their CSR initiatives. Yoplait has had a sizeable competitive advantage with their â€Å"Save Lids to Save Lives† campagain which has given them a leg-up on Dannon since 1997. The reason for Dannon to externally communicate their CSR efforts is two-fold. To eliminate the competitive advantage Yoplait currently holds as well as educating consumers about the health benefits of yogurt to generate new and residual revenue for the company. In regards to Dannon’s CSR, they have some of the best kept secrets going. The problem with that is that they are currently secrets and customers don’t know about their internal CSR efforts regarding people, nutrition and health and nature. The Dannon Institute has been around since 1991, with the mission â€Å"to develop and disseminate scientific knowledge on diet and nutrition to benefit public health.† Had Dannon externally communicated this when they first launched the Dannon Institute they could have held the competitive advantage that Yoplait currently holds. It is crucial for Dannon to externally communicate the projects and research that they are currently doing so that it lessens from marketability and uniqueness of Yoplait’s CSR. In regards to potentially facing backlash for what appears to be copying Yoplait’s CSR efforts, this is not the case for Dannon because the two efforts are much different. Yoplait is simply donating and engaging customers to donate towards a worthy cause. Dannon, on the other hand, is actively engaging in research on healthy eating and the benefits of how yogurt can improve health and quality of life. Yoplait is not actively engaging in breast cancer research. While they are promoting a worthy cause, they are not doing so hands-on. Dannon is not simply donating money to â€Å"look good in the public eye,† but rather, they are spending time and money to investigate how their products promote a healthy life-style and how engaging children in a healthy lifestyle can help prevent diseases such as a diabetes and obesity. This is much different than what Yoplait is doing and may even lead to a slight competitive advantage in Dannon’s corner for their active engagement regarding healthy eating and the benefits for children who follow a healthy life-style. The biggest benefit of externally communicating Dannon’s CSR is generating new sales by educating consumers about the health benefits of yogurt. Yogurt is more of a staple in Europe, where France in Switzerland consumer over four times as much yogurt as the United States despite being much smaller in population. This is why there is excellent potential growth in the U.S. yogurt market. The big question is how does Dannon convince the U.S. population to buy more yogurt? The answer is educating them on the health benefits of yogurt and why it is an important staple of a healthy diet. The U.S. economy is a huge market for dietary supplements. In 2006, The Economic Impact Report, completed by Dobson | DaVanzo, a Washington D.C.-based economic research firm, quantified that the dietary supplement business was responsible for over $20 billion dollars in sales. This is over six times larger than the domestic U.S. yogurt market. People in the U.S. are very active consumers when it comes to buying products that will help them lose weight. Dannon can cash in on untapped potential by externally communicating the weight-loss benefits of adding yogurt to a healthy diet. People buy dietary supplements because they are advertised to aid in weight loss. By marketing and educating the public on the research that Dannon yogurt can also aid in weight loss may result in a spike of sales while also regaining the lost market share to Yoplait. Action and Implementation Plan Dannon’s Executive Committee is to meet immediately. Marc Jove Gesti, the Senior Vice President of Marketing will be responsible for drafting and crafting a commercial and press release about the Dannon Institute, its previous findings and their current projects. Ken Strick, the VP & General Counsel will be responsible for reviewing and revising any legal aspects. These include claims such as â€Å"Yogurt, when consumed with a healthy and balanced diet can help aid in weight loss.† This prevents anyone from suing the company who thought they could eat yogurt in combination with any other type of food and expect to still lose weight. Eric O’Toole, Vice President of Sales will work to explore new opportunities with health and supplement companies such as GNC. When the word gets publicized about how Yogurt plays a valuable part in weight-loss and dieting, Dannon can market and sell its product across stores where dietary supplements are sold. Lastly, Albe Wendt, Vic e President Research and Development will work on developing a high-protein yogurt that is crucial for post-workout recovery as well as helping people reach their recommended daily protein intake.