International business is much complex both in establishment, management, and marketing relative to the localized venturing (Daniels, Radebaugh & Sullivan, 2007:57). The latter asserts that extension into the international markets by an international organization comes with a rather unprecedented diversity and complexity that calls for variation of the companies marketing business strategies particularly the marketing strategy if at all the organization is to be competitive in the international stages. Ideally, the need to vary the company’s strategy and marketing mix variables while operating internationally is greatly entrenched in the dynamisms of the external environment and the ensuing need to vary the microenvironment variables to be strategic and competitive by production and distribution of market fit in the international stages (Doole & Lowe, 2001:17). In reality, multinational corporations are the most common form of international business venturing.
By definition a multinational corporation is a company that is headquartered in a certain country but with representation either in the international markets both in terms of production / manufacturing subsidiary as well as marketing (Johansson, 2000:122). Examples of world renowned multinationals in the world includes the Coca-Cola, the General Motors, Cannon Company Inc., and Nestle all which are headquartered in the United States of America but with virtual representation all over the world. According to Johansson (2000:127), different markets differ in characteristics, customers’ composition and specific customers’ needs, degree of competitions, infrastructural developments, and market development levels, trends among others. As such, a standardized marketing mix strategy may not be effective. Instead, companies need to adopt a differentiated marketing strategy to meet the varying need of specific markets internationally. This paper therefore provides a deep insight into Dannon Company Inc and reviews ways via which it has applied its international marketing mix strategy to support its international market operations so as to remain as competitive and effective in marketing as it currently is. Furthermore, the paper attempts to find the company’s justification for the international marketing mix strategies choices making suggestions for marketing mix change strategy for Dannon over the next few years
About Dannon Company Inc
The Dannon Company, Inc. is a United States of America multinational with its headquarters in White Plains New York in the United States of America. Since its establishment in 1991 and its listing in the New York stock exchange in 1997, the company has since expanded in size and market share leadership in the food and beverage industry. To date, Dannon Inc has manufacturing subsidiaries in Minster, OH, Fort Worth, TX West Jordan, UT as well as marketing outlets worldwide. As a matter of facts, the company is a market leader in production and selling of dairy products as well as biscuits and water in the world markets. According to Dannon (2008: Para 2), Dannon produces and sells well over six million cups of yoghurt each day both in the United States and other parts of the world. Virtually, Dannon® is the company’s cash cow in the products portfolio; the latter of which the company sells under the name Dannon and Danone (Dannon, 2008: Para 3).
Dannon Company manufacturing subsidiary, Minster, OH, plant is virtually the world’s largest yoghurt manufacturing plant. In facts, it produces 230,000 cups of yoghurt every hour that comes adding up to three million cups of yoghurt daily for the United States and the world market; perhaps the highest production rate of the product in the world. Furthermore, Dannon Inc close association with Danone Group has instituted the diversification that aids in the achievement of larger market presence, spreading of risk and increased productivity via production of more product line including Evian water, LU biscuits, and a host of many other international brands (Dannon, 2008: Para 4).
Over the years, the Dannon company Inc in collaboration with Danone Group has perused key strategic approaches aimed at achieving international and worldwide presence and market command particularly in the three business lines whose great performance and potential rides on health and vitality strategic steps to achieve a global presence, focusing on three business lines with high potential built on health and vitality achieved by the three products lines i.e. dairy products, biscuits, and water (Dannon, 2008: Para 3).
Dannon’s international marketing mix strategy
The company culture and the international marketing mix strategy
The success that Dannon Company Inc and Danone group pride itself with currently being a market leader both in the United States and the global foods and beverages industry is greatly as a result of its unique and effective marketing mix strategy, which are typically developed in consistency with the multinationals vision, mission, core values and organizational culture. As a result, marketing strategy in Dannon Company Inc (whether for the US or in support of the international business operations), greatly adheres to the company’s core values; the latter of which are greatly supported by the associates (employees) and company’s management as well as the company’s corporate vision that they seek to defend and achieve. For instance, business at Dannon Inc is greatly steered by the principle that the company shall embrace diversity which is respected by the company as a source of wealth and constant opportunities for the organization (Dannon, 2008: Para 6).
Dannon company Inc and all its resources (associates) are usually obliged to embrace openness, enthusiasm, and humanism in all their undertaking; the latter of which have played a significant role in lifting the company above competition both in the United States market and internationally. In its operations, Dannon Inc has entrenched and embraced a culture of diversity curiosity, agility or rather vitality, energy, speed in response to the market need, flexibility in meeting the market dynamisms and adaptability to the ensuing market dynamics inherent in business and triggered by the equally dynamic local as well as international marketing environment (Dannon, 2008: Para 8).
Also, the company’s culture encourages associates to pursue an attitude of consciousness and focusing ahead, to be in sync with others, do away with preconceived ideas and models, as well as to be imaginative so as to continue offering unmatched value via the products that the company offers to the market and achieve unprecedented effectiveness in responding to the market needs. These principles have become part and parcel of every member of the organization and which greatly shapes employees cum management’s focus to maintain high levels of competitiveness both locally and internationally.
There is a general belief at Dannon Inc that there is the success in limitless and is entrenched in designing of a marketing mix strategy that translate to the market fit whether locally or internationally as well as effectively uniting to overcome challenges that are inherent in business. Ideally, the company has all through chosen to refrain from operations which suggest bureaucratic security and embrace boldness steered by the willingness as well as capacity to take unprecedented risks and explore new unconventional paths coupled with the capacity to brave and seek strategy to prevail over failure.
At Dannon, the culture and general corporate environment is characterized by the members appetite for challenge exhibited by the members high levels of optimism, a must succeed attitude, and a near physical craving for continuous growth and market leadership. Humanism is also central to the Dannon international marketing mix. Dannon successful strategy draws a lot of intricacies from the inherent respect for others. The company is particularly sensitive to cultural variations and responds to the needs of different cultures with a matching strategy. Furthermore, they believe that there is unity in diversity and responds to these facts via passionate support for the development of its partner’s particularly Danone groups. It ensures that all its operation including products development, marketing, promotion, distribution, and pricing responds either directly to the needs of all people irrespective of whether they are customers, common citizens, associates, and the general environment. This is evidenced by the fact that Dannon company Inc and Danone groups virtually excels in value delivery human resources management, business ethics, and corporate social responsibility not only in the US but also in the international markets where they are represented (Dannon, 2008: Para 1).
As a matter of facts, the company encourages high levels of transparency in operations, dialogue, and teamwork in pursuing of company goals as well as emphasizing on paying close attention to the safety of all people and products. Furthermore, Dannon insists on embracing a pro-social approach in organization of marketing mix variables while ensuring that all operations are consistent with the company’s need to be environmentally friendly.
Over the years, Dannon Inc and Danone group have pursued a product strategy that has ensured consistency in value delivery to the consumer via unprecedented product quality and highly competitive brand across the company’s market divide. Irrespective of the variations of markets particularly in the international platform, Dannon has relentlessly pursued a product strategy that has adamantly refused to compromise on the product quality and consumer value delivery. Basically, the Dannon products and brand are very competitive. To date, the company produces and sells well over 100 brands of dairy products, water and biscuits distinct in flavors, sizes of packaging style and pricing but of characteristically high in quality to match and effectively meet specific market needs. Ideally, The Dannon Company, Inc. delights itself for its unprecedented consistency in delivery of high-quality, nourishing dairy products as well as unmatched effectiveness in their apt response to user’s needs with wholesome, inventive new products and flavors (Dannon, 2008: Para 11).
Product wise, Dannon company Inc and the Danone groups has lifted itself above competition in meeting products standards regulations both in the United States and globally. As a matter of facts, Dannon’s products greatly surpasses the federal, states, and local environment agencies standards regulation, a principle that management/ marketers at the company have succeeded in ensuring that it is translated in all the international markets where it has representation both in product development and marketing. Consequently, the company has virtually entrenched the issue of products quality as company culture to be embraced by associates throughout the company facilities and locations both in the US and internationally (Dannon, 2008: Para 8).
Research and development
To support the product strategy which is perhaps the most outstanding Dannon’s strength, the company continues to invests heavily on research and development which is the engine behind unprecedented innovations, inventions, and continuous improvement that has enabled the company to effectively maintain its position as the global market leader in fresh dairy products, world second runners up in bottles water market share, world’s second best performing in the global baby nutrition products as well as leaders in medical nutrition in the European markets. Last year alone for instance, the company invested a whole 2000 million euros in research and development (Dannon, 2008: Para 13).
This has greatly fostered the company’s performance both at the local and international platform based on the balanced strategy for diversification into the external markets craving and commitment for innovations, inventions, and continuous improvement of products quality as well as the desire to continually strengthen health-oriented products. Basically, research & development and innovations remain a central strategy for the market leaders as they seek to further strengthen their favorable position in the United States and international markets.
Approximately 300 years after the discovery of the benefits of the profits of Evian mineral water, just over a hundred years after the debutant marketing of the Blédine and close to a century after Dannon released its initial brand of yoghurt into the market, innovations, and inventions along health nutrition line have remained the focal and predominant impetus of Dannon company inc and Danone group’s business growth. To effectively increase their international market presence, Dannon Inc via its partnership with Danone streamlined their product portfolio to incorporate two highly profitable product oriented strategy with fast growing, health-biased product lines namely medical nutrition products and baby nutrition brands (Dannon, 2008: Para 9).
The direct impact of this is that it completed the company’s product portfolio as well as made it to effectively align its products with the company’s mission statement that commits the company to foster customers’ health via food stuffs to as many people globally as possible. Presently, the company’s product focus is purely inclined towards health nutrition and beats competitors all over the world in the fulfillment of this promise.
Despite the near homogeneity and standardization in products quality raw materials and processes, Dannon Company Inc has consistently pursued a product differentiation strategy in terms of flavoring, styling of brands and size of products packages to meet specific pre-identified need of the consumers based on the varying tastes and preference of consumers in different markets particularly when marketing internationally. Dannon recognizes the need to conform to market diversity particularly in support of the company international business operations. This is greatly evidenced by widespread and characteristic tailoring of products to specific markets particularly for the greater afro-Asian markets and Middle East whose culture differs greatly with the rest of the world. Ideally technological innovations, inventions, and their application in product development greatly support the differentiation and product tailoring strategy at Dannon Inc. & Danone group (Dannon, 2008: Para 5).
Supply chain strategy
The effectiveness of the supply chain that Dannon Inc has adopted to support production and product strategy is unequalled in the industry. With only three manufacturing subsidiaries to support the headquarters in White Plains plant in New York strategic relationships with supplier has been necessitated owing to the fact that the company is bestowed with the responsibility of serving the global markets in their entirety and with competitive quality products. Basically, the company has concisely pursued a supply strategy to foster the reliability of raw materials to ensure continuity in production, reduce materials lead time while reducing need for expeditions, guarantees quality via steady supply of high quality materials as well as ensuring efficiency in the distribution of the final products to the global markets (Dannon, 2008: Para 6).
The pricing strategy
Dannon pricing strategy (whether in the local market or international) is greatly built on the tenets of fairness to all parties. Despite the fact the company is a profit making venture and aims at revenues maximization, Dannon adopts pricing strategies that takes into consideration the wellbeing of all the affected parties that abides by the ethical business practices. As such, it ensures that the strategy adopted is consistent with the company culture and values in avoiding consumer’s exploitation, price discriminating while enabling the company to maintain reasonable profitability levels. Although the company has at times applied different prices for the same products in different countries pricing of products at Dannon is done based on cost via placement of fair and reasonable margin on the cost to determine the non-exploitative prices.
The mission of Dannon Company Inc & Danone is to provide health via food to as many people in the world as possible. In effect, the fair pricing strategy adopted by the company in varying markets ensures that products are affordable across that social divide. However, the greatest challenge in this case has been high cost of distribution since the company has no manufacturing plan in many places outside the United States, which translates to unnecessarily high prices of products that would have been a bit cheaper if such subsidiaries were present in specific countries (Dannon, 2008: Para 11). At some points however, low pricing strategy has been applied particularly for market penetrating and in circumstance where intense rivalry necessitates it.
In order to attain its mission of reaching the widest market in the world with nutritional health product, Dannon has adopted an intensive products distribution strategy characterized by a rich and extensive network of marketing systems designed to reach even the far most corner of the world with the product. Furthermore, integration with strategic supply as well as marketing of company’s own marketing and distribution outlets and subsidiaries overseas forms strategic constituent of the distribution strategy that enables the company to meet its mission (reaching the maximum of as many people as it is practically possible with the health-oriented products). However, the company has always been battling with the challenges presented by the trade-off between generalized marketing system and need to retain identity via specialized distribution lines for its product (Dannon, 2008: Para 1). While the latter maximized company identity for reputation and increased reliability in value delivery it limits coverage which curtails the achievement of Dannon’s mission.
Although there is a great deal of homogeneity in the company’s promotion strategies, the promotion strategy adopted by Dannon varies with the specific market needs. For instance, the company is renowned for its intensive advertising campaigns, stores and exhibitions rooms, prices off and sales promotion among others depending on specific market needs and marketing objectives in time of the strategy application. However, application of marketing strategy at Dannon Company Inc greatly adheres to the ethics and business laws requirements both in the United States and in the international markets the latter of which laws guiding business greatly varies along the national lines. For instance, law governing advertising may vary from one nationality to the next. While some countries advertising law rules against comparative advertisement others accept superlative advertising and so on. At Dannon Inc, ethical considerations in business operations whether in the US or overseas takes center stage in designing and application of promotional strategy. In the most unique and latest promotion and marketing approach, Dannon initiated and established the Dannon institute which is an independent and a non profit making institution whose theme is to create and offer unlimited support to programs that explores and fosters understanding between nutrition and better health (Dannon, 2008: Para 12).
Effects of external environment of international marketing mix strategy
Since international business involves international marketing, there is need for the business person to adequately analyze the PESTEL environment, so as to ascertain the needs of the target market so as to effectively vary their marketing mix to meet specific market needs. The knowledge of PESTEL environmental factors will be very vital for successful entry into the overseas markets with its products. According to Daniels, Radebaugh & Sullivan (2007: 62), international marketing (which is the basis on which international business functions) is the application of marketing strategies across countries’ borders. Application of such marketing mix strategies to meet specific international markets/consumers needs therefore requires the marketers to be well conversant with the macro environment and its possible effects on the business operations, whether long-term or immediate, direct or indirect.
For Dannon company Inc & Danone to successfully penetrate the overseas markets and do well with their fashion related products, it is imperative that the marketers at Dannon inc, understand the political, economic, social, cultural, and technological differences between the two countries thus come up with strategies and their effect (either positive or negative) to the multinationals business strategy to counter the negative effects as well as take advantage of the positive ones. According to Johansson (2000:121), the multinational varies its marketing mix variable with the various markets mainly due to the dynamisms of the external environment. Dannon Company Inc & Danone group are no exception as they greatly tailor and customize marketing mix strategy in case it intends to take it operations international.
- Dannon is one of the most successful multinational with its headquarters in White Plains; New York in the United States of America with three other subsidiaries in Eastern Europe. Having gotten NSE listing in 1997, the company commands the world food and beverages industry particularly in nutritional health and baby nutrition. As a matter of facts, it is the world leading producer and marketer of yoghurt.
- The success that the firm prides itself with draws greatly to the company effective product strategy both in the US market and internationally steered by great investments in research & development and innovations for new product development as well as continuous improvement of existing products, unprecedented differentiation, and tailoring of products to meet pre-established international market needs among others
- The company varies the entire international marketing mix variable including promotion strategy to meet specific international markets needs. Basically, the need for variations in the strategy is greatly necessitated by the inherent dynamisms of the external (PESTEL) environment particularly in international business of which Dannon Inc is a major Participant (Doole & Lowe, 2001:13).
The paper recommends the following change strategy in regards to international marketing mix to support future overseas operations and competitiveness.
- First the company should consider establishing more subsidiaries particularly manufacturing in as many international markets as it is practically possible to increase its overseas presence, increase market, and reduce distribution costs.
- More lucrative markets call for skimming strategy in regards to international pricing strategy not only for absolute profitability maximization but also to build positive company reputations in the market. This is because the upper market often associate low prices with low class and poor quality hence Dannon may lose this essential market.
- The marketing systems should also be tailored to fit specific markets since the upper market prefers specialized distribution channels and specially branded distribution for class and identity rather that open for all distribution.
- Differentiation is costly and therefore the company should look out for points of homogeneity in regards to specific markets for opportunities to standardize its products in due consideration.
- Being a renowned company that embraces a pro-social approach it should consider increased investment in corporate social responsibility as it will help it create more touch with the global society for long-lasting market effect and building of a positive reputation that will enable it to stay ahead of competition well into the future.
Daniels, J., Radebaugh, L. & Sullivan, D. 2007. International Business: environment and operations, 11th edition. Prentice Hall. ISBN-10: 0131869426, pg 57-64.
Dannon. 2008. The Dannon company inc-official company’s website. Web.
Doole, I. & Lowe, R. 2001. International Marketing Strategy – Analysis, Development and Implementation, Thomson Learning, 3rd Ed pg 12-26.
Johansson, J. K. 2000. Global Marketing – Foreign Entry, Local Marketing, and Global Management, Johansson, International business 5th Edition 121-128.