Written Case Analysis

A.

Statement of the Problem

Given, the unsuccessful market penetration by year 2000, which incurred a loss of P60

million, Andecs management must decide on a new marketing strategy that would differentiate
its product from the other competitors brands such that it is able to reenter and successfully
penetrate the Philippine market.
B.

Objectives
a.

Financial Objectives

The unsuccessful market penetration in 2000, lead to a loss of P60 million, and Andec
must recover this loss as it reenters the market with a new marketing strategy. Sales performance
continued to decline as well during its two years in the market despite the heavy promotions for
the brand; thus, Andec must make sure its new marketing strategy prevents the reoccurrence of
the decline in sales. Lastly, Andec has to maximize its profitability and take sufficient market
share from the market challengers which take up 5% of the industry, as well as the market
follower which accounts for 25% of the industry size.
b.

Non-Financial Objectives

Based on Andecs product, which is a high-calcium milk formula, management must identify the
appropriate market segment for its company. Management must also repositioning its brand
based on a SWOT analysis as well as its planned 4Ps strategy so that it successfully penetrates
the market and avoid more losses. Andec must successfully relaunch its product in the Philippine
market with its new marketing strategy.

C.

Situational Analysis

a.

Areas of Consideration

Strengths
Andecs product is a vanilla flavored milk with high calcium, and it contains the highest
calcium content among all brands in the growing-up milk category. Furthermore, it also has other
important vitamins in its product. Andec is the leading full cream, milk brand in other Asian
markets like Singapore, Thailand, and Indonesia. In fact, it captured 90% of the Indonesian
market. With 5,500 retail customers strategically located nationwhide, Andec has a strong
network distribution system that allows it to sell its product to its target market with consistency.
Lastly, Andec has two variants of milk product, and is capable of catering to another category,
which is the 1-3 year old group. This shows that Andec can serve 3 of the 4 categories or
classifications of age groups that drink milk.
Weaknesses
Nido, Andecs leading competitor in the Philippine market, has been in the market for so
long that it has already solidified its brand within the market. The industrys market follower,
Anchor, as well as other forms of milk products also hinders market penetration as they offer
different choices and substitutes to milk products. Andecs 15% price premium over leading
competitors, due to having a higher calcium content, hinders its product attracting price sensitive
consumers. Andec, as it is, has not yet found its proper market segment; thus, it is unable to bring
attract consumers and obtain sufficient market share. Finally, its product is not suitable for
infants, and cannot cater to the remaining category to which milk products cater to.
Opportunities
The importance of calcium is continually stressed, and awareness for such an importance
is being generated. This brings forth a demand as well as a trend of introducing more calcium-

associated products into the Philippine market. With such an awareness, the milk industry is still
continually growing despite its already enormous size.
Threats
A big threat to Andec and its market penetration is Nido, the market leader with 70%
market share in the Philippine market, as well as Anchor, which is the market follower owning
25% of the market share. Andec also has indirect competitors, which are milk products in
different forms like fresh or skimmed milk. Furthermore, the consumers may opt to purchase
substitutes to milk like calcium beverages, supplements, and even fortified juices.
b.

Alternative Courses of Action

1. Andec may produce a swack pack which is already prevalent in the Philippine market.
By providing such a size of its product, Andec would be able to attract consumers who prefer the
swack pack over bigger sizes of milk products. This would allow Andec to obtain market share
from its competitors that provide such a variant.
2. Study and develop an infant formula for its Hi-calcium milk product so that it caters to
all categories of consumers of milk products. This would allow Andec to cater to a bigger portion
of the Philippine milk market; thus, allowing them to increase profitability. A wider or larger
market share will be covered and this would allow Andec to stand against its competitors more
firmly.
3. Redevelop or modify Andecs current formulation such that it is able to maintain its
edge of having more calcium and vitamins than other milk products, but be able to lessen its
cost, differentiate its product from other full cream milk products, and create an overall stronger
marketing strategy. By considering to modify its current formulation, Andec would also support

its search for identifying its proper market segment, as it would now market itself to have other
qualities that fit its new market segment.
D.

Recommendation
In order to successfully reenter and penetrate the market, Mr. Gonzales should

recommend the 3rd alternative course of action, which involes modifying Andecs formulation.
With its modification, management must also enhance its 4Ps marketing mix so that the price of
its product is aligned with what the remodeled product offers. Customers of milk products also
consider affordability when purchasing milk products. They do consider calcium content, which
Andec has an edge on, but is often associated with price. A reasonable price must be given by
Andec, while still maintaining calcium and vitamin content. During the modification of the
product, Andec may opt to increase the vitamin content depending on which age group the
product caters to. By checking the Dietary Reference Intakes (RDA) of the age groups which it
caters to, Andec should market its product to contain more of such vitamins, like Vitamin D for
growth, or other micronutrients to successfully market its product. Its wide distribution network
must be effectively utilized by enhancing the efficiency of its promotional strategies that
generate awareness in its chosen market segment. By also reconsidering its packaging design in
order to easily distinguish which age bracket the product caters to, Andec would be able to
generate more awareness and differentiation for its product.
E.

Conclusion
With proper consideration for its strengths, weaknesses, opportunities, and threats, Andec

would prevent its previous failure of penetrating the market. Furthermore, by enhancing its 4Ps
of marketing strategy, Andec would be able to identify its appropriate market segment, spread
awareness for its product in the market, and position its brand more firmly; thereby, successful

reentering the market and taking sufficient market share so that it maximizes its profitability and
regain its previous losses.