Opportunity Analysis for A2 MILK

Marketing 304 - Professor Franck Vigneron

Group Members:

Keven Acevedo

Ani Gevorgyan

Juan Guerrero

Hannah Langbehn

Dominyke Lopez

Jack Stauber

Ashley Chinchilla Urrego

May 10, 2022

Picture Name of Consultants Responsibilities Contact Information Signatures

Keven Acevedo Weakness Cell:(661) 317-9485 Keven

Email:keven.acevedo.284 Acevedo
@my.csun.edu
Location: Lancaster Ca

Ani Gevorgyan Cell: (818) 284-9497 Ani Gevorgyan

Threats
Email:
ani.0440@gmail.com

Location: Glendale, CA

Juan Guerrero Key Problems & Cell: (818) 370-9570 Juan Guerrero
Introduction Email:
juan.guerrero.122@my.cs
un.edu
Location: Sherman Oaks

Hannah Langbehn Strategies Cell: Hannah

805.328.8789 Langbehn
Email:
hm.langbehn@gmail.com
Location:
Simi Valley
Dominyke Lopez Opportunities Cell: 661-476-1833 Dominyke
Email: Lopez
dominyke.lopez.409@my
.csun.edu
Location:
Santa Clarita
Jack Stauber Strategies & Swot Cell: (310)-918-0944 Jack Stauber
Analysis Email:
Jack.Stauber.646@my.cs
un.edu
Location: Los Angeles

Ashley Chinchilla Strengths Cell: 8189383997 Ashley

Urrego Email: Chinchilla
ashley.chinchillaurrego.3 Urrego
18@my.csun.edu
Location: Northridge
A2 Milk is a company that aims to introduce the natural A2 protein found in milk into a greater
scale by selling milk products with a focus on the A2 protein. The company was founded in New
Zealand by Dr Corrie McLachlan and Howard Paterson. A2 Milk is a premium branded dairy
company that claims A1 proteins found in milk are harmful in contrast to the A2 protein. A2 Milk
currently has multiple products including baby formula that has been widely recognized and
different flavored A2 milks.

1. KEY PROBLEMS

To commence our opportunity analysis for dairy milk, we have identified the following obstacles
that the A2 Milk brand may potentially face.

Key Problem 1: Limited Social Media Presence. The A2 Milk company is facing a very big
problem in its effort to make an impression in social media outlets and platforms. Social media
platforms have become a crucial part of advertising in businesses as these platforms can attract
new customers with clever posts and campaigns. A2 Milk is relatively a new company with a very
small following and a limited audience. With spreading the word about why the A2 protein is
beneficial and important for consumption there is potential for new customers to be involved with
the company’s product.
Key Problem 2: Lack of product diversity. A2 Milk is primarily focused on products that
enhance the A2 protein in dairy products. With the lack of diversity in their products it has
allowed other companies to enhance their company by bringing forth a variety of products. A2
Milk having a very specific product means that their customers will be very narrowed down to a
small group of consumers. Without diverse products A2 Milk is essentially targeting their current
customers instead of appealing to a larger consumer base. Diverse products would allow A2 Milk
to be bought by multiple consumer groups increasing their following and sales.
Key Problem 3: Limit of A2 knowledge. A main key problem of the company A2 Milk is that
the research and knowledge of the A2 protein is very limited. Many consumers that buy dairy
products do not know of the A1 and A2 proteins that concede within dairy products. The lack of
knowledge from the general public of the A2 protein is a main reason the A2 Milk company is
such a limited company. If the consumers of dairy products understood the health benefits and
risks of A2 and its alternatives many would shine into the product increasing the sales of the
company.

2. SITUATION ANALYSIS (SWOT)

Internal SWOT Analysis

Strengths

● Free of Hormones and Antibiotics: A2 Milk is tested to be free from any antibodies and
never use growth hormones on their cows. As well as being free from the use of rBST
with no genetic engineering (A2 Milk USA, 2022).
● Comparable to Breastmilk: A2 milk is more structurally similar to the beta-casein
protein found in human breast milk, making the transition to cow's milk for breastfed
babies easier. The most natural type of milk protein for the human body is A2 beta-casein
protein. Our bodies are designed to digest this type of milk. A2 milk will be tolerated by a
larger percentage of the population than A1 milk (Serenity Kids, 2022).
● Lowers Health Risks: According to Brad Heins, a Professor of Dairy Science, A2 Milk
potentially helps lower health risks and lower possibilities of diseases and A2 milk only
carries beta casein protein (Breeding for A2 Milk, 2019).
 ● Safer for Lactose Intolerant: A2 does not cause an inflammatory response the same
way A1 milk does. Less and minal bloating and digestion discomfort among those with a
history of lactose/BCM-7 intolerance (Medical News Today, 2017).
● A2 Milk USA Company Workforce: The A2 Milk Company continually invests in its
workforce and personnel. This is done through in-house training as well as external
training and workshops. The company makes sure that the employees are updated with
the latest skills and knowledge to stay ahead of competition (Mr. Milk, 2019).
● Customer Consideration: The company has a high focus on innovation to introduce
new products that meet the consumers’ demands, the company maintains updated and
upgraded product lines through focus on research and innovation (Liam McAulifee
M.T.S, 2022).
● Working with Only Surrogate Cows: According to A2 Milk USA, A2 milk only works
with surrogate cows that only produce A2 protein unlike other milk companies.

Weaknesses
● 1. Finances: A2 Milk spends much more than their competitors on training and
development of their employees. The regional cost of expansion for the company has
risen. Further international expansion will also be costly for the business because of
limited resources for global expansion. They will focus on growth throughout the
production process and spend more to advance through production.
● 2. Business Core: They have not been successful outside of their core business. They are
a leading company in their industry but in terms of expansion they haven’t been able to
move into different product segments. Over the covid times market dropped for A2 milk
and they believe it will continue to drop.
● 3. Side Effects - A2 cow’s milk still contains the A2 beta-casein protein and whey
protein. If someone with a dairy allergy were to ingest either of these proteins, their body
will elicit an immune response, causing an allergic reaction, and making A2 milk an
unacceptable and dangerous alternative. Even the a2 Milk Company admits that their
milk is not safe for those who are allergic to cow’s milk.
● 4. Adaptability with companies: Adaptability is not A2 Milk’s strongsuit–they merge
well with smaller companies that have a similar culture but they do not adapt well to
working with larger companies with a diverse culture. A2 milk companies only average
about 320 workers, when regular milk companies average around 130,000 workers. A2
milk will want to expand with smaller companies due to larger companies not wanting to
follow the A2 milk production.
● 5. Limited Advertisement: Even though the company has high quality products, it has
limited presence on the internet and on social media platforms. This is a weakness for the
firm because modern consumers use social media for information gathering, verification,
as well as sales. The A2 Milk Company is losing out on important customer markets and
segments. Relatively new to the market , with only 6000 stores across the US as of
January 2022. A2 milk is not available in all stores across the US. Also with limited
productions through the companies.

Opportunities
● Expanding consumer market: One possible opportunity for A2 milk is expansion to
outside of the United States. They can build their consumer market and attract new
customers. There has been great success in terms of growth in external markets, which
could prove to become an upward trend. (Global News Wire, 2021)
● Tailoring the product to a larger audience: A2 milk is popular because of its reduced
 side effects for lactose intolerant people, protein content and high quality. If A2 milk is
able to keep all of the benefits of their product while eliminating lactose, their brand has
the potential to drastically increase their consumer market. (Yahoo, 2022)
● Lacking options that appeal to luxury consumers: There are currently no companies
that offer upscale A2 milk products. A2 milk is only available in regular cartons and
plastic bottles. There are no companies that offer the product in eco-friendly packaging
such as plastic, aluminum or glass.
● Making products available online: Many consumers prefer ordering online nowadays
and this could help them penetrate an entirely different market.
● Lack of dominant competition: There is a lack of dominant competition in the market
of A2 milk. Currently A2 Milk is the leading company in their industry. (Allied Market
Research, 2020)

Threats
● The growing popularity of dairy alternative milk: Dairy alternate sales have increased
dramatically in recent years. The variety of dairy-free milk alternatives is rising as well.
Valued at an estimated $22.6 billion globally in 2020, the non-dairy market is projected to
reach $40.6 billion worldwide by 2026.(Lorraine, 2021)
● An increased risk of lactose intolerance: The A2 milk is easier to digest, but still, it
contains lactose and can be harmful to people who have lactose intolerance. Experts
estimate that about 68 percent of the world’s population has lactose malabsorption.
(Definition & Facts for Lactose Intolerance, 2018)
● Increasing competitors: The benefits and gaining popularity of A2 milk are noticeable
not only for customers but also among producers. The Alexander Farms brand offers A2
organic milk that is slowly gaining customers. The market is expected to grow at a robust
rate in the forecast period of 2021-2026, growing at a CAGR of 13.5%.(A2 Milk Market
Report and Forecast 2021-2026, 2021).
● The ongoing cruelties in the dairy industry: Because of cruelties in many dairy
producing companies, people limit the whole usage of dairy. Even if some companies
produce cruelty free dairy products, the number of people avoiding dairy for cruelty
reasons. A new global survey involving more than 8,500 participants across over 100
countries reveals that animal welfare is the top reason motivating people to go vegan.(Ho,
2021)
● The tendency to eliminate plastic usage: People are more aware than ever before of the
risks and harms of plastic pollution. In order to eliminate plastic usage customers are
asking for packaging that eliminates single-use plastics. Unlike metal cans or glass
containers, carton recycling is still not widely available. Seventeen out of 20 dairy
businesses contacted by BBC News have seen a rise in sales of glass milk bottles to
homes and businesses amid concern over plastic waste. (Wearn, 2018)

3. ANALYSIS OF STRATEGIES AND POTENTIAL TARGETS

See Appendix J and K for more Strategies and details

Transitions are here…in need of an enhancement to make them relevant in the market. As of
today, they serve one common goal to service to workers. The potential of expansion of this brand
can grow exponentially with these success factors. Refer to Appendix J & K for additional
strategies we propose.
 3.1. Critical Success Factors
1) Exceeding customer expectations and boosting customer satisfaction
A2 Milk should provide outstanding customer service in an effort to establish customer loyalty.
This would include promptly addressing customer concerns or complaints and building a strong
social media presence.

2) Continuous innovation
Being that A2 Milk was the first company to create their product, they are known for being
innovative. They have created a product that was lacking in the market and was not expected by
their consumers, they should continue to create innovative products. A2 Milk should use this to
their advantage and build a strong brand image, being known for their innovation. This can be
done by implementing interactive engagement and allowing their customers to provide their input
for upcoming products. This would boost innovation, build a strong social media presence, engage
customers and strengthen brand image among consumers.

3) Available inventory and advanced supply chain management

A2 milk company should be able to accommodate possible demand forecasting to successfully
implement supply chain management and always be able to offer enough inventory. Insufficient
inventory might lead to missed sales and the company may lose its customers.

3.2. Strategic Options

Strategic Option 1 out of 2: Partner with businesses that will increase product awareness.
Schools and sports arenas are places where product advertisement and exposure is constantly in
the face of consumers. A2 milk being put into schools would draw the eye of the children and
parents alike, both of which would promote the product to be bought in the homes of the students.
With sports arenas, advertisements could be placed strategically in the arenas, and A2 milk could
be incorporated into milkshakes, ice cream, and be sold as plain milk alone. Event goers could
recognize that A2 milk does not have the adverse effect that milk usually does, and in turn seek to
buy it for themselves. Through market penetration this is very obtainable. This market
penetration could also give way to market development and A2 milk can have imitations of
arena offerings sold in the store level and special packaging that showcases the partner(s).

PROS
● With sports fans as consumers, certain marketing concepts such as market penetration
coupled with emotional affinity can be seen to increase sales due to the relationship and
loyalty to the team or group (Silva, 2017).
● Sports marketing leverages its consumers' positive associations with the sport to be
transferred to the brands that get advertised there (Thomas 2016).
● Food advertisements through schools can influence purchasing behavior through their
parents (Hite 2022).
CONS
● It may be costly to advertise in these places.
● People with lactose intolerances may be hesitant to try the product out unless they are
educated on the lessened effects on those with intolerances.
● The price of the A2 milk may be higher than what the consumers are paying for their
milk now, so there may be a reluctance to switch.

Strategic Option 2 OUT OF 2: Advertise health benefits on social media & offer new and
existing products to new market segments.
A2 milk has been linked to a lot of health benefits and it can help reduce the chance for various
health risks such as heart disease & type 2 diabetes. Many people are becoming more mindful
about what they eat and drink everyday and people are starting to prioritize a more balanced diet,
and a fitness regimen, especially millennials and those with health problems. A2 milk is made
with A2 protein which contains more Vitamin A & D, calcium, and has been linked to lower
cholesterol levels, reduced rate of heart disease, and lower inflammation. A2 milk is beneficial to
anyone who wants to improve their health and appeals to those who may have a history of heart
disease, digestive problems, or high blood pressure. A2 milk could also increase their market by
creating cheap healthy alternatives with their A2 milk such as cheese, vanilla or chocolate
flavored yogurt, strawberry ice cream, smoothies and protein shakes. Plant based alternatives like
blueberry or raspberry flavored almond/coconut milk. There is an opportunity in expressing these
benefits through market development, and diversification by targeting consumers in the health
and fitness markets through social media & celebrity endorsements that are focused on improving
their health and reducing health risks.

PROS
● A2 milk provides more potassium, calcium, and protein than traditional milk while also
reducing sodium (salt) intake which can lower blood pressure, reducing the risk of heart
disease and stroke (WebMD Contributors, 2020).
● In a recent study, it was shown that milk intolerant individuals can safely drink A2 milk,
without any adverse symptoms, compared to drinking conventional milk, which tended to
worsen digestive symptoms and inflammation (Macronutrients, 2018).
● The current trend of consumer inclination towards a healthy lifestyle in developed
countries has led to the demand for healthier products and plant-based milk alternatives,
which also serves as an inexpensive alternative option to underserved populations (Sethi
S. et al., 2016).
● Worldwide, plant-based non-dairy milk alternatives such as soy, almond, and oat milk are
the fastest growing segments in newer food product development category of specialty
beverages (Park Y.W., 2021).
● Being an active member of all social media networks helps you create brand awareness,
and is a very common way to market and promote products and services to engage
customers (Yousuf Ali Emon, 2021).
● Celebrity endorsements make a product more visible in the markets, and the perceived
value coming from an expert increases customer focus and attraction (Shrestha, 2019).
CONS
● The A2 Milk Company’s offerings cost about a third more than conventional milk, as
much as $1.50 more per gallon.
● Consumers may not like the taste of dairy products and so are increasingly switching to
plant-based alternatives and not drinking dairy milk.
● Low brand awareness and lack of diversification of products are taking business away
from A2 milk.
● Research and development for new and existing products can be expensive.
● Celebrity endorsements can be very costly and may not have the desired outcome.

3.3.Recommended Strategy for A2 Milk

Based on the analysis from the strategic options and SWOT, we have decided to create a phase
by phase approach to advertise the health benefits of A2 Milk and customize our products to
specific market segments. We will use Strategic Option 2 as a marketing development
strategy that showcases the benefits and target those audiences with specific products that will
fit into their everyday life as well as improve their overall well-being.
 In Phase 1 of the strategy, A2 Milk should target two audiences: fitness and health conscious
people. People who are in the fitness community generally have a good care for the state of their
body. Their diet accounts for about 70% of what is considered their overall health. If A2 Milk
targets the fitness community, the health benefits that A2 milk brings will attract them as
consumers and the same goes for people with health concerns and dietary restrictions. Ads could
be placed on social media outlets such as Instagram and TikTok. Those platforms use the
person’s interests to curate ads that would be best tailored and suited for them.

In Phase 2 of the strategy, finding and implementing partnerships with gyms and health stores
and also developing dairy alternatives to associate with their brand. The goal in this phase is
getting the product in front of the faces of the primary audience that A2 milk would be targeting.
Gyms and health conscious stores could carry A2 milk and the new products. When they see the
targeted ads, then the products in places they frequent, they will be likely to purchase it as they
are aware of the benefits, have brand recognition, and it is convenient so it will give a “why not
try it” inclination.

In phase 3 of the strategy, A2 milk should partner with influencers in fitness and influencers that
have a following based off of their experience in the health field or success in sports. With these
partnerships, the influencers will bring A2 milk to their followers which will be the targeted
audience. The influencers can encourage their followers to purchase A2 milk by informing of the
benefits and how easy it is to get as it would be available in retail stores, gyms, and online.

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APPENDIX

Etc.