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The Hong Kong dairy market is shifting from cows milk to plant extracts with fewer calories due to the high prevalence of lifestyle diseases and health concerns (Wu, 2020). Coconut milk contains only one-third of the cows milk calories and therefore serves as an antidote to the dynamic dairy market (Yankevych, 2019). Of all the non-dairy milk available in South East Asian countries, coconut milk has the lowest carbohydrates and proteins, making it an ideal healthy product to close the market gap. Introducing a healthier substitute by Kowloon Dairy will increase its competitive advantage and consequently thrive in the and highly competitive market.
Analysis of the External Situation
Kowloon dairy is one of the significant suppliers of milk and related dairy product in Hong Kong. The demand for fresh milk in the region grew steadily between 2012 and 2015, which drew new entrants to the market (Cheung & Lee, 2021). Consequently, competition grew, and only companies that resonated with the customer needs obtained customer loyalty. The Hong Kong market boasts of over 20 million customers whose difference in tastes, preferences, and health concerns plays a significant role in their purchasing decisions (Yang et al., 2018). The government restriction on milk products is intense to guarantee the health and safety of the customers and therefore requires all milk products to be tested against additives and sold in standard packaging. It is prudent to note that the government of China takes intellectual protection seriously, and any new product is likely to be protected. The political stability and tariffs to protect domestic industries encourage Kowloon to flourish. Hong Kong has an accessible labour infrastructure, making transportation of the products to the final clients easier. The increase in technology impacts dairy products and makes it possible to reach as many people as possible (Wu et al., 2018). The dairy niche in Hong Kong is favourable and gives a chance of growth for new products. Unsweetened coconut milk will add value to the company.
Internal Audit
The company has existed in the market niche since the 1940s and has gained customer allegiance, likely increasing its competitive advantage (Xu et al., 2022). The brand name created by Kowloon Dairy in the Hong Kong household will improve the sale of the new products. With over four hundred and fifty staff, and thirty refrigerated trucks, the customers will receive their deliveries on time and in the correct state (Cheung & Lee, 2021). A quick Value Rarity Imitability Organization (VRIO) analysis sets it a step ahead of its competitors in Hong Kong. The company is known for its high value and rare products, which cannot be imitated. The customers who have remained loyal to the company are likely to embrace the new product (Lee, 2019).
Further, prospective customers taste for regular dairy has considerably reduced because of milk allergies and the health concerns courtesy of awareness on prevention of lifestyle diseases such as obesity. The new product offers the best substitute to both Kowloon dairy loyalists and new clients. The company has received numerous awards, including ISO 22000, to prove organizational compliance with British standards of institutions and the Food Safety Management in Hong Kong (Cheung & Lee, 2021). The awards not only improve customer confidence but also offer capacity to deliver high quality products. Kowloon Dairy is environmentally compliant and packs its products in high-quality cases, which improves the quality of the products they produce.
Market Analysis
Hong Kong has a rough aggregate of about 3 million people who drink fresh milk from the company (Koch et al., 2021). Over 15 million customers in the region are sensitive to their health and will take a new product only if it answers their health concerns (Robinson et al., 2019). The introduction of the unsweetened coconut milk is likely to attract customers from all walks of life. It is prudent to note that Hong Kong is a city within China with numerous western influences because it is home to residents from Europe, America, and other regions. Kowloon Dairy has always been culturally aware of its customers and offer products that resonates with their culture. Despite competition from other companies like Dairy farm, Trappist dairy, and Hong Ning milk production, the company has maintained its customers courtesy of the customer obsession strategy (Cheung & Lee, 2021). However, competitive rivalry is high, and unless it introduces a new product to attract newer customers, its competitive advantage is likely to diminish as customer focus shifts. The Hong Kong dairy market has considerably shifted because of the health concern and increased awareness of how higher levels of calories are associated with obesity and other lifestyle diseases (Lu, & Bennett, 2018).
Customer Analysis
The customers in Hong Kong are consistently shifting from higher calorie intake to drinks that are conducive for cardiovascular wellness. This phenomenon is motivated by health concerns, especially after scandals rocked the dairy industries, particularly the Melamine in China milk and the Japanese firms. Consequently, the customers in China prefer goods from within Hong Kong whose source is justified (Shushuai, 2019). Kowloon Dairy has a massive following in the region, and many customers are likely to embrace the new product. Further, there is an increased demand for flavored milk in the region, and if the company remains with the traditional milk products, it may lose customers who move in pursuit of flavored milk. Introducing the unsweetened coconut milk would offer a substitute for the milk products and increase the companys influence in the region. The three major trends in dairy products in Hong Kong are increased demand for plant-based alternatives, sustainability challenges, and price change. The new product corresponds to all three trends in the dairy market since it focuses on plant extracts in the dairy industry (Yang et al., 2018). The unsweetened coconut milk offers low calories and higher nutritional value that matches the customers demands. Since the raw materials are available locally at the plantations in Hainan, economies of scale influence its price and therefore meet the customer considerations on price. The customers are oriented towards a healthier product, and as the unsweetened coconut oil provides it, they are most likely to embrace it.
Objectives
The introduction of unsweetened coconut milk aims to offer a healthy substitute that will increase customers wellbeing at a relatively lower price than the competitors. The products sustainability is assured since the raw material is readily available in the Hainan coconut plantation. The product aims to reach out to both existing and new customers who have health concerns and would wish to reduce the number of calories in their food products. The product launch is paramount to increasing the profitability of Kowloon Dairy because it offers a wide variety of products for its customers.
References
Cheung, F., & Lee, H. Y. (2021). Hong Kong Timeline. Asian Revitalization: Adaptive reuse in Hong Kong, Shanghai, and Singapore, 63.
Koch, C., Johansson, M., Kalling, T., & Kärreman, M. (2021). The Future of the Dairy Industry2030 Scenario Analysis. IIM Industry Report Series, 2021(22).
Lee, P. T. (2019). Business archives in Hong Kong: An overview. Do archives have value? 105.
Lu, J. M., & Bennett, L. (2018). Digitizing dairy in China. The McKinsey Quarterly.
Robinson, D. M., Lakner, S., & Otter, V. (2019). Chinese agricultural foreign direct investment in dairy: Could Germany become a Chinese cash cow? 292303, German Association of Agricultural Economists (GEWISOLA).
Shushuai, J. (2019). Population flow, spatial dependence and dairy consumption analysis based on Chinas provincial. Journal of Global Business Review., 21(2), 40-49. Web.
Wu, X., Lu, Y., Xu, H., Lv, M., Hu, D., He, Z.,& & Feng, Y. (2018). Challenges to improving the safety of dairy products in China. Trends in Food Science & Technology, 76, 6-14. Web.
Wu, Y. (2020). Dynamics of policy change in authoritarian countries: a multiple-case study on China. Journal of Public Policy, 40(2), 236-258.
Xu, X., Cheng, X., Zhao, L., Fang, H., Guo, Q., Ju, L.,& & Yu, D. (2022). Consumption of milk and dairy products among junior high and senior high school studentsChina, 20162017. China CDC Weekly, 4(3), 47-51.
Yang, R., Ramsaran, R., & Wibowo, S. (2018). An investigation into the perceptions of Chinese consumers towards the countryoforigin of dairy products. International Journal of Consumer Studies, 42(2), 205-216.
Yankevych, D. (2019). Strategies market research Chinas dairy market case study: Voloshkove Pole. Theseus.
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