SMP Final Report (1)

Table of Contents1 INDUSTRY BACKGROUND 1

2 CORPORATION & SBU BACKGROUND 3

2.1 Corporation 3

2.2 Strategic Business Unit (SBU) 4

3 SBU SITUATION ANALYSIS 5

3.1 SBU Culture/ Resources/ Stakeholders/Performance 5

3.1.1 Culture 5

3.1.2 Resources 6

3.1.3 Stakeholders 7

3.2 3.2 SBU Customers 8

3.2.1 Geographic Segmentation 8

3.2.2 Demographic Segmentation 9

3.2.3 Psychological Segmentation 9

3.2.4 Psychographic Segmentation 10

3.2.5 Sociocultural Segmentation 10

3.3 SBU Competition 12

3.4 External Environment 15

3.4.1 Societal Environment 15

3.4.2 Industry Environment 15

3.5 TOWS Matrix 16

4 SBU Objectives and Goals 17

4.1 Mission: 17

4.2 Objectives: 17

4.3 Goals: 17

4.4 Product Life Cycle of Yeo’s Food SBU 18

4.5 Yeo’s Goals Strategy Mix 19

5 Recommendation Strategies 21

5.1 Market Strategies 21

5.1.1 Market Scope 21

5.1.2 Market Geography 21

5.1.3 Market Entry 21

5.1.4 Market commitment 22

5.2 Product Strategies 22

5.2.1 Product-positioning strategy 22

5.2.2 Product Design Strategy 23

5.2.3 New product strategy: Improvement/Modification 23

5.3 Pricing Strategies 24

5.3.1 Pricing Strategies 24

5.3.2 New product 24

5.3.3 Existing Products 25

5.4 Distribution Strategies 26

5.4.1 Indirect Channels 26

5.4.2 Channel control strategy 26

5.4.3 Distribution Scope 26

5.5 Promotion Strategies 27

5.5.1 Advertising 27

5.5.2 Public Relation 28

5.5.3 Sales Promotion 28

6 Implementation Program 29

7 Reference List 31

1 INDUSTRY BACKGROUND

Food industry in Malaysia is diverse with lots of varieties of mixture of foods with Asian tastes (Asia

Pacific Food Industry 2010). The companies in this industry are mainly Malaysian-owned (Asia Pacific Food

Industry 2010). Local businesses range from small, medium, family own to large, publicly held enterprises while

others are subsidiaries of foreign or multinational conglomerates (Asia Pacific Food Industry 2010).

In 2008, the food industry contributed around 10% of the country’s manufacturing output (MIDA n.d). It

is a growing industry where the production and sales are growing every year, numbers of competitors increasing,

and each player is aiming to increase their market share. According to a report by Global Direct, 60 percent of

food and drinks manufacturers will expect to increase their procurement spend over 2010, with a concern on

evaluating their supply base (Asia Pacific Food Industry 2010). Besides, this will increase the competition in the

market (Asia Pacific Food Industry 2010). The overall production for processed food and beverages products

industry on that similar year increased by 8%, due to the high demand domestically and internationally (Market

Watch Malaysia 2010). Exports of selected processed food and beverages products have increased by 35.4 % in

2008 (Asia Pacific Food Industry 2010). Although the export performance has increased for the past ten years,

Malaysia continues to be a net importer of food (Asia Pacific Food Industry 2010). In 2008, Malaysia's total food

exports amounted to RM17.9 billion, while imports totalled RM28 billion (Asia Pacific Food Industry 2010).

According to Tey (2008), the increased amounts of import of food products were due to the changes of Malaysian

diets, increased of expatriates and foreign students and the boost of tourism industry. According to the Malaysian

Industry Development Authority (MIDA), present global retail sales in food products are worth around US$3.5

trillion, and are expected to grow at an annual rate of 4.8 per cent to US$6.4 trillion by 2020 (Market Watch

Malaysia 2010).

During the worldwide recession of 2007-2008, it impacted Malaysia economic growth and the economy

in 2009 (Market Watch Malaysia 2010). By end of the year, the country emerged from the recession and recover

moderately by 2010 (Market Watch Malaysia 2010). Malaysia's food and drink industry continues to recover

from the slowdown experienced in 2009 with many of the leading industry players posting vigorous growth in

interim financials (Market Watch Malaysia 2010). Along the years, the industry has also to deal with increasing

cost of production, deals with reputation issues as there have been incidents of unsafe foods happen in the past

(Tey 2008). These outbreaks lead to consumer loss confidence, and increased regulations (Tey 2008). With

additional rules and regulations, above extra campaigns, Malaysia government has encouraged consumers to buy

Malaysian products, and urge retail sector to carry more locally produced foods and beverages (Market Watch

Malaysia 2010). This leads to government’s emphasis on the agriculture sector, the processed food and beverages

industry development.

The global Halal food market is on the major developments that has prospect rapid and sustained growth

(Market Watch Malaysia 2010). With the Halal food market currently accounting for as much as 12 percent of

global trade in agri-food products, this will generate growth opportunities throughout the agri-food industry

(MIDA n.d). Malaysia has been globally recognized as the world’s Halal food hub and it’s the pioneer in this

industry. Hence, presently it faces stiff competition from both Muslim and non-Muslim nations, including

Brunei, Thailand, Philippines, Australia and New Zealand, United Kingdom and France (Kamaruddin and Jusoff

2009). In Malaysia itself with 60% of population being Muslim and if assumed expenditure on food as RM1 a

day, then the demand for Halal product is more than RM5 billion a year (Kamaruddin and Jusoff 2009). The

demand for Halal food is expected to expand progressively in view of the increasing trend among Muslims to

observe dietary obligations (Kamaruddin and Jusoff 2009). The Halal industry in Malaysia provides huge

opportunities for Malaysian manufacturers (Kamaruddin and Jusoff 2009).

The industry is growing and thriving for being self sufficient in food production (Siew and Tan 2007). A

mix of manufacturing, services and agricultures provides the stable economic foundation that resulting two-thirds

of Malaysia population achieving middle to upper levels income (Siew and Tan 2007). According to MIDA (n.d),

the country has seen a steady increase in the standard of living and with it, its purchasing power (per capita

income exceeds RM 19,739 or US$5681). The food consumption will continue to grow by 22.7% by 2013 and

soft drink sales to increase by 32.9% over the same period (MIDA n.d). The current development in the industry is

heading to product innovations which centre on health (MIDA n.d). A growing demand for premium food items

can be predicted, which indicated by the increasing living standards and purchasing power of the modern

Malaysian population (U.S. Department of Agriculture 2003).

Currently, food industry is still growing in Malaysia. The industry maturity guide which sample by John

R Castle (2008) as in exhibit A.

Industry maturity

Embryonic/Early

Growth / Expanding Mature / Stable Declining / Aging

Growth rate Very high Very highPlateau / Growth equal to GNP or slower

None

Competition IncreasingShake out / Increasing actively

well-established Decreasing

Market leaders / standards

None Emerging Fixed Less important

Market goals Exposure Differentiate Leadership Survival

Market share/ strategy

Trial and error Build share Defend Acquire

Product range Limited Expanding Wide Limited

Customer Loyalty None Growing Strong Eroding

Exhibit A: Industry Maturity guide

2 CORPORATION & SBU BACKGROUND

2.1 Corporation

Yeo Hiap Seng Corporation starts its business in Singapore first in 1935, before it established in Malaysia

on 1942. Yeo Hiap Seng Malaysia Sdn Bhd (Yeo’s) deals in the production, marketing and sales of food and

beverages products (Yeo Hiap Seng (M) Berhad n.d). Among earliest products produced then were soya sauce,

canned chicken curry and soya bean milk, Yeo’s is the pioneer for manufacturing canned chicken curry, bottled

soya bean drinks and tetra pack, a paper based packaging for drinks (Yeo Hiap Seng (M) Berhad n.d). Now it

produces a range of food, carbonated and noncarbonated drinks under the brands of Yeo’s, Fizzi, Goodtaste,

Soyrich and Cintan (Yeo Hiap Seng (M) Berhad n.d). Its series of food range include canned food: curries,

coconut milk, paste, beef rending and the like, whilst for drinks range includes sugarcane based drinks and

chrysanthemum tea (Yeo Hiap Seng (M) Berhad n.d). Due to its success in the market especially in the beverage

lines, it was overwhelmed to expand internationally by penetrating the U.S market in the early 90’s through

acquisition from local company named Chun King, which turned out to be a big management decision mistake

(Market Watch Malaysia 2010). Since then, it focuses its distribution network closer to home and, countries close

to Malaysia, before the restructuring of the management take over (Market Watch Malaysia 2010). Yeo’s has

been listed on the Kuala Lumpur Stock Exchange in 1975 (Market Watch Malaysia 2010). Its vision is to be

number one Asian food and beverage company in Malaysia (Yeo Hiap Seng (M) Berhad n.d). The mission is to

provide their customers high quality and best value products through the constant approach in innovation and

excellence (Yeo Hiap Seng (M) Berhad n.d).

The company use functional structure in order to manage its operation. It has functional line managers in

dominant organisational areas such as Finance division, Marketing, Sales, Management Information Systems

Technical, R&D, Products Human Resource, and Business Development Divisions (Yeo Hiap Seng (M) Berhad

n.d). The company assigned its Head Office Finance Division to oversee all financial matters relating to the group

which include financial and management accounting, budgetary and cost control (Yeo Hiap Seng (M) Berhad

n.d). It monitors the capital expenditure and business expansion programmes. The company also has it Corporate

Planning which function encompasses preparation of detailed feasibility studies relating to acquisitions, mergers,

financial restructuring or other issues that may affect company's future operations (Yeo Hiap Seng (M) Berhad

n.d). The Marketing Department is responsible for product management, Sales for distribution management which

manage the Fast Moving Consumer Goods (FMCG) sales distribution network all around Malaysia, MIS for

information system management, Technical for production support, R&D in identifying opportunities and

improving its products, Product Division for management of product facilities in 5 locations, whilst Human

Resource and Business Development for its human capital and identifying market opportunities (Yeo Hiap Seng

(M) Berhad n.d). The functional structure support implementation of business and some corporate level strategies

with low levels of innovation (Yeo Hiap Seng (M) Berhad n.d).

The company involves in joint ventures deals as its international expansion (Yeo Hiap Seng (M) Berhad

n.d). It collaborates with World Grain Co. in Thailand to launch WY Co. Ltd., which introduces variety of teas,

fruit juices, and other noncarbonated soft drinks under the Eliza brand (Yeo Hiap Seng (M) Berhad n.d). The

company also initiated the Rengo International holding company joint venture in Hong Kong, which then

launched of instant noodles on the mainland (Yeo Hiap Seng (M) Berhad n.d). The deals allowed Yeo’s to operate

six food and beverage production facilities in China (Yeo Hiap Seng (M) Berhad n.d).

Presently, Yeo’s has direct manufacturing facilities in Singapore, Malaysia and China, where Malaysia is

the centre for global distribution for Indonesia, New Zealand, Australia Europe and US (Yeo Hiap Seng (M)

Berhad n.d). Yeo Hiap Seng subsidiaries companies are Bestcan Food Technological Industry Sdn. Bhd.; Esin

Canning Industry Sdn. Bhd.; Leong Sin Nam Farms Bhd.; Rengo International Investment Ltd; Sarawak Coconut

Enterprise Sdn. Bhd.; Senawang Edible Oil (Sendirian) Bhd.; WY Co. Ltd. (Thailand); Xiamen Rengo Food. Co.

Ltd. (China); Yeo Hiap Seng (Middle East) Co. Ltd. (Bahrain); Yeo Hiap Seng (Perak) Sdn. Bhd.; Yeo Hiap Seng

Trading Sdn. Bhd.; Yeo’s Beverage (International) Pte. Ltd. (Singapore), and PT YHS Indonesia.

2.2 Strategic Business Unit (SBU)

Under the brands of Yeo’s, the company produces food and beverages which distribute locally and

internationally. The strategic business unit form for Yeo’s consists of 3 levels: corporate headquarters, strategic

business units and finally its divisions. The divisions within each SBU are related in terms of markets and may

share its market competencies and tools.

Under food section, Yeo’s produces:

1. Canned food :

i. canned meat products with local taste blend of Curry chicken, kurma chicken, Vindaloo chicken, Rendang chicken, Beef curry and mutton curry

ii. Canned seafood: Prawn sambal, cuttlefish in soya sauce, cuttlefish in curry, cuttlefish in sambal, curry cockles, fish with salted black beans, and sardines in tomato sauce.

iii. Vegetable: Baked beans, processed peas, sweet corn in creamy style and whole kernel corn.

iv. Kaya, sweet coconut based spread for bread or flavouring purpose

v. Sweet condensed milk, with Goodtaste lable.

2. Sauces: wide range of soya sauces, from thick dark, sweet, and liquefied soya sauce .

3. Noodles:

i. Cintan noodles, instant noodles with flavours of Curry, Assam laksa, Mushroom chicken, Tom yam, Asam soto ayam, Goreng Ala Indo, Goreng Spicy, and Vegetarian

ii. Selera Chef, with local taste of kari laksa and mi sup, series of product with collaboration of celebrity chef, Chef Wan.

iii. Cup-A-Mi, cup noodles in a pack.

iv. Grab Mi, noodle in cup packaging with different flavours of curry, vegetable and assam laksa.

v. Non-fried noodles, cholesterol free, with zero preservatives nor colouring for health conscious consumers.

The Yeo’s food SBU has the geography scope which is within whole Malaysia (Yeo Hiap Seng (M)

Berhad n.d). The main sales offices are located in populated cities in Malaysia such as Alor Star, Ipoh, Johor

Bahru, Kota Kinabalu and Kuching (Yeo Hiap Seng (M) Berhad n.d). The increased competition due to saturation

of markets and competitive threats from overseas companies entering local market has forced YEOS to penetrate

overseas market. However, the distribution of food products to overseas is only undertaken by Singapore Yeo’s

Corporation (Yeo Hiap Seng (M) Berhad n.d).

In terms of strategic fit, Yeo’s food SBU has achieved corporate objective through the Management

Information System (MIS) (Yeo Hiap Seng (M) Berhad n.d). Besides, it is also assisted by its outstanding human

resource function which includes formulation and implementation. These specialties of Yeo’s food SBU has

driven it becomes profitable and contribute to sustainable operations of whole Yeo’s Corporation.

3 SBU SITUATION ANALYSIS

3.1 SBU Culture/ Resources/ Stakeholders/Performance

3.1.1 Culture

Yeo Hiap Seng (Malaysia) Berhad (Yeo’s) was one of the leading local food and beverage companies in

Malaysia with the vision of becoming the number one Asian food and beverage company in Malaysia. It has a

commitment towards community’s welfare which manufactures products by just using the freshest ingredients in

order to maintain the natural delicious taste and flavour (Yeo Hiap Seng (M) Berhad n.d.). The company clings to

strict hygiene standards and stringent quality control to ensure the high quality of all its products (Yeo Hiap Seng

(M) Berhad n.d.). Moreover, Yeo’s is also committed to continuous research and development to further improve

its products as well as keep abreast of the market trends in anticipating consumer needs and providing consumer

satisfaction (Yeo Hiap Seng (M) Berhad n.d.).

Everyone within the corporate was shared the value of having clear communication between members

and the society (Yeo Hiap Seng (M) Berhad n.d.). In this case, Yeo’s will explain reasons behind actions taken

and encourage feedback from others (Yeo Hiap Seng (M) Berhad n.d.). There will schedule regular

communications meeting to disseminate important company information (Yeo Hiap Seng (M) Berhad n.d.).

The discipline of Yeo’s is to be honest, ethical and adhering to rules, regulations, policies and standards which are

by follow company rules, regulations, policies, and industry and statutory standards (Yeo Hiap Seng (M) Berhad

n.d.). They also intend to be honest when managing and handling company goods and business; and do not abuse

one authority and position in the company (Yeo Hiap Seng (M) Berhad n.d.).

They also aim to be a high standard corporate which they strive to achieve best business practices (Yeo

Hiap Seng (M) Berhad n.d.). They will ensure product quality meets statutory requirements as well as market

needs (Yeo Hiap Seng (M) Berhad n.d.). YHS also actively seek ways to improve their current business practice;

and be accountable and responsible for their actions (Yeo Hiap Seng (M) Berhad n.d.).

Thus, with all these, Yeo’s is always thoughtful of a quality work environment that promotes new ideas,

empowerment, and teamwork besides promoting healthy and safety workplace that are in line with the

Occupational Safety Health Policy ergonomics standards and reduce workplace hazards by means of engineering

controls, administrative controls and employee training (Yeo Hiap Seng (M) Berhad n.d.).

3.1.2 Resources

Yeo’s management team is also shared equally between the brands of foods and beverages (Yeo Hiap

Seng (M) Berhad n.d.). The marketing professionals are assigned to develop appropriate marketing strategies for

the canned food, instant noodles, processed meat and sauces which some of them are market leaders (Yeo Hiap

Seng (M) Berhad n.d.). Yeo’s has the single most extensive Fast Moving Consumer Goods (FMCG) sales

distribution network in the country (Yeo Hiap Seng (M) Berhad n.d.). Teams of salesmen equipped with the latest

hand held computers as to provide personal services directly to customers are led by experienced Area Sales

Managers (Yeo Hiap Seng (M) Berhad n.d.). With the reason to optimise business opportunities, there is well

implementation on management information system (MIS) which up-to-date computer technology has been

utilised (Yeo Hiap Seng (M) Berhad n.d.). They have embarked on a major project to integrate their financial,

human resources, production, logistic, purchasing and sales functions at all branches (Yeo Hiap Seng (M) Berhad

n.d.). The technical department supports the engineering operations of our Group of Companies (Yeo Hiap Seng

(M) Berhad n.d.). Tasks involve planning, controlling and coordinating of all engineering operations relating to

maintenance of land, buildings, machinery and equipment as well as installation of new machines and equipment

for the production of foods and beverages (Yeo Hiap Seng (M) Berhad n.d.).

As one of the leader in the food and beverages industry in Malaysia, Yeo’s having one of the best

research and development teams in the country (Yeo Hiap Seng (M) Berhad n.d.). Their team of Food

Technologists and Chemists constantly update their knowledge through participation in national as well as

international seminars and courses in the development of food technology (Yeo Hiap Seng (M) Berhad n.d.). Day

to day activities include developing new or improved technical processes, new or improved products as well as

utilising different materials and raw ingredients (Yeo Hiap Seng (M) Berhad n.d.). The Quality Control and

Assurance function involves carrying out laboratory testing as well as advising the production function on quality

standard problems (Yeo Hiap Seng (M) Berhad n.d.).

The human resource department of Yeo’s is responsible for the formulation and implementation of

personnel policies; industrial relations; training development; as well as safety and employee welfare (Yeo Hiap

Seng (M) Berhad n.d.). The Business Development Department monitors relevant economic, financial and social

market and administrative trends with the main objective of identifying new market opportunities (Yeo Hiap Seng

(M) Berhad n.d.).

3.1.3 Stakeholders

The key stakeholders of Yeo’s are suppliers, employee, consumers, shareholders, communities and

directors. The interest of the communities towards Yeo Hiap Seng is that they will gain welfare in different aspect

by the on-going campaigns organised by Yeo’s under the commitment of being responsible to the communities

and environment by proactively promote the public interest which encouraging community growth and

development, and voluntarily eliminating practices that harm the public sphere (Yeo Hiap Seng (M) Berhad n.d.).

For example, Yeo’s will consistently contribute to various causes, such as, sponsorship to charity organizations,

orphanage, old folk home and education institutions. Moreover, the society is also concern about the Yeo’s

responsibility towards preserving the environment and utilization of resources in a sustainable manner (Yeo Hiap

Seng (M) Berhad n.d.).

On the other hand, the employees of Yeo’s have the interest on having quality work environment that

promotes new ideas, empowerment, and teamwork as well as having healthy and safety workplace that are in line

with the Occupational Safety Health Policy ergonomics standards (Yeo Hiap Seng (M) Berhad n.d.). Reduction

on workplace hazards also will be one of the concerns of the employees which by means of engineering controls,

administrative controls and employee training (Yeo Hiap Seng (M) Berhad n.d.). Besides, employees of Yeo’s

have the interest on what employee benefits actually given by Yeo’s, for instance; wages, salaries, paid annual

leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in which the associated

services are rendered by employees of the group (Yeo Hiap Seng (M) Berhad n.d.). Further, there will be post

employment benefits relate to retirement benefits given to employees and are a non-contributory unfunded

retirement benefits scheme for employees who are eligible under a collective bargaining agreement (Yeo Hiap

Seng (M) Berhad n.d.).

Other than that, the directors of Yeo’s have the interests on the remunerations provided by Yeo’s (Yeo

Hiap Seng (M) Berhad n.d.). For the aspect of shareholders they have the interest on receive favourable dividends

generated from the profit of sales of foods and beverages. Further, they interested in having direct line of

communication through timely and through dissemination of information on the performance of Yeo’s and major

developments (Yeo Hiap Seng (M) Berhad n.d.). For the customers, they are interested on buying foods and

beverages products that are manufactured under hygiene standard using the freshest ingredients (Yeo Hiap Seng

(M) Berhad n.d.).

The suppliers of Yeo’s are those who supplied raw material or packaging material to the manufacturing

Yeo’s foods products. For example, Tong Seng Trading Co. (Pte) Ltd. has supplied the chilli powder, garlic

powder and so on to Yeo’s as for them to produce the seasoning of Cintan Instant noodles or Yeo’s Curry

Chicken (Yeo Hiap Seng (M) Berhad n.d.). So, the interest of these suppliers is on the long term supplier

relationship with Yeo’s which they aim to have a stable demand for their supplies from Yeo’s in order to generate

stable sales.

3.2 3.2 SBU Customers

3.2.1 Geographic Segmentation

Geographic segmentation divided into different geographical units such as region, city size, density of

area and climate. Customers in different areas display certain characteristics and behaviours in that particular

region. Organization can operate in one or a few geographic areas, or operate in all but pay attention to local

variations. Yeo’s operate in three major divisions which is consumer food and beverage in three major

geographical regions which is Malaysia, Singapore and Indonesia. Yeo’s food products are manufactured in the

Yeo Hiap Seng Malaysia factories located throughout Malaysia, Singapore and Indonesia. Yeo’s center its

attention on small market which reflecting small size of population, major metropolitan area and towns. In

additional, Yeo’s may produce its food products and distributed to urban, a suburban and rural area. This is

because a board density of area and population in Malaysia which consists of 27, 914 thousand of population,

Singapore consists of 4,837 thousand and Indonesia consists of 232, 517 thousand of population (World

Population Prospects: The 2008 Revision Population Database 2009) has a high potential to consume food

goods.

Region Malaysia

City Size major metropolitan area, towns

Density of area Urban, suburban and rural area

3.2.2 Demographic Segmentation

Demographic segments are the most popular bases for differentiate customer groups where customer

wants, preferences and usage rates are often been identified. The market is divided into groups on the basis of

variables such as age, gender, marital status, income and occupation.

Age 18 and above ( got income)

Gender Female and Male

Marital Status Single, married, divorced, widowed

Income Low-high

Occupation Housewife, employed and unemployed, students

3.2.3 Psychological Segmentation

Psychological factors play an important role in determines the quantity and sort of the food consumed

(Zielinska 2006). Motives, attitudes and personality are considered as the main key factors of psychological

factors. Nowadays, majority of the women as well as men desire to be healthy, slim or conserve the youth. Hence,

consumers are increasingly seeking for low-fat, lean and additive free, low-salt and roughly 50% of the consumers

are looking for ‘diet’ products (Ryan 2006). Based on the research, consumers are willing to demand and pay

more for nutrition values, extra quality or safe food (Grunert 2005). Besides, instant noodles have becoming a

popular snack food in Asia (Grunert 2005).

Customers might make an impulse purchase on instant noodles. In addition, consumers are now living in

a time-starved society is seeking for convenience food. Therefore, the motivation of consumers to buy packed

food is due to its convenience and preparation speed (Zielinska 2006).

Needs-Motivation Convenience, preparation speed, healthy, slim

Perception Low-risk

Learning-involvement Low-involvement

3.2.4 Psychographic Segmentation

Psychographic segmentation is a method of dividing the markets based on interests, activities, opinions,

behavioral patterns and lifestyles of customers (Thadani n.d.). The vast majority of people have busy lives

nowadays; they are busy for their work, studies, caring on kids and so forth. Due to time constraint, they probably

demand for fast food or canned food since it is convenience.

Lifestyles Time-starved society

3.2.5 Sociocultural Segmentation

Socio-cultural segmentation segments consumers on the basis of cultures, religions, subculture, social

class and family life cycle. Malaysian culture is a mixture of 3 different races which are Chinese, Malay and

Indian. Besides, the largest religion of Malaysia is Islam which approximately 60.4% of the population practiced

Islam, followed by Buddhism, 19.2%, Christianity, 9.1% and Hinduism, 6.3% (Culture & Religion of Malaysia

n.d.). Based on the research, Asia’s middle class is booming and the ADB report shows that the earnings of

middle class are between US$4 and US$10 a day and measured in international dollars (Idris 2010). Malaysia is

one of the largest middle class which means that Malaysian’s purchasing power is quite high compared to lower

class countries.

Cultures Malaysian

Religion Islam, Buddhism, Christian and Hinduism

Social Class Middle

Total Revenue, Assets and Capital Expenditure (RM ‘000)

2005 2006 2007 2008 2009

Revenue 336,976

407,854

383,756

463,109

446,087

Growth Rate of Revenue

21.03% -5.91% 20.68% -3.68%

Total Assets 401,276

446,055

358,732

334,792

332,304

Capital Expenditure

18,556 16,139 4,332 1,989 3,741

(Yeo Hiap Seng (Malaysia) Berhad 2007)

From the figure above, there is inconsistency of total revenue in the past 5 years. According to the

growth rate of revenue, there is negatives growth rate in year 2007 and 2009. On 2007, the company facing a

decline of 5.91% in the revenue due to inflation, prices of raw material increase and severe restriction of

margins in the company policies and structure (Yeo Hiap Seng (Malaysia) Berhad 2007). Year 2009 was a

challenging year for Yeo’s as the world economy struggled to regain its footing which affected the price of

raw materials remained high and insensitivity of market competition. In additional, the Indonesian

government had legalize the import and sale of food or beverage products due to a legal action by third party

against Badan Pengawas Obat dan Makanan (“BPOM”) which had consequently cancelled 15 out of total 31

of Yeo’s products for sale in the country (Yeo Hiap Seng (Malaysia) Berhad 2009).

3.3 SBU Competition

Food SBU

Current Promotional Strategy (eg: Key Message, Media tools; Unique Selling Proposition)

Current Pricing Strategy

Competitive Advantage

Sustainable Competitive Advantage

Market Share Financial Performance (eg: profit/loss; declining profits; trends; etc)

Yeo’s Malaysia

“To be the no.1 Asian Food and Beverage company in Malaysia”

Sales Promotion and Advertising strategy are the current promotional tools that Yeo’s Malaysia used.

Yeo’s leverages on Malaysia role as the role of world Halal manufacturing hub.

Yeo’s worked together with ntv7 on the TV programme ‘Finding Angel’, a charity programme that helps less fortunate or disabled individuals realise their dreams.

New product pricing strategy used for the new developed products by Yeo’s.

The products price had increased seem the increases of the raw materials.

Offered different range of foods to provide wider choices to consumers.

Sensitivity towards the changes of consumers’ needs and trends of becoming a high health-conscious product manufacturer. For instance, Cintan cholesterol free, non-fried noodles

Good relationship with production material supplier which ensure lower cost production.

Fast Moving Consumer Goods (FMCG) sales distribution network

one of the best research and development teams in the country

4% of the total market share in Malaysia food industry (2008).

In 2005, Yeo’s achieve the total profit of RM 6.324 million. Then it increases violently to RM 28.486 million in 2007. However, this total profit has dropped aggressively and lost RM 1.463 million at year 2008 due to economic downturn. Fortunately, it recovers to achieve the total profit of RM 617 thousand.

Food SBU






Competitor 1

Nestle Malaysia

“Good Food, Good Life” Sales Promotion

Strategy:On a 12-bottles purchase of 1.5ml, one bottle of 1.5ml was offered free to consumers. Similarly, on 6 bottles purchase of 1.5ml, one 0.5ml bottle was offered free. Regarding the trade promotion, the retailer was also given an additional discount of 4% during this sales promotion.

Publicity Nestle pure life was launched in Karachi with a huge amount of -enthusiasm and positive response shown by the local. This greatly helps in creating awareness to the brand and gave its introduction a good start. To increase sales and build and image in the mind of consumer through advertising on Television, Radio, Newspaper, Bill Board.

Claimed as playing price leadership role in Malaysia market.

Nestle has the highest market share, thus lead to the lower costs of production.

Combined price leadership with product differentiation from its competitors (no frills), hence offer a unique customers experience.

Good quality of the Nestle food product is the most important competitive advantages.

Nestle strategic priorities are focused on delivering shareholder value through the achievement of sustainable capital efficient and profitable long-term growth.

Has a good word-of-mouth regarding the foods and beverages and the healthy and nutrition foods to suit the market.

Strong worldwide brand recognition.

29% of total market share in Malaysia food industry (2008).

Based on the financial performance for the Nestle Malaysia, its earn RM8.081 million in year 2005, RM9.197 million in year 2006, RM10.649 million in year 2007, RM18.039 million in year 2008 and RM10.428 million in year 2009.

Total foodservice breakfast sales are expected to grow from $46 billion in 2006 to $85 billion in 2015. (trends)

Food SBU






Competitor 2

Mamee

“World of Good Taste” “Mamee- The well loved

blue monster” The company's

concerted efforts to create brand awareness via aggressive advertising and promotions that will continue to drive sales

“Bola Kampong e-card” which is the movie ticket contest, has been advertised through media as well as Mamee company website.

Adopted Competition based pricing strategy.

Leading manufacturers and marketers of snacks, instant noodles and beverages, with 80% revenues from snacks and instant noodles.

Wide distribution to Australia, Singapore, Russia, Hong Kong and The Netherlands

“New innovative snacks” development.

Market leader of the snack markets in Malaysia.

Strong-in-house expertise in product development- continuous innovation to generate consumer demand.

4.8% of market share (2008).

Mamee gain profit of RM2.552 million in year 2005, RM2.971 million in year 2006, however in year 2007 only RM1.992 million due to high cost of sales and high expenses. In year 2008, Mamee gain RM3.009 million and RM 5.0546million in year 2009 which are the most earning compared to the past.

(Yeo Hiap Seng (M) Berhad n.d; Nestle Product (Malaysia) Sdn Bhd 2009; Mamee-Double Decker (Malaysia) Sdn Bhd 2010)

3.4 External Environment

3.4.1 Societal Environment

Political Malaysian National News Agency (June 23, 2010) reported that, according to Prime Minister Datuk Seri Najib, Malaysia had been the forefront in developing standards for the Halal industry.

Economic Malaysia consumer inflation rate has dropped from 3.5% in the year 2006 to 2.4% in the year of 2007 thus increase in customer purchasing power. (Department of Statistics Malaysia 2008).

Social Customers concern more about healthiness such as natural and organic foods (Tey 2008).

Technology Agriculture-biotech emerged for growing more crops. (Biotechnology in Malaysia 2009).

Environment Manufacturers and retailers are working to reduce waste and improve energy efficiency to create higher awareness of green issue (Graiser and Scott 2004).

Graiser and Scott (2004) stated that government intent to cut waste, reduce consumption of resources and minimize environmental damage.

Legal Food Safety Act 1990 provides legal powers and offences in relation to public health and consumer’s interest (Food Safety Act 1990).

3.4.2 Industry Environment

(Sample 5 2009)

Michael Porter's Five

forces.

The intensity of competitive rivalryHigh. Significant growth of Malaysia food industryLarge food manufacturers such as Nestle, F&N, Yeo’s, Mamee and so forth

Threat of substitutionsHighThere are a lots of close substitutes of processed food such as fresh food.

Threat of new entrantsLow.Malaysia is encouraging the emergence of food manufacturers by providing subsidiaries.

Buyer PowerHighLow switching cost for buyers.There are a lots of food choices in the market for buyers.

Supplier PowerLowSuppliers are fear of losing business with large food manufacturer.

http://biotech.bizmalaysia.com/2009/02/biotechnology-in-malaysia.html

3.5 TOWS Matrix

Opportunities

O1: Emergence of Halal market in worldwide with the increasing on Muslim population.

O2: Consumers are heading towards health conscious product.

O3: Emergence of time-starving society

Threats

T1: Unstable economical performances.

T2: Health conscious group does not prefer processed food.

T3: Intensive competition environment. For instance: from other competitors like F&N and Nestle.

Strengths

S1: Yeo’s is Malaysian top brand under food categories.

S2: Yeo’s had won Malaysian Halal Excellence Awards 2009 Best Halal Brand by International Islamic Tourism and Halal Week 2009.

S3: Yeo’s understand Malaysian market very well especially their preference of food.

OS-Strategies

O1S2: Maintain production efforts which focus on Halal food products.

O3S1: Widen food distribution throughout Malaysia for consumers’ purchasing convenience.

O2S3: Position Yeo’s as Malaysian first choice brand.

TS-Strategies

T1S1: To become cost leader in terms of productions.

T2T3S3: Improve and modify food products to have high nutrition value.

Weaknesses

W1: Lack of advertising, promotion and public relation which is important to increase awareness in food industry.

W2: Low product differentiation as Yeo’s food products are similar with those existed in market,

W3: Weaker market image compared with large firm such as Nestle.

OW-Strategies

O2W1W3: Using high nutrition value food products as the advertising issue in order to increase brand awareness.

O2W2: Improve and modify food products to have high nutrition value.

TW- Strategies

T2T3W2: Improve and modify food products to have high nutrition value.

T3W1W3: Using public relations to advocate Yeo’s food image.

4 SBU Objectives and Goals

4.1 Mission:

To become leading food producer in Malaysia food industry.

4.2 Objectives:

1. To become cost leader in food manufacturing.

2. To maintain the recognition from Malaysia Halal Association

3. To focus on product development.

4. Strengthen brand position.

4.3 Goals:

1. To reduce production cost by 20% by 2011.

2. To increase profit growth to 10% from current growth of -5.38% (year 2009) by 2012.

3. To improve food safety standard which match Halal food requirements and regulations along the SBU

operations.

4. To increase product differentiation in terms of greater nutrition value and dietary attributes in order to follow

consumers’ trend of being health conscious in 2011.

5. To position Yeo’s food products as Malaysian’s first choice brand which suit Malaysian’s taste and cultural

the most by 2015.

6. To increase market share from 4% (2009) to 8% by 2015.

4.4 Product Life Cycle of Yeo’s Food SBU

With the analysis on the performance of Yeo’s Food SBU, it is identified that it is on maturity stage of product life

cycle. This analysis is done for the convenience of developing strategies. Table below shows the efforts of food

SBU in past 1 to 5 years which position it at maturity stage.

Product Modification

focus on product renovation and innovation (Yeo Hiap Seng (Malaysia) Berhad 2007).

Executed a packaging facelift for its bestselling products-Cintan Brand (Yeo Hiap Seng (Malaysia) Berhad 2007).

Extension of Cintan noodles with the launch of “Grab Mi” (Yeo Hiap Seng (Malaysia) Berhad 2007).

New products that emphasis on adding value to the existing product line (Yeo Hiap Seng (Malaysia) Berhad 2008).

New product offerings o Malaysia’s first nutritious instant noodle, Cintan Nutri Noodleo New variants for Yeo’s Soy Milk (soy bean corn and rose)o Strategic alliance with tea maker BOH Plantation > produce BOH The-O-

Ais in a ready to drink pack (Yeo Hiap Seng (Malaysia) Berhad 2009).

Profit (highest profit)

Profit slightly increases from RM373m in year 2004 to RM568m in 2008 and a drop of 4% which is RM536m in year 2009 due to economic downturn (Yeo Hiap Seng (Malaysia) Berhad 2009).

Promotion (concentrate on product positioning)

Sponsoring-both public and private sectors that promote caring society, environment and healthy community (Yeo Hiap Seng (Malaysia) Berhad 2007).

Future Development 2010- strengthen brand position in Malaysia through advertising, promotions and PR (Yeo Hiap Seng (Malaysia) Berhad 2009).

Low cost emphasis

Established infrastructure, strategic price adjustment and cost management, able to partly offset rising costs (Yeo Hiap Seng (Malaysia) Berhad 2008).

Material Contracts > an agreement with its major shareholder and immediate holding company (Yeo Hiap Seng (Malaysia) Berhad 2009).

Fixed price contracts to establish determinable prices for raw materials and commodities used (Yeo Hiap Seng (Malaysia) Berhad 2009).

Place (increase distribution efforts)

Launches its products in Indonesia in May 2006 in which appointed 31 distributors (Yeo Hiap Seng (Malaysia) Berhad 2006).

Products are widely distributed over 55 countries worldwide such as Hong Kong, Malaysia, Singapore, the US and China (Yeo Hiap Seng (M) Berhad n.d.).

4.5 Yeo’s Goals Strategy Mix

GOAL 1

To reduce production cost

by 20% by 2011.

GOAL 2

To increase profit growth to

10% from current growth of -5.38% (year 2009) by 2012.

GOAL 3

To improve food safety standard which match Halal food

requirements and regulations along the SBU

operations.

GOAL 4

To increase product

differentiation in terms of greater nutrition value

and dietary attributes in

order to follow consumers’

trend of being health conscious

in 2011.

GOAL 5

To position Yeo’s food products as Malaysian’s first

choice brand which suit Malaysian’s taste and cultural the most by 2015.

GOAL 6

To increase market share from 4% (2009) to 8% by 2015.

Product:

- Continue product modifications and reposition to match customers' needs and wants.

X X

- Product differentiation in terms of Halal features, greater nutrition value and dietary attributes

X X

-To achieve lower cost of production X

X

X

Pricing: - survive in the competitive

foods market and compete with existing competitors

X

- attract consumers to notice and buy this new product

X

- maintain or increase the profitability during the inflationary period

X

-segment the current market from price conscious to quality conscious

X

Distribution: - To maximise sales and

gain economies of scale

X X X

- Gain customer recognition

X X

- Minimise distribution costs

X X

- Wide spread of products within Malaysia.

X

Promotion: - Achieve low

promotion costsX X

- Influence customer perception on Yeo’s

X X

- Build brand equity X X X- Increase sales response. X X

X

X

X

X

X

X

X

X

X X

X

5 Recommendation Strategies

5.1 Market Strategies

5.1.1 Market Scope

It is recommended that Yeo’s to maintain its current total-market strategy throughout the next five years

which by selling different products in each of their strategic business unit directed toward different segments of

the market (Jain 2004). For example, Yeo’s is selling instant noodles, canned food and sauces that meeting the

requirements of all types of customers like children, adult and elderly. Since Yeo’s is already at maturity stage, it

is reasonable for Yeo’s to maintain its current total-market strategy as it can increase market share, increase

power in the processed food market as it serves the whole entire market and able to compete with competitors in

all segments. With the existing strong marketing professionals of Yeo’s, it can enhance the continuous

implementation of this strategy work in a more effective and efficient way by develop appropriate marketing

strategies for the different products offered.

5.1.2 Market Geography

It is suggested for Yeo’s Malaysia to continue adopting the national strategy for all their brands and

products which by just distribute and sell their products within Malaysia. For instance, the canned curry chicken

offered by Yeo’s Malaysia is just flowing in each state of Malaysia but not to overseas countries. The reason to

keep on carry out national strategy is that it can strengthen its brand name to increase market share; and

improvised in terms of product development within domestic market. Thus, it again can help to achieve the

proposed objective and goals. It is reasonable for Yeo’s to adopt this strategy as Yeo’s can make use of their

strong management team like marketing professionals and Fast Moving Consumer Goods (FMCG) sales

distribution network which can fulfil the requirement on resources needed in adopting this strategy.

5.1.3 Market Entry

Previously, Yeo’s has adopted the market entry strategy of first-in strategy for their canned curry chicken

which they are the first Malaysia processed food company who introduce canned curry chicken in Malaysia (Yeo

Hiap Seng (M) Berhad n.d.). Besides, they have adopt the early-entry strategy for their instant noodles which they

introduce their Cintan instant noodles after the introduction of MAGGIE instant noodles and Mamee instant

noodles in Malaysia. However, it is suggested that Yeo’s to continue adopt the early-entry strategy for their new

products as it can contribute significant profitability and has lower risk. Within this strategy, Yeo’s can make use

of the resources on fast distribution network, marketing professionals, management information system and so

forth.

5.1.4 Market commitment

As now the proposed objectives and goals for Yeo’s is to increase profit growth, reduce production cost

and increase market share it is suitable for Yeo’s to adopt a strong market commitment throughout the five years.

In this case Yeo’s have to utilise their strong resources on marketing team, management team and research and

development team on this strategy for the food SBU in order to implement it successfully by continue improve

their product which adapt to market needs. For example, Yeo’s could afford to implement its strong commitment

to the food SBU due to it had sustainable competitive advantage of Fast Moving Consumer Goods (FMCG) sales

distribution network in Malaysia, strong marketing professionals to implement effective promotional activities

and best research and development team in Malaysia. So, Yeo’s can defend its position in high competitive

environment in the food industry.

5.2 Product Strategies

5.2.1 Product-positioning strategy

In order to strengthen the brand position to become high quality and nutritious products as to fight with

the competitors in the competitive environment in food industry, Yeo’s is recommended to position its existing

products by product attributes which based on features or customer benefits. By positioning Yeo’s to a more

suitable market segment, it can receive a favorable reception and thus increase market shares. For example, Yeo’s

can position its existing canned baked beans by adding value on its ingredients which is by using high quality and

organic beans in producing it and so forth. The successful stage of this positioning strategy on canned food can be

shown in the following perceptual map.

So, under the environment of increasing health consciousness of consumers, after being positioned, in the

case of canned baked beans, it swifts the current customer perception towards Yeo’s canned food from medium

high price and medium low dietary nutrition to high price high dietary nutrition. Thus, it can successfully help the

help Yeo’s to achieve the proposed objective of strengthen brand position; and achieve the goal of increase

product differentiation and increase market shares. In implementing this strategy, Yeo’s can make use of their

resources strong marketing professionals and best research and development teams to achieve this positioning by

doing research in the first two years and start to promote these value added products in the next three years as well

as ensure the production of the value added product is fulfils Halal requirement. The estimated budget of the

strategy is proposed to be RM 50,000.

5.2.2 Product Design Strategy

Yeo’s is recommended to continue offer standard products which offer same products to every customer

without customization on flavour or size according to individual requirements. For example, the flavour of Cintan

instant noodles is the same to be sold in all regions in Malaysia which customers has no right to customize the

taste based on their preference. In this case, Yeo’s can make use of their strong resources in producing standard

products which is the technical department will support the engineering operations of maintenance of machinery

and equipment as well as installation of new machines and equipment for the production of foods. By adopting

this strategy, it can yield cost benefits by just producing standard products that can save in cost per-unit; and able

to efficiently merchandise their products nationally.

5.2.3 New product strategy: Improvement/Modification

In order to achieve the objective of focusing on product development and being positioned to be the

Malaysia’s first choice brand that suit Malaysian’s taste and culture, Yeo’s is recommended to implement new

product strategy by modifying the existing products. For instance, Yeo’s can improve and modify its Cintan

instant noodles to be made by whole wheat flour instead of grain flour as whole wheat contains higher fiber and

nutrition than grain. In this case, in order to develop this product successfully, Yeo’s can make use of their

research and development team to research on the best whole wheat to be used to produce the new instant

noodles. Thus, this new instant noodles can increase product differentiation among competitors through adding in

nutrition value and dietary attributes.

Other than that, Yeo’s can modify the flavour of their instants noodles by meeting the taste of multi races

Malaysians. Hence, Yeo’s can introduce new flavour for their instant noodles like Sambal flavour, ginseng

chicken flavour and ox tail soup flavour after done their research through their research and development team on

the most preferable flavour of Malaysian. In this case, Yeo’s can achieve their goal of positioning as Malaysia’s

First Choice Brand which can suit Malaysia’s taste and culture. To implement this strategy, it is proposed to have

a research project on how to improve and modify the products in the first 3 years and start to produce and

introduce the product in the market in the following years. The estimated budget of the strategy is estimated to be

RM 200,000.

5.3 Pricing Strategies

5.3.1 Pricing Strategies

It is recommended to adopt pricing strategy that provides affordable prices to the customers in order to

increase market share. As Yeo’s has higher variable costs incurred compared to fixed cost which show in their

annual report of each year that is roughly RM 394,345,000 of variable costs and RM 151,122 of fixed costs in the

year of 2009, hence the operation of Yeo’s is highly price sensitive which a small increase in price adds much to

earnings (Yeo Hiap Seng (M) Berhad n.d.; Jain 2004).

5.3.2 New product

As there is a new brand and new products being proposed to be introduce in the market during coming

five years which fall in the Health conscious Halal food segment. Thus, new pricing strategy has to be assigned to

the introduction of new product category as to meet Yeo’s objectives, cover the costs incurred to increase

earnings, able to survive in competitive foods market and so on.

The recommended strategy is by using competition-based pricing strategy for the introduction of new

product to be able to survive in the competitive foods market and compete with existing competitors. In this

strategy, price will be set based upon prices of the similar competitor products (Nobilis 2008). The similar

competitor products are like MAGGI® TASTYLITE™ Atta Whole Wheat Instant Noodles®, Ayam Brand™

baked bean and so on. Initially, Yeo’s can analyse the characteristics of the instant noodles key market segment

and then determine the price to be set for the new instant noodles against competitors products. As there are loads

of close substitute on instant noodles and canned food from other brands, the demand for this manufactured food

products is quite elastic in the market (Tutor2u Limited n.d.). Moreover, the switching costs that incurred in

buying a pack of instant noodles is very low as consumers perceived low risk in buying a pack of noodles. Under

this circumstances, if the new product being introduced in the market at a lower price than the similar competitor

products, there will be a large probability that consumers will choose to the new and do not purchase the existing

one, or vice versa. So in this case, it is recommended to implement market penetration pricing which is set a

lowest possible initial price that lower than the competitor products as to attract potential customers away from

competitors (Jain 2004).

This market penetration strategy will be implementing for one year only as to penetrate the market by set

the price of new Yeo’s instant noodles slightly lower than the price of MAGGI® TASTYLITE™ Atta Whole

Wheat Instant Noodles® which is RM4.90 slightly cheaper than the MAGGI® new instant noodles of RM 5.70

(Nestle Products Sdn Bhd. 2010). With this slightly cheaper price, it can motivate and attract consumers to notice

and buy this new product which can boost the sales volume and increase market share. With the high demand of

Yeo’s new instant noodles, Yeo’s has to increase their production and thus some of the production costs will be

decreased. The lower costs per unit of the production of new instant noodles is due to getting discount in buying

raw materials and ingredients in larger quantities and marketing costs spread over more units. Hence, economies

of scale will be achieved and create high potential to become cost leader in manufactured foods market. In

implementing this strategy, Yeo’s has to have good relationship with their raw material suppliers in order to get

discount in buying raw material in bulk. Yeo’s also needs to have enough production capacity in order to produce

large amount of instant noodles. For instance, possess 15 noodles making machines in each factory. Overall, it can

help to achieve the goal of increase market share to 8% within 5 years, reduce production cost by 20% in the first

year and become cost leader in the manufactured food market.

After the one year implementation of market penetration pricing, it is recommended to increase their

price from RM 4.90 to RM 5.30 for the following years. The reason of increase the price is that as Yeo’s has

successfully penetrated the market by having improvement in market shares as well as being more possible to

become cost leader within the five years, it is the time for Yeo’s to aim for other achievement which include

increase their profit margin, cover their on-going promotional price and differentiate their product to position at

the right segment (i.e. quality conscious) as to avoid being drawn out from the market in the future. The

differentiation of their product through higher price will be successful as consumers will have a perception of

goods that have higher price is normally higher quality than others (Tsao, Pitt and Carauna 2005). So, Yeo’s new

instant noodles can be segmented in the category of high quality and healthy products. In other words, as people

are more health conscious nowadays, the increase in price will only caused a slightly decrease in demand by those

consumers who are not quality and health conscious but the profit will still grow as the increase in price will

generate larger revenue which can cover the loss in decreased demand and also the on-going promotional cost. In

this case, the higher price of Yeo’s instant noodles can increase the profit by approximately 5% with constant

costs and can successfully differentiate their product with other ordinary instant noodles like Mamee® Premium.

To conclude, the increase in price after the penetration pricing in the first year can achieve the objectives of

increase profit growth as well as strengthen brand position.

5.3.3 Existing Products

For the case of existing products, it is recommended that to slightly increase the price of existing food

products by 10%. For example, the price of a can of 425 gram baked bean will be charged at RM 2.60 instead of

RM 2.35 (Yeo Hiap Seng (M) Berhad n.d.; Jain 2004). This increase in price is mainly to maintain or increase the

profitability during the inflationary period and to segment the current market from price conscious to quality

conscious. The increase in the price of baked beans is still reasonable as the price of other quality competitor

brand of baked beans is around RM 2.60 to RM 2.80. Other than that, the increase in price can help Yeo’s to

segment their product to be in the category of quality product instead of lower price product. In this case, again

people will perceived high quality product is reasonable to have high price, so Yeo’s is predicted can successfully

segment their current served market to become quality conscious. By this, the increase in price of existing product

is predicted to be successful to achieve their objective of increase profitability and strengthen brand position as

there will be low probability to lose large number of sales as the prices are more or less the same with other

similar large brand and consumers will perceived higher price products equal to higher quality products.

5.4 Distribution Strategies

5.4.1 Indirect Channels

Yeo’s is encouraged to distribute its food products through numbers of intermediaries as they may

perform distribution tasks more efficiently than manufacture alone. It is recommended that Yeo’s should have 2

level of intermediaries which from manufacture to wholesaler and then retailer and lastly to the customers. For

introduction of Yeo’s new food products such as whole wheat instant noodles, it is suggested to use selective

distribution channels such as some super or hypermarket, some of the mini market and particular retail stores in a

small volume to test market sales in first two years after new product development as they are in introduction

stage. Third years onwards, Yeo’s products may reach growing stage; therefore, Yeo’s can build intensive

distribution so that Yeo’s new products are available in most of the retail outlets not only urban but also rural areas

in whole Malaysia.

5.4.2 Channel control strategy

Moreover, technological advance such as automobiles, highways and mass communication, it has made

mass retailing in food become more feasible. It is recommended for Yeo’s to adopt vertical marketing system by

forward integration in take over the tasks of wholesaler with additional “Inventory Automation System” to

distribute their products. This system will record down the past transaction between retailers; and then when those

retailers are running out of stock; it will automatically sending signal to the logistic team to remind them for stock

replacement of those retailers. By this, Yeo’s can enhance their market image and widen their distribution

coverage rapidly through this efficient distribution system. The development of this system is estimated to be RM

2,500 and implement in the next five years.

5.4.3 Distribution Scope

As to increase the market share of Yeo’s existing and new food products, it is suggested to continue

implementing intensive distribution strategy in the next five years which Yeo’s food products will be available at

all possible retail outlets in Malaysia. In this case, it maximises sales and then gains economies of scale; wider

customer recognition and brand awareness. Thus, the objective to reduce production costs, increase profit growth

and increase market share can be achieve successfully.

5.5 Promotion Strategies

5.5.1 Advertising

In order to promote Yeo’s food products have greater nutrition value and suit the taste of Malaysian,

repetitive advertising is suggested to be conducted. Yeo’s will provide informative advertising as to build Yeo’s

brand reposition among 80% of Malaysia consumers. Yeo’s will conduct mass media advertising consists of

television and radio commercial program, advertise in local newspapers and magazine, in store advertising placed

in retail stores and online advertising.

Commercial advertisement converged across countries and more or less stable over time. Yeo’s may

perform the same messages, sounds and effects for television and radio advertisement. For example, Yeo’s may

organise and sponsor certain TV shows like cooking programs as to show the way to prepare meals with Yeo’s

canned food and sauces in a healthy way. As soon as commercial break, Yeo’s will lead the commercial before

others commercial advertisements did like promote on the new flavour of instant noodles such as sambal instant

noodles perfectly match with Malaysian taste buds. In this case, awareness on the new product offered will be

created as there is frequent exposure of Yeo’s advertisement right after the cooking program. By this, customers

will be informed about the new product features along with product differentiation in terms of greater nutrition

value and dietary attributes through the cooking program and thus influence customers’ perception on Yeo’s

product from normal convenience goods to healthy and high quality convenience good. Hence, achieve the goal of

increase product differentiation and achieve Malaysia’s First Choice Brand. The commercial advertisements will

be held for one month in the first year for existing products and will held for 1 month after the introduction of new

products which could gain awareness from wide coverage of different types of customer, thus the cost per person

reached is low and achieved the objective of reduce costs.

The advertisement on newspaper and magazine will be published on “Flavours Magazines” and “The

Star” newspaper which published by Star Publication Malaysia Berhad. The newspaper and magazine

advertisement will be use throughout the five years in monthly basis. In store advertising such as point-of-

purchase displays which designated the messages will be displayed as to attract customer attention and awareness

in every of Yeo’s retail outlets, stores and supermarkets. Internet advertising will be presented in Yeo’s official

website and social utility website such as Facebook. Yeo’s may want to redesign Facebook appearance to more

informative utility but simple and easy to access. Online advertising are well cross borders which enable visitors

of Yeo’s website to know the position of Yeo’s food products are fulfill the Halal standard and value added food.

The store advertising and online advertisement will be carried out throughout the five years period.

The whole advertising strategy is proposed to spend about RM500,000 on TV advertisement and

RM50,000 on other advertising methods. The implementation of the advertising strategy will make use of the

Yeo’s existing marketing professionals.

5.5.2 Public Relation

As to strengthen Yeo’s foods brand position and reduce cost of production, it is necessary for Yeo’s to

pinpoint the uniqueness and tastiness of Yeo’s food products and choose a low cost method to promote their

products. Thus, publicity is suitable for Yeo’s to do their promotion as it is known as a favourable low cost

promotional tools as well as it can generate potential positive impact on the products. Yeo’s can make use of their

current employees in human resource department to maintain the industrial relations through this strategy. Yeo’s

can utilise its website newspaper as one of publicity tools to endorse Yeo’s business and networks purposes such

as e-commerce where goods are sold directly to Yeo’s supplier, manufacturer and consumers as well as position

its brand to a wide range of customers. This enhances Yeo’s to generate value by acquiring sales leads from

website. Beside from that, press releases and news about Yeo’s brand like the achievement of wining Reader’s

Digest Trusted Brand Award which will be publish as a tool to updates Yeo’s current happening and create a

positive image like high quality and safety image for Yeo’s food products. Yeo’s can continue to perform

corporate social responsibility as to supporting charity events and public service activities. This will directly and

indirectly attract media attention and coverage. Thus, it will achieve the low promotion costs. This strategy will be

implemented throughout the five years period as well with the budget of RM 2,000 for newspaper publication.

5.5.3 Sales Promotion

It is suggested to implement sales promotion for the new products offered by Yeo’s like the new flavour

of Cintan instant noodles. The reason to implement this strategy to create immediate sales response on the new

product as to gain more profit and market share in order to cover the research and development cost of the new

product. Yeo’s will implement product giveaways, samples coupons, and discount during sales promotion in

every retail stores as to build Yeo’s food brand images that come to customer’s mind when deciding whether to

purchase Yeo’s particulars food products. Beside from that, during festival season there will be discount of 15%

for every food products sell in supermarkets in Malaysia. Sales promotion will be held right after the introduction

of new products which is February 2014 according to places for three months to gain public attention. The success

of those promotions will enhance Yeo’s to increase market shares and increase the profit growth. This strategy is

proposed to use up RM 10,000 and will make use of the existing marketing professionals of Yeo’s.

6 Implementation Program

IMPLEMENTATION AND CONTROL TABLESTRATEGY WHERE DATES HOW TO IMPLEMENT BUDGET CONTROL MECHANISM

Market 1. Scope - Total Malaysia

WideOngoing Selling different products in each of

their strategic business unit directed toward different segments of the market in Malaysia

N/A Carry out market survey to discover new segments, gauge satisfaction level, human resources manager need to ensure that there are sufficient workers, monitor sales report.

2. Geography - National Malaysia Wide

Ongoing Distribute and sell their products within Malaysia

N/A Working closely with distrbution network to ensure the products been distributed to every places in Malaysia.

3. Entry - Early Entry Malaysia Wide

Jan 14 - Jun 14

Enter the healthy instant noodles market after few introduction of othe company

N/A Study public reaction, marketing of new services and extra attention paid to new operations.

4. Commitment Malaysia Wide

Ongoing Continue improve their product which adapt to market needs.

N/A Monitor sales to gauge market share, financial manager lookout for good investments, monitor competitor’s actions.

Product 1. Product Positioning Malaysia

WideOngoing Adding value to the existing products in

terms of ingredients.RM

50000Carrry out research on the current market requirement for high quality and nutrition products

2. Product Deisgn -Standard

Malaysia Wide

Ongoing Offer same products to every customer without customization on flavor, size or others in Malaysia

N/A Working closely with the raw material supplier to ensure the products being manufactured in same quality.

3. New Product - Improvement

Malaysia Wide

Jan-14 Modify and improve products in flavours and ingredients.

RM 200000

Marketing personnel carry out market survey to gauge satisfaction level, monitor customer feedback, operation manager ensure consistency of quality.

Pricing 1. New Price - Penetration Malaysia

WideJan 14- Jan 15

New price will be set lower than competitors based upon prices of the similar competitor products

N/A Analyse the pricing strategy of competitors

- Increase Malaysia Wide

Jan-15 Slightly increase of the price of new product

N/A Analyse the consumer reaction towards the price of new product.

2. Existing Price - Increase

Malaysia Wide

Jan 11 - Jan 12

Increase price of existing product for 10%

N/A Customer satisfaction survey, customer feedback, monitor operation costs.

STRATEGY WHERE DATES HOW TO IMPLEMENT BUDGET CONTROL MECHANISMDistribution 1. Channel Structure - Indirect

Malaysia Wide

Ongoing Distribute its food products through numbers of intermediaries like wholesaler and retailer.

N/A Monthly report from all channel are studied

2. Distribution Scope -Intensive

Malaysia Wide

Ongoing Products will be available at all possible retail outlets in Malaysia.

N/A Monthly report from all channel are studied

3. Channel Control - Corporate Channel System

Malaysia Wide

Ongoing Forward integration in take over the tasks of wholesaler.

RM2,500 Monthly update and maintanance of the information system

Promotion 1. Advertising - TV and radio

Malaysia Wide

Jan 11, Jan 14

Organizing and sponsoring certain TV shows; products commercial during commercial breaks.

500000 Personnel: Marketing Professionals, Sales Manager. Gather information: Customer survery, market awareness survey. Monitor: Sales report, media reports, customer feedbacks.

- Others Malaysia Wide

Jan 11 - Jan 15

Publish products advertisement on each tools

50000

2. Public Relation Malaysia Wide

Ongoing Utilize website and newspaper to pulish press release and latest news

RM2,000

3. Sales Promotion Malaysia Wide

Feb 14 - May14

Implement product giveaways, samples coupons, and discount during sales promotion in every retail stores

10000

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Documents

SMP Final Report (1)