'Whey-ing' Up a Milky Mess

Prepared By
Reg. No.
Subject

S.A. Rathnayake
17881
Individual Integrated Assignment - Operational Level

December 2013 Examination

Post Graduate Diploma in Marketing

Sri Lanka Institute of Marketing

DECLARATION
I declare that this Assignment is of my own creation of the programming that contains as its
main content work, which has not been submitted previously for a diploma or a degree at any
territory education institute.
Where I have used conceptual material or work of others, I have, to the best of my understanding
and particularly given the parties concerned due acknowledgement for using or adapting such
material or work.

S.A. Rathnayake

ACKNOWLEDGEMENT
Predominantly, I wish to place on record my sincere thanks to the Management of Sri Lanka
Institute of Marketing (SLIM) for allowing me to carry out this study.
I wish to express my special gratitude to, all the lecturers of SLIM in Postgraduate Diploma in
Marketing programme, for the kind and willing guidance and constant interest and
encouragement given to me during this study.
I am greatly indebted to the lecturers of SLIM who gave me a wealth of knowledge and shared
their experiences, who made this study a truly valuable experience and made me well equipped
with the necessary competencies to complete this assignment in a meaningful manner.

Contents
DECLARATION ........................................................................................................................1
ACKNOWLEDGEMENT ...........................................................................................................2
Executive Summary ....................................................................................................................6
Introduction ................................................................................................................................7
Background of the Problem .........................................................................................................8
Task 01 .......................................................................................................................................9
1.1 Popular Milk Powder Brands in Sri Lanka .........................................................................9
1.2 Types of Milk powder products comes under Highland ....................................................... 10
1.3 Effects of the issue of the Micro Environment.................................................................. 11
1.3.1 Internal ...................................................................................................................... 11
1.3.2 Marketing Channel Firms .......................................................................................... 11
1.3.3 Customer Markets ..................................................................................................... 11
1.3.4 Competitors ............................................................................................................... 12
1.4 Macro Environment ......................................................................................................... 12
1.4.1 Demographics ........................................................................................................... 12
1.4.2 Economic .................................................................................................................. 13
1.4.3 Natural ...................................................................................................................... 13
1.4.4 Technological ............................................................................................................ 13
1.4.5 Political ..................................................................................................................... 13
1.4.6 Cultural Forces .......................................................................................................... 13
1.5 Situation Analysis ............................................................................................................... 14
1.5.1 SWOT Analysis ............................................................................................................ 14
Strengths ............................................................................................................................ 14
Weaknesses ........................................................................................................................... 14

Opportunities ......................................................................................................................... 14
Threats .................................................................................................................................. 14
1.6 Segmentation, Targeting and Positioning ......................................................................... 15
1.6.1 Segmentation............................................................................................................. 15
1.6.2 Demographic Analysis .............................................................................................. 15
Geographic Analysis .......................................................................................................... 16
1.6.3 Targeting ...................................................................................................................... 16
1.6.4 Positioning .................................................................................................................... 16
1.7 Corporate Objectives ....................................................................................................... 17
1.7.1 Marketing Objectives .................................................................................................... 17
1.8 Marketing Mix .................................................................................................................... 17
1.8.1 Product Strategy............................................................................................................ 18
1.8.2 Pricing Strategy ............................................................................................................ 18
1.8.3 Promotional Strategy .................................................................................................... 18
1.8.4 Distribution Strategy ..................................................................................................... 18
1.9 Recommendations and Suggestions ................................................................................. 19
Task 2 ....................................................................................................................................... 20
2 Customer value, satisfaction and retention .............................................................................. 20
2.1 Customer Value ............................................................................................................... 20
2.2 Customer satisfaction ....................................................................................................... 21
2.3 Customer retention........................................................................................................... 21
2.4 Brand Personality ............................................................................................................ 22
2.5 Perceptual Map ................................................................................................................ 22
2.6 Consumer Attitude ........................................................................................................... 23
2.7 Recommendations and Suggestions ................................................................................. 24
4

Task 3 ....................................................................................................................................... 25
3.1 Introduction ......................................................................................................................... 25
3.2 Consumer Protection........................................................................................................ 25
3.2.1 Why we need regulations? ......................................................................................... 25
3.2.2 Few Regulations of Internal Trade ............................................................................. 25
3.3 Consumer Affair Authority and Act ................................................................................. 26
3.4 Food Act No. 26 of 1980 ................................................................................................. 26
3.5 Sri Lanka Standards Institution ........................................................................................ 26
3.6 How Legal Factors affecting to Highland ......................................................................... 26
3.6.1 political ..................................................................................................................... 26
3.6.3 Government Institutions and Agencies ...................................................................... 27
3.6.4 Pressure groups ......................................................................................................... 27
3.6.5 Policies and Procedures ............................................................................................. 28
3.7 Recommendations & Suggestions .................................................................................... 28
Conclusion ................................................................................................................................ 30
References ................................................................................................................................ 31
Annexes .................................................................................................................................... 32

Executive Summary
In the midst of controversy over the imported milk powder, overall consumers demand for the
milk powder category decreased. However, consumers attention and trustworthiness went on to
the local dairy manufacturers while increasing of the demand for the local dairy products.
By considering the current hazardous over the milk powder category, Highland, has done in
depth analysis with reference to the company's micro and macro environments to understand the
current market situation. Highland, identified its strengths, weaknesses, opportunities and also
threats which can be affected. In such situation makes threat for whole industry. Hence, correct
segmentation, targeting, positioning and strategic marketing mix are important to develop the
Highland as a brand and a dairy food product. Recommendations and suggestions are given to
further more development of the milk powder market.
Considering the aforesaid situation Researcher closely looked on the change of the customers
perception on milk powder brands and behavioural and attitudinal change of this regards.
Furthermore discussed, due to industry crisis situation how Highland can deliver customer
values, how can satisfy them and finally how can retain customers for future.
After identifying of DCD contamination in imported milk powder brands, CAA banned several
milk powder products as concerning health factors of the consumers. Due to hazardous situation
and

consequences of negative publicity, questioned were raised by individual consumers,

Political parties, government institutions, pressure groups and other consumer protection
institutions over the suspected importers and manufacturers. In current situation how legal
factors are affecting to the Highland evaluated and given recommendations and suggestions to
overcome present market conditions.
In the latter part of the report given conclusion to suggests a major implementation of initiatives
in brand building with the recommendation for the training in production employees,
professional selling and consumer handling for sales & marketing employees.

Introduction
This institution was established in 1956 as The National Milk Board under the purview of the
Ministry of Agriculture. It commenced operations with a single Factory in Colombo
commissioned under the Colombo Plan.

Today it boasts of a wide network of milk collection, production and sales centres administrated
throughout the island and continue to contribute towards the enhancement of the rural economy
while providing the much needed nutrition to the entire nation.

In 1986, the National Milk Board was converted into Milk Industries of Lanka Company
Limited as a government owned company. After several confrontations in 2001 it was named as
Milco (Pvt) Ltd., which now stands as a 100 % government owned company.
Milco dairy products are sold in the market under the trade name of Highland . These products
are produced using only local milk that is produced by local dairy farmers. These products are
mainly categorized into two varieties, namely liquid milk and dairy products. Liquid milk such
as pasteurized and sterilized are very natural products and no any additives or chemicals are
added to these milk to extend their shelf life. Therefore these milk products are very close to the
nature. Other products named as value added products, such as yoghurts, ice cream, cheese and
butter are also very natural products and no any additives or chemicals are added for extending
the shelf life. In addition to the main raw materials, other raw materials which we use for
producing these products are sugar, gelatin, glucose syrup, stabilizers, emulsifiers etc., are
purchased from well reputed organizations the quality of these products can be guaranteed
without any doubt. Therefore, our product quality is superior than the other dairy products in the
market.

Our products are natural, high nutrition and very fresh. This guarantee is given to our valuable
customers.

Background of the Problem

In Sri Lanka packed milk powder consumption is high compare with fresh milk consumption.
Packed milk powder consider as fast moving good and majority of Sri Lankan consumers are
used to consume imported products. As a result there are many multinational companies
importing and distributing milk powder products within the Sri Lanka. New Zealand giant of
diary product, Fontera, is the leading market share holder while Nespray is the next. Other than
that there are several re-packeters whose importing milk powder as a bulk and distributing
products under their own brand names. eg: Lakspray, Maliban, Kotmale, Diamond, Candy.. etc
In May 2013, Health Ministry of Sri Lanka announced that they found Dicyandiamide (DCD)
contamination while in the testing of several Milk Powder brands importing to the Country. In
August 2013, After tests conducted by ITI (Industrial Technology Institute) had indicated
presence of DCD from testing of random samples of Milk Powder products which produced
under the brand names of Anchor milk powder, Maliban non fat and Candy milk powder.
The Health ministry has immediately called to remove the product from the trade which are
identified as contaminated.

Court issued order preventing on the advertising of DCD

contaminated milk powder in print and electronic media. Even the supplements which contain
large amounts of whey protein also tested for the presence of the Clostridium botulinum.

Task 01

1.1 Popular Milk Powder Brands in Sri Lanka

1.2 Types of Milk powder products comes under Highland

Full Cream Milk Powder
Ingredients
Manufactured With rich creamy fresh milk only. No chemicals are
added to make Highland full cream milk powder instantly soluble.
Price Rs. 350.00
Pack size

400g

Non Fat Milk Powder

Ingredients
Manufactured with rich creamy fresh after removing fat milk only. No
chemicals are added to make Highland Non Fat milk powder instantly soluble.
Price Rs 375.00
Pack Size 400g

Full Cream Milk Powder

Ingredients
Manufactured With rich creamy fresh milk only. No chemicals are added to
make Highland full cream milk powder instantly soluble.
Price Rs 750.00
Pack Size

10

1Kg

1.3 Effects of the issue of the Micro Environment

1.3.1 Internal
Demand for the production will be increased as many milk powder brands dry out from
the market.

Customers trustworthiness on the Highland will be increased and they will be more
encourage to consume the product.

As per the sudden changes of market conditions company will not able to match the
demand.

Production capacity depends on collection of the milk from the suppliers and government
farms.

Suppliers more motivate to supply the requirement.

Shareholders will be invested more assets to increase production capacity.

New innovative products need to be introduced to the market to attract the customers.

New marketing plan, more marketing activities need to be implement to capture the share
of the lost competitors while facing to the existing competitors.

When the demand goes up, market for the production will be expanding. Thus revenue
and the profits of the company will be increased. According to that wages will be
increased and employees will be motivated to increase production.

1.3.2 Marketing Channel Firms

As per increase of demand distributors are motivating to buy more highland products to
earn more profits

Whole sellers will keep the more profit margin when selling to the traders

Traders/Super markets will identify Highland as a substitute for other brands and try to
match the demand by filling more products in the shelf

1.3.3 Customer Markets

Highland is a home grown brand which is using local milk to produce milk powder.
Hence customers trustworthiness on the brand is high and demand for the product will
be increased.
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1.3.4 Competitors
There are 3 types of competitors can be identified within the Milk powder market.

Direct Competitors
Direct competitors are closest competitors. Anchor, Nestle, Lakspray, Kandy, Pelawatte
and Maliban...etc are the competitors for Highland milk powder. However, two main
brands (Anchor and Maliban) have tarnished their images due to DCD contamination.
Hence, competition among other brands will be high to obtain the places of Anchor and
Maliban in the trade.

Indirect
These are the subtitle products suppliers. In milk powder market Viva, Nestomalt,
Horlicks.. etc can be identified as a substitute for Highland.
Due to DCD issue these products demand will be increased.

Potential Competitors
These are brands which filling need gap of customers in another way. These products
included Kolakenda, Juice, Plain tea, plain coffee, cereal.. etc

1.4 Macro Environment

1.4.1 Demographics
Market can be divided into groups based on variables such as Age, Stage of the life cycle,
Occupation, Education, Income, Race, Nationality and Gender.
Age - According to the age distribution age between 20 -60 people are the customers of milk
powder products.

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1.4.2 Economic
Sri Lanka is a third world country which is having low GDP income. According to the data Sri
Lanka importing... Millions worth of milk powder from the several countries. At the
controversial of DCD contamination people are more concern to buy Sri Lankan home grown
products for their day to day consumption. Thus Sri Lanka able retains the money which is
flowing to other countries to import milk powder. However, Government imposed and controlled
tax on imported milk powder avoids the unnecessary price and quantity fluctuations.
1.4.3 Natural
The situation caused due to following unnatural conditions in a milk powder processing. There
for its really necessary to have a better Milk farm conditions to prevent this kind of

farm

chemical contamination situations.

1.4.4 Technological
Technology is more essential to reduce the amount of wastage and increase the quality of the
product. Tetra pack is another option Highland should be focus to provide sterilized milk to
customers.
1.4.5 Political
Contamination of harmful chemicals in the milk could be resulted to deadly reactions. (eg.
Melamine issue in China 2008) Government and other institutions are bearing the consequences
of the foods importing to Sri Lanka. Hence, imposing the regulations on the milk powder will
cause to protect the consumer, Industry and control imports.
There for Government impose following food act & regulation on import products and local
products in 2005.
Food (Labeling & Advertising) Regulations 2005
1.4.6 Cultural Forces
DCD contamination made hassle on the society. Cultural forces are the people who within the
population that influencing mechanism to guide business practices. As contamination of DCD
made burden issue on the society many of cultural forces involved and pressured on the
government to impose new practices on importing milk powder.

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1.5 Situation Analysis

1.5.1 SWOT Analysis
Strengths
Strength of home grown brand name and brand image

Quality of products

Trustworthiness of Consumers

Supported by Government

1700 chilling centres around the country

70,000 dairy farmers who supplying their products to the chilling centres directly

Wide range of products (Milk Powder, Pasteurized Milk, Sterilized milk, Yogurt, Icecream, Butter, Curd, Gee and Condensed milk etc.)

Weaknesses

Consumers perception on Highland products ( increasing phlegm)

Milk powder not mixing properly with hot water

Less marketing activities done in past years

Low capacity of the production

Less technology using for production

Less innovation on production

Opportunities

Vacuum to be filled in the market

More innovative products can be added under the Highland brand name

More marketing activities to grab the market share of the Anchor and Maliban

Threats
As per the situation customers are moving from the milk powder consumption.

14

Local competitors are highly motivated on current market conditions. Hence, competition
within the local manufacturer's high to grab the Fontera's market share.( Pelawatte,
Ambewela, Lak cow.. etc)

Threat of the substitute products becoming high (Nestomalt, Viva, Milk maid.. etc)

Potential product manufacturers are actively entering to the market and driving existing
customer to the different way (Eg: Kolakenda, Samaposha, Cereal.. etc)

1.6 Segmentation, Targeting and Positioning

1.6.1 Segmentation
Market segmentation is a strategy that involves dividing a broad target market in to sub sets of
consumers who have similar needs and wants.
Under the segmentation author analyzed market by using 2 dimensions of demographically and
geographically.

1.6.2 Demographic Analysis

This has been done using dimensions of Class, Income level and Age.
Class and Income Level
Class
A
B
C
D
E
Age Classification
Age Limits
0-2
3-5
6 - 12
13 - 19
20 - 35
35 - 50
50 above

15

Classification
Top end
Upper middle
Middle
Lower middle
Lower

Income Level
100,000 above
50,000 - 100,000
25,000 - 50,000
10,000 - 25,000
Below 10,000
Category group
Infants
Nursery
Kids
Teens
Young Adults
Adults
Senior Citizen

Geographic Analysis
Under this segmentation market divided to 3 subsets according to geographic criteria.
Geographic Classification
Urban
Semi Urban
Rural

1.6.3 Targeting
Product

Income Classification

Full Cream 400g

D,C,B

Age Classification

Geographic
Classification
Urban, Semi urban &
Rural
Urban, Semi urban &
Rural
Urban and Semi urban

Nursary to Senior
Citizen
Full Cream 1 Kg
D,C,B
Nursary to Senior
Citizen
Non Fat Milk Powder C,B,A
Adults to Senior
Citizen
According to the data's Highland's Full Cream Milk primary target market is consumers who in
age of 35 to 50 and living in a semi urban and rural areas.
Secondary target markets are Nursery, kids and Senior citizen who do not have a purchasing
power but consuming the product and people who are looking for healthy life.

1.6.4 Positioning
Brand Positioning is how a product is perceived in the mind of consumer in relation to
competitors brand in the market. Positioning is act of placing a companys brand in consumers
minds over and against competitors in terms of characteristics and benefits that the brand does
and does not offer,

Attribute or Benefits

Quality or Price

Use or User

Competition

Milco is a government own company which manufacturing milk base products by using Sri
Lankan resources. Since 1956 Milco has been come long way keeping the trustworthiness by
16

ensuring the standard of the products it produced. Highland, always delivered the promise it
made to the consumers. As a Sri Lankan milk powder manufacturer, Highland always liable to
keep the guaranteed quality of the products.
According to above Highland can be used Product attributes and benefits as their positioning
strategy.
Highland milk powder will be positioned as a,
Authentic Sri Lankan originated, Natural and Healthy milk powder product which has
been kept generational trustworthiness providing dairy products to the Sri Lankan
consumers.

1.7 Corporate Objectives

Objective of the Highland is to establish come up to the number one position to the Milk powder
industry within next 3 years.

1.7.1 Marketing Objectives

Increase market share of milk powder category from 25% within 02 years

Increase penetration by over 30% within next 02 years

Increase revenue from 40 % within next 02 years

Increase number of Distributors from 25% within next 02 years

1.8 Marketing Mix

To communicate to the consumer in the target market that the right product is available at the
right price at right place is called Marketing mix. It's include 4 elements as such Products, Price,
Promotion and Place.
Marketing mix is the strategy company used to achieve its marketing objectives. According to
the current situation Highland marketing mix should be implement as follows.
17

1.8.1 Product Strategy

Highland products are refusing customers at the trade because of some defaults with
current products. (eg: increasing phlegm, not diluting with water) Hence over come to
this situations Highland need to develop existing products to the higher level to give
better customer satisfaction.

Introduce new products to the existing product portfolio. (new products focusing on
infants, pregnant mothers, elder customers.. etc)

Increase production capacity from over 25% to by increasing milk collecting centres and
suppliers.

1.8.2 Pricing Strategy

As a brand which originated from locally, Highland will keep the cost driven pricing strategy for
existing products while value based pricing strategy for new products which we are suppose to
introduce in near future.

1.8.3 Promotional Strategy

Educational program to be operated to increase the positive attitude towards while

increasing the awareness of the product.

Advertising on TV and Radio the increase awareness, Brand Image and Brand
acceptability

There will be many programs do under the PR building, Sponsoring events (chidren's
day...etc) to build relationship with stakeholders.

Press Issue with indicating company history and its responsibility grab attention of
audience

1.8.4 Distribution Strategy

There will be new appointed distributors to increase the distribution network to reach
penetration of 100,000 outlets within 02 years

18

Increase the depth and the width of the stock level in the outlets

1.9 Recommendations and Suggestions

According to observation that carried out negative factors on the product is high as it
increase phlegm. Hence, there should be development program on products to overcome
this situation. After that Highland need to run the educational program to change the
perception of people regarding Highland milk powder.

There was seen that production of the milk powder is low as result of capacity of the
machines and supply of the production quantity low. Hence, recommending increasing
milk production by 50% by installing new machines and increasing supply chain.

Product portfolio under the Highland is lower compare with other milk powder
manufacturing companies. Recommending introducing new products targeting Infants,
Pregnant mothers, elder citizens to increase the market by catering different needs of
different segments in the market.

The distribution of the Highland is so low. Increasing distribution is must to increase the
sales. Recommending increasing distribution network to increase the reach.

Recommend to do marketing pull by doing advertising and promotions while increasing

the awareness.

Brand need to be repositioned as consumers trustworthiness increase on local

manufacturers. New repositioning need to be communicated by using 360 marketing
campaign.

Recommend to do press release by saying Highland is a local manufacturer which is

producing milk powder under quality standard.

19

Task 2

2 Customer value, satisfaction and retention

2.1 Customer Value
Customer value is can be define as the different between what a customer gets from a product in
order to what he has to give to get it. There can be identified two aspects of customer values as
desired value and perceived value.
Desired value refers to what customers desire in a product or service. Perceived value is the
benefits that a customer believes that he or she received from a product after it was purchased.
Customer value can be examined at different levels. At a low level, customer value can be
viewed as the attributes of a product that a customer perceives to receive value from. At a higher
level, customer value can be viewed as the emotional payoff and achievement of a goal or desire.
When customers derive value from a product, they derive value from the attributes of the product
as well as from the attribute performance and the consequence of achieving desired goals from
the use of the product.
Customers assessing values in two stages, called before purchase and after purchase. Under the
circumstances of the DCD contamination in Fonterra, Maliban and Candy milk powder,
customers hesitant to buy all imported milk powder brands. As a result of non delivering the
promise what they have made, customers rejected to buy above mentioned products as they
haven't delivered the customer value.
In this situation help to increase the customers positive perception on local dairy manufacturers.
Hence, Highland need to be focused on delivering the customer value in all the stages of
customer involved to increase the customer value on regards to Highland.

20

2.2 Customer satisfaction

Is a measure of how products and services supplied by a company meet or surpasses the
customer expectations. Customer satisfaction provide leading indicator of consumer purchase
intension and loyalty. As per the below circle business companies continuously seeking
feedbacks to improve the customer satisfaction.

Before the DCD contamination incident happened Fontera's milk powder brand "Anchor" was
the number one brand in the market with high satisfaction rates. After the incident Anchor
consumer satisfaction rates came down. As a result of purchase intension and loyalty of Anchor
consumer's have been come down while consumer satisfaction of Highland other local dairy
brands increased.
2.3 Customer retention
Customer retention is the activity that a selling organization undertakes in order to reduce
customer defections. Successful customer retention starts with the first contact an organization
has with a customer and continues throughout the entire lifetime of a relationship.
Customer retention is more than giving the customer what they expect; its about exceeding their
expectations so that they become loyal advocates for the brand. Anchor was failure on customer
retention and brand loyalty was shattered as DCD found in their milk powder. In such situation
Highland having good potential to increase the customer retention by attracting new customers
and retaining existing customers by giving good service and making better reputation across the
marketplace. Other than giving the guaranteed quality product Highland need to consider on
increasing brand values to make life time loyal customers under the customer retention.

21

2.4 Brand Personality

This is the added value which brand gains other than from its functional benefits. Those are set
of human characteristics that are attributed to a brand name. An effective brand will increase its
brand equity by having a consistent set of characteristics.
Customers are more likely to purchase a brand if its personality is similar to their own. Anchor
established their brand personality by using traits of "Trusted mother" which was shattered after
found of contamination DCD in milk powder.
Highland need to reform brand personality by using brand positioning under recognized areas of
authentic Sri Lankan originated, Natural and Healthy milk powder product which has been kept
generational trustworthiness providing dairy products to the Sri Lankan consumers. Hence,
Brand personality of the Highland is a typical Sri Lankan mother who serves her all children
with giving similar attention and care.

2.5 Perceptual Map

By tracing or plotting consumer's view with regards to the milk powder products we can identify
the current perception of consumer on milk powder brands.
Import Milk powder

Anchor/Maliban

LAKSPRAY/NESPRAY

Perception- Negative

Perception - Positive

Highland

Local Milk Powder

22

According to current situation, Perception of the Anchor and Maliban moved Positive to
Negative while Highland moved Negative to Positive perception. Lakspray and Nespray were
able to increase their positive perception on product.

2.6 Consumer Attitude

Consumer attitude represent the like or dislike of consumer on product or service. Consumer
attitudes are long lasting but changeable.
Consumer attitudes composite on 3 things as follows.

Beliefs - On Anchor/Maliban consumer's had positive belief before the incident.

Affect - Consumer's hold feelings towards the brand. Sometimes those are based on
beliefs.
Behavioral Intentions - Is what consumer plan to do with respect to the brand.

According to the data's, Anchor was the market leading milk powder brand before it was banned
by the government. It had the positive attitude of consumer's with regards to its predisposition on
learning.
After the DCD contamination found in a Anchor milk powder Consumer attitudes completely
changed. Their beliefs on brand became negative. based on that they were feelings towards
Anchor was negative and finally their behavioral intention was not to buy the Anchor.
However, Consumer's belief and feelings on Highland alternated to positive. Hence, consumers
behavioral intension became positive on Highland.

23

2.7 Recommendations and Suggestions

As a result of the DCD controversial, customers positive perception on Highland

increased while increasing its demand on the products. Now it is time to Highland to
focus on maintain the customer positive perception and keep the demand for its products.
For that Highland need to make the satisfied customer. Attributes of the product need to
be changed with identifying changing of consumers new emerged need and wants.

Brand building is a one way to keep customer retention and increase customer
satisfaction. To build the brand, Highland need to increase communication and customer
involvement with brand by advertising, sponsoring suitable events for brand,
participating exhibitions, doing promotions and CSR projects.

When consumer satisfaction increases, it will help to increase the consumer loyalty.
Consumer loyalty makes the long lasting valuable consumer for brand.

In such situation Highland having good opportunity to grow in the full cream milk
powder market. Increasing a PR with stake holders is essential. Providing a good service
to the Customer will make the long lasting bond with customer and brand. Hence,
Highland need to focus on to provide better service by providing better products,
distribution, handling customer complaints, ..etc

Now it is time of changing consumer's perception on local dairy products. As a main Sri
Lankan originated dairy product brand, Highland, need to keep and maintain the emerged
positive insights of the consumers. Ensuring the brand values by delivering brand
promise Highland will be able to maintain positive perception on its products.

Developing the brand personality will help to increase the brand identity and recognition.
Highland's brand personality of "Typical Sri Lankan mother" should be communicated
through the communication campaign to establish and position brand personality on
consumers mind.

Consumers attitude positively changed on Highland. Consumers beliefs make affections

and finally positive customer behavioural intension will make the purchasing decision.
Hence, Highland's center of attention should be to keep and increase positive consumer
attitude on brand.

24

Task 3

3.1 Introduction
After the implementation of "Free Open Market Economic Policy" foreign brands flowing to the
Sri Lanka increased. It had been drastically effect to the political, social and economical pattern
of the country. Due to result of arrived foreign products and companies, challenges faced by
consumers have been greatly increased.
Thus, adoption and implementation of new measures and safeguards to protect consumers are
crucially important. Different legislation on consumer protection had to declare in Sri Lanka to
shield the consumers from being exploited by unfair trading practices.

3.2 Consumer Protection

Consumer protection is a group of laws and organizations designed to ensure the rights of
consumers as well as fair trade competition and the free flow of truthful information in the
marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair
practices from gaining an advantage over competitors. Consumer protection laws are a form of
government regulation, which aim to protect the rights of consumers.

3.2.1 Why we need regulations?

To Protect Consumers

To Protect Industry

To Control Imports

3.2.2 Few Regulations of Internal Trade

Price marking, labeling and other issues

25

Determining standards and specifications relating to goods and services

Specified goods

3.3 Consumer Affair Authority and Act

The current Law as to consumer protection in Sri Lanka is primarily found in the Consumer
Affairs Authority Act No. 9 of 2003. The Act has established the Consumer Affairs Authority
(CAA), the apex government organization authorized to protect consumers interests and to
ensure that there is fair and effective market competition within Sri Lanka.
Consumer Affair Authority is vested with wide ranging powers from an overall supervisory
power to regulate trade, to entering in to written agreements with manufacturers concerning the
various specifications and conditions of trade. Basically, CAA is the place where have power to
investigate the matter and may determine matters relating to anti-competitive practices.
To ensure further protection of consumer, the authority may issue warning in writing to person of
contravened any of provisions of the Act.

3.4 Food Act No. 26 of 1980

Prohibits manufacture, import or sale of commodities which are unfit for human consumption or
commodities that are adulterated. It prohibits manufacturing, preserving, packing, and storing for
sale of any food under unsanitary conditions.

3.5 Sri Lanka Standards Institution

Provides minimum standards to be maintained in specified commodities marked in Sri Lanka,
whether they are imported or manufactured locally.

3.6 How Legal Factors affecting to Highland

3.6.1 political
Milco is a 100% government owned dairy product manufacturing company. Hence, government
support on the Milco comparatively high with other milk powder manufacturers. A controversy
has arisen with the DCD contamination found in a imported milk powders. Government and its
consumer authorities tested the products to identify the hazardous. Consumer authority banned
the several milk powder brands as a result of they found traces of the DCD in the samples.
Consequences of the milk powder controversy consumers demand for the local dairy
manufacturer's increased. Government trustworthiness increased on regarding locally producing
milk powder products as they found those are as a consumer protecting brands. However,
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government is advised to launch an Island-wide program by the Ministry of Health in

collaboration with other relevant stakeholders to promote breast feeding and consumption of
locally produced liquid milk. Thus, present situation will be helpful Highland to increase brand
recognition and ultimately build the brand.

3.6.3 Government Institutions and Agencies

With passing of the Consumer Affairs Law No.9 of 2003 and the appointment of the Consumer
Affairs Authority, the general awareness of the consumer rights has become important for the
benefit of the general public. Now consumer protecting activities are becoming major public
section in the country.
CAA is the main authority which established for consumer protection. To ensure consumer
protection, the authority inquires and investigates matters relating to ill practices of
organizations. Food Act No. 26 of 1980 is another law institution which has ability to prohibit
manufacture, import or sale of commodities which are unfit for human consumption. Sri Lanka
Standard Institution providing minimum standards to be maintains consumer protection.
Though, Highlands milk powder products less consumer expert but more on following regulation
of the consumer protection, CAA and other government institutions and agencies are highly
recommending for human consumptions which is positively affecting to the brand recognitions.

3.6.4 Pressure groups

Pressure group is a group or an organization which tries to influence the government but does not
hold power in the government. Groups representing broad interests of a group may be formed
with the purpose of benefiting the group over an extended period of time and in many ways.
At the controversy of the DCD contamination pressure group influenced individual consumers,
media, political parties, government and government institutes against the suspected brands to
take legal actions. However, same time they influenced to buy local dairy products that can trust
on Sri Lankan originated dairy than the imported milk powder. Pressure groups approach
positively affected to the Highland as increasing the demand for the products. There can be
27

identified Consumer organizations, Professional associations, Trade associations, and Trade

unions..etc as some of pressure groups which actively engaged in the milk powder controversy.

3.6.5 Policies and Procedures

A policy is a principle or protocol to guide decisions and achieve rational outcomes. A policy is a
statement of intent, and is implemented as a procedure or protocol. Policies are generally adopted
by the Board of or senior governance body within an organization whereas procedures or
protocols would be developed and adopted by senior executive officers.
Government policies and procedures are clear on dairy product manufacturing. Government
willing to help, develop and motivate local dairy manufacturers as it decrease the money flowing
to foreign countries for importing milk powder products. As a local dairy manufacturer and
government owned company, Milco doing huge work on retaining the local currency in Sri
Lanka.

3.7 Recommendations & Suggestions

Milco is a government owned dairy manufacturing company. Hence, support of the

government

always

behind the Milco. Consumer's trustworthiness, suppliers

trustworthiness and employees trustworthiness on Government Company always high.

Highland need to understand the opportunity of becoming the government own dairy
manufacturer and need use in effective way to capture market.

Government developed the regulations to protect the consumer and industry while
controlling the imports. Highland as a Sri Lankan originated dairy product manufacturer
which serves its consumers over the years well, government institutional support can be
easily obtained. Highland should have to use support of these governments institutional
to convey its goodness to the customers. (eg:- Recommendation of CAA, Health ministry
or any other consumer protecting government institution)

Milco is following Food act No 26 of 1980 and Sri Lanka standard institutional
regulations in the process of milk powder manufacturing. Hence, Highland needs to

28

communicate to its consumers these quality standards to increase the brand recognition in
the trade.

Most of the pressure groups are non profitable organizations which work to develop and
protect local manufacturers. Hence, support of the pressure groups need to be kept as they
have ability of influence government and community.

Under the policies and procedures of the government providing specialized knowledge,
land for farms and financial benefits to improve the dairy manufacturing sector. Highland
need to take the benefits of government policies to develop the brand and company by
improving production to match the demand.

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Conclusion
Highland as a Sri Lankan originated dairy brand positive perception of consumers is high. But in
the trade off take was low compare with imported products. Imported milk powder brands
segmented whole milk powder market to subsets and catering different products to each segment
to full fill their needs. Highland need to develop its products with identifying emerged consumer
needs to satisfy them.
However, as a result of DCD controversy consumers are switching to imported brands to local
dairy brands. Although Government, pressure groups and government institutions are giving
their support to the Highland, capacity of the manufacturing process will not be able to match the
demand of the milk powder consumption of the country. Hence, Highland need to increase the
farm lands, amount of milking cows, number of suppliers and obtain of efficient machineries to
match demand.
Furthermore to keep the acceptance of the brand, Highland need to focus on brand building
process to make the loyal customers. Motivating employees, efficient client service management
and effective marketing communication programs will be helpful to develop the brand to
Number one brand in the milk powder category in the Sri Lanka.

30

References
1. Kotler Philip, Marketing Management, 10th Edition, Prentice Hall of India, Pages 135 162
2. Martinesz Rienzie, Marketing Management, a New Approach, Ceylon Daily News, 14
December 2001, Page 11.
3. Milko Official Web Address, Accessed on 11.11.2013
<http://www.milco.lk/milk_powder.html#>
4.

http://en.wikipedia.org/wiki/Customer_retention

5.

http://en.wikipedia.org/wiki/Customer_satisfaction

6.

Fontera Official web site, Accessed on 11.11.2013

http://www.fonterra.com/

7.

http://www.nation.lk

8.

http://en.wikipedia.org/wiki/Policy

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Annexes

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