Change the rule of competition!Good Taste Milk, GT

Contents0) About the competitive domain1) Good Taste Milk, GT2) GT TechnologyThe Effect of GTFutureConclusion

0) About The competitive domain, Milk IndustryDivided into White milk, Functional milk, Processed Milk

0) About the competitive domainMichael Porters 5 force model The degree of existing rivalry: Seoul Milk as s traditional market dominator (market leader) Maeil milk as a competitor that competes with Namyang to get 2nd market position. (ESL) Many other competitors, like Yunsei, Denmark.The degree of potential entrants: The high entrance barrier. Agriculture departments of Universities as a potential entrants.Bargaining power of suppliers.: Suppliers demand for 20% increase of raw milk price. => 13% increase since Sep. 2004

0) About the competitive domainMichael Porters 5 force model Bargaining power of buyer: 21.7% rise in the consumer price index (107 -> 130.2) => increase the price => 10 % reduction in consumption The change of Customers needs/wants to processed or functional milk because of Well-being movement

The industry changing to Customer-driven industries from Capacity-driven industries.Threat of Substitutes: The growth of functional milk and processed milk markets. White milks loosing its market.

0) About the competitive domainTrends of milk market before GT The State of white milk market: Decrease in White milks growth ratio. White milk market on the matured stage of the S-Curve Rule of competition: Brand image as Rule of competition in White milk market. ex) Brand power of Seoul: Processed milk in whole milk market ex) Banana milk, Strawberry milk, Chocolate milk, Green tea milk, peanut milk

0) About the competitive domainNamyangs DecisionPros. And Cons.White milkPros : Stable market. (school,..) Low Cost.Cons : Strong competitors. Customers needs/wants.Functional & Processed milkPros : High quality. High price. Well-being trend.Cons : Unstable. (depending on trend.) High Cost. High Sugar content Change the Rule of Competition to White Milk !!!All the main competitors focused on Functional & Processed milk

1) Good Taste Milk, GTMarket researchTarget 20~ 30s !!Target white milk !!Focus on better Taste !!

MaleFemale10s20s30s40s50s10s20s30s40s50s50.358.951.447.542.856.375.889.987.579.1

1) Good Taste Milk, GTAbout Gook Taste Milk, GTHigh PriceSuccess: 100 million milks (200ml) sold 100 days after launching.Why?Good Taste !!!

1) GT TechnologyAbout Gook Taste Milk, GTWhat is Good Taste ?: From Research,true taste of raw milk, sweet taste, flavory tastesmooth taste, freshness, end tasteTrue taste and freshness of raw milk !!How?GT Technology !!!Bad tastes are from bad smell

2) GT Technology What is GT Technology?Key technology of Namyang. The result of Product InnovationA technology that makes the white milk with better taste than processed milk: Removing crude and unpleasant taste and smell, & Maintaining good taste of raw milk for long.3 Steps of GT TechnologyGT1- Good Taste process

GT2- Nitrogen filling process

GT3- New milk processCompatibility with existing values, but having Relative advantage in tasteTechnology Integration & Market-Pull Innovation

2) GT Technology Overall Process

2) GT Technology GT1, GT2, GT3 ?GT1- Good taste Process: Eliminating oxygen dissolved in raw milk.Eliminating bad taste and smell components from Pasture and Feed smell.Using GC/MS and detectors.GT2- Nitrogen filling Process: With filling Nitrogen, Eliminating dissolved and free oxygen, bad taste, bad smell perfectly. Maintaining the taste until drinkingA Patent applicationGT3- New milk Process: Finding the secret of milk taste, and Improve the taste without artificially adjusting components.

2) GT Technology Namyangs Technology Management (Problem recognition -> Technology Selection)Scanning & Forecasting: To Catch the market needs.Using questions and customers feedback.Catching the technological opportunity and Decision to technology appropriation: Technological opportunity not derived by technical feasibility but also by marketplace needs.The market need is TASTE.Taste is the technological opportunity !!Convincing that white milk can be competitive again.

2) GT Technology Namyangs Technology Management (Solution development)Developing Technology Strategy: Choosing Technology Leadership Strategy. - Get out of competition functional & Processed milk market. alter the rule of the competition (->taste) Decision to In-house Development Adopting Differentiation Strategy - Good taste but higher price.White milk can be tasty !!

2) GT Technology Namyangs Technology Management (Commercialization/Implementation)Diffusion: Developing new products, Good Taste Milk, GTAdopting this technology to other products.Whole Products to be Good taste.: Marketing with Emphasis on its competitive advantage, Good Taste.Ex) Naming the product as Good taste milk, GT

Emphasis on the good taste in CF.

Free Sampling party. (80% answered delicious)Removing other white milk products

2) GT Technology Three major milk companys Decision

3) The Effect of GT Success in the Competitive Domain100 million packs sold in 100 days after LaunchingThe most sold milk in a day. (1million packs a day)

3) The Effect of GT Success in the Competitive DomainBCG Matrix

3) The Effect of GT Change the Rule of Competition => Induced ChangeBreaking the fixed idea that White milk is not delicious.: 80 % of participants in the sample party answered deliciousChange the rule of competition to taste of white milk from processed milk.Disruptive technology to Processed Milk, But, Sustaining technology to Functional Milk.: 40% increase in sales of Calcium and vitamin Milk (2005~2006)

Chart8

0.10.35

0.16-0.12

0.25-0.16

white milk

processed milk

Revenue Growth

Sheet1

like61%

soso28%

hate11%

For Health26%

For Taste22%

etc.52%

For meal42%

For Taste38%

etc.20%

White milkProcessed Milk

200410%35%

200516%-12%

200625%-16%

Sheet1

Do you like White Milk?

Sheet2

For What Reason? / Men

Sheet3

For What reaswn? /women

white milk

processed milk

Revenue Growth

3) The Effect of GT ExpandingAdopting GT technology to other Products: Improve the taste of other milk Increase the competitive power of whole productsGlobalization: Pass PMO (Pasteurized Milk Ordinance) Supply Good taste milk, GT to US army

3) Future ChallengesProtection From Imitation: Protect the key technology and Differentiation from imitators.Developing new technology : To make Product life longer (ESL of Maeil)Offensive Marketing for differentiationGlobaliztionTo make Products more nutrious

3) Conclusion Success factor of NamyangMarket research and get the Market needs/wantsDeveloping new technology, GTDiffusion StrategyInvestment, and having its own R&D Center.