12/15/2014
FAN
MILK
INTERNATIONAL
Fan Milk International expanding to Cameroon | Guy Maurice
Guy Maurice Atsagou Nkeng
187980
Fan Milk International
How can Fan Milk International penetrate the
Cameroonian market?
AP Degree in
Marketing Management
Author:
Guy Maurice Atsagou Nkeng
Assignment: Final Project
Supervisor: Palle Rasmussen
Submitted: 15th December 2014
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Guy Maurice Atsagou Nkeng
187980
Fan Milk International
Table of contents
Executive summary. .................................................................................................................................... 5
1
Introduction. .................................................................................................................................... 5
2
Project description .......................................................................................................................... 5
2.1
Background description ................................................................................................................... 5
2.2
Purpose. ............................................................................................................................................ 6
2.3
Problem Formulation. ....................................................................................................................... 7
2.4
Delimitation....................................................................................................................................... 7
2.5
Methodology and model used. ........................................................................................................ 7
3
Fan Milk Company analysis. ............................................................................................................ 8
3.1
Company history. .............................................................................................................................. 8
3.2
Current sales in the market. ............................................................................................................ 8
3.3
Company competitive advantages. ................................................................................................. 9
3.4
Company core competencies. ......................................................................................................... 9
4
Market Situation Analysis.............................................................................................................. 10
4.1
Cameroon and current economy situation. .................................................................................. 10
4.2
PEEST ANALYSIS. ........................................................................................................................... 11
4.2.1.
4.2.2.
4.2.3.
4.2.4.
4.2.5.
4.3
Porter's Forces. ............................................................................................................................... 17
4.3.1.
4.3.2.
4.3.3.
4.3.4.
4.3.5.
4.3.6.
5
Political ................................................................................................................................................... 11
Economic ................................................................................................................................................ 12
Environmental ........................................................................................................................................ 13
Social....................................................................................................................................................... 15
Technology ............................................................................................................................................. 15
Treat of new entrance ............................................................................................................................ 17
Bargaining power of suppliers ................................................................................................................ 18
Bargaining power of buyers.................................................................................................................... 18
Threat of substitutes .............................................................................................................................. 18
Intensity of Rivalry .................................................................................................................................. 19
Competitors analysis. ............................................................................................................................. 19
Consumption of dairy processing food in Cameroon. ................................................................... 20
5.1
6
Customers analysis.( Five w model.) ............................................................................................. 20
SWOT Analysis ............................................................................................................................... 22
6.1
Strength........................................................................................................................................... 22
6.2
Weaknesses .................................................................................................................................... 23
6.3
Opportunities. ................................................................................................................................. 24
6.4
Threats. ........................................................................................................................................... 24
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Guy Maurice Atsagou Nkeng
187980
7
Fan Milk International
Segmentation, targeting and positioning. ..................................................................................... 25
7.1
Segmentation. ................................................................................................................................ 25
7.1.1.
Purchasing criteria. ................................................................................................................................. 26
7.2
Targeting ......................................................................................................................................... 26
7.3
Positioning ...................................................................................................................................... 27
7.4
Production ....................................................................................................................................... 27
7.4.1.
7.4.2.
8
The importance of packaging size. ......................................................................................................... 27
Achieving the sales by different type of marketing.. .............................................................................. 28
Marketing Mix 4ps......................................................................................................................... 29
8.1
Product ............................................................................................................................................ 29
8.2
Price................................................................................................................................................. 30
8.3
Promotion........................................................................................................................................ 31
8.4
Place ................................................................................................................................................ 32
9
Market communication Strategies. ............................................................................................... 32
9.1
Market communication Objectives................................................................................................ 32
9.2
Creating brand awareness............................................................................................................. 33
9.3
Hofstede's intercultural dimensions. ............................................................................................ 34
10
Organization .................................................................................................................................. 36
11
Value Chain ................................................................................................................................... 38
11.1
Primary activities ........................................................................................................................ 38
11.2
Support activities ........................................................................................................................ 39
12
Activities and Estimated Budget. .................................................................................................. 40
12.1
13
Estimated sales .......................................................................................................................... 41
Recommendations and Conclusion. ............................................................................................. 42
13.1
Recommendations. .................................................................................................................... 43
13.2
Conclusion................................................................................................................................... 43
14
Bibliography and references ......................................................................................................... 44
15
Appendices ....................................................................................................................................... I
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Guy Maurice Atsagou Nkeng
187980
Fan Milk International
Executive summary.
The purpose of this report is to find out whether Fan Milk International should extend to the
Cameroonian market and if yes, what ways they should do so. Fan Milk International currently has
established sales in seven West African countries and is willing to expand to the continent. In fact they
still have some unconquered markets in Africa and one of these is the Cameroonian market. Fan Milk
International sees a potential in expanding to this country, but the question is how will the company
really make successful and sustainable sales.
Based on my personal experience and thorough research made on this great company, I have evaluated
their possible ways to success and point out some factors that need to paid particular attention as to
enable Fan Milk International to successfully expand in to Cameroonian market.
The result of my research is positive, there’s an extension path available for Fan Milk International in
Cameroonian market if all cultural and commercial aspects are considered and handled correctly with
proper segmentation applied.
1
Introduction.
The market of dairy products(frozen milk , ice cream, yoghurt) and juice drinks in western nations has
reached its maturity stage and most Milk producers are looking forward to grow their profit margins by
venturing into markets that are still growing. Fan Milk A/S ambition since its creation is to become one
of the leading food companies in Africa precisely the western part of Africa. For over 50 years Fan Milk
has been operating comfortably in seven countries in west Africa and today the company is still working
hard to continue with its dream of bringing a brighter future for Africa in general.
To be able to realize this the company needs to find new markets so that their profits can be
consolidated. One opportunity could be the Cameroonian market which also has dairy products but the
milk market in Cameroon has not yet reach its maturity level. Having this in mind, Fan Milk A/S can
use this to the advantage as the Cameroonian government is offering attractive incentives to foreign
companies that would want to invest in the country in various sectors without the exception of the
food industry. This could be a huge opportunity for Fan Milk international to enter the market.
If Fan Milk International can penetrate the market , it will be able to abolish the monopolistic market
that is been enjoyed by Camlait A/S and others dairy producing companies. As a result of this, it will
offer customers a wide range of products to choose from.
It is therefore with this in mind that I want to find out whether Fan Milk International should enter this
market so as to increase its profit margins and in return realize their corporate objectives.
2
2.1
Project description
Background description
Fan milk is a Danish company that was founded in 1960 in Ghana by a Danish merchant and
industrialist Erik Emborg. The company vision is to become one of the leading food companies in Africa
and particularly West Africa , with a mission to create a business that benefits all the stakeholders
by producing and distributing high quality branded products to consumers .
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Guy Maurice Atsagou Nkeng
187980
Fan Milk International
Fan Milk International is committed to conducting its business in a transparent and responsible manner
including social and environmental laws. In this regard Fan Milk operates in accordance with the
relevant laws of the countries in which its operates and if no relevant local law exists then the company
will strive to comply with international standards as well as the Danish laws, this is to show their
CSR(core social responsibility).
In the beginning the company was known as Ghana milk company Ltd but in 1962 its change from
Ghana Milk to Fan milk company. For the last 50 years Fan Milk International has been doing very well
specially with it product portfolio . The company today operates in six others West African countries
such as ( Nigeria, Togo, Benin, Côte-D.ivore, Liberia and Burkina Faso) and has a total of 1700
employees with over 25000 agents and vendors.
The company continue to show its willingness to fight unemployment and it been being a successful
brand, Fan milk International objective is to gain access to others countries as well as to maintaining
and consolidating their position in the various markets they have been operating.
As mentioned before, they are selling a wide range of dairy products but specializes in frozen yoghurt
and ice cream.
Their key values are:





ensure professional management
use world class technology
ensure high quality products
exercise sustainable business activities
be good corporate citizens
These keys values above mention reflect their business approach in a 2/3 model that relies on trustful
partnership with a mission to create a business for the benefit of all stakeholders by producing and
distributing high quality branded products to consumers reliably and efficiently throughout the business
chain.
These values are solid since the establishment of the company. It has continued to meet the
satisfaction of its customers and this philosophy is also applied in all the countries that the company
operate in.
2.2
Purpose.
The main objective of this report is to identify ways in which Fan Milk International can expand its
business to new markets such as Cameroon and how they can keep their existing market growing .
This report will also analyze examples of how the company tried to approach new markets and its
outcome. This will help in having a better view of how the challenges and opportunities the company
might face when trying to enter a new market. In addition to this their current sales and marketing
methods will also be analyzed and recommendations drawn in order to help the company have a
successful market entry
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Guy Maurice Atsagou Nkeng
187980
2.3
Fan Milk International
Problem Formulation.
The overall question I will seek to answer in this report is : How can Fan Milk International penetrate
the Cameroonian market? In answering this question, it will show how Fan MIilk International intends to
obtain its objective of increasing its profit margin as well as being one of the leading dairy products in
Africa and particularly in West Africa
Getting into new markets is not an easy goal to reach and one has to be very careful and think over
each steps taken to meet the expectations from both sides. In order to accomplish our purpose the
following questions need to be answered.
.What are the company's strengths and weaknesses ?
.Who are their competitors?
.What threats and opportunities can Cameroon offer to Fan Milk International?
.What target group should Fan Milk consider?
.How should Fan milk communicate in order to attract customers and gain market share?
.What are the customers preferences and what do they lack in that market?
2.4
Delimitation.
The project is planned to analyze the opportunities offer by the Cameroonian market to Fan Milk
International in which they could expand. It's also a way of taking advantage for a long run to have a
comfortable place in the Center Africa by why not expanding to the neighboring countries like(Tchad
Republic, Congo, Equatorial Guinea , Gabon and Center Africa Republic). In the economic situation of
Fan Milk an analysis of the budget will be carried out to see how much they will need to use to market it
selves.
I will focus on analyzing the company in question and Cameroonian market( more specifically the dairy
products industry ). A desk research will be carried out with the intention of gathering all necessary
information.
At the end of this research a recommendation will be suggested to the company on whether or not it is
in their interest to penetrate the Cameroonian market.
2.5
Methodology and model used.
The aim is to make successful and sustainable sales on the new market. In the following report, I will
use some of the relevant models learn in the Marketing Management course in the last two years. The
report will contain some of relevant models and theories learnt in the marketing and management
course.
I will also use my personal experience which might help in sharing the light a little clearly in the grey
areas of the report being a Cameroonian citizen having lived there for the last 32 years my experience
might come in handy.
In relation to Marketing, Fan Milk International will be analyzed by using the Marketing Audit. i.e. the
use of PEEST analysis, Marketing Mix, Competition, (Porter’s 5 forces), Segmentation, Targeting,
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Guy Maurice Atsagou Nkeng
187980
Fan Milk International
Positioning, and the SWOT analysis. We will also use the Marketing Audit to assess the Market
environment. Data collection for analysis will be based on different web-based solutions, handbooks,
Internet sites and other source of writings .
In Communication, I will use the Geert Hofstede and Edward Hall model of communication to
understand the intercultural dimension of the two countries, also the analysis on how Fan Milk
International should communicate will also be analyzed. In organization the main focus will be on supply
chain and how Fan Milk International should be organized while entering the new market. My finding in
this assignment together with recommendations as well as an estimated budget and conclusion for Fan
Milk International will be enclose in the report.
3
3.1
Fan Milk Company analysis.
Company history.
Established in the early1960 as one of the first dairy businesses in Ghana, the company was called
Ghana milk company Ltd and later became Fan Milk company in 1962. In fact by early 1950's most
African countries obtained their independence and the Availability of dairy process food products was
not fully develop in West Africa amongst all the fresh Milk.
So this offer the opportunity to the Danish merchant and industrialist Erik Emborg to establish the fan
milk company. The manufacturing principle was based on reconstituting milk from milk powder
originating from surplus milk in Denmark. Fan Milk has since been doing well and extended to the
neighboring country Nigeria in 1962 in the city of Ibadan.
The positive development has continued into the 21st century and Fan Milk shares the dream about a
brighter future for Africa and West Africa in particular. Fan Milk has therefore continued its development
by investing in two more countries, the Ivory Coast in 2002 and Liberia in 2009. Fan Milk today offers
unique frozen dairy products, and juice drinks to a total population of more than 200 million people
inhabiting seven West African countries.
The company continues to look for emerging market so as to fulfill its dream "A brighter future for Africa
and particularly the west Africa ". Fan Milk International is looking to venture in the Cameroonian
market which will be a better golden opportunity for them to established in central Africa.
3.2
Current sales in the market.
Fan Milk International is a well functioning company, which produces and sells affordable frozen dairy
products and juice drinks to its consumers directly using a unique street vending system since 1960.
Their main principle is to sell their products to as many countries as possible and to continuously
provide a brighter future for Africa . They have to take different steps to reach a market they would like
to acquire.
In Fan Milk most of the employees are skillful and highly qualified. The company operates in seven
west African countries . (see appendix 5.). Based on relevant experience from the company web page,
a typical working day not only consists of sales on phone calls and cold calls, but also daily sales
meetings. This is important, because the turbulence of the business requires frequent, daily meetings
and it also provides a functional guidance of the given day( the follow up).
Fan Milk is a well established company that has overcome the challenge of language barrier because
majority of their employees are the native people who have been trained to work in the company. To
make a successful sale, Fan Milk uses the “Push” strategy. By using street vendors ,shops etc. to
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Guy Maurice Atsagou Nkeng
187980
Fan Milk International
directly satisfy their end users, the sales person has the possibilities to interact directly with the buyer
on Fan Milk product. This gives both side the opportunity to acquire necessaries information needed.
With this strategy it enables the company to constantly improve their market position . The company
has been able to acquired an average of 1.8 million of products sold daily and in using the above
mention strategy makes them be a market leader in West Africa.(Fan Milk group annual report pp.22)
3.3
Company competitive advantages.
A competitive advantage is the achievement of superior performance through differentiation to provide
superior customer value or by managing to achieve lowest delivered cost(Jobber, 2007). Here I am
going to look at the advantages that Fan Milk has over its competitors in the same industry through its
strategy.
It is derived from the superior skills and resources of a firm and achieving competitive advantage
strengthens and positions a company better within the business environment. Such resources may
include; the number of sales people in the market, expenditure on advertising , promotion, knowledge,
brand equity and financial resources etc. However the report will be focus more on what applies in Fan
Milk International.
Competitive advantage which are helping the company grow and stand in the last years of existence
are that they are currently the only leading brand in all the countries they are operating in West Africa.
They have a comfortable capital , high technology and skillful employees. Fan Milk makes sure that
delivery is on time and it's done as per promised. Fan Milk personnel sells the products with a smile
which is associated with fun. They offer high quality standard products that gives value for money. The
company has a unique value chain with a large range of competencies including effective networking
with suppliers, efficient production and laboratory testing which allows the company to secure the
quality in each stage of the value chain.
Fan Milk also has perfect collaboration with its key stakeholders which gives them long standing
relationship with each other which enable the company to grow strong in the market. The company also
has a perfect control over route to market by ensuring the efficient and well-managed distribution with
high degree of flexibility through their mobile vendors. This gives the company the opportunity to sell
over 90% of their products.
3.4
Company core competencies.
The distinctive nature of the skills and resources that forms the competitive advantage makes up a
company’s core competencies. A core competency is a more specific factor that a business sees as
being a central way to operate its business , or how its employees works. It fulfils two key criteria that
is not easy for competitors to imitate and it can be used widely to market many products.(Prahalad &
Hamel, 1990)
A core competence can include an understanding of technical or subject matter which can result in a
specific unique set of skills or production techniques that can deliver value to the customers. This can
strengthen a company to provide the fundamental basis for added value which can coordinate a diverse
production skills and integrate multiple streams of technologies.
In communication, it can involve a deep commitment of working across organizational boundaries this
is because it is what the company can simply do so as to succeed in an emerging global market and is
more important to build core competences rather than having a vertical integration. (Prahalad & Hamel,
1990).
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Guy Maurice Atsagou Nkeng
187980
Fan Milk International
The core competence for Fan Milk is producing high quality products for both taste and quality for its
customers who are from the B2B and B2C customers and are based across the entire territory in which
the company operates. The ability of adapting their products to the trend of the society is one of their
production attributes. Price flexibility is also one of their main core competences. Fan Milk offers quality
and standards products that are worth value for money that is making the products available at the
right price point. The company is constantly working hard to reach the end users irrespective of their
area. This is also another core competence of the company.
These attributes enables FMI to provide added value service to their customers while at the same time
helping the company achieve its objectives.
4
4.1
Market Situation Analysis.
Cameroon and current economy situation.
In reference to the CIA world fact book, Cameroon is a land locked country that is rich in natural
resource. These are part of the composition of Cameroon’s GDP. GDP as at 2013 estimates was at
$53.16 billion per capital income compare to $48.62 billion 2011 and $50.85 billion 2012
respectively. The composition of GDP is Agriculture, industry and service. Agriculture accounts for
20.6%, industry at 27.3% and service at 52.1%. Service employs more than half of the workforce.
These constitute mainly of self employed people and labour force from agricultural to industrial sectors
such as coffee, cocoa, cotton, rubber, bananas, oilseed, grains, cassava (manioc, tapioca); livestock;
timber which are the agriculture products, refining and producing of petroleum products, aluminum
production, food processing, light consumer goods. These are considered as the main sources of
generating foreign exchange for Cameroon . The industrial sector growth rate is 4.1%(2013) ranking
the country number 70th in the world. (https://www.cia.gov/library/publications/the-worldfactbook/geos/cm.html)1 assessed date 5/10/2014
Since her independence in 1960, Cameroon is in the second republic under the leadership of His
Excellency Paul Biya who took over from the first President Ahmadou Ahidjo in 1982 and has been in
the office since then till date. Under the leadership of His Excellency Paul Biya the country has generally
enjoyed stability, which has permitted the development of agriculture, transport, as well as a the oil
industry. However there has also been a downside in the governance of the second republic which is
characterized by mismanagement and corruption that has led to the decline of the economy in the
1990s. In the mid-1980s, the country faced an overvalued currency that was combined with economic
mismanagement which led to a decade of long recession which saw the GDP fall by 60% from 1986 to
1994.
The idea of multi-parties in 1990 was to improve the Cameroonian economy and to empower
Cameroonian citizens through democracy. Since then the government has been fighting against
corruption and the "operation Epervier" is a committee that was set up by the President so as to
investigate and prosecute all ministers, directors or civil servant who have been embezzling the state
fund and at the same time contributing to the mismanagement of the public fund.
Since 1990, the government has embarked on various IMF and World Bank programs designed to
encourage business investors, increase efficiency in agriculture, improve trade, and recapitalize the
nation's banks. The IMF is pressing for more reforms, including increased budget transparency,
privatization, and poverty reduction programs(https://www.cia.gov/library/publications/the-world-
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Guy Maurice Atsagou Nkeng
187980
Fan Milk International
factbook/geos/cm.html)2 assessed date 5/10/2014. Cameroon trades with AU(African Union) and
WTO( world trade organization).
Today the results are progressively positive and the economic situation of Cameroon is favorable for
foreign investment. The economic expansion in Cameroon is accelerating, and the prediction in 2013
shows that real GDP grow will be 4.6% in 2014. The country's economy will outperform its Central
African peers, averaging 4.8% growth between 2014 and 2018.
(http://store.businessmonitor.com/cameroon-business-forecast
report.html#sthash.X3LCfhRy.dpuf)1 assessed date 5/10/2014.
Cameroon plays a leading role in the Central Africa region, with a strong GDP, a large money supply and
strong exports. During the first ten years of the new millennium, Cameroon accounted for 40% of
CAEMC’s GDP, 44% of its money supply and 39% of its exports. Cameroon’s geographical location
makes it a key country of transit towards inland countries, while its more diversified economy naturally
allows it to trade strongly with other CAEMC countries and beyond into Nigeria. Its key CAEMC partners
are Equatorial Guinea (30% of trade), Chad (27%), Republic of Congo (25%) Gabon (11%) and Central
African Republic (7%). Cameroon has a trade surplus with all CAEMC countries except Equatorial
Guinea. Outside CAEMC, Nigeria3 – with which it shares a border that is more than 1 000 km long –
remains Cameroon’s main trading partner, ahead of the major European Economies
.(http://www.africaneconomicoutlook.org/fileadmin/uploads/aeo/2014/PDF/CN_Long_EN/Cameroun
_EN.pdf).1 assessed date 6/10/2014
4.2
PEEST ANALYSIS.
The PEEST analysis will be used to describe the macro - environment factors used in the environmental
scanning component of strategic management. I will use this model to analyze the Political, Economical,
Social and Technological factors. In this analysis I am going to take a clear look on external factors
affecting the penetration of Fan Milk International in the Cameroonian market an get and overview
about the above mention market in such a way to be able to assume possible outcomes for the
company afterwards.
4.2.1. Political
The Cameroonian government is faced with corruption problems and in 2012
transparency international ranked Cameroon number 144 among the 174 countries that
were surveyed. Transparency international gave Cameroon a score of 2.6, a score of 0
is considered to be most corrupt whereas a score of 10 is considered to be least
corrupt. (Marketline, 2012 and http://www.africaneconomicoutlook.org/statistics/table-21-corruptionperception-index-cpi/)2 assessed date 6/10/2014.
Corruption remains endemic in Cameroon and raises the costs and risks of doing business.
The people's democratic movement(CPDM) and its President Paul Biya long tenure in office has
encouraged cronyism, and members of his Beti ethnic group dominate many key positions. Protection of
real property rights is weak due to pervasive corruption and a slow, inefficient judicial system that is
vulnerable to political interference. Intellectual property rights are routinely violated.
As the company is producing dairy process food products(frozen milk, ice cream and juice drinks), there
may be instances where the company might lose out on biding contracts or in acquiring the business
license in favor of companies that have offered bribes in order to get the accreditation. The picture of
the political situation is not so black though, this is because the transparency international has come to
the conclusion that Cameroonian government has become more effective in fighting corruption since
2008. (Marketline, 2012). In addition to this, the government has also put in place a National
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Fan Milk International
anticorruption commission(NACC) to track and punish all the civil servant involved in bribing and
corruption.
In entering this market Fan Milk international should be aware that political
upheavals/instability might affect the running of their business in the country. The main law governing
foreign investment in Cameroon is the National Investment code of 1990 as amended by the New
investment charter which was adopted in April 2002 and was enforce in 2013. These changes have
been in a bid to catch up with the changing trends in investments and helped to pull into the country
more foreign investors as it is now little bit easier to get licenses for the purposes of trading in the
country. (Ltd, n.d.).
The Cameroonian government with the help of the IMF is trying to reform the value added
tax and the expected date of completion was supposed to be in 2012. The Cameroonian
government is also trying to decrease the level to which they interfere in the running of businesses; this
is yet to be totally successful due to corruption that is still rooted in the country’s business culture.
Beside these efforts by the Cameroonian government is binding and respecting the agreement terms
of AU( African Union) and WTO( world trade organization) which they are member.
A competition act was enacted on July 14, 1998, and the Decree N° 2005/1363/PM enacted on May
6, 2005 .( http://www.gwclc.com/Library/Africa/Cameroon/CameroonFinal.pdf) 1 assessed date
8/10/2014. A competition authority office was set up to make sure that the competition law is followed
and that the full implementation of the competition act enacted This is an advantage for the companies
willing to establish in Cameroon :

There will be no government interference with the company as it runs its operations in the
country.
 There will not be any red tape/bureaucracy to go through when the company has to make
decisions with regard to its business interests in the country.
The government of Cameroon is offering tax concessions to investors who decide to
invest in the country, especially for those in the manufacturing industry. For
instance investors are offered tax breaks and deductions for shipping investment
deduction, double taxation treaties, and tax remission on exports, among many
others. (Partners, 2010).
The company might negotiate tax breaks with the ministry of finance. When the company receives tax
breaks in the above mentioned, their costs of doing business in the country would also be lowered.
Despite the fact that corruption and poor governance affects the foreign investors who want to invest in
Cameroon, the country can boost for being the only peaceful state in the sub region. Parliamentary and
local elections were held in September 2013 and ran smoothly, bolstering socio-political stability in a
region that has been plagued by political and security crises. These elections have reshuffled the roles
of the ruling party and that of the opposition, but the president still holds a comfortable parliamentary
majority, allowing his party to legislate without risk.
However, the political context is marked by grave political and security crises in neighboring
Central African Republic and incursions and kidnappings in the north of the country by extremist groups
allied to the Nigerian sect Boko Haram.
4.2.2. Economic
Cameroon is not only the largest successful economy country in Central Africa but it is also the center
of regional trade hub and acts as a link between Central Africa and the rest of the
world. If Fan Milk International is established in Cameroon it will not only be penetrating Cameroon but
will also be entering the other Central African countries and will also be able to find readily available
resources such as labour force in the Cameroonian market.
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Fan Milk International
Like the rest of the world, Cameroon is still dealing with the aftermath of the 2008
recession. Cameroon’s economy fell sharply as a result of fall in demand in its tourism
and agricultural sector which are the backbone of the economy. The recession led the Cameroonian
government and major companies to tighten their spending and as a result of this, major capital
investments were halted and the current investment in major project is slowly increasing.
Since 1990, the government has embarked on various IMF and World Bank programs designed to
encourage business investors, increase efficiency in agriculture, improve trade, and recapitalize the
nation's banks. The IMF is pressing for more reforms which includes; increase in the budget
transparency, privatization as well as poverty reduction programs.
Today Cameroon economy is emerging and the country is gradually going toward the objectives of
becoming an emerging country in 2035. Cameroon continues to make effort on structural reforms and
in 2013, the country produced a medium-term budgetary framework in line with a directive issued by
the Economic and Monetary Community of Central Africa (CAEMC).
The framework is in line with the growth and employment strategy paper for 2010-20 (Document de
stratégie pour la croissance et l’emploi, DSCE), emphasizing on growth and employment and focusing
action on developing infrastructure through major energy, transport and telecommunications projects.
The GDP of the country reached 4.6% in 2014 and it will be 4.8% between 2014 and 2018 ranking
Cameroon number one in the central Africa and 64 in world.
(https://www.cia.gov/library/publications/the-world-factbook/geos/cm.html)3 assessed date
8/10/2014
With an economy that is liberalized it will be easy for the company to operate in Cameroon as it is a
middle class economy and will be willing and able to buy quality products that the company can provide.
The global competitiveness report in the year 2012-2013 ranked Cameroon 112 out of 148 countries
(http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf)1 assessed date
8/10/2014. This was mainly due to corruption still rooted in the system in place.
In the year 2011, Cameroon was ranked 144 out 0f 183 in transparency internationals
corruption index (international, 2012). This is limiting the countries potential as foreign donors choose
to stay away and thus Cameroon as a country is not able to fulfill some of its visions, e.g. the vision
2035. For a company like Fan Milk International which is used to trading in West Africa, the company
may not face strong difficulties. This is because the corruption and bribing is still rooted in the African
countries, but the situation is changing gradually as the African countries are combating the problem
hence attracting foreign investors to enter the market.
Cameroon is part of the economic and monetary community of central Africa(CAEMC) which consists of
Cameroon, Tchad , Central Africa republic, Equatorial Guinea, Congo and Gabon . The community allows
free movement of goods and services within the boundaries of the countries mention above. Using
Cameroon as a starting point it will be an advantageous for the company as it will not only have
Cameroon as her only market but her products will also be moving freely within the countries that
trade with Cameroon. This will increase its market share while turning its bottom line achieved more
profit.
4.2.3. Environmental
When analyzing the environmental factors it was established that FMI cannot be directly affected by
the environmental issues that affects others companies operating in Cameroon.
The company will need to closely work with their customers to ensure that the farmers who are
producers of milk are in sound environment that will enable their animals to produce more milk leading
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to increase of demand in the company’s milk processing factories if the company will need to source
raw milk from them.
Some of the environmental issues that will indirectly affect the company might
include among others:
Over 70% of the Cameroon population is employed in the agricultural sector while there is
only 8% of arable land. Farmers are now facing problems such as soil erosion, desertification,
deforestation and water pollution, this factors might lead to a decrease of milk production due to lack
of enough feeds for the animals. This will in turn affects the processing companies since there will not
be enough milk to process. However the Cameroonian government is aware of these vises and it is
doing its best to fight the problem. One problem the government is fighting is soil erosion where by
fertile soil is pick up and taken to where the soil erosion took place and its mixed up. Another way is by
advising the farmers the stop tilling the land so it can rest for some time.
Water pollution is combated by educating its citizens on how they can treat water so as to get clean
water to feat the animals as well an themselves together crops. This has really improve the health of
both its citizens and their animals. Planting two trees after cutting on down is another way
deforestation is been fought.
Geographically Cameroon is a country whose present some natural risk. The terrible natural disaster
that occurred in Lake Nyos in 1986 released carbon d,ioxide very dangerous for the environment. Also
Cameroon has the only active mountain ( mount Cameroon) in the sub-Sahara region and which the last
eruption was in the year 2000. But since the Cameroon government has taken all the necessaries
measure to control the situation and today the local population and their belongings are living in a
secured environment.
Global warming and some farming practices led to severe drought which recently saw
some region of Cameroon being threatened with starvation which also included animals. This included
their animals too. This happened mostly in the northern part of the country where there has not been
clean water for the animals to drink posing a great challenge for the Cameroonian government which is
tackling this problem of polluted water. There isn’t enough clean water for the animals to drink and this
has posed a great challenge for the Cameroon government which is trying to tackle the problem of
polluted water from the industrial sector in urban areas.
The Cameroon government is doing this through its various watch dogs such as the Ministry of
Environment and Protection of Nature (MINEP), National Environmental Management Plan (NEMP),
Forest and Environment Sector Program (FESP) with the support of the Global Environment Facility
(GEF) and the United Nations Environment Program (UNEP ). Through the above mentioned watch dogs
the government of Cameroon enacted the environmental coordination act which seeks to solve the
problems mentioned above.
The Cameroon government is also aggressively campaigning for the planting of trees of
different types that will help in the restoration of bio diversity and water retention. Though the
environmental situation is not too bad due to the geographical situation of the country in the subSahara region. There is hope yet due to the efforts the Cameroon government is making in order to deal
with the above mentioned problems.
To briefly sum it up, the company could through its corporate social responsibility
program work together with development partners such as Ministry of Environment and Protection of
the nature and the farmers to ensure that they (farmers) have an enabling environment for their
animals to produce a lot of milk which will in turn drive up the demand for the company’s dairy
processing lines.
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4.2.4. Social
As of 22 June 2014, the population of Cameroon had reached 23,1 million and the
country potential workforce is growing faster than the population. The population growth is 2.6%.
Changes in the size and age structure will have an impact on economic growth performance on any
business , for example if the population is growing, then the overal demand and spending will grow as
well.
The country’s potential workforce, i.e. those between 15 and 64 is growing at an alarming rate of
56.5% according to CIA world factbook estimation 2013. This ready workforce offers a readily available
labour market for the company. The population of Cameroon is also very young, with the average age in
2013 standing at 18.3 years (CIA world factbook, 2013). This relatively young population will drive the
demand of dairy products, as young people are the main consumers of milk and it’s by- products, such
as yoghurt etc. When the demand for milk products goes up then the demand for dairy processing lines
goes up to while the reverse could be deemed to be true.
The country is often referred to as Africa in miniature for its geological and cultural diversity. Natural
features include beaches, deserts, mountains, rainforests, and savannas. The highest point is Mount
Cameroon in the southwest region, and the largest cities are Douala, Yaounde and Garoua. Cameroon
is home to over 200 different linguistic groups. The country is well known for its native styles of music,
particularly makossa and bikutsi, and for its successful national football team Indomitable Lion. French
and English are the official languages.
Despite the fact that Cameroon remain the only peaceful nation in the sub-Sahara region, its security is
threatened by the instability in the Central Africa republic and the Boko Aram from the neighbouring
country Nigeria. But the Cameroonian Arms forces with a rapid intervention battalion(BIR) has been
neutralizing the enemies effort, and protecting the population and the national territory.
4.2.5. Technology
Cameroon recently began several large infrastructure projects, including a deep sea port in Kribi, a
natural gas powered electricity generating plant, and several hydroelectric dams. This infrastructure
projects that also aim at improving and upgrading, road transport networks, airports etc.
http://www.theodora.com/wfbcurrent/cameroon/cameroon_economy.html
SOURCE: 2014 CIA WORLD FACTBOOK AND OTHER SOURCES )1 assessed date 9/10/2014
This will make the transportation of finished or semi finished project from the company easier.
Cameroon fixed line was small and inadequate and the situation was made much
worse by the high rate of inefficiency. The situation is improving today due to the structural reforms and
liberalization of the sector by Camtel the monopoly provider for fixe line in Cameroon. The company to
this end will not have to worry about how their business messages will be sent to and from.
As of 2011 Cameroon was one of the only few African country left with only three competing mobile
operators MTN and Orange and camtel mobil. But recently the launch of the Nextell Cameroon makes
the number to become four. Also, the arrival of two new international cables, WACS and ACE, and major
expansion program for a national fibre backbone network is underway with funding from the Word Bank
and China will bring lot of improvement.
http://www.budde.com.au/Research/Cameroon-Telecoms-Mobile-and-Broadband-Market-InsightsStatistics-and-Forecasts.html?r=51#sthash.Jk6jVugh.dpuf. 1 assessed date 9/10/2014
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The competitiveness in this industry will therefore bring inexpensive mobile communication. This for
the company simply means that it will have more options for communication other than just the fixed
line calling which was the norm in the previous years. Communication will also be cheap for the
company as competition among the different phone network service providers has led to the lowering of
phone call costs. Cameroon airways (Camairco) is becoming more and more operational and working in
partnerships with others international airways( Air France, Brussels airways).
Cameroon has two international airports which are used as getaway between Central Africa and the rest
of the world. For the company this simply means that they can easily move between Cameroon and
Denmark and also the others African countries where they are operating. Cameroon makes use of
hydro electric energy and this has been to the disadvantage of the country during the dry months when
water levels fell in the dams that are used for generating the electricity. Low levels of water have
sometimes led to severe power rationing which has in turn affected companies especially those in the
manufacturing industry.
To help solve this problem the Cameroonian government is requiring that both heavy industrial and
domestic consumers of energy make use of solar energy so as to ease pressure on the country’s
electricity production grid. The government is encouraging the use of renewable energy such as wind
and solar energy. The country produces a lot of solar energy as a result of the large amounts of
sunshine it receives each year. The Cameroonian government has signed recently two agreements with
international partners to improve the production of electricity energy.
In June 2014 UK energy company Joule Africa signed a Memorandum of Understanding to develop a
100MW solar power plant. The project is due to be completed in 2015 and commissioned in 2017
(http://store.businessmonitor.com/cameroon-infrastructure-report.html#sthash.MxjeJrZF.dpuf), also
the government signed in July 2014 an agreement with the French major EDF to develop a 360MW
hydropower plant located at Nachtigal Falls on the Sanaga River. The Construction is expected to start
in early 2015 and cost USD814mn. EDF is providing 40% of the funds, with the remainder coming from
the International Finance Corporation (with 34%) and the Cameroon government (26%).
http://store.businessmonitor.com/cameroon-infrastructure-report.html#sthash.MxjeJrZF.dpuf 1.
assessed date 10/10/2014
If the company were to make use of solar energy then it will be assured that the manufacture of their
products will not be interrupted even when hydro electric power is rationed or decreases. By making use
of solar energy which is cheaper than hydro electric power, the company would be able to significantly
lower their production costs.
Cameroon road high and rail ways has also improve making the circulation of people and goods very
easy. The government awarded a contract to Mota-Engil, a Portuguese company to construct rail and
port infrastructure. The construction is estimated at 3.5 billion Us dollars and will take 3,5years
duration.( http://store.businessmonitor.com/cameroon-infrastructure-report.html)2 assessed date
10/10/2014
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4.3
Fan Milk International
Porter's Forces.
This part of the report consist of the Microenvironment which consist of analyzing the complex forms of
competition that the company(Fan Milk) will face in entering the Cameroonian dairy foods products
market. The Porter's forces comprises of five elements(Treat of new entrance, bargaining power of
suppliers, bargaining power of substitute, competitors, bargaining power of customers).
Potential
entrants
Threat of new entrants
Supplyer
srers
Bargaining
power
Of suppliers
Industry
Competitors
Bargaining power
Buyers
Of buyers
Rivalry among
ExistingThreat
firmsof
substitute
Substitutes
Figure 1. Porter's Five forces: own source.
4.3.1. Treat of new entrance
The market is mature but still different companies acquire new brands, also from other countries.
Customer’s tastes and fashion are changing all the time, so there always exists a chance for changes to
quickly appear on the new market. Current competitors offer customers unique products of strong
brands, but there are not many players in this domain. So barriers to entry for new entrants will not be
high, but as the consumption of dairy processing food is increasing, many players are interested in the
Cameroon market. With the experience gained due to its longetivity in the market , Fan Milk will not
face strong treat in entering Cameroonian market. They should nevertheless consider what to change
in their products designs to differentiate themselves from competition.
Barriers of entries: Some of the barriers that may be faced by the Fan Milk International on entry into
the Cameroonian market includes among others:
Supply side economies of scale: There are no supply side economies of scale in this
industry as most equipment that is produced are turn key projects that require a lot company as there
will be no cost disadvantages as the firms in the field are not producing for economies of scale.
Customer switching costs: Customer switching costs are high, thus once the
company has customers in the industry it can deter other players from entering the
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field by ensuring that switching cost are made larger in terms of altering product
specification and training employees on how to handle customers during sales. If the company
establishes a foothold in this industry then making sure that switching cost go high will thus
discouraging other global companies from penetrating the same market.
Capital requirements: Concerning this particular factor, Fan milk international is in a strong financial
situation and will face no difficulties. The company has a consolidated revenue of 880 million Dkk with
17% growth and expected growth off 10.2% in 2017.( Fan Milk annual report 2012.) Therefore the
company has financial resources to expand. see Appendix7
Government policy: The Cameroon government policies have made entry into this
market easier. The Cameroon government is working very closely with foreign
investors through the Cameroon dairy board with the help of the IFM and world bank to ensure that the
shortage of processing equipment and production are met. Foreign investors are given incentives such
as tax breaks etc. The policies have made entry in this market easier as the Cameroonian government
is working on improving the situation.
4.3.2. Bargaining power of suppliers
The bargaining power of suppliers is low as suppliers of steel that will be used to make the processing
lines are not more concentrated than the participating companies.
Something else that makes the supplier power low is the fact that switching costs in changing suppliers
is low as suppliers are not offering special equipment or differentiated products. Therefore the company
can play suppliers against each other in order to get the raw materials at the lowest possible cost.
Currently the Fan Milk has a large range of competencies including effective networking suppliers. the
company source its raw material through Emidan from Denmark. It means that they will not have any
difficulties about their supplies.
4.3.3. Bargaining power of buyers
The bargaining power of buyers is low because there are companies in this industry who are offering a
standardized products that offer customized solutions to each client, therefore customers can not play
companies against each other in order to get low profits.
The bargaining power of customers is also very low because their switching costs are very high and they
cannot threaten to integrate backwards and produce the dairy processing lines themselves.
4.3.4. Threat of substitutes
If the offered product may be replaced through something else, the companies on the market compete
not only among themselves but also with firms producing substitutes. Prices on the product market are
limited by the level of the prices of their substitutes. Considering alternatives for the risk they pose to
the market, Fan Milk International should take into account the degree to which they meet customer
needs and offer prices.
In our case there are some locally made products that customers often use in the place of dairy
processing foods. However, the risk that customers consider completely replacing yoghurt , milk and
juice drinks for traditional made products is minimal, as yoghurt, ice cream etc. are of high quality . The
product could also contribute for the good health of the customers.
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4.3.5. Intensity of Rivalry
Profitability in this industry is not negatively affected as the intensity of rivalry is low. Competitors are
not numerous and most of the competitors are home base company and the leading company is
Camlait SA. Companies in this industry do not compete on price but they instead compete on attributes
such as delivery time, availability of the products, product features etc. Competition based on the above
does not negatively affect profitability like competition on price would.
As mentioned earlier, the Dairy industry is the fastest growing industry and this will lessen the intensity
of competition as the more the market grows the more market available for all competitors. Also some
attributes such as large amounts of capital investment required to enter this market make the barrier to
entry high keeping entrants out leaving the industry more profitable for Fan Milk as a company if
established.
4.3.6. Competitors analysis.
In this section of the report, a competitor analysis has been carried out so as to find out who will be the
company’s direct competitors on the Cameroon market; what their profiles are and our assumptions
about how they are bound to react with the entry of Fan Milk International into the scene. Out of the
research that was carried out, we founded the following companies who have a large share in the dairy
manufacturing industry. They include: Camlait SA and Soticam.
Camlait limited.
Camlait limited was established in 1972 with a capital of 15000.000 FCFA The company initial goal
was to respond to the local market demand in term of milk production. The company has been doing
very well and progressively diversify its range of products . As the dairy products foods is growing so
fast, the demand also increase and to overcome the situation, Camlait has increase its capital and
today is operating with a capital of 2,222,760,000 FCFA( company website).
The clients being served by this company are the entire household across the national territory and
today Camlait has expanded to the neighboring countries( Gabon, Central Africa Republic and Congo).
Camlait led sales in 2013 with a retail value share of 31%. The company operates an effective
nationwide distribution network and offers a wide variety of products which are also packed in small
catering for the price-sensitive consumers. In addition, the company commands a strong brand loyalty
among consumers and has introduced in-store equipment for the storage and display of Camlait
products(http://www.euromonitor.com/yoghurt-and-sour-milk-products-in-cameroon/report)1 assessed
on 16/10/2014.
The core values of the company are: Performance, Responsibility, and integrity. Some of the company’s
strengths include among others; Good reputation on the Cameroon market, the company has a strong
management team, and the technicians have deep knowledge of the products. The company also has
a large product portfolio that helps it to serve customers in the daily bases. Those products are:
-yoghurt
-juice drinks
-magarine
-baby milk
-packaging etc..
Another strength that the company possesses is the fact that they have been in the Cameroonian
market since the year 1972 and therefore had a lot of experience in regard to this market. Skillful
employees, products equipment and facilities are also key force for the company.
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Fan Milk International
Soticam.
The company was founded since 2002 and specializes in producing dairy products. Soticam is
represented in all the economic and monetary community of central Africa(CAEMC) zone. They are
producing products such as yoghurt, juice drinks and energy drinks. they are present in the market with
yaourt dolait, jus de fruit extra Fresco, la boisson énergisante extra power.
I limit my analysis on this company because they do not have an appropriate website , the company only
use socio media like face book to communicate. But according to the statistic on yoghurt market carried
in December 2013, Soticam is the strong competitor of Camlait .(
http://www.euromonitor.com/yoghurt-and-sour-milk-products-in-cameroon/report)2 assessed on
16/10/2014 .The company Soticam strength is led by a young group who have a dynamic personnel.
5
Consumption of dairy processing food in Cameroon.
As days goes by things also undergo changes and the Cameroonian population just as many as other
African countries are adapting to the changes impose by the society. Some years ago in Cameroon, the
processing foods specially yoghurt and sour milk products were consider as luxury products destined to
certain class of people. But today the situation is not the same any more. The gradual improvement
economic situation of Cameroon contribute to the increase of Cameroonian lifestyle. others factors
such as fast growing population, the need of consumer to change from their traditional ways of eating to
more modern one make the consumers lifestyle rise more and more. Also the constant urbanization
made consumer to become more healthy conscious.
Total food consumption in Cameroon in 2014 increase of 9.4% and expected to be 11.1% in
2018(http://store.businessmonitor.com/cameroon-food-drink-report.html) assessed on 17/10/2014.
This is due to an increase need for convenience in these areas where the pace of life is growing quickly.
With the climate being hot for most of the year and the increasing pace of life, the consumption of
yoghurt and sour drink products notice a positive trends. Increase demand for these products has led
some players to opt for larger pack sizes within the category. The convenient packaging of these
products and the nutritional advantage they offer to consumers has furthermore helped grow sales.
According to Euro monitor, Prospection of values sales of yoghurt and sour milk products are projected
to grow at the constant CAGR of 3% over the forecast period 2013-2017. Furthermore, strong
economic growth and marketing activities by producers will be the key factors in influencing forecast
period growth as disposable incomes are expected to rise and help boost consumer confidence. It is
also expected that manufacturers will continue to seek new opportunities to expand customer bases
widen distribution coverage by innovating their products with new flavours and offering increased
convenience for on-the-go consumption.
In fact the general outlook of yoghurt and sour milk products is positive.
(http://www.euromonitor.com/yoghurt-and-sour-milk-products-in-cameroon/report)3 assessed on
18/10/2014. This gives an opportunity to the international players to try their luck and Fan Milk
International for sure will not have difficulties entering the scene and attracting customers as well.
5.1
Customers analysis.( Five w model.)
In this part of the report the five w model will be used to better understand the current customers as
well as the potential customers of the products, answering the following questions will help the
company to fully understand their customers. The questions include are:
a) Who are the current and potential customers of our products.?
Dairy products such as frozen yoghurt, ice cream juice drinks in which Fan Milk International operates
are the products of low involvement. Its requires no specific research or long time to take a decision to
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Fan Milk International
purchase. In Cameroon the household as a whole represents the consumers of frozen dairy and juice
products. People are changing their lifestyle and are adapting to the trend of the society(an increased
need for convenience foods). Irrespective of the social class the consumption of the above mention
products are increasing specially in the urban cities.
In the big cities consumption is relatively high because of the availability of the products and also the
population represent the middle class people. Though household in general represent the current and
potential customers of the products, young people between the age of 14 to 36 age are the main
customers.
The population residing in the interior where the reach of the product is difficult or in a small quantity
because of the lack of road infrastructure and electricity constitute a good number of potential
customers also. As the consumption of dairy products(yoghurt ,ice cream, juice drink etc.) is growing
faster in Cameroon in position to the population which is expected to be 28.8 million with 72.2% of
youth in 2030 (http://www.euromonitor.com/cameroon-in-2030-the-future-demographic/report)4
assessed on 19/10/2014., customers of these particular products will be also very high and it will
represent a good deal for companies and Fan Milk International as well.
b)What do they do with our product?
This question is to find out in which quantity and in what combination the products are being
purchased. Cameroonians are becoming more and more customers of dairy processing foods. they
often use it in their daily bases and this to equilibrate their balance diet. Middle class population
represent the heavy buyer because they purchase in large quantity regularly. Beside this the rest of the
household purchases in small quantity but represent the majority.
To know if the consumption of the frozen yoghurt , ice cream, juice drinks goes together with a
compliment, yes it's true. Cameroonian normally take these particular type of product with compliment.
These compliments may include bread, cakes, biscuits just to mention these. Their demand is very high
thus making the demand of yoghurt, juice drinks also high.
c)Where do the customers purchase the product?
In Cameroon the market of yoghurt , ice cream, juice drinks and many others dairy products are
becoming more flexible. Customers can purchase the products at any junction of the city. In the big
cities there are street vendors , kiosk, shops, supermarket where you can easily find the product. The
product does not have a specific place to be sold. Fan Milk International have to make a good
marketing strategy in order to create awareness and ensure that their product are available for the
above mentioned sales point for the consumers to purchase. The company should also make use of
petrol station to sell their products.
d)why do customer purchase the product?
Cameroonians as many others consumers purchase certain product because they find in it their
perceive advantages or satisfaction of their need. It could be price factor(cheap) or the benefit the
product offer to them. The net increase of the Cameroonian consumption lifestyle and the
consciousness of eating more healthy food for the past few years the increase their purchase level.
Cameroonian are very price sensitive, they like quality products but are not willing to pay the price.
Therefore if the product is too expensive the sales are expected to be low Fan Milk International will
therefore have to be very careful in terms of the price of their products. The company should provide
high quality product as well as offer good services.
e)Why do customers not purchase the product?
As mentioned above, the reason that customers may not buy our products is the fact that the price may
be above their expectation( expensive). It may also be the poor quantity or the size of the package. The
economical situation could also contribute for customer not to buy because of the low income. If the
products are expensive , customers often turn to use the substitute one.
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Fan Milk International
Another reason could be that the product might be scares in the market or customer cannot easily get
access to the product( product not available in all region). It could also be poor knowledge of the
product, Fan Milk have to make a proper communication as well as marketing so as to reach a huge
number of consumers.
6
SWOT Analysis
The SWOT Analysis is a planning tool used to understand the Strengths, Weaknesses, Opportunities,
and Threats involved in a project or in a business. It involves specifying the objective of the business or
project and identifying the internal and external factors that are supportive or unfavourable to achieving
that objective. SWOT is often used as part of a strategic planning process.
SWOT is an acronym that stand for Strengths, Weaknesses, Opportunities and Threats. The origins of
the SWOT analysis technique is credited by Albert Humphrey, who led a research project at Stanford
University in the 1960s and 1970s using data from many top companies. Below is the table of SWOT
analysis.
Strengths.
-ISO certificate.
-Experienced and Skillful Staff.
-Unique high quality products.
-High Technology
-A Unique value chain
-Good Management.
-Good Strategy of serving the customers.
-Strong Financial situation.
-Acquisition of Fan Milk International by DANONE
and The ABRAAJ Group.
- Company name.
Weaknesses.
- Poor knowledge of the Cameroon Market.
-Low awareness of the company and its products
in the Cameroonian market.
Opportunities.
-Low quality of the products in others countries.
-Fast Rising of consumers Spending
-Increasing need of consumers to eat on-the-gofoods.
-Strong population growth and rapid urbanization.
Threats
-Competitors in the local market.
-Corruption and Bribering.
- Legislation.
-Possible change of the government.
Table1. SWOT Analysis.
6.1
Strength.
1- Company name. The very name of Fan Milk International brings with it the confidence of quality as it
has reliability and trust associated with it. Usually in the consumer's mind they prefer Fan Milk
International products over others brands time and again whether it is their dairy products or something
else.
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Fan Milk International
2-ISO certificate( International organization for standardization): ISO 90001:2008, ISO 22000:2005,
ISO 14001:2004, ISO 18001:2007, ISO 9001:2008 and FDA( Food and drugs administration) These
certificates are really hard to achieve and it gives afterwards company high status and makes them
trust worthy. Customers therefore remain loyal and they have the opportunity of attracting potential
customers.
3- Experience and skilled staff. Fan Milk has an experienced, skilled, and dedicated team. the company
has people from more nationalities so there is a common language with most of their clients, which
gives them a more thorough trust. Been operating in most of the countries where the language spoke is
French or English beside each national language, the company has the ability in integrating itself.
Cameroon having both French and English as their official languages , it will be easier for Fan Milk to
enter the market because there is no language barrier.
4-Unique High Quality. Fan Milk International is the biggest manufacturer of dairy food products in West
Africa. Fan Milk name is synonym of quality and they have tradition of providing food product of
supreme quality. Most of their products belongs to category of assured and certified quality confirmed
by tests done by quality assurance companies . As above mention its production facility is certified with
ISO certifications and also FDA approval certificates. Fan Milk products are of high quality standards
and are highly defined by freshness, and cooling. Their products also have good tastes, high energy and
in convenient packaging. Fan Milk has different range of products which it sell and are very popular in
west Africa
5-High technology. The company boast of having state of the art technology machines, certified and
proven process and techniques which facilitates them to produce the best in the category. Fan milk
also upgrade, do maintenance and innovate its machines.
6- A unique value chain. Fan Milk has total control of its value chain, from global sourcing, procurement,
transportation of raw materials to the production, the company ensure high degree of control of every
detail throughout the chain.
7- Good management. As the business environment is unstable due to the fast growing of competition,
Fan Milk regularly offers some of the best training to its employees to better overcome the challenge.
"employees are our most valuable and important assets" company annual report 2012 p25.
8- Good strategy of serving the consumers. The company has the ability to satisfy all its end users
irrespective of their area of location through bicycle, pushcart and cooler-box vendors.
9- Strong financial situation. The company is doing very well and achieving good revenue. They have a
revenue of 880 million DKK with the revenue growth of 20% in 2012. In 2013 the company
management were so confident and optimistic of the continued growth. we are in a unique position. our
business is streamlined and ready for continued growth. Fan Milk Annual report 2012, p7.
6.2
Weaknesses
10- Poor knowledge of Cameroon market. Though Fan Milk has been operating in Africa( western Part),
the company does not have knowledge about the Cameroon society. Cameroon as many others
countries has its own realities and specificities to be taken into consideration.
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11- Low awareness. The product Fan Milk International is about to introduce in the Cameroonian
market is new and will need to carry out a strong marketing strategy to create proper awareness of the
company and its products while entering the Cameroonian market.
6.3
Opportunities.
12- Low quality of the products in others countries. The qualities of the frozen yoghurt, ice cream juice
drinks that the others countries (Cameroon as well) are low as to compare of what Fan milk
International as a Danish and experienced company can offer.
13- Fast rising of consumer spending. The relative growth in the economy in most African countries
makes the consumers to earn more and are willing to spend as well.
14- Increasing need of consumer to eat the on-the-go foods. consumers are becoming more conscious
of what they eat nowadays. They are constantly consuming healthy and convenient food and gradually
having high demand. Statistic shows that the growth rate in 2014 is 9.4% and predicted to be 11.1% in
2018( see 3.6)
15- Strong population growth and rapid Urbanization. Africa has the world's fastest growing population
and according to the United nation it predicted to account for more than 40% of global population
growth by 2030. Cameroon is a fast growing country in terms of population with 2.6% growth rate in
2014. the country also has a considerable urbanization growth.
6.4
Threats.
16-Existing products in the local market. The products that Fan Milk is to sell to the Cameroon market
exist there and is also available at the majority of the national territory. It will be really hard to position
their products in the mind of consumer because its competitors are all national and have loyal
customers. But fan milk can count on its high and convenient products.
17- Corruption and bribering. Fan Milk should be aware of the corruption and bribering that exist in
Cameroon. this might be a hindrance for the fast acquisition of the business license.
18- Legislations. Changes in legislation can be a major threat since laws varies according to the
country and there is a lot of demand by the different cultures as well. There are lot of high taxes in
Cameroon and specially in the custom sector . And as production of dairy processing foods, there are a
lot of control because it concern health issue. Another threat that Fan Milk could be affected is the
change of the government, Cameroon is expected to have presidential election in 2018.
There are sometimes tension in Cameroon following the rigging of election creating political instability
that affect the general economy of Cameroon. This at times end up with the closure of market ranging
from weeks to months.
Based on the SWOT analysis , it is not an easy task for Fan Milk to enter the Cameroonian market . But
regarding the strength of the company and the wide opportunities that the market offers Fan milk has
the possibilities and potential to start up. Also its longevity and experience gained in the milk market
will enable the company to integrate in the Cameroonian market.
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7
7.1
Fan Milk International
Segmentation, targeting and positioning.
Segmentation.
A written market segmentation plan needs to be measurable targets attached to specific customer
groups that can help a business maximize their profits. The more a business' owners understands the
market, the better their chances are for forming a strategy that reaches the most productive customer
groups without wasting resources.
To find the perfect segmentation, we need to “divide and conquer”. This involves customer
segmentation by grouping customers together based on relevant criteria for the business that Fan Milk
International want to do. It can be divided up by many measures, such as demographically,
geographically, and clients can fit into more than one category. The main goal here is to separate those
segments that Fan Milk International can serve most profitably, ideally in a way that they will not need
to switch between vendors based on a price decrease or marketing pitch from a competitor. (Marketing
plans, Small Business)
Fan Milk International has to think carefully about their segmentation. They want to sell premium quality
products (frozen yoghurt, ice scream and juice drinks) to the Cameroonian market, so based on this
they need to look for the best potential buyers (wholesalers, typically), but must be aware of the end
customer market, as well.
Segmentation could be made by behavioral segmentation( benefits sought, purchase occasion etc.)
psycho graphical segmentation( lifestyle or personality) and profile segmentation( demographic ,
geographic, and socio-economic). Out of all of these, demographic and geographic segmentation will be
applicable since this is what is important for Fan Milk International.
Fan milk International could make segmentation of the end customer, leaving out the partner
wholesalers, stating whom they would like to sell their products to. In Cameroon, as it is mentioned
above, the on-the-go consumption of food and beverages is not more the luxury destined to certain
class of people . The combination of high growth and rapid urbanization, increasing household
consumption and moderate growth rates in the Cameroonian economy and is leading to a fast and
sustained rise in consumer spending. Fan Milk International could sell its products to the Cameroonian
market without problem targeting metropolitan cities like Douala(economical capital of Cameroon) and
Yaounde (political capital).
The reason being that these two cities are the most populated towns in the country with high number of
youth , young professional and middle class people. This is suitable for a decent market size in a
country for Fan Milk International. Tough the company will preferably target these big cities as mention
above in the beginning , but later on will expand to the others main cities of Cameroonian market.
The Cameroonian population today is about 23.1 million habitants, Douala and Yaounde are the most
populated cities with 2.446945 million habitants and 2.440462 million habitants respectively. The
annual urbanization growth rate is 3.23% with 52.1% people living in the urban areas. These are the
estimation as for 2011.( http://populationsdumonde.com/fiches-pays/cameroun) assessed on
22/10/2014. By focusing on these big cities the company will also have the opportunity to serve
Nursery(kinder garden) and primary schools students and also others nearest cities. . All of these
customers may be about to appreciate the high quality and high value of the Fan Milk International
products.
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Fan Milk International
There are several target marketing strategies to choose from. They define whether all the customer
groups are targeted with the use of the same marketing mix or not. In this case, the choice of
undifferentiated marketing with possibly only slight or no differences in marketing mix. The company
needs to position itself in the mind of its targeted customers as a producer of adapted and high-quality
products which creates value to customers and respect the trend of the society.
The company could also go further and use others criteria such as Purchasing to segment the market.
7.1.1. Purchasing criteria.
Like most organizational buyers, it can also be safely assumed that the consumers in the Cameroonian
market will value quality, delivery, service and a reasonable price in relationship to the other above
mentioned characteristics. We can also safely assume that the buyers in this market will be relationship
buyers; this is because the products that the company will be offering to them are important to their
health, they are therefore not so price sensitive and will value products and services render by the
company.
The consumption of the dairy foods is growing faster in Cameroon Nowadays; we could therefore base
on this knowledge said that, the customers that the Fan Milk International will acquire on this market
will be customers in a highly competitive market. Therefore this customers will be looking for a supplier
whose product will speed up not only their manufacturing processes but also all those activities that are
related to manufacturing. The company should have this in mind as it tries to prospect for customers on
this market.
7.2
Targeting
The basis of the target marketing is the target segmentation written above. The market is analyzed to
identify groups of potential customers with similar needs and price sensitiveness. Each segment is
assessed on factors such as size, growth rate, degree of competition, price sensitivity, and the fit
between these requirements and the company’s capabilities.
However, the most attractive markets may not be the biggest ones because then the unfortunate thing
can happen that the customers can be left unserved by the companies who have been compromising
their marketing mix by trying to serve a too wide customer base. This is why the identification of such
customers is a prime opportunity during segmentation analysis. Target marketing allows firms to tailor
their marketing mix to the specific requirements of groups of costumers more effectively than trying to
cater for diverse needs. The customers who are at the periphery of the target market are called halo
customers and they can make a substantial difference between success and failure. (Target Marketing,
Services marketing).
Having analyze the different segment that fan Milk International could serve, it is advisable that the
company could target the youth population (14-36 years)and middle class people. This is because
youth represent more than half of the Cameroon population and also the large consumer of the frozen
yoghurt, ice scream etc. Also with improvement of the economic situation of the country, The young
professional who form part of the consumers are optimistic and confident that their income will rise
and they have high aspirations and hopes for the future, and are willing to spend more.
The middle class simply has the means of spending . These two segment represents the high
purchasing power because they are regular buyers. Fan Milk International could also consider the
general family or household because the increased need for convenience food is contributing to the
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Fan Milk International
growth of dairy foods. All these target group as above mentioned are the population that consume the
products on the daily basis. For the company to augment its profit and market share they could also
target Nursery schools(kinder garden) and primary school because they are also potential buyers tough
occasionally. In fact in Cameroon school often organize party during the end of term or end of the
academic year and during ceremonies juice drinks, yoghurt, ice scream etc.. are purchase by the
institution for gift or refreshment. This could be consider for Fan Milk International as annual sales thus
boosting their revenue.
7.3
Positioning
After segmenting and targeting , the company will like to get the attention of the target segment to buy
their products. As a new market, it is not an easy task for Fan Milk International to enter the
Cameroonian market because of existing products in the scene. How can Fan Milk International do
that? The company has to come up with ideas on how to make sales happen and keep it going. since
the Cameroonian consumers are becoming more demanding in the quality and the value of the foods
they eat, Fan Milk International has no problem in regard to this. They are well positioned because the
company has the reputation in producing high quality products. They are quality assured( about us, Fan
Milk homepage).
The company has ISO certificate and within the company their qualified staff constantly carried on
audit on CSR including their entire productions facilities:



warehousing of raw and packaging materials.
Production of frozen yoghurt, frozen chocolate etc.
Storage and distribution of finished products .
Fan milk International franchisers and agents are committed to work according to the company
specified standards including the relevant CSR aspects. This includes minimum standards regarding
standard of premises, correct treatment of products, hygiene and employment of staff and vendors. All
these measure are to assured the high quality and standard of their product.
7.4
Production
Fan Milk International is a household name and they strive to ensure that the brand is , and will be
known for its high quality .Quality in taste and quality in experience. The raw material the company
source, the machines they use and the products they manufacture all have to be of the highest quality.
The company is able to maintain this by auditing suppliers, using modern equipment, creating and
maintaining a hygienic production environment and auditing their B2B customers. as above
mentioned(4.3) the company has ISO certificate in its three production facilities.
Furthermore and most importantly the cold chain of the company keeps their products frozen
throughout production, storage and delivery until consumer receives the products in the street( Fan
milk group Annual report 2012. p22).
7.4.1. The importance of packaging size.
The package could be in different size and material. Fan Milk is recognized as an iconic brand and
household product in all the West Africa countries where the company is operating. The company has a
reputation of selling convenient products in a special convenient packaging for on-the-go consumption
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Fan Milk International
which gives value for money. Offering a high quality products at an affordable price to the consumers
will help the company attract more customers and gained good position in the market. Fan Milk is
already doing this in all the others African countries . Their strategy is that the majority of their goods
are sourced through Emidan which keeps track of more than two hundred suppliers worldwide. In this
way , Fan Milk International supply chain is fully optimized and the company enjoy discounts which are
directly transfer to the price of the products.
It is therefore advisable for the company to position itself into Cameroonian market with the same
packaging strategy used in others countries like Nigeria. But they should be aware that the increasing
number of consumers is making some class of customers demand for a more big size.
7.4.2. Achieving the sales by different type of marketing..
Based on my personal cultural knowledge of the Cameroonian market, advertisements especially the
different marketing catches work well on the Cameroonian people. For example, if two places offer the
same product at the same price, the Cameroonian person would go to the one where he or she could
get something extra. This can even be a nice personnel service, but also something tangible. Hereby I
will analyze what approaches could work in the Cameroon market.
Product with extra gift.
Since Fan Milk International is new in the Cameroonian market, they should come up with a creative
idea about making their sales more interesting for the clients when offering a commercially widely
available product (Frozen yoghurt, ice cream or juice drinks) . As an idea, they can add some other
product to the order depending on the volume of the order for example determining a certain amount
or quantity that each customer buy(B2B). This addition could be some other Frozen yoghurt or ice
cream. Based on the sole decision of the wholesaler this can end up at the end customer or the
wholesaler can decide to keep it and resell for extra revenue.
As for the direct consumers, street vendors, shops or any other places where they products could be
sold , the company could make sure that there are certain quantity of products to be used as a free gift
for the first 10 buyers.
Product with a special offer.
Fan Milk can make an offer to sell their products to wholesalers at a special price(discount) The
wholesaler can make extra margin by selling a product purchased at a lower-than-market price
product.
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8
Fan Milk International
Marketing Mix 4ps.
Figure:2 4P's
The acronym 4p stands for Price, product, promotion and Place. It is a key decision area that marketers
must manage so that they satisfy or exceed customer needs better than the competition. ( David Jobber
p17).
8.1
Product
The product is seen as an item that satisfies what a consumer is looking for and/or receiving for his/her
money. It can be a tangible good or an intangible service. The tangible products have an independent
physical existence. The yoghurt, ice scream , juice drinks etc. that Fan Milk International wants sell in
the Cameroonian market is a mass produced tangible object.
Every product, even the fresh food has a product life-cycle including a growth phase followed by a
maturity phase and at the end an eventual period of decline as sales fall. It has to be researched
carefully on how long the life cycle of the product can last and focus on their attention on different
challenges that arise as the product moves.
Here the marketers have to note the facts about yoghurt and sour drinks production in Cameroon. This
will state the product life-cycle of the on-the-go product they are willing to sell. As the year passes there
will be possibilities for many competitors to enter the market, and the chance to sell Fan Milk products
might reduce. Therefore strategies need to be taken.
The product marketing is another crucial point. If Fan Milk International does not have any marketing
presence on the Cameroon market, then it will almost be impossible to sell their products (i.e. no
customer will chase Fan Milk to buy from them). After finding the right price this is the second most
important task to do, since without this there will not be success. Marketing can be communicated on
different channels, such as making cold calls from the office or sending printed hand-outs. Marketing
can also be made by sending emails and information about meeting the company at different trade
fairs or shows.
Fan Milk International already has a high quality, beautiful printed catalogue with all their yoghurt, ice
cream and juice drinks that they produce, in it. The catalogue itself is in the language of the country
where they operate .
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Fan Milk International
The marketing could be sent to wholesalers all over the country by email at least, Fan Milk
International should focus on the economical capital (Douala) and political capital ( Yaounde) area and
on the bigger cities. As it was stated in the segmentation and targeting, it is important to find the right
target clients. Fan Milk International with its products has to meet the customer needs. In this case it
means for the products to be :




Fresh, cooling
Healthy
Convenient packaging.
Tastes good.
Fan Milk should therefore not sell the low quality products in the Cameroonian market.
8.2
Price
Determine the correct price is a very important factor as it is also determining the company’s profit and
its survival later on. Adjusting the price has a deep impact in the marketing strategy, and depending on
the price elasticity of the product, often it will affect the demand and sales as well. The price should be
set complemented with other elements of the marketing mix.
Sharpio and Jackson identified three methods used by managers to set prices. The first one is based on
cost and this has a strong internal orientation. The second one is to use competition-oriented pricing
where the major emphasis is on competition activities. The final element is called marketing-oriented
pricing as it focuses on the value that customers place on a product in the marketplace and its
marketing strategy. (Economists’ approach to pricing)
As it has been mentioned many times before, Fan Milk products are destined to general household.
Now Fan Milk International has to set their prices so that they can still have some profit on it for
themselves. But the company products are of average ,they offering high quality product at prices that
attract customers in West Africa, and it should be advisable that the company uses the same policy in
Cameroon market. They are in a difficult position, because the product they are selling is really high
quality, so it has a basic price (which is also quite high) and they have to add profit and the cost of the
transportation to it. Also, if they decide to make some advertisement it also costs money. But this will
not be a problem for Fan Milk because the company optimized its supply chain by sourcing all its goods
through Emidan. This give the company some discounts which are directly transfer to the price of their
products.
The way of calculating the price of product is: The cost of the transportation has to be divided by the
tons of the truck and then multiply by hundred. This gives a price in Euro cents.
cost 𝑜𝑓 𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡𝑎𝑡𝑖𝑜𝑛
= € (𝑐𝑒𝑛𝑡𝑠)
𝑡𝑜𝑛𝑠 𝑜𝑓 𝑡𝑟𝑢𝑐𝑘 (𝑤𝑒𝑖𝑔ℎ𝑡)𝑥 100
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187980
8.3
Fan Milk International
Promotion
Advertising covers any communication that is paid for, from television commercials, radio and Internet
advertisements through print media and billboards. Public relations is where the communication is not
directly paid for and includes press releases, sponsorship deals, conferences, exhibitions, seminars or
trade-fairs and events.
Companies are always looking for a good opportunity to introduce or position their products in the mind
of consumers. In Cameroon there are many trade fair organized over a year and multiple events as well
such as exhibitions . Every year during the last weekend of the month of January or the first weekend of
the month of February, Cameroon federation of Athletes under the ministry of sports organized the
Mount Cameroon race of hope.
It is an international event where athletes and delegations comes from all over the world. More than
1000 athletes representing over 25 countries over the world participate every year. The event also
attract more than 3000 to 4000 people. There are many activities that takes place 3 to 4 days prior
the race such as trade fair (Buea trade fair show) where companies exhibit their products. There is time
to look for potential clients from all over the world and make some new contacts or find new ideas. Fan
Milk International could use the opportunity not to make a sale, but to meet and established customers
thus creating and sustaining a series of relational exchanges.
Trade show on the development of valuable long -term buyer-seller relationships is important Li(2007)
and cited by Geigenmuller(2010) Essentials of Marketing communication p312.
Cameroon is also a great nation of football, each time that the national team ( Indomitable Lions ) are
playing home they gathered more than 30000 to 40000 spectators in the field. Fan Milk products can
really have an upper hand for these particular event because the product is cool, refreshing, taste good
and associated to the fun. The company could use ambulance vendors during the football match and
also make sure to have a stand in the entrance to sell their product while doing the same time the
promotion.
Figure:3. Ambulance vendors.
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Fan Milk International
These events and the fair are great opportunities for Fan Milk International to look for the appropriate
clientele and position itself, because the companies represented are only serious ones in the business
and the ones who are looking for international expansion. Here there is a good possibility to talk to the
sales managers and purchasers from the companies and ask them about the products, and the
different services they offer. It is also an opportunity to tell the potential consumers about the benefits
of the products.
8.4
Place
The place factor refers to the location gap in the types of distribution channels, where would be
convenient to the customers to access the products. Fan Milk is selling its products to the B2C
customers, and also to B2B customers reason why they are providing the logistics from the packing
stations to the wholesaler client.
This is an important factor as well because it is very costly and if the customer does not buy enough
from Fan Milk International, sending only a few pallets or boxes is really not worth it to the company.
Fan Milk International has been doing so well in west Africa, where consumers can purchase their
products everywhere at any time. The company has to use the same policy in the Cameroonian market.
They need to make sure that their products should be available in the supermarkets, shops, kiosk,
petrol's stations and make a good use of the street vendors to satisfy their clients.
The company should pay attention to the B2B because they will represent the wholesale and they
control a large number of shops where the products of Fan Milk International will be easily distributed.
The other kind of distribution channel is the time gap, which results from divergences between the
producing and distributing of the goods to the customers. For example, the company's office is open
from 7 am to 4 pm, but based on geographical differences, the client wishes to make the order in the
afternoon. Fan Milk for this reason needs to have a person who is available for these cases. By having a
person in the office after the closing time, Fan Milk bridge the time gap between production and sales.
(Types of Distribution Channels, Distribution).
9
9.1
Market communication Strategies.
Market communication Objectives.
Designing an effective marketing communication strategy is crucial in today’s fast paced world. By
having new technologies around us, the advertisement of the products is easier. For example Fan Milk
International and Emidan Have come together working jointly and are currently developing a mobile
kiosk concept in Nigeria, they are open to a new level of advertising. This is not direct advertisement,
because they are not directly advertising their products, but giving the customers the opportunities to
purchase their products at any time and where ever they want. With the recent improvements on
internet connectivity, the company is also beginning to make social media a part of their communication
strategy. This advertisement allows the business to reach a large audience and by this way increase its
sales .
Sales promotion provides a customer with an incentive to buy the company’s products or services, such
as a company that makes a charitable contribution with each sale. By using sales promotion, Fan Milk
could easily call customers to action and by then accelerate sales. But they should be aware of the
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Fan Milk International
restriction of the Cameroonian government and also be aware that sales promotion turn to become very
expensive.
Public relations is concerned with the development and communication of corporate and competitive
strategies. It provides visibility for an organization, and this in turn, it is hoped allows it to be properly
identified, positioned and understood by all stakeholders. ( Essentials of Marketing communications).
By using public relations, fan Milk have the opportunity to meet the stakeholders directly. The company
employees need to be motivated in such a way that during their work as external communicators, they
will make full use of word-of-mouth communications to provide external cues as part of the company's
corporate identity. This will result in organizing a range of events, activities and developments. It will
also help the company to create awareness and trust and furthermore create goodwill and interest ,
which may translate into purchase of company's products.
9.2
Creating brand awareness
Creating brand awareness is a really important extent to which a brand is recognized, and is correctly
associated with a particular product or company. Brand awareness is the primary goal of advertising, in
the early months or years of a product’s introduction. Fan Milk is a new company entering the
Cameroonian market and they need to develop strategies to make their brand be known and be
appreciate by the customers. Fan Milk International has been operating in west Africa for more than 50
years, Fan Milk is almost consider like home base company because they best understand customers
behaviours and attitudes.
A part of the traditional means of creating awareness of Fan Milk brand such as television, radio and
advertisement, The company has its own special ways to attract customers. Through a highly involved
network of agents and vendors, Fan Milk products are easily available. As the face of Fan Milk their
vendors sell the company's products from their cooler boxes at the local markets, bus stops, sports
venues, churches, schools, beaches , villages and in the streets. Doing this their vendors are
characterized by the turned horn through which they alert the population ,the eye-catching uniform and
the designs on all their distribution units are also a strong significant way of creating awareness.
Furthermore, Fan Milk in its continue willing of creating awareness of the company brand is engage to
numerous social responsibilities. the company alongside the government are fighting in reducing waste
in general on the environment. The company provides information to the public and place along roads
and schools trash cans which carries their logo, Fan Milk International also support large scale
programs for waste collection and recycling. The company in attending its CSR objectives support the
education of children in West Africa. They provide support in form of scholarships and donates school
supplies to the school system. School bags, exercises books carried Fan Milk brand.
Fan Milk could also use the same system as in West Africa in creating its brand awareness in the
Cameroonian market. They could as well join the Cameroonian government or others NGO which has
been already operating in the country to fight against AIDS. This could be by printing T-Shirt with their
logo and carrying messages like "Fan Milk says No to AIDS". They could also organized special days to
sensitized and provide information to the public on how to avoid being infected by the disease. As
earlier mentioned, Cameroon is a football nation and each time the national team is playing , it creates
a lot of emotion for all the Cameroonian all over the national territory and attract thousands of patriots
to the field or to watch the game over television.
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Fan Milk International
Fan Milk could seized this opportunity by sponsoring the national team and others first division home
base football team by providing some of their products and printed T-Shirt to the team, these T-Shirt
could also be distributed to the spectators . The company could furthermore use football celebrities
such as Roger Milla and Samuel Eto Fils in their ads where they are consuming the Fan Milk products.
The ads should be passing in the national television CRTV or popular privates channels like Canal2
International, STV and Equinox Television just to mention this and as well Radio medias.
By using these channels mentioned above to create awareness Fan Milk International will be assuring
a long term relationship with the customers . This will also help the company to increase its sales and
market share.
9.3
Hofstede's intercultural dimensions.
Hofstede’s cultural dimensions theory is a framework for cross-cultural communication, developed by
Geert Hofstede. It describes the effects of a society’s culture on the values of its own members, and
how these values relate to behaviour, using a structure from factor analysis. The theory has been widely
used in several fields as a paradigm for research, particularly in cross-cultural psychology, international
management, and cross-cultural communication.
"Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best
and often a disaster." -said Hofstede.
Despite the evidence that groups are different from each other, we tend to believe that deep inside all
people are the same. In fact, as we are generally not aware of other countries' cultures, we tend to
minimize cultural differences. This leads to misunderstandings and misinterpretations between people
from different countries.
Just as far as Cameroon is from Denmark in terms of geographical distance, so also is the business as
well as social culture between the two countries. To be able to successfully acquire and retain
customers in this market, there has to be an understanding of the business culture in Cameroon. To
help in the understanding of the business culture in Cameroon, use of Hofstede cultural dimensions
and Edward Hall model on cultures will be made.
Figure:4 . Hofstede five dimension of culture.
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Fan Milk International
Though Cameroon is one of the country that does not figure in the world map of Geert Hofstede crosscultural analysis, I will personally use my experience as a Cameroonian and others related sources to
provide information about Cameroon.
Power Distance: While the power distance in Denmark is very low ranked 18(Hofstede, 2001), in
Cameroon the power distance is low(45), which means that , in Cameroon, followers as much as
leaders endorses a society level's of inequality. this resulted from the analysis carried by global
economic. In Cameroon(http://www.researchomatic.com/Global-Economics-116543.html)1. Assessed
date 31/10/2014. In Cameroon, people tend to respect the power distance between them and their
superiors or subordinates and work relationships extend outside office hours, so your superior is still
your superior even if you meet him outside of work.
To have success in the country the company should ensure that it only deals with the top management
of the buying organization. While the culture in Denmark is mostly informal. The culture in Cameroon on
the other hand is very formal; the influencers in the buying organization will need to be acknowledged
so that the sales process can run smoothly.
Individualism / collectivism: Cameroon with a score of 39 is a collectivist country. People in Cameroon
sees themselves as interdependent with others and responsibilities are shared, and accountability is
also collective.( http://www.researchomatic.com/Global-Economics-116543.html)2, assessed date
31/10/2014. while Denmark has high scores on individualism ranked 74 (Hofstede, 2001 ). In
Cameroon the culture achieve success in this market the company will need to respect traditions that
exist in this market, unlike Denmark where people are direct, the same does not hold true for
Cameroon. The company officials dealing with the buying organizations will need to be indirect and
more tactful during the sales process so as to ensure that there is business harmony between the
company and the buying organization(s).
Masculinity/Feminity: Denmark has low score, rank number 16 on this section and roles for men and
women are not defined (Hofstede, 2001 ). They both work together in harmony. On the other hand
Cameroon is not like that. The country is more masculine and ranked number 68. The business will
most likely need to employ a male sales rep or agent to be their point man on the Cameroon market.
Uncertainty Avoidance. Cameroon in this dimension has a very low score of 13. Cameroonians are
characterized by their strong achievement motivation, calmness and risk taking. They are also less
aggressive, more relax and very tolerant . this shows that the atmosphere for doing business in the
country for foreign companies is good. Denmark is also low 23 (Geert Ofstede 2001). In the Cameroon
culture people are governed by orders and rules. To ensure that the buying organizations/partners are
taken on board with regard to innovative ideas that the company may have. Though Cameroonian will
need to have some information from the company ; they would not be surprised by any new
development of changes that might occurred during the process because they are risk taking society.
Long term Orientation: So far Cameroon does not have any long or short term orientation as regards of
the Geert Hofstede cross-cultural dimension. Therefore the company will need to ensure that it does all
its best to ensure that none of its customers lose face or are embarrassed in any way while the sales
process is being undertaken. To achieve any level of success the company will also need to reward
commitment and loyalty through things such as constant communication, enquires and customer follow
ups, this will evoke positive response from the customer(s).
With the help of the Edward Hall model on culture, further analysis of the Cameroon culture will be
carried out:
Cameroon is a polychronic society where human relations are valued more over values of time. On the
other side, Denmark has a monochronic culture and time management is very important. With these
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Fan Milk International
differences in mind, the company officials should try to not get upset when the contact person or people
from the organization culture turn up late for scheduled meetings.
Cameroon is also a high context society with very many rules that remain unwritten, this could be a bit
frustrating for the company as it is used to working in a society where the rules are simple and explicit.
The company will need to exercise patience as they navigate this particular market and learn the
unwritten business rules.
If the company understands and respects the cultural differences between the two markets, it will be
better placed to do business successfully and harmoniously on the Cameroonian market. But all these
cultural aspect will not be a big problem for Fan milk International , because the company has been
operating in African for over 50 years and we assumed that its success is due to the fact that Fan milk
International understand well the African culture.
10 Organization
Analyzing the organization of Fan Milk company will help us to better understand how it operates in
order to achieve its goal.
According to Richard L. Daft in his Organization Theory and Design book, organization is a social entity
that is goal- directed and is designed as well as deliberately structured with coordinated activity
systems, which is linked to the external environment1.
Every company tries to adapt an organizational structure that fits into their business activities so as to
be efficient and cost effective, thus cutting their costs and maximizing their profits as much as they can.
Fan Milk International is a Danish company which has been operating in West Africa for over 50 years.
As earlier mention the company was founded by a Danish entrepreneur Erik Emborg. The company
today employs a total of 1700 people and 25000 vendors across the world.
The organization in Fan Milk International is centralized. This is the concentration of authority and
decision- making towards the top of an organization. The company is highly centralized and a clear
chain of command can be seen. The middle level managers report to the top managers ( managing
directors/CEO). That is. Sales and marketing manager, finance manager etc and in turn the top
manager reports to the company Shareholder and helps them in the running of the business .
The reason why the company has decided to centralize its organizational structure is to be able to allow
a high degree of control of every detail throughout the chain and maintain their commitment to high
quality. They stay in control from sourcing the raw material and until when their products leaves the
factory .They also assure total control during delivery till the consumers receive it.
Advantages of centralization for the company are:
Decision making is strong, authoritarian, charismatic and visionary. The company is also able to
respond fast to changes and the implementation of decisions is decisive, coordinated and fast.
Centralization also leads to uniformity and conflict between parts of the organization are low or in some
cases not available. The organization and the changes that might affect it are shaped by the owners of
the company and board of directors . With centralization there is emphasis on top to down power in all
aspects of the organization that is; leadership, strategy and vision.
1
Richard L. Daft , Organisation Theory and Design
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Fan Milk International
Another advantage of centralization is the fact that a strong coordinated top management team is
formed( board of directors); here there can be brainstorming and discussions when faced with
challenges or threats and together find the most efficient ways to solve problems that arise.
Also due to departmental specialization duplication is minimized, this saves on time, money and effort.
In centralization one other advantage is that extensive and elaborate procedures and practices are not
required because most times they are already drawn or defined by top level management.
Some of the challenges the organization is facing by adopting the centralized system of organization
among others:
Sometimes decisions are to be made on the spot on the factory floor, but because of centralization no
decision can be made without the involvement of top level management and these results in time and
financial loss, because time is money.
Because there is little participation in the lower parts of the organization, workers may sometimes feel
they are not directly responsible for the product and therefore may result in the workers not taking their
work seriously therefore affecting the quality of the final product.
Centralization sometimes lead to the demoralization of the workers because in most cases it is the top
level management that takes credit and are sometimes rewarded in the form of bonuses and
promotions for the work of the junior employees.
Fan Milk International organization is designed by function. An organizational design by function groups
of people into departments or subunits based on similar skills, expertise, and functions performed-such
as production, sales and accounts.
Taking the example of Fan Milk Ghana and Nigeria where the company is doing very well shows the
typical organization of how Fan Milk group operate in different country. Through these two country we
have the overview of the company organization structure. In Ghana, CEO, Jesper Bjorn Jeppesen has
nine direct subordinate departments: Human resource , sales and marketing , finance and account ,
technical, quality and environmental, I .T, internal audit, e.g. product , distribution and project
department. All these department in the third step in the company has sub managers in charge of
each specific area of activities in the company.
Meanwhile in Nigeria there is a corporate governance( board and management) which have continued
to demonstrate a very strong commitment to achieving the highest standards of corporate governance
in the direction and control of the company's business. The board consist of Chair man with no
executive responsibilities, the Chief Executive Officer, and six non-executive directors. The board is
responsible of determining the general policies of the company.
Members of the board are experienced professionals of diverse backgrounds . The chair man is
responsible for leading and managing the board while the others six non-executive directors are able to
challenge , monitor and approve strategies and policies recommended by the managing director. The
board maintains a good relationship with its shareholders and makes sure that they are part of their
meetings. The managing director assume the entire responsibility of the day-to-day management of the
company.
After taking a look of how Fan Milk International is organized in Ghana and Nigeria , we realized that the
company's organizational structure is more or less the same . It will be advisable for the company
entering the Cameroonian market to use bench marketing for the Nigeria and Ghana organizational
structure. Being close neighboring country, the Nigeria system could be easily adapt and be implement
into Cameroonian market. Beside the company could in the first year maintain the same organization
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Guy Maurice Atsagou Nkeng
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Fan Milk International
structure from Nigeria to control their sales in Cameroon but employing Cameroonian as sales director
who will in return have regional representative as the company is targeting two big regions . This will
help Fan Milk International to save some money because their activities will be manage and control
from Nigeria.
11 Value Chain
Value chain represents the model of how businesses receive raw materials as input, add value to the
raw materials through various processes, and sell finished products to the customers. The model was
introduced by Michael Porter in 1985 in his book, Competitive advantage, where he introduce a generic
value chain model that covers a series of activities found to be common to many firms. Porter identified
Primary activities, inbound logistics, operations, outbound logistics, marketing and sales and service,
and support activities, infrastructure, human resource management, technology development and
procurement.
Figure:5 .Value chain.
These activities has the purpose to offer the customers value that exceed costs, in order the obtain
profit margin.
11.1 Primary activities
Inbound logistics: This refer to the receiving and warehousing of the raw materials. In the case of Fan
Milk the raw materials source is brought in the company every day and the
transformation process start immediately.
Operations: : the next step is the process of transforming the raw material in the final product, and this
is pasteurization. Fan Milk makes sure that the transformation goes through a high-technology of
production in their various factories. The company ensures high quality all over the value chain by
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Fan Milk International
doing laboratory testing during the transformation using their experts employees. As the company want
that their brand should always be known as high quality in taste and high quality in experience, Fan
Milk strive to ensure that its products be produced in a hygienic environment. Their cold chain keeps
their products frozen throughout the production ,storage and delivery until the consumers receive the
products in the street.
Outbound Logistics: Here is where warehousing and distribution of finished goods take place. The
products are stocked in their warehouse, later on the distribution starts . The Company distributes the
products to some of its sales point and shops they own where vendors will easily receive the products.
They also deliver the order receive from their B2B customers, and for some stores they deal with them
which will then do the distribution themselves.
Marketing and Sales: The identification of customer needs. Fan Milk International wants to offer its
clients the best dairy and position Daily products as natural, fresh and healthy. Detailed information
about this action are in the marketing plan in the report.
Service: The support of customers after the products and services are sold to them. Fan Milk
International has a high degree of controls of every detail throughout the entire production chain from
raw material to distribution and they can guarantee the highest quality of their products. The company
ensure this by auditing its suppliers, by using modern equipment, creating and maintaining a hygienic
production environment and also auditing their B2B customers. Beside Three of the company
production facilities are ISO certified. Fan Milk International also distributes its products efficiently with
high degree of flexibility using mobile vendors.
11.2 Support activities
The infrastructure of the firm: organizational structure, control systems, company culture. Every
company tries to adapt an organizational structure that fits into their business activities so as to be
efficient and cost effective, thus cutting their costs and maximizing their profits as much as possible.
Fan Milk
Human resource management: employee recruiting, hiring, training, development, and compensation.
People that apply for Fan Milk have to have qualifications in the field they want to work. The company
constantly offers the employees in the factory some of the best training when the new technology is
implemented and learnt how to work with the new system. They also offer training to all the employees
on how to handle customers . Fan Milk International also motivate their employees and recognize that
they are the most valuable aspects of the company, so Fan Milk employs passionate people and inspire
them to be the front-runners of knowledge in their field( Fan Milk group annual report. pp 25).
Technology development: Technologies to support value-creating activities. Fan Milk International have
the latest technology equipment and owns modern production lines for the transformation of its raw
material, which make their products of high quality. The production flow is computerized and the
company keep informing itself for the latest changes in the market. This gives the company a clear
overview of the situation and enable them to constantly upgrade their technology and adapt to
customers changes.
Procurement: purchasing of inputs such as materials, supplies, and equipment. The supplier of Fan
Milk is Emidan which supply the company with packaging material. Emidan is the same company that
worked successfully in acquiring the new advanced technology. The plastics packaging( plastics
containers and cups, disposable food containers and ice cream boxes) are source by Emidan.
They also supply raw materials to Fan Milk International and many others materials like machinery
and equipment used in the production of dairy products. This includes freezing and cooling and also
39
Guy Maurice Atsagou Nkeng
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Fan Milk International
spare parts. Bicycles, push carts and motorized tri-bikes and cooling equipment for the transportation
of frozen products are also source in a large quantity through Emidan. This includes tyres, tubes and
spare parts as well.
Above all, Emidan assure the logistical system through the whole process from planning, ordering,
quality control, certification control to the shipment of goods.
Value chain adds value to the company’s products and services, the support activities represent a very
important part in this whole strategy.
12 Activities and Estimated Budget.
Since Fan Milk International was founded it has been rapidly growing and successfully expanding in
the west Africa region . Since the end of the recession period which has enable the increase of
consumption force, many company has regained the healthy economic situation. Today Fan Milk is the
leading brand in frozen dairy foods in west Africa. with its exponential growth total assets of 880.912
T.DKK(2012) for the period of 12 months see annual report of 2012, compare to 797.025
T.DKK(2011) for the period of 12 months see (annual report 2011) it's without any doubt that the
company is doing very well economically .
Fan Milk with the energetic CEO and skillful employees have the ability in adapting to the rapid
changes impose by the consumers. With its gross profit ratio of 58.5% T. DKK( 2012) for the period of
12 months which is relatively high and shows that the company is able of taking care of its liabilities. As
the company produces high quality and healthy dairy products which contain less sugar , it has the
opportunity of seeing the consumer switch in its range of product because nowadays the tendency of
the consumer for not eating unhealthy food is very high. Base on this analysis and the healthy situation
of Fan Milk International company we believe that the company can successfully carry on any activity.
The following estimation of budget is mostly going to be focus on how the company can promote itself.
The budget estimation will limited by showing how to promote the company and its assortment
because further investment such as Acquiring land and building a factory, equipping etc. This needs
experts and inquiries to come out with proper figures. But in regard of the company revenue( 880
million DKK) and cash flow of 251 million DKK) in 2012, Fan Milk International is in a good position to
carry on any investment
Estimating and creating a marketing budget is a difficult task, since it requires taking into consideration
all the costs and expenses connected to the promotion activities of a product on a new market including
all the activities involved. The marketing budget for the following year can be divided into three different
categories according to different ways of promotion – trade fairs, representatives contacting potential
B2B customers and promotional material. Considering trade fairs, it is important to take into
consideration expo expenses which we assume to be (7815,00Dkk) for the exposition of material,
4000,00 DKK entrance fee and 1 050,00Dkk for cleaning), salaries for employees, who will represent
the company on the trade fairs (calculating two employees on five trade fairs in different cities), travel
expenses, accommodation, cost of shipping of the good to the trade faire show and other expenses
(taxi) which may be needed .
These prices are of average and very approximate, as well as it is not possible to find out with certitude
prices, such as shipping costs without the actual inquiry to the shipping company, the renting of a
warehouse or the acquiring of land and equipping the factory. Consequently, five representatives are
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Guy Maurice Atsagou Nkeng
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Fan Milk International
suggested to be sent to five different metropolises in order to contact potential B2B customers (such
as whole sellers, shops owners..). The costs connected regarding this way of promoting of the products
are similarly to salaries expenses, travel expenses, accommodation and others. in the same other of
view, the cost of promotional material is calculated to be 35Dkk per brochures. We estimate that the
amount of 5025 pieces is requires .
Calculating all these costs together excluding shipping costs, renting of warehouse and possibly
acquiring land in the second year for the construction of the company factory gives us approximately
334.260.00Dkk for the marketing budget. For more detail and clear view see appendix( 3). This way of
budgeting seems to be advantageous for the company because for the first time they are planning to
enter in the Cameroon market there is a huge need of not taking too much risk. after participating in a
trade fair show, the will be able to measure the level of awareness of the company through the number
of visit to their website and also the number of customer willing to buy their products. This will be the
result of a successful campaign and it will serve as a trial period for the first year though the result
might not respond to the exact expectation.
12.1 Estimated sales
Estimating future sales and probably revenue in the Cameroonian market is not an easy task.
Nevertheless, base on the company previous sales in the neighboring country Nigeria, we can be able to
make some estimation. Our analysis will be base on many factors which has been partially elaborated in
the project.
Firstly the high growth of the population and relatively rapid urbanization in Cameroon constitute a key
factor in the prospect of high sales. Africa represent today an emerging market an all the African
country are facing a new face in their economy. The fast urbanization is increasing household
consumption and high growth rates in the Cameroonian economy leading to a fast and sustained rise in
consumer spending.
Secondly the Cameroon population is relatively young and this generation represent the leading
consumer of the product Fan Milk is producing. Also another fact is that this young generation are
confident that their income will increase and they have high aspiration and hopes for the future, and are
willing to spend more.
Thirdly due to the fact that the economy is developing and the urbanization rising, equally the increasing
need of eating convenient food is growing. For the recent year in Cameroon the number of lifestyle and
demographic are driving increased on -the-go consumption and food beverages. This phenomenon is
also reshaping people's habit and lifestyle and calling for increasing work hours. The demand on -the-go
convenience is growing so fast.
Fourthly we believe that the marketing strategy of Fan Milk will lead to the expectation creating thus
more awareness. The products of Fan Milk are of high quality and in Cameroon trust in quality is very
important specially safety in food is view as a key indicator of quality. This will make more consumers
remains loyal to the Fan Milk brand . We hope that after certain time the customer base will build up
and the profit will become higher. Cameroonian market been at the center force of the Central Africa
region economic ,sales of Fan Milk products will extend to the other country , reason why we have huge
hope of the company making profit when expending into Cameroon.
In regards of these above mention factors which we assume are almost the same in the neighboring
country Nigeria except political context and stability in the country, there is no doubt that Fan Milk
product will do well in Cameroonian market. People with the same culture , the same lifestyle and
having almost the same historical background automatically have the same way of appreciating things.
41
Guy Maurice Atsagou Nkeng
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Fan Milk International
Cameroon with approximately 1/8 of the Nigeria population will probably give the revenue of the same
per cent of the Nigeria sales.
We focus our analysis in the last year of Nigeria revenue that is 2012. Nigeria with estimated
population of 170 million inhabitants and with the revenue of 325MDKK , we assume that Cameroon
representing the 1/8 of the said population will have 43.97 MDKK as revenue for the first year.
Assuming that the production cost of the total revenue of the company is 41.5% in 2012, the gross
profit will stay at 58.5% , the profit margin will be set at 17.4% base from the 2012 result . Therefore
for the gross profit for Cameroonian market for the first year is expected to be 25.72MDKK and the
production cost at 18.25 MDKK. The net profit for the first year will be expected to be 7.65 MDKK. This
calculation is based on the company profit margin of 2012.This could be less because of the brand
establishment .
The company is still new in the market and will need sometime the gain consumers confidence. But
base on the opportunities offer by the Cameroonian market and the positive change in the consumers
behaviour in Cameroon, the assurance is that the company will make profit for its beginning.
Base on this analysis, we assume that in the second year, the company will have establish itself
gradually and gain some loyal customers thus making Fan Milk Internal increasing it sales. We assume
that the company will have gain 30% of the first year revenue. The second year revenue is assume to be
57.16 MDKK, this due the increase in demand because more people will be willing to consume the Fan
Milk International Brand.
There will be an increase also in the production cost because the company will use more raw material
and more labour force as well. We assume that the production cost will stand at 23.72 MDKK and the
gross profit at 33.44 MDKK. The net profit for the second year will be expect to be 9.95 MDKK. This is
just an assumption, it could be more because the company will continue to establish itself and will be at
its growing phase.
The third years for Fan Milk will sees its profit grows and we expect revenue to be 80.03MDKK. As the
company revenue increase so are the production cost , gross profit and the profit. The production cost
will expected to be 33.21 MDKK, the gross profit at 46.81 MDKK and the net profit assume to be
13.92MDKK.
These expectations might not exactly happen for the first year in Cameroonian market because the
company will need some time to establish itself and gain customers confidence. Nevertheless it is
without any doubt that entering the Cameroonian market Fan Milk International will make profit and by
this increasing its market share and achieving its dream as to bring brighter future to Africa.
Below is the table with more details on expected sales .
Revenue
Cost
Gross profit
Profit
Table 2: Own source.
Year 1
43.97 MDKK
18.25 MDKK
25.72 MDKK
7.65 MDKK
Year 2 ( 30%)
57.16 MDKK
23.72 MDKK
33.44 MDKK
9.95 MDKK
Year 3 ( 40%)
80.03 MDKK
33.21 MDKK
46.81 MDKK
13.92 MDKK
13 Recommendations and Conclusion.
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Guy Maurice Atsagou Nkeng
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Fan Milk International
13.1 Recommendations.
In this section of the report, some recommendations are going to be mention as to enable the Fan Milk
International to successfully enter the Cameroonian market.
1. It will be wise for Fan milk International while entering the Cameroonian market to maintain the top
sales products in Nigerian market but in a limited quantity, the volume should be increase gradually
base on the demand in market.
2. Because of the lack of adequate knowledge about the Cameroonian market, the company should not
enter directly but indirectly by using intermediaries such as resellers to introduce the products in the
market. The intermediaries best understand the consumers and have the experience of the
Cameroonian market. They have been trading for years and Fan Milk International by using them will
easily enter the market thus gaining loyal consumers confidence .
3. For the first year the company should be place under the same Organization from Nigerian and have
only sales representatives in Cameroon. This will help the company in reducing cost and not taking too
much risk during their first year of operation in Cameroonian market.
During this period the company will evaluate the degree of awareness and the number of confidence
customers gained. Later on from the second year, Fan Milk International could set up an organization
for the running of the company employing nationals at key managerial post and a Danish as Chief
Executive Officer. The company should operate the same way they are doing in Nigeria and Ghana
because the organizational system in these countries functioned well.
4.The company should rent a warehouse in order to stock its good enabling them to satisfy the B2B and
B2C customers in time and in quantity needed.
5. After the first year, Fan Milk International should open the production center in Cameroon in order to
operate fully because the company will have gained loyal customer and create more awareness of the
brand.
13.2 Conclusion
Summing up, the current economic situation , the Cameroon economic was examined in order to
suggest whether introducing Fan Milk frozen and possibly its range of product has a prerequisites to be
successful. Since the Cameroonian economy is experiencing growth, falling unemployment and raising
consumption, specifically in eat food production company, this provides a clear opportunity for a
company to expand there. Moreover, recent trend and switch in consumer preferences show that the
Cameroonian customers value quality and convenient dairy product from natural and juice recipices.
Base on these factors and regarding the quality of Fan Milk International products, we can said that
the company products will suit part of the Cameroonian customers and they will be willing to buy.
Furthermore, a detailed marketing budget was proposed. Company´s strengths, weaknesses ,
opportunities and costs were stated to make a clear plan for introducing the frozen yoghurt and others
Fan Milk International products in the Cameroonian market. STP analysis was carried out to choose the
right group of customers to target, mainly on B2B sphere. The potential target group is formed by whole
sellers and shops in the metropolises cities of Cameroon . These are the main target groups the
company would focus on when creating its marketing mix. while entering the market.
The marketing budget was created in order to estimate expenses connected with promotion for the
Cameroonian market. The approximate number of 330,260DKK excluding shipping costs was set as a
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Guy Maurice Atsagou Nkeng
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Fan Milk International
practicable plan for entering the market. The marketing budget takes into consideration different
expenses connected with attending the exhibitions, sending representatives to potential Cameroonian
customers and printing of the promotional flyers and brochures.
Moreover an estimation sales has been made and its shows that the future looks smooth and
prosperous for the company. The company will simply experiences growth in the Cameroonian market.
Doing this, we can assume that moving towards the Cameroonian market is the right choice for Fan
Milk International and it can bring new opportunities and customers to the company. Fan Milk
International with its clear vision, good management, strong financial resources and technology is
capable and is ready to take the opportunities offers by the Cameroonian government for investors to
expand to the Cameroonian market.
14 Bibliography and references
Internet souce.
1. https://www.cia.gov/library/publications/the-world-factbook/geos/cm.html. 1. Assessed on
05/102014.
2. http://store.businessmonitor.com/cameroon-business-forecast-report.html Assessed on
05/10/2014
3.http://www.africaneconomicoutlook.org/fileadmin/uploads/aeo/2014/PDF/CN_Long_EN/Cameroun
_EN.pdf Assessed on 06/10/2014 Assessed on 08/10/2014.
4. http://www.gwclc.com/Library/Africa/Cameroon/CameroonFinal.pdf Assessed on 08/10/2014.
5. http://www.theodora.com/wfbcurrent/cameroon/cameroon_economy.html
SOURCE: 2014 CIA WORLD FACTBOOK AND OTHER SOURCES. Assessed 0n 08/10/2014
6. http://www.slideshare.net/earnerprince/5-w-model-for-customer-analysis-feb-2013 The five w
model. Accessed the 10 octorber 2014.
7-http://www.theodora.com/wfbcurrent/cameroon/cameroon_economy.html
SOURCE: 2014 CIA WORLD FACTBOOK AND OTHER SOURCES Assessed on 09/10/2014.
8. http://www.budde.com.au/Research/Cameroon-Telecoms-Mobile-and-Broadband-Market-InsightsStatistics-and-Forecasts.html?r=51#sthash.Jk6jVugh.dpuf Assessed on 09/10/2014.
9- http://store.businessmonitor.com/cameroon-infrastructure-report.html#sthash.MxjeJrZF.dpuf(2)
Assessed on 10/10/2014.
1o- http://store.businessmonitor.com/cameroon-infrastructure-report.html : assessed day
12/10/2014
11. http://www.euromonitor.com/yoghurt-and-sour-milk-products-in-cameroon/report : 1 assessed day
16/10/2014
12- http://www.euromonitor.com/yoghurt-and-sour-milk-products-in-cameroon/report :2, assessed day
16/10/2014
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Guy Maurice Atsagou Nkeng
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Fan Milk International
13. http://www.euromonitor.com/yoghurt-and-sour-milk-products-in-cameroon/report :3 assessed date
18/10/2014.
14- http://www.euromonitor.com/cameroon-in-2030-the-future-demographic/report :4 assessed date
19/10/2014
15- http://populationsdumonde.com/fiches-pays/cameroun assessed date 22/10/2014
16--http://www.researchomatic.com/Global-Economics-116543.html 1. Assessed date 31/10/2014.
17-http://www.researchomatic.com/Global-Economics-116543.html 2. Assessed date 31/10/2014.
Bibliography.
-Principles and practice of Marketing by David Jobber six edition.
-Organization theory and design of Richard L. Daft
-Essentials of Marketing Communications by Chris Fill.
- Fan Milk Annual report 2012.
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Fan Milk International
15 Appendices
Background description
Fan milk is a Danish company that was founded in 1960 in Ghana by a Danish merchant and
industrialist Erik Emborg. The company vision is to become one of the leading food companies in Africa
and particularly West Africa , with a mission to create a business that benefits all the stakeholders
by producing and distributing high quality branded products to consumers .
Fan Milk International is committed to conducting its business in a transparent and responsible manner
including social and environmental laws. In this regard Fan Milk operates in accordance with the
relevant laws of the countries in which its operates and if no relevant local law exists then the company
will strive to comply with international standards as well as the Danish laws, this is to show their
CSR(core social responsibility).
In the beginning the company was known as Ghana milk company Ltd but in 1962 its change from
Ghana Milk to Fan milk company. For the last 50 years Fan Milk International has been doing very well
specially with it product portfolio . The company today operates in six others West African countries
such as ( Nigeria, Togo, Benin, Côte-D.ivore, Liberia and Burkina Faso) and has a total of 1700
employees with over 25000 agents and vendors.
The company continue to show its willingness to fight unemployment and it been being a successful
brand, Fan milk International objective is to gain access to others countries as well as to maintaining
and consolidating their position in the various markets they have been operating.
Purpose
The main objective of this report is to identify ways in which Fan Milk International can expand its
business to new markets such as Cameroon and how they can keep their existing market growing .
This report will also analyze examples of how the company tried to approach new markets and its
outcome. This will help in having a better view of how the challenges and opportunities the company
might face when trying to enter a new market. In addition to this their current sales and marketing
methods will also be analyzed and recommendations drawn in order to help the company have a
successful market entry
Problem formulation
The overall question I will seek to answer in this report is : How can Fan Milk International
penetrate the Cameroonian market? In answering this question, it will show how Fan MIilk International
intends to obtain its objective of increasing its profit margin as well as being one of the leading dairy
products in Africa and particularly in West Africa.
Delimitation
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Guy Maurice Atsagou Nkeng
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Fan Milk International
The project is planned to analyze the opportunities offer by the Cameroonian market to Fan Milk
International in which they could expand. It's also a way of taking advantage for a long run to have a
comfortable place in the Center Africa by why not expanding to the neighboring countries like(Tchad
Republic, Congo, Equatorial Guinea , Gabon and Center Africa Republic). In the economic situation of
Fan Milk an analysis of the budget will be carried out to see how much they will need to use to market it
selves.
I will focus on analyzing the company in question and Cameroonian market( more specifically the dairy
products industry ). A desk research will be carried out with the intention of gathering all necessary
information.
At the end of this research a recommendation will be suggested to the company on whether or not it is
in their interest to penetrate the Cameroonian market.
Choice of models and theories
In relation to Marketing, Fan Milk International will be analyzed by using the Marketing Audit. i.e. the
use of PEEST analysis, Marketing Mix, Competition, (Porter’s 5 forces), Segmentation, Targeting,
Positioning, and the SWOT analysis. We will also use the Marketing Audit to assess the Market
environment. Data collection for analysis will be based on different web-based solutions, handbooks,
Internet sites and other source of writings.
In Communication, I will use the Geert Hofstede and Edward Hall model of communication to
understand the intercultural dimension of the two countries, also the analysis on how Fan Milk
International should communicate will also be analyzed. In organization the main focus will be on supply
chain and how Fan Milk International should be organized while entering the new market. My finding in
this assignment together with recommendations as well as an estimated budget and conclusion for Fan
Milk International will be enclose in the report.
Sources, references, literature
In order to obtain information for the report, I will mainly use the textbooks for the theory and the
figures from the business placement.
Appendix 2. Estimated budget.
No
1
2
3
4
5
6
7
8
A
Activities
Trade Faire
Stand Rental
Personnel Salaries
Travel Expenses
Accommodation
Shipping Expo
Others
Expenses(Food
B
Quantity
5
5
2(5)
10
C
Price(DKK)
D
Total Price
7095
1600
1500
1000
35.475 Dkk
16000Dkk
15000Dkk
10000Dkk
23345.00
23345.00Dkk
II
Guy Maurice Atsagou Nkeng
187980
9
10
11
12
13
14
15
16
17
18
Fan Milk International
and tasting)
Representatives
5
Traveling
Expenses
Personels Salaries
Accommodation
Promotion
5025 pieces
Material
Leaflets,
brochures
Rent
and
equipment
of
warehouse
Expo Materials
Entrance
Cleaning
3300.00
16500.00Dkk
3500.00Dkk
1500.00Dkk
35
17500.00Dkk
7500.00Dkk
175875.00Dkk
7815.00
4000
1050
7815.00Dkk
4000Dkk
5250.00Dkk
Total=330260Dkk
Appendix3:Time schedule
Task
1- Gathering Information about
the Company.
2-Project description.
Stard
25.09.2014
End
29.09.2014
30.09.2014
02.10.2014
3. Introduction.
08.10.2014
10.10.2014
4- Fan Milk Company
11.10.2014
16.10.2014
5- Market situation analysis
17.10,2014
20.10.2014
6-Consumption of dairy foods in
Cameroon.
7- SWOT analysis
21-10.2014
27.10.2014
29.10.2014
05.11.2014
8- STP
06.11.2014
10.11.2014
9- Marketing Mix.
11.11.2014
13.11.2014
10- Market Communication.
15.11.2014
19.11.2014
11- Organization.
21.11.2014
26.11.2014
III
Guy Maurice Atsagou Nkeng
187980
Fan Milk International
12- Activities and budget.
27.11.2014.
04.12.2014
13- Recommendation and
conclusion.
05.12.2014
12.12.2014
List of tables and figures
Table 1: SWOT-Analysis
Table 2: Expectations sales
Figure 1: Porter's five forces
Figure 2: Hofstede five dimensions of culture
Figure 3: Four P's
Figure 4: Street vendor
Figure 5: Value Chain
Appendix4: Fan Milk International map.
IV
Guy Maurice Atsagou Nkeng
187980
Fan Milk International
Appendix5: Fan Milk International In West Africa.
Appendix6: Cameroon GDP growth.
V
Guy Maurice Atsagou Nkeng
187980
Fan Milk International
VI
Guy Maurice Atsagou Nkeng
187980
Fan Milk International
Appendix7: Fan Milk Financial report 2012.
VII
Guy Maurice Atsagou Nkeng
187980
Fan Milk International
Appendix8: Fan milk organization design.
Chairman
Board of
directors
Managing
director
Human
Resource
manager
Quality and
Environmental
system
manager
Sales and
marketing
manager
I:T
Manager
Finance and
Account
manager
Internal
Audit and
security
manager
Technical
Manager
Ag, Production
and distribution
manager
Projects
manager
VIII