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Kowloon Dairy’s Strategic Marketing Planning and Auditing


Before making a decision about the introduction of a certain new product to the market, it is vital to conduct preliminary analyses to assess the existing situation and likely prospects. A comprehensive approach to the market and its trends implies studying the external and internal situation for a given company as well as checking the potential customer response. The current case concerns the Kowloon Dairy company, one of the largest milk producers in Hong Kong. Specifically, the company’s management thinks of featuring a new product, the chocolate butter, and, therefore, requires a thorough analysis of the market and the brand’s capabilities and a sustainable strategy guaranteeing success.

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External Situation Analysis

In order to analyze the external situation of the dairy industry in Hong Kong, of which Kowloon Dairy has a considerable share. The first factor is political, and studies demonstrate that the Chinese authorities, including in Hong Kong, promote dairy consumption and production in the country, which positively affects the prospects of companies such as Kowloon Dairy. Another aspect is the economic one, and research shows that there is a favourable situation for dairy producers since the government in China and Hong Kong maintains low taxes (Wang, Wei, and Wang, 2021). In the social sphere, there is a possible issue associated with the changing tastes of customers who may find butter to be compatible with their diets.

From the technological perspective, the dairy industry may see an emergence of new equipment which will make the production of butter and other products more efficient. In terms of the environment, there is a potential challenge coming from the activities stating that dairy production contributes to detrimental carbon emissions, which can cause the company to lose some clients (Brito and Silva, 2020). One of the key problems may be related to the legal aspect of dairy production, which is food safety regulations imposed by the authorities. The products of Kowloon Dairy can be potentially considered to be as not having the appropriate quality.

Internal Audit

The VRIO framework is an effective tool for conducting an internal audit which is also applicable to the Kowloon Dairy company. The first component of the business is its workforce which considerably offers value to clients but is not rare and therefore can be considered problematic and a source of competitive parity. The company also possesses sources of a sustained competitive advantage which is its Hi-Calcium Slimilk, which is not only rare and delivers value but also is non-imitable and its production successfully organized (Our story, n.d.). The brand reputation is another source of a sustained competitive advantage for Kowloon Dairy since the enterprise is extremely popular in Hong Kong and have been in existence for 80 years (Doorley and Garcia, 2020). Moreover, the company delivery service consisting of 40 trucks provides it with a temporary competitive advantage. The chocolate butter is a product which can become a source of a sustained competitive advantage for the company if Kowloon Dairy decides to patent its recipe. Additionally, the business will need to create a unique name for its chocolate butter similar to that of Hi-Calcium Slimilk, for instance, Choco Butter.

Market Place Analysis

It is also essential to employ the 5 Forces model to analyze the current market of dairy products, and the segment of butter, in Hong Kong. First of all, there is a moderate threat of new entrants considering the growing production of milk in China (Bai et al., 2018). Thus, there is a possibility that more butter will be imported into Hong Kong, yet by offering a chocolate version, Kowloon Dairy can provide a niche product which is unique. In the dairy industry, the bargaining power of suppliers is low since there are many manufacturers of machinery for milk and butter production. The bargaining power of buyers in the dairy industry is high because, in Hong Kong, consumers can choose among several dairy brands, which forces businesses to keep their prices low (Milani, 2019). At the same time, the chocolate butter can be a premium product due to its exclusivity. Similarly, there is a low threat of substitutes for chocolate butter and a high one for milk. Finally, the rivalry among the competitors in the dairy industry of Hong Kong is high.

Customer Analysis

Customer analysis is another crucial step in analyzing the conditions of the market environment for the introduction of the new product. The statistics show that the dairy and eggs industry in Hong Kong is estimated to be at more than a billion dollars and is expected to grow in the coming years (Dairy products & eggs, 2022). Such information indicates that there is a clear demand for milk-based products in Hong Kong. Moreover, the data on butter demonstrates that Honk Kong imports more than fifty million dollars worth of the product (Butter in Hong Kong, 2022). Thus, once again, butter can be considered a popular choice for Hong Kong residents. Another interesting statistic concerns the confectionery industry, which is projected to expand by more than 6% in 2022-2027 (Confectionery, 2022). Chocolate butter is a product bringing together dairy and confectionary, the two steadily growing industries in Hong Kong. The primary customers of the new product will be middle-class people who need a simple breakfast option for their toasts. By using chocolate butter, people will be able to both enjoy their morning meal and receive healthy nutrients contained in all dairy products.


Thus, based on the aforementioned information, clear objectives can be formed in relation to the new product of Kowloon Dairy. The SMART approach implies creating objectives which are specific, measurable, achievable, relevant, and time-bound (Masterson, Phillips and Pickton, 2021). Therefore, the marketing objective for the chocolate butter will be to conduct a two-week campaign in Hong Kong stores, where people will be encouraged to taste samples of the product and rate it. If the result of the campaign is satisfactory and the company will see a clear interest in the chocolate butter, the first batch can be sent to the points of sale. The commercial objective will be to sell the entire first batch, consisting of 100 items, of the product in a week. The societal objective for the product will be, in a year, to change the dietary habits of a share of the Hong Kong population, and make it consume the chocolate butter for breakfast. In two years, the company will need to reach the objective of selling 1000 items of the chocolate butter a week.

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Kowloon Dairy is one of the main dairy producers in Hong Kong, which can gain a competitive advantage by introducing the new chocolate butter product. The research shows that there is a favourable external situation on the market, which is characterized by low taxes and government support for dairy production. Although there is high competition among dairy producers in Hong Kong, chocolate butter is a unique product, the recipe of which Kowloon Dairy can patent to protect itself from competitors. In order to test the consumers’ attitudes towards the new product, Kowloon Dairy can conduct a sample tasting campaign in Hong Kong stores.

Reference List

Bai, Z. et al. (2018) ‘Global environmental costs of China’s thirst for milk’, Global Change Biology, 24(5), pp. 2198–2211.

Brito, A. and Silva, H. (2020) ‘Comparisons of feed and milk nitrogen efficiency and carbon emissions in organic versus conventional dairy production systems’, Journal of Dairy Science, 103(6), pp. 5726–5739.

Butter in Hong Kong (2022). Web.

Confectionery (2022).

Dairy products & eggs (2022).

Doorley, J., and Garcia, H. (2020) Reputation management: the key to successful public relations and corporate communication. New York: Routledge.

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Masterson, R., Phillips, N., and Pickton, D. (2021) Marketing: an introduction. London: SAGE.

Milani, F. (2019) Digital business analysis. London: Springer.

Our story (n.d.).

Wang, Q., Wei, L., and Wang, W. (2021) ‘Challenges and prospects for milk production in China after the 2008 milk scandal’, Applied Animal Science, 37(2), pp. 166–175.

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