Scenario A: A Traditional Marketing Success Story: How Oatly Dominated Plant Milks Without Using Social Media

In a year of adversity, oat milk is on top, with dollar sales up 212% above last year. With this year's explosive growth, Oatly is one of the hottest products on the grocery shelf. Of the food industry success stories emerging from the pandemic, oat milk is the biggest. Though sales have moderated a bit, they're still growing fast.

It makes sense that Oatly is the first brand that comes to mind when thinking of oat milk because the company literally invented it. Rickard ste, a Swedish food scientist first formulated the product in the 1990s. He was looking to oats, which are known both for their healthy properties in food and sustainable farming principles, to make food items that were better for the environment and available to consumers with milk allergies. The products first launched in Europe in the '90s, going through several iterations before they became the familiar oat milk products millions of consumers recognise. Oatly created a Barista Blend for coffee shops that was thicker than other plant-based milks, which made it the best non-dairy option for baristas drawing those cool designs in cappuccinos. Other plant-based milk companies had forgotten about the middleman between their milk substitute and their customers: the people making their coffee. Oatly has achieved loyal word-of-mouth through baristas. The company is shifting its focus now from a segment that was around 35 years of age to those aged up to 55.

Scenario B: Paid social media and Huels success

Huel believes that there are two types of food: functional food and entertainment food. Huel will never be the solution for a social occasion, but there are many times during the week when you need nutrition and convenience, which Huel offers. Huel is a meal replacement product, available in powder, bar and drink formats. Oats is the main ingredient. It has sold more than 45 million packets but has bigger goals in the convenience market. Huel targets time-poor yet health-conscious customers younger than 40.

Huel shows the success that new entrants can have if theyre prepared to spend heavily on paid social media rather than traditional paid marketing channels. Huel spent over 17.9 million on Facebook and Instagram Ads in the first six months of 2019. Huel is now leaning on performance marketing and word-of-mouth after its experimental forays into TV and OOH at the end of 2018.

(Scenarios adopted from Forbes and other news articles.)

Task:

Critically analyse the two market scenarios above and how the two companies nurtured their market segments in a competitive space. Justify their seemingly contrary approaches and recommend what these brands should do in future. Justify your recommendations.

25 marks