Marketing Strategy for Archer Daniels Midland

Introduction

The report primarily focuses on the marketing strategy of Archer Daniels Midland to give a reader an overview of the growth dynamics of the company. Recently, several strategic issues and managerial problems have been identified in marketing strategy of Archer Daniels Midland that have drawn the attention of the entire management to devise new marketing strategies that can help the company to resolve the problems to continue its expansion and future growth to achieve a competitive edge in the marketplace. This report is written to provide Archer Daniels Midland marketing strategy with the required strategic solutions using multiple frameworks and tools.

External Environmental Analysis

PESTLE Analysis is the most popular strategic tool that is used by many organizations when conducting an external environmental analysis. This framework typically focuses on political, economic, social, technological, legal, and environmental factors that can impact the macro environment of the business (Zalengera, E.Blanchard, & C.Eames, 2014).

Political factors

Political Stability

Archer Daniels Midland operates in a politically stable environment, which means that it provides the company with more friendly and stable business growth opportunities (Christodoulou & Cullinane, 2019). However, since Archer Daniels Midland operates in multiple countries, there are high chances of various political tensions that can cause instability in market growth trends for Archer Daniels Midland. This can limit the company's growth opportunities.

Pressure Groups

Moreover, it is important for Archer Daniels Midland to analyze and monitor the activities of pressure groups. Archer Daniels Midland can create a close collaboration with these groups to achieve long-term goals.

Corruption and Changing Policies

Archer Daniels Midland must keep a close check on the changes in any government policies because they can directly impact the performance of the business. The operations of Archer Daniels Midland are its different countries can become unpredictable if there is a high level of corruption and weak enforcement of the law (Achinas, Horjus, & Achinas, 2019).

Trade and Taxes

The profitability of a company is directly influenced if there are high taxes in a country. Archer Daniels Midland should look into the taxation policies in each country before further expanding its operations (Eierle, Hartlieb, & C. Hay, 2022). Similarly, if there are high trade restrictions, it can get difficult for Archer Daniels Midland to import and export its products, impacting the relationships with trade partners.

Economic factors

GDP, Employment, and Exchange Rates

The long-term growth strategies of Archer Daniels Midland are majorly determined by the GDP growth of the economy. The purchasing power of consumers significantly increases with a high GDP. High unemployment in an economy shows that Archer Daniels Midland can benefit from surplus labor with low-cost wages. Furthermore, Archer Daniels Midland should monitor interest rates as it can affect the borrowing ability. With that being said, if there is a high fluctuation in currency, the profitability of Archer Daniels Midland can also be influenced (Sadeghi, 2020).

Labor Market

It is important for Archer Daniels Midland to make appropriate predictions regarding the labor market conditions in a specific economy (Sadeghi, 2020). This can help the company to hire a more talented workforce that can improve the performance of the company.

Industry lifecycle stage

Archer Daniels Midland should consider expanding its operations in growing economies to benefit from growth opportunities. It can be challenging for Archer Daniels Midland to enter a mature industry at a growing stage (Villamarín & Pinzon, 2017).

Social factors

Demographics

Archer Daniels Midland should study the changing patterns of demographics, such as socio-economic variables, the aging population, and trends in migration (Barbara & Cortis, 2017). This can help the company to identify the right segment to target with a high potential for growth opportunities.

Cultural norms

Every country and society has a distinctive culture with different norms and values. It is important for Archer Daniels Midland to study and identify social class stratification.

E-commerce

There has been a significant shift in online shopping. Archer Daniels Midland needs to adopt necessary changes considering the growing use of social media networking sites and mobile phones to increase its revenue and overall profitability (Villamarín & Pinzon, 2017).

Technological factors

Technological innovations

On-going technological innovations should be considered carefully by Archer Daniels Midland so that it can stay ahead of the competitive market. Archer Daniels Midland should continue working on introducing major technological transformations to achieve a competitive advantage (Rastogi & TRIVEDI, 2016).

Social Media Marketing

The collaboration with consumers has been growing rapidly because of the development of communication technologies (Rastogi & TRIVEDI, 2016). Archer Daniels Midland can take it as a great opportunity where can use innovative strategies to expand its customer base.

Environmental factors

Waste Management

Archer Daniels Midland should implement the latest technological tools to minimize environmental pollution. Waste management is now getting popular and has been considered a major business norm (Igliński, Iglińska, & Cichosz, 2016).

Climatic Conditions and Eco-friendly products

Climatic conditions can influence the efficiency of Archer Daniels Midland. The cost of a company's operations can be increased if there are extreme weather conditions. Similarly, there has been an increasing demand for eco-friendly products. Archer Daniels Midland should work towards adopting more sustainable business practices to gain customer trust (Barkauskas, Barkauskienė, & Jasinskas, 2015).

Legal factors

Employee protection laws

It is important for Archer Daniels Midland to follow the health and safety laws for its employees that are issued by the authorities to ensure the safety of its labor.

Consumer laws

Archer Daniels Midland should protect its customer data to ensure their security and privacy concerns. Moreover, it should set the right price with the right product quality (Igliński, Iglińska, & Cichosz, 2016).

Porter's Five Forces

Archer Daniels Midland can use Porter's Five Forces to analyze the competitive landscape of the industry. The strategic planners of Archer Daniels Midland can use this framework to make effective decisions.

Threat of New Entrants

Archer Daniels Midland operates in an industry where it is difficult to achieve economies of scale, making it difficult for new entrants to enter the industry (Yunna & Yisheng, 2014). There is a strong product differentiation with high capital requirements. Moreover, it is difficult to establish a distribution network easily in this industry. Thus, Archer Daniels Midland has a weak threat of new entrants.

Bargaining Power of Suppliers

There are more suppliers in the industry of Archer Daniels Midland. This shows that there is less control over prices. Organizations like Archer Daniels Midland can easily switch to other suppliers because of less differentiation in products. This makes the bargaining power of suppliers a weak force in Archer Daniels Midland's industry (H. Th. Bruijl, 2018).

Bargaining Power of Buyers

The industry in which Archer Daniels Midland operates has many suppliers as companies to buyers. This means that buyers have fewer options and do not have control over prices (H. Th. Bruijl, 2018). The high product differentiation shows that there are few alternative products for buyers, and there is a high switching cost. This makes the bargaining power of buyers a weak force in the industry.

Threat of Substitute Products and Services

Archer Daniels Midland operates in an industry that offers very few substitutes to its customers. The substitutes that are available are expensive because of their high quality (Zhao, Zuo, & Wu, 2016). However, companies like Archer Daniels Midland sell their products at a lower prices. This clearly shows that buyers may feel reluctant when switching to other substitutes.

Rivalry Among Existing Firms

Archer Daniels Midland operates in a less competitive industry. The already established companies have a large market share, meaning that any move by the existing companies will be noticed. Moreover, Archer Daniels Midland has to take several competitive actions to become a market leader, as the industry is likely to grow rapidly in the coming years (Aithal, 2020).

SWOT Analysis

Archer Daniels Midland can make use of SWOT analysis to effectively analyze the company's internal strengths, weaknesses, external opportunities, and threats.

Strengths

Strong distribution network

Archer Daniels Midland operates in various countries and has multiple outlets that help the company to deliver its products quickly to its customers. This shows that Archer Daniels Midland has a strong distribution network (Benzaghta, Elwalda, & Mousa, 2021).

Financial position

Archer Daniels Midland has established itself as a strong financial company over the past few years. It has generated enough profits that can be used to finance any future expenditure (Basset & Mohamed, 2018).

Automation

Archer Daniels Midland has adopted the latest and innovative technology in its business operations, which has allowed the company to reduce its production costs (Benzaghta, Elwalda, & Mousa, 2021).

Social media presence

Archer Daniels Midland has been successful in establishing itself as a strong brand on social media platforms that, includes Facebook, Twitter, and Instagram. This increases customer engagement (Basset & Mohamed, 2018).

Weaknesses

High rent costs

Archer Daniels Midland has its manufacturing plants on rented properties. This increases the company's overall costs, and a significant portion of Archer Daniels Midland's profits go into paying the rent (Comino & Ferretti, 2016).

Research and Development

Archer Daniels Midland has not been able to conduct effective and in-depth market research regarding new markets and products (Comino & Ferretti, 2016). Customer trends are always evolving, and it is important for Archer Daniels Midland to take immediate action in conducting its research.

Centralized Power

There has been a centralized decision-making process in Archer Daniels Midland. This means that employees have to consult their managers before taking any decision themselves. This slow down the decision-making process. and employees feel demotivated. Thus, impacting the operations of Archer Daniels Midland (Comino & Ferretti, 2016).

Opportunities

Presence of Internet

Archer Daniels Midland has a great opportunity of expanding its business by using the internet. Since there has been a growing trend in online shopping Archer Daniels Midland can boost its sales by expanding its online stores (Yan, Xia, & X.H.Bao, 2015). Additionally, social media platforms can be updated constantly to engage customers with all the new products introduced by Archer Daniels Midland.

Technological Innovations

Technology is constantly evolving, and Archer Daniels Midland can benefit from it by implementing the technology in its various departments. Manufacturing process can be completed automated, which can eventually help Archer Daniels Midland to reduce its costs (Taghavifard, Mahdiraji, & Alibakhshi, 2018).

Globalization

The continuous increase in globalization has allowed Archer Daniels Midland to expand its business operations across borders. It has the opportunity of entering new markets (Yan, Xia, & X.H.Bao, 2015).

Threats

New Entrants

Recently, many companies are entering the industry in which Archer Daniels Midland operates. This means that there are chances of increased competition. This poses a threat to Archer Daniels Midland as it has to put more effort into gaining market share (Taghavifard, Mahdiraji, & Alibakhshi, 2018).

Fluctuations in exchange rates

The exchange rates are highly subjected to fluctuations that negatively impact the sales of Archer Daniels Midland. Archer Daniels Midland needs to study the changing fluctuations to keep up with its profitability (Vlados & Chatzinikolaou, 2019).

Consumer trends

The consumer trends are constantly changing, that causes changes in their demands. This puts pressure on companies like Archer Daniels Midland, who have to continuously meet their consumer demands. Moreover, there is a significant threat from substitute products because consumers tend to switch to these companies (Vlados & Chatzinikolaou, 2019).

Marketing Mix

Product

Archer Daniels Midland operates in a wider range of products. Each of the products has its further product lines that are sold under the Archer Daniels Midland. This means that customers can benefit from a large variety of products. Archer Daniels Midland sells highly differentiated products with higher quality that, gives it a competitive edge (Khan, 2014).

Price

Archer Daniels Midland follows a competitive pricing strategy. The company also takes into account all its costs before setting its prices (Londhe, 2014). Currently, Archer Daniels Midland is using a product bundle pricing strategy where customers get bundled products at lower prices.

Place

Archer Daniels Midland has adopted various distribution channels to reach its customers. The company sells its products through its website directly (Thabit & Raewf, 2018). Apart from this, it also distributes its products to wholesalers, who then further sell it to small retailers. Archer Daniels Midland has its own retail stores where it sells its products directly to consumers.

Promotion

Archer Daniels Midland uses traditional and modern promotional techniques. TV ads are used to reach a larger audience. Archer Daniels Midland also advertises on social media sites such as Facebook, Instagram, and Twitter. Events are sponsored by the company. Moreover, Archer Daniels Midland participates in several exhibitions (Londhe, 2014).

VRIO Analysis

Valuable

Archer Daniels Midland engages in corporate social responsibility activities. This has allowed the company to establish a strong brand image. Since, Archer Daniels Midland has a well-established distribution network, the products are reached to consumers in a timely manner. Archer Daniels Midland has been able to introduce innovation in its various departments, which has lowered its costs (Ariyani & Daryanto, 2018).

Rare

Archer Daniels Midland operates in multiple countries. This means that its global presence is a rare factor. It works towards an organizational culture that encourages teamwork, and creativity among employees (Ariyani & Daryanto, 2018). Archer Daniels Midland is also able to adapt to different societies, and cultures due to its exposure to various locations.

Inimitable

The products produced by Archer Daniels Midland are of a high quality. Customers make repetitive purchases, and thus it is an inimitable source. (Miethlich & G. Oldenburg, 2019). Archer Daniels Midland has a significant placement of its stores that gives an easy access to its customers. Additionally, the company has been using a competitive pricing strategy because it has been able to achieve economies of scale, thus lower production costs.

Organization

Archer Daniels Midland, over the years, has successfully gained a financial strength. Archer Daniels Midland can make use of these finances to invest in major acquisitions that give it more growth opportunities. The advancements in technology have allowed Archer Daniels Midland to manage its operations more effectively. Distribution channels are another resource for Archer Daniels Midland. The supply chain is very efficient, resulting in more revenue (Miethlich & G. Oldenburg, 2019).

Value Chain Analysis

Primary Activities

Archer Daniels Midland is involved in primary activities such as the production of goods and then selling them to the target audience.

Inbound Logistics

Archer Daniels Midland should ensure to have a strong relationship with its suppliers to avoid any inconvenience in receiving, storing, and distributing the product. This will help Archer Daniels Midland to have a more effective transformation of a product (Ariwibowo & Saputro, 2021).

Operations

Operations involves manufacturing as well as services. Archer Daniels Midland should conduct an in-depth analysis of its operational activities to remain ahead of its competitors (M.El-Sayed, W.Dickson, & O.El-Naggar, 2015). This will increase the productivity of the company, and more profits can be generated.

Outbound Logistics

It is important for Archer Daniels Midland to analyze, and optimize its outbound logistics so that it is able to achieve the long-term corporate goals. Managing outbound activities properly reduces the chance of late deliveries (M.El-Sayed, W.Dickson, & O.El-Naggar, 2015).

Marketing and Sales

Archer Daniels Midland should use various marketing and sales techniques to differentiate its products from its competitors. Archer Daniels Midland can adopt marketing and sales activities such as promotional activities, advertising, and building strong relationships with suppliers and customers (Ariwibowo & Saputro, 2021).

Services

In terms of services, Archer Daniels Midland must ensure that it provides its customers with the pre-sale and post-sale services (Jaligot, C.Wilson, & R.Cheeseman, 2016). The post-sale service typically falls into the promotional activities of a company. Archer Daniels Midland can thus develop its customer loyalty.

Secondary Activities

Firm infrastructure

A strong infrastructure of a firm can enable Archer Daniels Midland to optimize the entire value chain of the company. Moreover, by controlling the infrastructure activities, Archer Daniels Midland can be in a better position to get a strong foothold in the competitive marketplace (Darmawan & Wiguna, 2014).

Human Resource Management

Archer Daniels Midland should place its major focus on analyzing the different aspects of HR, such as recruitment, selection, training, and performance evaluation of employees (Darmawan & Wiguna, 2014). Archer Daniels Midland can reduce its costs by identifying and analyzing the costs associated with hiring and training.

Procurement

Procurement is an important element in the Archer Daniels Midland's value chain. It is important for the company to assess its overall procurement activities so that the inbound, outbound, and operational activities can be optimized (Kumar & P. V., 2016).

Ansoff's Matrix

Archer Daniels Midland can implement Ansoff's Matrix to make decisions regarding its business growth. This framework includes four different strategic choices that can be selected by Archer Daniels Midland.

Market Penetration

Production capacity

Archer Daniels Midland can increase its overall production capacity. This will allow the company to reach more wider audience in an existing market. Archer Daniels Midland can also benefit from the reduced costs by expanding its production capacity. Thus, Archer Daniels Midland can attract more customers using competitive pricing (Madsen, 2017).

Marketing Investment

Archer Daniels Midland can penetrate the market by investing more in marketing and sales activities. This will help the company to engage with its customer more effectively, leading to more potential customers (Dawes, 2020).

Distribution Channels

Innovative and unique distribution channels can be explored by Archer Daniels Midland. This will enable the company to reach new segments and groups of customers (Dawes, 2020). In addition to this, Archer Daniels Midland can penetrate the market by improving its supply chain, giving more accessibility to customers.

Joint Ventures/Acquisitions

Archer Daniels Midland can enter into joint ventures or can take over other leading companies of the market. This will give Archer Daniels Midland more market share.

Market Development

Research & Development

Archer Daniels Midland should keep on investing in its R&D department, so it is able to identify the changing trends of the market. This will help Archer Daniels Midland to target the right market at the right time (Mukangai & Murigi, 2021).

Expanding Regionally

Archer Daniels Midland can enter in a new market by expanding its operations regionally. This includes considering different cities of the country. Archer Daniels Midland must consider any cultural differences when entering a new market (Mukangai & Murigi, 2021).

New Segments

New segments of the current market can be explored (Mukangai & Murigi, 2021). Archer Daniels Midland can add new features and product uses to its existing products that satisfies the needs of a different customer segment.

Product Development

Modifications

Archer Daniels Midland can modify the existing product by improving its features to enhance the product offerings.

Launching additional products

Archer Daniels Midland should invest in its R&D department so it can come up with new and innovative products that attracts and fulfill the needs of the target audience. This will boost the sales of Archer Daniels Midland and will increase profitability (Khajezadeh, Niasar, & Asli, 2019).

Diversification

Vertical Integration

Archer Daniels Midland can consider vertical integration. This will allow Archer Daniels Midland to develop and launch new products that are similar to its existing product category (Khajezadeh, Niasar, & Asli, 2019).

Horizontal Integration

Archer Daniels Midland can diversify its business operation using horizontal integration. This means that the new products and services of Archer Daniels Midland will not be related to its current products (Dhir & Dhir, 2015).

A new business diversification

Entering into a completely new business can be considered by Archer Daniels Midland. The organization can work towards starting a new business that can give a company more growth prospects in the future (Dhir & Dhir, 2015). Archer Daniels Midland can conglomerate with the help of mergers and acquisitions.

Conclusion

To conclude, it could be said that Archer Daniels Midland can resolve its current managerial and strategic problems by focusing on its existing products. The company can adopt more attractive marketing strategies that can help Archer Daniels Midland to boost its revenue and profitability. It is recommended to focus on maintaining strong supplier relationships. Moreover, it is also advised to focus on more innovative products so Archer Daniels Midland can remain competitive in the market.

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