Tetra Pak Business and Innovation Models 1) Tetra Pak as a Market Pull model for innovation. Before the introduction of Tetra Classic pack in 1952, milk was sold unpackaged, in returnable glass bottles, in groceries and small stores. Distribution was by horse-drawn cart, which took days to reach certain areas. As self service stores gradually replaced traditional groceries, it led to the need for a more practical and hygienic system for selling milk. Tetra Pak’s packaging process enabled milk to be stored for extended periods of time without the need for temperature control.
The Tetra pack succeeded in solving both distribution and hygiene issues, while also making the sale of milk in self-service stores simpler and more practical. Since then, Tetra Pak has essentially followed a market pull model for innovation, diversifying into related food products and beverages for packaging. [pic] Tetra Pak Marketing Innovations : The Integrated Value Chain Model. Tetra Pak has also been highly innovative in their approach towards marketing their products in emerging markets.
Emerging markets, such as India and China, had initially posed a similar scenario when Tetra Classic Pack was launched in 1952. Tetra Pak’s presence in these markets has not been new, however by modernizing and revitalizing the Tetra Classic System they were confident of meeting the needs of such markets. The focus of the Tetra Pak business model in emerging markets consisted essentially of two elements: advanced technology for processing and packaging of liquid food, and the development of a network of partnerships with the public and private sectors.
They focussed their operations in two fields : school milk programs and consumer drinks outside the home, based on the consumption characteristics and habits of these emerging countries. However, due to the inability of many dairy farms and processing plants to purchase its valuable technology and machinery, Tetra Pak faced the challenge of creating a market for their product. The solution which Tetra Pak hit upon in order to promote the development of these markets was the creation of its “Food for Development” programs, which made it easier to set up nutrition schemes.
Drawing on its experience and network of contacts, it tapped into funding, from development cooperation agencies, government schemes and other nutritional funding organizations, to be used for nutrition and agricultural development programs. The main advantage of these schemes was that they acted as market catalysts, increasing demand for milk and serving to kick-start the marketing of local products. They thus encouraged agricultural development and economic growth, thanks to an increase in the local production, and processing of food stuffs.
For this purpose, Tetra Pak follows an Integrated Value Chain Model which involves food production, food processing, food distribution and feeding programmes. The “Cow to Consumer” model (also applicable to agriculture products) is the base for public-private partnership solutions in agricultural development (ACDs i. e Agricultural Cooperative Development) and feeding programmes. The model includes training and education of farmers, commercial financing of plant and equipment, market development activities and consumer information.
The requirements of each actor in the value chain are addressed and integrated, creating a base for sustainable social and economic development. Given below is a conceptual business model of this “Food for Development” project. The arrow numbers indicate the general process sequence. [pic] 3) Tetra Pak as a Technology Push Model for Innovation. Tetra Pak focuses on cost driven innovation. They continuously endeavor to develop new drinks, based on local produce and customized flavors to suit local preferences.
For instance, Tetra Pak has been a partner in the launch of a highly fortified meal supplement drink called Nutri-sip in South Africa. The drink is based on maize and soy, and contains minerals, proteins, fats carbohydrates, vitamins and water – the six essential nutrients to sustain life. In this way, Tetra Pak also follows a Technology Push Model for Innovation. [pic] Tetra Pak Innovations in Human Resource recruitment and management. While Tetra Pak was a pioneer in its business category, the competition has been steadily increasing.
As Tetra Pak is a leader within this industry with pioneering advances in food processing technologies, they aligned their Human resources processes and employment brand on the same principles of innovation and execution that drives them. To continue attracting top talent, Tetra Pak modernized recruitment processes. Potential job candidature was evaluated by a streamlined application process. The initial model of decentralized recruiting, which contributed to high agency and advertising costs, was replaced with automated electronic sourcing. Candidates approach Tetra Pak through their corporate website and from a variety of job boards.
In this way, they cut costs and centralized their candidate pool. Conclusion Tetra Pak thrives and survives on its core founding principle of Innovation. Though they initially began operations based on a Market Pull Model for innovation, they incorporated elements of a Technology Push model for innovation as they expanded over time. Moreover, they have innovated themselves in all pertinent areas of business operations from building and catalyzing a new market for their products through clever social schemes, to streamlining and smoothening hiring of top talent through their Human Resource process refinement endeavors.
