“We must, must, must understand the underlying commercial aspects of the business in order to take an integrated approach and be truly innovative over a sustainable period of time,” says A2’s Susan Massasso of the marketing profession.

“To me, innovation is not just new products, it’s anything over and above core business as usual that results in significantly new growth. For example, it may include new retail channels, significantly different new communication approaches including new consumer benefit claims, new markets, new pack forms, and of course new products.”  

But how you deliver to consumers in a way that surprises, delights and leads to positive action will only be commercially favourable if it also leverages the unique commercial strengths of one’s business model, Massasso argues.  

“Without it, you won’t surprise and delight your P&L also. In addition, it is necessary to leverage your unique commercial strengths make your approach as competitively insulated as possible,” she says. “So in my mind, marketing innovation = consumer insights + unique brand proposition + leveraging unique commercial business model strengths.”  

All of these levers have been brought to bear by Massasso over the past seven years as she’s worked to help transform the A2 Corporation into The a2 Milk Company, an ASX-listed, purpose-led brand providing an ever-expanding range of nutritional milk products targeting the health and digestion needs of the whole family. The broad growth strategy, with repeated enhancements and supported by new data and insights, has been consistently applied over the last seven years to drive local and increasingly global growth.

And the commercial numbers highlight the ongoing success of the brand vision and approach: A2 has gone from revenues of $62.5 million in FY12, to $1.73 billion in FY20.  

Business smarts

A2’s approach to sustainability is intrinsically linked to the brand proposition and company reputation. As it continues to rise up the ASX company listings and evolves its approach, the group this year announced The a2 Impact Fund.

The objective is to develop a more robust and strategic approach to environmental innovation grants, relevant scientific research, community and employee wellness programs. This is being achieved via an integrated strategic approach and communications platform to fund and manage intended investments in pursuit of sustainability goals and is supported by millions in funding.

The sustainable framework is driven by five pillars: Protecting and improving the environment for future generations; enabling happier and healthier cows; advancing wellness with scientific, health-related research and IP; supporting communities to thrive; and creating a workplace where people are passionate.

Guiding principles for investment then include initiatives that build or maintain strategic relevance, material impact, global frameworks adapted to for local impact, and both an embedded and integrated approach to sustainability.  

One recent example Massasso points to is a2’s agreement with Sea Forest, which develops Asparagopsis (a type of seaweed) as a natural feed supplement to cows in order to actively reduce their methane emissions. This partnership, backed by a $500,000 investment from a2, aims to unlock new research and trials required to test the product’s viability, scalability and positive impact.

“Importantly, given the high overlap between our retail shareholders and Australian consumers, these initiatives are important to continuing to reinforce our progressive and modern brand values,” Massasso says.

Shaping a2’s sustainability strategy has been a new area of professional development for Massasso and she says she’s thoroughly enjoyed the work as a natural continuation to brand and company development.

“Our brand is our company and our company is our brand. Our integrated approach to ensuring our company - and world - is sustainable for the future is a direct reflection of our brand’s values and hence a crucial part of ultimately shaping our brand and company reputation,” she comments.

“This is an extension of our broader approach to communication – where the way we talk to our consumers, people, farmers, business partners and investors is incredibly consistent and thereby creating a transparency, honesty and credibility for our company and brand in total.”

Innovative marketing

Another key area of focus for Massasso since her role was extended to chief brand and growth officer in February 2020 is a2’s further expansion into China.

By interrogating consumer segmentation data and leveraging other data and insight techniques, her team uncovered several insights that informed a new communication campaign for a2’s infant milk products in China in November 2019.

The campaign has been running in a ‘two-speed’ way: A broadcast campaign including TV and outdoor to drive long-term brand equity; and masterbrand awareness and activation tactics such as in-store, mama classes, live events and digital live streaming to drive short-term ROI.

While spend isn’t close to the marketing investment made by other FMCG brands in China, Massasso says a2 remains one of the fastest growing brands in the category in China with the highest trust and loyalty scores as a result of these efforts. For example, the campaign has lifted both unaided and total brand awareness by 5 and 9 per cent respectively, as well as delivered a 14 per cent rise in those who will definitely or probably buy the product.

As a company, a2 has built up a significant infant nutrition business in China worth over $1.3 billion. While it continues to focus on building this further, Massasso says the executive team is also focused on developing new products for consumers to ‘graduate’ to.

Enter a2 Smart Nutrition, a fortified milk drink for children 4-10 years of age. An a2 Smart Nutrition powder has recently debuted in Australia and China and the company will shortly release a ready-to-drink version. The brand is going well with all sales incremental, a gross margin over the company average and revenue well ahead of budget.

Adaptability

The group’s commitment to the China market is also illustrated through many efforts to support customers as the COVID-19 crisis struck.

During the early days of the pandemic in January, Massasso says a2 wanted to do its bit to assist those families in China who were affected. Initiatives included product donations worth 5 million RMB to frontline medical teams and families affected by coronavirus. A cash donation of 5 million RMB to Shanghai Red Cross was also made to help and support the areas and people seriously affected.

On 12 February, a2 announced it had signed Gift Agreements with the University of Queensland’s School of Chemistry and Molecular Biosciences and the Peter Doherty Institute for Infection and Immunity (Doherty Institute) – a joint venture between the University of Melbourne and the Royal Melbourne Hospital – to assist in the development of a vaccine to stop the spread of the novel Coronavirus (COVID-19).

“The best part of this initiative is that we are genuinely doing good for human health via investing in pioneering new research,” says Massasso. “This is completely in line with our purpose and values, and in keeping with our own pioneering and scientific origins as a company.”