Sunday, 1 May 2016
Marketing Strategy
In its effort to compete and maintain its strong position in market, Nestle KitKat has been using a wide range of promotional tactics over decades. The well-known slogan ‘Have a Break, Have a KitKat’ was created in 1958 by Donald Gilles, the executive at JWT Orland. The iconic and enduring tagline has undeniably helped it in creating a strong image and reputation in the confectionery market. KitKat used television commercials as well as strong-coloured posters to promote the slogans. Online marketing is also used by Nestle to promote its products. Facebook and Twitter are constantly used to inform and update its consumers about the products developments as well as upcoming events.
There are several less well-known slogans used in countries over the world to appeal customers. The United States used the short-lived slogan, "Tastes So Good, You'll Roar" and "classic" American version of the "Gimme a Break". Advertising campaigns are organised from time to time in countries such as UK and Ireland. Several new flavours of KitKat are marketed and consumers are asked to vote for their favourites. Therefore, we would like to stay in line while modifying the remarkable tagline to “Have a healthy break, have a KitKat Oat”.
There is a killing two bird with a stone promotional strategy where KitKat can set up sampling booth in a few areas where Malaysian populations are concentrated. By doing this, the consumers can taste the new KitKat Oat and if it is good, it will encourage word of mouth. Otherwise, the new KitKat needs to be revised for improvisation.
Ansoff Model
In developing the new product KitKat Oat Bar, Nestle is said to be involved in the fourth quadrant in the Ansoff Model, which is diversification. In diversification an organization tries to grow its market share by introducing new offerings in new markets. It is the most risky strategy because both product and market development is required.
There are 2 types of diversification:
(i) Related Diversification
(ii) Unrelated Diversification
In our case here, KitKat Oat Bar is considered a new product because it is no longer just plain chocolate bar but more to a healthy snack like granola or energy bar. It also ventures into a brand new market where health is the main issue. The target consumers are no longer limited to those who are simply looking for a snack but also those who are leading healthy lifestyles.
Our new product is considered a related diversification as it involves the production of a new category of goods that complements the existing portfolio, in order to penetrate a new but related market. The old market the company caters to is saturated and therefore the company needs to venture into a new market to expand its size and increase its sales.
SWOT Analysis
a. Strength
1. Big market shares. The brand has begun to build its market share since 1935. As a result, Kit Kat has become the best-selling chocolate bar in most of the countries and it has since fostered a loyal bond with the consumers. It has become a habit of the consumers to purchase Kit Kat chocolate bar as refreshment for their break.
2. Kit Kat also has a strong brand name which is the result of strong marketing skills that it possesses. Kit Kat is a well established brand and it has positioned itself as a snack that consumers should have during their break time. With the huge success of the “Break” campaign, now every consumer has associated their break time with the chocolate bar.
3. Good distribution. Kit Kat has a very good distribution channels to support the huge demand of the market and also vast sales quantity of the new chocolate bar. This makes the Kit Kat chocolate bars readily available any time anywhere and it is the key contribution to achievement of Kit Kat dispatching over 50 million chocolate bars when they first launched the Kit Kat Chunky.
4. Strong marketing skills. Kit Kat has been a huge success in the confection industry credits to its marketing skills and strategies. Kit Kat has invested in the marketing research and integrated marketing communication in carrying out various promotion campaigns. It has conducted focus group, advertising and promotional activities targeting the right group of consumers that finally revitalised the interest of consumers toward itself.
5. Kitkat Oat Bar takes advantage of the current trend in the market. The Kitkat Oat Bar will be accepted and loved by the customers who are transforming to healthy lifestyles. It will take only a short period to enter the market at full scale.
b. Weakness
1. Competition among its own products varieties. The competition among the varieties drives down KitKat’s products sales. It is also considered less popular among youngsters as the new generation is more fascinated by new brands or competitors that offer innovative and trendy products.
2. Nestle is known for its weak implementation of corporate social responsibility programs. The company has received a lot of complaints and criticism despite its efforts in creating good company social image.
3. Apart from the varieties in its flavours, the intrinsic characteristics of the Kit Kat product and packaging have changed very little during the last sixty years. Only some minor, subtle changes have been made in packaging, merchandising and sales promotions. This can cause boredom in customers who value innovations and new ideas. People may lose interests in KitKat products and opt for new and trendy products from its competitors.
4. Altering the actual product is potentially a very hazardous act for an established brand name as it risks altering the consumer perceptions of quality built up over decades. Tampering with the long established and recognizable core qualities could well damage the integrity of the brand. It is therefore very important for KitKat to maintain its unique selling points and intrinsic elements in its products.
c. Opportunities
1. It has become a trend for people to lead a healthy life recently and health issue has become the top priority in most of the consumers’ minds (Crofton, Markey, & Scannell, 2013). Products that incorporate the health aspect in their formation appeal more to customers. Hence, new product that aims for healthy lifestyle such as KitKat Oat will no doubt be accepted by the market very easily. It does not just satisfy consumers with sweet tooth but also those who desire a healthy lifestyle. People will find a better way to kick start the day with the launch of KitKat Oat.
2. Although KitKat is considered less popular among the youngsters market, with the right marketing strategy and position it as an easy and healthy breakfast bar, the KitKat Oat will become popular among the new generation as the youngsters nowadays are more open to changes and willing to accept new things. The young generation also tend to follow trend and prefer to have an easy breakfast (Koo, Jalil, & Abd Talib, 2015). It is therefore very easy to secure a place and instantly become recognizable in the new generation market provided that KitKat can build a good image and reputation among youngster trying its products.
3. The proliferation of digital technology also helps. With the consumers becoming more connected to the internet and social media, new or even existing products from KitKat can be introduced and promoted to a worldwide market with a moderate cost. KitKat Oat will become a hit once it starts its promotion. It can make use of popular social media such as Facebook and Instagram to penetrate into the market in a short period. User-generated content and word-of-mouth play important roles in creating positive buzz for the new Kitkat Oat.
d. Threats
1. The threat of substitute products or services. There are many more existing competitors offering better and healthier options such as granola or energy bars.
2. Bargaining power of suppliers and inflation. The ever increasing costs are making it impossible for Kitkat to keep its products at low price. Customers who are price conscious will eventually opt for competitive products that are relatively cheaper.
3. Imitation of ideas. The competitive confectionary brands will copy Kitkat ideas and come up with similar products in no time to compete with the company. Customers will then switch brands and brand loyalty is hard to build.
Product Life Cycle
1. At the research and development stage, Nestle Kitkat would have to put more effort in understanding the customer preferences to fulfil their needs and target the market better. Research should be carried out to learn more about the ingredients for the Kitkat Oat Bar.
2. When the Kitkat Oat Bar is first introduced to the market, a lot of promotion efforts are necessary to ensure the product penetrate into the market in no time. Sales at this stage are low because customers are not aware of the existence of the product yet. Competition is still low as it comes from only those other substitute brands that are already existed in the market offering healthy snacks. The company should carry out more R&D in order to gain insights into the customers’ preferences and likings. Revenues are still non-existent at this stage.
3. During the growth stage, Kitkat Oat Bar starts to reach the target market and customers start to gain knowledge about the new product’s existence. Sales begin to increase and buzz regarding the new product will start to generate. However, competition will start as other confectionary brands such as Cadburry will also imitate the ideas and come up with similar healthy snacks. Kikat shall continue with the promotion efforts to obtain the most from the sales and attract more customers.
4. When Kitkat Oat Bar is at its maturity in the life cycle, the product sales reach its peak and become very well-known among its target customers. However, competition becomes very harsh at this stage as most of the Kitkat’s competitors have already adapted the idea and even come up with innovations that beat the Kitkat Oat Bar down. Kitkat Oat Bar should put in effort to introduce some creative changes on the product such as adding other ingredients and changing the packaging to keep its customers loyal with the brand.
5. At the decline stage, Kitkat Oat Bar starts to become obsolete and taken over by its competitors that offer better features. The product is no longer in the trend and the sales drop gradually. Kitkat Oat Bar should choose whether to innovate or eliminate the product.
Product Review
There are different offerings from KitKat in countries all over the world. For example, Japan has launched more than 200 flavours in 15 years. In fact, the old Kitkat chocolate bar is undeniably doing quite well in the market. However, the current trend among the consumers are heading to a healthier lifestyle and hence, Nestle Kitkat can no longer survive with their existing products. Hectic and stressful lifestyles cause consumers nowadays to emphasize on speed and convenience. The consumers will opt for better options such as granola bar because they want something quick, convenient and healthy. The new product Kitkat Oat Bar incorporates the sweet as well as the healthy perspective together. This can definitely attract and appeal to the health-conscious consumers more as the Kitkat Oat Bar provides the customers both convenience and health. The Kitkat Oat Bar will be able to penetrate into the market in no time.
Executive Summary
The healthy awareness of consumer is on the rise; therefore, to keep up with the pace and current changes in the market, Kit Kat can no longer stay with its original chocolate bar. It has to innovate in order to seize this opportunity and maintain its customers brand loyalty so that we will focus on the analysis of Nestle KitKat and propose a new product, KitKat Oat, to Nestle.
Subscribe to:
Posts (Atom)