Current Market Situation: Kitkat-Nestle - Research Paper Example

? Marketing Kitkat-nestle Table of Contents Current market situation 4 Branding 4 Introduction of Kit Kat 4 Introduction Of Nestle in UAE 4 Business 4 Organizations that market the brand 5 Business activities of market 5 SWOT analysis of Kit Kat 5 Structure and size 7 Marketing environment of Kit Kat 7 Micro environmental factors 7 Macro environmental factors 8 Market description 9 Market for brand’s product line in UAE 9 Competitors 9 Challenges 9 Future 10 Segmentation 10 Targeting 11 Marketing opportunities 11 11 Bibliography 12 Current market situation Branding Introduction of Kit Kat Kit Kat is a confection of wafer biscuit bar which is covered with chocolate and was created in England by Rowntree. It is produced worldwide by Nestle which has acquired Rowntree in the year 1988 except in United States. In United States, it is made under license by the Hershey Company. Each chocolate bar has fingers which are composed of wafer of three layers and are covered with chocolate as an outer layer. Each of the fingers can be separately snapped from the bar. Bars have 2 or 4 fingers typically. Introduction Of Nestle in UAE Nestle’s first official presence in Middle East was in 1934 in Lebanon. It has grown then in the entire region and operating companies has been opened in every country of Middle East except Iraq and Yemen. In these two countries, selling and distribution of products is done through agents. The regional head office of Nestle was established in Middle East in Dubai in the year 1997. Currently, the activities are focussed on 13 countries of Middle East. Business Nestle is into food industry. They products in every food sector from infant food for children to chocolates, beverages, frozen food, seasoning, water, tea, coffee, ice creams etc for adults to pet care food for pets. Their product Kit Kat has its separate marketing and it is into the chocolate business with a range of different Kit Kat flavours. Organizations that market the brand Business activities of market In terms of retail and distribution, the market of Middle East can be characterised compared to others. There are three trade clusters in Middle East. The first includes countries like UAE, Qatar, Oman, Bahrain where top retailers account for more than 50% of sales. In this environment, the business is much more skewed towards hypermarkets, supermarkets and key accounts. In the second cluster, the top retailers make up less than 30% of business which includes countries like Saudi Arabia, Jordan and Lebanon. In the third cluster, the top retailers account for less than 5% of business. It includes countries like Yemen, Iraq, Iran, Palestine and Syria. The United Arab Emirates forms a large part of developed trade environment where the key accounts, supermarkets, hypermarkets, typically Lulu, the Coop, Carrefour and Spinneys represent the majority of sales. SWOT analysis of Kit Kat Strength The chosen company is such that it is very difficult to consider its weakness in promoting their chocolate. The way in which Kit Kat Company is promoting its product is very strong. They make a discount when consumer buys large pieces. It also has many factories which increases and improves the sales of company. Maximizing the distribution of the product is very strong to achieve the goals for any company to have many consumers and gaining profits like the Kit Kat Company does. The way that retailers promote the Kit Kat chocolate is different. Good retailers should help the customers to observe the chocolate in the supermarket in a good way to sell more. For example, when we went to the see how supermarkets promote our product that we chose, we saw big differences in the amount of the Kit Kat chocolate in each store like in Al-Hadaf Supermarket, there are many sections provide different types of Kit Kat. Kit Kat chocolate is a familiar over the world because it has been produce for a long time. The company shows many advertisements and puts many billboards on groceries and big markets. Their slogan of Kit Kat “Have a Break, Have a Kit Kat” is very effective to the buyers because many workers and students like eating Kit Kat from what they see in the TV’s advertisement. Weakness The weakness that we saw is some supermarkets don’t promote the Kit Kat well. For instance, when we went to the Carrefour in the Manar Mall, we saw the Kit Kat chocolate that they want to sell is few and put it in one shelve. So, Kit Kat Company should know how the retailers promote the chocolates because it affects the sales. Maybe Carrefour doesn’t provide more quantity of Kit Kat because the demand of the chocolate in this market is low compared to other supermarkets which is let us to see that is not a weakness but it is the way to not to lose because the consumers of Kit Kat in the Manar mall is less which lead Carrefour bring less of Kit Kat chocolate. Opportunities Kit Kat has the potential of expansion into smaller towns and other geographies. The existing market is not fully tapped with it and so the company can increase its presence by further penetration. Chocolates are also considered as substitute of sweets. This is an opportunity to Kit Kat to make a chocolate packing that can match every occasion like religious occasion of Eid and birthdays. Threat Though economy is running at descent place but due to increase in costs, the prices of fuels and raw materials have increased which raises the manufacturing and packaging costs resulting in higher price for Kit Kat. Also the company may not be able to shift the whole burden of cost to its consumers. Structure and size Kit Kat has a big geographical market. Although it was acquired by Nestle but it did not struggle under it since Kit Kat was internationally recognised. It has grown in the entire region and operating companies has been opened in every country of Middle East except Iraq and Yemen. In these two countries, selling and distribution of products is done through agents. Currently, the activities are focussed on 13 countries of Middle East. Marketing environment of Kit Kat Micro environmental factors A new factory of Kit Kat was opened in Dubai in the year 2010 with an investment of $136 million. There were many factors contributing to such a large investment in Dubai. It includes the ability of attracting talent, overall political, economic and legal environment and the existing infrastructure. The shipping of products is easier across the region in terms of bringing in raw materials and exporting finished products. Other factors are also considered like schools for children of all ages, tax incentives and investment. Dubai was selected to build a NIDO plant followed by a Kit Kat factory. The overall environment in United Arab Emirates has been very supportive and the employees of Nestle also enjoy very much living in United Arab Emirates. Macro environmental factors PEST-G Analysis Political analysis Political decisions in UAE can affect Kit Kat. These can be either advantage or disadvantage. If the government increases taxes and if Kit Kat tries to recover the tax money through customers then the numbers of customers will decrease. Sales will also decrease and there will be a pile up of stocks of Kit Kat. But if taxes reduce, the consumers will purchase more. Other governmental laws can also cut the income of Kit Kat. Again if the government is concerned about obesity, it might cause trouble to Kit Kat. Economic analysis The interest rates can have an effect on Kit Kat. Kit Kat will not want to increase its price if interest rates go high. Nestle is well established financially so for expansion of Kit Kat, no borrowing is required but if they do so, it will raise the price of Kit Kat. Further, if the consumers are under loan pressures, they will have less disposable income to buy Kit Kat. Again, if wages are brought down, this will mean more money for Kit Kat and low sales to consumers. Social analysis Local residents with small businesses like grocery stores will have more benefit from visitors. People, now a day, have become more health conscious so they read the ingredients. Technological analysis Better equipment is needed to produce Kit Kat at faster rate so that there will be no shortage in market and sales will also increase. The prices of machinery have raised and so if Kit Kat wants to invest in new machinery for fast production, it may have to make a cut down in its labours to turn into a capital intensive company in terms of production. Maintenance of these machines may prove costly. Green analysis Concerning for environment, Kit Kat has a red coloured plastic. There are some companies which use foil as a cover for chocolate. The same packaging can also be used by Kit Kat to reduce pollution in environment as plastic is harmful for the environment. Market description Market for brand’s product line in UAE Competitors In the competitive landscape, strong competitors in chocolate confectionary are Mars, Galaxy, Snickers, Twix and M&M’s brands. Mars retained its lead in chocolate confectionary in 2010 with two percentage point gain in the share of retail sales to 47%. The continued success of the company was driven by the strong performance of Mars, Galaxy, Snickers, Twix and M&M. Nestle followed a share of 22% in its retail sales as Kit Kat remained the second leading brand of chocolate confectionary. Both Nestle and Mars have production facilities in UAE and it continued to support the products with aggressive promotional campaign. Challenges There is increasing price control activity by the authorities of United Arab Emirates. It is a real challenge and threatens to a certain extent, the competitiveness of Dubai in future, both from the point of view of investment and from retail perspective. If a company is not free to price its products, decision makers will ask themselves whether they are on the right place of investment. It can be a drawback and should be managed more carefully by UAE. Future In the existing competition within chocolate confectionary, there is an expectation that innovation will be vital to the success of manufacturers as momentum is gained in the trend. This will exist at the time of innovations while making healthier products as demand for healthier products and products of high quality is from the side of health conscious consumers Segmentation Geographical The market can be categorised into urban and rural market. Urban market refers to towns and cities and rural market refers to the villages. Kit Kat caters the urban need by making availability of product with a variety which can attract the rural crowd. The price of Kit Kat is very reasonable so rural crowd can also be attracted by giving them the proper quality of chocolate. Demographic As the population of youth is increasing, Kit Kat is also taking its full advantage. It has segmented the market for children, adults and aged people. Kit Kat chocolate is very light and so it can be consumed by every age group. Income groups Majority of customer base in market belongs to middle class and upper middle class. But income group has never been a concern for Kit Kat because of the stability of its prices for decades which can be affordable by any income group. Targeting Women and children Every chocolate company targets mainly women and children. Chocolates can be given as a gift to women. Similarly, the chocolates can be gifted to kids to let them avoid the boring food of home. Rural population Due to the stability of price Kit Kat can target the rural population by letting them aware that their product is much cheaper and affordable as compared to the product of competitors. Marketing opportunities Kit Kat is a well known confectionary chocolate brand. With its growth, it is also trying to save the environment by going green. To protect the environment, Kit Kat is using sustainable cocoa in its ingredients. No other chocolate company has taken this step and so it is good sign of growth for both company and product. Kit Kat has the potential of expansion into smaller towns and other geographies. The existing market is not fully tapped with it and so the company can increase its presence by further penetration. Chocolates are also considered as substitute of sweets. This is an opportunity to Kit Kat to make a chocolate packing that can match every occasion like religious occasion and birthdays. Bibliography Kotler, P. (2012). Marketing Management. 14th edition. New Jersey: Prentice Hall. Doyle, P. (2010). Marketing Management and Strategy. 4th edition. New Jersey: Prentice Hall. Donnelly, R., Harrison, G. and Megicks, P. (2009). The Marketing Planning Process.CIM Coursebook. United Kingdom: Taylor and Francis Routledge. Cant, M., Strydom, J., Ooste, C. and Plessis, P. (2006). Marketing Management. 5th edition. Cape Town: Juta & Co. Ltd. Loudon, D., Stevens, R. and Wrenn, B. (2005). Marketing Management: Text and Cases. New York: The Haworth Press, Inc. Kazmi, S. (2007). Marketing Management: Text and Cases. New Delhi: Excel Books. Lancaster, G. and Massingham, L. (2011). Essentials of Marketing Management. New York: Routledge. Saxena, R. (2009). Marketing Management.4th edition. New Delhi: Tata McGraw Hill. Panda, T. (2007). Marketing Management: Text and Cases. 2nd edition. New Delhi: Excel Books. Mullins, J. (2005). Marketing Management: a strategic, decision-making approach. 5th edition. United States: McGraw-Hill. Read More

 

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