Promotional Marketing With Respect To Chocolate Industry - Report Example

Promotion Marketing and Event Management Table of Contents Table of Contents 2 Introduction 3 Overview of the Promotional Marketing With Respect To Chocolate Industry 4 Comparative Analysis of Competing Brands and Types of Promotions They Deploy 7 Assessment Analysis 10 Conclusion 11 References 13 Introduction Promotional marketing within any organisation frames a vital part in the 21st century context. It acts as a tool for assuring the overall sustainability of the organisation in a competitive market. The promotional activities are conducted in order to communicate effectively with the customers. This process is commonly used by the organisation to attract the attention of the customers towards the product, which is strategically based on the preferred combinations of components from the promotional mix framework, consisting of advertisement, public relation, sales promotion, direct marketing and personal selling (Promotion Marketing and Event Management, 2009). As observed the UK confectionary industry mainly comprise of small number of companies, counted to be around 290. Almost all these players specialise in their unique chocolate bars, which are frequently launched and re-launched in the national market aided with various promotional strategies for its growth and sustainability in the competitive market space. Advertisement promotions, social networking, by fostering public relations and direct selling are usually regarded as the techniques applied by the confectionary industry within the UK. With reference to the fact that the consumption rate of the chocolate bars in the industry amounted around 17.9%, it can be asserted that the companies enjoy a substantial degree of customer loyalty. In other words, the promotional strategies adopted by the chocolate bar companies in the UK confectionary industry can be regarded as productive enough to support the growth in demand (KPMG, 2012). The discussion henceforth will emphasise these facets with due significance to examples when elaborating on the strengths and weaknesses of the applied promotional strategies by chocolate bar companies in the confectionary industry. In precise, this report intends to discuss about the promotional activities being undertaken by the chocolate confectionaries marketing chocolate bars. Furthermore, this study also aims to discuss about the competing brands and the types of promotion strategies being undertaken by them. Besides, the report will discuss about the applicability and the performance standard of the strategies being implemented. Overview of the Promotional Marketing With Respect To Chocolate Industry A general study of the industrial practices revealed that seasonal promotions form a common strategy set being used by the confectionary industry. The leading companies of this industry implement seasonal strategies to promote their new as well as the existing products in the market. The seasonal events, wherein the chocolate bar companies attempt to aggressively promote their products include New Year Resolution, Valentine’s Day, Red Rose Day and Easter events among others. The leading companies of the industry, such as Nestle, Kraft and Mars among others, have also been observed to follow similar promotional strategies (Brandchannel, 2014). For instance, Nestlé’s Valentine’s Day new treats for the customers such as Crunch, Women Sweetheart Lollipop and Treat Bags Kit among others indicate the company engaged in seasonal promotional activities, which have been quite famous amid couples and the young customers (Tomson, 2014). Another example can be taken as Mars Confectionary, as the company has been practicing the same strategy of launching new products specially manufactured for festive season purposes to boost the sales of the chocolates not only in the UK, but also in the US. Kraft’s program of ‘unwrapping category potential’ can be illustrated as one such strategy. The company has also been observed to launch videos for campaigning its chocolate products in the US through the viral marketing approach (Nieburg, 2013). As discussed, confectionary industry players in the chocolate bars sector opt for event management and seasonal offers more frequently as observed in other industry dimensions. Therefore, it can be asserted that the industry follows a seasonal marketing cycle. It has been observed that the seasonal year provides scope for the chocolate companies to utilise the opportunities of holidays and lifestyle events during the year. With a high return during festive seasons, chocolate bar companies in the confectionary industry, enjoy lessened pressure from competitive forces in other months of the year. It is in this context that product promotion is conducted principally to revitalise the brands. Distribution activities is being undertaken to deal with the trade-off-point-of-sales (Global business insights, n.d.). It is worth mentioning in this context that participants in the confectionary industry indulge in the promotional activities as compared to other industries. Notably, apart from making aggressive promotions during festive seasons, in order to obtain the attention of the customers, the confectionary companies also promote their chocolate bars in branded retails stores. They create various displays and designs to attract the customers. Seasonality displays and promotions also create an impact on the customers with respect to how, what and where to purchase the products all year round. In this respect, seasonal promotion plays a critical role in assisting the retailers to gain substantial profits. Furthermore, seasonality is also considered as the repetitious behaviour with respect to the demand for products. In this respect, it depicts the periodic variations i.e. peaks and the valleys in the demand for the products in the industry (Global business insights, n.d.). Event-driven seasonality is another promotional activity commonly practiced by the chocolate bar companies in the confectionery industry. It relates with particular occasions and festive seasons where, the demand for the chocolate bars is higher as compared to other products. During festive seasons and special events, gifs are given to the close friends and relatives in various societies around the world, and because chocolate has always been a preferred form of gift, these special occasions impose strong influences on demand variations for chocolate bars, thereby indulging the leading confectionary companies in seasonal promotion activities. It has been accordingly ascertained that during strong seasonality, the demand for chocolate bars accelerates considerably. This reveals that demand for chocolates reduces its price during preferred seasons. The discussion herein reveals that seasonal promotion activities are advantageous for the confectionary industry players (Moore, 2010). Confectionary industry participants, including the chocolate bar companies have also been observed to implement ‘self-liquidating promotion’ strategies for accelerating the chocolates sales within the market throughout the year. This strategy is implemented with a motive to generate accelerated sales revenue during off-seasons in the market. Stating precisely, in case of the premium being paid by the company, the customers are required to pay the entire price of the product to enjoy free-gifts. In this respect, the customers are the provided the gift by means of coupons and reduction in product prices. As discussed, confectionary industry follows events and seasonal promotion, ‘self-liquidating promotion’ strategy accelerates the sales margins (Bloomsbury Information Ltd, 2009). The promotional strategy to offer ‘Free Samples’ is also used by the chocolate bar organisations to generate awareness among the customers about the new products prior to its final launch, which has proved to be quite beneficial for the industry participants over the traditional period (Satpathy, 2013). Comparative Analysis of Competing Brands and Types of Promotions They Deploy Comparative analysis of the confectionary industry leading brands in the UK will ensure the various promotional strategies being undertaken by these industry participants to promote chocolate bars. As mentioned above, although there are many small market players, the industry is categorised by a few dominant large players, including Nestle, Kraft Food and Mars among the major brands. It is thus expected that because of the oligopolistic nature of the industry, understanding the promotional activities undertaken by these companies will be beneficial to obtain an insight of the common marketing practices within the selected industry context. Contextually, for advertising the existing and the new product in the market, Nestle has been observed to practice viral marketing and audio-visual marketing in alliance with TVC production along with its partnership with various medium and large-sized print media hosts. It is worth mentioning in this context that Nestle has been practicing viral marketing in various markets around the world, promoting its chocolate bars through video advertising in both television (local channels of the national markets) and internet media. Through video advertising, the company tries to connect with the emotions of the customers, where chocolate bars are represented as strongly related with their emotions. Nestle also sometimes promote its product through print media i.e. newspaper. It has been observed that majority of the global population read newspapers that makes it a best source for promoting the products. Advertisement through radio is however, not much used by Nestle as its promotional strategy. Besides, the company puts flyers in the roads to communicate with the customers about its new and existing product (Burrows, 2010). In comparison to Nestle, another confectionary company, functioning as the leading brand in the chocolate bars market, is Mars. This particular company have adopted the promotional strategies of advertising through television and the radio program, but seldom applies internet media. It was since 2000 that Mars began adopting interactive consumer promotion methods. Mars has also adopted the strategy of public relation for its promotional activities. These strategies have provided a new leverage to the company in gaining customers attention by applying the various above-mentioned promotional activities. Considering, the promotional mix strategies being adopted by the companies, certain similarities and dissimilarities can be identified. From the analysis it can be well ascertained that the confectionary industry opt for television or video as the promotional strategy. In the similar context, it has been observed that Mars follows public relation as an important strategy whereas Nestle restrains from doing the same (The Irish Times, 2000). Mars has been promoting seasonal chocolate bars for the customers during Easter. Illustratively, the Medium Easter Eggs Boxed-Mars Bars was the product launched by Mars during Easter for the consumers (Chocolate Buttons, n.d.). In the similar context, Nestle also promoted few chocolates brands as its Valentine’s Day special offering, named as ‘Chocolate Buddy Exchange Bag’, ‘Nerds in disguise Kit’ and ‘Wonka Mixups’. This particular finding further depicts that confectionary industry follows aggressive marketing strategies during the festive seasons and events for promoting their products to connect emotionally with the customers, thus enriching their customer relationship efficiencies (Chao, 2014). To differentiate its products from that of the close rivals, especially during the festive seasons, Nestle has also been emphasising persuasive tag line promotions, such as “Let your senses take you on a journey of romance!” for Valentine’s Day promotional activity. Nestle Lebanon can also be observed to have applied direct marketing strategies to promote its product in the luxurious and the premium range of the chocolates within South Africa. In this regard, the company launched a new product named, Nestle-Gold, designed with a motive to provide intense pleasure to the chocolate connoisseurs of the country, which already had its unique chocolate heritage. The company also delivered due emphasis in its product packaging strategies when promoting. In this respect, it can be well ascertained that the company opted for various direct promotional activities and invested huge amounts to create hype in the market with respect to the product by differentiating it from other available products. Subsequently, followed by the aggressive viral marketing, Nestle-Gold was made available within the offices and universities as a free sample, rewarding Nestle with the desired level of success (Direct marketing, 2014). Kraft Food is another leading confectionary company within the industry. The promotional strategies being undertaken by the company are free trial packs, coupons, advertisements in mass media and acquisition of space in the retail stores. In this context, it can be well ascertained that this particular company applies sales promotion strategies by implementing the self-liquidation promotion methodology and free trial. In this manner, the company was able to attract the customers and increase the sales largely not only during the season but throughout the year (Jain, 2011). From the above analysis of the three confectionary companies, it can be determined that they apply different promotional schemes for making the customers aware about the product. Assessment Analysis Promotional activity is important factor for any company to achieve success. From the above analysis, it has been clear that chocolate bar companies participating in the confectionary industry, such as Nestle, Mars and Kraft Food have successfully adopted the promotional strategies for gaining sustainability within the competitive market scenario giving rise to an oligopolistic structure to the industry overall, thereby intensifying the entry and exit barriers for new entrants. However, these participants have been observed to restrain from he being involved in the third-party promotional activities. Suggestively, involving the third party for the promotional activities will provide better opportunities to the confectionary industry. The third parties, such as sponsorships and tie-ups-activities with sports camps or other groups involving the targeted customers of these companies when promoting their chocolate bars can be utilised for the promotional purpose to attract an extensive customer base (Cook, 2013). Nevertheless, the currently applied strategies of chocolate bar companies can be observed as all-inclusive within the present business situation, wherein the initiatives have been productive enough to yield competitive returns to these players. As observed from the above study, the industry participants have been much inclined towards practicing social networking, viral marketing (through video advertising) and television advertisements. However, in the current day context, the confectionary industry is witnessing massive hurdles in terms of interventions from the government and society through campaigns against the rising risk for obesity. Perhaps owing to this reason, investments in aggressive marketing by these companies have been lowering in the recent years, especially since the occurrence of the global recession (KPMG, 2012). Nevertheless, drawing inferences from the above study, it can be assumed that majority of the investment amount is deployed in internet and viral marketing in comparison to other options of television and video advertising. In response to the investments made, assuring adequate Return on Investment (ROI) is also crucial for these companies. Correspondingly, as can be observed in confectionary industry, determinants of ROI include rising customer demand and sales of the product. Factors such as number of footstep in the store and instant buying behaviour also frame the determinant of the ROI, which has been rising in the recent phenomenon. As reported by KPMG (2012), an insignificant number of customers deem chocolate bars responsible for obesity. In addition, companies have also been focused on practicing sustainable strategies to overcome such social hazards effectively. Hence, it can be assumed that these customers are not completely obstructed by the obesity campaigns that might have otherwise hindered ROI at the desired rate for the companies (KMPG, 2012). However, stating precisely, profitability of chocolate bar companies can be identified with examination of their sales revenue over the past years. For instance, Mars in the US market was able to obtain total sales of around USD17,640 million, whereas Nestle in Switzerland market yielded revenue of around USD11,760 million. In this respect, it can be ascertained that company’s spending on the advertisement expenses have provided a profitable outcome (ICCO, 2014). Conclusion Confectionary industry has gained immense growth in recent scenario. The study revealed about the various promotional activities and events, which the confectionary industry takes into account for promoting the products. The confectionary industry indulges in seasonal promotions herewith, such as the Valentine’s Day Special events, Easters and New Years among others for attracting the customers. The study also revealed that chocolate bars being a preferable product for every age group mainly involves instant buying, seasonal promotion strategies enables them to get involved emotionally with the product. The promotional activities undertaken by the confectionary industry participants to convey about the existing as well as new products to the customers also focuses on building strong customer relationship to promote efficiency throughout the promotional channel. The study further provided a comparative analysis about various leading confectionary companies with respect to their practiced promotional activities. Accordingly, it was observed that participants in the confectionary industry involved in marketing chocolate bars, focuses on advertising through social media such as internet and television rather than emphasising print media and other traditional promotional methods as beneficial investment options. Undoubtedly, promotional activities and events are important aspects for the success of any particular brand in gaining accelerated sales margins. It is owing to the similar reason that chocolate bar marketers in the confectionary industry have also been extensively involved in the most innovative and creative promotional activities for attracting the customers largely. References Bloomsbury Information Ltd, 2009. Self-Liquidating Promotion. Q.Finance. [Online] Available at: http://www.qfinance.com/dictionary/self-liquidating-promotion [Accessed April 22, 2014]. Burrows, D., 2010. Nestlé in Strategy Review after Confectionery Marketing Chief Leaves. Home. [Online] Available at: http://www.marketingweek.co.uk/nestl-in-strategy-review-after-confectionery-marketing-chief-leaves/3017390.article [Accessed April 22, 2014]. Cook, A., 2013. Incentive & Motivation. Easter Promotions. [Online] Available at: http://www.unmissable.com/easter-promotions/ [Accessed April 22, 2014]. Chocolate Buttons, No Date. Medium Easter Eggs Boxed - Mars Bar. Home. [Online] Available at: http://www.chocolatebuttons.co.uk/medium-easter-eggs-boxed-mars-bar.html [Accessed April 22, 2014]. Chao, E., 2014. Nestle USA Valentine’s Day Promotional Candy Kits Make Classroom Exchanges Fun. Advertisement. [Online] Available at: http://mamasmission.com/nestle-valentines-day-promotional-candy-ad/ [Accessed April 22, 2014]. Direct marketing, 2014. Nestle-Gold. Home. [Online] Available at: http://www.directmarketingsa.com/nestlegold.php [Accessed April 22, 2014]. Global business insights, No Date. Seasonal Profits - Managing the Seasonal Marketing Cycle. Business Insights. [Online] Available at: http://www.globalbusinessinsights.com/content/rbcg0010m.pdf [Accessed April 22, 2014]. ICCO, 2014. The Chocolate Industry. Home. [Online] Available at: http://www.icco.org/about-cocoa/chocolate-industry.html [Accessed April 22, 2014]. Jain, A., 2011. Marketing Strategy for KRAFT. Slide Share. [Online] Available at: http://www.slideshare.net/alokjain1987/marketing-strategy-for-kraft [Accessed April 22, 2014]. KPMG, 2012. The Chocolate of Tomorrow: What today’s Market Can Tell Us about the Future. Consumer Markets. [Online] Available at: https://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/Market%20Sector/Retail_and_Consumer_Goods/chocolate-of-tomorrow.pdf [Accessed April 22, 2014]. Margolin, S., 2014. 2014. The chocolate market unwrapped. BrandChannel. [Online] Available at: http://www.brandchannel.com/features_effect.asp?pf_id=71#author [Accessed April 22, 2014]. Moore, J., 2010. Seasonality and Its Effects on Lifecycle Pricing. Revionics, Inc, pp. 1-10. Nieburg, O., 2013. Mars Devises Strategy for the US Chocolate Consumption to Match Western European Levels. Confectionary News. [Online] Available at: http://www.confectionerynews.com/Manufacturers/Mars-devises-strategy-for-US-chocolate-consumption-to-match-Western-European-levels [Accessed April 22, 2014]. Promotion Marketing and Event Management, 2009. How to Achieve an Effective Promotional Mix. CIM, pp. 1-9. Satpathy, R., 2013. Sale. IMC. [Online] Available at: http://www.slideshare.net/RajeshSatpathy/9-sales-promotion [Accessed April 22, 2014]. The Irish Times, 2000. Global Marketing - Building and Maintaining the M&M’s Brand. Masterfoods, pp. 1-2. Tomson, 2014. Nestle Seasonal Valentines Day Review Review. Home. [Online] Available at: https://www.tomoson.com/promotions/view/nestle-seasonal-valentine-s-day-review-review [Accessed April 22, 2014]. Read More