The Brand Performance Kit Kat - Case Study Example

Table of Contents Executive Summary 2 Introduction 3 Part A Research discussion 3 Brand Performance 4 Awareness & Salience 4 Demographics & Segmentation 6 The Impact of Demographics and segmentation on the market strategy 7 Conclusion 8 Recommendation 8 Works Cited 9 Executive Summary From Part A research, Kit Kat faces a huge competition with Twist, Snickers and Mars. It performed better having a half of the total number of brand buyers but the market share dominated by Mars Bar. Kit Kat also performed averagely in the number of purchases of the brand made. It however performed poorly in the total purchases of brands made with its competitors topping. Thought its sole loyalty isn’t as high as Mars Bar, but it is doing quite well compared to its competitors and has a chance of improving if its market strategy is improved. In the brand performance Kit Kat is performing better though not as Mars Bars both in the market share and penetration. Its average purchase frequency is high compared to its competitors and performs better in share category requirements. However its major competitor Mars Bars has high sole loyalty. In the brand awareness and salience Kit Kat performs averagely with the highest brand awareness. Its overall brand awareness is low compared to its competitors. In the demographics and segmentation section, Kit Kat doesn’t perform better in single and divorced/separated category but does great in the couple category. Its market share is high in the high earner’s category (over $70,000). In the gender category, female are the highest purchasers compared to the male. This has a big implication on the market strategy of Kit Kat, whose marketers should improve on in order to increase the market share. Introduction This report analyzes the performance of Kit Kat among its competitors with emphasis on its brand performance, awareness and salience, and demographics and segmentation. Part A Research discussion Kit Kat is facing huge competition in the market especially with Mars Bar, Snickers and Twist. Its least competitor is Nestle Gold, and however much it is doing averagely better, it only has almost 23% market share. Of all 50 customers observed and interviewed on the brands they bought and the quantity, only 55 of Kit Kat were bought in all 233 totals that were bought. Though an average number of customers preferred it, many of them also preferred buying other brands. The buying pattern varies per customer and per brand. The total number of all brand buyers was 50. Among this, Kit Kat buyers were half the total number with 50% while its major competitor Mars Bar dominated the market. However, the market penetration of Kit Kat is a half percent meaning it has a potential of dominating the market is the market strategy is improved. Moreover, its marketers should work hard to improve on the market strategy otherwise Twix and Snickers are right behind and may overtake its market share soon. The number of brand purchases made and the number of brand buyers varied. The number of brand buyers was lower than the number of brand purchases made. Mars Bar had the highest number of brand purchases made and the number of brand buyers, followed by Kit Kat and Snickers. This means that one buyer made more than one purchase of a particular brand. However, the number of purchases and number of brand buyers for Nestle Gold was almost balancing. Meaning, only one buyer bought two of its brands while the rest buyers bought only made one purchase. In the total purchases made by brand buyers, Kit Kat was outdone by its competitors, Mars Bars, Snickers and Twix with Mars Bar having the highest while Nestle Gold the lowest. The number of brand buyers who made the purchases was more for Mars Bar and Kit Kat compared to Twix Snickers and Nestle Gold. However, though Nestle Gold had the lowest total purchases made, it had the highest consumer buying rate with only 12 buyers making 100 purchases. Mars Bar had the highest number of buyers who did not purchase any other brand making it perform better in the sole loyalty. It is followed by Kit Kat and Snickers who aren’t performing to the expectations of the firm. Twix and Nestle Gold on the other hand have zero sole loyalty as all customers who buy their brands also bought other brands. Brand Performance From Table 1 Mars Bar has the largest market share followed by Kit Kat and Snickers. Twiks is doing averagely better but Nestle Gold has the least market share. Still Mars Bar has the highest penetration followed by Kit Kat, Snickers and Twix. Nestle has the lowest penetrated which is reflected in from the market share. Both Mars and Snickers have high average purchase frequency followed by Snickers and Twix, while Nestle Gold trails behind. In the category buying Rate, Mars Bars drops to last position while Nestle Gold tops, followed up snickers and Twiks and Kit Kat. However, Mars Bar tops in the share category requirements followed by Kit Kat, Snickers and Twix, while Nestle Gold. The sole loyalty for Mars Bar is very high compared to Kit Kat and Snickers while Twix and Gold have no sole loyalty. Kit Kat is performing as expected on the brand performance matrix. However, its sole loyalty is very low putting in mind that it has high penetration. The Marketing Director shouldn’t be worried about Kit Kat category Buying Rate being lower than Twix because it’s performance is at an average. On the other hand its sole loyalty is higher than Twix which means that its category buying rate has potential of rising whether it is advertised or not. Awareness & Salience Brand salience is the degree at which consumers think of or notice a brand when in buying situations, or how easily and often a certain brand can be recalled. . This is usually reflected in the quality and quantity of information network in the consumers’ memory, and in the breadth and awareness of brand awareness. A brand is strong when it has high brand salience and it is weak when it has low brand salience. This explains in a nutshell, why small and bigger brands are the way they are. Brand Salience however is different from top of mind awareness and attitudes. What brands come to mind when customers try to recall brands is what is called top of brand awareness. Brand Salience is what comes to customers’ minds when in a buying situation. Specifically, it is the memory of a company’s brand is linked to other important structures of memory. The ‘mindfulness’ which is the purchasing situation and the link to structures of memory is what differentiates Brand Salience from top of mind awareness. Brand salience is important as it relates to future customer retention and loyalty. Consumers who use brands that aren’t very salient have defect in future at a high rate that is four times higher than the defection rate for consumers whom the brand the use is highly salient. Brand salience is also important to management as it acts as a key measure in evaluating brand performance, which is long term. This also provides a strategy for advertising which plays an important role in keeping the brand salient. Besides its contents, advertisements grab customers’ attention and make them think about the brand. Therefore, the objective of any kind of campaign should be to receive positive attention from many prospective consumers. According to Table 2 Kit Kat is performing averagely. Though its overall brand awareness is high, only 26% of it attain top of mind awareness. Brand salience isn’t performing as expected from the overall brand awareness, but its customer base is at an average and at least slightly more than 50%. It is therefore important to look at salience for brand users separately in order to know which brand is performing as expected and which is not. This will enable management to strategize on how to increase its customer base as well as rate of brand salience for those brands. Having discussed the importance of brand salience, it is crucial to know how to build and enhance brand salience. The focus should not be on what the company want customers to think about its brand, but how it can get them to think about the brand. When the brand has a broad range of attributes, there is a greater chance that it will be considered and therefore purchases. It is important to build and emphasize on association that consumers hold about the brand. The brand is more likely to be purchased if the associations among customers are greater and stronger. Marketing strategy should focus on availing the brand and making it accessible. This thus requires communication strategists, advertising agencies and consumer insight specialists to see the strategic need for the brand salience building. Cues are very important in an advertisement. People put information into categories within their long-term memory to make the processing of information easier. This happens naturally and every time they encounter new things, they use these categories to help understand those new things. Meaning, people’s purchasing decisions are based upon product perceptions. Furthermore, perceptions are influenced by cues sent by packaging, advertising, and brochure and so on. Cues can be the packaging, the brand name, use of words, colors, scents, images, emotions and so on. Many people like chocolates and to create brand salience, there are cues or signals that can be used. Price can be used as a cue to quality and make consumers assumes that a higher priced chocolate is better than a lower priced chocolate. Physical attractiveness cue can also be used to make consumers feel attractive when taking chocolates. This is portrayed by using a model or a celebrity in the advertisement. Demographics & Segmentation According to Table 3 (Demographic –relationship status), many single people prefer Nestle Gold Twik and Mars Bards. Kit Kat and Snickers are less preferred. Couples however prefer Kit Kat which shares the same market equally with Twix, and slightly with Nestle Gold, Snickers and Mars Bar. In the divorced and separated category, Kit Kat has low market share compared to Snickers. The purchases made by the single and the separated are low compared to couples. This may be because the couples are stable financially which enables them to afford the brand. Table 4 (Demographic - Total Household income) shows household income categories that spend on Kit Kat and its competitors. Kit Kat performs poorly in households whose income is less than $50,000. It also performs poorly in the households whose income is $50,000 -$70,000. However, it performs best in households whose income is more than $70,000. From the findings Kit Kat seems expensive because it has the highest purchase from the high earners and the lowest purchases made by lowest earners. Table 5 (Demographics –Gender) shows how Kit Kat performs in gender compared to its competitors. Kit Kat performs very poorly in the male category where its competitor Mars Bars is performing greatly. However it performs better in female category where it beats its customers. Female prefer Kit Kat while male prefer the competitor may because Kit Kat products are female friendly in terms of what women like as compared to male. The Impact of Demographics and segmentation on the market strategy Demographic segmentation is division of market into groups based on variables such as occupation, race and nationality, income, religion, education, family size, gender and age. With change in age, customer needs and wants change though they may still want to have the same type of product. Marketers will therefore design, promote and package products differently to meet the needs and wants of different age groups. In toothpaste marketing the brand of children toothpaste will be branded differently from the adult toothpaste. Toys on the other hand will be branded and packaged differently depending with the age segments. Life-cycle is also an important variable particularly in tourism and leisure market. The promotional and product approach of clubs will vary by life-cycle stage. Differently gender categories (female and male) prefer different clothing, cosmetics, toiletries, magazines and hairdressing and marketers should ensure that each category has what it needs. The income variable is also another popular segmentation. Companies will target their products and services and promotional activities on consumers in a certain income levels. Many firms target high earners with luxury goods and convenient services and at the same time market products that are more appealing to consumers with low income. It is believed that ‘perceived’ social class of consumers influences their preferences for leisure activities, home furnishings, cars and clothes. This also is linked to income-based segmentation. Different social classes consume different products and their promotional strategy will also vary. Conclusion The brand performance of Kit Kat is at an average and it is in a good position with an opportunity to improve. However, it faces stiff competition in the market. It is a strong brand compared to other brands but not as strong as its biggest competitor Mars Bar. The competition from other brands can’t let Kit Kat survive in the market if its management won’t come up with a strong strategy to improve its brand performance. Recommendation The Kit Kat marketers should change the marketing strategy in order to try and outdo its major competitor (Mars Bar) and get of its shoulders other competitors that are almost at per with it. To improve brand awareness, its marketers should try to improve on its packaging, advertising, presentation, promotion and the product itself. The marketers should also try to increase its market share by reaching the niche it performs poorly. They should try to shift customers from other brands to Kit Kat by improving on the product. Works Cited Kotler, Philip, Waldemar Pfoertsch, and Ines Michi. B2B brand management. Springer, 2006 Lindstrom, Martin. 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