Mars Bars: Brand Performance in the Chocolate Market - Case Study Example

Executive Summary to Marketing Director The following report provides a comparison of brand performance in the chocolate market. It compares the performance of Mars Bars with other brands in its category including Kit Kat, Twix, Snickers, and Nestle Gold. The report found that Mars Bars occupied a significantly higher market share as compared to the other brands and commanded a significantly higher sole loyalty than the other brands. Thus its brand salience was higher and that is the reason for its increased market share. More men consumed Mars Bars than any other brand but women were found to prefer it least of the five brands tested. Couples purchased more chocolate than single people and this trend was similar across the board, with higher income groups consuming more chocolate than lower income groups. The implications for marketing are that strategies should emphasise loyalty, with emphasis on light buyers with concentration on male buyer and romantic messages aimed at couples. Executive Summary to Marketing Director 1 Brand Performance 3 Analysis 3 Market Share 4 Penetration 4 Average Purchase Frequency 4 Category Buying Rate 5 Share of Category Requirements 5 Sole Loyalty 5 Markets 5 Market Strategy 6 Awareness and Salience 7 Definition of Brand Salience 7 Patterns 8 Building Brand Salience 8 Demographics and Segmentation 10 Analysis 10 Implications for Market Strategy 12 References 13 Brand Performance There is a management catchphrase that says, ‘what is not measured is not managed’. It is important for businesses to keep track of their performance in the long term in order to ensure continued success. The major advantage of measuring brands is that it connects the management of brands to business performance. This system is most potent when regarded as a strategic management tool for the ongoing enhancement rather than one time only measurement of brand performance. An efficacious brand measurement system assists firms to; Gauge how well the brand is doing in comparison to competitors, Recognise weaknesses of the brand before they escalate into problems Identify the areas where brand-building focus needs to be concentrated in order to create business value (Munoz & Kumar, 2004). The Dirichlet Model (Ehrenberg et al, 1984) traces the repeat purchase patterns that are displayed by brands within a product category. It is useful in the analysis of brands. Dirichlet modelling entails application of the model to create an assessment of the brand performance including the rate of purchase, market share, purchase frequency, penetration, share of category requirements and loyalty. This assessment is called ëtheoreticalsí and is used in comparison to the ëobservedsí whose calculation is done directly from the data gathered (Ehrenberg, Uncles et al, 1995). Analysis In the brand performance metrics, Mars Bar market share in comparison to other brands can be illustrated by the following graph: Market Share Mars Bars has the highest market share at 34% which is 10% higher than their closest competitor, KitKat. Snickers and Twix which come after have fairly even competition while Nestle Gold trails the group in market share. Mars Bar’s market share is also higher than the group average. Penetration There is quite a gap between the penetration of Mars Bars and other types of chocolate. The graph dips sharply from Mars Bars’ 74% penetration to Kit Kat’s 52%. This again evens out for Snickers and Twix before dipping significantly in the case of Nestle Gold. Average Purchase Frequency When it comes to purchase frequency, Snickers beats Mars Bars by 0.1 of a point. The average for the group is 1.9 which shows that purchase frequency is relatively even across the board. The differences between one brand and another is negligible apart from the Nestle Gold which is still significantly lower than the rest. Category Buying Rate The rate of purchase per category is inverted as compared to other categories. Mars Bars has the lowest category buying rate and Nestle Gold the highest. Share of Category Requirements Mars Bars has the highest share of category requirements. This follows the same pattern as the other categories with Mars Bars being ahead of the other brands. Sole Loyalty Mars Bars commands the highest brand loyalty of the group, followed by Kit Kat then Snickers. Twix and Nestle Gold do not command any type of sole loyalty from consumers. Markets In the categorisation of offline patterns of behaviour, research found that markets are classified through the consumer choices displayed by them. These are classified into Repertoire and Subscription markets (Sharp, Wright & Goodhardt, 2002). These two can be distinguished by the loyalty behaviour displayed by the consumer to the primary brand. The former market involves consumers developing loyalty to a set or repertoire of brands. They use these brands to purchase a majority of goods, and they are loyal to the entire repertoire of brands rather than any individual one. This means that consumers do not develop sole brand loyalty. The latter market consists of consumers who display a considerably higher degree of loyalty behaviour toward one brand mainly because a contractual obligations to a single supplier. The Negative Binomial Distribution-Dirichlet model (Goodhardt, Ehrenberg and Chatfield, 1984; Uncles, Ehrenberg and Hammond, 1995) has a measure that describes this characteristic loyalty known as the S parameter. This parameter tends to be high for repertoire markets (usually over 0.8) and low for subscription markets (less than 0.2). The sole loyalty to the Mars Bars brand is significantly higher than that displayed to other brands in this category therefore it makes sense that Mars Bars is operating under the subscription market even though there is no stated contract between the consumer and supplier. Market Strategy The frequency and volume of consumers’ purchases and consumption was the subject of the some of the earliest literature on marketing (Cook & Mindak, 1984). Twedt (1964) was a pioneer in describing and classifying buyers as heavy, light and non-buyers depending on their purchase frequency. He stated that heavy buyers constitute 80% of the overall purchases in any category; a phenomenon that has evolved into the Pareto Effect also known as the 80/20 rule. Recent research has modified this figure to 50-60% of sales annually (Sharp, 2010). Understanding the distinctions between heavy and light buyers is a way to create strategies that deal with each section of buyers effectively. Heavy buyers are said to be conscious of price, partial to deals, disloyal or loyal to brands they buy, akin to other people in their demographic and who have the same media use profile, and their choices tend to be more heterogeneous than light buyers (Clancy & Shulman, 1994). However, these characteristics are not dependable across the board (Wansink & Park, 2000) and therefore it is not advisable to generalise results even in the same product category. Buying rates and purchase probabilities have been discovered to be independent of each other across buyers according to Chatfield & Goodhardt, (1975) and Massy et al, (1970). Shoemaker et al, (1977) found some distinguishing features between brand purchase probabilities of some of the major brands especially when it comes to heavy buyers. However a consistent trend could not be established as to the reason for these trends and therefore no rationale could be proposed as to the reason why certain brands are bought by heavy buyers. The director having expressed a preference for light buyers as opposed to heavy buyers; the reason could be the indifferent loyalty that the heavy buyers display toward a particular brand. it may be more likely to evoke sole loyalty to the brand from light buyers. From the market research above, it is apparent that Mars Bars has a quite high level of sole loyalty and it would be wise to capitalise on that. This can be done through direct marketing strategies modified towards the needs of different groups dependent on the attributes that drive greater loyalty. This means striving harder to meet the expectations of light buyers. Awareness and Salience Definition of Brand Salience Within the structure of brand equity according to Keller, (2001) is the idea of brand salience and it means ‘the prominence or level of activation of a brand in memory’ (Alba & Chattopadhyay, 1986; pp.363). Brand salience is important because it is connected to enhancing the potency of advertising (Miller & Berry, 1998); bettering the position of the brand in the consideration group (Moran, 1990); intention to buy the brand (Hasher and Zacks, 19884); likelihood of purchase (Domke, Shah & Wackman, 1998) and behaviour of purchase (Ambler et al, 2004). Top of mind awareness is the situation where a brand comes to mind first thing when consumers are looking for a supplier for a product or service. Attitude on the other hand stands for an overall and permanent impression that could be negative, positive, or neutral about an individual, object, organisation, or happenstance. The top of mind awareness is merely concerned with the first brand that is remembered while brand attitude focuses on a broader definition that evaluates the brand in detail. Patterns The top of brand awareness and overall brand awareness for Mars Bars is higher than that of other brands in the category. The overall salience is lower than that of the users only. Considering that its market share is higher than the other brands, then it naturally follows that brand salience would be higher for Mars Bars than for the other brands in the category. It is important to examine salience for brand users because brands that are recently purchased are more likely to be selected (Shapiro, 1999) by the user. Therefore, a more accessible brand which has higher brand association should have commensurate brand salience. This in turn would affect the purchase likelihood that leads to purchase. Building Brand Salience In order to build and enhance brand salience we need to look at the basis for it, which is brand awareness (Keller, 2003a) which is based on brand knowledge. In order for a brand to have salience, consumers must possess brand knowledge and a higher order awareness as well as a wealth of information connected to each brand that is to be considered (Fazio et al, 1992). Appropriate marketing strategies for this include emphasis on connection to a broad number of cues to the brand rather than one specific cue. The more cues there are, the higher the purchase likelihood for consumers. Ten cues that would customarily be included in an advertisement of a chocolate brand include: romantic symbols, symbols about feeling better after some depression, symbols of happiness, symbols signifying the tastiness of chocolate, symbols of love, symbols signifying Valentines’ day, Mother’s day symbols Birthdays symbols Symbols that downplay the potential negative effects of chocolate such as weight gain by featuring good-looking people. Gender related symbols as chocolate is said to be consumed more by women. Friendship symbols. Demographics and Segmentation Analysis More couples than either single or divorced people buy chocolate as can be seen from the statistics and this could be related to the romantic connotations associated with chocolate and the many occasions in which the male would purchase chocolate for the female. Mars Bars do not have the largest market share in this segment probably because Mars Bars are more associated with men than women (Carter, 2010). From the graph it can be seen that households with the highest income buy the most chocolate. This is probably because it can be viewed as a luxury product. The differences between the income category purchases for Mars Bars are much narrower as compared to the other brand. This could be due to the greater sole loyalty displayed toward this brand as compared to the other brands. It does however still adhere to the trend that those with higher income buy more chocolate than those with less income. In all categories, females consume almost twice as much chocolate as males. This ratio differs slightly in the Mars Bars category where the ratio is more 2:3. This could account for the perception that men eat Mars Bars (Carter, 2010). While Mars Bars is the most popular chocolate among the males, the females seem to prefer Kit Kat, Snickers, or Nestle Gold followed by Twix with Mars Bars trailing slightly. Implications for Market Strategy The double jeopardy law states that those brands with less market share have fewer buyers who are less loyal in their attitude and purchases. Mars Bars having more market share means that they generate more loyalty and this should be maintained by shaping advertising messages which foster and rewards loyalty. This means that marketing strategies would be geared toward couples of all income brackets with attention to the male purchasers as well. Also since user bases rarely vary this means that rival brands have similar consumer bases and therefore need to promote distinction of their brand in some way to make it stand out. This is known as building mental –as well as physical-availability. References Alba, J., and Chattopadhyay, A. (1986). Salience effects in brand recall. Journal of Marketing Research 23(4), 363-369. Ambler, T., Braeutigam, S., Stins, J., Rose, S., and Swithenby, S. (2004). Salience and choice: Neural correlates of shopping decisions. Psychology and Marketing 21(4): 247-261. Carter, M. (2010). Men buy Mars, women prefer Galaxy: Gender targeting is advertising industry's secret weapon. Retrieved 4-Jun-12 from: http://www.independent.co.uk/life-style/food-and-drink/features/men-buy-mars-women-prefer-galaxy-gender-targeting-is-advertising-industrys-secret-weapon-1922941.html Chatfield, C. and Goodhardt, G. (1975). “Results concerning brand choice.” Journal of Marketing Researach, Vol. 12, No. 1, pp. 110-113. 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Building customer-based brand equity. Marketing Management 10(2): 14-19. Keller, K. (2003a). Strategic Brand Management: Building, Measuring, and Managing Brand Equity. Pearson Education Inc.: Upper Saddle River, NJ. Massy, W.F., Montgomery, D.B. and Morrison, D.G. (1970). Stochastic Models of Buying Behaviour, The MIT Press, Cambridge. Miller, S., and Berry, L. (1998). Brand salience versus brand image: Two theories of advertising effectiveness. Journal of Advertising Research 38(5): 83-88. Moran, W. (1990). Brand presence and the perceptual frame. Journal of Advertising Research 30(5): 9-15. Sharp, B. (2010). How Brands Grow, Oxford University Press, South Melbourne. Sharp, B., Wright, M. & Goodhardt, G. (2002). Purchase Loyalty is Polarised into either Repertoire or Subscription Patterns. Australasian Marketing Journal, 10, 3, 7- 20. Shoemaker, R.W., Staelin, R., Kadane, J.B. and Shoaf, R. 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