Vegemite - Marketing Mix of Kraft Foods Product in Australia - Example

Student: Tutor: Course: Date: Table of Contents Vegemite marketing mix in Australia 3 1Introduction 3 2The target market 4 2.1Demographic segmentation 4 2.2Geographic characteristic 5 2.3Psychographic characteristics 5 3The marketing mix 6 3.1The Product 6 3.2The place 9 3.3The price 10 3.4The promotion 12 4Competitive advantage 15 5Success of the products marketing mix 16 References 18 Vegemite marketing mix in Australia 1 Introduction The aim of this report is to analyse the marketing mix of Vegemite, a concentrated dark brown yeast extract that is widely used in Australia as a jam for toasts and sandwiches during breakfast[Mon133]. By analysing the marketing mix, the report seeks to evaluate the success of the product in satisfying the needs of the target market and thereby achieving a competitive edge in the market over rivals. Vegemite is produced by the Kraft food company in Australia. It has been in production since 1922 by the Fred Walker Company. During the first years into the market, product faced stiff competition from marmite, a similar product manufactured in Britain. However, within 20 years of struggle to gain market share in Australia, the product had become a strong market player and an icon of Australia with even medical practitioners recommending it to patients as a source of vitamin B[Mon132]. Today the Kraft Foods Group through Mondolez Australia Foods boasts of producing 22 million jars of vegemite sold to a population of over 22 million Australians who have a national attachment to the brand that is both nutritional and a national icon they love spreading on their toast every morning. Apart from toasts and crackers, the product has various other uses such as thickening flavouring of soups and stews[Mon133]. A product’s marketing mix should be well planned and executed to achieve the intended marketing function of satisfying the needs of the target market and also deal effectively with competition in the market to make the brand successful and profitable for a business[Fer10]. Analysis of the success of the marketing mix as explained will be the main concern of this report and will be achieved under appropriate subheadings. 2 The target market Vegemite is a natural paste containing no sugar, fat or animal content. It is a rich source of vitamin B (thiamin B1, riboflavin B2, niacin B3 and folate) making it a nutritious energy boosting product apart from it providing a unique flavor derived from the brewers yeast it is extracted from[Mon133]. Australians also view vegemite as a national symbol after it replaced the market share of marmite during World War I[Dun12]. these are some of the factor that can determine the target market for vegemite in Australia which can be segmented in the following ways; 2.1 Demographic segmentation Nationality Vegemite is popular mainly with Australians as they have a national attachment to it. Furthermore it is less flavoured unlike marmite making it less appealing to people who are not used to it. Age: Vegemite is popular with Australians of all ages but children seems to have a strong attachment to the product maybe due to the fact that their parents introduce it to the early as a nutritious product and over time they develop a liking for the product flavour[Mon132]. Income: Vegemite is a cheap product which is affordable to almost all households in Australia considering Australia is a developed country with high standards of living. 2.2 Geographic characteristic Vegemite is an Australian product mostly consumed by Australians. It is both a national brand and icon. Australia constitutes 98% of Vegemite’s market; it sells in all states of Australia and thus the country comprises the prime target market geographically[Mon13]. 2.3 Psychographic characteristics Lifestyle Vegemite is a family consumer product associated with the standard lifestyle of an Australian family. Children have a strong attachment to the product and as such they take it with them from a young age up until adulthood; its part of their lifestyle. An adult leading an active lifestyle is also key target for the manufacturer as the product promises to provide vitality and energy to consumers Social class Being a moderately priced item and a basic nutritional commodity, vegemite is targeted for all social classes as it serves as a source of B vitamins for consumers. Behavioural characteristics: Loyalty status Vegemite is an Australian product with strong attachment to its nationals. Many Australians love not only its taste but its strong attachment to the history of Australia. As such Australians feel proud having a vegemite in their household[Dun12]. Benefits sought Vegemite has a special flavour attributable to the brewer’s yeast it is sourced from. Consumers expect to enjoy this flavour on their toasts and crackers as they have been used to it. They also expect to be nourished with (thiamin B1, riboflavin B2, niacin B3 and folate). It is also a healthy alternative as it is fat and sugar free[Mon132]. 3 The marketing mix Marketing mix is made up of the Product, Price, Place (Distribution), and Promotion. The best combination of the four determines the performance of a product in terms of marketing[Fer10]. 3.1 The Product This report is centred on vegemite jam; a dark brown yeast concentrate used as a paste to spread over bread, sandwiches and crackers. The product has a unique flavour derived from the brewer’s yeast it is processed from. Apart fro m the flavour, vegemite provides the users with B vitamins in every serving. It also provides energy and vitality to users and as such the manufacturer intends for children and adults to take a daily serving of vegemite to provide much needed energy and B vitamins[Mon133]. Vegemite is available in two flavours; the first flavour is the original vegemite without any addition, the other variety is made of vegemite and cream cheese. The latter is well suited to spread straight on to crackers, bread and vegetables while pure vegemite requires that one spread butter or margarine before the vegemite. Image source: Mondolez Australia Foods, 2013 The product is able to meet the needs of the consumers in that it contains the attributes that most Australians have been used to. It is packaged in an attractive container coming in different sizes; 150gram, 220gram, 280gram, 400gram, 600gram. This means one gets the size they feel suits their consumption habit. The product has a dark brown colour is attractive for a natural jam containing no sugar or fat for the health conscious consumers. The packaging is different in colour for the two products too in terms of colours. While vegemite has a dominant yellow colour, vegemite cheesybite has a dominant brown colour. This differentiates the two for ease of selection by consumers. The packaging also ensures that consumers can easily identify the product through the conspicuous ‘Vegemite’ title on the products packaging[Mon133]. The product also delivers energy and vitamins for users, further fulfilling their bodies’ need for nourishment. The packaging also conspicuously states that the product is ‘proudly made in Australia since 1923’[Mon134]. This identifies the product with the feeling of nationality that the product has come to be associated with over the more than 90 years it has been in the Australian market. All the above mention product attributes meet the needs and expectations of the consumers. Vegemite is a convenience product since it is targeted for the mass market. Consumers buy it frequently and without much deliberation as it is inexpensive and delivers a basic need for the consumers. The most important attributes of the product is the flavour that it gives bread and crackers upon being spread on them. The nutritional aspect is also a very important factor for consumers. Vegemite has achieved branding success over the past 90+ years it has been in the Australian market. The company can now boast of producing more than one billion units of the product. Vegemite maintains the same golden yellow and red colours identifiable with the product since it was launched into the market. This ensures that is easily recognisable from other jams in the market. The product has maintained the ‘proudly made in Australia’ for a long time to ensure that its positioning as a truly nationalistic product is not lost. This and more factors have made the brand very strong and almost unchallengeable in the Australian market. Vegemite is in its maturity stage of products lifecycle. It is important to note that the product has been in the market for about 90 years now. It enjoys quite a huge market share with approximately 80 per cent of households across Australia have VEGEMITE in their pantries. At this stage only the packaging design and product development can be used to maintain the market share. Vegemite is doing this by maintaining two varieties of vegemite in attractive packaging. Using the packaging to reassure consumers of finding the quality they have been used to is also important at this stage and vegemite has achieved this by stating that it is ‘one of the world’s richest known sources vitamin B’ [Mon132]. 3.2 The place Vegemite is distributed through retailers such as Coles and Woolworths in Australia. The retailers sell the product at a margin after buying it from the supplier (Mondolez International). The retailers cannot avoid stocking the product as it is a convenience product with a strong brand in Australia and thus their customers will be expecting to find it in any store they shop at. This distribution strategy cuts costs for the company as they don’t have to buy shop space to stock up with the product in a direct distribution line to customers. Most customers also expect to find convenience products all under one roof for ease of marketing and thus distributing vegemite through the retailers. Big retailers such as Coles and Woolworths have extensive market coverage and thus help to get vegemite to the target market at a moderately inexpensive price. The product is not distributed online by the shop since most customer only buy small quantities of the product which would be uneconomical to ship to consumers considering the product is not so expensive as such the company relies on higher volumes sold and not higher profit margin per product. However, customers can buy vegemite as part of their shopping cart from Coles and Woolworths online shopping sites[Col136]. The distribution strategy suits the products lifecycle at maturity stage as it has to rely on established networks to get the product to its target market. Vegemite cannot be marketed through niche marketing as it is a convenience product with a huge market share. The mass distribution strategy is therefore suited to the maturity stage as it finds the consumers wherever they are to maintain the market share. 3.3 The price Just like most fast moving consumer products, vegemite relies on moving larger volumes and gaining a little profit margin in order to generate enough return on investment. As such the commodity cannot be priced too high beyond the reach of the standard Australian family which happens to be the target market of the product. The main retailers in Australia are Coles and Woolworths. These two supermarkets are part of the main retail outlets of the product to the target market. The prices of vegemite in these supermarkets are displayed in the table below. Vegemite prices Product size Price at Coles Price at Woolworth 150 grams $3.49($2.33 per100g) $3.50($2.34 per100g) 400 grams $6.83($1.71 per100g) $6.85($1.72 per100g) 145 grams(tube container) $4.22($2.91 per100g) $4.25($2.93 per100g) 600 grams $7.00 ($1.17 per100g) $7.00($1.17 per100g) Vegemite Cheesybite prices Product size Price at Coles Price at Woolworths 270 grams $5.31 ($1.97 per 100G) $5.35 ($1.98 per 100G) 156 grams (6pack) - $ 5.00 ($3.21/100g) Sources: [Col136] As can be seen from the analysis above, the price of vegemite in the two leading retailers is very affordable to the average Australian. The product is also available in different sizes all having varying prices. This helps shoppers to get the best value for their money by buying just what they need thereby reducing wastage and it may also mean discounts for those who buy in large quantities. The variation in prices can be explained by price based competition between the two major retailers. Woolworths is usually having higher prices for commodities than Coles, however, from time to time the two engage in price based competition. Sanitarium Marmite spread (250g) which is similar to vegemite cheesybite is going for $3.11 at Woolworths. This is a very competitive price considering vegemite cheesybite (270g) is going for $3.00[Woo135]. The pricing tactic here is having vegemite cheesybite at a lower price for even more quantity than the competitors. This is price based competition meant to protect the market share of vegemite chessybite. Vegemite receives very minimal competition from popular brands, private brands by supermarkets are however moving in slowly but steadily to challenge the market share of the brand. The pricing is consistent with the product’s lifecycle. At maturity stage, the pricing of a product has to be well aware with the threat of competition from equally strong competitors. The price is very competitive as compared to prices of similar products in the market. With such pricing the product is able to maintain the market share it had acquired during the growth stage and will thus accumulate enough profit to finance product development and innovation pinto the decline stage of the products lifecycle. The pricing too complements the other 3Ps of marketing as it is in line with positioning of the brand as an everyday Australian product which is supposed to be readily available. The inexpensive price makes it reach consumers in time and is consistent with the marketing efforts made by the company. 3.4 The promotion Promotion activities include all efforts made by a business to create awareness of the existence of a product, efforts made to provoke a consumer into making a decision to purchase the product. It may also involve efforts meant to remind consumers of the existence of a brand in the face of growing competition that threatens the market sharer held by a company. These three happen to be the core promotion targets that a firm must strive to achieve in order to complement the contribution of the other marketing elements (4Ps) in building a strong and profitable brand[Fer10]. In light of this, it is fair to contend that vegemite has conducted a very productive effort over the years to position vegemite as the strong brand it is especially in the eyes of Australians. To Australians, vegemite is not only a concentrated cheese paste that they take every morning with their bread, but it is a national symbol that they take pride in purchasing and using in their homes[Rac12]. Most of the promotion activities by vegemite are aimed at reminding Australians of the great product that is part of the national culture that Australians identify with. The strategy then seeks to maintain the market share of the brand and ward off any form of threat that is always so real in the fast moving consumer goods market segment. Vegemite launched a campaign in May 2013 “Start with vegemite” which the company said was designed to remind Australians the vegemite spread is a nutritious and delicious start to the day. The campaign idea is to show Australians a number of breakfast option they can create with vegemite. The campaign features two 30 minutes TV commercials which show various appetising ways to consume the Australian classic breakfast. One of the TV commercials features a poached egg on top of sourdough with vegemite spread on it. This is an impersonal approach towards advertising which is actually a brand equity campaign meant to reposition the brand as fresh as it was when the consumer first new it. According to the company officials, their aim s to ensure vegemite retains its position at the Australians breakfast table like it has been for the past 90 years. The campaign coincides with the company’s celebrations of producing the famous Australian brand- vegemite for 90 years[Mon131]. In the lead up to Australia Day 2012, vegemite replaced the name “VEGEMITE” on the products with “AUSTRALIA”. This was a limited edition which also featured a map in the place of the vegemite logo. This was the company’s way of celebrating Australians and the Australian culture (ABC, 2013). The product story is inseparable with the Australian story and the brand clings on this beneficial relationship as a marketing advantage over other brands in the market. Vegemite prides as being the Australians number one nutritional and delicious breakfast spread[Mon131]. The vegemite website is actually a very important and efficient tool that the company has used to provide information regarding the product and the story of struggles and triumphs that the brand has gone through to become what it is today. The website also seeks to explain the special relation the brand shares with the culture of the Australians. Vegemite also utilizes the emerging media such as facebook and twitter to increase toe brands visibility and promote campaigns in a bid to ensure they reach each and every person within their target market. The vegemite facebook page which can be reached by clicking through a link provided on the vegemite website, has more thank 400 thousand “likes”. The facebook page is used to introduce campaigns and promote consumption of the product. One update reads: “New years resolution- Start with Vegemite (365 days of vegemite)” the update has a photo of the campaign banner shown below [Fac14]. Source: [Fac14] Some of the television commercials target the kids with commercials such as the recently re-launched classic ad “we are happy little vegemites” the adverts are centered on one single theme of reminding Australians of the brand that they love and which they should introduce to to their children as part of the national culture that they identify with. The vegemite song is very popular with Australians and it is sung by everybody in the family and not only kids. Vegemite revived the old advert after learning how much Australians love vegemite as part of their culture. This was after introduction of a vegemite variant with the name iSnack2.0 which received a lot of protest from the loyal consumers of the product (Lee, 2010). Promotion efforts are perhaps the best indication of which stage of product lifecycle vegemite is in. vegemite is in the maturity stage of the products lifecycle. At this stage the product has to reinvent itself a lot and to keep on reminding consumers of its existence in order to ensure that the product does not advance into the decline stage where it would shed market share and fall to rivals products or consumers’ indifference. The promotion efforts like “start with vegemite to celebrate 90 years of vegemite” clearly seeks to remind Australians of the national brand that they should take pride in. 4 Competitive advantage Vegemite is a strong brand in Australia facing threats from other pastes and jams from other manufacturers. Mondolez Australia Foods estimates that its product vegemite is used in 80% of households in Australia. It will be right then to put forward the argument that vegemite has dealt well with competition over the years to be the market leader it is today. Vegemite main competitive advantage is the strong association it has with the Australian culture. Over the 90 years the product has been in the market, it has positioned itself as a national symbol of Australia which is inseparable with the national culture of the country. Consumers in Australia choose it over other brands not only because of its unique flavour and expected nutritional benefits but also for the special feeling they have towards the national brand. Vegemite has along history in Australia spanning 90 years. This long history means the product production process has been standardized and improved over the years to ensure that consumers can be guaranteed of a quality product that tastes the same as the product they have been used to over the years. The experience and technical knowledge cannot be marched by other late entrants into the market thereby giving Kraft food a competitive advantage in the production section which it advances into the market through high quality and standardised vegemite paste and also relatively inexpensive product due to massive investments in technology and production methods over the years the company has been in operation. Vegemite as a brand is owned by one of the biggest multinationals in the consumer foods sector, Kraft Foods Group Inc. The company has adequate financial and qualified human resource to keep the brand always in touch with dynamic business environment. 5 Success of the products marketing mix A products marketing mix should be able to satisfy the needs and wants of the target market as a business strives to meet the objectives of the individual marketing mix element. Vegemite has been successful in ensuring the product is successful in meeting the needs of the target market judging from the popularity of the brand in Australia where 98% of the product is sold. 80% of households in Australia use vegemite at any particular time according to Mondolez Australia foods website. The product has maintained the same unique brewers’ yeast flavour it has had over the years much to the delight of the consumers who get into retail stores looking for the yellow red vegemite packs on the jam shelves. The product also has a high nutritional content of B vitamins being one a major source of vitamin B in the world. The packaging too is easily identifiable as it has maintained the same colours and logos for years for loyal customers to easily identify it when shopping for jams and pastes. This product attributes make vegemite successful in meeting consumer needs. The pricing of the product is quite competitive as compared to similar products in the market giving consumers greater value for money as well as a chance to enjoy a product that should be found in every Australians household. The distribution strategy also ensures the product is able to reach the target market in every region of Australia which comprises the geographical target market for the brand. The product also reaches the target market at an affordable price due to the established networks of the retailers such as Coles and Woolworths. The promotion efforts also continuously identify with the aspirations of the target market which is what the consumers look for in a brand that they view as a national symbol. The company strives to connect with Australians at every major event or issue of national interest. It can therefore be concluded that the company has succeeded in producing and presenting to consumers a product that meets their needs and expectations and thus are willing to pay for the product making it a successful brand. References ABC., (2013, October 25) Vegemite turns 90: what's your favourite iconic Australian brand?, ABC News. Retrieved from: http://www.abc.net.au/news/2013-10-25/vegemite-turns-90-whats-your-favourite-iconic-australian-brand/5046112 [Accessed: 2014 January 4] Mon133: , (Mondolez Australia Foods, 2013), Mon132: , (Mondolez Australia Foods, 2013), Fer10: , (Ferell & Hartline, 2010; Lewis & Weber, 2011), Dun12: , (Kennedy, 2012), Mon13: , (Mondolez Australia Foods, 2013), Fer10: , (Ferell & Hartline, 2010), Mon134: , (Mondolez Australia Foods, 2013), Mon132: , (Mondolez Australia Foods, 2013), Col136: , (Coles, 2013; Woolworths, 2013), Col136: , (Coles, 2013; Woolworths, 2013), Woo135: , (Woolworths, 2013), Rac12: , (Pannett, 2012), Mon131: , (Mondolez Australia Foods, 2013), Fac14: , (Facebook/Mondolez Australia Foods, 2014), Read More