Nestle Case Analysis

Submitted to : Sir. Muhammad Ahmed Butt

Submitted by : Ayesha Khan (54465)

Submitted on : 19th Nov, 13

Contents

Introduction ........................................................................................................................................... 5 Introduction and history to the case Managing Global Brand ........................................................ 5 History of Kit Kat ................................................................................................................................. 6 SWOT Analysis ..................................................................................................................................... 8 Strategic Brand Objectives .................................................................................................................. 9 Qualitative Objectives ......................................................................................................................... 9 Qualitative Objectives ......................................................................................................................... 9 Corporate Strategy ............................................................................................................................. 10 Brand Positioning .............................................................................................................................. 10 Target Market ................................................................................................................................... 10 Segmentation .................................................................................................................................... 10 Lifestyle ......................................................................................................................................... 10 Age ................................................................................................................................................ 10 Gender .......................................................................................................................................... 11 Sharing .......................................................................................................................................... 11 Income .......................................................................................................................................... 11 Nature of Competition/Category ...................................................................................................... 11 Consumers Profile ............................................................................................................................ 11 Marketing Mix .................................................................................................................................... 12 Product .............................................................................................................................................. 12 Price .................................................................................................................................................. 12 Place .................................................................................................................................................. 12 Promotion ......................................................................................................................................... 13 Branding Strategy ............................................................................................................................... 14 Brand Equity Model .......................................................................................................................... 14 Step 1: Brand Identity Who Are You? ........................................................................................ 15 Step 2: Brand Meaning What Are You? ..................................................................................... 15 Step 3: Brand Response What Do I Think, or Feel, About You? ................................................. 15 Step 4: Brand Resonance How Much of a Connection Would I Like to Have With You? .......... 16 Points of Parity (POP) ........................................................................................................................ 17 Wafer............................................................................................................................................. 17 Milk / Dark / White Chocolate...................................................................................................... 17

Packaging size varies .................................................................................................................... 17 Points of Difference (POD) ................................................................................................................ 18 Wafer stick .................................................................................................................................... 18 Associated with snacks ................................................................................................................. 18 The chocolate comes in various sizes ........................................................................................... 18 Brand Mantra .................................................................................................................................... 19 Brand Name ...................................................................................................................................... 19 Recommendation to the Management............................................................................................... 20 Bibliography ........................................................................................................................................ 21

ACKNOWLEDGEMENT

First of all I would like to express gratitude express to Almighty Allah, the most merciful and beneficent, for enabling me to accomplish this assignment. I am extremely grateful to my teacher Mr. Muhammad Ahmed Butt for extending best possible support and cooperation for giving me the idea for making such report on practical basis. He got a strong command on the subject and the topics he covered, during the semester, would help me a lot while implementing this knowledge in my practical life.

Specifically, I am thankful to Mr. Kevin Lane Keller the author of the book Strategic Brand Management, who has been a tremendous source of assistance throughout my whole project.

I am also thankful to Mr. Philip Kotler "the world's foremost expert on the strategic practice of marketing".

Introduction
We went Nestles headquarters, Switzerland under the supervision of our teacher Mr. Muhammad Ahem Butt to attend annual sales conference of Nestle. Where we are given a project to analyze the case study Managing Global Brands and make branding strategy of any Nestles brand for entering and penetrating in China.

I am making a branding strategy on Kit Kat for Chinese market by using CBBE model of Kevin Lane Keller.

Introduction and history to the case Managing Global Brand

Nestle is a company that operates in different kind of regions, from developed to less developed countries, and to cater to each kind of market appropriately, it uses different strategies. In developed markets, Nestle works through acquisitions that yield valuable economies of scale, and for about 15 years, starting in 1984, it spent around $30 billion on acquisitions within different countries. However, Nestle adopts a different strategy in less developed markets, that includes meeting local conditions in terms of processing technology and ingredients, and once local conditions are met, Nestle applies the already-existing local brand names to the products, for example Nescafe coffee, or gives the product a whole new brand name, for example Bear condensed milk in Asia. One of Nestls strength is that it is patient in its decisions. This is proved by the fact that they had to go through a decade of negotiation before they could enter the market of China. But due to their patience, they are now leading the China market too. To enter a new market, Nestle usually attacks a few selected labels, and then concentrates on just two or three brands in terms of advertising and marketing budget. This way, Nestle is able to limit its risks and simplify its efforts when entering a new market. In managing so many different brands,

Nestle needs to keep global, as well as local, control in mind, thus, a few decisions taken by Nestle, for example Branding, follows strict corporate guidelines. The company has the following brands operating under it: 10 worldwide corporate strategic brands, example Nescafe, Maggi, etc. 45 strategic worldwide product brands, example Kit Kat, Coffeemate, etc. 25 regional corporate strategic brands, example Eskimo, Go-Cat, etc. 700 local strategic brands, example Brigadeiro in Brazil, etc.

Earlier, Nestle used the decentralized management approach, where local managers took most of the decisions, excluding those of worldwide and corporate brands. However, in 1997, the new CEO proposed that more formal central and regional control was needed by Nestle, therefore factory management was put together region-wise, and oversight of similar products was merged into strategic business units. Nevertheless, local managers still retained decision-making power in order to adapt products to local tastes, for example, the 200 different kinds of Nescafe instant coffee, catering to different local palates, still continued to be manufactured. With a more centralized management approach, Nestle was able to focus more on growing its core brands, and was highly successful at each level. During the time period between 1999 and 2003, Unilevers organic growth was about 2.7 percent, whereas Nestles organic growth was double that amount, that is, 5.1 percent (excluding acquisitions).

History of Kit Kat

This product was developed as a four-finger wafer crisp, initially launched in London and the South East in September 1935 as 'Rowntrees Chocolate Crisp' and re-named two years later as KitKat Chocolate Crisp. It became KitKat after the Second World War. No one is sure where the name KitKat came from but its thought the famous KitKat Club of the 1920s had some influence.

Within two years of launch, KitKat was established as Rowntrees leading product, a position that it has maintained ever since. During the war, KitKat was portrayed as a valuable wartime food and advertising described the brand as What active people need. For most of its life, KitKat has appeared in a red and white wrapper. It did, however, change to a blue wrapper in 1945, when it was produced with a plain chocolate covering due to shortages of milk after the war. This blue livery was withdrawn in 1947 when the standard milk chocolate KitKat was reintroduced. KitKat was first advertised on TV back in 1957 and had its first colour advert in 1967. Famous adverts include the Dancing Panda in 1987 and the Have a Break adverts in the 90s. KitKat is produced at the Nestl Rowntree Factory and in 2004 a massive 39,000 tonnes of KitKat were sold - that's 107 tonnes a day! Over the years KitKat 4 Finger has appeared in Orange and Mint variants and in 2004 we released a Lemon + Yogurt flavour, a Halloween variant, Blood Orange, and Lime flavoured KitKat. A Caramac variant was launched in 2005 and has proved to be our most successful variant to date.

For the dark chocolate lovers, new KitKat 4 Finger Fine Dark uses the finest Cocoa beans to coat each bar in an intensely rich bittersweet dark chocolate. KitKat Fine Dark will also feature the new Foil Fresh packaging. This is a permanent edition to the KitKat range and taps into the growing consumer trend towards dark chocolate. 2 Finger KitKat is the UK's number one biscuit. The 2 Finger KitKat was launched in the 1930s alongside the 4 Finger variant, and has remained the best-selling biscuit brand ever since. In the beginning, the 2 Finger KitKat was only produced as a milk variant, but is now available in Milk, Mint, Orange and since 2004, premium variants of Dark and White chocolate.

In 2005 there were over 800 million 2 Finger KitKats sold in the UK. That's over 2 million EVERY day!

SWOT Analysis STRENGTH

Certain segments of customers are found loyal. Nestle is maintain formidable position against competitors

WEAKNESS
Customers have become savvy, they do migrate when they get value. Food and food products competition is fierce Nestle needs strategic rethinking and redefining the organization aspect. Marketing management needs significant improvement in all the aspects of marketing. Brand Management needs significant improvement; Nestle should think also to come up with new business model capturing the brands. HRM needs improvement, particularly the process of recruitment and selection and human resource development.

Internal Environment

Company is maintaining healthy relationship with suppliers. Company is maintaining positive relationship with collective bargaining agents. Nestle is financially strong. Production process system, operation management procedure, quality assurance are consistent with high standards of industry.

OPPORTUNITIES
Economic conditions of Switzerland apparently seems conducive/stable. Switzerland.

THREATS
Social shift has been experienced in Legislation is being passed frequently in Switzerland, covering food and health industry. The internalization environment depicting uncertain situations in many factors such as economic, social, etc.

External Environment External Environment

Nestle is equipped to internalize the social shift. Nestle has the potential to implement all the laws/legislation. Switzerland is experiencing stability in political area, they have consistent policy.

Nestle have adequate requisite technology.

Strategic Brand Objectives

Qualitative Objectives
Broaden the number of occasions on which people consume Kit Kat, with the vision that Kit Kat would be the natural choice for all breaks Increase Kit Kat's market penetration by enticing new consumers to the brand, and by persuading lapsed users to return to the product, with particular emphasis on the 12-20 year old segment Create real innovation in the count line market.

Qualitative Objectives
Achieve 90% distribution in all sectors of the confectionery market within the first four months after the launch Sell 50 billion units in 2005, the year of the launch Increase sales in subsequent years.

Corporate Strategy

Brand Positioning

Broad in appeal, young in feel, big in stature. This quote encompasses the brand positioning of Kit Kat.

Kit Kat is the chocolate brand worldwide that offers low price, convenient, easy-to-find products uniquely associated with feelings of nostalgia and the idealized user dream.

Target Market
Kit Kats target market is men and women of all ages. The brand is youthful in nature, and focuses on the consumer segment who love chocolate, and are willing to indulge themselves with chocolaty snacks. What draws consumers to this brand is its association with breaks due to its tag line Have a Break, Have a Kit Kat. Its low prices, constant over the past 100 years, allows it to target the mass consumer market, as opposed to other high-end chocolate brands such as Godiva.

Segmentation
Lifestyle

The slogan Have a Break, Have a Kit Kat, positions the brand as a treat enjoyed when a consumer needs to relax or needs a break.

Age

Between 15-40 years old

Gender

Targeted at all genders.

Sharing

Can easily be shared between family and friends as the design of the chocolate bar allows consumers to be able to break off a finger at a time.

Income

Easily affordable with a diverse range of sizes.

Nature of Competition/Category
Class: Prepackaged food

Category: Wafer Type: Chocolate

Consumers Profile
The typical KitKats consumer is Youthful Loves chocolate Family-oriented Happy Fun Middle Class Conservative Frugal

Marketing Mix
Product
Product Objective: Product will convey tangible benefit (the image of effective performance) & intangible benefit (High prestige)

For Kit Kat, these intrinsic elements of the brand, or unique selling points include the:

Chocolate fingers Foil and band wrapping, unique in the countlines market and seen as an important feature which encourages involvement and sharing by consumers

Well-known strapline - Have a Break, Have a Kit Kat.

Price
Price Objective: Price will indicate the perception of high quality & low price A key advantage of maintaining a strong brand image in a competitive market is a degree of flexibility in the pricing strategy. It is a common characteristic of imperfectly competitive markets for producers to concentrate on non-price competition. When looking at the pricing strategy for Kit Kat, it can be seen from the figures that the real price has remained remarkably stable over the last sixty years.

Place

Place Objective: Kit Kat will follow pull and push road-map Nestl has developed distribution channels which ensure the availability of Kit Kat to buy wherever and whenever the consumer wishes to purchase it.

Sales of confectionery depend heavily on its availability, with market research showing that well over 60of all purchases are made on impulse. Consequently, Nestl tries to supply as many outlets as possible - both wholesaler and retailer channels.

Promotion
Promotion Objective: Kit Kat will use communication options of TV ad, Co-operative advertisement, Trade show, complementarily and versatility. The Have a Break, Have a Kit Kat theme appeared briefly in 1939, but has been the on-going Kit Kat slogan, or strapline, since the mid 1950s Free bars in the multi-bar family packs and an instant win deal with Burger King in 1996 On-pack promotion featuring The Simpsons Kit Kat's advertising is concentrated in two media: o Television commercials - which follow the well-known Have a Break tradition. o Posters - where the powerful colours of the pack and product are used to dramatise the message A particular challenge for the advertisers is to appeal to both the consumers and the purchasers Women account for two thirds of all confectionery sales, but a large proportion of these purchases are subsequently consumed by children

Branding Strategy
In order to build a strong brand, we must shape how customers think and feel about our product. We have to build the right type of experiences around our brand KitKat so that customers have specific, positive thoughts, feelings, beliefs, opinions, and perceptions about it. When we have strong brand equity, our customers will buy more from us, they'll recommend us to other people, they're more loyal, and we're less likely to lose them to competitors.

Brand Equity Model

We are going to use Keller's Brand Equity model in this project which Sis also known as the Customer-Based Brand Equity (CBBE) Model. Kevin Lane Keller developed the model and published it in his widely used textbook, "Strategic Brand Management." Within a pyramid, the model highlights four key levels that you can work through to create a successful brand. These four levels are: o Brand identity. o Brand meaning. o Brand responses. o Brand relationships.

Within these four levels are six building blocks that further help with brand development. These six building blocks are salience, performance, imagery, judgments, feelings, and resonance.

The model, seen in annexure 1, illustrates the four steps that we need to follow to build strong brand equity.

Step 1: Brand Identity Who Are You?

In this first step, our goal is to create "brand salience" or awareness in other words, we need to make sure that our brand stands out, and that customers recognize it and are aware of it. We're not just creating brand identity and awareness here; we're also trying to ensure that brand perceptions are "correct" at key stages of the buying process.
Step 2: Brand Meaning What Are You?

Our goal in step two is to identify and communicate what our brand means, and what it stands for. The two building blocks in this step are: "performance" and "imagery". "Performance" defines how well our product meets our customers' needs. According to the model, performance consists of five categories: primary characteristics and features; product reliability, durability, and serviceability; service effectiveness, efficiency, and empathy; style and design; and price. "Imagery" refers to how well our brand meets our customers' needs on a social and psychological level. Our brand can meet these needs directly, from a customer's own experiences with a product; or indirectly, with targeted marketing, or with word of mouth.

Step 3: Brand Response What Do I Think, or Feel, About You?

Our customers' responses to our brand fall into two categories: "judgments" and "feelings. These are the two building blocks in this step. Our customers constantly make judgments about our brand and these fall into four key categories: Quality: Customers judge a product or brand based on its actual and perceived quality. Credibility: Customers judge credibility using three dimensions expertise (which includes innovation), trustworthiness, and likability. Consideration: Customers judge how relevant your product is to their unique needs.

Superiority: Customers assess how superior your brand is, compared with your competitors' brands. Customers also respond to our brand according to how it makes them feel. Our brand can evoke feelings directly, but they also respond emotionally to how a brand makes them feel about themselves. According to the model, there are six positive brand feelings: warmth, fun, excitement, security, social approval, and self-respect.

Step 4: Brand Resonance How Much of a Connection Would I Like to Have With You?

Brand "resonance" sits at the top of the brand equity pyramid because it's the most difficult and the most desirable level to reach. We have achieved brand resonance when our customers feel a deep, psychological bond with our brand.

Keller breaks resonance down into four categories: Behavioral loyalty: This includes regular, repeat purchases. Attitudinal attachment: Our customers love our brand or our product, and they see it as a special purchase. Sense of community: Our customers feel a sense of community with people associated with the brand, including other consumers and company representatives. Active engagement: This is the strongest example of brand loyalty. Customers are actively engaged with our brand, even when they are not purchasing it or consuming it. This could include joining a club related to the brand; participating in online chats, marketing rallies, or events; following our brand on social media; or taking part in other, outside activities.

Points of Parity (POP)

Wafer

Kit Kats use of wafer is a POP as though it may not be unique to the brand as M&Ms also has a version which uses wafers, it is one of the key features which is associated with Kit Kat. On the other hand, M&Ms key feature is its small, round and colorful look, and Ferrero Rocher is known for its spherical.

Milk / Dark / White Chocolate

Kit Kats use of milk, dark and white chocolate variances in its products is a POP for the brand as it is one of the features which helps Kit Kat target a range of different consumers. This feature is also seen in Ferrero Rocher, which provides milk and dark chocolate variations. On the other hand, M&Ms provides a range of flavors through its difference in fillings: plain chocolate, peanut, and wafer.

Packaging size varies

Kit Kats two-stick and four-stick versions come in varying package sizes and types. Boxes of twelve and twenty-four are common for both the two-stick and four-stick versions, as are long packets containing six to nine of the two-stick versions of Kit Kat.

We feel that this is something which differentiates Kit Kat as the normal size M&Ms come in three packet sizes, one newly released box format and the mini sized M&Ms come in a single column. On the other hand, Ferrero Rocher comes in either large boxes, or its newly released three-in-a-box size.

Points of Difference (POD)

Wafer stick our team feels that the fact that Kit Kat is essentially a wafer stick is one of the key PODs for the brand. Though M&Ms has a version that incorporates wafer, we feel that being a chocolate wafer stick is a unique attribute for Kit Kat. On the other hand, Ferrero Rocher is primarily recognized for incorporating Almonds into the centre of the chocolate. The newly released Ferrero Rocher dark chocolate version has a chocolaty centre.

Associated with snacks Kit Kat is often associated with the word snack, as opposed to Ferrero Rocher and M&Ms which are primarily associated with being chocolates, a sweet. Kit Kat was able to achieve the snack status as a result of its highly recognized tagline Have a Break, Have a Kit Kat. Furthermore, Kit Kat is considered more affordable in comparison to Ferrero Rocher which is considered one of the higher-end chocolates.

The chocolate comes in various sizes We feel that this is another key POD for Kit Kat compared to Ferrero Rocher and M&Ms. Kit Kat has many versions: the single stick version, two-stick, four-stick, and chunky which is a larger version of single stick. On the other hand, M&Ms only come in normal and mini size and Ferrero Rocher have a fixed size for each chocolate.

Brand Mantra
Emotional Modifier KitKat Cheerful Descriptive Modifier Friends Brand Function Food

Brand Name
Can be achieved using a company name. Promises the consumer particular benefits. Consider by a company to be its most important tangible asset. Become paramount to a products success.

Recommendation to the Management

Kit Kat is famous brand of nestle. We can successfully launch in the china market.

China market have a different culture, language and behavior, we can use their local language in promotion activities.

China is a stable market we can use this as opportunity and segment the market according to the buying behavior of the customers.

Launch with full-prove marketing plan. Because many competitors are already exist in china market.

Bibliography

http://www.nestle.com/ http://www.kitkat.com/labs/ http://www.mindtools.com/pages/article/keller-brand-equity-model.htm http://www.brandingstrategyinsider.com/brand-positioning

ANNEXURE

Annexure 1

Customer based brand equity (CBBE) model, by Kevin Lane Keller

Annexure 2