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...............................................................................................................................................11

Gender.........................................................................................................................................11

Sharing.........................................................................................................................................11

Income.........................................................................................................................................11

Nature of Competition/Category.....................................................................................................11

Consumer’s 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.........................................................................................................................................22

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 Nestle’s 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 Nestle’s 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 Nestlé’s 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, Unilever’s

organic growth was about 2.7 percent, whereas Nestle’s 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 'Rowntree’s 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 it’s thought the famous KitKat Club of the 1920s had

some influence.

Within two years of launch, KitKat was established as Rowntree’s 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

90’s. KitKat is produced at the Nestlé 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 WEAKNESS Certain segments of customers are found

loyal.

Nestle is maintain formidable position

against competitors

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.

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.

Ext

ern

al E

nvi

ron

men

t

OPPORTUNITIES THREATS Economic conditions of Switzerland

apparently seems conducive/stable.

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.

Social shift has been experienced in

Switzerland.

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.

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 Kat’s 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”. It’s 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

LifestyleThe 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

GenderTargeted at all genders.

SharingCan 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.

IncomeEasily affordable with a diverse range of sizes.

Nature of Competition/Category

Class: Prepackaged food

Category: Wafer

Type: Chocolate

Consumer’s Profile

The typical KitKat’s 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

Nestlé 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, Nestlé 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 Kat’s use of wafer is a POP as though it may not be unique to the brand as M&M’s 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&M’s key feature is its small, round and colorful look, and Ferrero

Rocher is known for its spherical.

Milk / Dark / White Chocolate

Kit Kat’s 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 Kat’s 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&M’s come in

three packet sizes, one newly released box format and the mini sized M&M’s 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&M’s 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&M’s

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&M’s.

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&M’s only come in normal and mini

size and Ferrero Rocher have a fixed size for each chocolate.

Brand Mantra

Emotional Modifier Descriptive Modifier Brand Function

KitKat Cheerful Friends 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 product’s 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

Products