The marketing mix

Product strategy

No matter how effective the promotion and packaging, a firm will find it very difficult to market a product which fails to satisfy a consumer need. Kit Kat owes much of its success to a unique dual appeal - as a four-finger chocolate bar, (known in the confectionery trade as a countline), sold at corner shops and newsagents, but also as a two-finger biscuit sold in supermarkets. It is a product that has endured because of its wide appeal across the age ranges and to both sexes.

Altering the actual product is potentially a very hazardous act for an established brand name as it risks altering the consumer perceptions of quality built up over decades. Tampering with the recognised core qualities could well damage the integrity of the brand. 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.

In spite of the risks of altering the product, the two finger bar and multipacks were introduced in the 1960s to meet the increased needs of supermarket shopping and more recently, Orange, Mint and Dark Chocolate Kit Kats have been available for limited periods. In the third week that Kit Kat Mint was available, it more than doubled total Kit Kat Sales. The Orange Kit Kat proved particularly popular with sales of 38 million bars in just three weeks. It provided very positive market research results. While they are seen as novelties, they can also be used to provide reassurance and reinforcement of the core attributes of the original established brand name.

Special editions are used primarily as promotional tools. Market research has shown that consumers prefer special editions to be available for limited periods only and that consumers are likely to purchase the original Kit Kat at the same time or shortly after. (They are, therefore, a good way of injecting new life into the Kit Kat product life cycle). Depending on their popularity, some special editions are introduced more than once. The Orange Kit Kat has proved so popular that the two-finger multipacks are now permanently available.

Apart from these variants, the intrinsic characteristics of the Kit Kat product and packaging have changed very little during the last sixty years. Although some minor, subtle changes have been made in packaging, merchandising and sales promotions, a Kit Kat from the 1930s would be instantly recognisable to modern consumers today.

Pricing strategy

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.

Promotional strategy

Nestlé has used a wide range of promotional tactics with Kit Kat. Promotion offers have included free bars in the multi-bar family packs and an instant win deal with Burger King in 1996. This promotion, where over 75 million free burgers were on offer, increased sales of Kit Kat by an estimated 30 In 1998, an on-pack promotion featuring 'The Simpsons,' with the chance to win £20,000 cash and hundreds of other prizes, increased sales of Kit Kat by a staggering 41

Advertising plays an extremely important part in the confectionery industry, with spend approaching £114 million in 1996. 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. Kit Kat's advertising is concentrated in two media:

television commercials - which follow the well-known Have a Break tradition 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. Men eat as much as they purchase suggesting they are less generous!

Distribution strategy

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.

Point of sale merchandising is also important when consumers are making instant, snap decisions from a wide range of products on view. Instantly recognisable packaging also helps to tempt customers. Shoe shops, for example, have recently been identified as having potential for confectionery sales owing to the large number of families that visit them. It is also predicted that confectionery, along with all foodstuffs, will become available through cable and interactive television, videophones and the Internet. Internationally, Kit Kat is now also manufactured in Canada, Germany, India, Malaysia, China, Japan, Australia, South Africa and the United States. It is available in more than 100 countries throughout the World.

Read more: http://businesscasestudies.co.uk/nestle/long-term-maintenance-of-a-classic-brand-name/the-marketing-mix.html#ixzz2k9cvfq3X

Design

When first introduced, the original Rowntree's Chocolate Crisp bar had a red wrapper, which briefly became blue between 1945–1947. As a result of milk shortages after the end of World War II, the milk chocolate coating was suspended and a dark chocolate was used instead during that period.

Since its introduction in the 1970s, the Hershey's Kit Kat packaging and advertising in the United States differed from the branding used in every other country where it was sold. In 2002, Hershey Kit Kats adopted the slanted ellipse logo used worldwide by Nestlé, though the ellipse was red and the text white. The US native "Kit Kat Chunky" is known as "Big Kat".

In the United Kingdom, the product has traditionally been wrapped in silver foil and an outer paper band. In 2001, flow wrap plastic was substituted as the confectionery's packaging.[19]

In Norway, a similar product is manufactured by Kraft Foods and sold as Kvikk Lunsj; Kvikk Lunsj XXL is similar to a Kit Kat Chunky.

http://en.wikipedia.org/wiki/Kit_Kat#Design

Nestlé launches new Android KitKat packs

FMCG giant Nestlé will be launching new Android KiKat packs to promote its new alliance with Google

Nestlé has teamed up with Google to help launch the latest version of the search engine’s Android mobile operating system, which Google has named after the KitKat chocolate bar.

Nestlé will be launching more than 50m chocolate bars featuring the Android mascot to shops in 15 markets, including the UK, US, Brazil, India, Japan and China.

Consumers in the UK can participate via special packs of KitKat Four-Finger and KitKat Chunky multipacks available in Sainsbury’s, Morrisons, Asda and Tesco.

The packs will lead consumers to the website android.com/kitkat where they will have the opportunity to win prizes including 1,000 Google Nexus 7 tablets or one of 50,000 £5 credits for Google Play, Google’s online store for apps, games, music, movies, books and more.

The packaging had to be produced in advance over the past two months. However, despite the scale of the operation, the two firms managed to keep the story a secret.

The creators of the world’s most popular mobile platform have teamed up with the world’s biggest food and beverage company to name the next release of the platform ‘Android KitKat’.

Android has been developed by the company’s engineers under sweet-themed names ever since the release of Android Cupcake in 2009 and continuing in alphabetical order until the most recent version, Android Jelly Bean.

The news that the letter ‘K’ will be dedicated to Nestlé’s KitKat will surprise most technology commentators, who had widely thought the latest version would be ‘Android Key Lime Pie’.

“We couldn’t imagine a better name for our Android K release than the tasty chocolate that’s been a favourite among the team since the early days of Android,” said Marc Vanlerberghe, director of Android Marketing.

‘Take a break’“We’re excited to announce this partnership with Android, the world’s most popular mobile platform, which will help us to enable even more KitKat fans to enjoy their break,” said Patrice Bula, Nestlé’s head of marketing.

“KitKat is one of the world’s top ten fast-moving consumer goods brands in social media in terms of fan numbers and engagement. We continue to build on its strong digital presence with interactive, creative branding campaigns.”

http://www.packagingnews.co.uk/news/nestle-launches-new-android-kitkat-packs-to-promote-google-partnership/

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

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.

Competitor Analysis:Kit Kat is owned by Nestlé SA which also owns a range of other product brands, e.g. baby food, bottled water, cereals, coffee, etc. In 2012, Nestlé’s company share in Singapore’s confectionary market was 9.4%. This has remained fairly constant since 2009, following a drop from 10.1% in 2007 to 9.6% in 2008. This shows us that introduction of competitor brands, as well as increased in market share in existing competitor brands such as Ferrero Group since 2009 has led to a drop in brand share for Nestlé.

This is depicted by the bar chart showing company shares by global brand owner. As can be seen, overall since 2007, Ferrero Group and Mars Inc.’s brand shares have increased whereas Nestlé SA’s brand shares have reduced.

Brand AnalysisAs can be seen via the brand shares table below, despite the decrease in Nestlé’s company shares in Singapore’s confectionary market since 2007, the brand share of Kit Kat has increased from 2007, from 3.2% to 3.7%. However, it still lags behind competitors such as Ferrero Rocher, Ricola, Fisherman’s Friend and Mentos in the confectionary market. However, through filtering out of products such as Ricola, Fisherman’s Friend and Mentos, which are not chocolate brands, it can be seen that Kit Kat is second behind Ferrero Rocher.

The comparison of change in brand shares between Ferrero Rocher and Kit Kat can further be seen in the chart below. Our team chose M&Ms as the second brand competitor as Cadbury had insufficient data based on the brand shares table. Furthermore, in the Company Shares by Global Brand Owner table, it can be seen that Mars Inc. is Nestlé’s second competitor. Applying this to the brand shares table, we chose to compare Kit Kat to M&M’s, which is owned by Mars Inc.

Kit Kat vs. Ferrero Rocher vs. M&M’s:

How Kit Kat Differentiates Itself?Points of Parity (POP):

1. 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

2. 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.

3. 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 version 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):

1. Wafer stick: our team feels that the fact that Kit Kat is essentially a wafer stick is one of they 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.

2. 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.

3. 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.

http://breakwithkitkat.weebly.com/brand-positioning.html

Brand Name Selection

Kit Kat is a chocolate-covered wafer biscuit bar confection that was created by Rowntree's of York, England, and is now produced worldwide by Nestlé, which acquired Rowntree in 1988,[1] except in the United States where it is made under license by The Hershey Company. Each bar consists of fingers composed of three layers of wafer, covered in an outer layer of chocolate. Each finger can be snapped from the bar separately. Bars typically have 2 or 4 fingers. Larger Kit Kat Chunky bars are also popular.

Brand Sponsorpship

Licencing

Association with Android

In September 2013 it was announced that version 4.4 of Google's Android mobile operating system would be named "KitKat".[24] Google is licensing the name from Nestlé, with no money changing hands.[25] A promotion will be run in numerous countries with specially branded Android Kit Kat bars to win[26] Nexus 7 devices & Google Play Store credit. The contest runs till November 15, 2013 (January 31, 2014 in the U.S.[27]). There are several terms and conditions[28] to participate in this contest. [29] Although the licensing deal is with Nestlé, Hershey has also confirmed that its Kit Kat bars in the United States will be included in the promotion.[30]

http://en.wikipedia.org/wiki/Kit_Kat#Association_with_Android

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Android and KitKat – a brand new type of sponsorship

There was a surprise announcement in the press recently when Google and Nestle revealed that they were coming together in a joint venture: Google’s new android version 4.4 will be branded Kitkat and 50 million Kitkat wrappers will feature the Android Mascot in 19 markets across the world.

The deal apparently came about when Google’s development team were discussing the merits of the version’s previously proposed codename “Key Lime Pie” (in line with its Hurricane style naming convention for Android release versions). KitKat was suggested as an alternative, and Google then cold called Nestle to ask if they would mind Google using the name.

There are two points which mark this news out as unusual:

Secrecy was maintained throughout the process Neither is paying the other, so this is not a traditional sponsorship or brand licence

agreement

This makes it a rather interesting partnership. Given Kitkat’s established markets and brand recognition, Kitkat would usually be considered the “sponsor” in a deal like this, paying a substantial premium for the brand exposure. That scenario turns on its head, however, when one then goes to less established markets for Kitkat.

Similarly, use of a third party’s brand would usually attract a premium (licence fee) for the privilege of benefiting from the attached reputation and goodwill.

The arrangement could therefore be viewed as an inspired marketing union with incremental benefits for both parties. It may well set a precedent for further similar ventures on varying scales.

What gave the announcement additional impact and coverage was the surprise element. It emphasies the importance of tightly drafted confidentiality agreements, limited disclosure within an organisation and careful management of staff. Indeed, Google helped to maintain the surprise element by rumours that the release would indeed be called Key Lime Pie.

http://www.brodies.com/blog/technology/android-kitkat-brand-new-type-sponsorship/