ADM 2320 Marketing Plan- Candy Crushies PDF

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SECTION 1: PRODUCT INTRODUCTION King is a mobile app game developer with over 200 titles, including Candy Crush Saga, Farm Heroes, Bubble Witch, and Pet Rescue. King aims to develop games with a broad appeal, allowing people to play in small moments at many times during their day. King crowned this concept as ‘bite sized entertainment”. In 2012, King launched their most famous title, Candy Crush Saga for Facebook and mobile devices, which was a variation of their puzzle browser video game Candy Crush. Candy Crush, and its later sequels, is a ‘match-three’ puzzle game, where players swap adjacent candies to create rows or columns of three or more matching candies to gain points. Candy Crush Saga has become so addictive to consumers that only one year after it’s release, players had spent over $493 million US in just three months (Dredge, 2014), and five years after it’s release it had 2.73 billion downloads (Takashi, 2017). The sugar rush has not seemed to have stopped. Candy Crush gummies, called Candy Crushies, are delicious, fruity gummies that expand King’s philosophy of ‘bite sized entertainment’ into the confectionary world. Candy Crushies are a real-life recreation of the iconic Candy Crush sprites, in sweet, fruity flavours. The gummies will have a medium consistency, not too soft that they stick to your teeth, but not hard enough that they become unchewable. The reasoning behind these product specifications is as such: first, the medium consistency is one that will appeal to a broad range of consumers, from children to seniors. Secondly, the product will have an appropriate amount of sugar, so as not to be considered too sweet but also not tasting bland. This is because the aim of the product is to appeal to a mass market of consumers from all over the world. Lastly, each flavour has been chosen as something unique, yet appropriate for it’s prescribed shape and colour. This provides consumers with an alternative to the standard flavours you see in traditional gummy candies, while still being enticing, enjoyable flavours. With these distinctions we hope to target the broad consumer base of Candy Crush fans, as well as those unfamiliar to the game, but are looking for a quality, gummy treat. Consumers of Candy Crushies are those looking for a sweet snack, in convenient locations like grocery stores, convenience stores, or candy stores. However, just because these consumers are looking for a treat easily accessible, does not mean they will pick just any product. Consumers have been playing the game for years and have spent loads of money on the game. By seeing the real-life candy of the virtual ones they’ve been playing with, it invokes a want and curiosity that consumers didn’t even know they had. In using the Candy Crush brand, consumers will know that the gummies will reflect the same fun, addictive experience they get from playing the game. SECTION 2: CONSUMER PROFILE Candy Crush Saga is a highly respectable puzzle video game played mostly amongst almost all demographics in the world. Candy Crush is available online and on mobiles to download and play for free. Candy Crush has been downloaded approximately 3 billions times, which gives the brand already a lot of attention (Smith, 2018). One might imagine Candy Crush players as casual video game players, but that’s not case. Candy Crush actually appeals to a wide age demographic, with 42% of the players being between 21-35 years old, 40% being above 35, and 18% being under 21 ("Supercell vs King: How do Clash of Clans and Candy Crush gamers compare?", n.d.). People who explore Candy Crush sometimes become addicted to its simple but challenging gameplay properties. With Candy Crush being so popular amongst all age groups, it is important for Candy Crushies to target all segments of the population. Since Candy Crush is a free game, all types of

demographics have an interest in it, no matter their age, gender, income, education, race, etc. With such a general game, it is difficult to even pinpoint a psychographic segment, since innovators to survivors own mobile devices in this age and can download the game, and Candy Crushies are focusing on targeting individuals who play the game. Approximately 10% of adults eat candy on a regular basis, with 97% eating candy at least once a year (Duyff, et al., 2015). Candy is a very general food as well, even though it is often targeted towards children. With such a wide adult consumer base, Candy Crushies has an opportunity to appeal to a market that many other candy brands have difficulty with. With this in mind, it is important for the candy product to be tasty enough so as to appeal to both adults and children. The positive thing about having an undifferentiated segment is that it guarantees reachability, responsiveness, and is substantially large to be profitable. The hardest part will be to target adults who don’t often eat candy and create value for them. However, with a cheap price, and a strong loyalty towards Candy Crush Saga (many adults are willing to spend a bunch of money on a game), it should facilitate a stronger value for the product. Games are usually targeted towards children, but Candy Crush has also been successful amongst adults. Why can’t the same be done for candy? Candy Crushies is unique in the sense that it is a virtual candy that has been turned into a real product. All other candy brands start as just that -- candy brands. But Candy Crushies already have a recognizable brand, in the sense that millions of different people around the world have been playing with the virtual candies since 2012. It would be hard for competitors to create a game and then introduce a candy to the market that was based off the game. This on it’s own sets Candy Crushies apart from other candy brand competitors, as they would be a first-of-itskind product. Consumers from all over the world, no matter their age, would be curious in trying the real life Candy Crush Saga candies. SECTION 3: MARKET PROFILE 3.1 SWOT analysis S-

WStrong brand. Candy Crush is a famous game played by over 93 million people Extensive market reach. Candy Crush offers product that interests all ages Wide distribution network, customers can purchase at convenience store or online

O- Candy has big market share in Canada - Changes of CDSTEP bring new opportunities for business

Mass market being targeted, may be difficult to appeal to all demographics Need licensing from the Candy Crush Saga to operate the business

T- Regulatory change. Health issue related to candy(obesity, tooth decay) Economic issues. Increasing raw material and labor costs

3.2 Industry Research In Canada, the candy industry was comprised of many small companies. Statistics Canada posted that 60.6% of candy companies in Canada has few than 20 employees and only 1.4% of the candy companies has more than 500 people (Stivaros, 2017). In this case, candy industry in Canada has a low concentration. The supply chain of candy industry is not complex. There are three parts in the supply chain, which are raw resources suppliers, manufacturers and demand parts (Stivaros, 2017). Raw resources supply industries include coated paper manufacturing and syrup production etc. (Stivaros, 2017). Demand industries are sellers, such as wholesalers, supermarkets and retailers (Stivaros, 2017). Canadians have a high demand for candy. According to a 2016 study, 62% of Canadian have a sweet tooth, which indicates that the confection sector is large in Canada (Neshevich,

2017). High demand leads to growing sales in Canada’s candy sector. Appendix 1 shows the candy sales revenue in Canada between 2014 and 2017. The graph describes that candy revenue is growing and a great increase of sales achieved in 2017. It can be predicted that sales of candy in Canada will grow in the future. Moreover, candy market value is also rising. In Canada, candy industry market value was $3.14 billion CAD in 2014; furthermore, the market value was predicted to achieve $3.53 billion CAD in 2019 (Statista, n.d.). Therefore, a large consumer group in Canada and growing trends of sales and market value encourage new candy product to succeed. However, more than 250 candy companies exist today in Canada (Stivaros, 2017). It is predictable that new-entry company will suffer a high level of competition. Moreover, people have rising awarenesses of diabetes and health today, which may affect customers purchasing candy (Prasannan, 2017). 3.3 Customer Research Confectionary consumers come from all income levels (Prasannan, 2017). Demographic and psychographic characteristics are two important factors that influence customers’ purchasing behaviours. In terms of demographic aspects, age and income are two primary characteristics of customers. Children under nine years old strongly demand candy; moreover, the percentage of people under nine years old is rising, which in turn increases the demand for candy (Stivaros, 2017). Furthermore, the middle class highly demands candy (Prasannan, 2017). According to Statistics Canada, the number of middle-class people is increasing, and their incomes are rising as well (Statistics Canada, 2017). In this case, more people are willing to spend more money on discretionary goods like candy (Stivaros, 2017). In terms of psychographic factors, Canadian likes candy. For example, maple syrup is one of the most loved Canadian food by Canadian, which reflects that confectionary is widely liked by Canadian (Gurman, 2017). The sales of candy rapidly grow and achieve the highest sales during the holidays, such as Valentine's Day and Easter, which indicates that candy is an important snack for Canadian to celebrate holidays (Stivaros, 2017). 3.4 Competitor Research In Canada, the candy market has very aggressive players. Companies in the candy sector have many direct (Tootsie Roll Industries and Mars Inc.) and indirect (Ferrero Canada Ltd.) competitors. Mars Inc. occupies the highest market share in the Canadian confectionery industry (16.9%). Mars Wrigley Canada expects candy production will reach $196.8 million revenue in 2017. (Stivaros, 2017). Mars Wrigley Confectionery is the world’s leading manufacturer of confectioneries; it has comprehensive sustainable plan. But Mars Inc. has experienced product recall events that create bad image of the company. The merging of Mars Inc. and Wrigley offered a great opportunity for broader markets. However, the candy market competition is intensive, and people are more concerned about whether candy are healthier nowadays. Tootsie Roll Industries Inc. has 3.8% estimated market share in Canada. In 2017, IBISWorld expects the company will earn $44.7 million from its relevant Canadian operations. (Stivaros, 2017). The candy company has a strong brand name and good business ethics, leading to the company being in business for 116 years Tootsie Roll also limits advertising spending to make sure other departments have enough funds. Weakness of the company is obvious, the company suffers from serious rigidities and is controlled by The Gordons’ (Rettic, 2012). Tootsie Roll considers itself as a classic American candy brand, but the recent product has some

innovative flavor and packaging, such as theatre box candies. Threats are health awareness and competition as well. Ferrero Canada Ltd. own 12.8% of Canadian chocolate market. IBISWorld expects Ferrero's revenue from chocolate production in Canada to reach $235.1 million in fiscal 2017(Stivaros, 2017). Ferrero has strong brand name and customer loyalty; the selling point of Ferrero is the special packaging and incredible shape of chocolate. But people only usually buy Ferrero for gifting because the price is high. While the higher price can be a weakness of the chocolate, it can be an opportunity as well. During Valentine’s Day and Christmas, Ferrero is the best option for presents. Beside common candy production’s threat, Ferrero concerned about copyright problem because many company introduce product that imitate Ferrero’s. 3.5 Partner Research Our product cooperates with the game company, King Digital, so we need permissions to use candy images and relevance copyrights in the game. In terms of advertisement, King will promote the product across it’s social media and in-game. Even though it is planned to sell Candy Crushies mainly online in the beginning,there are plans to sell in a brick-and-mortar retailers. There are plans to partner with both large retailer, such as Walmart and Amazon.ca, and small shops, such as local convenience stores, so that we can have wider customer reach in Canada market. SECTION 4: MARKETING MIX 4.1 Product The point of the product is to exactly mimic the candies that are seen in the popular game, Candy Crush Saga. The product that will initially be introduced to the market, called Candy Crushies, will include the original six types of candies that are presented at the beginning of the game, and that are used throughout its’ hundreds of levels. The candies will be sweet, flavourful gummies, with different flavours attributed to the different colours. The colours, and flavours associated with them, will be as follows: green - green apple, red - cherry, yellow lemon, orange - clementine/orange, blue - blue raspberry, and purple - concord grape. The green candies will be in the shape of a square, the red ones a jelly bean, the yellow ones a tear drop, the orange ones an oval, the blue ones a sphere, and the purple ones a hexagon with a bumpy texture (to mimic a grape). Each candy will be the size of a quarter, which is around 2x2 cm. The packaging will be bright and colourful, and the imagery will be similar to that of the opening screen on the game, with bright blue skies, green grass and flowers, and smiling characters. With it’s bright colours, the packaging is meant to be attention grabbing, so that it stands out on a shelf with other candies. Like most candy packaging, the packaging will be made of plastic, with a clear, transparent strip at the bottom in order for the consumer to be able to visually see the product. As children will be part of the demographic targeted, there will be a choking hazard

warning on the back of the package. The name of the product will be “Candy Crushies”, a play on words of the first part of the game’s name, Candy Crush. “Crushies” is also a fun reference to the candy’s gummy and chewy texture. The logo will look like the image on the right, with the “Candy Crush Saga” name

attached to it so as to provide an obvious link between the candy and the game it is inspired by. A good thing about basing a new product off of an already successful product is the fact that a lot of the work around the branding has already been accomplished. There is already a well established, recognizable brand with Candy Crush Saga, so consumers will easily be able to identify exactly what the connection between the two products is. With Candy Crush Saga having almost 3 billion downloads, there is not only a strong brand awareness, but an evident brand loyalty as well. This loyalty comes from consumers from all different kinds of ages, from children to seniors who enjoy playing the game. This enables Candy Crushies to be distinctive in the candy market, since hardly any of the candy brands on the market can say that their brand has already had such a massive digital exposure before even being launched. Not only is Candy Crush recognizable between almost all ages, but it is played all around the world. This means that the Candy Crush brand is recognizable between almost all demographics in the world, as that Candy Crushies are therefore able to target a mass market. As Candy Crush Saga is such a popular game, it’s perceived brand association is fun. Games are fun, and so is candy. Linking the two together in a consumer’s mind will not be difficult, especially when it is topped with the curiosity that will arise when consumers get the opportunity to actually taste the candy they’ve been playing with for years. Thus, the perceived value will be high, complemented with the consumer will be interested in trying a physical product of the digital product they’ve spent so many hours playing. While there are many sweet, chewy candies on the market, Candy Crushies has the advantage of incorporating excellent branding with a new, never-before seen type of product on the market.

Fruity gummies are a product that have been around for ages, but basing an edible product off a mobile game is brand new. In regards to the product’s life cycle, Candy Crushies will be in the introduction phase. The sales will need to start at zero and then gradually grow, with the main promotion strategy being to try to create as much awareness of the new product as possible. However, Candy Crushies will still have many competitors, as there are hundreds of thousands of fruity gummy types on the market. Although, with their high-brand recognition Candy Crushies are a low-learning product, so the product will be quickly understood by

consumers and sales will begin immediately. While Candy Crushies will be in the introduction phase, it will still have to face the challenge of facing competitors. However, even with a high volume of competitors, the product is distinct enough to compete and stand out amongst other candies. If successful, there is much room for extending Candy Crushies’ product life cycle by creating even more types of candies which are just as recognizable (as there are many other different kinds of candies used in the game as well). This will contribute to the overall product strategy, since adding more types of candy gummies would contribute to the product line depth. If Candy Crushies prove to be successful, then there would also be an opportunity to introduce different types of sweets (such as chocolates or hard candies) to the market, therefore increasing product mix breadth. However, in order for this to occur the original launch of Candy Crushies must be successful in the market. 4.2 Pricing A pack of Maynards Sour Patch Kids sells for around $2 CAD (or 3 for $5 CAD) (Maynards Sour Patch Kids, 2018) at most stores, while a pack of Great Value (a less recognized brand) gummy worms sells for around $1 CAD (Great Value Gummy Bears, 2018). Candy falls under the “food” category, and as quoted by a chart created by Stiglitz and Walsh in 2002 (see slide 22 of Professor Lee’s “Chapter 11” Powerpoint), food is considered to have a generally inelastic demand, with an elasticity of 0.58. Since Candy Crushies is a new product, but also a one-of-a-kind, the price for a pack will be $2.10. This will allow for a consumer to associate the price with “high value” candy brands such as Maynards, but allows the price to also be low enough so as to be still considered affordable for some consumers. This also coincides with the “skimming” pricing strategy, since Candy Crushies is a unique product that not many competitors can copy, and its demand is fairly inelastic. Candy Crushies also has a high quality brand that supports the higher price, and the cost of producing candy is not very high (see Section 3), so the conditions for effective price skimming are properly met. As the product’s shelf life increases, and new products start coming on the market, there is much room for Candy Crushies to undergo different kinds of sales promotions. Quantity discounts would be amongst these (similar to Maynards), where the products could sell 3 for $5, especially if the products are nearing their expiration date. If a new product comes on the market, then the price could be marked down, so as to place a higher value and price on the new product being introduced. And, like most edible products, coupons could be used also, allowing for consumers to buy the product for a cheaper price if business is going slow or a new product is introduced. To calculate the profit margin of Candy Crushies, the cost of making/obtaining the product must be determined. Over 50% of candy companies have fewer than 20 employees, and the supply chain is very simple (see Section 3). Raw materials included in gummy candies include gelatin, corn syrup, sugar, and citric acid (Haribo Gummies, n.d.), all of which aren’t very expensive (i.e gelatin is $0.03/100g) at a wholesale price (Unf...