Kitkat Assignment 2 PDF

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Assignment 2: Situation Analysis Report####### Lecturer : NGUYEN THI HUONG GIANG####### Class : MKTG####### Campus : Saigon South Campus####### Team : 12 Weeks of Drama####### Members :####### ● Tran An Binh – s####### ● Tran Phuong Linh – s####### ● Nguyen Thi Lam Phuong - s####### ● Ly Ngoc Phuong...

Description

Assignment 2:

Situation Analysis Report

Lecturer: NGUYEN THI HUONG GIANG Class: MKTG1205 Campus: Saigon South Campus Team: 12 Weeks of Drama Members: ● Tran An Binh – s3756186 ● Tran Phuong Linh – s3752862 ● Nguyen Thi Lam Phuong - s3764026 ● Ly Ngoc Phuong Thanh – s3741193 ● Nguyen Thanh Nguyet Thao - s3755239 ● Lai Thien Thao – s3751311

TABLE OF CONTENT I.

II.

SITUATION ANALYSIS

2

A. Company description

2

B. Product description

2

MARKETING ENVIRONMENT:

2

A. Micro Environment

2

1. Suppliers

2

2. Marketing Intermediaries

3

3. Consumers

3

4. Public

3

5. Competitors

4

B. Macro Environment

5

1. Demographic Environment

5

2. Political Environment

5

3. Technological Environment

5

4. Economic Environment

5

5. Cultural Environment

6

6. Natural Environment

6

III.

SWOT ANALYSIS

7

IV.

DESIGN A CUSTOMER DRIVEN-STRATEGY

7

A. Segmentation

7

B. Targeting

10

C. Positioning

10

D. Differentiation

11

V.

CONCLUSION

11

VI.

REFERENCES

12

VII.

APPENDICES

14

I.

SITUATION ANALYSIS A. Company description

Nestlé was established in 1867 in Switzerland when its founder, Henri Nestlé, created one of the first baby formulas due to recognizing the need of a healthy and affordable product for those babies whose mothers do not have the ability to breastfeed as an alternative method. Later years, to meet more human demands, this company merger with many different companies in different fields to expand its product line. As a result, Nestlé now successfully becomes the largest food and beverage company in the world with more than 2000 brands and appears in 189 countries. Their mission "Good food, Good life" which means producing safe, nutritious, tasty food to help people live a healthier and happier life. It also helps them to gain lots of belief, love from customers worldwide. In Vietnam, Nestlé has had a long history of establishing and developing since the first company was founded in 1912. Since then, the famous symbol of Nestlé which is a natural bird nest has become familiar with Vietnamese users over the past 100 years. In Vietnamese’s minds, Nestlé is considered to be a popular and credible brand that appears in almost all the marketplace, and also supplies various types of product with high quality and affordable price. Moreover, it also holds a huge pie of this developing country' s market share, particularly soft drink market with 30% market share (Vietnam Investment Review, 2017).

B. Product description As Nestlé acclaimed, KitKat is a harmonized mix between 100% superior cocoa and crunchy wafer, first appeared in the UK in 1935 with its original name “Chocolate Crisp”, however, in 1937, its name was changed into KitKat and the new logo was introduced. It was generated under many kinds, such as two-finger bar, four-finger bar, eight bites and its appealing package is a Red-White trademark wrapper. Nowadays, KitKat has become a household name in more than 80 nations including Vietnam. KitKat was first introduced to Vietnam’s marketplace in 1988 (Nestlé Corporation 2016), at that time, Vietnam was suffering from a difficult economic period and the whole country was in the state of recovering so that people did not pay much attention to confectionery industry. Over nearly 30 years of developing, KitKat chocolate of Nestlé has become one of the most popular confectionery products among Vietnamese people especially among youngsters (Generation Y and Z). The first KitKat in Vietnam was original flavour and until now many flavours have been manufactured, for instance, matcha, matcha with red bean, rose, coconut, munch nuts,… in order to satisfy their customers as people are becoming richer and they demand more from every product. In the future, the Nestlé corporation in Vietnam will develop more flavours with various types of KitKat to keep their position and raise their place in Vietnam’s market.

II.

MARKETING ENVIRONMENT A. Micro Environment 1. Suppliers

The Nestlé Cocoa Plan’s goal is to enhance the well-being of cocoa farmers and product’s quality. We can divide the Nestlé’s suppliers into two sections: Labour supplier and material supplier. a. Labour supplier has a great deal of quality at an optimum level so as to avoid the shortage of labour force. More than 57,000 farmers are trained in good agricultural practices which helps them to boost yields, decreases cocoa diseases and improves bean quality. b. Material supplier plays the role of handling the sufficiency of materials needed for manufacturing the final products. They provide 2,160,000 plans so as to replace those old ones which past their best. Moreover, they are planning to provide near 12,000,000 hardier, better yielding plants in 2019. The Nestlé Cocoa Plan operates under 3 main key factors: (Nestle Cocoa Plan 2018) - Better farming, tackling obstacles such as agricultural reality and revitalization of the plantation. - Better lives, which heightens gender equality, women’s rights and gets rid of child labour. - Better cocoa, which is the main ingredient, creating a sustainable relationship in the supply chain. As the Nestlé Cocoa Plan has sustained the highly qualified sufficiency in both the quality and quantity

of the two kinds of suppliers. Hence, the company can be able to operate their business smoothly.

2. Marketing Intermediaries a. Resellers In Vietnam, KitKat is sold at numerous places, from big retailers such as Big C, Coopmart, Aeon Malls to convenient stores such as Circle K, Vinmart, Family Mart, and grocery stores. And that helps KitKat reach a mass of customers and consumers. b. Marketing Service Agencies J. Walter Thompson introduced Mirum which is a Digital Marketing agency assembled 11 Digital agencies over 17 countries with 40 officers (Brand Vietnam, 2015). In 2014, Mirum Vietnam helped Nestlé launch a campaign named “Take a day off for love” for Valentine’s day and “Say you do” campaign which won Silver in the “Best Sound Branding” Award (Brands Vietnam, 2016). Introduced in Valentine’s Day 2016, “Say you do” campaign is about encouraging people to bravely express their love and create a sweet “online” present which connects people closer.

3. Consumers KitKat’s customers are both men and women of all ages, who love Chocolate and are willing to pay for their favourite chocolate. What persuades consumers to this brand is its relation with “breaks” thanks to its tagline “Have a Break, Have a KitKat”. KitKat is a low-price product, remained stable over the last 100 years, allow it to reach a mass consumer market, as competing with others high-end chocolate brands, Godiva for example. Besides, the second largest group of consumers are wholesalers and retailers in each region, particularly, in Vietnam, KitKat is sold from big retailers such as Big C, Coopmart and small convenience stores like Circle K, Vinmart, B’s mart and even grocery stores. However, recently, thanks to many successful promotion campaigns on the Internet and an increasing number of youngsters accessing social media, KitKat seems to be more popular among young people than any other generations.

4. Public As can be seen, Vietnamese recently have preferences for using foreign goods rather than those domestic ones due to their high-quality ingredients and materials. Thus, KitKat can meet the demand of using foreign brands as well as ensure the quality of products and food hygiene. Moreover, as people are becoming more aware of having healthy eating lifestyles, they are likely to choose products that contain beneficial ingredients for health like green tea (matcha). And KitKat has done a great job of meeting their consumer’s demand and satisfaction by producing the KitKat green tea flavour. (Image: Hai Vu, 2017) Besides, KitKat is also concentrating on advertising through various means of social media or TVC. And the most successful campaign that KitKat has ever launched is the TVC “Take a day off for love” in Valentine 2014. This campaign encourages people to spend a day off and devote their time to the one they love. Their campaign TVC, “Take a day off for love” reached more than 1,700,000 views on Youtube, and its revenue approach half of that compared to 2013 and more than 2012 within 6 weeks of starting the campaign. The social media value of KitKat was 70,000 USD, while their cost was just about 20,000 USD (KitKat Valentine’s Day Case Study, 2014)

5. Competitors

Since Vietnamese people nowadays have a sweet taste and are always in the need of energy for work and study, the confectionery companies from local to foreign, seem to have a colossal opportunity to drop their products into this expectant market. Up to now, there are some brands with the most flourishing and emergent products, which are consumed by children, adults, even some of the elderly and can be considered as KitKat’s great competitors. For example: a. Belcholat: Belcholat is a chocolate brand from Vietnam. Belcholat is chosen to serve many customers in luxurious hotels, restaurants or resorts. They also have a product line which is affordable for middle-end consumers and that is the main reason why we can see their brand share remains stable at the highest, followed by KitKat (Appendix 2). Throughout many years, Belcholat continues to keep the 1st rank of brand shares of the chocolate confectionery in Vietnam, accounting for 10.5% in 2018 and seems to remain stable (Appendix 2). Moreover, Belcholat is packaged in elegant assorted boxes which is a type of packaging that has the most consumptions (Appendix 3) whereas KitKat just appears for countlines (Appendix 4). b. Mars: Although Mars has the largest market share (Appendix 5), their brand shares (M&M, Mars, Dove, Snickers) are much lower than the others and two of them have shown a sign of decline (Appendix 2). It is obvious that Nestlé can take advantage of this case to enlarge their market share for the purpose of reaching more consumers and increase their sales. In addition, in the indirect competition, KitKat has to compete against other brands, such as Bibica (Sumika candy), Kopiko (Coffee candy), Perfetti Van Melle (Alpenliebe). Brands from these firms are loved and consumed most of the time by Vietnamese people, especially children and workers in their break time instead of having a KitKat for a break. However, it is obvious that KitKat from Nestlé is the most favourite chocolate after Belcholat at the present time.

Direct Competitors

Brand

Company

Package and Price

Belcholat

Belcholat JSC

Package:

(Belcholat Gourmet n.d.)

Description Founded in September 2000, Belcholat is the only brand that is allowed to brand its product in the name of Berry Callebaut and is proud to welcome many visits of International Delegation (Belcholat JSC).

Price: depends on the types of chocolate and the quantity per bar/box

Snickers

Mars Inc

Package:

(Snickers n.d.)

First introduced in 1930, Snickers has always been innovating their products to satisfy customers’ wants.

Price: 51g - 18.000VND Indirect Competitors

Sumika Candy

Bibica Corporation

Package:

With various flavours like chocolate,

strawberry, milk, Sumika candy is soft and sweet so that kids and even adults love this product.

(Sumika candy n.d.) Price: 350g - 29.000VND

B. Macro Environment 1. Demographic Environment As can be seen in the two charts taken from PopulationPyramid.net (Appendix 6), the total population in Vietnam has a sign of expanding. Although the number of youngsters is not the highest, this element does not deeply affect the sales of KitKat since it depends on people’s eating habits, lifestyles and their interests in foods at a specific time of lives. According to a Euromonitor report, it is the “desire to remain fit and healthy has been increasing ”as well as“ growing demands for health and wellness products” (Health and Wellness in Vietnam, executive summary, 2018), and a report from Nielsen, confirmed that health remained the top concerns of Vietnam (Vietnam Consumer Confidence Ended 2017 On A High Note, Q4/2017). However, there are groups of people who will refuse to change their eating habits, but some will not. So that even when the population of Vietnam is going up, there is no exact evidence to prove that KitKat’s sales will rise or decline in the near future.

2. Political Environment According to the ASEAN Free Trade Agreement 2018, Vietnam has to eliminate about 99% of tariff lines on allies in ASEAN, includes confections. As a result, products exported to Vietnam are cheaper than those exported from other continents. Every chocolate bars of KitKat which are shipped from Thailand to Vietnam do not lose money on taxes except transport charges, therefore, KitKat’s price is low, people will buy more, Nestlé can earn more profit from them.

3. Technological Environment Nestlé is making a real effort on improving their technique to create nutritious and tasty products. Due to the increasing rate of global obesity, two years ago, KitKat's producers found out a potential way to reduce sugar in their confectionery products by up to 40% without affecting the taste (Reuters, 2016). Therefore, it can be said that KitKat chocolate is the result of modern scientific technology but still uses only natural ingredients to meet the international standards and gains more health benefits for their consumers.

4. Economic Environment Vietnam is known as a developing country which has a great speed of economic growth. As it showed clearly in Appendix 6, the Vietnamese GDP has raised from $14.095 billion (1958) to $223.864 (2017), which could be considered as a huge change. In recent years, the average monthly wages of Vietnam’ s citizens seem to have a slight rise (Appendix 7). To get a better living condition, people become busier. They have to work more, even over 8 hours a day so that most of them prefer going to a convenience store for meal. The number of those stores is running up faster and faster, over one thousand in 2017 (Appendix 8) which illustrates for the extremely high need of handy products. Besides, there are many different brands providing the same kind of products, particularly chocolate. It is easy to see that Vietnamese supermarkets where customers have more than ten choices, such as Toblerone, Guylian. However, KitKat still gains a sustainable place in consumers’ minds due to their high quality and affordable price.

5. Cultural Environment Vietnamese people, especially young generations, still keep eating snacks as a long-term featured culture which existed thousand years ago. A report of Saigoneer in 2017, has shown that a

huge range of money ($354 million) was spent on snacks in this country last year, which means that Vietnam has a very high consumption of confectionery, the citizen also seems to have the ability and hobbies of buying these products. Meanwhile, KitKat nearly satisfies most of the Vietnamese criteria, including reasonable price, high quality, various flavours, convenience and different size packagings. Nestlé is also very successful in building trust through a main factor, Japan culture and cuisine. Vietnamese people believe that matcha can bring lots of advantages for their physical health, moreover, thanks to its good taste, "KitKat Green Tea" has been produced and developed rapidly since 2015 (EUROMONITOR INTERNATIONAL, 2017). With the amazing slogan "Have a break, have a KitKat", this brand has excited their customers and become an important part of their lives. In recent years, this chocolate bar is chosen to be a special gift, which people use to express their love on occasion days, such as Valentine’s day, Tet holiday.

6. Natural Environment As Vietnamnet mentioned, Vietnam is facing with plastic waste problem. In 2010, the amount of wasted plastic reached 1.8 million tons. The current environmental condition becomes worse and worse as science has not found out any potential solution to reduce those huge ranges of garbage. Understanding this problem, Nestlé is aiming to use 100% reusable or recyclable materials on packaging by 2025, which helps minimize the negative impact on landfill (Nestlé.com). Furthermore, Vietnam is a tropical nation which has a long-term farming tradition and is famous for growing coffee and cocoa. There are thousands of hectares of lands producing those materials annually. This would be a potential place for Nestle to invest in a factory. However, natural disaster is still a giant challenge. As claimed by Vietnamnews, 14 types of natural disasters have come over this country in 2018, which leads to damaging approximately 1,700 hectares of industrial plantation. It could be a huge risk for those company who want to establish their factory in Vietnam.

III.

SWOT ANALYSIS STRENGTH

WEAKNESS

- KitKat has created successful campaigns. - Well-oriented slogan - “Have a break, have a KitKat”. - Make the recipe healthier to meet the demand of the customers (Knows how to reduce sugar level without changing its flavour) - Suitable price for both low and high incomes or busy people. (While Vietnamese people usually skip their meal, KitKat is the best option for them to gain energy to do work.) - Well reputation foreign snacks towards the Vietnamese. (KitKat has its own position in the market) - Have a large amount of loyal customers - Have a massive distribution throughout Vietnam - Have a recognizable shape (the 4 fingers shape) - No need to pay tax.

- Can cause health issues like obesity, diabetes, etc. - Easily broken when storing in package or bag. - Limited flavours in Vietnam (only original flavour) for many years. Sometimes, consumers want to experience new things, and KitKat should create and introduce new flavour in Vietnam before other brands took that advantage.

OPPORTUNITY

THREAT

- Expand the market in Vietnam - Use 100% reusable or recyclable materials on packaging by 2025 to minimize the negative impact on Vietnam’s landfill. - People are looking forward to having healthier snacks. (Decrease sugar level, increase the amount of black chocolate, new recipes,…)

IV.

- Have many other international and domestic competitors - There still have a number of people who want a healthy snack, and KitKat hasn't met this demand yet. - Cost of natural ingredients (such as milk, ...) are rising

DESIGN A CUSTOMER DRIVEN-STRATEGY A. Segmentation Segment

Demographic

Youth

Young adults

Young working adults

Mature working adults

Seniors

Age

12 to 18

19 to 23

24 to 34

35 to 55

Above 55

Generation

Z

Millennial

Millennial

X

Baby Boomers

Life Stage

Youth

Adult

Adult

Adult

Senior

Mostly depend on their parents’ income or have part-time jobs.

Have fulltime jobs and in the process of earning income, but not much.

Have stable full-time jobs and ea...