Question

Kit Kat is the UK's best-selling chocolate bar. 650 bars are consumed every second globally. Kit Kat was introduced in 1958 and continues to generate strong consumer demand. In 2009, Kit Kat was listed as one of Time’s “13 Most Influential Candy Bars of All Time”. Kit Kat is also the number one best-selling chocolate in Japan, and the only non-American brand in America’s list of top 5 chocolate favorites. Kit Kat is the world’s first chocolate bar made from 100% sustainable cocoa. Kit Kat has a case to be the healthiest candy bar in the market. Kit Kat’s tagline is a simple and memorable “Have a break...Have a Kit Kat!” one that effectively communicates the brand’s vision. With such a catchy tagline, Kit Kat has branded itself as the go-to social snack for people of all ages. In late 2013, just as Kit Kat was searching for the next brand to partner with, Google approached Kit Kat with a proposal to name version 4.4 of their Android operating system the Android Kit Kat.

However, in the competitive modern world consumers' tastes continually change. There has been in recent years an ongoing revolution in modifying products. In previous times, sweets and chocolate bars remained in more or less the same form for many years. Today, however, modern sophisticated consumers constantly seek novelty and change, and consumers have become the driving force behind product modification.

Although Kit Kat continued to be the Number 1 confectionery brand, by the late 2010s its volume sales were falling. Faced with several increasingly attractive competitive offerings, consumers began to see Kit Kat in its traditional form as lacking in excitement and interest, with purchases being driven more by habit than positive choice. Although the four-finger Kit Kat continued to be highly popular with its core target market of 25-40-year-olds, it was losing popular appeal with younger consumers.

The image problem was most evident among core count line consumers i.e. The youth segment those who are between the ages of 12-20-year-olds. In this important age group, while Kit Kat had been part of 'growing up' and may also have made regular appearances in lunch boxes, it was hardly relevant to their lifestyle. Moreover, Kit Kat created the International Youth Day that supports the youth of today to move forward in their dreams and aspirations along with enjoying their breaks. Kit Kat intensifies its promotion campaign to this segment during exams time. Students after being exhausted from studying turn to Kit Kat for a break. Kit Kat recognizes the power of digital networks and social media platforms in influencing the youth consumer choice and strategically uses social media to win their affections. The traditional four-finger Kit Kat did not seem relevant to them. In 2011 therefore, Nestlé felt it was time for some re-invention. The company decided to develop a new format of Kit Kat whilst still retaining the four-finger variety with which consumers are so familiar.

Nestle is a market-focused producer that recognizes the need for regular change. This is required because consumers want and demand change, rival firms are constantly re-inventing themselves and their products and, innovation and inventiveness keep an organization flexible and able to respond to further change.

To find out exactly what consumers were looking for, Nestlé carried out detailed market research, including detailed qualitative research. Many pairs of young people were invited to give their views on different formats for the new product whether they preferred one or two fingers, what flavors they preferred (caramel, peanut butter, orange jelly, chocolate layers, etc). Researchers also considered the most appropriate form of packaging to add further interest and attraction to the product. A survey group might consist of, for example, males and females who were 17, 18, 19 or 20 years old, of different ethnic origin, from different parts of the UK, and a mix of students and non-students.

A top Kit Kat competitor, Cadbury is an international confectionery company that is headquartered in London, United Kingdom. It was founded during the year 1824 and the company is owned by Mondelez International since 2010. Cadbury's main objective is to become the World’s biggest confectionery company in the world. Cadbury brand is considered as the second-largest brand in the world. It has its business operations in about 50 countries. Cadbury always seeks to challenge Kit Kat in every segment of the market. Cadbury is legally fighting Nestlé over the shape of Kit Kat. In short Cadbury and Nestlé are bitter rivals and Cadbury is looking for the appropriate time to attack Nestlé.

Questions:
1- As a manager for Kit Kat brand in Lebanon, critically analyze what kind of strategies you can apply during maturity stage and during this time of the corona virus time. Explain the different kinds of strategies and support your answer with real example.

2- An important function of marketing is to drive growth in sales and revenue for a company. Explain all growth strategies that Kit Kat can apply in order to achieve comptetive advantages over Cadburys. What specific strategy would you recommend and why? Support your answer with examples.

3- Evaluate how Kit Kat should segment its market. Which segmentation variable is the most applicable for Kit Kat and what are the criteria they must consider?

4- Not everyone who buys a product has the same needs or wants the same benefits from it. Based on the above statement, discuss and explain how Kit Kat can identify their distinctive market segments with clear marketing implications.

Answer 1

1- At Maturity stage, Kitkat is at peak and demand is not increasing from this point. As manager at KitKat, First strategy would be innovating the KitKat. The innovation could be in terms of packaging or flavor profile. For example- Japan is one of the country where 300 limited edition seasonal and regional flavors of Kit Kat are made and sold. This strategy can be adopted in UK where we can offer few flavors like caramel, peanut butter, orange jelly, chocolate layers, etc to attract target customers of young age.

second strategy would be cause related marketing in this corona virus time. This is the time which can help in increase of kitkat sales as well as create good image. for example- Nestle company can launch a social campaign to donate some profit from its sale of kitkat so customers will buy more to help poor and corona virus victims.

2- The growth strategies which can help KitKat to gain competitive advantage over Cadbury is market development strategy. Under this strategy, Nestle can find new market for its new flavors of kitkat. for example- Indian consumers like chocolate and india only has one flavor of Kitkat. Indian can be new market to sell new flavors of kitkat.

second growth strategy would be differentiation strategy in which Company can offer exclusive and premium range of kitkat like unsusally big kitkat chocolate in premium packaging like gourmet level.

I would recomend market development strategy to reach untap market so that nestle can increase its PLC of kitkat and gain more market share over Cadbury.

3- KitKat should segment its market by using demographic criteria. Under Demographic segmentation, Company divide market based on age, gender, education, family size etc.

The most suitable and applicable segment for Kitkat are young belong to 10-25 years of age. Both men and women especially school and college going students who likes to take break from thier study and eat its kitkat.

4- Kitkat can identify distinctive market segments with clear market implications by Pyschographic segmentation, Geographic segmentation and behavioral segmentation.

Under psychographic segmentation, Kitkat can segment market based on attitude, like/dislike, lifestyle,personality etc.for example- customers with sweet tooth but likes to eat healthy so kitkat is good option here.

Under geographic segmentation meeting customer needs based on location, population, income level etc. for example- Japan sells hundreds of flavor kitkat because Japanese likes to eat chocolate with different flavors variety.

Behavioral segmentation where company can see customer's intent of buying. for example- Kitkat can create a range of premium kitkat range for occassion like wedding, valentine etc.