Executive Summary

As for this assignment, we have chosen chocolate & confectionery from Nestle,

specifically on Nestle Kit Kat. Here, we have research on the current market situation as

well on SWOT analysis whereby we have done on the strength, weakness, opportunity

and threat of Kit Kat. Furthermore, we have done our own marketing strategy on our

chosen brand such as on the product, pricing, promotion and distribution strategies.

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Table of Contents

Executive Summary.............................................................................................................1

Introduction of Kit Kat........................................................................................................3

Current Market Situation.....................................................................................................6

SWOT Analysis Of Nestle Kit Kat......................................................................................7

Objectives of the Marketing Plan......................................................................................10

Marketing Strategies..........................................................................................................13

Pricing Strategy..............................................................................................................13

Product Strategy.............................................................................................................14

Distribution Strategy......................................................................................................15

Promotion Strategy........................................................................................................16

Conclusion and Recommendations....................................................................................19

REFERENCES..................................................................................................................21

Appendices........................................................................................................................25

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Introduction of Kit Kat

The origin of Kit Kat can be traced back to 1935, which a four-finger wafer was

launched in UK as “Rowntree’s Chocolate Crisp” (Netnewspublisher.com, 2010). The

idea came from one of the Rowntree’s employees who felt that Rowntree’s should make

‘a chocolate bar that a man could take to work in his pack up (packed lunch)’

(Netnewspublisher.com, 2010). The name changed to Kit Kat Chocolate Crisp in 1937,

before finally becoming Kit Kat in 1949 (Netnewspublisher.com, 2010).

Figure 1: Advertisement of Kit Kat in 1937 (Nestlé S.A., n.d.)

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Figure 2: Advertisement of Kit Kat in 1950’s (Nestlé S.A., n.d.)

Kit Kat has seen many changes during its first 76 years – a temporary move to

blue wrapping when the recipe had to change during rationing in the Second World

War, the development of a two-finger variant in the 1960s and expansion across Europe

in the 1970s (Netnewspublisher.com, 2010). However, for the last 51 years, there has

been one constant: the now-classic advertising line, ‘Have a Break, Have a Kit Kat’,

which appeared in one of the UK’s earliest commercial TV advertisements in 1958

(Netnewspublisher.com, 2010).

Figure 3: Kit Kat 75 years full cycle (Anna Rudenko, 2010)

In 1988, Nestlé acquired Kit Kat through the purchase of Rowntree's (Nestlé S.A.,

n.d.). This gave Nestlé global control over the brand (except in North America), and the

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past two decades have seen an ever-more hectic pace of brand development in established

markets and manufacturing expansion in emerging markets (Netnewspublisher.com,

2010).

Throughout the decade Kit Kat has introduced dozens of flavours and line

extensions within specific consumer markets. Kit Kat bars contain varying numbers of

fingers depending on the market, ranging from the half-finger sized – Kit Kat Petit in

Japan, to one large finger – Kit Kat Chunky, to the three-fingered variants in Arabia, to

the twelve-finger family-size bars in Australia and France (Nestlé S.A., n.d.). In Ireland,

the UK and America Nestlé also produce Kit Kat Ice Cream, and in Australia and

Malaysia, "Kit Kat Drumsticks" (Nestlé S.A., n.d.).

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Current Market Situation

In the current market situation of products such as chocolates, there are a few

leading brands in the chocolate world. Twix by mars, Hersheys, Galaxy, Kinder Bueno,

and time out by Cadburry are a few of Kit Kat’s main competitors. Despite the heavy

competition, Kit Kat remains as one of the UK's best-selling chocolate bars. But recently

In both the US and Canada, the Kit Kat is also extremely popular and is one of the

top ten candy bar brands. In 2006 (William Grobel), Kit Kat came in at number three for

the UK’s most valuable confectionery brands whereas Cadbury dairy milk came in at

number one and Wrigley extra at number two.

Some experts such as William Grobel, marketing director of intangible business

states that Kit Kat is a brand with a degree of unrealised potential. According to

Brandirectory (n.d.) brand value is considered to be the net present value of the estimated

future cash flows attributable to the Brand. Kit Kat’s brand value as at 31st December

2011 is to drop by $3,279m.

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SWOT Analysis Of Nestle Kit Kat

Strengths

The main strength of Kit Kat is being owned by Nestle, the world’s largest

nutrition and food company and globally successful folio of products and brands. This

itself is a huge promotion for Kit Kat that ease the market penetration whereby customer

believes that Nestle production itself is high standard of quality product and image.

Kit Kat being not only a chocolate but also a wafer gives a different texture of

chocolate combination of wafer whereby most people still have it in their favourite list.

It was Kit Kat that came up with a chocolate-wafer combination and could not be

overtake by its main competitor Cadbury’s Time Out till date (Anon., 2010).

Kit Kat has creative, simple and visible advertising where the slogan “Have a

Break, Have a Kit Kat” created a hype among customers especially children and

youngsters which creates high brand awareness.

Kit Kat products are easily reachable as it can be found in small grocery stores

up to huge hypermarkets. Furthermore, Kit Kat has been one of Nestle best selling

products for its high sales and revenue record (Anon., 2010). Revenue generated by Kit

Kat is $201.8 million with a unit sale of 202.5 million according to CNBC (Fox, 2011).

Weakness

In European countries, Kit Kat has expanded vastly but in regions like Asia

especially in Malaysia as in small towns and villages, it is still not so recognized. Thus,

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Kit Kat is lacking on distribution strategy to reach small towns and villages and pricing

should be lowered as the citizens here are usually low income earners.

Nowadays, people are becoming more health conscious and avoiding having

chocolates. Moreover, Kit Kat does not have any health- conscious chocolate bars that

attracts health conscious crowd. In addition, packaging is a silent promoter for a brand

and Kit Kat has not change its packaging style for some time. Possibility to attract more

customers indeed is there if Kit Kat tries changing its packaging style.

Opportunities

Expanding market growth in emerging countries such as Russia, Brazil, India and

China would be an excellent strategy to improve their revenue. Company can opt to

establish a company in China And India for cheap labor.

Kit Kat came up with “The Cocoa Plan” where Kit Kat enhancing the product

quality and the production of cocoa by itself which can help to reduce production cost.

Growth of technology, helps Kit Kat continuously improve their product into a quality

and environmentally friendly (Aboumerhi, 2012).

Adding on, chocolate confectionery market is growing as well the sales whereby

it is expected to increase from $83.2 billion in 2010 to $98.3 billion in 2016 (Aboumerhi,

2012).

Threat

Due to rising costs of raw materials, fuels, dairy cost and the hiking price of

packaging and manufacturing result in a higher price of Kit Kat product. This shifts the

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price burden towards the consumers by the company, whereby shrinking packages which

is unnoticeable, so consumers pays same price for less product (Fifield, 2007).

Contamination to the product will cost in recalling of the brand. This is caused by

the weather or irresponsible attitude of workers and quality check. For instance in 2009

there was a outbreak of virus e-coli in the Toll House brand cookie dough which made it

to recalled (Anon., 2010).

Lastly, there are huge competition (Fifield, 2007) with Mars, Cadbury and Twix

in market where Kit Kat has to compete to remain an established brand and favourite

chocolate-wafer.

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Objectives of the Marketing Plan

Marketing Objective

Marketing objective is an organization statement of what is to be

accomplished/achieve through marketing activities. Before the details of a marketing plan

can be developed, goals and objectives for plan must be stated. Without objectives there

is no basis for measuring the success of marketing plan activities. (Charles W. Lamb,

2009). Kit Kat is stated as “Have Break, Have Kit Kat”

Kit Kat markets its product in two different formats. Which are as follow;

1. Two finger format

2. Four finger format

These formats are promoted and marketed differently in order to cover more than

one market segment, and also to play with the minds of consumer not to be able to tell the

difference. Both formats cover the same aspects of objectives which are needed to

conform to the commonly used SMART criteria.

Kit Kat SMART objectives can be express as follows;

S-Specific

Kit Kat has to adopt to obtain maximum customer satisfaction. Where Kit Kat is

trying to pursuit and coup up with different types of people in the world based on their

culture and eating habits. They try to come up with different types of flavors and size just

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to satisfy customer needs in order to survive in the business market. For example in

France Kit Kat produce its products in form of “Balls”, In Singapore, you’ll find “Bites”

and In the Arabian region, there’s a 3-finger version and so many others according

geographical regions globally.

M-Measurable

The effects of integration will have on the brand globally. For example in the year

1999, Kit Kat Chunky Sell 50 million units (i.e. 2,750 tonnes of product) as soon as the

lunch of the product. The company also measures the sales they have achieved per week,

per month and per year to get track of the profits they have achieved worldwide and

forecast the measurements made that do the consumers admire Kit Kat. This forecast

measurement helps them in producing Kit Kat according to the huge demand in the

global market.

A-Achievable

In order Kit Kat to achieve its goal, it must obtain maximum profitability. This is

where by increase sales in subsequent years as soon as the launch their products. For

example, to achieve 90% distribution in all sectors of the confectionery market within the

first four weeks after the launch.

R-Relevant

The company must know who their competitors are in order to figure out what

new ideas they are coming up with in order to sustain and succeed by generating

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innovative and unique promotions and ideas for maximum customer attraction. This

information is relevant to their mission statement.

T-Timed line

Follow future recommendations to sustain in the business industry. This will help

Kit Kat to stay ahead of the competition from rival chocolate confectionaries companies

e.g. Cadbury’s, Mars and etc. Nestle has timely goals to manufacture Kit Kat. The

company confirms to produce specific amount of Kit Kats to be delivered in the market

in a given time period.

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Marketing Strategies

Pricing Strategy

In order to sustain a strong brand image in a competitive market is level of

flexibility in pricing strategy. Kit Kat has remained outstandingly stable over the last

sixty years. Kit Kat’s pricing increases as sizes varies, the bigger the size, the higher the

price. Kit Kat able to reduce its production cost of buying cocoa from another company

by investing in their own production “The Cocoa Plan”, which help to maintain the price

of the product in the market.

Food products such as chocolates, ice-cream and snacks are introduce in a low

initial entry price lower than intended established price to attract customers. Kit Kat at

the start could introduce a lower price for its new upcoming flavors. This is can be used

for seeking to enter marketplace and develop a niche for themselves which is known as

penetration pricing (Groucutt, 2005).

Furthermore, Kit Kat has to be a competitor- based pricing (Groucutt, 2005),

whereby there is wide choices for customers to choose the cheapest and best customer

service. However, customers would prefer to a reasonable price in market, thus Kit Kat

will be a price–taker as it has to accept the ongoing market price as determined by

demand and supply. This will be Kit Kat following the price of Cadbury, Twix, Mars and

other chocolate brands. So when price is not a competitive advantage, business needs to

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have other ways to attract customers such as discount prices, free gifts or better

availability.

Kit Kat company can also apply promotional pricing (Groucutt, 2005), during

festivity season as Malaysia is rich with different races and celebration whereby they can

change the packaging color to green during the Eid celebration and others. Kit Kat can

also offer discount pricing in certain time of the year to attract customers.

Product Strategy

In today’s world, creativity and innovation is the key to success. Market research

has shown that consumers prefer special edition to be available for limited periods only.

Thus, Nestlé could release some special edition once a while as it will be a good way of

injecting new life into the product life cycle of Kit Kat.

In term of appearance, Nestlé can release different edition for different holidays

and festivals, with some customised words related to the holiday or festival. For instance,

Nestlé could introduces 4 fingered Kit Kat during Valentine’s Day, with each customised

words such as “Kiss me”, “Hug me”, “Love me”, “Hear me”, to replace the name “Kit

Kat” on each bar.

In term of quality, Nestlé could create better and healthier chocolate crisp which

is low fat, low calories or low sugar. Since nowadays people have become increasingly

health-conscious, Nestlé could reduce the sugar level in the ingredients of Kit Kat or

come up with new recipe such as high fiber Kit Kat or Kit Kat with collagen.

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In term of flavour, Nestlé can come up with variations that reflect the local

produce and palate of each region, and create more unique flavours. For instance,

Cameron Highlands is well-known with its tea plantation, so Boh tea-flavored Kit Kats

could be introduced. Nestlé can also create durian-flavored dark chocolate Kit Kats as

Pahang is famous for its durians.

In term of packaging, Nestlé could add on some unique features of the country or

local culture to the packing design of Kit Kat. For example, kangaroo picture on Australia

package, whereas panda pictures on China package. As the result, the limited edition Kit

Kat will turn into coveted souvenirs for domestic travelers, and each flavour will only sell

in the region for which it was created.

As a nutshell, many of the special flavours can only be introduced for a limited

time to entice consumers to try something new while they can, then Nestlé have to

quickly take off from the market. Excess inventory can be collected and use to create the

mixed bags of consumer favorites and exciting new flavours as high-value gift bags, and

sell during the major gift-giving periods, such as New Year, Father’s Day, Mother’s Day

and Christmas.

Distribution Strategy

Distribution strategy is referred as a plan created by the management of a

manufacturing business that specifies how the firm intends to transfer its products to

intermediaries, retailers and end consumers. (Business dictionary, 2012)

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For Kit Kat to control, vary its marketing of its product and to influence huge

number of customers to buy the product they must provide it at the right place and at the

right time.

For Kit Kat to be successful in distribution of its product and marketing in the

future it has to come up with a new plan and idea which will penetrate and be stable in

the change of business environment and to survive in a huge business market where

they’re a lot of competitors. For example they can offer their inventory of its product

through both online and in-store means, satisfying customers of different needs and

shopping styles.

Other than that, Kit Kat can offer their customers a place to buy their products as

well as offering to deliver the products right to their doors. In the end, both Kit Kat and

its customers will approach to this situation which will provide the most profitable

situation.

Furthermore Kit Kat can expand its product ranging from Kit Kat Snacking range,

Kit Kat Hunger range and any name that come up. This will help Kit Kat to show that

they care and are willing to change due to the changing of business environment and also

the change of technology in order to be up to date and more the less to survive and also to

maintain its current position in marketing by distribution.

Promotion Strategy

For Kit Kat to maintain as one of UK's best-selling chocolate bars, they need to

have an outstanding promotion strategy to maintain as the best. One of the ways they can

do that is by advertising. Advertising plays an important role in promoting the product as

advertising is a paid form of communication, delivered through media from an

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identifiable source, designed to persuade the receiver to take some action, now or in the

future (Grewal and Levy, 2008).

Kit Kat can advertise with creative and innovative advertisements such as

television advertisements, magazines and newspapers, posters, outdoor advertisements

such as the Kit Kat bench, and of course advertisements through the internet like social

networks to capture the hearts of consumers once more. By doing so, Kit Kat may boost

sales as in the past, Kit Kat has generated remarkable success from net advertisement as

their $1million campaign achieved results Nestle would normally have expected from a

television campaign, but at a quarter of the cost (Lara Sinclair, 2009).This gives Kit Kat

a better chance to generate impressive profit.

Apart from that, product placement is also one of the promotion strategies that can

be used for Kit Kat. Product placement is a form of non-personal selling in which the

marketer pays a motion picture or television program owner a fee to display his or her

product prominently in the film or show (Grewal and Levy, 2008). Famous celebrities

can promote Kit Kat by having it appear or consuming it in their film or show. By doing

so, this can ignite an interest in Kit Kat as Kit Kat’s potential customers who idolises the

celebrity would follow every step of the celebrity and consume the product. For

example, Kit Kat is one of the featured brands that has appeared in 2 films which is exit

wounds in 2001 and sex and the city in 2008 (Brand Channel, n.d).

Furthermore, Kit Kat can adopt sales promotion as part of their strategies. There

are many types of sales promotion that can be used. One of the sales promotion strategies

are coupons which is a certificate with a stated price reduction of the item (Grewal and

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Levy, 2008). Deals such as feature price and buy one get one free is another sales

promotion used by many firms (Grewal and Levy, 2008). Moreover, sampling offers

potential customers the opportunity to try a product before they make a buying decision.

This is one of the most costly sales promotion tools but also one of the most effective

(Grewal and Levy, 2008). Besides that, point-of-purchase displays are merchandise

displays located at the point of purchase, such as the checkout counter in a grocery store

(Grewal and Levy, 2008).

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Conclusion and Recommendations

In conclusion, Kit Kat is one of the most popular chocolates all around the world,

owe to its marketing strategy all over the years. Its trademark ─ red and white colours

and the distinct “Kit Kat” logo makes it one of the most recognized brands ever. The

marketing strategies of Kit Kat chocolate were good enough, but like any other product

there is always room for improvement. Kit Kat can also improve its competitive

advantage by adopting new and innovative strategies.

No matter how effective the promotion and packaging, a firm will find it difficult

to market a product which fails to satisfy a consumer need. Since nowadays people are

concern about their health, Nestlé could create Kit Kat which is low fat, low calories or

low sugar to target on the health-conscious consumers. Besides, it can also create higher

value product such as high fiber Kit Kat or Kit Kat with collagen to increase its sales.

To increase more loyal Kit Kat consumers, it is time for Kit Kat to change its

packet design. It can be turned into limited edition or coveted souvenirs by adding some

unique and attractive features to the packing design, so that people will be attracted and

buy it as their personal collection just because it is a limited edition.

Although there are numerous weakness and threats awaiting Nestlé Kit Kat to

neutralize and overcome, the brand has been performing excellently during its 76 years of

development. The company’s competitive strategy has made a good impact on Kit Kat in

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establishing a strong and positive brand. Kit Kat has a lot of strengths and opportunities

to build upon it to face future challenges. It can be confidently anticipated that Nestlé Kit

Kat will keep demonstrating and improving its position in chocolate and confectionery

industry.

3200 words

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REFERENCES

Aboumerhi, W., 2012. SWOT Analysis. Your Way, Your Kit Kat, [blog] 10

Available at: <http://kitkatlebanon.blogspot.com/2012/03/swot-analysis_10.html>

[Accessed 20 June 2012].

Anna Rudenko, 2010, Kit Kat Turns 75 [online], Popsop Ltd., Available from

http://popsop.com/39282/ [Accessed 18th June 2012]

Anna Rudenko, 2010, Kit Kat 75 years full cycle [image online], Popsop Ltd., Available

from http://popsop.com/39282/ [Accessed 18th June 2012]

Anon, 2010. SWOT Analysis Nestle. [online] Marketing research. Available at:

<http://www.marketing--research.com/marketing/swot-analysis-nestl%C3%A9>

[Accessed 21 June 2012].

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Brandirectory, n.d., Brand Value – Definition [online] Available at:

http://www.brandchannel.com/brandcameo_brands.asp?

pageno=12&brand_year_az_all=brand_year_az_all [Accessed on 24 June 2012].

Brand Channel, n.d., Kit Kat [online] Available at:

http://www.brandchannel.com/brandcameo_brands.asp?

pageno=12&brand_year_az_all=brand_year_az_all[Accessed on 24 June 2012].

Corporate Media Relations, n.d., About Kit Kat [online], Nestlé S.A., Available from

http://www.kitkat.com/about.aspx [Accessed 18th June 2012].

Corporate Media Relations, n.d., Advertisement of Kit Kat in 1937 [image online], Nestlé

S.A., Available from http://www.kitkat.com/about.aspx [Accessed 18th June 2012].

Fifield, P., 2007. Marketing Strategy: The Difference Between Marketing and

Markets. 3rd ed. Burlington: Elsevier Ltd.

Fox, M., 2011. America’s Favorite Chocolates. [online], CNBC. Available at:

<http://shine.yahoo.com/shine-food/americas-favorite-chocolates-2514741.html >

[Accessed 20 June 2012].

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Gelder, D. & Woodcock, P., 2003, Marketing and Promotional Strategy, [online], Nelson

Thornes Ltd, Available from http://books.google.com.my/books?

id=GFWvwA4_EF4C&pg=PA16&dq=SMART+OBJECTIVE+OF+kitkat&hl=en&sa=X

&ei=5q_iT-eUD4birAedwtWZAw&ved=0CDIQ6AEwAA#v=onepage&q&f=false

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Grewal, D. and Levy, M., 2008. Marketing. International ed. Singapore:

McGraw-Hil/Irwin

Grobel, W., 2006, Confectionary Brands, [online], Intangible Business Limited, Available from

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Groucutt, J., 2005. Foundations of Marketing. New York: Palgrave Macmillan.

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id=QpCvQfnPpNwC&pg=PT66&dq=what+are+OBJECTIVES+oF+marketing+plan&hl

=en&sa=X&ei=VgLfT5-

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%20OBJECTIVES%20oF%20marketing%20plan&f=false [Accessed 23rd June 2012].

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Netnewspublisher.com, 2010, Iconic Brand Kit Kat Celebrating Its 75th Year [online],

Net News Publisher, Available from http://www.netnewspublisher.com/iconic-brand-kit-

kat-celebrating-its-75th-year/ [Accessed 18th June 2012]

Sinclair, L., 2009. Kit Kat's net advertisement enjoys remarkable success, [online], News

Limited . Available at: http://www.theaustralian.com.au/business/breaking-news/chunga-

the-kit-kats-whiskers/story-e6frg90f-1111118584613 [Accessed 20 June 2012].

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Appendices

Work Break down structure

Members Work Assigned

Yeoh Sook Yen

CURRENT MARKET SITUATION

PROMOTION STRATEGIES

Grijha Selvakumaran

SWOT ANALYSIS

PRICING STRATGIES

Yeoh Shin Yee

INTRODUCTION

PRODUCT STRATEGIES

CONCLUSION AND

RECOMMENDATIONS

Ally Humud Saleh

MARKETING OBJECTIVES

(SMART)

DISTRIBUTION STRATEGIES

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