Long Term Maintenance of a Classic Brand Name Introduction

Kit Kat was launched in 1937. Since then, it has consistently been one

of the best selling chocolate bars on the market and has acquired an

instantly recognisable brand name and identity. In 1997, British sales

of Kit Kat amounted to some £227 million, which made it easily the

most popular confectionery product on the market. Forty four Kit Kats

are consumed every second in the UK!

The UK confectionery market is worth over £5 billion per annum and

is highly competitive. It continues to be dominated by large, well-

established names - highlighting the importance to firms of creating

brand identities for their products. Once created, however, a brand

name needs constant maintenance. Kit Kat’s ability to remain a brand

leader over sixty years is no accident. The long term maintenance of a

brand name requires continuous monitoring and investment. Brand

image must be seen as a dynamic, not a static factor; the same

consumer perceptions that create brand loyalty can also turn against a

product that fails to adjust and adapt to changing attitudes.

This case study focuses on Nestlé’s Kit Kat and the long term

brand name maintenance strategies which have sustained Kit

Kat’s position as a market leader for over sixty years.

What is a brand  name?

Branding is the collection of attributes

that the consumer has come to expect

from a product, which will strongly

influence their buying patterns.

Branding can be achieved using a

company name - it can be applied

generically or, as in the case of Kit Kat,

on an individual basis. The brand name

promises the consumer particular

benefits, such as quality and value for

money, with these expectations being

built up over many years. A brand

name is often considered by a company

to be its most important intangible

asset. In a market where repeat

purchases are the key to profitability, a

brand name becomes paramount to a

product’s success.

A catchy name and distinctive

packaging are vital ingredients in any

brand image, but the true essence of a

brand identity lies in the consumer’s

mind i.e. the perceptions of the product.

A company must be constantly aware

of these perceptions and try to preserve

and build on them through advertising

and other promotions. Branding

enables marketers to build extra value

into products and to differentiate them

from their competitors.

The history of Kit Kat emphasises the

importance of successfully managed

brand names to the company that owns

them. Nestlé was prepared to pay a

record price to acquire Rowntree in

1988 because of the prestigious brands

in Rowntree’s product portfolio. Kit

Kat was an important part of the

portfolio. This acquisition prompted

the City to look into the possibilities of 

including a financial valuation of a

brand as an asset on a company’s

balance sheet.

 Product life-cycleBusiness theory suggests that products

follow a life-cycle, going through

phases of development as follows:

• the conception of an idea/product

• research and development

• introduction to the market.

A period of growth then follows as

consumers become increasingly aware

of the product and, if successful, it

becomes profitable. Eventually, the

growth of sales will level off - this is

the mature phase and is usually the

result of increased competition. The

theory predicts that sales will gradually

decline as the market becomes

saturatedand consumer tastes change.

However, it would be wrong to assume

that after the uphill struggles of the

development and growth phases, life

becomes easier on the level. It is a

considerable challenge to the marketers

to prolong the profitable mature phase

for as long as possible, using a range of 

extension strategies.

A major drawback with the product life

cycle theory is that it cannot be used as

a predictor. Firms may be able to

identify some of the stages of 

development from historical sales data,

but they cannot know their exact

position on the cycle, nor in which

direction they might be heading. In

addition, some products seem to enjoy

very long maturity, if not immortality,

with no signs of decline. Extending the

product life span is the goal of many

firms, but achieving this requires

careful co-ordination of corporate and

marketing objectives and strategies.

 Nestlé’s corporate objectives

It is vital to any firm that its marketing

objectives are compatible with the

overall corporate objectives. In

selecting corporate objectives and

strategy, a firm might wish to refer to

the Boston Matrix, Ansoff’s’ Matrix or

use a simple SWOT analysis to

establish where the company is and in

which direction it wishes to head. For

example, a company planning to

consolidate its position within a

national market might set very

different objectives for the marketing

of its products to a company wishing to

expand into international markets. This

in turn would affect the marketing

tactics each company might employ.

Confusion can often arise when

attempting to reconcile marketing and

corporate objectives. It could be argued

that the success of any firm depends on

its ability to satisfy a consumer need at

a profit. This is, itself, the essence of 

marketing - so it could also be said that

marketing and corporate objectives are

the same thing. However, this would

imply that marketing is more important

than the other functional areas, when

clearly they are all inter-dependent.

Ultimately, any corporate strategy must

both reflect and dictate to each of the

different functional areas of the firm.

Nevertheless, the information provided

by the marketing department will be

central to any corporate strategy

formulation. This will include sales and

market share, analysis of the

competition, sales and profit forecasts

for the future and analysis of changing

consumer attitudes.

Nestlé’s corporate objective is to be the

world’s largest and best branded food 

manufacturer , whilst ensuring that the

Nestlé name is synonymous with

products of the highest quality. In

recent years, the company has pursued

a policy of expansion and

diversification through acquisitionand

divestment to achieve a more balanced

structure to the business.

Global brand names can achieve

substantial production and purchasing

economies of scaleand, as world travel

increases, so does the importance of 

instantly recognisable products. With a

product portfolio which includes eight

of the thirty top selling confectionery

brands, such as Quality Street, Aero,

Smarties, Polo and Rowntree’s Fruit

Pastilles, Milky Bar and After Eight, it

is extremely important that the

marketing objectives for each product

line are fully compatible with the

overall objectives of the company as a

whole. Like any group of individuals,

each product has its own character,

strengths and weaknesses and

consequently, the marketing objectives

of each product need to be specifically

tailored.

Objectives What is the company

trying to achieve?

In which direction are

we headed?

Strategy How can we get there?

Tactics What specific actions

need to be taken, by

whom and when?

Control How can we judge

whether we are being

successful in achieving

our objectives? How do

we measure our success

or failure?

 Marketing objectives and strategy

Having decided its corporate objectives

and strategy, Nestlé can set marketing

objectives for each of its product lines

and profit centres. The primary

objective for Kit Kat is to maintain its

 position as the UK’s number one selling

confectionery brand . In order to

achieve this, Nestlé has to develop a

SALES Injections of new life using extens

TIME

     D     E     V     E     L     O     P     M     E     N     T

     G     R     O     W     T     H

     G     R     O     W     T     H

     G     R     O     W     T     H

     G     R     O     W     T     H

     M     A     T     U     R     I     T     Y

     S     A     T     U     R     A     T     I     O     N

     D     E     C     L     I     N     E

 

The product life-cycle

 

marketing strategy that will take into

account all the elements of the

marketing mix. This will involve

individual strategies for pricing,

product development, promotion and

distribution. For an established brand

name, these strategies must be flexible

and relevant to each new generation of 

consumers, but at the same time, great

care must be taken not to damage the

perceptions of the product built up over

decades of marketing.

Kit Kat has a particularly broad

consumer profile and is popular with

all age groups. The Kit Kat marketing

strategy can be summarised by the line

‘Broad in appeal, young in feel and big

in stature.’

 Marketing tactics - 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.

YEAR PRICE

1937 2 old pence

1941 2.5 old pence

1958 5.5 old pence

1962 6 old pence

1973 3.5p

1983 15p

1993 24p

1995 25p

1998 27p

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

60% of 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.

The importance of evaluating the success

 of Nestlé’s brand  strategy

An important ingredient in the pursuit

of any objective is control. It would be

irresponsible of a firm to commit itself 

to objectives and strategies without also

setting in place the means to monitor

and evaluate its success. In the short

run, Kit Kat’s sales figures are a key

indicator of success, enabling Nestlé to

assess growth and market share

performance and compare its progress

with that of its competitors. However,

in the longer term, it is also necessary to

gain market research information on

consumer perceptions. Consumer

attitudes constantly change over time. If 

Kit Kat is going to maintain its brand

leadership, it must be aware of and

adapt to these changes. The market

never forgives complacency.

ConclusionKit Kat’s success can be attributed to

consistency in its marketing, whilst

allowing for minor changes to maintain

a modern image. Above all, the brand

has enjoyed continuous backing with

investment in marketing to both the

trade and consumer sectors, enabling it

to compete successfully with both

established and new products.

Continuous reinforcement of the brand

message through advertising and

promotions has enabled Kit Kat to

sustain its popularity over a long period

of time in the face of rapidly changing

consumer attitudes and tastes and

consumption patterns.

1How does Kit Kat’s advertising

target both the consumer and the

purchaser?

2Visit a supermarket and a small

independent retailer. List the

different countlines available, their

prices and manufacturers. What

evidence is there of price and non-

price competition? What is the best

way of presenting these results?

3Select two special edition

chocolate bars and devise a market

research questionnaire to evaluate their

success and discover to what extent

they reinforce the brand image.

4What is meant by the terms

‘acquisition’ and ‘divestment’?

How has Nestlé used these to achieve

a more balanced structure to its

business?

5Draw up a Boston Matrix and

Ansoff’s Matrix. With reference to

these and using SWOT analysis,

explain Kit Kat’s marketing strategy.

6Discuss the advantages and

disadvantages of corporate, generic

and individual brand names.

7List the intangible assets a firm

might own. Why is it important to

consider these when valuing a firm?

8Produce two corporate strategy

statements, one for a firm wishing

to consolidate its position and fight off 

competition in a domestic market and

one for a firm wishing to expand into

European markets. How will these two

different objectives affect the

marketing strategies and tactics?

9Define the following terms used in

the case study:

product life-cycle

brand image

corporate objectives

marketing strategy

control

promotion

imperfectly competitive markets

unique selling points

distribution channels

product portfolio.

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