Creating the Brand Experience

Skittles Case Study

SAATCHI & SAATCHI

August 23, 2005

Objectives

• Why and how did Skittles change its brandpositioning and creative strategies?

• What exactly did Skittles change?

• What is the roadmap for developing insightful andimpactful communications?

Skittles Background

• A European favorite, Skittles was launched in theUSA in 1981

• A bite-sized candy with a coated hard shell andchewy center

• Competitive set: Fruit-flavored confectionaries,primarily non-chocolate candy and gum

Confectionary Market Dynamics (USA)

• Non-chocolate candy sector value is $5.3B– Chewy candy: $659MM for 2003, 1.4% YOY– Gum: $309MM for 2003, (4.8%) YOY

• 427 new candy products were launched in 2004

• Per capita consumption of candy and chocolateis 22.3lbs for 2003 vs 18.9lbs in 1984

• Mature and consolidating sector w/ increasedcompetition from other vertical “players”

Source: USDA; National Confectioners Association; Convenience Store News, 2005

Confectionary Trends

• Novelty– Part candy, part toy

• Licensing and entertainment partnerships and tie-ins

• Transformers– Candy changes into gum

• Extreme mints– Liquid mint blasts and capsules

• Mash Ups– Unorthodox flavor, texture, and taste combinations

Source: candyindustry.com, 2005

Make me Feel “It”

Sweeten Up

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Not inclusive of broader competitive set eg, macrosnacks

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Creativity

“Taste the Rainbow”

A Functional Benefit Strategy

Pre 2005

Skittles: Product Truths

• Hard, shiny, colorful shells• Fruit-inspired soft, chewy

center• Round/disc-like• Fruity and floral aromas• Noisy and crunchy• Signature “S” badge

Base Brand (Original Skittles), does not include line extensions

Taste Messaging…Simple but Limiting

• Skittles previous communications (pre 2005)focused solely on taste and flavor messaging– “Taste the Rainbow”

– Target: Gender Agnostic teens, ages 13-17 whofrequently consume macrosnacks

– User Benefit: Combination of fruity, tropical, andcolorful flavors; multi-sensory (hard & chewy) -Rational

– Reason to Believe: Only Skittles brand is thecolor of the rainbow

A Literal & Undifferentiated Positioning

“Taste the Rainbow”

Experience the differenthues, flavors of Skittles

When I want a fruit-flavored candyConsumer Motivation

Product Offering

Brand Message

(Product)

Only 1/2 of the Story

“Taste the Rainbow”

Diagnosis

• Messaging taste and flavor in a commoditized andundifferentiated category, where rational elementsare the “price of entry” is not a strategy

• Product has become king, trumping the actualbrand; once consumption is finished, the brand hasno extraneous role for the user– No emotional dialogue or relationship with

user/audience

Implications

[Young] consumers value relationships with brandsthat have a clear POV, stand for something, and aredifferent. Brands that do not strategically soundbrand promise, defined essence, and positioning,run the risk of consumer disinterest

– Low awareness– Infrequent consumption– Ambiguous perceptions– Negative equity measures (eg, regard,

recognition)– Weak brand loyalty

“Believe the Rainbow. Taste the Rainbow.”

An Evolved Experiential Brand Strategy

2005

Skittles: Target (Lifestyle)

• 13-17year olds; sweet spot 16• Full time students (junior to high

school)• Responsibilities: Part time gig,

community service, familial duties• Living life to the fullest (active)• Social creatures powered by

positive energy• Vibrant and dynamic personalities• Multi-cultural/ethnic• Self expressive and experimental• “On the Go” but not sure how to

get “There” yet…

Source: LSI, 2005

Skittles: What/When is it for?

• Functional– Gives me a boost– Lets me focus– Satisfies my indulgence– Flavor rush– Allows me to feel

• Emotional– Makes me excited– Brings out positivity– Changes my perspective– Makes me happy– Engages all of my senses– Affirms my good mood

The Solution

[Young] consumers value relationships with brandsthat have a clear POV, stand for something “real”,and are freshly different. The experience can begreater than the product.

Develop natural product extensions that organicallycreate occasions/moments for the desired andintended experience and/or solution to an unmetneed.

Skittles Smoothie Mix Skittles Bubble Gum Skittles: Original, Sour, Tropical,

“Blend the Rainbow” “Inflate the Rainbow” “Hear, See, Touch, Smell, Taste… theRainbow”

Multi-sensory Experience

Brand Product

Consumer

“As Real As It Gets”

FROM TO

CANDY EXPERIENCE

IRRELEVANT IRREVERENT

COLOR PASSION

EXPECTED UNPREDICTABLE

13-17 LIFESTYLE

EXPERIENCELIFE INCOLOR

“LIVE W/INRAINBOW”

“TASTE THE RAINBOW”Functional

Emotional

Brand Essence

To users ages 13-17, sweet spot 16, who use candy and macrosnacks, only Skittles delivers afruit-inspired multi-sensory experience to color your world…

Assumed brand positioning and benefits

(Product)“Taste the Rainbow.”

“Believe the Rainbow.”(Brand)

The Skittles Experience+

Results

• June 2005 sales have increased 10% (IRI)to approx.$80MM for the 52 weeks ending July 10, 2005

• Unaided Awareness increased 3% (Ipsos-ASI)

• June 2005, Skittles.com had 318K visitors vs 11K forthe same period in 2004

Source: Adweek, August 8, 2005

Advantages of a Prescient Strategy

• Inspiration and development for revenue-buildingbrand extensions - both flavors and new products

• A Skittles differentiated brand in the non-chocolatecandy and gum sectors, and the MasterFoods/Marsportfolio

• Resonation with the target audience - credible and“future proof”