kitkat case study

7/30/2019 Kitkat Case Study

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KIT KAT Case Study


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Agenda

BRAND - KIT KAT

A case study on long term Kit Kats brand name maintenance strategies

It is about how a once number 1 brand, fallen to number 8, got back to thetop.


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Agenda

Group Details

Company

Current Problems

Situational Analysis

PEST Analysis

SWOT

Recommendations

Conclusion


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Situation Analysis Company Profile

- KIT KAT Nestl's flagship chocolate bar

Product Line Kit Kat 4 Finger, KitKat Caramac , KitKat 4 Finger Fine Dark, 2 FingerKit Kat, Kit Kat Chunky, KitKat Chunky Peanut Butter

Image in Market

Kit Kat is a brand leader over sixty years

One of the best selling chocolate bars and has acquired an instantlyrecognizable brand name and identity.

In 1997, British sales of Kit Kat amounted to some 227 million. Forty fourKit Kats are consumed every second in the UK!

The UK confectionery market : is worth over 5 billion per annum and ishighly competitive.

Technology and Experience technically superior products, following international quality and

safety norms

Primary ObjectiveTo maintain its position as the UKs number one selling confectionary

brand


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Situation Analysis Company Profile

Quantitative Objectives achieve 90distribution in all sectors of the confectionery market

within the first four weeks after the launch sell 50 million units (ie 2,750 tonnes of product) in 1999, the year of

the launch increase sales in subsequent years.

Qualitative Objectives

broaden the number of occasions on which people consume Kit Kat, withthe vision that Kit Kat would be the natural choice for all breaks

increase Kit Kat's market penetration by enticing new consumers to thebrand, and by persuading lapsed users to return to the product, withparticular emphasis on the 12-20 year old segment

create real innovation in the countline market.

Marketing Strategy

Broad in appeal, young in feel and big in stature

Collaborators Dealers, Exclusive Outlets, Confectionary market


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Customers

Product

Cream, Caramel.

Market Size/Growth

In 1997, British sales of Kit Kat amounted to some 227 million. Forty four

Kit Kats are consumed every second in the UK! Market Segments

12 20 years old -> Single Finger

25 50 years old -> Four Finger Kit Kat

Benefits Customer seeking

Seek Novelty and Change

Seek Excitement Decision Maker

Children Parents / Relatives

Situation Analysis - Customers


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Motivation

Impulse something that gives excitement Status Look for Brands Good Quality, technically superior product adhere to international safety

norms

Audio Visual media, Print Media

Habit

Forty four Kit Kats are consumed every second in the UK

1 finger younger generation 4 finger - adults

Situation Analysis - Customers


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Competitors

Reeses, Caramilk, and M&Ms. Oh Henry was a big eat. It was

consistently well supported, and targeted a younger audience than Kit Kat

Original.

Situational Analysis - Competition


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Unlike Kit Kat, these were heavily supported with advertising. Unaided brand awareness of Kit Kat dipped from 24% in 1997 to 20% in1999.

in the 90s, as a result of inconsistent and spotty communications

support, the brand hovered in 4th to 6th place.

In 1999, after 3 years of no advertising support at all, it reached an all-time low 8th place.



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Unlike Kit Kat, these were heavily supported with advertising. in the 90s, as a result of inconsistent and spotty communications

support, the Kit Kat brand hovered in 4th to 6th place.

In 1999, after 3 years of no advertising support at all, it reached an all-

time low 8th place.



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PEST Analysis

Climate or Context

Deregulation to create free market force to open for tensecompetition.The feeling of acceptable goods is directly affected the distributionchannel for product.

As economic grows, disposable income are expected to increasewhich has droved the expense on functional food products.

Inflation-moderate

habit

Technical manufacturing quality has to be of high standards Safety norms need to be considered


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SWOT Analysis STRENGTHS

Strong team work.

The business is well-established; companyhas enough financial strength to keep upwith the advertisement and promotions of

the product.

Its company is working on the brand imageand its brand will maintain clear position inorder to prevent cannibalization.

The company has been positioned ofnumber one brand in 1999 in UK.

The company believes long-term brand

which means it will bring competitiveadvantage to KitKat over their competitors.

Widely known slogan.

Different from competitors range of

product, packaging and taste.

OPPORTUNITY

Expansion - It has the potential to expand tosmaller towns and other geographies.

Modifying products to satisfy customerseeking novelty and change 4 fingers, 2fingers, Caramac, chunky, Peanut Butter

Global hub - Since manufacturing of some

products is cheaper in India,India couldbecome an export hub for it.

WEAKNESSES

Still spending a big amount on the

advertisement.

Dont have a strong special feature of its

product.

Can not deliver better benefit than itscompetitors.

Sales profit was not very impressive.

They have reverse marketing relationship

with their supply-packaging suppliers.

High operating cost and slight price

THREATS

Competition - It faces immense competition

from the organised as well as theunorganised sectors. The IndianGovernment has reduced the import duty offood segments thus intensifying the battle.

Changing consumer trends

Sectoral woes - Rising prices of rawmaterials and fuels, and inturn, increasingpackaging and manufacturing costs


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Current Problems/ Issues

In 1999 was a watershed year for Kit Kat as it dropped to its lowest shareranking in decades, at number 8 in the highly competitive confectionerycategory.

Revitalizing a Brand Leader was felt

Marketing departments are expected to ensure that products do not

go into decline

Mature products need new life injected into them, to keep the buyingpublic interested and aware of the product's benefits.


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Recommended Course of Action

Two Pronged Strategy

Nestl had to reinvest in advertising.

Kit Kat needed a line extension for teens. They prefer

big eat bars like Oh Henry!


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Three Phase Journey back to Number 1

First Phase

Started in 2000

with the return to advertising,

and the launch of Chunkya single Kit Kat finger, 22% bigger

than 4-fingered Kit Kat Original.

Advertising for the overall brand (there was no specific

advertising for Chunky)

was a modernized version of Kit Kats long-running Have a

Break campaign.

This brand effort worked,and by the end of 2001, Kit Kat overall

was at #3. Original was selling more than it did in 1999, and Chunky had a

good foothold.


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Phase Two Started in 2002

Nestl wanted to push Chunky higher, and shifted all advertising

to it.

Kit Kat overall got to number 2.

However, Kit Kat Original had flattened out, which would be a

problem if Kit Kat was ever to get back to number1.


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Phase Three Started in 2003

the team wrestled with how keep Chunky growing, and re-

energize Original, without a significant media increase.

The two bars appeal to very different audiences.

The solution was individual advertising, but with the common

platform: If he deserves a break, you certainly do.

This spawned the Cannes-winning Male Model for Original,

and Josh & Jason for Chunky.

By mid-year, Chunky and Original were both growing.

This propelled Kit Kat to number1with all-time high dollar

shares.


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Strategy and Insights

Phase One (2000 2001)

This phase was based on a threefold strategy:

Strategy 1: Reinvest in advertising at levels in line with competitors.Insight:Kit Kat had to re-establish itself top-of-mind to regain market share.

Kit Kat had been supported in line with competitors in 1993, but this had

dropped to zero.

Competitorssupported by advertisingtook the opportunity to pass Kit Kat in

sales.


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Phase One (2000 2001)

This phase was based on a threefold strategy:Strategy 2: Launch a line extension that offers young people a big eat.Insight:To get to #1, Kit Kat needed to appeal to teens.

Teens eat more bars per capita than any other group.

They are looking for a big eat, and are willing to pay a higher unit price along the way.

But teens, especially boys, were not interested in Kit Kat. They saw it as a brand Moms share with their

kids, not a gut-fill bar like Oh Henry!

A Kit Kat for teens (Chunky) would have to be created.


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Phase One (2000 2001)

This phase was based on a threefold strategy:

Strategy 3: Contemporize the Have A Break idea.Insight:The campaign had potential, but in its old form was not motivating

enough to todays consumers, especially teens.

the ways we take breaks have changed over 40 years.

Todays consumers need an emotional release in a stress filled day.

Traditional breaks have become less acceptable.


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Execution : Phase 1

Advertising In March 2000, an outdoor campaign launched, and ran through July.

In 2001, outdoor and magazine advertising ran throughout the year.

The new campaign updated the break idea, with a more contemporary and youthful feel. Over the two years,there were 37 outdoor and 27 magazine executions.

Chunky: In June 2000, Chunky was launched.

The Brand Advertising Decision: It was decided to launch Chunky without dedicated advertising support --to put it on-shelf next to Kit Kat

Original, and rely on the halo effect of the newly developed brand advertising.

Media Levels were as follows:


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Business Results : Phase 1

Kit Kat vaulted from #8 in 1999 to #3 in 2001.

Over the two years, total brand volume grew 29%.

Chunky was well established, and Original was ahead of 1999 levels, with little

apparent cannibalization from Chunky.


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Cause and Effect : Phase 1

Chunky contributed to the brands growth.

Advertising was also seen as a strong driver given the brand approach and

Originals growth.

Original saw some distribution gains in Grocery, but otherwise had retail

conditions that remained relatively flat:


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Phase Two (2002)

Strategy: Develop teen-dedicated Chunky advertising, and run thisexclusively.

Insight:Chunky is a significantly different product, but many teens(especially those who had not tried it) still saw it as much the same as KitKat Original.

The brand advertising in 2000 - 2001 had helped get strong Chunky growth,

with reasonable distribution levels, and total awareness around 20%. However, Chunkys four-week share never exceeded 2.8%.

In the absence of its own advertising, a baseline pattern had been set.

Many teens who had not tried Chunky still believed it was just another light

snack.

The challenge was to have them realize that it was way better than the Kit

Kat their mothers and little sisters ate, and expand awareness beyond

20%.


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Execution : Phase 2

: Outdoor advertising modified the previous years campaign, reinforcing

Chunkys big eat in teen languagewith headlines like Choc-o-lot, Kit Kong,

Beat hunger with a big stick and Katlossal.


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Kit Kat overall reached #2 with Chunky up 58% and Original basically flat.

There was no cannibalization of Kit Kat Original, but equally, it was hardly

growing.


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Cause & Effect : Phase 2

The Chunky advertising was noticed:Six months after Chunky advertising was launched, its brand awareness doubled

.This correlated with increased trial. Other variables were flat, or consistent with advertising-driven growth:

The table shows Original in a hold pattern. Chunky has increased distribution and display, but this is a

consequence of Chunkys growth, not a cause.


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Phase Three (2003 on)

Strategy 1: Run separate advertising for Chunky and Original, because theyhave very different audiences.Insight:With support only on Chunky, Kit Kat Original had stopped growing.

Kit Kat Chunky advertising had little to no impact on Kit Kat Original sales

because:

1) the big eat message is not relevant to the controlled eat consumer.2) it was in teen language.

3) the media plan was teen directed.


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Strategy 2: Even though they are to be advertised individually, find acommon Have A Break platform for Chunky and Original.

Insight:Kit Kats financial plan would not support the media increaseneeded to support different positionings for Chunky and Original. Kit Katneeded a common theme, to avoid fragmenting its message.

It was clear that Have a Break still had pulling power.

For 2003, the key was to find the break positioning that big eat Chunky and

controlled eat Original could share.


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Strategy 3: Create advertising that embraces break insights in anentertaining, uplifting and humorous way to engage both consumersteensand adults.

Insight:The Have A Break platform needed to be contemporized onceagain.

While teens and adults see breaks very differently, they are still relevant to both.

Teens tend to relax and chill, even when they have nothing to relax from.

Adult breaks are more forced or planned, because they face more daily

pressures.


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Execution : Phase 3

Instead of the problem-solution break advertising of the past, Male Model

captured the universal need to take a break in a more motivating way.

It brought the same message to life with a teen storyline.

These continued to be competitive, though by no means excessive.


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For the first time in over a decade Kit Kat broke back to # 1, as both Kit Kat

Original and Chunky grew.

Overall Kit Kat volume grew 10% in 2003 (tonnage), while the category was flat.


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Cause and Effect : Phase 3

it was clear that the advertising was breaking through and motivating people to

buy.

Furthermore, over the 3 year Results Period, there was no innovation on the

brand beyond the launch of Chunky.


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Conclusion

If Kit Kat is to maintain its brand leadership, it should be aware of

and adapt to these changes. The market never forgives

complacency.


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Conclusion

Kit 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 changingconsumer attitudes and tastes and consumption patterns.

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