Kraft Australia

ITE 269 Advanced Computer Applications for Accountants

Case Analysis 2: KRAFT AUSTRALIA Velasco, Albert John T. Bautista, Jessica N. Daga, Edward De Jesus, Judy Anne T. Euperio, Pheona Galapon, Ben-nice Joy Geronimo, Janet Nicolas, Krisia Sumawang, Maureen P. Tamayo, Ma. Alyssa N. Umerez, Errol

Submitted to: Ms. Prima Christina DR. Lopez

COMPANY BACKGROUND Kraft Foods Australia is a subsidiary of Kraft Foods, the second largest branded food and Beverage Company in the world. Established in 1926, Kraft Australia is headquartered in Melbourne and has sales revenue of over a $650 million. The company’s flagship brand— Vegemite—has long been considered an Australian national icon. For all the diversity in the worldwide consumer products market, the most successful companies tend to have an important thing in common. They focus on continually improving the business functions that are critical to the consumer products business model, from maintaining vibrant and market-driven product development to having efficient manufacturing and a lean and flexible supply chain. Even more fundamental to consumer-products success, however, is the strength of the relationships companies form with their customers. That’s why a company’s brands, as the embodiment of this bond, represent the most important strategic asset for a consumer products company—indeed the backbone of its success. In a business built on customer loyalty, brands also serve to convey the promise of a consistent and high-quality experience that customers can count on. Maintaining the integrity of this promise—and thus the strength of the brand—is a first level priority for consumer products companies and a key to maintaining and growing market share. The billions of dollars companies spend every year on brand research and advertising attests to the continuous nature of this challenge. With demographics constantly changing and new market opportunities opening up, consumer products companies need to not only strengthen their brands, but also ensure that they are in sync with marketplace trends. It was through such an exercise that Kraft Australia (www.kraftfoods.com.au) made an important discovery. Its hero brand, Vegemite, has been a beloved fixture in Australian households since it was introduced half a century ago. While its brand remained strong, Kraft found that a large portion of “new” Australians—such as those who immigrated into Australia—had no relationship with the Vegemite brand. Seeking to tap into this market potential, Kraft was determined to gain a comprehensive understanding of this group, and more specifically its beliefs and attitudes toward Vegemite. At the same time, Kraft was also looking to bring its longtime brand message—which featured children as “Happy Little Vegemites”—up to date with changing lifestyles, demographics and usage patterns. Kraft also understood that there were many lapsed users who had grown up on the spread who needed to be reminded of their affinity for the brand. Kraft didn’t take such change lightly. It was determined to get the deepest possible insights into what consumers were thinking and saying about the Vegemite brand and to tailor a message that would resonate most strongly with those themes. The web offers a wealth of the insights from consumers through web content. There are half a million mentions of Vegemite out of 1.5 billion posts of user generated content across 38 languages. These can provide Kraft the answer that they may need. One of Kraft’s goals going into the research was to test certain hypotheses about the kind of issues it would address in its upcoming advertising campaign. An example was whether or not customers were looking for variations to the “classic” Vegemite product, and if so what they should be (e.g., new flavors, different jar sizes.)

BUSINESS OBJECTIVES

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Change the branding campaign based on how the consumers view and used Vegemite Identify market opportunities at a very early stage Detect and respond to threats to Kraft’s brands and corporate reputation Ability to increase sales and customer loyalty through more targeted advertising campaigns

QUESTION AND ANSWER 1) What are the problems that Kraft Australia would like to address? a. Analyze the issues and challenges in naming a brand (new brand, brand extension, rebranding). b. Construe the effectiveness of crowd sourcing in branding decisions. c. Appreciate the importance of marketing research in branding decisions. d. Construe the pros and cons of using social media as a marketing tool to generate publicity for a product. e. Analyze why the target segment rejected the brand name 'iSnack 2.0' for the brand extension of the iconic Vegemite brand. f. Explore ways in which Kraft could have made the branding campaign more effective and also explore branding strategies that Kraft's marketing team can adopt in the future. 2) What are the data available that can be used for analytics solution? a. Sales Report b. Strength and Weakness i. Strength 1. Strong Brand Image and Product Innovation 2. Strong distribution Network 3. Focus on Research and Development ii. Weakness 1. Declining Profitability 2. Geographic Concentration c. Feedback 3) How can these data be used to identify the customers view and use Vegemite? a. Sales Report can be used to monitor product standing in the market if it is still profitable and if it is declining the management will able to make ways how the product will be profitable again. The organization may know who are their customers based on the sales report, those who always buy and those who frequently buy. This will also lead to the conclusion if the customers like the product or not. b. Knowing the strengths and weaknesses of the product enables the organization to determine how the customers will react on product and who is the real market of this product and if they could innovate it, to target other markets. c. Feedback is the most important data in identifying the customers view and use of the product because the organization will able to know what exactly the customers wants on the product and what are the other factors may affect the product.

4) What are the possible solutions that can be provided for Kraft Australia to help them solve their problems? a. Descriptive Analytics: i. Kraft Australia is headquartered in Melbourne and has sales revenue of over A$650 million.(1926) ii. Vegemite considered an Australian national icon.(1926) iii. The ‘Happy Little Vegemites’ jingle is adapted into a television commercial featuring famous marching band. (1950 – 1960). b. Predictive Analytics: i. Although Vegemite becomes famous and earn Australians costumers loyalty, Vegemite should have deeper insights in immigrants like their language, culture, hobbies, and personal backgrounds so that vegemite will not be only patronize by local customers but also other country. c. Prescriptive Analytics: i. Kraft Foods should aware where the majority of immigrants came from and conduct analysis for what culture and food they usually eat. ii. Based on our research 2011 Census most of the immigrants came from New Zealand(16.2%) of totaled 158,021 (Wikipedia.com) iii. Kraft foods may established a food systems that will enables them know how their customers consume their products and they may also share it to a more larger market iv. Also they could provide recipes in the label of the product that will help new customers know how they could use the product. v. Kraft Foods may also use advanced algorithms (based on patented technology) to extract insights from user generated content posted on the Web in the form of blogs, message boards, and online news sources. Its purpose is to monitor the online “chatter” associated with their brands, and thus enable them to detect and react to content messages that have the potential to adversely affect their brand and reputation and has ability to: 1. Identify market opportunities at a very early stage 2. Detect and respond to threats to Kraft's brands and corporate reputation 3. Increase sales and customer loyalty through more targeted brand advertising campaigns.