The Company Project Kit Kat

The company Project

Name : RAHUL . J . BHATIA Company : NESTLE product : KIT KAT course : BBA year : 2nd YEAR ( SML ) Registration number : 091607278

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Contents

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Executive Summary

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Introduction

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Market Environment

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PEST-G analysis

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The Competition

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The Company

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SWOT analysis

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Product Life Cycle

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The company’s marketing strategy

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BCG Matrix

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Marketing Mix

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Evaluation of Company’s Strategies and Tactics

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Conclusion

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Appendices and Referencing

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Executive Summary

This project gives and introduction of the company Nestlé and aims at providing detailed information of one of its famous product Kit Kat. This company project also aims at allowing understanding of important marketing aspects of Kit Kat like the SWOT analysis and the Marketing Mix ( 4 P’s) . Nestle and Kit Kat’s sales and profit trend have been explained. This company report also aims at explaining the product life cycle of Nestle’s Kit Kat. Other key points to be looked at in this report are its main competitors and their market share, also the evaluation of the company’s strategies and tactics have been explained. The company’s marketing strategy has also been elaborated in the company report. By the end of this report we will be able to understand where Nestle and its product Kit Kat stand.

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Introduction

Nestlé S.A is the worlds largest consumer-packed-goods company with its headquarters founded in Vevey, Switzerland. Nestlé was a company that was formed after merging two companies i.e., Anglo-Swiss milk company which was owned by brothers George Page and Charles Page and was formed in 1866 and Farine Lactée which was formed by Henri Nestlé in 1866. During the First world war and the Second world war the company grew significantly, eventually expanding its offers and products beyond condensed milk products and infant/baby formula products. Today Nestlé has a large variety of products to offer like infant food, ice creams, chocolates, and beverages like coffee and bottled water. The product of Nestlé that has been chosen to work on for this company project is Kit Kat. Kit Kat was launched in 1911 by the name of “Kit Cat” by a company named Rowntree a confectionary company which was based in York, United Kingdom. It was discontinued after 1930’s for a while as the company gave promotional importance to other products. It eventually came back in the market in 1939. It picked a global name by the 1950’s and was later acquired by Nestlé in June 1988 through the purchase of Rowntree. This gave Nestlé a global control over the brand except it had no control over the North American region as The Hershey Company already acquired the license to produce Kit Kat all over North America. Kit Kat is a chocolate bar that consists of creme-filled wafer which is covered with smooth milk chocolate. Each of the finger of the traditional four-fingered bar can be snapped of one at a time.

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The Market Environment

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The Geographical Market :

Kit Kat has a big geographical market. Even though it was acquired by Nestlé in 1988, it did not struggle under it at all since Kit Kat was already internationally recognized. It is produced in 17 countries by Nestlé namely UK, India, Japan, China, Australia, Canada, New Zealand, Egypt, Algeria, Turkey, Malaysia, South Africa, Germany, Venezuela, Mexico, Bulgaria and Spain. Kit Kat in the USA is produced under the license by The Hershey Company due to the prior licensing done by Hershey’s to produce Kit Kat in the North American region.

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What Business Are They In :

Nestlé is into food industry. They are basically a multi-food industry to be precise. They products in almost every food sector from infant food for children from the age of two-to-five, to beverages, chocolates, seasonings, frozen food, cereals, coffee, tea, water, ice creams etc., for adults to pet-care food for pets. Their product Kit Kat has its separate marketing done and it is into the chocolate business with a range of different Kit Kat flavors.

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The Competition 7

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Who Are The Main Competitors :

Kit Kat is a brand that has been in the market from the past 75 years, but still is not a monopoly. It has some serious competition with companies like Cadburys and The Hershey Company.

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Sales and Profit Trend : Cadbury’s sales trend as always been good. Being in the market for over 50 years, this brand originated in UK itself and is considered as the toughest competitor of Kit Kat. Cadbury has seen a rise of over 10% of sales in the UK industry this year 2010. Whereas The Hershey Company’s net sales reached $1.4 billion in the fourth quarter of the year 2009 that means a 2.2 per cent increase in sales.

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Market Share :

Cadbury’s market share in UK slipped down to 30 per cent by end of 2009 where as till date Cadbury has the highest market share in India i.e., 70 per cent. Whereas Hershey’s owns 42 per cent of the market share in the US.

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Target Markets :

Be it any chocolate company, Kit Kat, Cadbury or Hershey’s chocolates are something that have always targeted children and women in the recent past, but these days chocolates are targeting men, women and children as it is something that is meant for both the sexes and all age groups.

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The Company

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Sales Trend :

Kit Kat is a brand which is internationally recognized. The sales trend of Kit Kat has been positive all throughout. Being spread out in 17 countries, Kit Kat has always had abundant sales. Recently in the month of October 2010, Kit Kat declared that its sales had gone up by 10 per cent and at the same time Kit Kat celebrated its 75th birthday.

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Market Share :

Kit Kat’s market share is at a hike in UK recently as it completed 75 years which add to the name of the brand and has increased its market share by 4.1 per cent. Comparing this with the market share of Kit Kat in India its good enough as the market share in India is dominated by Cadburys with 70 per cent market share.

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Business Sector :

Nestlé’s business sector comes under the food industry. They have spread their business in various numbers of food sectors starting from infant foods to foods consumable by children and adults like ice cream, chocolates, frozen food, milk powder etc. to pet care products. Kit Kat belongs to the chocolate sector of their business and is the leading brand of chocolates of Nestlé .

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Project Focus :

Its not that Nestlé has a specific focus on only the chocolate sector of their business i.e., Kit Kat, they have an equal amount of focus on every business sector of theirs and have made no compromise on any products growth. Though in countries like UK and India Nestlé has put in more focus on the chocolate sector of their business and have done no compromise on promoting Kit Kat. So therefore Nestlé in regions of UK and India has main focus only on Kit Kat because of its brand recognition.

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The Company’s Marketing Strategy

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Segmentation :

Prior to Kit Kat’s takeover, Rowntree, the founders of Kit Kat, had set a foundation of the product by cementing it in the heavily populated areas of York later in almost all urban and rural places of UK. This was followed by global recognition to Kit Kat by 1950 which led to diversification of the product when Hershey bought the rights of producing Kit Kat in North America whereas Nestle bought the rights of producing and supplying Kit Kat to the rest of the world except for North America. Nestle segmented the market for Kit Kat in the following ways :

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Geographical : 15

The market is broadly divided into Urban (cities and towns) and Rural (villages). Kit Kat caters the high urban need by making products available that too with a variety with the help of which the rural crowd can be kept attracted. Rural needs are also kept in mind and there is nothing even required for Kit Kat to make an effort to attract rural crowd because of the price. Kit Kat’s price is very reasonable that attracts rural crowd and gives them proper quantity of chocolate as well be it the two-finger Kit Kat or the fourfinger.

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Demographic :

With the youth population getting larger, Kit Kat looks to take an advantage of that. They have also segmented the market for children, adults and aged people. Kit Kat is a type of a chocolate that is light and can be consumed by every age group.

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Income Groups :

Majority of the customer base in market comprises of middle class and upper middle class. But income groups have never been a concern for Kit Kat, as mentioned earlier the prices of Kit Kat have been stable for decades and the prices are such that any income group can afford it.

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Targeting :

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Kit Kat has implemented a strategy of offering itself to its segments in the market. The following are the target customers of Kit Kat.

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Women & Children :

Women and children are the two targets that every chocolate company values the most. They are those to segments of the crowd that are highly into chocolates. For women chocolates can be given as a gift for example the new Kit Kat Senses 8 finger box which is usually meant for gifting it to someone, whereas for kids chocolates are just another reason to avoid boring home food.

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Rural Population :

Since Kit Kat has its price stable and has a very minor change in its price, it can still target the rural crowd by making them aware that compared to their competitors Cadbury their product is cheaper and much affordable.

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Evaluation of the company’s Strategies and Tactics

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Evaluation of company’s current position :

Keeping in mind the company, Nestle is doing pretty well currently at the market and still is the leading producer of different types of foods ranging from infant foods, adult foods to foods meant for pet care.

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Evidence of company’s success (Growth in sales and profit) :

Recently in Nestle completed 100 years in Australia, and chose Sydney as one of its three global IT support centre. In the Oceanic region, Australia is the headquarters of Neslte’s operations covering Australia, Papua New Guinea, New Zealand and the South Pacific islands. Nestle has fifteen factories, eight distribution centres and over 50 offices and 5,700 employees across the region. Annual sales revenue only from Australia alone totaled up to A$ 2.8 billion in 2007.

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Nestle is the largest industrial company of Switzerland, and the biggest food company in the world. It runs a global workforce of 265,000 people in over 481 factories, selling over 1 billion Nestle products every day.

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Prospects for future growth/success :

Invest in new products and bring out a new product in the market. Market expected to emerge rapidly and sales to be up by 45 per cent by 2020.

Conclusion

After all the research, and with the help of PEST-G , SWOT analysis, BGC matrix and the Product Life Cycle, we come to a conclusion that Nestle was and still is the largest food company in the world. Its product Kit Kat till date is highly recognized and preferred by people. The price of a Kit Kat bar is very reasonable to an extent where not only the rich people can afford it but even consumers who are below middle class can purchase it and enjoy the quality of wafer coated with milk chocolate. Though Kit Kat went through ups and downs, but it never vanished from the market despite of loads of attempts from its competitors Kit Kat still stood out to be the brand that is highly preferred. Nestle. In future, also 23

plans to bring out new products and Kit Kat in the near future plans to bring out new seasonal flavors to new markets and increase its sales globally. Kit Kat is ranked one in the UK and aims to be ranked one amongst all other chocolates in the whole world.

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References

http://www.nestle.com/Resource.axd?Id=4FF18A81-0D77-43B4-949D-FC5F740E4EB3 http://en.wikipedia.org/wiki/Kit_Kat http://en.wikipedia.org/wiki/Nestle http://www.kitkat.com/about_kitkat http://www.thestudentroom.co.uk/showthread.php?t=64830 http://www.foodanddrinkeurope.com/Financial/Kit-Kat-sales-up-in-UK-and-Ireland http://candy.amplify.com/2010/02/03/hershey-sales-earnings-increase/ http://www.scribd.com/doc/11274954/Nestle# http://www.foodanddrinkdigital.com/sectors/food-manufacturing/how-good-does-greentaste-nestle-kit-kats-made-sustainable-cocoa http://www.austrade.gov.au/Nestle-celebrates-a-century-of-success-inAustralia/default.aspx

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