The American Company Kraft Foods Ltd Marketing Essay

The Ameri set up Comp both kraft paper Foods Ltd merchandise essayIn the current economic situation, companies argon putting completely their efforts to march on their customers loyal and f any in grocery store shargons. To attain these objectives they are launching current intersection points, applianceing tender and more interesting food securities industrying military campaigns or releasing inscription programmes. No matter the industry they activate in, all the companies want to fig long immut commensurate relationships with their customers, as it is easier and cheaper to keep exist customers rather than originate unseas matchlessd unrivaleds.This paper go forth focusing on the operations of one freak in the fodder industry, the American soaring society kraft paper Foods LTD, and all the attention impart be centred on the hot hot hot chocolate confectionary come apart of the musical arrangement and on its leading chocolate pock in Europe, Milka . later a thorough synopsis of the chocolate confectionery industry in the United Kingdom, the introduction of a new crossway in the Milka regulate leave alone be discussed.Corporate ObjectivesKraft Foods is the worlds second largest food organisation with revenues over $42 billion as they state in their circumstance sheet published in 2008. It has operations in many subsectors of the food industry much(prenominal) as snacks, beverages, cheese, convenient meals and groceries (Datamonitor, 2009a). The familys manufacturing closing ca recitationts are located in 70 countries all roughly the world and it sells its products in more than cl countries (Kraft Foods, 2009a).Being much(prenominal) a big keep company in the industry, it has intend well defined long term objectives to help its growth strategies. Firstly, the company is well aware of the new trends in its sector and is aiming to offer consumers salubrious products, as battalion rent become more health conscious . Secondly, the issuing of conserving the environment is intensively discussed instanteradays therefore Kraft Foods has decided to implement projects for sustainability. Also, the company wishes to expand even more and increase its world insurance coverage (Kraft Foods, 2009b). To satisfy this last objective the company is acquiring variant companies which are operating in key markets. One example could be the new-fashioned acquisition of the British chocolate manufacturer Cadbury, which offers the company to opportunity to consolidate in the UK chocolate market (Mintel Oxygen, 2010). Kraft Foods also wants to expand to south-east Asia as the countries here innovate high growth rates in the food industry (Mintel Oxygen, 2008)Furthermore, since 2008 the company has decided to implement a restructuring plan knowing to lower its cost structure and optimize capacity without meeting the quality of products (Kraft Foods, 2009a).Market all overviewAs stated forward, this pape r will focus on the chocolate confectionery operations of Kraft Foods in the UK market and therefore an overview of this particular market is necessary.Datamonitor (2009b) states that the chocolate confectionery industry accounts for intimately 67.5% of the total value of the UK confectionery market, which also includes gums, cereal bars and dent confectionery (Chart 1).Chart 1 Market segmentation in the UK (Datamonitor,2009b)The UK chocolate confectionery industry has been in a permanent growth from 2003 until 2008, change magnitude by 11.1%. (Mintel Oxygen, 2008b). This particular segment is characterised by fierce competition as about of the most well known food giants are competing here. The main(prenominal) players in 2007 were Cadbury, with 35.3% market share, Masterfoods, with 30%, Nestle, with 14%, Ferrero, with 4% and Kraft Foods with 1.8% as it can be seen in Chart 2.Mintels 2008b forecast on market growth states that it will grow by 17% until 2012, if the prices of chocolate would hurt remained at the 2007 value. In real terms and taking into consideration swelling this growth will be of just 2%.Chart 2 Manufacturers value shares in the UK chocolate market 2003-2007 (Mintel. 2008b)The report on chocolate confectionery published by Mintel Oygen (2008b) states that current trends in the market set off the fact that more florid foods subscribe to to be released on the market, forcing in this way companies to produce better chocolates. As childhood obesity is an classic issue in the UK, there is an absolute need of water-loving products and what now is a trend it will later become a way of living. Also, consumers tend to become more educated on chocolate and in brief will study high quality products. Moreover, the same report shows that consumer preferences pee started to change and shortly they will ask for new flavoured chocolates.Marketing visit Internal and ExternalAfter getting a brief acuteness on the chocolate confectionery se ctor in the UK, an internal and external marketing audit needs to be done in value to identify which are current problems of the company.Firstly, since it has consumer products the overall marketing mix apply needs to be analysed. Then, the strengths and opportunities must be identified in drift to overcome the companys weaknesses and banes. Also with the help of the PEST model and Porters atomic number 23 forces the chocolate confectionery industry will be nurture analysed.Marketing flowKraft Foods is doing problem in the consumer products domain, therefore its marketing mix is specially tailored for its consumers.Its main products are food items such as chocolates, biscuits, different beverages, snacks and convenient meals. Some of the companys products have become leading brands planetary proving that the company offers qualitative products and also knows what its customers want. The company prefers to buy its unexampled materials from third parties such as agricultur al cooperatives and independent producers to ensure high quality of the final product. (Kraft Foods, 2009a)The pricing policy of any company has to be elaborated in such a way that it retains current customers and also attracts new ones (Brassington and Pettitt , 2006 pg.431 ). The company charges acceptable and affordable prices for its products. notwithstanding these prices are affected by raises in gross materials, as was the chemise in 2008 when the company had to raise prices to dairy, coffee, cocoa, drinking straw or nut products as a result of price increases for the raw materials (Kraft Foods, 2009a)When talking about promotion, Kraft Foods invests important amounts of money into well demonstrable marketing campaigns which are meant mainly to attract new customers only if also to consolidate its check in the eyes of present consumers. The company uses well-nigh of the tools in the promotional mix such as advertising, sales promotions, existence relations.The organis ations products have a wide distri neverthelession, reaching many markets all around the world. The main places where the products can be fund are supermarket chains, wholesalers, convenience stores, retailers, fraternity stores or mass merchandisers (Kraft Foods, 2009a).SWOTAs it has already been stated, Kraft Foods operates in different sectors of the food industry and in many markets in the world, so for each sector the company faces particular threats and has different strengths and weaknesses. In the case of the chocolate confectionery industry in the UK, the following SWOT analysis can be elaborated based on information provided by Datamonitor (2008).StrenghtsKraft Foods has a strong brand image worldwide comfortably organizeed distribution networkManages a variety of brands in UK such as Milka Chocolate, Oreo biscuits, Toblerone, Terrys Chocolate Orange and separates well man sr. brand portfolioThe raw materials used for production are always of high qualityWeaknessesOver the yrs the company had to recall some products, action which has damaged its imageIts margins have constantly decreased causing problems in the implementation of new growth plansOpportunitiesThe acquisition of the British chocolate manufacturer Cadbury offers access to its expertise, look for and information on consumer trends in the UKPermanent growth in the demand for healthy productsNew technologies and developments in the industryThreatsFierce competition in the UKGovernmental laws regarding alimentationToo much divestment, having a large portfolio of brands worldwide might affect the companys cash flowPESTKraft Foods is doing melodic line in a constant changing environment and as a result it must always know what is happening in the UK environment. The UK business environment is continuously affected by political/legal, economical, social and proficient /environmental factors.Political factorsThe laws in the UK regarding alimentation are quite rugged with for companies, b ut they work in the benefit of the consumer, demanding more usage of healthy products. Any law imposed by the UK government or by the European Union can affect the companys operations and revenues.Economical factors before long the UK has not entered the Euro Zone and it is smooth able to have a stronger property then the Euro Zone. However, in the context of nook, the UK has reported a drop in GDP and in the third quarter of 2009 the GDP contracted by 0.2%, and remained 5.1% lower than in the same period of 2008 (www.statistics.gov.uk, 2010a). The recession has affected greatly this country and as a result the disposable income has decreased, affecting the populations get habits. Consequently, companies had to reduce prices and implement different schemes to maintain their customers and lose a low percent of sales.Social factorsThe UK population is very affected by the recession and many of them have lost their jobs. Unemployment rate has reached 7.8% in November 2009, but no twithstanding there has been registered a decrease in the number of unemployed people (www.statistics.gov.uk, 2010b). Since unemployment is quite high, not many British people afford to drip money on other things that are not of strict necessity, such as chocolates.Confectionerynews.com (2009a) states that women are more uniformly to have chocolate receivable to the fact that when they reach menopause they become more stressed and need to get relieved.Technological factorsTechnological advances always occur in any industry. Companies in the chocolate confectionery sector have to invest in research and development in order to come up with healthier products as customers demand these intensively. Recently, Kraft Foods and Nestle were accused of using deal oil and indirectly encouraging deforestation in Indonesia (www.confectionerynews.com, 2009b) and as a result both companies had to review operations and decided that from 2010 will use only certified palm oil.Porters 5 Forces Ana lysisThe UK chocolate confectionery industry can also be assessed by using Porters five forces.Threat of new entrantsThe UK industry is quite fragmented with many companies competing within. Since some of the largest companies are present here such as Nestle, Kraft Foods, Cadbury and impair Inc. it is very difficult for a smaller company to enter this market. However there are also niches, such as premium chocolates which could still welcome new players. This particular threat is considered to be low as it is difficult to enter the UK market.CompetitionIt is common knowledge that the UK market presents high levels of competition. The worlds food giants are in a continuous quest for market shares and increased sales volumes. This particular force might heartrendingly affect Kraft Food since it still doesnt have a high market share, but because of the new acquisition of Cadbury this might change.This force is considered to be high, as there are important companies battling for supre macy.Buyers bargaining powerNowadays British people choose to spend money just on the necessary products and have eliminated premium products from their daily shopping. As a result, this force is considered to be quite high and have serious impacts on the companies activating in the industry.Suppliers bargaining powerOver the years companies have built lasting relationships with their suppliers, as a result suppliers work jointly with buyers to ensure productivity. overdue to these relationships the suppliers bargaining power is considered to be medium, as raises in raw materials can occur and affect the final products of the company.Threat of substitutesChocolate can have many substitutes such as gums, candy or ice cream. As new consumer trends show that there is a serious shift to healthy products chocolate could be seriously affected, unless producing companies launch healthier versions. Consequently this threat can be considered as being medium to high.Current yearCompetitionFi ve years time (assumption)New entrants causality of buyersSubstitutesPower of suppliersFigure 1 Porters five forces (current year and five year prediction)AssumptionsThe vat has increased to 17.5% (www.hmrc.gov.uk), automatically causing increases in the prices of all products. A further increase might endanger future plans for launching new products and present product sales might be affected.Also, if the UK decides to join the Euro zone serious price changes might occur and people might think they are paying more for a product then when they were using the greatest pound.It must not be forgotten that consumers are changing their buy patterns and preferences so they might choose to replace chocolate with other sweets.Marketing Objectives and Strategies for new productGrowth StrategyAs it has been previously presented, Kraft Foods does not have a considerable market share on the UK confectionery industry. It should focus more on its leading European chocolate brand, Milka, and ca tch up with it a preferred chocolate in the UK too. Milka chocolate is present on the UK market in just six assortments (www. take outa.co.uk, 2010) while other chocolate brands have more assortments. The need for a new product has been identified, and the proposed product is Poppin Milka. This new product will be alpine milk chocolate and in the interior it will have a agiotage of pa candy.Since it is a new product for the Milka brand, Ansoffs new product existing market growth strategy will be followed (Dobson and Starkey, 2002).Marketing objectives pile up more market share on the UK chocolate market establish a strong brand name and image for the Milka brand line new customers, while retaining current onesIdentification of Alternative PlansIn the finish up case scenario the new product could prove to be a failure, even though prior research would show that it should have success. Since the product has already been launched Kraft Foods could enhance it by adding new flavours s uch as melon, hemangioma simplex or cherries, fruit flavours which make a good combination with daddy candy. Confectionerynews.com (2009c) shows that nostalgia has helped boost the UK food market, and since popping candy was very popular a couple of(prenominal) years back, it could make a comeback.Also, it should be noted that the new product will be rumping children, but their parents are the ones who have to be convinced(p) to buy the product. If the product does not manage to reach forecasted sales for the graduation months, the marketing plan should be reviewed and changed where it went wrong.Promotional ProgrammeObjectives of the campaign the main objective of the campaign will be to draw attention on the new Milka product and promote it throughout the year. Also, through this campaign it is mean to raise Milkas brand awareness and help build a stronger brand image.Target audience the main target audience is children aged 5-13, but indirect target audience is men and wome n aged 25-40, who have children aged 5-13, since they are the ones who will buy the products, even though they might not be the users.Message since the product is mainly targeted to children, the message has to be charitable and funny. It will stress on the fact that it is fun to have popping candy together with chocolate, a soft and creamy chocolate like Milka.Budget the product launch campaign could be quite expensive, but Kraft has to take the risk and invest approximately 2 2,5 million, to develop an effective and integrated marketing campaign. Since the company is a world giant it should be able to afford such a campaign especially when aiming to gain market share. The company already has a contract with Ogilvy to make the advertisement for Milka, so it can count on the help of a well known advertising agency. (Mintel Oxygen, 2009)Promotional mix prior to the genuine launch of the product (two weeks ahead), a guerrilla marketing campaign will be conducted such as to raise in terest in the new product. Teaser ads would be placed in supermarkets and short TV ads will be played on kids TV networks. After the launch, samples will be given to customers of selected supermarkets such as Tesco or Sainsbury for a period of one month. Then full length ads will be played on kids TV networks for the next three to four months. In conjunction with TV ads billboards will be posted close to supermarkets and playgrounds to make sure the target audience becomes familiar with the product. At celebration times sales promotions will run to encourage and increase the product sales.The tagline used in all the ads will be Poppin the magic with Milka and will feature the Milka symbol, the liliac cow bounce on a popping candy dance floor and in the end the dance floor will explode as fireworks, showing the properties of popping candy.Time frame the marketing campaign is designed for a period of twelve months commencing January, 2010.Measurement, Review and ControlAny marketing campaign has to be evaluated before, during and after implementation (Brassington and Pettitt, 2006). The campaign will be evaluated before implementation through focus groups. During the campaign, sales will be nearly followed and on-site interviews will take place. In the end, the campaign will be assessed by evaluating sales volumes and revenues, and check if the marketing objectives have been attained.Conclusion insertion a new product in a market where Kraft does not have high market share might be very difficult, but such actions must be done in order to become known on the market. With a well designed product and marketing campaign the new product should be able to reach expectations.Poppin Milka should be a success since Milka chocolate is a European leading chocolate brand, and British people are familiar to the brand.