Since it was established in Germany in 1949, by Adolf Dassler, adidas has been synonymous with the sporting industry. Today, adidas is a global public company and is one of the largest sports brands in the world. It is a household brand name with its three stripes logo recognised in markets across the world. The company’s product portfolio is vast, ranging from state-of-the-art sports footwear and clothing to accessories such as bags, watches, eyewear and other sports-related goods and equipment. Employing over 46,000 people worldwide, the adidas Group consists of around 170 subsidiaries including Reebok, TaylorMade-adidas Golf, Rockport and CCM-Hockey. The Group’s headquarters are in Herzogenaurach, Germany. In the second quarter of 2013 the Group’s revenue was €3.383 billion. adidas and the Olympic Games
The adidas brand is built on a passion for sports excellence and innovative design to help athletes perform to the best of their ability. It is therefore no surprise that adidas has supported many iconic athletes to achieve great things at the Olympic Games. In the UK, adidas has partnered and supplied Team GB since 1984. The company’s heritage with the Olympic Games dates back to the Games in Amsterdam in 1928 when adidas’ running shoes were debuted. Footwear and clothing by adidas has been seen on athletes at every Olympic Games since. In fact, all British medal-winning athletes at the last 8 Olympic Games wore adidas products. There are countless historic sporting achievements that have taken place in adidas products. These include: Jesse Owens’ 4 gold medals in Berlin 1936
Cassius Marcellus Clay (Muhammad Ali) taking gold in the boxing light-heavyweight division at Rome 1960 Dick Fosbury’s revolutionary new back-first high jump technique at Mexico 1968, known as the ‘Fosbury Flop’ Gymnast Nadia Comaneci’s perfect 10 at Montreal 1976.
This case study demonstrates how adidas used innovative marketing strategies in its sponsorship deal with the London 2012 Olympic Games to engage with
young consumers in the UK and across the globe.
Page 2: The marketing mix
For most organisations the marketing function is vital for survival. The Chartered Institute of Marketing defines marketing as: ‘Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirements profitably.’ This definition outlines the key purposes of the marketing function. These are: to compete in a competitive marketplace
to identify and anticipate consumer requirements and then satisfy these requirements to make a profit. As a market-orientated organisation adidas continuously identifies and reviews consumers’ needs to ensure its products meet these needs. It aims to exceed customer expectations by adapting its product portfolio to meet the changing needs of consumers. It is this focus on its customers, teamed with product and marketing innovation, that plays a key role in adidas’ success. Every organisation must look at its marketing in relation to the marketing mix. The marketing mix, often referred to as the 4Ps, is a means of assessing how to balance the elements of the mix in order to meet customers’ needs. The elements include: the right product
sold at the right price
in the right place
using the most suitable form of promotion.
No two businesses are identical, as such, every organisation must decide on its own balance of the 4Ps to suit its consumers’ needs. There are many internal and external factors that will influence an organisation’s marketing mix. Key factors include the size of the business, the markets it operates in and available resources. Sports marketing
For a global organisation like adidas its marketing mix is tailored to specific markets. This is known as international marketing as it takes cultural and social differences into account when planning marketing activity. Sports marketing is a key focus for adidas’ marketing mix. The growing popularity of sports as entertainment has led to a huge increase in
sports marketing. The founder of adidas was one of the first people to see the potential of this form of marketing when he sponsored the FIFA World Cup back in 1978. Sponsorship involves a business paying to be associated with another organisation, event or TV programme. Like many new developments, the sports marketing function has changed dramatically since its introduction. Just consider Sony’s first ever Walkman in 1979 to today’s iPod. The same dramatic difference is evident in the sports marketing arena with sponsorship deals now worth tens of millions of pounds. Rather than simply trying to gain positive associations with particular sports, companies use sports marketing to drive the brand and increase sales.
Page 3: Marketing strategies
Within the marketing function of any organisation there will be key goals, or objectives, to be achieved. For example, increasing the market share by 3% or entering a new market overseas. To achieve these marketing objectives requires a plan that details the actions needed. These plans are referred to as marketing strategies. A key challenge for adidas’ marketing strategies is finding innovative ways to inspire and engage its 14-19 year old target audience. Sponsorship
For adidas, London is a key focus for the sportswear market, for both performance sportswear and sports fashion. This market sets more trends than anywhere else in the country. London 2012 gave adidas a platform to target this audience but with a global reach. The sponsorship deal obtained by adidas was the broadest set of sportswear rights in Olympic history.
It became the Official Sportswear Partner of the London Games and the exclusive licensee of all branded (adidas + London 2012) and event branded (London 2012 only) clothing. From these rights adidas set four key marketing objectives: To ensure a clear association as Sportswear Partner of London 2012, Team GB and Paralympics GB. To engage and excite the 14-19 year old audience in order to drive brand preference in the UK. To deliver a Licensed Product Return on Investment (ROI) (branded and event branded licensee rights). To become the most talked about sports brand in 2012.
A major aspect of this sponsorship deal was the athletes’ kit. The kit
provided the opportunity to be innovative and excite the target audience whilst creating products to meet commercial sales targets. Market research undertaken by adidas showed the youth audience wanted something ‘untraditionally British’. Designer Stella McCartney fulfilled this brief with her deconstructed union flag design. Preparations to equip the team started 2 ½ years before the Games were due to start. Over 550 athletes were fitted for over 680 items of kit. This meant the marketing activity for the campaign also started long before the Games in 2012. A photo booth shoot captured every athlete in their kit. These images were used to create excitement around the Team GB kit product launch.
Page 4: Promotion
All elements of the marketing mix are important. However, in increasingly competitive markets innovative methods of promotion can create a competitive advantage. Promotional activity is used to communicate with consumers about the brand and its products. As there were more than 50 London 2012 sponsors, adidas needed to ensure it communicated the right messages, at the right time, through the appropriate channels for its target audience. It aimed to create national support for Team GB through its ‘Take the Stage’ campaign. The acronym AIDA is useful when planning promotional activity, promotion should aim to: initiate awareness amongst consumers
generate interest for and desire to have the product
ensure action to purchase.
There are many different methods of promotion. Above-the-line promotion refers to traditional methods of advertising, such as, print adverts in magazines and newspapers, billboards or online and TV advertisements. This form of promotion is expensive. As mass audiences become harder to reach through advertising, for example, an increasing number of people record TV and fast-forward the adverts, innovative methods of below-the-line activity is becoming increasingly important to engage the audience. Above-the-line activity for adidas’ campaign included TV adverts that showcased the best UK talent across sport, street and style.
The adverts contained carefully planned product placement. Amongst those featured were David Beckham, Wretch 32 and Derrick Rose. In addition to a significant outdoor media spend, adidas featured artist impressions of athletes on 17 London Metro front pages. TV adverts featuring athletes such as Jessica Ennis and Tom Daley were used to rally support for Team GB. In these adverts athletes shared their intimate goals, fears and thoughts, something which was dramatically different to other sponsors of London 2012. Below-the-line promotion
In contrast, below-the-line promotion aims to reach more targeted groups of consumers. For example, through sponsorship deals, direct marketing, public relations and social media. Below-the-line promotion targeted at the youth audience was a key method for adidas to achieve its marketing objectives. It used a wide range of promotional activities to create deeper engagement with its audience, mixing traditional media with an innovative use of social and digital channels. The scale of the activation of this campaign was an industry first.
Its TV adverts aimed to drive consumers to a website where they could demonstrate their talents for a chance to meet their idols. Through ‘Project 32’, adidas had already rewarded 32 talented youngsters in London with the chance to meet leaders in their chosen fields, such as the sporting and musical industry, giving undiscovered talent the chance to ‘Take the Stage’.
Social media played an integral part in adidas’ campaign. For example, on Twitter #takethestage became the summer trend for supporting Team GB. Videos on YouTube created hundreds of millions of views, including a video of Team GB athletes singing along to Queen’s ‘Don’t stop me now’. In addition, a large photo booth was set up at Westfield shopping centre in Stratford. Members of the public then entered the booth to show support for Team GB. Videos of peoples’ reactions to David Beckham making a surprise appearance received 3.2 million views, as well as international TV coverage.
Page 5: Measuring a promotional campaign
Promotional activity is very expensive. Organisations want to see a return on investment (ROI) for the money they spend on a promotional campaign. Sponsorship of London 2012 was no exception. Every aspect of its promotional campaign, both online and offline, was continuously monitored and measured. This enabled adidas to demonstrate that becoming the Official Sportswear Partner of the London Games and the exclusive licensee of all branded (adidas + London 2012) and event branded (London 2012 only) apparel was cost effective. Throughout the campaign adidas monitored all of its media coverage. This data was then used to establish whether the marketing objectives had been achieved. The table below demonstrates the significant return achieved through this campaign and how adidas successfully achieved its marketing objectives.
Page 6: Conclusion
An organisation’s marketing mix is its own way to uniquely position the brand and drive sales. For adidas, this includes understanding what its consumers want and producing innovative products that fulfil these needs. Using innovative methods of sports marketing, on a scale never before seen in the industry, enabled adidas to target the youth audience in London whilst also having a global reach through social media and online promotion. Sponsorship deals such as adidas’ heritage with the Olympic Games are very expensive. However, as this case study shows, through well planned marketing strategies with clearly defined objectives they can offer a way of creating deeper engagement with consumers. Partnering the brand with London 2012, Team GB and the Paralympics engaged adidas’ target consumers and created huge amounts of support for Team GB before, during and after the Games.
[+] Achieving sustainability through lean production
[+] Creating shared value in the supply chain
[+] Business principles in action – nutritional labelling
[+] Nutrition, Health & Wellness – New Product Development at Nestlé [+] Responding to changing customer requirements: the drive towards Wellness [+] Sustainability and water
[+] From bean to bar – the production process
[+] Kit Kat: Revitalising a Brand Leader
[+] Doing Better By The Environment
[+] Coffee – The Supply Chain
[+] Long term maintenance of a classic brand name
[+] The power of love
[+] Injecting new life into the product life cycle
Nutrition, Health & Wellness – New Product Development at Nestlé 1: Introduction
Businesses operate in markets that are constantly changing. Consumer tastes and expectations are always on the move. This case study examines a market-focused innovation developed by Nestlé. It explores the development of Maggi ‘A Natural Choice’: a range of culinary (cooking) products that is primarily targeted at chefs.
Nestlé is the world’s leading food company. Since it was set up by Henri Nestlé to provide an infant food product, it has been associated with providing high quality, customer and consumer focused products. In recent years it has focused on becoming a nutrition, health and wellness company. Wellness is about supporting people to live more healthy lives e.g. through the development of probiotic yoghurts that help maintain the balance of the digestive system. The company is a world leader in research and development, and Nestlé’s scientists work in all areas to create healthier and more nutritious foods. Maggi is an important brand for Nestlé. It is a global brand – widely recognised as a consumer and foodservices brand in continental Europe. In the UK, Maggi consists of a range of culinary aid products that are exclusively available to the catering trade (known as ‘foodservice’) – primarily to chefs. Maggi ‘A Natural Choice’ is a new development that is unique to the UK.
Nestlé FoodServices sells Maggi ‘A Natural Choice’ to wholesale distribution companies, such as 3663 and Brakes, and Cash and Carry operators such as Booker, who in turn supply chefs and the catering trade. The UK foodservice market is very competitive. Companies must apply high standards to products and their nutritional content to meet stringent food safety and labelling laws. In addition, members of the public are becoming increasing knowledgeable and choosy about what they eat, as a result of food scares and an increase in food allergies, leading to even higher specifications.
D Page 2: Market research
The Maggi brand experienced a decline in sales in the UK leading up to 2004. This was because the product had come to be seen as uninteresting and old fashioned due to its dehydrated format and flavour. The product failed to meet users’ increasing requirements for fresh tasting culinary aids. Maggi commissioned face-to-face qualitative research to get a deeper insight into chef and consumer views. Chefs were asked to discuss their requirements.
The results showed that consumerswere saying ‘fresh is best’. However, the chefs’ view was slightly different in terms of: ‘My customers would like everything to be made from scratch (i.e. made from basic raw ingredients), but I don’t have the time and money to do this’. The research revealed that the market was divided into a number of segments. A segment is a part of an overall market made up of customers with similar characteristics. Chefs fitted into four main segments: The research showed a sizeable demand for Segment 3 – a target for Maggi ‘A Natural Choice’ products.
Brand proposition – the research defined a proposition for developing the new brand. This new proposition was to create a product with more natural qualities for ‘chefs who aim to please’ who want their cooking to be as fresh tasting as possible. Natural qualities would be defined in terms of taste, smell, look and texture. Target market– Maggi ‘A Natural Choice’ target was to be ‘chefs who aim to please’. Their prime aim is to provide delicious, wholesome foods that customers enjoy. These chefs enjoy their work and have a pride in the satisfaction they give customers. They are not in business just to make money. Brand ambition – Maggi ‘A Natural Choice’ combines the goodness and taste of real ingredients with time and cost saving.
Page 3: Research and development
Nestlé’s strength in product research and development makes it possible to develop products to fit market requirements. Maggi is committed to providing cutting edge products that chefs want, e.g. products with a lower salt content. These products are high quality and easy to use. The new products need a more natural taste while at the same time offering value for money. The Maggi ‘A Natural Choice’ range is now lower in salt and made using sunflower oil. In addition, where possible the range benefits from having no added MSG, is gluten free and contains no artificial colours or flavours.
The Maggi ‘A Natural Choice’ range has clear and easy to understand nutrition and allergy information on all packaging to help chefs understand what is in the products so they in turn can inform their customers. The range is aimed at a variety of chefs. For example, two Maggi ‘A Natural Choice’ products widely used in school kitchens are: 1. multi-use tomato sauces – this saves time vs using chopped tomatoes. The product is pre-reduced which means less wastage (the juice from chopped tomatoes makes up one third of a tin and is usually poured away) and also less cooking time as the product can be used straight from the tin.
It contains sunflower and olive oil and is pre-seasoned with basil and oregano so it can be used straight from the tin. The sauce is mainly used as a pizza topping or a pasta sauce as well as in soup and casseroles, and one serving can contribute to one of the suggested five portions of fruit and vegetables per day. Maggi also uses easy to understand labels showing nutritional and other information. For example, the multi-use tomato sauce label states: there are no added colours or artificial flavours
there is a low fat content
the salt and sugar content has been reduced by 25%
the key nutrients contained e.g. energy, protein, carbohydrates, sugars, fat, saturated fats, fibre and sodium, salt equivalent labelling (if used on brand) details of allergenic ingredients used.
2. bouillons (i.e. stock or broth for soup and sauces produced by cooking vegetables, poultry, meat or fish in water, which is then strained) – using a paste or powder bouillon is quicker than preparing stock from scratch and helps to provide a consistent, authentic flavour. They are easy to use, cost effective and there is no waste. Chefs prefer paste bouillon because they believe it dissolves better when added to water. Maggi paste bouillons are ideal for school catering because they are gluten free, contain no added MSG, artificial colours or flavours, are made with sunflower oil and have less than 0.7g salt per 100ml when made up. Bouillons are mainly used as a base to soups and sauces, as well as adding flavour to casseroles and stews. Page 4: New product development (innovation and renovation)
Each of Nestlé’s European factories is a centre of excellence that specialises in developing new areas of food technology. New paste bouillon research and development is carried out at an Austrian factory. The new Maggi ‘A Natural Choice’ paste bouillons are created and developed there. New product development involves a number of important stages. To give an idea of timescale, the development process for paste bouillons took 6 months. At the same time front labels are designed, product photography commissioned, recipe sheets produced and sales presenters are designed to ensure a successful product launch.
Page 5: Product launch
Launching to chefs is very different from the launch of a product for the retail environment. This is because it is not easy to communicate directly with chefs, as this target market is made up of busy people who work unsociable hours.
Publicity in the press started 6-8 weeks before the launch. Selected trade media such as Catering Update and Caterer and Hotelkeeper carried advertising and promotional material. Eight page supplements were produced to get the message across. These appeared in the April and May editions of the magazines, along with ongoing features in the wider press. Direct mailing of informative literature to chefs and other users supported this. Promotions including providing opportunities at special events for chefs to sample new products were set up.
Maggi works closely with the main FoodServices wholesalers (3663 and Brakes) and Cash and Carry operators (e.g Booker). This ensures that distribution of Maggi ‘A Natural Choice’ to caterers and chefs is effective. These companies use a Product Listing Order Form (PLOF), which is updated by negotiation in April and September only. It is imperative to ensure distribution takes place to meet these critical timelines. Wholesalers, together with cash and carry operators, were therefore given supporting promotional material about the new products to coincide with the launch. Events
Other activities to develop young chefs run alongside Maggi ‘A Natural
Choice’ advertising and promotional activity. Nestlé FoodServices sponsors two major prestigious events for chefs which involve using Maggi ‘A Natural Choice’ products. The Nestlé Toque d’Or competition is in its 18th year. Nearly every young chef dreams of running their own restaurant. The challenge set is the task of designing a restaurant concept and theme. This includes putting together an exciting menu. Teams of six students work on this challenge. The other event is the Local Authority Caterers Association (LACA) School Chef of the Year award sponsored by Nestlé FoodServices.
This was launched to applaud the skills of many unsung heroes – the school chefs who prepare the daily school dinners. Each entrant has one and a half hours to cook a healthy, balanced main course and dessert within a strict budget. The meal must appeal to 11 year old pupils. This is an important competition since schools provide an estimated 30% of children’s daily food and nutrient intake. The government’s Healthy Living blueprint encourages school caterers to help pupils eat sensibly and adopt healthier lifestyles. The LACA School Chef of the Year award recognises the important work going on in school kitchens throughout the UK. These awards, together with the launch of Maggi ‘A Natural Choice’, are all part of Nestlé’s commitment to providing healthier menus within a busy chef’s time constraints.
Page 6: Conclusion
The Maggi ‘A Natural Choice’ range is designed to combine chefs’ requirements for tasty wholesome food with consumers’ requirements for more nutritionally balanced, healthier meals. Maggi ‘A Natural Choice’ is a carefully researched and developed product designed to give customers more of what they want.
Responding to changing customer requirements: the drive towards Wellness A Nestlé case study
Page 1: Introduction
Consumer research shows that people are looking to adopt healthier lifestyles. Newspapers and television channels bombard us with health information and messages about the benefits of healthier living.
Governments, keen to ensure that people are looking after their health in order to ease the burden on public health services, are also reinforcing these messages. As a result, many people are taking positive steps to lead healthier lives. They are starting to take appropriate exercise; to find ways of relaxing and to eat a balanced, nutritious diet. When millions of people decide to change their lifestyle and their buying habits market-led companies are certain to notice and to respond. This is because their ability to stay in business depends on providing goods and services that meet customers’ needs and to respond to changing requirements.
Nestlé is the world’s biggest food and beverage company and produces a wide range of products. Many of its best known brands are household names, although you may perhaps not realise, that some of them are part of the Nestlé portfolio. The Nestlé organisation operates through product divisions. These include:
You will be familiar with many of the brands, which include: Nescafé (coffee)
Smarties, KitKat (confectionery)
Perrier, Buxton (water)
Sveltesse (chilled dairy)
Shredded Wheat (cereals).
Henri Nestlé developed the first infant food in 1867 to save the life of a friend’s baby who could not be breastfed. Since then, the company has looked to build on a tradition of providing nutritious products. It builds its business around: discovering what customers want
identifying pressures for change e.g. government campaigns, health education initiatives responding to changes in the market place.
Today, in Lausanne (Switzerland), Nestlé operates the world’s largest nutrition based science research unit. Over 600 scientists and food technicians work there developing and improving products. This Case Study focuses on how Nestlé, one of the world’s leaders in consumer-led approaches to product development, continually seeks to provide products that meet consumers’ changing requirements. In particular, it also looks at how Nestlé
use its vast scientific and consumer knowledge to make products that make it easier for consumers to be healthier.
Page 2: Responding to market demands
A market led company like Nestlé is continually monitoring customer attitudes and requirements through market research. This research takes two main forms: Qualitative research. This involves setting up small focus groups of consumers who express their ideas and opinions about their needs and views on different products. At one level, this might involve asking groups of athletes to talk about their lifestyles, dietary habits and training regimes. At another level, it could involve a consumer focus group discussing the quality of the nutritional labelling on a yoghurt drink. Quantitative research. Whereas qualitative research involves only relatively few people, quantitative research involves much bigger numbers.
For example, professional market researchers may interview thousands of people through postal or telephone interviewing. Nestlé regularly uses both forms of research to gain a clear idea of consumer opinions and trends. Market research helps the company to keep in touch with an ever changing environment in which social attitudes and buying patterns are continually shifting. Nestlé’s market researchers do not work in isolation. They liaise closely with the company’s product developers, food scientists and technologists. In this way the company can design products to meet market needs. Research and Development
Nestlé spends more on Research and Development (R&D) than any other company in the food industry. It is constantly looking at ways to improve its products. Using this market-led approach, Nestlé introduced and developed its Sveltesse (‘slimness’ or ‘elegance’ in French) range. The range began with yoghurts and dairy products and globally now includes bottled water, ice cream, cereal bars and frozen prepared meals. In developing Sveltesse, the emphasis is concentrating on an appealing taste combined with a low or no fat, low calorie option.
Page 3: Strategic development
A strategy is the means by which an organisation achieves particular ends. An agreed strategy answers the question “By what means are we going to achieve our objective?”. For example, Nestlé’s market research confirms that increasing numbers of consumers want to buy good tasting foods that can allow them to have healthier diets. Nestlé is keen to capture a greater share of this growing market. So Nestlé’s ongoing strategy is to develop a ‘Wellness’ approach that builds on its tradition of producing nutritional products. Wellness is a condition of enhanced health, a physical state which is maintained by good diet, exercise and life habits. Wellness is also associated with a feeling of vitality and being in good shape.
In 2001, Nestlé’s Chief Executive set out the company’s vision when he stated: ‘We want to grow from the respected and trustworthy food company that we are known as now, into a respected and trustworthy food, nutrition and Wellness company’. Nestlé’s development of a strategy to promote Wellness is an evolution of the company’s original commitment to nutrition and health.
Page 4: Ensuring strategic fit
An Environment, Value and Resources (EVR) fit is a simple but useful business tool to decide whether a proposed strategy is appropriate. The strategy the business chooses must match these three elements. For example, Nestlé’s Wellness strategy must:
Match the strategy to the prevailing Environment, in which the business operates. In this case, it is a social environment, in which consumers are seeking nutritional products to complement a healthy lifestyle. Value
Ensure the strategy is consistent with the organisation’s Values. Nestlé worldwide adheres to a set of business principles that have long underpinned the way the company operates. One key principle is that of meeting consumers’ needs for nutrition, enjoyment and quality they can trust. This is why the company places so much emphasis on market research and on the
best ways to communicate with customers. Principles that underpin consumer communication include: stressing moderation in food consumption
depicting children in healthy, energetic pursuits.
Nestlé is clear, for example, that its advertising must not look to encourage children to eat snack foods instead of meals. Resources
Ensure the company has the necessary Resources to support the strategy. With its science and technology base, Nestlé is well equipped to develop the required science-based improvements to existing products. It can also handle the development of new products that contribute to Wellness. Personal health and Wellness are powerful, universal, human needs. With its strong brands, wide product portfolioand R&D competence, Nestlé is well positioned to benefit from a growing market. It has the values and the resources to meet customer requirements in an environment in which more and more people are seeking health and Wellness.
Page 5: Implementing the strategy
Having developed a clear strategy, it is important to implement it. Nestlé will look to ensure that going forward all its products retain a superior taste profile while providing enhanced nutritional benefits. This will involve: i. retain certain products
ii. product reformulations (including salt, sugar, fat reduction) iii. launching new products with scientifically proven nutritional benefits. Nestlé’s product research and development network ensures it is well placed to meet the challenge of changes in consumer expectations. The Company’s Wellness strategy is carefully geared to delivering what consumers want in relation to the foods they eat – a high nutritional value and a positive contribution to their general wellness. This has led to the following three-part strategy:
Clinutren has been formulated for patients with increased energy and protein requirements and supports the nutrition of people suffering from a series of medical conditions or recovering from operations. Fitnesse is a 99% fat free cereal. Sveltesse is a range of low or fat-free products (e.g. yoghurt and fromage frais). Using this approach, over the past five years Nestlé has developed or reformulated over 700 products so that they have a lower fat, sugar and salt content. In addition, the Company looks to educate consumers about healthy lifestyles and proper nutrition. Its initiatives include: the Nestlé Trust supporting a number of initiatives focused on developing nutritional awareness, often these are aimed at young people a website focused on providing nutritional information
on-pack nutrition information.
As the Wellness approach is now central to everything that Nestlé does, the company has set up a Strategic Wellness Unit. Its job is to promote the Wellness approach both internally and outside the organisation, so that everyone knows what it means and how to implement it.
Page 6: Conclusion
Consumer interest in the nutritional quality and health impact of foods has probably never been greater and for good reason. Governments have been busy ‘spreading the message’ that healthy foods and a balanced diet are vital for good physical and mental health and a general feeling of Wellness. Nestlé is one of the world’s leading food companies and intends to remain so.
Its commitment to high quality market research ensures that it remains fully aware of changes in consumer behaviour and consumer tastes. Its excellent product research and development network ensures that it is well placed to meet the challenge of changes in consumer expectations. The company’s Wellness strategy is carefully geared to delivering to customers what they now clearly want in relation to the foods they eat; a high nutritional value and a positive contribution to their general Wellness.
Kit Kat: Revitalising a Brand Leader
A Nestlé case study
Page 1: Introduction
All products have a life-cycle. It starts with preparations for the product’s launch, followed by the launch itself. Some products are an immediate success; they capture public imagination. Often this results from well targeted, exciting promotional and advertising activity and from careful market research that has identified a genuine gap in the market.
Other products take longer to come to consumers’ attention, and longer still to become popular. Some new products flop, and soon disappear from sale. The growth stage comes next. Growth can take weeks or months (e.g. the latest fashion clothes) or years (e.g. the typical packet or canned food and drinks found in supermarkets). Eventually the maturity stage is reached, where sales of the product and consumers’ level of product awareness are both high. At this stage, products risk going into decline, largely because they have become too familiar and are seen as less exciting than recently launched alternatives.
Page 2: The life-cycle of a product
Marketing departments are expected to ensure that products do not go into decline. Mature products need new life injected into them, to keep the buying public interested and aware of the product’s benefits. This case study provides a classic example of how to put new life into a favourite, leading brand: Kit Kat.
Page 3: Why Kit Kat needed revitalising
Kit Kat is the UK’s best-selling chocolate bar. However, in the competitive modern world consumers’ tastes continually change. As a result, even the most popular icons have to re-invent themselves from time to time in order to keep their appeal and stay ‘on top’. For example, pop stars adjust their image, film animators amend their favourite cartoon characters, and car designers re-design old favourites such as the VW Beetle and the Mini.
One secret of success is to retain enough of the old image to keep the loyalty of present enthusiasts for the product, whilst making sufficient innovations to attract a whole new group of consumers. In the world of popular chocolates and sweets, there has been in recent years an ongoing revolution in modifying products. In previous times, sweets and chocolate bars remained in more or less the same form for many years. Today, however, modern sophisticated consumers constantly seek novelty and change, and consumers have become the driving force behind product modification. Take Smarties, for example, which have undergone a series of changes in recent years. Until the late 1980s, Smarties came in well-established standard flavourings, colours and packaging. Then: 1989 Nestlé introduced blue Smarties
1991 Printing on sweets was introduced
1992 Green chocolate arrived
1995 The standard range of Smarties was relaunched with colourful new packets 1997 Giant Smarties were launched
1999 Smarties ice cream was launched
2000 Mini Smarties came on the scene
2001 Tetrahedon pack for Mini Smarties
Every alert, market-focused producer recognises the need for regular change. This is required because: consumers want and demand change rival firms are constantly re-inventing themselves and their products innovation and inventiveness keep an organisation flexible and able to respond to further change. Although Kit Kat continued to be the Number 1 confectionery brand, by the late 1990s its volume sales were falling. Faced with several increasingly attractive competitive offerings, consumers began to see Kit Kat in its traditional form as lacking in excitement and interest, with purchases being driven more by habit than positive choice.
Although the four-finger Kit Kat continued to be highly popular with its core target market of 25-40 year olds, it was losing popular appeal with younger consumers. The image problem was most evident among core countline consumers ie 12-20 year olds. In this important age group, while Kit Kat had been part of ‘growing up’ and may also have made regular appearances in lunch boxes, it was hardly relevant to their lifestyle. The traditional four-finger Kit Kat did not seem relevant to them. In 1999 therefore, Nestlé felt it was time for some re-invention. The company decided to develop a new format of Kit Kat whilst still retaining the four-finger variety with which consumers are so familiar.
Page 4: Project Tyson
Project Tyson resulted in the launch of Kit Kat ChunKy, a super size Kit Kat finger with a real mouthful of chunky milk chocolate. This ‘heavyweight’ idea assumes that younger consumers are looking for novelty, interest and even excitement when they buy a chocolate bar. While most of us are loyal to
the chocolate products we buy regularly, we also seek novelty. Project Tyson, as with all Nestlé projects, followed Nestlé’s internal advertising code of conduct, which reflects the industry position on advertising to children.
The project team ensured, for example, that the promotional campaign would not encourage children to pester their parents for products nor would it encourage children to eat confectionery frequently throughout the day, in preference to properly balanced meals. To find out exactly what consumers were looking for, Nestlé carried out detailed market research, including detailed qualitative research. Many pairs of young people were invited to give their views on different formats for the new product eg whether they preferred one or two fingers, what flavours they preferred (caramel, peanut butter, orange jelly, chocolate layers etc). Researchers also considered the most appropriate form of packaging to add further interest and attraction to the product. Other forms of market research included group discussions with young people who, typically, were regular consumers of chocolate bars. A survey group might consist of, for example, males and females who were: 17, 18, 19 or 20 years old
of different ethnic origin
from different parts of the UK
a mix of students and non-students.
Using focus groups in this way, researchers were able to compile data on the views and feelings of representative samples of the targeted groups of consumers. The research provided clear evidence that:
the targeted population of 12-20 year olds were attracted to the idea of the single Chunky finger Project Tyson could be a winner.
The research also identified the type of packaging with the greatest appeal – a mainly red and silver flow wrap. It also became clear that Kit Kat Chunky would inject new interest in Kit Kat across a broad range of consumers, including young children and older adults. The research examined different types of wrappings and formats. In particular, it compared two-finger and single-finger variants of Kit Kat Chunky. The single-finger proved to be most popular with the 12-20 year old group, and was also the most distinctive form that the new product could take. The research also indicated that a two-finger variety would, in some ways, compete with the four-finger variety. This would lead to Kit Kat competing against itself; not a very good idea! By contrast, the single-finger Kit Kat Chunky provided a promising line extension.
Page 5: Objectives for the launch
A wise company will look to justify every new venture in strict business terms: it will set tough performancetargets. These in turn can be converted into production targets, cost estimates and revenue projections.
Page 6: Quantitative objectives
Nestlé set demanding quantitative objectives for the launch. Nestlé aimed to: 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.
Page 7: Qualitative objectives
Nestlé also set several qualitative objectives. These were to: broaden the number of occasions on which people consume Kit Kat, with the vision that Kit Kat would be the natural choice for all breaks increase Kit Kat’s market penetration by enticing new consumers to the brand, and by persuading lapsed users to return to the product, with particular emphasis on the 12-20 year old segment create real innovation in the countline market.
Page 8: Supporting the launch: media, PR and point of sale
For a new product to grab public attention quickly, it is vital to support its launch with well-targeted advertising and promotional activities. Chunky was supported by two dedicated television adverts complemented by a phone site campaign. The advertising was a big departure from previous campaigns in that it focused on the targeted age group. It concentrated on 17-18 year olds in order to capitalise on aspirational identification from the younger groups, without alienating older consumers. In addition, Nestlé invested in a range of public relations activities through radio and the national press. A detailed point-of-sale campaign supported the launch with attractive dumpbins in stores, and posters for shop windows. Field sales staff were involved in a detailed communication exercise to raise awareness in all forms of distribution channels.
Page 9: The success of the launch
The launch of Kit Kat Chunky proved to be one of the best marketing success stories in recent times. Over 50 million bars were despatched within the first few weeks of the launch. Kit Kat Chunky almost immediately became the best selling countline, and this success story has continued. Nestlé provided excellent support for retailers by providing them with in-store promotions and a smooth supply of the product in order to meet the massive customer demand. Within 6 months, more than 20 percent of the UK population of the UK had tried the product, and repeat rates have been very high. Both the quantitative and the qualitative objectives for the launch were quickly met.
The most successful aspect of the launch and subsequent marketing activity has been that of revitalising interest in the Kit Kat line, particularly among the 12-20 year old age group. There has been a clear knock-on effect into other age groups and only a limited negative effect on the sale of the traditional four-finger Kit Kat. In addition, the Kit Kat Chunky is a versatile product with an ability to inject new ideas into the market focused at 12-20 year olds eg by producing varieties such as orange flavoured Chunky.
Page 10: Conclusion
The launch of Kit Kat Chunky has shown that intelligent innovation and adaptation, supported by meticulous market research and product promotion, really can extend a successful product’s life-cycle significantly.
Injecting new life into the product life cycle
A Nestlé case study
Page 1: Injecting new life into a brand
The Polo mint is a British institution – ‘The mint with the hole’. Everyone is familiar with Polo and can clearly distinguish the brand from other products. The pack has its own distinctive colour and shape. As with most established brands, there comes a time when they need a bit of a facelift to inject new life into them. Markets are in a constant state of change and the life of a product is the period over which it appeals to customers. The product life cycle charts the life of the product from its launch until its eventual decline. In the course of time rival products come along and begin to take away some of a brand’s market share. It is at this time when the enlightened business will take stock and make sure that it wins back its prime position. The Smarties brand offers a classic example of this in recent times. In the late 80s M&Ms moved into a market which had been dominated by Smarties for a long time.
Fortunately the warning signals were recognised and new life was injected into the brand by bringing out blue Smarties, ‘Gruesome Greenies’ Smarties and other extensions to the brand. The net effect was to revitalise it. So, if a firm wants to revitalise the life cycle of a product or brand, it is essential to invest in its development. This means not only putting a lot of work into the product before it is launched.
Once it is on the market, it is also necessary periodically to inject new life into the product. Injecting new life can be done in a number of ways including: Changing the product to better meet the needs and wants of consumers. Using price to influence market share e.g. change prices relative to those of the competition. Altering patterns of distribution e.g. by making the product more widely available. Changing the style of promotion; for example, by creating brand awareness through advertising and promotions which show the additional benefits of new aspects of a product.
Page 2: Mint competition
Polo has traditionally been the market leader in mints in the United Kingdom. However, during the late 80s and early 90s this position was slipping. We can see this decline by looking at the Index of Polo Sales from 1986 to 1993. Instead of making sense using sales figures it is sometimes useful to use an index. Index numbers in this context use 1980 as a base year and then other figures are expressed as a percentage of this. Polo’s problem was that it had gradually lost its value as a product in the eyes of consumers. When this happens it affects the position of a product in the market place. This was as a result partly of strenuous competitive activity, partly because of a lack of innovation in the Polo brand itself and partly because advertising had not bound people sufficiently to the brand. Competitors such as Trebor
Extra Strong Mints, Trebor Mints, Trebor Spearmints and Softmints had fought hard to win a share of the market from Polo. Instead of consumers primarily associating mints with Polo they were choosing from a variety of mints. Polo’s declining share up until 1993 is shown in the chart below:
Page 3: Polo´s response
Polo’s response to these trends was decisive. The key problem was that the brand had not been developed and so it was starting to be seen as predictable. To regenerate sales volume and rejuvenate brand interest, three new Polo variants were added to the in 1994 and Polo was relaunched as Polo Original. Extensive market research was carried out before the relaunch. The objectives were: revitalise the brand rejuvenate the total sales of Polo broaden Polo within the consumers repertoire – i.e. offer consumers a range of different types to select from create trade interest in the brand. Retailers are always keen to stock products for which there is a lot of interest and hence demand The new flavours were selected as a result of market research because: Spearmint is a very popular growing market.
Strong provides direct competition with Trebor’s Extra Strong Mints Sugar Free is a small but growing market which is becoming increasingly appealing to figure -conscious consumers. At the same time all these mint variants support Polo’s core brand valuesof being ‘hard, smooth, round hole mints’.
Page 4: Target markets
As the market for mints has grown it has also become more diverse. In the past there was only one Polo which was targeted at the general public of mint eaters. There tended to be a single message which was put over through advertising and promotion to this market. Selling to a single market in this way is called undifferentiated marketing i.e. you sell the same product, at the same price, through the same distribution channels, with the same advertising and promotion to an undifferentiated target group.
The new strategy involves widening and deepening this market by using differentiated marketing. This enables the company to alter ingredients of the marketing mix such as where and how it advertises its products, the outlets it sells its products in, and gives it the flexibility to charge different prices for the variants of this where appropriate. To extend the total market for Polo mints each of the products needs its own ‘marketing mix’ which enables it to be focussed at the appropriate target market. For example, Sugar free Polo’s have been advertised in the Women’s press, whilst the Spearmint and Strong Polo’s have been advertised through posters and more recently in TV adverts.
Page 5: Developing a distinct message
In developing Polo through differentiated marketing it has been necessary to do two things. It has been essential to stress the core strengths of Polo It has been necessary to create the character of the variants in their own right. The Polo’s core strengths which have needed to be stressed are: Its unique physical form – it is this which distinguishes Polo most tangibly from other mints. Polo’s ‘friendly’ reputation, built up over many years through humourous advertising. The core strengths had to continue to be a key part of all Polo advertising. However, in addition to these core strengths it is also important to draw out the distinct characteristics of the variants. Polo have established these as being: Polo Original- the original and best taste.
Polo Spearmint – the younger trendier mint.
Polo Strong – a smooth strong taste.
Polo Sugar Free – the sugar free mint with a hole.
Page 6: A success story
The Polo strategy of differentiated marketing in order to extend the Polo brand has been a success both in terms of the overall brand, and for the three variants. Importantly the size of the overall mint market has grown. Polo has regained its supremacy as the UK’s number one mint. The total mint market grew by £6 million to £207 million in 1994, and this increase continued in 1995. In 1994 market growth was largely as a result of the spearmint and sugar free sectors stimulated by the new Polo variants. By stocking Polo, retailers were able to increase their total mint sales rather than simply substituting sales of one mint brand for another. The success of
the relaunch is shown in the figures below. In April 1995 Polo Spearmint had captured 4.3of all mint sales, Polo Strong had 1.7and Polo Sugar Free had 1.5. Of course it is early days and the marketing mix will now need to be carefully applied to ensure that the new mints are provided to consumers at the right place, the right time and the right price with the appropriate advertising and promotional mix to appeal to their lifestyles.
Page 7: The Polo goes from strength to strength The Polo case study provides us with an interesting and exciting example of the way in which an innovative company can retain market leadership for its products. The Polo mint is just one element of the overall portfolio of sweets and confectionery products produced by Nestlé Rowntree. The art of successful marketing is knowing when and how to make changes to highly successful products. Polo has been a successful product for many years. Its continuing success will depend upon further innovation and change which is taking place to make a good brand an even better brand.
Developing a marketing plan
A NIVEA case study
Page 1: Introduction
The NIVEA brand is one of the most recognised skin and beauty care brands in the world. NIVEA creme was first introduced in 1911 and the NIVEA brand now extends to 14 product ranges worldwide from suncare to facial moisturisers, deodorant and shower products. In 1980 when Beiersdorf, the international company that owns NIVEA, launched its NIVEA FOR MEN range internationally, it broke new ground with its aftershave balm product. It was the first balm on the market that did not contain alcohol, which can irritate the skin. It proved to be very popular with consumers. In 1993, NIVEA FOR MEN developed a fuller range of male skincare products.
This reflected the growing social acceptance of these products with male consumers. The brand was able to exploit its knowledge of the skincare market. The company’s research showed men mainly wanted skincare products that protected the face after shaving. Men were willing to buy products that helped calm and soothe irritated skin caused by shaving.
The NIVEA FOR MEN brand was launched in the UK in 1998. At that time total annual sales of men’s skincare products (facial and shaving preparations) in the UK were only £68 million with the male facial product sector worth only £7.3 million. Sales of male skincare products have grown steadily since the launch of NIVEA FOR MEN and the market in 2008 was worth over £117 million with male facial products worth £49 million. NIVEA FOR MEN wanted to increase its share of the UK male skincare market. This case study examines how NIVEA re-launched the NIVEA FOR MEN range in 2008. This was part of its overall plan to develop the range in the UK. It shows how the company developed amarketing plan for the relaunch and organised its marketing activities to achieve its aimsand objectives. The study focuses on how a company can respond to changes in consumer expectations, external influences and business aims to achieve those objectives.
Page 2: What is a marketing plan?
A business needs to set its overall direction for the company through a business plan. This plan sets out how the company is to achieve its aims. The aims and objectives of a business inform and shape its business plan. A vital part of the overall business plan is the marketing plan. The relationship between the two plans is shown in the diagram. Marketing involves identifying, anticipating and satisfying customer needs. A marketing plan takes the stated aims and objectives and then puts in place a series of marketing activities to ensure those objectives are achieved. Marketing plans can cover any time period, but normally set out activities for the next one to five years at either a business or brand level. The main sections of the plan cover:
SWOT and competitive analysis to assess where the business or brand is currently and what competitors are doing objectives what the plan needs to achieve
the marketing strategy how the objectives will be achieved sales forecast by how much sales are likely to increase budget how much the marketing activities will cost and how the plan will be financed evaluation how outcomes will be monitored and measured.
There is no set model for a marketing plan. The structure of the plan and the amount of detail will depend on the size of the brand, the timescale involved and how the market and economy is behaving. However, NIVEA’s marketing plan for the relaunch of NIVEA FOR MEN follows closely the outline described here.
Page 4: Setting objectives
A successful marketing plan relies on setting clear and relevant objectives. These must relate directly to the business’s overall aims and objectives. In other words, the marketing plan must fit with the overall company strategy that is set out in the business plan. Beiersdorf states its goal as ‘…to increase our market share through qualitative growth. At the same time we want to further improve our sound earnings performance so that we can fulfil our consumers’ wishes and needs with innovations today and in the future. This will give us a strong position within the global competitive environment.
The marketing team set SMART objectives for the NIVEA FOR MEN relaunch. These are Specific, Measurable, Achievable, Realistic (given the available resources) and Time constrained (to be achieved by a given date). The marketing team used research data to forecast market trends over the next three-to-five years. This helped them set specific targets for increasing sales, growing market share and improving its brand image.
Beiersdorf wanted to increase its UK market share for NIVEA FOR MEN, but also wanted greater market penetration for male skincare products. In other words, it wanted not just a greater share of the existing market; it wanted to expand that market. It wanted more men buying skincare products. One key aim was to move men from just considering skincare products to making actual purchases. It also aimed to sell more male skincare products to women.
Research had indicated that women were often the initial purchaser of skincare products for men. NIVEA FOR MEN used this key fact as a way to increase opportunities for sales. Another objective was to develop the NIVEA FOR MEN brand image. The NIVEA brand has always stood for good quality products that are reliable, user-friendly and good value for money. The brand’s core values are security, trust, closeness and credibility. These values would be strengthened and expanded on with the re-launch, to get more men and women to think of NIVEA as first choice for skincare.
Page 5: Marketing strategies
The NIVEA FOR MEN team devised marketing strategies to deliver its objectives. These strategies set out how the objectives would be achieved within the designated budget set by the management team. This focus on product development combined with an emphasis on consumer needs is a key differentiator for NIVEA FOR MEN. It is a major reason why in the UK the brand is still the market leader in the male facial skincare market. Another cornerstone of the UK marketing strategy for the re-launch was promotion. NIVEA sought to build on and develop the approach it had used in the past. In the 1980s, advertising in men’s style and fashion magazines along with product sampling was a major promotional tool. In the 1990s, the company used radio, television and press advertising together with sampling. Since 2000, there has been a greater emphasis on consumer needs and an increasing use of experiential activities in the promotional mix.
Experiential marketing is about engaging consumers through two-way communications that bring brand personalities to life and add value to the target audience. This helps build an emotional connection between the brand and the consumers. It is important to get the promotional balance right. NIVEA FOR MEN promoted the new launches of its products through a mixture of above-the-line and below-the-line promotion. The use of sport was a key element here. NIVEA FOR MEN supported football events at a grass-roots level through its partnership with Powerleague to build positive relationships with men. This helped create stronger brand affinity for NIVEA FOR MEN among men. It also allowed the brand to build and maintain a consistent dialogue with men, which helps to drive sales.
Above-the-line promotion included television and cinema adverts, which reached a wide audience. By using links with sport, NIVEA FOR MEN aimed to build a positive male image associated with male facial skincare. The brand also benefited from press advertorials in popular men’s magazines, making the daily usage of their products more acceptable. Promotions were used to attract new customers. For example, the distribution of free samples encouraged trial of NIVEA FOR MEN products which drove purchase. These promotions have helped build up brand awareness and consumer familiarity which reinforce the NIVEA FOR MEN brand presence. There is a dedicated NIVEA FOR MEN website to support its products and provide information to educate men on their skincare needs. To enhance the brand a tool called a ‘Configurator’ was created on the website to help customers specify their skin type and find the product that best suits their needs.
Page 6: Conclusion – evaluating the plan
The marketing plan is a cycle that begins and ends with evaluation. The final stage in the marketing plan is to measure the outcomes of the marketing activities against the original objectives and targets. Continuous evaluation helps the marketing team to focus on modifying or introducing new activities to achieve objectives. NIVEA FOR MEN adopted a range of key performance indicators to assess the success of the NIVEA FOR MEN re-launch in the UK. It looked at: market share – Did the re-launch accelerate this growth and help achieve its market share objectives?
NIVEA FOR MEN is market leader in many countries and is consistently gaining additional market share. overall sales – Was this in line with objectives? Internationally, NIVEA FOR MEN skincare products grew by almost 20%. Its sales in the UK market at retail in 2008 were nearly £30 million and in line with expectations. brand image ratings – NIVEA FOR MEN was the Best Skincare Range winner in the FHM Grooming Award 2008 for the fifth year running.
This award was voted for by consumers. It illustrates that NIVEA FOR MEN has an extremely positive brand image with consumers compared to other brands. product innovation – In response to consumer feedback and following extensive product innovation and development, the NIVEA FOR MEN range has been expanded and the existing formulations improved. These results show that, in the UK, the NIVEA FOR MEN re-launch met its overall targets, which was a significant achievement, considering the difficult economic climate. The marketing plan for the re-launch used past performance and forecast data to create a new marketing strategy. This built on the brand and company’s strengths to take advantage of the increasing change of male attitudes to using skincare products.
Page 1: Introduction
NIVEA is an established name in high quality skin and beauty care products. It is part of a range of brands produced and sold by Beiersdorf. Beiersdorf, founded in 1882, has grown to be a global company specialising in skin and beauty care. In the UK, Beiersdorf’s continuing goal is to have its products as close as possible to its consumers, regardless of where they live. Its aims are to understand its consumers in its many different markets and delight them with innovative products for their skin and beauty care needs.
This strengthens the trust and appeal of Beiersdorf brands. The business prides itself on being consumer-led and this focus has helped it to grow NIVEA into one of the largest skin care brands in the world. Beiersdorf’s continuing programme of market research showed a gap in the market. This led to the launch of NIVEA VISAGE Young in 2005 as part of the NIVEA VISAGE range offering a comprehensive selection of products aimed at young women. It carries the strength of the NIVEA brand image to the target market of girls aged 13-19. NIVEA VISAGE Young helps girls to develop a proper skin care routine to help keep their skin looking healthy and beautiful. Market orientation and product orientation
The market can be developed by creating a good product/range and introducing it to the market (product-orientated approach) or by finding a gap in the market and developing a product to fill it (market-orientated approach). Having identified a gap in the market, Beiersdorf launched NIVEA VISAGE Young using an effective balance of the right product, price, promotion and place.
This is known as the marketing mix or ‘four Ps’. It is vital that a company gets the balance of these four elements correct so that a product will achieve its critical success factors. Beiersdorf needed to develop a mix that suited the product and the target market as well as meeting its own business objectives. The company re-launched the NIVEA VISAGE Young range in June 2007 further optimising its position in the market. Optimised means the product had a new formula, new design, new packaging and a new name. This case study shows how a carefully balanced marketing mix provides the platform for launching and re-launching a brand onto the market.
Page 2: Product
The first stage in building an effective mix is to understand the market. NIVEA uses market research to target key market segments which identifies groups of people with the same characteristics such as age/gender/attitude/lifestyle. The knowledge and understanding from the research helps in the development of new products. NIVEA carries out its market research with consumers in a number of different ways. These include:
using focus groups to listen to consumers directly
gathering data from consumers through a variety of different research techniques product testing with consumers in different markets.
How research improved the product Beiersdorf’s market research identified that younger consumers wanted more specialised face care aimed at their own age group that offered a ‘beautifying’ benefit, rather than a solution to skin problems. NIVEA VISAGE Young is a skin care range targeted at girls who do not want medicated products but want a regime for their normal skin. Competitor products tend to be problem focussed and offer medicated solutions.
This gives NIVEA competitive advantage. NIVEA VISAGE Young provides a unique bridge between the teenage market and the adult market. The company improved the product to make it more effective and more consumer-friendly. Beiersdorf tested the improved products on a sample group from its target audience before finalising the range for re-launch. This testing resulted in a number of changes to existing products. Improvements included: changing the formula of some products. For example, it removed alcohol from one product and used natural sea salts and minerals in others introducing two completely new products
a new modern pack design with a flower pattern and softer colours to appeal to younger women changing product descriptions and introducing larger pack sizes. Each of these changes helped to strengthen the product range, to better meet the needs of the market. Corporate responsibility
Some of these changes reflect NIVEA’s commitment to the environment. Its corporate responsibility approach aims to: reduce packaging and waste – by using larger pack sizes
use more natural products by including minerals and sea salts in the formula increase opportunities for recycling – by using recyclable plastic in its containers.
Page 3: Price
Lots of factors affect the end price of a product, for example, the costs of
production or the business need to maximise profits or sales. A product’s price also needs to provide value for money in the market and attract consumers to buy. Pricing strategies
There are several pricing strategies that a business can use: cost based pricing this can either simply cover costs or include an element of profit. It focuses on the product and does not take account of consumers penetration price an initial low price to ensure that there is a high volume of purchases and market share is quickly won. This strategy encourages consumers to develop a habit of buying price skimming an initial high price for a unique product encouraging those who want to be ‘first to buy’ to pay a premium price. This strategy helps a business to gain maximum revenue before a competitor” product reaches the market.
On re-launch the price for NIVEA VISAGE Young was slightly higher than previously. This reflected its new formulations, packaging and extended product range. However, the company also had to take into account that the target market was both teenage girls and mums buying the product for their daughters. This meant that the price had to offer value for money or it would be out of reach of its target market. Price leader
As NIVEA VISAGE Young is one of the leading skin care ranges meeting the beautifying needs of this market segment, it is effectively the price leader. This means that it sets the price level that competitors will follow or undercut. NIVEA needs to regularly review prices should a competitor enter the market at the ‘market growth’ point of the product life cycle to ensure that its pricing remains competitive. The pricing strategy for NIVEA is not the same as that of the retailers. It sells products to retailers at one price. However, retailers have the freedom to use other strategies for salespromotion. These take account of the competitive nature of the high street. They may use: loss leader: the retailer sells for less than it cost to attract large volume of sales, for example by supermarkets discounting alongside other special offers, such as ‘Buy one, get one free’ (BOGOF) or ‘two for one’.
NIVEA VISAGE Young”s pricing strategy now generates around 7% of NIVEA VISAGE sales.
Read more: http://businesscasestudies.co.uk/nivea/the-use-of-the-marketing-mix-in-product-launch/price.html#ixzz2hnr21qvz Follow us: @Thetimes100 on Twitter | thetimes100casestudies on Facebook Page 4: Place
Place refers to:
how the product arrives at the point of sale. This means a business must think about what distribution strategies it will use where a product is sold. This includes retail outlets like supermarkets or high street shops. It also includes other ways in which businesses make products directly available to their target market, for example, through direct mail or the Internet. Distribution channels
NIVEA VISAGE Young aims to use as many relevant distribution channels as possible to ensure the widest reach of its products to its target market. The main channels for the product are retail outlets where consumers expect to find skin care ranges. Around 65% of NIVEA VISAGE Young sales are through large high street shops such as Boots and Superdrug. Superdrug is particularly important for the ‘young-end’ market. The other 35% of sales mainly comes from large grocery chains that stock beauty products, such as ASDA, Tesco and Sainsbury”s. Market research shows that around 20% of this younger target market buys products for themselves in the high street stores when shopping with friends.
Research also shows that the majority of purchasers are actually made by mums, buying for teenagers. Mums are more likely to buy the product from supermarkets whilst doing their grocery shopping. NIVEA distributes through a range of outlets that are cost effective but that also reach the highest number of consumers. Its distribution strategies also consider the environmental impact of transport. It uses a central distribution point in the UK. Products arrive from European production plants using contract vehicles for efficiency for onward delivery to retail stores. Beiersdorf does not sell direct to smaller retailers as the volume of products sold would not be cost effective to deliver but it uses wholesalers for these smaller accounts. It does not sell directly through its website as the costs of producing small orders would be too high. However, the retailers, like Tesco, feature and sell the NIVEA products in their online stores.
Page 5: Promotion
Promotion is how the business tells customers that products are available and persuades them to buy. Promotion is either above-the-line or below-the-line. Above-the-line promotion is directly paid for, for example TV or newspaper advertising. Below-the-line is where the business uses other promotional methods to get the product message across. Promotional activities
Promotional activities include:
Events or trade fairs help to launch a product to a wide audience. Events may be business to consumer (B2C) whereas trade fairs are business to business (B2B). Direct mail can reach a large number of people but is not easy to target specific consumers cost-effectively. Public relations (PR) includes the different ways a business can communicate with its stakeholders, through, for example, newspaper press releases. Other PR activities include sponsorship of high profile events like Formula 1 or the World Cup, as well as donations to or participation in charity events.
Branding a strong and consistent brand identity differentiates the product and helps consumers to understand and trust the product. This aims to keep consumers buying the product long-term. Sales promotions, for example competitions or sampling, encourage consumers to buy products in the short-term. NIVEA chooses promotional strategies that reflect the lifestyle of its audience and the range of media available. NIVEA realises that a ‘one way’ message, using TV or the press, is not as effective as talking directly to its target group of consumers. Therefore NIVEA does not plan to use any above-the-line promotion for NIVEA VISAGE Young. Consumer-led promotion
The promotion of NIVEA VISAGE Young is consumer-led. Using various below-the-line routes, NIVEA identifies ways of talking to teenagers (and their mums) directly. A key part of the strategy is the use of product samples. These allow customers to touch, feel, smell and try the products. Over a million samples of NIVEA VISAGE Young products will be given away during 2008. These samples will be available through the website, samples in stores or in ‘goody bags’ given out at VISAGE roadshows up and down the country.
NIVEA VISAGE Young launched an interactive online magazine called FYI (Fun, Young & Independent) to raise awareness of the brand. The concept behind the magazine is to give teenage girls the confidence to become young women and to enjoy their new-found independence. Communication channels are original and engaging to enable teenagers to identify with NIVEA VISAGE Young. The magazine focuses on ‘first time’ experiences relating to NIVEA VISAGE Young being their first skincare routine. It is promoted using the Hit40UK chart show and the TMF digital TV channel. In connection with FYI, NIVEA VISAGE Young has recognised the power of social network sites for this young audience and also has pages on MySpace, Facebook and Bebo. The company is using the power of new media as part of the mix to grow awareness amongst the target audience.
Page 6: Conclusion
NIVEA VISAGE Young is a skincare range in the UK market designed to enhance the skin and beauty of the teenage consumer rather than being medicated to treat skin problems. As such, it has created a clear position in the market. This shows that NIVEA understands its consumers and has produced this differentiated product range in order to meet their needs. To bring the range to market, the business has put together a marketing mix. This mix balances the four elements of product, price, place and promotion. The mix uses traditional methods of place, such as distribution through the high street, alongside more modern methods of promotion, such as through social networking sites. It makes sure that the message of NIVEA VISAGE Young reaches the right people in the right way.
A NIVEA case study
Page 1: Introduction
Beiersdorf is the international skin care company behind the leading brands NIVEA, ELASTOPLAST, ATRIXO and EUCERIN. Over the past 10 years the company has grown rapidly in the UK by developing a balanced and well managed portfolio of brands. A brand portfolio should consist of a range of products which support each other, irrespective of which categories they operate in. The NIVEA range includes product types ranging from female face and body products to men’s shaving gels, through to deodorants and sun care products. NIVEA identifies market segments that meet individual consumer needs. Segmentation occurs when a market is split into sub-markets (segments) which can respond in similar ways to different marketing activities. Each segment: contains consumers with similar needs or tastes
is best satisfied by products targeted to meet their specific needs. This can be at a macro level (e.g. total health and beauty market) and at a micro level (i.e. within a specific category). NIVEA Sun is a major international sun care brand, recognised worldwide as a leader in sun care research and development. The UK market is worth £173.6m with an overall category purchase penetration of 33% (usage penetration is higher).
Sun care is a serious issue for all and the protection message is key to the NIVEA Sun brand proposition. NIVEA Sun appeals to, and is used by men, women and children with quality products to meet all needs. The brand also aims to bring fun to the market through recognising situations when sun care products are applied.
Page 2: The three main product segments
The diagram above shows the three main product segments that make up the NIVEA Sun range. As you will see, there are a variety of products in each, which can also be segmented as shown. 1. Protection
It is vital that skin is adequately protected against the sun”s harmful effects (although no sunscreen can provide total protection). NIVEA Sun provides products that enable people to be as safe as possible. NIVEA Sun also encourages the use of other forms of protection (e.g. wearing a sun hat
and avoiding midday sun). Protection is the largest segment in the sun care market with a purchase penetration of 28%. NIVEA Sun is the protection segment market leader by value (i.e. more money is spent on NIVEA Sun protection products than any other sun care brand in the UK). When choosing sunscreens there are two important factors to consider: i. skin type
The chart below shows segmentation by skin type. The level of protection required for each segment will vary according to generalised skin types (as seen below): Skin type applies to children, as well as adults. Children”s skin is thinner and its repair mechanism is not yet fully developed. As a result they require extra protection and sun screens that are specifically developed for their skin. ii. location
NIVEA Sun provides a range of lotions and sprays targeted at different climates and to users with different skin types. Someone with fair skin may be well protected with a SPF 20 product when in England, but if they were in Barbados they would need SPF 40. 2. After Sun
NIVEA Sun is the market leader within this segment in the UK, which has been growing rapidly. 3. Self-tan In contrast to protection and after sun, the self-tan category is concerned mostly with cosmetic appeal. Many adults use self-tan to have an all year round sun kissed glow. Page 3: Brand Vision
A vision paints a picture of what you are trying to achieve with your brand in a simple sentence. NIVEA Sun’s vision is “To be the Number 1 brand in the UK sun care market in penetration, sales and likeability.” Penetration relates to the percentage of potential customers that purchase a product. Sales relate either to value (the money spent on the product) or volume (the quantities sold). Likeability is all about enjoyment. If people like a brand/product they will continue to buy it. One key way to achieve the vision is to provide innovative solutions to market needs. This has been a key success factor for NIVEA Sun. As a brand it has achieved this through continually segmenting its consumers in order to: effectively meet consumers’ needs
identify new market opportunities.
Page 4: Consumer segmentation
Segmentation has been vital to the success of NIVEA Sun and allowed the brand portfolio to grow to over 40 products, all meeting clear consumer needs. The following factors are used to develop and define the sun care segments: Demographics – different groups of consumers behave differently (factors relate to age, gender, etc).
Demographic differences relevant to NIVEA Sun include different buying behaviours between men/women and adults with children. There is a stark contrast between awareness and usage of sun care products between men (who prefer convenience) and women (who enjoy more luxurious sun care products). Similarly, adults with children are another broad segment with differing needs. Demographic segments are broad. As research shows, the level of awareness of sun care transcends income and social class. Attitudinal this is the most important segmentation variable. Consumers’ attitudes towards sun care influences their purchases. NIVEA Sun conducts market research to understand user attitudes.
This involves questionnaires using a nationally representative sample, and more intensive research with small groups, to discuss individual skin protection habits and preferences. This has identified 5 distinct groups for protection and after sun: Concerned Consumers ‘a good tan is not important’. These consumers are conscious of the harmful effects of the sun and purchase sun protection products that are most likely to offer high sun protection factors Sun Avoiders – avoid sunbathing and using sun protection when in the sun – it is seen as a chore. These are unlikely to purchase a sun care product. Through education, this segment may be convinced to protect using more easy-to apply products such as sprays. Conscientious Sun Lovers – adore sunshine and like to use a trustworthy brand with suitable protection factors.
They know about sun care and use this knowledge to purchase suitable products for their skin. Careless Tanners – adore the sun but don’t protect against harmful dangers. Tanning is important to this group, not protection. They don’t worry about the long-term damage to their skin and may purchase a low SPF product, if any at all. Naive Beauty Conscious – like to have a good sun tan. They recognise that sun protection is important but fail to understand about Sun Protection Factors (SPFs). These consumers may still be interested in the core features of a sun protection product (e.g. SPF) and be more inclined to purchase an added-value offering such as a mousse. Consumer segments were identified by analysing answers to questions about attitudes. The two main aspects of attitudes relate to:
Usage occasion (when) e.g. holiday, outdoor sports, gardening, working etc. This relates to the Sun Protection Factor (SPF) required, e.g. the SPF required for a holiday in Egypt differs greatly to outdoor work in the UK. This is one of the reasons why NIVEA Sun produce a wide range of sun protection from SPF 4 to 50 . Research has shown that consumers often purchase a variety of SPF’s for differing needs and occasions.
This factor alone however is not an accurate means of segmenting markets. Benefit sought – protection is the primary benefit but the preference by which this is delivered will vary by segment, e.g. convenience is important to men (so they choose spray applicators). Parents want to provide maximum protection for children (high SPFs and coloured products are therefore important). The benefit sought differs across the attitudinal segments. Whilst ‘Concerned Consumers’ want a very functional product providing ‘adequate protection’ (e.g. SPF 30), ‘Naive Beauty Conscious’ may want a more luxurious sun protection product (e.g. mousse). This also applies to consumers with special skin types, who require a more specialised product. Recognising that this is a separate segment, NIVEA Sun has formulated sensitive skin products.
Page 5: Brand strategy
The key proposition of the NIVEA Sun brand is protection. The main elements of this proposition include: making sun care simple
educating that protection can lead to safer tanning
reinforcing the immediate protection message.
This last point relates to the immediate protection formula which was developed by NIVEA Sun and launched in 2005 to provide proven instant and full UVA and UVB protection. This was researched and developed following consumer studies which found that consumers often failed to apply sun screens 20-30 minutes before sun exposure (despite packaging instructions). NIVEA Sun follows a strategy of product innovation, in order to achieve its long-term objectives. This takes the form of timely new product launches to enable the brand to more closely meet the needs of different types of consumers. Some good examples of innovative launches include:
spray products that are easy to apply (particularly appealing to men) a coloured formulation for children’s sun products (making application more fun) reformulation of the products to offer immediate protection. For 2006, NIVEA Sun has developed ‘Long Lasting Water Resistance’ for children, a product which has increased the water resistance of sun protection from 80 minutes to 120 minutes. This allows children to be safer in the sun for longer. In addition NIVEA Sun creates innovative marketing communication. Women are the main purchasers of sun care for the family.
This is reflected in above-the-line (advertising) communications, generally targeted towards a female audience. However, in 2005, NIVEA Sun targeted male consumers with its immediate protection message in press advertising. This was presented in a fun and ‘non-serious’ way in order to appeal to a male audience. Children are not purchasers of sun care. However, NIVEA Sun recognises it can play an important part in educating children from a young age to be safer when in the sun. Every year, a ‘Sun Sense’ primary school resource pack is distributed to over 10,000 teachers to communicate this key message. Continual segmentation is vital to fully understand consumer needs and changing habits. This helps provide appropriate products to meet their need888s.
Page 6: Conclusion
Segmentation is the tool that enables NIVEA Sun to identify different groups of customers, and provide the best possible products to meet individual requirements. The sun care market consists of different consumers with differing needs. The UK has the biggest sales of NIVEA Sun across Beiersdorf within Europe. Understanding segmentation enables NIVEA Sun to maintain a Number 1 value position in protection and after sun in the UK.
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