Kit Kat started in August 29 in 1935 in York by Rowntree, in 1973 Kit Kat entered in Japan market. In 1988, Nestle took over the Kit Kat ( Kit Kat, 2014). Today, Kit Kat is very successful in Japan, Kit Kat has more then two hundred different products in Japan, it help Kit Kat get more and more market share in Japan( Kit Kat, 2014). More and more people think Kit Kat is like a logo in Japan, because there are some special Kit Kat products only selling in Japan. Kit Kat success in Japan is the fact, but why Kit Kat is successful in Japan, it must be affect with generic strategy. Kit Kat using the right strategy to help them success. Generic strategy is very important for the company, it will help the company increase the competitive. When the Kit Kat choose the right generic strategy, it will help the company more stronger, they can get more market shares, help the company to be successful. 2. Generic Strategy
Generic strategy was described by Micheal Porter in 1979, Porter’s generic strategy is talking about how a company increase the competitive advantage in their chosen market. There are three generic strategy, cost leadership, differentiation or focus, focus is about two different way, cost focus or differentiation focus (Oxlearn.com, 2014). Cost leadership strategy means save the cost in the organization help the company to increase the competitive advantage. For example: Wal-Mart, they are using cost leadership, they are very successful, they find the cheap domestic suppliers and from low-wage foreign markets, they keep the cost and using the lower price selling to the customers (Small Business – Chron.com, 2014). Differentiation strategy means a company using many different products to increase the competitive advantage and get more market shares.
For example, Apple company is a very successful in the world, they have many different products, iPhone, iPad, iPod, Mac, Watch, etc. They are using different products to improve themselves, help the company to get more customers and market shares. Focus strategy is including cost focus and differentiation focus. The different with cost focus and differentiation focus is focus the cost or products differentiation. Cost focus is focus the cost, use the lower cost to improve the competitive advantage. Differentiation focus is a company try to produce the different products in the new market take the company more stronger, increasing the competitive advantage. Kit Kat is a successful company in the world, they are using cost leadership strategy and differentiation strategy.
There are some reasons for why Kit Kat chosen cost leadership strategy. Lower cost raw materials. Kit Kat owned by Nestle SA. Kit Kat is selling chocolate, when they making the products, the need the raw materials, for example: sugar, milk, coffee and cocoa. Nestle SA is doing business with this raw materials, so they can use the cheaper prices to get the raw materials (MarketWatch, 2014). That will help the company to reduce the cost, it means Kit Kat can use the lower price to selling their product and keep the profit, increase the competitive advantage. Retail. In January 15 2014, the world’s first Kit Kat opened in Tokyo (Ashcraft, 2014).
Before 2014, Kit Kat do not have any store, they only selling in the other shops. All of the customer can buy the Kit Kat from the supermarket or shops. It can help the company save the cost. They are selling in the supermarket can help the company, they do not need to hire more employees and open the own shop they need to spend more cost. Today they opened the first store in Tokyo, but customer also can buy the Kit Kat from the supermarket or in other shops, it can help the company get more customer and increase the competitive advantages. There are some reasons for why Kit Kat chosen differentiation strategy. The strategy customer.
Kit Kat has more then 200 different products in Japan. There are more then forty products are only selling in Japan, for example: Wasabi, Strawberry Cheesecake, Lemon Vinegar, and Cucumber (Break with Kit Kat, 2014). Kit Kat produces many different products, that is achieve the differentiation strategy, they try to use the differentiation to improve the company. Different people has different taste, need and want, so different will get more and more customer to buy the products, different product is suitable to different customers. That is the reason why different products can increase the competitive advantage for the company. All of the different products have their own package, different colour and different weight.
In 1942, Kit Kat fist time selling the blue Kit Kat in the market, in 1949, Kit Kat start to selling red Kit Kat in the market, after that, Kit Kat produced more and more different Kit Kat, for example, in 1990s Kit Kat start to selling the Nestle Macintosh Corporation ( Kit Kat, 2014). Japan is a developed country, people want to improve the quality of life, so they need more different products, they want more different experience. Everyone’s life is different, so they have different demand, students, workers and old people have different need, today you can find much more different Kit Kat in Japan, anyone can choose different Kit Kat for them. Different Kit Kat has own colour, people like different colour, so different colour can keep different customer and different weight is suitable for different customer, for example, if one family like eating Kit Kat, they need more weight, can help them save time, do not need to buy many times, so bigger weight is suit for them. Key competitors.
Kit Kat is doing business with chocolate, but there are some chocolate industry in the world, for example:Ferrero brands, Mars brands and Cadbury brands. They are also doing the business with chocolate, the are also very successful, so Kit Kat need to improve the competitive advantage. Other brand do not have much different products, but Kit Kat have many different products, it will help Kit Kat easy to get the customer. Kit Kat is owned by Nestlé SA which also owns a range of other product brands, from 2007 to 2012, the market share only changed 0.7%, that mean differentiation help the Kit Kat keep the market shares (Break with Kit Kat, 2014).
Kit Kat’s target market is men and women of all ages, so different products can help Kit Kat keep the market shares. All of the chocolate company selling the products in Japanese market, the number of customers is fixed, so Kit Kat is using differentiation strategy to increase the competitive advantage, when Kit Kat fight with other company in the market, they are more stronger, they can get more market shares, help the company more successful. 3. Ebola and Kit Kat
Ebola virus is an infectious disease, this disease has a high risk of death (Who.int, 2014). First cases notified in March 2014 in west Africa.(Who.int, 2014). It affect the price of cocoa, in November the price of cocoa up twenty percent, before November it was up to thirty-five percent to forty percent (PBS NewsHour, 2014). West Africa is the world’s largest cocoa origin, when Ebola virus found in west Africa, that affect the cocoa trade, many farmer in Ebola virus disease, because this disease has a high risk of death, so much of the farmer died of Ebola virus disease, so they lose a lot of labor, they do have enough people to working with the cocoa, so the chocolate company can not buy the enough cocoa, demand higher then supply, the price of cocoa will going up. In USA, all of the price of chocolate increase ten cents for each Kit Kat. Kit Kat is a chocolate company, cocoa is the most important raw material, they need the cocoa to make the chocolate, but the price of cocoa going up, so they need to spend more cost on the cocoa, but they did not pass all the cost to the customers, so in 2014 the sales slump seven percent (FoodNavigator-USA.com, 2014).
Kit Kat can use operational level strategy. Operational level strategy A plan that details how a business will use its production resources to meet its goals. Many business managers will put together a detailed operation strategy in order to clearly present to subordinate staff their plans for how their portion of the business should function in order to attain its objectives (BusinessDictionary.com, 2014). The price of cocoa up around twenty percent is about the global economy, so all of the chocolate companies are increase the costs, they also need the cocoa to produce the products. If Kit Kat is using cost same like other time, they also want to keep the profit, they must transfer the cost to the customer, it means increase the price of the Kit Kat, but Kit Kat can choose to reduce the cost in the transport or other please, they also can find the cocoa supplies from other countries, help them to reduce the cost.
Seventy percent cocoa from west Africa, there are also thirty percent cocoa they can find, using the cocoa from other may be is cheaper, try to save the cost in the other places, for example: package, or transportation. Kit Kat can find the cheaper other raw materials, help the company to reduce the cost. When Kit Kat try to save the cost in other places, do not increase the price of products, they can increase the competitive advantage, help the company keep the customer and market shares.
Kit Kat is a very successful company in Japan. Kit Kat is start from 1935 to now, Kit Kat has 79 years history. In this 79 years, Kit Kat from a small business becoming this successful company, because they are using the right strategy, right strategy can help the company service and becoming more stronger. They have more the four hundred different products, they can fight with the Ferrero brands, Mars brands and Cadbury brands, and becoming same with that brands, even more successful in Japan. Different strategy suit for different situation and different company, there is not best strategy, there is only suitable strategy, a strategy may be can take the company more and more successful or closed.
5. List of References
Kit Kat. 2014. KitKat History. [ Online]. Available from: http://nestle.jp/brand/kit/about/history/ [Accessed 22 DEC 2014]. Oxlearn.com, (2014) Oxford Learning Lab – Watch it Learn it Badge it. [ Online]. Available from: http://www.oxlearn.com/arg_Marketing-Resources-Porter%27s-Generic-Strategies_11_33 [Accessed 28 December 2014]. Small Business – Chron.com, (2014) Examples of Cost Leadership & Strategy Marketing. [ Online]. Available from: http://smallbusiness.chron.com/examples-cost-leadership-strategy-marketing-12259.htm l [Accessed 28 December 2014]. MarketWatch, (2014) Nestle keeps view on raw material inflation. [ Online]. Available from: http://www.marketwatch.com/story/nestle-keeps-view-on-raw-material-inflation-2012-08-09 [Accessed 28 December 2014]. Ashcraft, B. (2014) The World’s First Kit Kat Store Is Opening in Tokyo, Kotaku. [ Online]. Available from: http://kotaku.com/the-worlds-first-kit-kat-store-is-opening-in-tokyo-1501753395 [Accessed 28 December 2014]. Break with Kit Kat, (2014) Global Business Strategy. [ Online]. Available from: http://breakwithkitkat.weebly.com/global-business-strategy.html [Accessed