This marketing plan was created for Nestle Crunch to position itself in the next year to deliver at least $13 million in profit without increasing the budget by over $2 million. An analysis of the chocolate confectionery market will be analyzed to develop marketing strategies to implement to satisfy these objectives. situation analyses
Crunch is produced by the largest food and beverage company, which is Nestle. Retail sales of chocolate confectionery comprised of $33.8 billion in retail sales, which $16.9 billion were in chocolate sales.
The growth rate of chocolate confectionery lagged behind the cereal, gum, and sugar confectionery and showing very little projected growth through 2014.
35% of the market share in sales were the Regular sized Chocolates, 30% were for the miniatures, 25% were of promotional items (promotes seasonal sales), and then there were the king sizes which made up of only 10% of the market sales.
Nestlé’s strategy was to list the lowest price on their bars at $0.79 each for Butterfinger and Crunch, while its close competitor, Hershey’s priced its Bars and Reese’s cups at $0.89. The other competitor, Mars, priced theirs even higher at $0.99 each. Price increase would result in lost in sales.
Product Services Offered
Nestle Crunch offered consumers a chocolate confectionery that served as an indulgent treat in contrast to satisfying hunger.
In SWOT, strengths and weaknesses are internal factors. In business, the strengths identified are what a business works to maintain, build, and leverage. Weaknesses that are identified should be removed, resolved, or remedied. Opportunities and threats are external factors. External factors are, in most part, out of our external locus of control. We can only either optimize it or deal with it. Opportunities should be prioritized and optimized. Identified threats must be acknowledged by a business and/or develop counter measures for it, if any (SWOT Analysis, 2009).
Offer the lowest prices among competitors
Crunch is regarded as an indulgence, a reward, or treat
Participates in all channels of distribution
Produced by the worlds’ largest food and beverage company – Nestle Weaknesses
Marketing budget cannot increase more than $2M from the previous year (2009)
Its positioned to target males and young adults who were not the largest chocolate consumers
Large market in the Midwest
Females and children consumed most of the chocolate confectionery
Psychographic segments that are potential target markets:
Practical value seekers
Confection loving moderators
TV has the greatest reach
Chocolate sales lag behind sugar confectionery, cereal bar and gum Competitors –Hershey and Mars in the U.S. market share
We want to position Crunch as:
“Nestle Crunch is for women and children who want to reward themselves to an indulgent chocolate treat, because Nestle Crunch is the only chocolate bar that tells you best that you deserve it.” strategy development
The mission is to deliver at least $13 million in profit without increasing the budget by more than $2 million. Targeted Consumer Demographics
Crunch satisfies a consumer’s need to satisfy an indulgent desire, and promotion is used to trigger these impulses. Therefore, promotion is vital to increasing sales. Specifically, to children and females (teenage females, adult females, and mothers) who mostly attribute chocolate as an indulgent desire according to the
In addition, according to the research, women are 51% of the population and consume 6% more chocolate than men. Children and young adults under the age of 25 comprise 60% of the population. In terms of geography, the Midwest is 22% of the population and the region that sells the most chocolate confectionery.
Strategy and Execution
Minus 1 event of free standing insert (FSI) coupon good on one regular size Crunch bar Add I event of A regular bar bonus size (+25%) is offered during 2-week promotional period; it was not offered in 2009 Minus 1 event of a 2-week store display featuring regular size Crunch Distribution increases by 2.0 percentage points
A Crunch price increase of +12.5% on all products would match Hershey’s retail prices but would still be less than Mars’ prices; no pricing action was taken in 2009
The following table shows the impact on sales and profit when making changes in the marketing mix.
According to the table, with the marketing mix selected we are able to achieve our objective of ensuring production contribution of at least $13 million, our profitability percentage change is at least over 15%, and budget does not increase by more than $2 million.
Advertising and Promotion
The media vehicles for advertising that will be utilized are TV, print, and online. Since TV has the greatest reach, 70% is allocated in the budget for TV advertising and promotion; 20% for online and 10% of the budget for print marketing. The total budget for these media marketing is a little below $12.9 million
We have an estimated reach of 90% for the TV advertising and marketing and 10% and 20% for print and online respectively.
The pie graph below illustrates the media mix selection:
The pricing strategy will be to increase the price of Crunch by 12.5%, which will match the Hershey’s retail price, but will still be below the price of Mars. An increase in price does result in a decrease in sales, but after thorough examination of the P&L, it will show an increase in profitability to justify the drop in sales.
Increasing the distribution showed to increase sales. Since a large percentage of sales were sold through other distribution channels besides mass merchandisers, supermarkets, and convenient stores, an increase in distribution to the other channels that include drug stores, warehouse club, and vending machines, justify a slight budget increase as shown in the Figure below.
The following figure summarizes the marketing plan
Promotions, advertising, and special events are concentrated on the special holidays that historically show increase sales in the chocolate confectionery market.
Many of the events are also focused mostly in the Midwest, because this region is shown to have the highest sales and consumption in the nation.
The budget is kept below a $2 million increase while still accomplishing the goal of increasing profitability.
The following table shows 2008 and 2009 chocolate confectionery market size and market shares of Nestlé Crunch and its competitors as additional references.
Alan Chapman. SWOT Analysis. (2009, October 13). Retrieved October 16, 2009, from http://www.marketingteacher.com/Lessons/lesson_swot.htm
U.S. CHOCOLATE CONFECTIONERY: DYNAMIC MARKETING PLANNING. Retrieved on June 02, 2014 from : https://brenau.instructure.com/courses/1209789/pages/course-documents?module_item_id=10683688