Nabisco is a company that has been in existence since 1898. During their 109 years in existence, they have grown through natural growth, mergers, and acquisitions. This has allowed Nabisco to be the leading snack maker in the world. The Oreo chocolate sandwich cookie was first introduced in Hoboken, N. J. in 1911. Oreos today are far and away the world’s most popular cookie. The Oreo family accounts for approximately 10 percent of all store cookie sales–a $3 billion market. However in recent years Nabisco has been reluctant to adapt to current market trends.
The company was focusing on producing new versions of existing products to make them more convenient. Situation Analysis In 1898, the New York Biscuit Company and the American Biscuit and Manufacturing Company merged over 100 bakeries into the National Biscuit Company, later called Nabisco. Founders Adolphus Green and William Moore, orchestrated the merger and the company quickly rose to first place in the manufacturing and marketing of cookies and crackers in America. To expand their global presence and to strengthen their position in the fast-growing consumer snacks sector, Philip Morris Co.
Inc. acquired Nabisco Holdings in December 2000. Philip Morris purchased Nabisco for $14. 9 billion in cash plus assumed $4 million in debt. Eventually, Philip Morris integrated the Nabisco brands with its Kraft Food operations. And now it includes brands such as Chips Ahoy, Fig Newtons, Mallomars, Oreos, Premium Crackers, Ritz Crackers, etc….. Nabisco Arabia Company Ltd. (NAARCO) was formed in 1995 as a joint venture between Nabisco International and The Olayan Group of Saudi Arabia.
In 2000, NAARCO made a major investment in a new plant to produce OREO, the world’s most popular cookie. OREO cookies were launched in the Saudi market in March 2001 with a major TV campaign. Internal Analysis The $3 million plant upgrade included a whole new production line, new offices, additional warehousing, and new mess rooms for the increased work force. Equipment from Spain, Italy, India, France, and Austria went into the world-class facility, under the supervision of Nabisco Technical Director Frank Willemsen and the Technical Services Manager Anselmo Codina.
The people of Kraft have recognized that the business has an important role in society- a responsibility that included understanding and meeting the public’s expectations, helping to address important social, environmental and economic issues and making a difference in local communities and the world. They firmly believe that “Our success will depend importantly on our willingness and ability to listen, get feedback on what we’re doing from those both inside and outside Kraft and act responsibly on issues of important concern. ” 1 Stargate Institute
Market Analysis Target Market: The current target market for the original vanilla filling Oreo is children. The original Oreo cookies have previously focused on and promoted the new colors for the creme filling and change the round shaped cookies into rolls, which would generate new interest amongst children, who would in turn convince their parents to buy the new cookie. Geographic Factor: This project is done and carried on in Riyadh, the capital and largest city of Saudi Arabia. Riyadh belongs to the historical regions of Nejd and Al-Yamama.
The population of the city is 4,700,000 of which 60% are Saudis and 40 % are foreigners. And the density is 3,024 km square. Demographic Factor: As Riyadh is known for its restrictions and being an Islamic country, the family life cycles followed here are usually all family members. Young single people can not live separately and independently, fearing for them young mature boys/girls will live under their families until its time for them to start up their own families. And generally Saudi people are well known by their family sizes.
Most of the family sizes are more then 6 or even far more than that. This is what makes the youth population really high in the kingdom. And it is something obvious and general that Saudi people are known for their wealth and considered as rich people and in return earn high incomes. Behavioral Factor: As Riyadh is developing, people now are becoming aware of various new brands which are attracting them to explore and investigate things. Women here are obsessed about shopping and show a favorable attitude and interest towards the different brands.
They are also considered as heavy users when it comes to brand loyalty. 2 Stargate Institute Marketing Need As Oreo is a biscuit, and biscuits are food, so the most important need the Oreo biscuits satisfy is Hunger. But if we further narrow down the needs, Oreo can be satisfying more than just the drive (hunger). *Oreo satisfies the nurturing need example, a mother having difficulties in feeding her 4 to 6 years old child with some nutrition food, can consider Oreo to feed her child with a sip of milk.
*Oreo satisfies the imitation need example, kids watching the Oreo ad on TVs while the other kids are enjoying twisting, licking and dunking the cookie into a glass of milk. This forces the kids to want that cookie right away and imitate the same steps. *Oreo also satisfies the fun need, and in this case not only kids will want to have fun and enjoy Oreo even adults like to have fun once in a while individually or even with their kids. Market Trends Various on-going and changing trends in the consumer market affect the business of an organization.
Some of those having an impact on Oreo chocolate sandwich biscuits are: A 2004 TNS study amongst Saudis has found a trend towards smaller families. It revealed that Saudis – realize the need for smaller families to provide a better quality of life for their children. Females have been given permission by the government to work which resulted in the increase of purchasing power. Driven by changing lifestyles and population growth the impact on the food market has been positive. The market therefore witnessed rapid growth over the review period.
The consumers in Saudi market are seen as active switchers with a medium brand loyalty level. Lastly, a study was conducted by TNS in 2007 which showed that 99 per cent of Saudi respondents in the study consumed chocolate “food” (chocolates, chocolate milk, biscuits, etc. ) in the last seven days, an increase from 95 per cent in 2004. 3 Stargate Institute Market Growth Growth in the Saudi Arabian biscuit market is being driven mainly by two factors – firstly, the marked increase in advertising spend by multinationals such as Nabisco, Master Foods and Danone.
Secondly, the popularity of emerging products such as chocolate-coated biscuits and bread substitutes, which have recently been launched in the market. Researches have shown that biscuits, particularly sweet biscuits, are generally sold at low prices, averaging between SR0. 25 and SR2 (US $0. 06 – US $0. 53), for a single-serve pack and enjoy excellent distribution in all outlets. The biscuits sector is highly developed owing to the strength of the local industry in Saudi Arabia, represented by large manufacturers such as United Food Industries.
Oreo sales showed a fluctuating result during the past 13 years. When Oreo initially was launched into the market, sales increased to a high extent for about 3 years but then sales decreased for a long period during 1997 to 2002. Oreo marketing managers became aware of their loses and immediately went back to action and changed their marketing mix and started to introduce several different new products. This effort resulted with high sales in 2008. Sales were amounted to $4 billion and market share 41%.