cb group 3 final report - oreo

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FORE School of Management, New Delhi AN EXTENSIVE CONSUMER RESEARCH ON OREO BISCUITS CONSUMER BEHAVIOUR Submitted to: Dr. Anupam Narula Professor (Marketing) Group 5 (IMG VI): Avneesh Luthra (063012), Deepak Arora (063014), Nikhil Gurg (063030), Pooja Juneja (063035), Rohit Batta (063042), Shikha Mittal (063048) 1 | Page

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Page 1: CB Group 3 Final Report - Oreo

FORE School of Management, New Delhi

AN EXTENSIVE CONSUMER RESEARCH ON OREO BISCUITS

CONSUMER BEHAVIOUR

Submitted to:

Dr. Anupam Narula

Professor (Marketing)

Group 5 (IMG VI):

Avneesh Luthra (063012), Deepak Arora (063014), Nikhil Gurg (063030),

Pooja Juneja (063035), Rohit Batta (063042), Shikha Mittal (063048)

FORE School of Management, New Delhi

8th August, 2013

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CERTIFICATE

This is to certify that Group 3 Members Avneesh Luthra, Deepak Arora, Nikhil Gurg,

Pooja Juneja, Rohit Batta and Shikha Mittal , Roll Nos. 063012, 063014, 063030, 063035,

063042 and 063048 , have completed their Term project report entitled “An Extensive

Consumer Research on Oreo” towards part fulfilment of the requirements for the award of

the Post Graduate Diploma in Management (IMG-6) 2012-2014.

This Mini Report in Consumer Behaviour is the result of their own work and to the

best of my knowledge no part of it has earlier comprised any other report, monograph,

dissertation or book. This project was carried out under my overall supervision.

Date: 08/08/2013

Place: New Delhi

-----------------------------------

Dr Anupam Narula

Internal Faculty Guide

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TABLE OF CONTENTS

CERTIFICATE..........................................................................................................................................2

LIST OF TABLES......................................................................................................................................5

LIST OF FIGURES....................................................................................................................................5

ACKNOWLEDGEMENT...........................................................................................................................6

EXECUTIVE SUMMARY (Shikha Mittal)...................................................................................................7

LITERATURE REVIEW (Deepak Arora)....................................................................................................8

INTRODUCTION (Avneesh Luthra).......................................................................................................10

PESTLE ANALYSIS FOR INDIA (Pooja Juneja)........................................................................................17

PORTER’S 5 FORCE ANALYSIS (Avneesh Luthra)..................................................................................19

SWOT ANALYSIS (Pooja Juneja)...........................................................................................................21

VALS SEGMENTATION (Nikhil Gurg)....................................................................................................23

PRODUCT STRATEGY (Shikha Mittal)...................................................................................................25

B2B Market......................................................................................................................................25

PRICING STRATEGY (Deepak Arora).....................................................................................................26

DISTRIBUTION STRATEGY (Rohit Batta)...............................................................................................27

PROMOTION STRATEGY (Shikha Mittal)..............................................................................................29

Cadbury and Oreo...........................................................................................................................29

Nielsen Research.............................................................................................................................29

Twist, Lick and Dunk........................................................................................................................30

Father Son relationship...................................................................................................................30

Father Daughter Duo.......................................................................................................................31

Siblings.............................................................................................................................................31

Mass and Digital Media...................................................................................................................32

Facebook / Twitter (#DailyDunks)................................................................................................32

Youtube.......................................................................................................................................32

On Ground Activities........................................................................................................................33

Oreo Togetherness..........................................................................................................................33

Oreo Togetherness Bus................................................................................................................34

Consumer Behaviour and Some Concepts (Shikha Mittal)...................................................................34

PACKAGING STRATEGY (Nikhil Gurg)...................................................................................................36

Packaging.........................................................................................................................................36

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PRIMARY CONSUMER RESEARCH (Nikhil Gurg)...................................................................................37

Key Objectives.................................................................................................................................37

Understanding of User Preference in Biscuit Segment....................................................................37

Competitive Scenario of Biscuit segment........................................................................................40

REFERENCES........................................................................................................................................45

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LIST OF TABLES

Table 1: Oreo Product-wise Segments...................................................................................................7Table 2: Indian Biscuits Market Growth...............................................................................................10Table 3: Segments in the Indian Biscuits Market.................................................................................11Table 4: Biscuits Penetration in India...................................................................................................12Table 5: Biscuits Consumption Pattern across India............................................................................12Table 6: Kraft Foods SWOT..................................................................................................................18

LIST OF FIGURES

Figure 1: Oreo - Twist, Lick, Dunk..........................................................................................................9Figure 2: Biscuits Market in India..........................................................................................................9Figure 3: 2011 Market Share (Overall Biscuits Market).......................................................................13Figure 4: Market Share in Cream Biscuits............................................................................................13Figure 5: Oreo Distribution..................................................................................................................22Figure 6: User Preference to Taste......................................................................................................34Figure 7: User Preference to Price.......................................................................................................35Figure 8: User Preference to Variety...................................................................................................35Figure 9: User preference to Flavor.....................................................................................................36Figure 10: User preference to Brand...................................................................................................37Figure 11: Brand Preference in terms of Taste....................................................................................37Figure 12: Brand Preference in terms of Price.....................................................................................38Figure 13: Brand Preference in terms of Flavour.................................................................................39Figure 14: Brand Preference in terms of Brand...................................................................................39

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ACKNOWLEDGEMENT

We take this opportunity to express our gratitude to Professor Anupam Narula for

giving us the opportunity to conduct a consumer research and analyze how Oreo has

responded to the preferences of Indian consumers with its unique taste and special ritual of

twist, lick, and dunk. as part of our Mini Project for the course ‘Consumer Behaviour’,, and

subsequently guiding, monitoring and encouraging us throughout the course of the project.

The project was a great learning experience for all of us.

During the course of the project, we gained immensely valuable insights on the

strategies adopted by Kraft Foods for its product – Oreo Biscuits. There was also a great

deal of learning with regard to the Biscuits Industry in India.

We also take this opportunity to express our thanks to FORE School of Management,

New Delhi for providing us with the resources and environment required to carry out the

project.

Avneesh Luthra (063012)

Deepak Arora (063014)

Nikhil Gurg (063030)

Pooja Juneja (063035)

Rohit Batta (063042)

Shikha Mittal (063048)

Group 3, IMG VI

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EXECUTIVE SUMMARY (Shikha Mittal)

Kraft Foods and Cadbury’s launched Oreo (Premium Segement Cream Biscuit ) in India in

2011. India is the world’s largest Biscuit market (as per volume) growing at a rate of 17% per

annum. The cream segment is leading the growth of biscuit industry with 25 % - 30%

growth.

Oreo has built its positioning on ‘Togetherness’ in India. It’s ritual of ‘Twist, Lick and Dunk’ is

internationally known, and has also caught up with Indian consumers. This positioning has

helped Oreo in differentiating itself, in an industry where competition and rivalry is high. At

the same time suppliers have low bargaining power.

Nielsen Group had conducted a research ‘Togetherness Quotient’ for Oreo. The findings for

the research have been extensively used by the company in modelling and understanding

consumer behaviour with respect to Price, Promotion, Place and Product. Various concepts

like perceptions. Motivation and Learning of consumer behaviour have been leveraged by

Cadbury Oreo.

A Primary research was conducted to analyse the preference of Oreo with respect to its

competitors and understand he attributes important in buying behaviour of the consumers

for Cream biscuits.

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LITERATURE REVIEW (Deepak Arora)

Consumer Behavior is the behavior that consumer displays in searching for, purchasing,

using, evaluating and disposing of products and services that they except will satisfy their

needs. (Sciffman, Kanuk & Kumar).

Krishnan (2011) showed that in consumption environment a person chooses a product or

brand which seems to possess a maximum possibility or elaboration of his lifestyle identity.

A complete picture of consumer cannot be given by demographics alone and thus might

affect the perfect segmentation of market (Cooper, 1984).

Forrest and Blumberg (1981) sees life style as a basis that allows marketers to assess

accurately the needs of appropriate segments, as demographic descriptions have proved

inadequate for this task.

From the past work it can be concluded that values and lifestyle (VALS) plays an important

role for marketing of product and services. This would facilitate reduction of large and

heterogeneous population into few homogenous groups.

Sivan(2000) showed that 18% of buying decisions are influenced by advertisement . Ibrahim

and Alnawas (2010) that there is tremendous influence of using the celebrities on consumer

buying behavior. Thus, Promotion is of great importance for marketing.

Padberg and Westgren(1979) has also shown that along with product quality the

communication, distribution and pricing are other important factors that affects the

consumption process.

Sehrawet and Kundu(2007) has shown that packaging is the key component that affects the

consumer behavior. Ease of carriage, lightness of weight, simplicity, transparency and

consistency of package are the key factors and are more important for urban consumers.

Packaging plays an important role and is an important tool for marketing a product.

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Thus Packaging, promotion, distribution, Lifestyles and values and pricing determines the

consumer behavior to larger extent.

The Asia Pacific Biscuits market has grown by 7.5% in year 2011 and has reached the value

of $9974 Million. The compounded annual growth rate of market in the period 2007-11 was

5.9 %.( Market line).

Jago (2000) considered the functional food and beverage category one of the most

important drivers of new product development (NPD) in recent years

Longman (2001) stated that increased demand for functional foods amongst consumers is

due to maturation of the general healthy foods market.

Kraft’s multi category distribution (warehouse delivery and direct store delivery) and

consumer awareness are its key strengths (Data monitor). The Biscuit Market has reached

the value of $9974 million and thus it has a lot of potential and to study various factors

affecting the consumer behavior in this category of product is important. But a very less

work has been done towards specifically biscuit market; more focus is on Food and

beverages industry.

According to Deloitte (2012) convenience, health/nutrition benefits, affordability, taste/

freshness, functionality, product availability and corporate responsibility issues are the key

consumer drivers in food and beverage industry. Since this biscuit industry provides

immense opportunity, so still a lot of researches can be conducted in particular to Biscuits

industry and study of consumer behavior can be made which will allow marketers and

managers to better serve the customer and increase the profitability.

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INTRODUCTION (Avneesh Luthra)

Kraft Foods

Kraft Foods Group Inc. is a North American grocery manufacturing and processing

conglomerate, which is headquartered in Northfield, Illinois, a Chicago suburb. Kraft Foods

Inc. (Kraft Foods) manufactures and markets packaged food products, including biscuits,

confectionery, beverages, cheese, convenient meals and various packaged grocery products.

Its product categories span breakfast, lunch and dinner meal occasions, both at home and in

foodservice locations. The company sells its products to consumers in approximately 170

countries (Forbes, 2013). Kraft Foods operates in three broad segments:

1. Kraft Foods North America

2. Kraft Foods Europe

3. Kraft Foods Developing Markets.

Kraft Foods currently have operations in more than 75 countries and made its products at 223

manufacturing and processing facilities worldwide.

In February 2010, the company announced that it has acquired the control of Cadbury plc.

The company operates in the following five segments (Product-wise):

Table 1: Oreo Product-wise Segments

Segment Description

US Beverages This segment is responsible for the

manufacturing of packaged juice drinks,

powdered beverages and coffee.

US Cheese This segment is involved in the

manufacturing of manufactures processed,

natural and cream cheeses

US Convenient Meals The segment deals with the manufacturing

of processed meats and lunch combinations.

US Grocery This segment is involved in the

manufacturing of spoonable and pourable

dressings, condiments, desserts, packaged

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dinners and snack nuts.

Canada and NA Foodservice This segment sells products that span all of

its segments and includes the Canadian and

Puerto Rico grocery business, the North

American Foodservice operations and the

North American Grocery Export Business.

(Source: Reuters, 2013)

Kraft Foods have set upon themselves a target of achieving 40% of its revenues from the

emerging markets and is particularly keen to expand its presence in the BRIC countries—

Brazil, Russia, India and China. Kraft Foods acquired Cadbury Plc. to further develop its

footprint in the developing countries. The Chicago-headquartered parent company in 2010

said the combination of Kraft Foods and Cadbury provides the scale necessary to grow sales

and distribution in new and existing markets, delivering $1 billionn in incremental revenue

synergies by 2013.

Oreo Biscuits

First introduced in 1912 in the United States, Oreo Biscuit is an iconic product of the Kraft

Foods Group. It is a sandwich biscuit (called cream biscuit in India) with the delicious

combination of dark chocolate cookie and smooth vanilla cream. Today it stands as the

world’s No.1 biscuit with approximately 25 billion Oreos eaten per year (About 70 million

per day, or 800 per second!).

Although a well-established brand globally, Oreo is new to India. It was launched in India in

March 2011 under the Cadbury brand. Since its launch, the company has gained

considerable market share in the cream biscuits segment in India, making a name for itself

minds of the Indian consumers. According to Cadbury India Managing Director Anand

Kripalu, the launch of Oreo resulted in a growth in Cadbury India’s sales by 40% between

January-September 2011.

SEPARATE STRATEGY FOR TANG

Kraft opted to keep Tang Brand with itself while launching Oreo through Cadbury. There

were two major reasons for this:

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1. Launching Tang through Cadbury would’ve resulted in a brand conflict. Cadbury is

known for its association with chocolates and launched a fruit concentrate would’ve

been in stark contrast to their existing strategy.

2. Cadbury didn’t have the necessary infrastructure to manufacture Tang through their

existing facilities. Hence, it would’ve needed considerable investment from the

company to manufacture Tang.

‘Twist, Lick and Dunk’

Based upon the habits of Americans, Kraft designed the ‘Twist, Lick and Dunk’ slogan for

Oreo as a ritual or a fun way to eat the biscuits.

This is described in the picture below:

Figure 1: Oreo - Twist, Lick, Dunk

(Source: Official Company Website – India)

The Indian Biscuits Industry

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Figure 2: Biscuits Market in India

(Source: Business Today)

As per Nielsen’s study, India is the biggest market for biscuits in the world with a market

share of 22% in terms of volume as compared to 13% in the United States. The size of the

biscuits market is estimated to be Rs. 13,000 Crores. The way for biscuit companies to the

Indian consumer’s stomach is through competitive pricing, high volumes and strong

distribution, especially in the case of rural areas.

The market is dominated by Britannia, Parle and ITC majorly due to their presence in the

low-cost glucose biscuits. Britannia was the first organized company that started

manufacturing of biscuits in India followed by Parle. Other popular brands of biscuits in the

country are Priyagold, Anmol, Biskfarm, Dukes, Cremica, Priya, Veeramani, Bonn, Bhagwati,

Raja, Sobisco, Madhabi, Nezone, Ankit and Nalanda. Over the years, cream biscuits have

gained popularity in India. The market size for premium creams in India currently is

estimated to be Rs. 5,500 crores.

Industry Growth

Growth in the Industry has been stable, ranging from 13-15%, although there has been a

slight decline in the growth pace after 2010-11

Table 2: Indian Biscuits Market Growth

Market Growth Growth in Production

Year Growth

(%)

Year Annual Production

(Lakh Metric Tonnes)

2003-04 13% 2003-04 11

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2004-05 14% 2004-05 12.55

2005-06 14% 2005-06 14.29

2006-07 13% 2006-07 16.14

2007-08 14% 2007-08 16.85

2008-09 16% 2008-09 17.50

2009-10 14% 2009-10 18.50

2010-11 11% 2010-11 19.00

2011-12 11% 2011-12 20.50

2012-13 9% 2012-13 10.50 (April to Sept)

(Source: Indian Biscuits Manufacturer Association)

Segments:

The industry is dominated by the organized sector. However, unorganized players also

make a vital contribution mainly due to their presence in rural and semi-urban regions.

Table 3: Segments in the Indian Biscuits Market

Sector Wise Organized Sector 70%

Approximately 9100 crores

Unorganized Sector 30%

Approximately 3900 crores

Import/Export Wise Exports 14% of annual production in

2010-11. This declined to

around 12.5% in 2011-12.

Imports Has not shown any

considerable growth during

the last five years

Categories of Biscuits Functional

(includes Glucose, Marie and

Digestives)

This segment has

dominated Indian

market, showing a steady

growth of 8% per annum.

Smaller Indulgence

(includes Cream, chocolates

This segment has grown by

25 % - 30% recently, mainly

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and cookies) because of reasons like,

rising disposable incomes

and growing modern retail

outlets.

(Source: Indian Biscuits Manufacturer Association)

Rural-Urban Penetration of Biscuits

The Penetration levels for biscuits are strong in the Urban Market, emphasizing on the

efficiency of distribution used by companies like HUL. Rural Market has a significant scope

for further exploration and sales.

Table 4: Biscuits Penetration in India

Rural Market Urban Market

50-65% 75-85%

(Source: Indian Biscuits Manufacturer Association)

Per Capita Consumption

The per capita consumption of biscuits in India is about 1.8kgs, as compared to 2.5kgs to 5.5

kgs in countries from South East Asia and Europe and 7.5kgs in the United States.

Pattern of Biscuit Consumption (On Zonal basis)

The consumption pattern is fairly similar across all regions in India, with the Eastern region

showing slightly higher consumption as compared to other regions.

Table 5: Biscuits Consumption Pattern across India

Zone % of Overall Consumption

Northern Zone 25%

Western Zone 23%

Southern Zone 24%

East & North Eastern Zone 28%

(Source: Indian Biscuits Manufacturer Association)

Market Shares & Trend

1. Overall Biscuits Market

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Parle has the market leadership position with a market share of 40%. Britannia has a

market share of 25% followed by ITC with 8%. Oreo has thus far only been able to

gain 1% market share.

Figure 3: 2011 Market Share (Overall Biscuits Market)

Others; 17%

Britannia; 25%Parle; 40%

ITC; 8%

Priyagold; 5%

Anmol; 4% Oreo; 1%

(Source: Nielsen Study on Indian Biscuits Market)

2. Cream Biscuits Market

Britannia has a market share of approximately 15% followed by Sunfeast with 11%.

Oreo has been able to achieve 6% market share in the cream biscuits segment.

Figure 4: Market Share in Cream Biscuits

Oreo; 6%Sun-feast; 11%

Britania; 15%

Others; 68%

(Source: Nielsen Study on Indian Biscuits Market)

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Within the Cream Biscuits, Oreo has been able to gain a market share of 30% in the

Premium Cream Biscuits Segment.

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PESTLE ANALYSIS FOR INDIA (Pooja Juneja)

Political Environment:

Production and Distribution licenses have been liberalized. Excise duty on biscuits

has been removed for biscuits priced below Rs.100 per kg. Custom duty on food

processing machinery has been reduced from 7.5% to 5%.

Indian Agriculture Research Institute (IARI) helps to provide transfer of new varieties

of wheat seeds to farmers under Public Private Partnership (PPP). Exemption limit of

excise duty for SSI raised to 1.5 cr. CST is levied at 3%.

Economic Environment:

According to the World Bank, as of 2011, the Indian economy is nominally worth

US$1.848 trillion with its average annual GDP growth rate of 5.8% over the past two

decades, and reaching 6.1% during 2011–12. GDP (PPP) per capita as $3,693.

India is a young country with median age as 24.9 as of 2001 census so the biscuit

market has a great potential. Products in the category of Cream Biscuits like Oreo,

Dream Cream, Dark Fantasy, etc can find an increasing potential market. The per

capita consumption of biscuits in our country is 2.1 Kg.

The biscuits market experienced 11% annual growth of in 2011-12. India is mainly an

agriculture based country; hence there is cheap availability of wheat, flour and other

ingredients used for preparing biscuits.

Social Environment:

Increasing per-capita income of the country has improved the quality of life which

has led people to spend more and look for value like Quality and Taste.

There is a large variety of tastes among people in India and, hence, there is a

requirement of a large number of flavours in the biscuit industry. With increased

awareness the consumer will move from tastier to healthier foods.

Technological Environment:

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Development of quality practices, augmented with traceability management systems

are at place. Supply Chain improvements to enhance product freshness, optimal

servicing of proximal markets and margin expansion will continue to receive

significant attention. Achieve zero effluent discharges, providing treated wastewater

for irrigation as an alternative for farmers in water stressed areas and enhancing

rainwater harvesting both within units and across watershed catchment areas are

some of the goals.

Automation in India is widespread in most industries. Even for manufacture of

biscuits, imported machinery is available which will help in mass production and reap

benefits of economies of scale. So the technological know-how and equipments are

available for development of the biscuits industry.

Legal Environment:

Different laws like the standards of weights and measures (packaged commodities) rules

1977 and amendment rules 1977 and amendment rules 2006, The Competition Act 2002,

The Prevention of Food Adulteration Act, 1954 etc are in place for the interest of the

consume and this has led rise to Special Interest Groups..

Environmental:

India is an agriculture based economy and so more emphasis is given for agriculture.

In the area of potato sourcing, the support of foods business by procuring the chip

stock potatoes can be seen. Other requirements like wheat; rice etc can be easily

met.

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PORTER’S 5 FORCE ANALYSIS (Avneesh Luthra)

Threat of New Entrants LOW

It is apparent that for any company to form a stronghold in the Indian biscuits

industry, having an extensive and efficient distribution network is essential.

Hence, the costs involved in setting up such a network are very high.

There are no major regulatory hassles/restrictions involved. Companies must

be complaint with the quality, health and nutrition norms.

Threat of Substitutes MODERATE

Consumers have certain options available with them as a replacement for

biscuits such as Snacks (Chips, Wafers etc), Sweets and Homemade items.

However, apart from readymade snacks, there is a cost involved when

choosing any other alternative (For instance, preparing an item at home

would have time cost).

Furthermore, Sweets or Snacks cannot be categorized as direct substitutes for

biscuits, which are usually eaten during morning and evening times.

Bargaining Power of Consumers HIGH

The Indian consumer has a very high propensity to change and move to a

product he/she feels provides better value (either less expensive or better

quality).

Also, consumers in India have a variety of brands and biscuit types to choose

from. The availability of these products is extensive, thus switching cost is

extremely low.

Furthermore, the youth of the country believe more in experimenting and

trying new products, thus the switching tendency is on the rise.

Bargaining Power of Suppliers MODERATE

The producer’s side in the industry includes large FMCG companies like Parle,

Britannia and ITC. These companies enjoy a considerable advantage when

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negotiating with suppliers.

Supplier switching costs for companies is also low, since suppliers are mostly

fragmented and companies have the option to shift to other suppliers.

Competitive Rivalry HIGH

India offers a substantial amount of scope to MNCs for the biscuits market.

The industry has remained and stable and has witnessed sustained growth

(10-14%) over the last few years.

Rivalry among the large companies (Parle, Britannia and ITC) is very strong

while unorganized sector also poses some competition.

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SWOT ANALYSIS (Pooja Juneja)Table 6: Kraft Foods SWOT

Strengths Weaknesses

World’s second largest food

company

Strong brand equity

Pioneering innovation

Strong distribution network

Research & Development

Unimpressive Market share

Debt requirements

Geographic concentration

Opportunities Threats

Expansion in developing markets

Explore Cadbury markets

Repositioning

Offer Organic Products

Cadbury purchase issues

Fierce competition

Unhappy customers

STRENGHTS

After Nestle, Kraft Foods Inc. is the largest food company in the world. The company has

been able to build significant expertise in the manufacturing and marketing of

confectionary, food items and beverages.

It has to its name over 11 brands across markets of America, Europe and Asia. The company

has strong brand image and offers various innovative products to its customers.

Kraft Foods provides is an example of a company which has employed traditional

distribution network as well as a 2 tier direct store delivery distribution network to great

efficiency.

The company’s R&D initiatives have also been a major reason for its success by continuously

providing safe, healthy and innovative products to the customers. Effective R&D has helped

the company sustain its market position.

WEAKNESSES

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The company is relatively weak on its market performance. Kraft foods acquired Cadbury

which has no doubt increased the company’s profit ratio to many folds but it also added lot

of debt pressure on the company.

Despite of its operations in various markets and presence in US and other markets, the

company is weak on geographic concentration. Kraft foods has low market share but it

enjoys high margins in grocery business.

OPPORTUNITIES

Kraft Foods can engage considerable efforts in market expansion by focusing upon

developing markets of Asia like India, China and Japan. These markets have shown great

potential for the business.

Although Kraft Foods have acquired Cadbury but lots of its resources of revenue are still

untapped to the company. Cadbury is a major player in the developing countries and earns

billions of revenues from its customers in India, China and other Asian countries.

Further, Kraft foods can employ the brand equity of Cadbury to offer new products in these

markets to explore these markets and opportunities present there further.

Secondly, Kraft Foods can also look to reposition itself in the existing markets with more

unique and health-centered products. There is an increasing trend among the customers to

buy fresh, original and organic products. The company can reposition itself in the market as

a provider of farm fresh products to gain the customer attention.

THREATS

The profit margins of the company dropped subsequently, especially after the acquisition of

Cadbury. The customers stopped purchasing the products offered by Kraft Foods, thus,

hurting the market position of the company

Further, the company faces immense competition from international (Nestle, Harshey) and

domestic level (E.g. Parle and Britannia in India) competitors in the various countries where

it operates.

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VALS SEGMENTATION (Nikhil Gurg)

VALS Segmentation is primarily used for segmenting on the basis of

values, attitudes and lifestyles. VALS is a framework which is highly

beneficial for such segmentation. The VALS segmentation for Oreo

Biscuits will be as following,

INNOVATORS:

Innovators are high end people who have high resources

and high motivation. They are the leading edge of

change having high income and self esteem. Oreo being

a high end product well suit their personality and they

also have the resources to purchase such product. Oreo,

due to its make and packaging, is a kind of product that

fits into their behaviour towards finer things in life i.e.

the prestige products. With its eloquent shape, exotic

design on the sandwich biscuits and finish on the

product it fits with the lifestyle of the consumers.

THINKERS:

Thinkers are the high resource people who get motivated by ideals and beliefs. They are

mature people who are highly responsible and well educated. Their primary sources of

leisure are family and are highly rational and practical in their spending. Hence, Oreo

extremely fits into such segment because it is extremely evident from the advertisements

also where extremely well educated father seeks to have pleasure of playing the ‘TLD’ game

with his daughter. The product is also rational expense for this segment because the

advertisement says to use the product with milk making it further beneficial for the kids.

ACHIEVERS:

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These are high resource segment who primarily get motivated by achievements. These are

successful and satisfied people who respect authority and favour established product. Oreo

being the no. 1 product in the biscuit segment is a well established brand and suits the

lifestyle of this segment.

EXPERIENCERS:

This segment is primarily motivated with self expression. They also have high resources and

these are mainly the young generation having lots of energy. This generation prefer new

clothing and fast food who particularly emphasize on new products. Oreo being a new

brand in the biscuit segment have targeted this segment through it famous Twist, lick and

dunk activity that is not only energetic but also request social activation of consumers.

MAKERS:

Even though Oreo is a high end product but with extreme pressure from competition and

market pressure, Cadbury has launched the economic pack of Oreo biscuits in the market.

These biscuit can be targeted at this segment that even though has low resource but are

motivated with self expression. The company has used the same Twist, lick and dunk activity

for its promotion as well and has also used the concept of family and product features which

motivates this segment.

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PRODUCT STRATEGY (Shikha Mittal)

Oreo initially entered the Indian Market with Oreo Vanilla Cream biscuits. These were well

received by the Indian customers.

It is also planning to come out with Oreo Choco Cream. This new flavour was based on the

insights

Indians love the chocolate flavor, which is the single largest cream flavour in the

Indian market with a share of 45% of the cream segment.

44% of Indian households are sole chocolate cream consumers.

Oreo Choco Cream will be available in two SKU's across all retail outlets pan India. –

Rs. 15 for a 6 unit slug pack of 58.8 gm

Rs. 30 for a 12 unit slug pack of 117.6 gm

B2B Market

Oreo is also promoting its use as a basic ingredient for various sweet dishes and desserts.

The idea is to let Indian players (in restaurants and QSR segment) innovate and come up

with their own versions of Oreo dishes.

It has collaborated with Café Coffee Day to introduce a new shake , ‘Crunchy Frappe’ ; Mc

Donald’s to introduce ‘Mc Flurry’; Kwality Walls to introduce ‘Oreo Swirl’ and very recently

with Mad Over Donuts.

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These products are being backed up by digital marketing by respective companies in

collaboration with Oreo.

This has the following advantages

1) It’s creating a strong complimentary B2B market for the product.

2) New Oreo based products strengthen the brand, giving it publicity and visibility.

3) This helps in co – branding and product extension.

4) It creates a greater youth connect (Increase customer Delight).

PRICING STRATEGY (Deepak Arora)

Initial Import Route: Oreo entered India through the import route. The imported pack, consisting of 14

biscuits was initially launched at Rs. 50 (about $1).

Kraft realized their pricing flaw, that the product was prohibitively expensive for the

value conscious Indian Masses, who would usually buy biscuits at less than half the

price and simultaneously get more quantity too.

Subsequent Localization

The company therefore, in order to correct their action, chose to opt for localization

strategies. This resulted in a $19.1 billion acquisition of Cadbury in 2009.

The locally produced Oreo biscuits were priced at Rs. 5 for a pack of three, Rs. 10 for

a pack of seven and Rs. 20 for a pack of 14 for heavy usage, and carried a Made in

India tag on the packing.

The Made in India Tag meant using locally sourced ingredients, modification of

recipe to suit Indian tastes and possibly cheaper ingredients, a smaller size and

competitive prices

Cadbury cracked its distribution well for Oreo, given the correlation between

chocolates and biscuits. The company was innovative with lower-priced packs and

bet on the recognition for the foreign brand

The pricing strategy, especially for the 3 pack, allowed Oreo to drive impulse

purchases and trials from the Indian consumers.

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Marginally cheaper than Britannia’s Jim-Jam treat which is priced at Rs 25 for 14

biscuits.

DISTRIBUTION STRATEGY (Rohit Batta)

The 'in-store behaviour' is the driver that leads to purchase at the point of sale. The factors

which have been exploited by Oreo to drive sales by understanding Indian consumer

behaviour are:

Availability Bold Display Eating Out Market

1. Availability

Availability is a major factor which affects buying of Indian consumers. This requires

a strong distribution network, Oreo took advantage of Cadbury’s intensive

distribution network to reach the Indian consumers.

Awareness generated at the 12 lakhs store reach of Cadbury and the display at the

point of sale has helped Oreo to acquire the Indian customer. Cadbury’s distribution

network includes 2,100 distributors (including super-stockists) and 450,000 retailers

Oreo’s launch was also combined with a rural thrust, in which the rural spokes were

offered schemes on target achievements for five months, the highest gift being a

laptop. The super-stockists were also offered incentives and recognition.

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Figure 5: Oreo Distribution

(Source: ‘Storm in a Milk-Cup: Oreo in India’ By Dev Narayan Sarkar)

2. Bold Display

A bright, bold design by Oreo attracts customers’ eyes. The train point of display stands out

from the rest of the merchandise at the point of sale.

(Source: http://www.behance.net/gallery/Oreo-Train-Display/3966785)

Visi-coolers

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“Visi-coolers” are the special display cases that give Cadbury visibility at the retail

location and keep the chocolate from melting in the

oppressive Indian summer heat. According to a study, the

outlets that had Visi-coolers generated sales that were 15

percent higher than those at comparable outlets. On the

principle of leveraging what works, it was decided to

double the number of locations with Visi-coolers, from

20,000 to 40,000 retail outlets. The permanent in-store

displays have been doubled from 5,000 to 10,000. The

distribution has been expanded into 2,100 additional towns

and villages, bringing the total number of sales outlets to

550,000 in India.

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3. Eating Out Market

Oreo is targeting to be more than a cookie. It is now a part of ingredient mix of delicacies of

quick service restaurants (QSRs), including ice cream shakes, donuts, and frappes. For

Example, Oreo Milk Shake are very popular in many QSRs. According to an executive of Mad

Over Donuts, 20% of their sale includes donuts with Oreo.

PROMOTION STRATEGY (Shikha Mittal)

Cadbury and Oreo

Kraft roped in Cadbury to for Oreo (globally its Kraft’s Oreo; In India its Cadbury’s Oreo)

because of following reasons

1) Cadbury has a stronger presence in India with superior marketing and distribution

hold, as compared to its parent brand Kraft.

2) Association with Cadbury brings perceptions like ‘family bonding’, ‘traditions’,

‘chocolate’ and ’delicious’ to mind. This re-enforces the Oreo Positioning, hence

giving Oreo a strong base here.

The brand is targeted to family with focus on consumption by next generation. The idea is

to make the new generation brand evangelist, when they grow up with TLD ritual.

Nielsen Research

Nielsen Research conducted in 6 cities to map Indian families’ views on evolving Children

and Parents relationship came out with findings that parents today crave more time with

their kids. In an international survey (The Global spirit of childhood report), three out of five

parents (63%) say spending time having fun with their kids is more important to them than

it was to their own parents when they were growing up.

Some of the important findings are

Not even half (47%) of all the mothers feel that the father in today’s world is extremely

involved with their child

52% of parents expressed that they would like to have more knowledge on being a better

parent

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Only 57% parents agree that it is the joint responsibility between the two parents to

bring up a child

69% of the fathers say their work-life balance does affect the level of involvement with

their child

A mere 44% of fathers and 43% of mothers are very satisfied with their work-life

balance

Only 55% of parents are very satisfied with their current level of involvement in their

child’s life

A majority of Indian parents (77%) are ready to trade part of their salary in exchange

for more time with their kids

4 major activities where parents spend time with children are , ‘Snacking’ , watching TV

at home, Helping in their studies and chatting with them.

Twist, Lick and Dunk

This ritual is a trade mark for the brand. It has created fun filled moments for family (based

on family bonding) in various countries globally.

In India the ‘dunking ritual’ already existed prior to Oreo. Biscuits are dunked in tea and

eaten. Hence Oreo will not be building a completely new ritual in India. Consumer research

has shown, Indian consumers are looking for new innovative products, and Oreo with its

TLD ritual plans to give this innovation to it’s customers.

Father Son relationship

According to the Nielsen Survey, 94% of Indian parents convinced that it is extremely

important for fathers to spend time with children. With dynamic change in Indian Values,

relationships are changing as well. The survey confirms that 53% of Fathers say their

relationship with their kids differently as theirs was with their own fathers. The key factors

causing these differences are

1) Fathers are seen more of as Friends now

2) Better Education and awareness

3) Parents have a busy schedule (with both parents working, Fathers now plays more

part in domestic activities as compared to before).

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A close bond with fathers in the growing periods of a child, also gives the child a

psychological edge. Hence Oreo has chosen Father-son relationship as a center theme for

their campaigns.

Father Daughter Duo

This campaign is based on the insight ‘little girls are fond of playing their mother’s role and

the liberties they take with their dad; the fathers have a ‘compulsive need’ to indulge and

pamper his little princess. It explores the dynamics of a father & daughter relationship. ‘

Siblings

The new ad campaign for Oreo Choco Cream captures the playful relationship of two

brothers. The brothers enjoying the snack face the dilemma which is chocolatier, the cream

or the biscuit itself. It’s based on the unique relationship that the siblings share. It starts of

as a coach-student relation and eventually develops in one of equals, as they discover both

cream and biscuit are equally chocolaty.

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Mass and Digital Media

(Supported by Interface Communication)

Oreo has high engagement score on social media with its followers. It keeps the

engagement high using various campaigns.

Facebook / Twitter (#DailyDunks)

The Facebook fan page has more than 3 million users. Oreo has launched a campaign called

‘ Daily Dunks Focus’. This campaign focuses on ‘content with connect’. Based on some

happenings in Indian context, some content with Oreo as theme is build immediately.

Youtube

Oreo launched its new flavor ‘Choco Cream’ using Youtube and Facebook. The campaign

was named as ‘Oreo Surprise’ which had a game at the end of which you could unlock the

new Choco cream TVC of the product.

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Sahib, Sindh and Sultan, the ancestors of the

Indian Railways: On 16 April 1853 the first

passenger train was inaugurated between now

renamed Chatarapati Shivaji Terminus, Mumbai

and Thane. Covering a distance of 34 kilometres, it

was hauled by three locomotives, Sahib, Sindh and

Sultan.

“It’s a biscuit, it’s Oreo, it’s

Superman”- A steel Oreo was posted

on Facebook page on Indian release

date of The superhero movie ‘Man of

Steel’. This one received 6.5K+ likes,

136 comments and 217 shares.

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On Ground Activities

(Supported by Candid Marketing)

Cadbury is spending one third of its marketing budget on ground activities and in store

promotions. The segment being where all the brands are clustered together in large store

formats, Oreo has developed special Oreo Panels, to increase in-store visibility.

Oreo Togetherness

This campaign symbolizes the family togetherness. It was based on insight, ‘There was a gap

between desired and actual time spent together by parents and children.’

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Oreo Togetherness Bus

This bus will travel to 9 cities – New Delhi, Mumbai, Bangalore, Ahmedabad, Pune, Lucknow,

Hyderabad, Kolkata and Mysore. It will provide a platform for parents to bond and

interact with their family.

Consumer Behaviour and Some Concepts (Shikha Mittal)

1) Perception of Colour: Blue colour signifies ‘Security’, ‘Dignity’ and ‘Respect’. Oreo’s

positioning around family and togetherness can be linked to this.

2) Figure And Ground : As seen the advertisements are centered around two themes

(Figures)

a. Twist, lick and Dunk Ritual

b. Togetherness (Father Son / Father Daughter Relation)

These are clearly separated from Ground (the cute graphics of kids and their innocence

being used). Hence the brand has successfully been able to put across its brand name and

proposition consistently through various media.

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Special interactive activities around ‘Twist Lick and Dunk ritual’ were planned to be held in the bus. Parents were encouraged to Take ‘Oreo Pledge’, to spend more time with their kids.

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3) Relationship Pricing: The brand encourages long term relations with the consumers.

This is seen through their effort in Social Media campaigns (to increase consumer

engagements) and ad campaigns that touch real lives of people. This has also helped

in making a low involvement product a High Involvement one.

4) Normative Reference Group: All the campaigns are based on family and

togetherness. They directly influence the children and teens to buy the product. The

Togetherness Bus was also based on family concept. India being a High context

culture, this strategy has paid off efficiently. In a very small time Oreo gained 6%

market share of cream segment.

5) Needs Being satisfied:

a. Social Needs (Maslow Hierarchy of needs): The ads depict the need of a

strong and happy relationship between fathers and children. The

son/daughter seek love and affection from their fathers which they willing

giving.

b. Affiliation (Trio Of Needs): The young children seeking attention from their

fathers and taking liberties around them.

6) Motivation (Value Expressiveness): The various campaigns positively reflect

consumer’s lifestyle and values. The values of a strong father children relationship is

reflected consistently through the communication

7) Consumer Learning (Repetition): The twist, Lick and Dunk ritual is centered on this

concept. Though the concept pre existed in India, However using it with Milk had to

be built upon. Oreo did this through its consistent campaign message.

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PACKAGING STRATEGY (Nikhil Gurg)

Packaging

Being a FMCG product, the brand requires to outshine

itself in the eyes of the consumer so that it can be easily

noticeable at the retail outlets among the competing

other brands kept in the shelf. This makes packaging an

important aspect of FMCG products.

As can be seen the product has been furnished into a

dark blue colour that is extremely brightening. The

company has followed the same concept of packaging as used in the international

standards. It still has kept the Cadbury logo because the brand is launched under the

Cadbury umbrella which is the subsidy of KRAFT Foods. The company extremely believes in

its Oreo ritual of twist lick and dunk in milk and thus they have primarily launched the

product with vanilla flavour showing white as symbol of both flavour and milk and thus

presenting the necessary benefits of the product.

The company has followed its the Indian standards in terms of packaging with a green

symbol representing the product as a vegetarian product and can be consumed by both

vegetarians and non vegetarians. The company also maintains the necessary disclaimers of

ingredients.

The packaging of the product should be so that it

explicitly signifies its benefits as expressed in the

product in terms of benefits of milk usage with

the product and the taste factor.

With bright blue colour for view noticing ability, milk and taste as its benefits and Cadbury

brand value, the packaging of the brand has been correctly made so that it achieves the

necessary consumer sight and thus becomes part of consumer choices.

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PRIMARY CONSUMER RESEARCH (Nikhil Gurg) Key Objectives

The Key objectives of the research are as follows,

Understanding of User preference in Biscuit Segment in terms of various factors like

Taste, Price, Variety, Flavour and Brand.

Understanding of competitive scenario of Oreo

Impact of these preferences with respect to different factors on the buying

behaviour of Oreo Biscuit.

Understanding of User Preference in Biscuit Segment

Figure 6: User Preference to Taste

74%

19%3%1%3%

Taste

Highly FavourableFavourableNeutralUnfavourableHighly Unfavourable

Analysis:

It is clearly evident from the above analysis that users extremely favour those biscuit brands

which are favourable in terms of taste as 93% of the total users expect taste as a major

factor for buying biscuits. Thus this analysis can be beneficial for new product development

of Kraft Foods under the Oreo Brand. The brand should primarily focus on taste as key

aspect to increase customer base and market share.

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Figure 7: User Preference to Price

Highly Favourable Favourable Neutral Unfavourable Highly Unfavourable0%5%

10%15%20%25%30%35%40%

11%

38%

30%

14%

7%

Price

Analysis:

It can be implied that though price is not highly favourable aspect while understanding the

buying behaviour of consumers for biscuit segment but it is a favourable feature. This is

primarily because of low involvement during the buying process. Yet brands like Oreo, which

target premium segment should have a pricing strategy such that it represents a status

symbol, gives the needful image of premium segment yet does not gives negative effect to

the buying process.

Figure 8: User Preference to Variety

Highly Favourable Favourable Neutral Unfavourable Highly Unfavourable0%5%

10%15%20%25%30%35%40%45%

7%

41%37%

12%

3%

Variety

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Analysis:

Similar to price, variety is another factor for which though consumer prefer to have yet it

does not impact extremely on the buying process as 37% of the respondents are neutral for

the factor. In case of Oreo brand, it does not has any major variety in its umbrella hence it

does not impact much of the marketing strategy of the company.

Figure 9: User preference to Flavor

Highly Favourable

Favourable

Neutral

Unfavourable

Highly Unfavourable

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

41%

42%

11%

4%

1%

Flavour

Analysis:

Flavour is again a major factor in terms of consumer buying preferences in the biscuit

segment with 83% of the consumers willing to buy particular biscuit if they find multiple

flavours of the brand. This can also been from the sales perspective where larger the

number of flavours, larger is the shelf space occupied and thus higher is the eye catching of

consumers. Kraft foods need to think into this aspect and should bring up a major strategic

effort in terms of flavours. This can be seen as the company has recently launched the most

appreciated chocolate flavour under the Oreo umbrella.

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Figure 10: User preference to Brand

21%

34%

29%

8%8%

Brand

Highly FavourableFavourableNeutralUnfavourableHighly Unfavourable

Analysis:

Consumers in biscuit segment do prefer brand as one of the factor for the purchase but it

does not impact much. This is evident from the fact of highly fragmented market of biscuit

segment, large number of small and large players with lower market share.

Competitive Scenario of Biscuit segment

We have made the study keeping in mind the above factors and our discussion with retail

outlets of Katwariya sarai and on the basis of above discussion we came to the point that

Good Day (Britannia), Hide and Seek (PARLE), Butter Bite (Priya Gold) and Sunfeast (ITC) are

the major competitors of Oreo (Kraft Foods).

Figure 11: Brand Preference in terms of Taste

15%

62%

18%3% 2%

Which brand do you prefer with respect to Taste ?

Good DayHide and Seek OreoButter BiteSunfeast

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Analysis:

As it is evidently seen that Hide and Seek is the market leader in terms of taste with majority

of 62% favouring the brand as having better taste than others. Though Oreo is next in the

preference but the difference between the two represent that Oreo needs much more

efforts in terms of marketing, product development to increase its preference.

Figure 12: Brand Preference in terms of Price

Good Day Hide and Seek Oreo Butter Bite Sunfeast

Which brand do you prefer with respect to Price ?

0.29 0.380000000000001

0.12 0.17 0.04

3%

8%

13%

18%

23%

28%

33%

38%

Analysis:

With only 12% prefer Oreo in terms of price, the company should look into its pricing

strategy. Though the results show Hide and Seek and Good day as market preference but it

should be also understood that our study has a limitation of respondents primarily from the

middle income segment and thus it may lead to limitation in results.

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Figure 13: Brand Preference in terms of Flavour

Good Day

Hide and Seek

Oreo

Butter Bite

Sunfeast

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

13%

48%

27%

9%

3%

Which brand do you prefer with respect to Flavour?

Analysis:

In terms of Flavour also Hide and Seek has been the market preference. Oreo, even though

has recently launched its second flavour of Chocolate is the second preference primarily

because of its twist lick and dunk choice of the product.

Figure 14: Brand Preference in terms of Brand

23%

43%

29%

1%4%

Which brand do you prefer with respect to Brand?

Good DayHide and Seek OreoButter BiteSunfeast

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Analysis:

Oreo has been a major preference in terms of brand preference among its market players.

With 29% preference the brand has started to become one of the major players even

though the brand has recently been launched in the market as compared to other brands.

11% 12%

25%22%

30%

Flavour preference with respect to Oreo biscuits

Highly UnfavourableUnfavourableNeutralFavourableHighly Favourable

Highly Un-favourable

Unfavourable Neutral Favourable Highly Favourable

Series1 8% 14% 45% 25% 8%

3%8%

13%18%23%28%33%38%43%

8%

14%

45%

25%

8%

Price preference with respect to Oreo biscuits

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Highly Un-favourable

Unfavourable Neutral Favourable Highly Favourable0%5%

10%15%20%25%30%35%40%45%50%

5%

23%

45%

21%

5%

Variety preference with respect to Oreo biscuits

Highly Unfavourable

Unfavourable

Neutral

Favourable

Highly Favourable

0% 5% 10% 15% 20% 25% 30% 35% 40%

5%

22%

19%

36%

18%

Taste preference with respect to Oreo biscuits

11%

18%

23%26%

22%

Brand preference with respect to Oreo biscuits

Highly UnfavourableUnfavourableNeutralFavourableHighly Favourable

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REFERENCES

1) http://www.afaqs.com/news/story/30817_Twist-Lick-Dunk-says-Cadburys-Oreo-

biscuits : Last accessed on 7/7/2013

2) http://articles.economictimes.indiatimes.com/2011-03-03/news/28650799_1_parle-

products-parle-g-glucose-biscuit : Last accessed 8/7/2013

3) http://www.just-food.com/analysis/foreign-firms-face-fight-for-indias-biscuit-

market_id114659.aspx : last accessed 8/7/2013

4) http://www.hindustantimes.com/business-news/CorporateNews/Late-entrant-Oreo-

finds-Indian-consumer-willing/Article1-866005.aspx : last accessed 8/7/2013

5) http://www.exchange4media.com/50840_is-oreo-the-smartest-cookie-in-town.html

: last accessed 8/7/2013

6) http://www.domain-b.com/industry/Foods/20110304_kraft_foods_oneView.html :

Last accessed 9/7/2013

7) http://www.medianewsline.com/oreos-new-tvc-showcases-playful-relationship-

shared-by-two-brothers/ : Last accessed on 9/7/2013

8) http://www.campaignindia.in/Article/252877,oreo-introduces-india-to-the-twist-

lick-dunk-ritual.aspx ; last accessed on 9/7/2013

9) Source : http://lighthouseinsights.in/how-oreo-indias-daily-dunks-are-being-lapped-

up-on-social-media.html - last accessed 17/7/2013

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