Study Of Consumer Preference Towards Cadbury And Nestle Chocolates

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Study Of Consumer Preference Towards Cadbury And Nestle Chocolates

A SYNOPSIS  ONSTUDY OF CONSUMER PREFERENCE TOWARDS CADBURY AND NESTLE CHOCOLATES

INTRODUCTION

In this research I have survey the product performance and buying behavior of two famous brands of chocolates – Nestle and Cadbury, which are consumed by people of all ages. During this research I have interacted with people of “Delhi/NCR”. After this research I came to know how people perceives these products on the variables like price, quality, advertisement, satisfaction, taste, packaging, brand loyalty etc. I also came to know which particular brand of chocolate is most preferred by people of different age groups. In this research I have surveyed that how frequently and how much chocolate they consume, whether they buy small, big or family pack. Trend of ongoing changes in their likings has been shown in the report. In this report I have tried to explain the entire research and facts product wise.   

CONSUMER PREFERENCEAll marketing starts with the

Project Profile: Kit Kat company consolidates co-pack ops

ChallengeConfectionery giant Nestlé, the group behind Kit-Kat, Polo mints and Smarties among others, has two main distribution sites in York and Bardon. Until this year these factories have been serviced by five co-packing facilities. However, since June this number has been reduced to only two, one in Bardon and one on the same site as Nestlé York, the company’s distribution centre for the north of the UK.

Supply chain director Dave Thomp-son says: “Fundamentally it was about taking co-packing that was done across the UK by various organisations to one location.” He adds that the use of co-packers adds an element of flexibility to the company to create bespoke packaging and meet upturns in demand.

Nestlé took the decision to convert a former warehouse into a co-packing facility on its York site in June last year. The hope was that reducing the number of contract packing operations used by the company to only two would prevent the need to transport goods across the country to be packed. It was estimated that the new co-packer at York would reduce Nestlé’s annual carbon emissions by 300,000 tonnes.

StrategyA disused warehouse, known as CF1 from its former days as the site of a cricket field, was chosen to house the new factory. Meanwhile IPS First, Nestlé’s preferred co-packer, won the contract to run it. “The length of the supply chain was quite significant,” says Thompson. “What we did, along with IPS, was to start and consolidate a strategy to bring this together.”

York MP Hugh Bayley, who was on hand to open the facility in June, was instrumental in helping IPS First attain the loan guarantee, under the government’s Enterprise Finance Guarantee Scheme, that financed the project. “I went to see Peter Mandelson to ask the government to assist both IPS and the company’s bank

in achieving a loan guarantee under the Enterprise Finance Guarantee Scheme,” he says. In total the investment cost £1m.

ImplementationProduction commenced at the Nestlé facility on time on 1 June 2009, one year after plans were put in place to convert the site. IPS First’s Andrew Dawson was named as managing director of the site. “I guess what we are doing is packing volumes that do not necessarily fit the automated systems Nestlé already has,” he said. “We’ve taken an empty, mature building and turned it into a co-packing business.”

Local engineering firm Adam Engineering was employed to help develop the packaging lines. The flow-wrapping and cartoning lines alike remain flexible and can be moved from York to the sister site in Bardon within 24 hours.

The York Press, the local newspaper, advertised the new positions at the York site, which led to 30,000 hits on IPS’ website. Out of the 2,500 who applied, 100 were chosen and trained at Bardon. “It’s extremely good news, especially in difficult economic times, to see a company investing in new jobs,” says Bayley.

ResultsThe new factory has proved successful in decreasing the number of miles Nestlé transports its goods around the country. For example, York produces all the chocolate bars that go into Nestlé’s Christmas selection boxes. Therefore, the bars now only need to be transported next door for packing.

IPS First York is already packing Christmas selection boxes, which are now made from 100% recycled board. Nestlé says that the change will cut the packaging used by 200 tonnes, compared to 2007. An additional 17% and 20% will be removed from the weight of the medium and large selection boxes respectively.

Nestle Kit Kat Perfect Breaks (Break Enhancers)

Unmissable has been busy working for Nestle on their latest £1 million on-pack promotion which ran as a part of their ‘biggest ever’ marketing drive. Giving up to 2000 lucky consumers the chance to choose their perfect break enhancer which tied in with the top tier Perfect Break categories, we came up with a host of concepts with a value of up to £50. There were again six themes to choose from which were pamper, travel, entertainment, sport, shopping and home.

Prize enhancers included:

IPod shuffles Karaoke systems Design your own perfume Professional haircuts Pamper treats DVD players Fashion magazine subscriptions Foot spas Ski or snowboard sessions Seat massager Wimbledon tours Samsonite shopping totes

 Kit Kat : Have a break , Have a Kit Kat

Brand : Kit KatCompany : NestleAgency : JWT

Brand Analysis Count : 261

Kit Kat is one of the world's largest selling chocolate brands. I am little nostalgic about this brand because when I was doing the management degree course, the war between Kit Kat and Perk was at the peak. I still remember doing a retailer survey to find out who was winning the fierce marketing battle at that time.Kit Kat was born in 1935 as Chocolate Crisp. The company which

manufactured thi s brand was Rowntree Ltd of York, England. The brand was renamed as Rowntree Chocolate Crisp in the year 1937 and acquired the brand name Kit Kat shortly after Worldwar II . The brand was acquired by Nestle in the year 1988. According to Wikipedia, Kit Kat derived its name from the Kit- Cat Club which was a literary club located in Christopher- Catling (Kit- Cat) Pie House. Except for US, Kit Kat is marketed by Nestle while in US the brand is marketed by Hershey's.

Kit Kat was launched in India in 1995. The brand was an instant hit because of smart marketing as well as the novelty of the product. Kit Kat is wafer covered in chocolate. During the time of the launch , there was no such kind of product although wafer biscuits were available in the market. The high profile launch of

Kit Kat and Perk created a new segment of Wafer Chocolates. Though a new segment was created, none of the brands were able to sustain or grow this segment.

Kit Kat was launched as a young vibrant snack . The brand was positioned as an anytime snack ( similar to Perk). Kit Kat differentiated itself based on its finger shaped wafer bar( product form). More than the shape, Kit Kat differentiated itself by a ritual. We all know that to teach an Indian consumer new way of doing things is one of the most difficult tasks for a marketer. Nestle has proved to be a master in that. Using smart advertising, Kit Kat taught Indian consumers a new way of eating this product. Kit Kat used advertisement to promote a ritual for eating a Kit Kat. The ritual has the following steps:

Remove the wrapper.Separate a finger bar using your fingerBreak the barEat it.

Surprisingly customers accepted this ritual. Even now, after over 12 years of this campaign, still customers follow this ritual. That shows the power of smart advertising. And I think that the campaign succeeded becauseIt made sense. ( Its first time customers are seeing such a product form)&The ads were cool.

The brand used the world famous campaign " Have a break, have a Kit Kat". I think it is one of the best taglines a brand can have. From the tagline itself, its obvious that the brand is positioned as anytime snack. The brand targeted the young crowd and the ads

were in line with the TG. The segmentation is based on the Usage Occasion.

Surprisingly , during the 2004-05, the brand changed its famous tagline of Have a break to " Kit Kat Khao Khush Ho Jao" translated to Eat Kit Kat , Be Happy. I am not sure why brands change their famous and successful taglines. Kit Kat is currently running campaigns based on this tagline. I have seen some reports of legal hindrances faced by Nestle in copyrighting the tagline " Have a break " , but for a successful tagline like this , Nestle already have taken copyright from the customers. Even if the competitor uses this tagline, only Kit Kat benefits. But Kit Kat is now struggling with establishing the new tagline.

In 2007 , the brand made a smart move by launching a new variant Kit Kat Lite , which is a low sugar low calorie variant. The launch is in line with the trend in the Indian market for healthy foods. The brand is now promoted with a cool commercial. I am sure the ad will appeal to the hip -hop crowd.

Watch the commercial here : Kit Kat LiteKit Kat lite is promoted as a healthy option for all the calorie conscious. The variant uses the tagline " 50% less sugar, 100 % taste, don't think Just bite" . There is also a brand site justbite.com. I am little skeptical about the attractiveness of " 50% less sugar" : whether it is compelling enough for a calorie conscious to take the bite. However, the brand has to be lauded for the initiative.

Kit Kat faced tough competition from Perk during the nineties , but now Perk is also struggling to find the right positioning after discarding its original positioning. Both the brands have struggled to expand the market for this segment. I personally

feel that Kit Kat may do well if it gets back its original positioning based on the tagline " Have a break".

Kit Kat barred by Slaven Marinovich June 6, 2005 

For nearly fifty years, Kit Kat has used the strapline "Have a break... Have a Kit Kat." The phrase was used in the chocolate bar's first television advertisement in 1957 and has entered the English-speaking lexicon as belonging to the two- or four-fingered bar.

Now owner Swiss food giant Nestlé is working hard to acquire the rights to just three of the seven words in its strapline. 

 

 Nestlé registered "Have a break... Have a Kit Kat," "Kit Kat" and "Have a Kit Kat" as trademarks in the UK. But issues arose when the company sought to register only the words "Have a break" as an independent phrase for chocolate products in March 1995.

Rival Mars opposed, claiming that "Have a break" could not be registered as it had no distinctive character (unlike the "Have a break... Have a Kit Kat" strapline), and therefore did not comply with rules for trademark registration.

A trademark's essential function is to distinguish goods or services of one company from another. A trademark must therefore be of distinctive character and cannot merely be descriptive of the goods or services sold.

A mark can be inherently distinctive, or it may, through use, acquire a distinctive character, initially lacking, and thus be registered as a trademark.

Nestlé's hearing officer established that the relevant consumers construe "Have a break" as an invitation that is neutral in regard to origin and therefore devoid of inherent distinctiveness. Further the mark had not acquired distinctive character through use because, although there was extensive use of "Have a break... Have a Kit Kat," hardly any use was made of the line "Have a break" on its own. The hearing officer felt that use of the first three words on their own was essential. Therefore Nestlé`s application was blocked in December 2002.

Nestlé appealed, pointing to a consumer survey showing that a high proportion of the public associated the phrase "Have a break" with the trademark. The Court of Appeal had to consider whether the phrase "Have a break" as a result of use of the principal strapline "Have a break... Have a Kit-Kat" had acquired its own independent distinctive character.

For technical reasons to do with interpreting the UK Trade Mark Act in accordance with Community Law, the Court decided that this question had to be referred to the European Court for clarification.

On 27 January 2005, Juliane Kokott, an advocate general at the European Court in Luxenbourg, released her opinion on the matter.

Kokott stated that the use of a word sequence as part of a word mark can, as a matter of principle, lead to that word sequence acquiring the requisite distinctive character in order to be registrable as a trademark.

Kokott said that it may be presumed that the slogan "Have a break" used on its own, causes many relevant consumers to

react automatically and to complete that slogan with "Have a Kit Kat." However, on its own that reflex reaction is not sufficient to prove distinctive character.

Instead it must be demonstrated that a product or service designated by the mark "Have a break" will in fact be attributed by the relevant consumers directly and unmistakably to the manufacturers of Kit Kat: Nestlé. It is therefore not sufficient for those consumers to wonder whether the product or service originates from that manufacturer. That would only give rise to the likelihood of confusion.

A brand owner wishing to register a non-distinctive element of a composite trademark is advised to make some individual use of the mark applied for on its own before application. Where the composite trademark is highly distinctive, as in Kit Kat's case, today's consumers should, with the help of advertising, quickly learn to treat the target mark as a trademark. This should then lead to a fast and successful registration of the mark.

An advocate general's opinion is followed in about 85 percent of cases by the full court; in this case the full court's ruling is due later this year. Once the full court rules on what criteria are needed, the UK court must make a final judgment if Nestlé and its "Have a break" slogan meet those terms.

But how important is the slogan "Have a break... Have a Kit

Kat" to Nestlé anyway?

Nestlé's problem is customer relations not KitKat video

Mon, 22 Mar 2010 | By Vikki ChowneyPrint Email Share

Comments (7) Save

Nestlé might be in the middle of a PR crisis thanks to Greenpeace, but some of its biggest issues this week have come from its response through social media.

Last week Greenpeace launched a full-on attack on Nestlé’s KitKat brand by creating a somewhat shocking video and website highlighting its concerns over how the chocolate bar’s maker sources palm oil.

A quick post on Twitter and I had more responses than the time I started waxing lyrical about Lady Gaga. It was only a matter of time before the media picked up on the campaign. I knew it would be a big story because Greenpeace knows how to pick its battles and has a pretty slick PR machine.  

What I wasn’t expecting was that the response from Nestlé (at least, its social media guy/girl) via its Facebook group would be the most controversial aspect.

We all know the online world is fast paced and sometimes stressful − there’s a lot to keep up with. One of the beautiful things about social media is that it allows a brand to show a bit of personality and you can talk to real people.

However, during a crisis, it’s hard not to take things personally. I was directed to one of Nestlé’s Facebook wall posts on Friday, which proclaimed that anyone commenting using Greenpeace’s altered version of the KitKat logo as their avatar would have any input deleted. I thought it was a bit rich (Nestlé doesn’t have any say over what images individuals use for their profile picture), but it was nothing I hadn’t seen before in terms of poor engagement.  

Unfortunately, as the comments about Nestlé’s Big Brother-style of moderation rolled in, the responses from the brand gradually got worse and worse. It became sarcastic, posting the following: “Thanks for the lesson in manners. Consider yourself embraced. But it’s our page, we set the rules, it was ever thus.”

It then continued with, “Oh please…it’s not like we’re censoring everything to allow only positive comments.”

It obviously took a few hours for news of the inappropriate responses to filter through to the rest of the company, as after a few more swipes the final message from Nestlé was more apologetic: “We’re learning as we go.”

This is a valid point. The space is new and there are no set rules. But as I’ve said time and time again of late, this is a customer service issue. Concerned customer has question about new story, goes to brand, wants answer not a kick in the teeth. Of all the case studies is how not to respond to criticism, this takes the cake.

Yes, it’s good it’s good at reaching out, but the company − or person at the helm of the Facebook page, at least − seems to think it’s on Nestlé’s terms. This would have been the perfect opportunity to soothe some of the damage caused by Greenpeace’s campaign, provide more information and add another perspective to the debate. Instead, the actions of the company’s social media person have only shown a lack of understanding of what social media engagement really means, causing more damage along the way.

RELATED LINKSNew Media Age is not responsible for the content of external internet sites.Groundhog day for companies misjudging the impact of the webEurostar: same old lessons to be learnt RELATED ARTICLESBaby Gaga shouldn't be considered just a PR stuntMon, 7 Mar 2011

Nestlé faces backlash over social media responseFri, 19 Mar 2010

READERS' COMMENTS (7)

Joey (@sparksheet) | Mon, 22 Mar 2010 6:46 pmWe are all learning, but whoever was running the Nestle fanpage has a little more to learn. From a PR perspective, customers hold the power. Nothing should be taken lightly, and it is better to say nothing than to get angry and sarcastic!

Cheers!- Joey @sparksheetUnsuitable or offensive? Report this comment

Vikki Chowney | Tue, 23 Mar 2010 10:31 amIndeed Joey. It's a huge waste of an opportunity to reach out to a community responding with real concern to the facts presented to them by Greenpeace.Unsuitable or offensive? Report this comment

mirage islam | Tue, 23 Mar 2010 1:07 pmAgree with you guys but there is also a huge opportunity for Nestle now to show that they are capable or even willing to listen to consumers. The ball is definitely in their PR court. There's been a few apologies already but it will be very interesting to see how they react over the next few hours/days esp when spin off groups are being created: http://tiny.cc/hq22a >2000 members and growing!Unsuitable or offensive? Report this comment

Vikki Chowney | Tue, 23 Mar 2010 3:21 pmHi Mirage, long time no speak :)

I'd have liked to have seen a better, more honest response by now. But, having said that, it took Grill'd

a few weeks - and they nailed it.

See the full story here: http://reputationonline.co.uk/2010/03/02/competition-stirs-grilld-into-action/Unsuitable or offensive? Report this comment

Ann Longley | Fri, 26 Mar 2010 9:59 amA positive outcome could still be achieved if Nestle apologies and adapts their approach quickly. It would appear like many brands they jumped on the social media bandwagon without understanding the dynamics, norms and inherent power shift that underpins the social web. A sensible move would now be to use their FB page to start talking about what they are doing to address Greenpeace and others' concerns about their social and environmental impacts.Unsuitable or offensive? Report this comment

Julius Duncan | Fri, 26 Mar 2010 5:26 pmChange has got to come from the inside out, and that is a massive challenge for Nestle. It doesn't have its big, bad corporation reputation for nothing, and a meaningful shift to transparency, authenticity and truthfulness is going to be tough. But, if they genuinely want to win out in the socially networked world, it's the only way. So how to find the opportunity in this car crash? Someone bold should use it to engage the company's most senior execs as an example of why social media need to be taken seriously. Once senior buy-in is secured form a social media working group that covers; marketing, comms, HR, Customer Service, and Product Development as a minimum. This group needs to map where they are (in the brown stuff), where they need to be, and the steps required to make that journey. Then evangelise that message internally, and re-design the business to effect change. Come

on Nestle, Dell did it, you can too!Unsuitable or offensive? Report this comment

Anonymous | Fri, 23 Apr 2010 4:59 pmI am a little mystified by the bandwagon of social media. It is an inevitable but my experience of trying to use it positively to help customers has been less than positive. Offensive, irrelevant posts with libellous, malicious statements are made on a regular basis by people who would not dream of doing that face to face.

If, 10 years a go, a marketeer had suggested to us that we put up a poster and invited passers by to scrawl how sh*t they think we are on it they would have ceased to be employed. 

Nestle's answered wrongly but I get from our social media gurus that we have to accept and engage with people who have an agenda (many are 'regulars' for whom SM is a gift) but that means customers that do like us then begin to think differently about our brand.

As I say, we are going down this route but some social media advocates need to put common-sense marketing values first and tell us how to prevent brand damage.Unsuitable or offensive? Report this comment

Research found that while 90 percent of the population could recite the slogan, it did not actually make them purchase a Kit Kat any more. So Nestlé dropped "Have a

break... Have a Kit Kat" last year and replaced it with the slogan "Make the most of your break." With this move, Nestlé aims at increasing the market for workplace confectionery and snacks, currently worth € 140 billion in western Europe alone (US$ 171bn).

But according to a report in the Financial Times, the company is not giving up entirely on the old slogan. The FT speculated that it could be reinstated in three or four years when Nestlé has "re-established the relevance of the brand."

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Over the weekend the latest issue of 4Ps would have hit the stands. I have been featured in an article called ‘Marketers@War’, which is about the marketing war between Cadbury’s & Nestle. The questionnaire that came by from the correspondent Shephali Bhatt and the answers I shared are here. The link for the final article is not up on the site yet. Will share once I get it!

How aggressive, in your opinion, have both the brands been, in marketing their various chocolate variants?If I have to consider all facets of marketing (not just communications), I believe that Cadbury’s has been relatively more aggressive. In my opinion, their distribution strengths far exceed that of Nestle. Also, regular promotion strategy for new products and festive seasons are highly catchy as compared to the Nestle stable. The focus shown by Cadbury’s in having different SKUs in the chocolates segment is again superior. You will always find something at every price point by Cadbury’s and I think it starts at Rs.2/-

Though Cadbury Dairy Milk(CDM) occupies a major share of the entire market, one doesn’t see advertisements of variants like Fruit & Nuts, Crackles or Wowie. Do you think that affects the consumer mindset in anyway?Not necessary to advertise the other variants. The strategy could be to get the consumer to ‘ask’ for a particular (maybe the cheapest) variant in your stable. Since Chocolates are ‘low-involvement’ & ‘high-impulse buying’ products, they would almost always be ready to pay that Rs.10 or Rs.20 extra to go for the other variants. Especially Wowie, which I have never seen advertisements of. But consider this scenario when a family is walking through the aisles of a super market looking at CDM & the kid spots Wowie. The consequences will be far higher than the parents can imagine if the kid doesn’t get it! JI always go to a store with the determination to not buy chocolates, but end up buying a crackle or Fruit & Nuts. Not as much of CDM though it is evergreen!

What are your thoughts on Nestle Kit Kat’s squirrel commercial? Do you think Nestle’s recent marketing campaigns have been able to oust the impact of Cadbury in the crunchy chocolate category? ( Cadbury: Perk, 5 Star Crunchy. Nestle: Kitkat, Munch)The Squirrel commercial was heart warming. No doubt about that. The insight, the creative & the execution were to perfection. But the campaign could not survive the onslaught of Cadbury’s muscle of being present all around the Nestle communication, distribution and the variants at every price point. Though Kit Kat is a lovely product, I think they must do something far reaching like the Jesus in Kit Kat (Dutch viral) to outdo the effects of Cadbury’s. The products from the Nestle stable are as good or better, but should have more muscle or that ‘one great idea’ to outdo Cadbury’s.

Nestle launched fresh campaign for Bar One late last year. Would you consider it a wise move considering their product faced competition from both CDM, and 5 star?It is a variant in a similar price point. I think it was a good move by Nestle to launch the Bar One chocolate as against the 5 star. Bar One has again been in the market for way too long, but has

almost been forgotten. Also, the issue with Nestle is that there is no over arching brand identity as compared to Cadbury’s. People will always remember 5 star as a Cadbury product, but not many realize that Bar One is a Nestle product. Their chocolate category communication requires rethinking.

Despite not much competition in the Milk chocolate category, we hardly see any marketing activity for Nestle Milkybar? What does that say about consumer demand for the category?In my opinion Milkybar is a smaller niche as compared to the dark chocolate market. This is a very acquired taste and is very evolved in many other markets. India is still a dark chocolate market and would take a long while before there will be activities in this space.

In general, which are the best marketing initiatives of each of the brands that you like the most?Cadbury’s – 1st  of the month campaign & festival campaigns are great. Their latest ‘Khane ke baad kuch meeta ho jaye’ is not exactly as great as their ‘sweet uthao, majaa lo’ campaign. However, their support to these campaigns are just inspiring.Nestle – I believe that their Kit Kat Squirrel campaign was very heart warming. Also, their old campaigns still ring in my head!

With CDM Silk getting popular in the market, do you think it would make the cut to the premium chocolate category( imported chocolates)? Or we are still far from that?Not exactly. ‘Chocolates’ is a not a requirement market. It is not a necessity. Hence the urge to try the new one will always be there. One can expect slightly lesser levels of loyalty in the consumer as against to most other ‘foods’ category. So we are far from creating great / successful barriers for say a Ferroro, bounty, Mars or Snickers. They will find their own space in the average chocolate eater’s stomach!

Any last words on how do you perceive the market for chocolates growing as an observant of consumer behaviour.As a rank outsider, I believe that the chocolates market has grown leaps and bounds with (not in any particular order):

Frequent abroad travels by many Availability of different SKUs at every price point Easy availability Distribution in-roads (you can now find chocolates at local

chaaiwala shops too) Variants to address the different palettes

It will continue to grow as long as the consumerism that the Indian markets have witnessed since 1991 continues and probably far longer than that.

StrengthsSweetCheapEveryone likes it

WeaknessesCauses health problemsRots teethDifficult to manufacture

OpportunitiesGrowing MarketRecession putting competition out of businessNew generation growing up

ThreatsRecession causes a lack of discretionary spendCompetition being aggressive

Strengths and weaknesses are internal, the product itself in this case. Opportunities and threats are external, the competition, politics etc.