Executive Summary
As for this assignment, we have chosen chocolate & confectionery from Nestle,
specifically on Nestle Kit Kat. Here, we have research on the current market situation as
well on SWOT analysis whereby we have done on the strength, weakness, opportunity
and threat of Kit Kat. Furthermore, we have done our own marketing strategy on our
chosen brand such as on the product, pricing, promotion and distribution strategies.
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Table of Contents
Executive Summary ............................................................................................................ 1
Introduction of Kit Kat........................................................................................................ 3
Current Market Situation .................................................................................................... 6
SWOT Analysis Of Nestle Kit Kat ..................................................................................... 7
Objectives of the Marketing Plan ..................................................................................... 10
Marketing Strategies ......................................................................................................... 13
Pricing Strategy ............................................................................................................. 13
Product Strategy ............................................................................................................ 14
Distribution Strategy ..................................................................................................... 15
Promotion Strategy........................................................................................................ 16
Conclusion and Recommendations ................................................................................... 19
REFERENCES ................................................................................................................. 21
Appendices ........................................................................................................................ 25
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Introduction of Kit Kat
The origin of Kit Kat can be traced back to 1935, which a four-finger wafer was
launched in UK as “Rowntree‟s Chocolate Crisp” (Netnewspublisher.com, 2010). The
idea came from one of the Rowntree‟s employees who felt that Rowntree‟s should make
„a chocolate bar that a man could take to work in his pack up (packed lunch)‟
(Netnewspublisher.com, 2010). The name changed to Kit Kat Chocolate Crisp in 1937,
before finally becoming Kit Kat in 1949 (Netnewspublisher.com, 2010).
Figure 1: Advertisement of Kit Kat in 1937 (Nestlé S.A., n.d.)
Figure 2: Advertisement of Kit Kat in 1950‟s (Nestlé S.A., n.d.)
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Kit Kat has seen many changes during its first 76 years – a temporary move to
blue wrapping when the recipe had to change during rationing in the Second World
War, the development of a two-finger variant in the 1960s and expansion across Europe
in the 1970s (Netnewspublisher.com, 2010). However, for the last 51 years, there has
been one constant: the now-classic advertising line, „Have a Break, Have a Kit Kat‟,
which appeared in one of the UK‟s earliest commercial TV advertisements in 1958
(Netnewspublisher.com, 2010).
Figure 3: Kit Kat 75 years full cycle (Anna Rudenko, 2010)
In 1988, Nestlé acquired Kit Kat through the purchase of Rowntree's (Nestlé S.A.,
n.d.). This gave Nestlé global control over the brand (except in North America), and the
past two decades have seen an ever-more hectic pace of brand development in established
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markets and manufacturing expansion in emerging markets (Netnewspublisher.com,
2010).
Throughout the decade Kit Kat has introduced dozens of flavours and line
extensions within specific consumer markets. Kit Kat bars contain varying numbers of
fingers depending on the market, ranging from the half-finger sized – Kit Kat Petit in
Japan, to one large finger – Kit Kat Chunky, to the three-fingered variants in Arabia, to
the twelve-finger family-size bars in Australia and France (Nestlé S.A., n.d.). In Ireland,
the UK and America Nestlé also produce Kit Kat Ice Cream, and in Australia and
Malaysia, "Kit Kat Drumsticks" (Nestlé S.A., n.d.).
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Current Market Situation
In the current market situation of products such as chocolates, there are a few
leading brands in the chocolate world. Twix by mars, Hersheys, Galaxy, Kinder Bueno,
and time out by Cadburry are a few of Kit Kat‟s main competitors. Despite the heavy
competition, Kit Kat remains as one of the UK's best-selling chocolate bars. But recently
In both the US and Canada, the Kit Kat is also extremely popular and is one of the
top ten candy bar brands. In 2006 (William Grobel), Kit Kat came in at number three for
the UK‟s most valuable confectionery brands whereas Cadbury dairy milk came in at
number one and Wrigley extra at number two.
Some experts such as William Grobel, marketing director of intangible business
states that Kit Kat is a brand with a degree of unrealised potential. According to
Brandirectory (n.d.) brand value is considered to be the net present value of the estimated
future cash flows attributable to the Brand. Kit Kat‟s brand value as at 31st December
2011 is to drop by $3,279m.
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SWOT Analysis Of Nestle Kit Kat
Strengths
The main strength of Kit Kat is being owned by Nestle, the world‟s largest
nutrition and food company and globally successful folio of products and brands. This
itself is a huge promotion for Kit Kat that ease the market penetration whereby customer
believes that Nestle production itself is high standard of quality product and image.
Kit Kat being not only a chocolate but also a wafer gives a different texture of
chocolate combination of wafer whereby most people still have it in their favourite list.
It was Kit Kat that came up with a chocolate-wafer combination and could not be
overtake by its main competitor Cadbury‟s Time Out till date (Anon., 2010).
Kit Kat has creative, simple and visible advertising where the slogan “Have a
Break, Have a Kit Kat” created a hype among customers especially children and
youngsters which creates high brand awareness.
Kit Kat products are easily reachable as it can be found in small grocery stores
up to huge hypermarkets. Furthermore, Kit Kat has been one of Nestle best selling
products for its high sales and revenue record (Anon., 2010). Revenue generated by Kit
Kat is $201.8 million with a unit sale of 202.5 million according to CNBC (Fox, 2011).
Weakness
In European countries, Kit Kat has expanded vastly but in regions like Asia
especially in Malaysia as in small towns and villages, it is still not so recognized. Thus,
Kit Kat is lacking on distribution strategy to reach small towns and villages and pricing
should be lowered as the citizens here are usually low income earners.
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Nowadays, people are becoming more health conscious and avoiding having
chocolates. Moreover, Kit Kat does not have any health- conscious chocolate bars that
attracts health conscious crowd. In addition, packaging is a silent promoter for a brand
and Kit Kat has not change its packaging style for some time. Possibility to attract more
customers indeed is there if Kit Kat tries changing its packaging style.
Opportunities
Expanding market growth in emerging countries such as Russia, Brazil, India and
China would be an excellent strategy to improve their revenue. Company can opt to
establish a company in China And India for cheap labor.
Kit Kat came up with “The Cocoa Plan” where Kit Kat enhancing the product
quality and the production of cocoa by itself which can help to reduce production cost.
Growth of technology, helps Kit Kat continuously improve their product into a quality
and environmentally friendly (Aboumerhi, 2012).
Adding on, chocolate confectionery market is growing as well the sales whereby
it is expected to increase from $83.2 billion in 2010 to $98.3 billion in 2016 (Aboumerhi,
2012).
Threat
Due to rising costs of raw materials, fuels, dairy cost and the hiking price of
packaging and manufacturing result in a higher price of Kit Kat product. This shifts the
price burden towards the consumers by the company, whereby shrinking packages which
is unnoticeable, so consumers pays same price for less product (Fifield, 2007).
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Contamination to the product will cost in recalling of the brand. This is caused by
the weather or irresponsible attitude of workers and quality check. For instance in 2009
there was a outbreak of virus e-coli in the Toll House brand cookie dough which made it
to recalled (Anon., 2010).
Lastly, there are huge competition (Fifield, 2007) with Mars, Cadbury and Twix
in market where Kit Kat has to compete to remain an established brand and favourite
chocolate-wafer.
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Objectives of the Marketing Plan
Marketing Objective
Marketing objective is an organization statement of what is to be
accomplished/achieve through marketing activities. Before the details of a marketing plan
can be developed, goals and objectives for plan must be stated. Without objectives there
is no basis for measuring the success of marketing plan activities. (Charles W. Lamb,
2009). Kit Kat is stated as “Have Break, Have Kit Kat”
Kit Kat markets its product in two different formats. Which are as follow;
1. Two finger format
2. Four finger format
These formats are promoted and marketed differently in order to cover more than
one market segment, and also to play with the minds of consumer not to be able to tell the
difference. Both formats cover the same aspects of objectives which are needed to
conform to the commonly used SMART criteria.
Kit Kat SMART objectives can be express as follows;
S-Specific
Kit Kat has to adopt to obtain maximum customer satisfaction. Where Kit Kat is
trying to pursuit and coup up with different types of people in the world based on their
culture and eating habits. They try to come up with different types of flavors and size just
to satisfy customer needs in order to survive in the business market. For example in
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France Kit Kat produce its products in form of “Balls”, In Singapore, you‟ll find “Bites”
and In the Arabian region, there‟s a 3-finger version and so many others according
geographical regions globally.
M-Measurable
The effects of integration will have on the brand globally. For example in the year
1999, Kit Kat Chunky Sell 50 million units (i.e. 2,750 tonnes of product) as soon as the
lunch of the product. The company also measures the sales they have achieved per week,
per month and per year to get track of the profits they have achieved worldwide and
forecast the measurements made that do the consumers admire Kit Kat. This forecast
measurement helps them in producing Kit Kat according to the huge demand in the
global market.
A-Achievable
In order Kit Kat to achieve its goal, it must obtain maximum profitability. This is
where by increase sales in subsequent years as soon as the launch their products. For
example, to achieve 90% distribution in all sectors of the confectionery market within the
first four weeks after the launch.
R-Relevant
The company must know who their competitors are in order to figure out what
new ideas they are coming up with in order to sustain and succeed by generating
innovative and unique promotions and ideas for maximum customer attraction. This
information is relevant to their mission statement.
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T-Timed line
Follow future recommendations to sustain in the business industry. This will help
Kit Kat to stay ahead of the competition from rival chocolate confectionaries companies
e.g. Cadbury‟s, Mars and etc. Nestle has timely goals to manufacture Kit Kat. The
company confirms to produce specific amount of Kit Kats to be delivered in the market
in a given time period.
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Marketing Strategies
Pricing Strategy
In order to sustain a strong brand image in a competitive market is level of
flexibility in pricing strategy. Kit Kat has remained outstandingly stable over the last
sixty years. Kit Kat‟s pricing increases as sizes varies, the bigger the size, the higher the
price. Kit Kat able to reduce its production cost of buying cocoa from another company
by investing in their own production “The Cocoa Plan”, which help to maintain the price
of the product in the market.
Food products such as chocolates, ice-cream and snacks are introduce in a low
initial entry price lower than intended established price to attract customers. Kit Kat at
the start could introduce a lower price for its new upcoming flavors. This is can be used
for seeking to enter marketplace and develop a niche for themselves which is known as
penetration pricing (Groucutt, 2005).
Furthermore, Kit Kat has to be a competitor- based pricing (Groucutt, 2005),
whereby there is wide choices for customers to choose the cheapest and best customer
service. However, customers would prefer to a reasonable price in market, thus Kit Kat
will be a price–taker as it has to accept the ongoing market price as determined by
demand and supply. This will be Kit Kat following the price of Cadbury, Twix, Mars and
other chocolate brands. So when price is not a competitive advantage, business needs to
have other ways to attract customers such as discount prices, free gifts or better
availability.
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Kit Kat company can also apply promotional pricing (Groucutt, 2005), during
festivity season as Malaysia is rich with different races and celebration whereby they can
change the packaging color to green during the Eid celebration and others. Kit Kat can
also offer discount pricing in certain time of the year to attract customers.
Product Strategy
In today‟s world, creativity and innovation is the key to success. Market research
has shown that consumers prefer special edition to be available for limited periods only.
Thus, Nestlé could release some special edition once a while as it will be a good way of
injecting new life into the product life cycle of Kit Kat.
In term of appearance, Nestlé can release different edition for different holidays
and festivals, with some customised words related to the holiday or festival. For instance,
Nestlé could introduces 4 fingered Kit Kat during Valentine‟s Day, with each customised
words such as “Kiss me”, “Hug me”, “Love me”, “Hear me”, to replace the name “Kit
Kat” on each bar.
In term of quality, Nestlé could create better and healthier chocolate crisp which
is low fat, low calories or low sugar. Since nowadays people have become increasingly
health-conscious, Nestlé could reduce the sugar level in the ingredients of Kit Kat or
come up with new recipe such as high fiber Kit Kat or Kit Kat with collagen.
In term of flavour, Nestlé can come up with variations that reflect the local
produce and palate of each region, and create more unique flavours. For instance,
Cameron Highlands is well-known with its tea plantation, so Boh tea-flavored Kit Kats
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could be introduced. Nestlé can also create durian-flavored dark chocolate Kit Kats as
Pahang is famous for its durians.
In term of packaging, Nestlé could add on some unique features of the country or
local culture to the packing design of Kit Kat. For example, kangaroo picture on Australia
package, whereas panda pictures on China package. As the result, the limited edition Kit
Kat will turn into coveted souvenirs for domestic travelers, and each flavour will only sell
in the region for which it was created.
As a nutshell, many of the special flavours can only be introduced for a limited
time to entice consumers to try something new while they can, then Nestlé have to
quickly take off from the market. Excess inventory can be collected and use to create the
mixed bags of consumer favorites and exciting new flavours as high-value gift bags, and
sell during the major gift-giving periods, such as New Year, Father‟s Day, Mother‟s Day
and Christmas.
Distribution Strategy
Distribution strategy is referred as a plan created by the management of a
manufacturing business that specifies how the firm intends to transfer its products to
intermediaries, retailers and end consumers. (Business dictionary, 2012)
For Kit Kat to control, vary its marketing of its product and to influence huge
number of customers to buy the product they must provide it at the right place and at the
right time.
For Kit Kat to be successful in distribution of its product and marketing in the
future it has to come up with a new plan and idea which will penetrate and be stable in
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the change of business environment and to survive in a huge business market where
they‟re a lot of competitors. For example they can offer their inventory of its product
through both online and in-store means, satisfying customers of different needs and
shopping styles.
Other than that, Kit Kat can offer their customers a place to buy their products as
well as offering to deliver the products right to their doors. In the end, both Kit Kat and
its customers will approach to this situation which will provide the most profitable
situation.
Furthermore Kit Kat can expand its product ranging from Kit Kat Snacking range,
Kit Kat Hunger range and any name that come up. This will help Kit Kat to show that
they care and are willing to change due to the changing of business environment and also
the change of technology in order to be up to date and more the less to survive and also to
maintain its current position in marketing by distribution.
Promotion Strategy
For Kit Kat to maintain as one of UK's best-selling chocolate bars, they need to
have an outstanding promotion strategy to maintain as the best. One of the ways they can
do that is by advertising. Advertising plays an important role in promoting the product as
advertising is a paid form of communication, delivered through media from an
identifiable source, designed to persuade the receiver to take some action, now or in the
future (Grewal and Levy, 2008).
Kit Kat can advertise with creative and innovative advertisements such as
television advertisements, magazines and newspapers, posters, outdoor advertisements
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such as the Kit Kat bench, and of course advertisements through the internet like social
networks to capture the hearts of consumers once more. By doing so, Kit Kat may boost
sales as in the past, Kit Kat has generated remarkable success from net advertisement as
their $1million campaign achieved results Nestle would normally have expected from a
television campaign, but at a quarter of the cost (Lara Sinclair, 2009).This gives Kit Kat
a better chance to generate impressive profit.
Apart from that, product placement is also one of the promotion strategies that can
be used for Kit Kat. Product placement is a form of non-personal selling in which the
marketer pays a motion picture or television program owner a fee to display his or her
product prominently in the film or show (Grewal and Levy, 2008). Famous celebrities
can promote Kit Kat by having it appear or consuming it in their film or show. By doing
so, this can ignite an interest in Kit Kat as Kit Kat‟s potential customers who idolises the
celebrity would follow every step of the celebrity and consume the product. For example,
Kit Kat is one of the featured brands that has appeared in 2 films which is exit wounds in
2001 and sex and the city in 2008 (Brand Channel, n.d).
Furthermore, Kit Kat can adopt sales promotion as part of their strategies. There
are many types of sales promotion that can be used. One of the sales promotion strategies
are coupons which is a certificate with a stated price reduction of the item (Grewal and
Levy, 2008). Deals such as feature price and buy one get one free is another sales
promotion used by many firms (Grewal and Levy, 2008). Moreover, sampling offers
potential customers the opportunity to try a product before they make a buying decision.
This is one of the most costly sales promotion tools but also one of the most effective
(Grewal and Levy, 2008). Besides that, point-of-purchase displays are merchandise
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displays located at the point of purchase, such as the checkout counter in a grocery store
(Grewal and Levy, 2008).
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Conclusion and Recommendations
In conclusion, Kit Kat is one of the most popular chocolates all around the world,
owe to its marketing strategy all over the years. Its trademark ─ red and white colours
and the distinct “Kit Kat” logo makes it one of the most recognized brands ever. The
marketing strategies of Kit Kat chocolate were good enough, but like any other product
there is always room for improvement. Kit Kat can also improve its competitive
advantage by adopting new and innovative strategies.
No matter how effective the promotion and packaging, a firm will find it difficult
to market a product which fails to satisfy a consumer need. Since nowadays people are
concern about their health, Nestlé could create Kit Kat which is low fat, low calories or
low sugar to target on the health-conscious consumers. Besides, it can also create higher
value product such as high fiber Kit Kat or Kit Kat with collagen to increase its sales.
To increase more loyal Kit Kat consumers, it is time for Kit Kat to change its
packet design. It can be turned into limited edition or coveted souvenirs by adding some
unique and attractive features to the packing design, so that people will be attracted and
buy it as their personal collection just because it is a limited edition.
Although there are numerous weakness and threats awaiting Nestlé Kit Kat to
neutralize and overcome, the brand has been performing excellently during its 76 years of
development. The company‟s competitive strategy has made a good impact on Kit Kat in
establishing a strong and positive brand. Kit Kat has a lot of strengths and opportunities
to build upon it to face future challenges. It can be confidently anticipated that Nestlé Kit
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Kat will keep demonstrating and improving its position in chocolate and confectionery
industry.
3200 words
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REFERENCES
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Available at: <http://kitkatlebanon.blogspot.com/2012/03/swot-analysis_10.html>
[Accessed 20 June 2012].
Anna Rudenko, 2010, Kit Kat Turns 75 [online], Popsop Ltd., Available from
http://popsop.com/39282/ [Accessed 18th June 2012]
Anna Rudenko, 2010, Kit Kat 75 years full cycle [image online], Popsop Ltd., Available
from http://popsop.com/39282/ [Accessed 18th June 2012]
Anon, 2010. SWOT Analysis Nestle. [online] Marketing research. Available at:
<http://www.marketing--research.com/marketing/swot-analysis-nestl%C3%A9>
[Accessed 21 June 2012].
Brandirectory, n.d., Brand Value – Definition [online] Available at:
http://www.brandchannel.com/brandcameo_brands.asp?pageno=12&brand_year_az_all=
brand_year_az_all [Accessed on 24 June 2012].
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Brand Channel, n.d., Kit Kat [online] Available at:
http://www.brandchannel.com/brandcameo_brands.asp?pageno=12&brand_year_az_all=
brand_year_az_all[Accessed on 24 June 2012].
Corporate Media Relations, n.d., About Kit Kat [online], Nestlé S.A., Available from
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Markets. 3rd ed. Burlington: Elsevier Ltd.
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[Accessed 20 June 2012].
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Netnewspublisher.com, 2010, Iconic Brand Kit Kat Celebrating Its 75th Year [online],
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Appendices
Work Break down structure
Members
Work Assigned
Yeoh Sook Yen
Grijha Selvakumaran
Yeoh Shin Yee

CURRENT MARKET SITUATION

PROMOTION STRATEGIES

SWOT ANALYSIS

PRICING STRATGIES

INTRODUCTION

PRODUCT STRATEGIES

CONCLUSION AND
RECOMMENDATIONS

MARKETING OBJECTIVES
(SMART)
Ally Humud Saleh

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DISTRIBUTION STRATEGIES