By
NAM E AA AA
NAME BBBBB
NAM E RR RR
NAME ZZZZZ
MARKETING 304
Table of contents
* Executive Summary--------------------------------------------------------------------------------------------1
1. Situation Analysis-----------------------------------------------------------------------------------------------2
1.1 Macroenvironment Situation---------------------------------------------------------------2
1.2 Market situation---------------------------------------------------------------------------------3, 4
1.3 Competitive situation-----------------------------------------------------------------------5, 6
1.4 Target Buyer Situation--------------------------------------------------------------------------7
1.5 Product Situation----------------------------------------------------------------------------------8
1.6 Distribution Situation----------------------------------------------------------------------------9
2. Company Analysis------------------------------------------------------------------------------------------10
2.1 Internal analysis ----------------------------------------------------------------------------1013
2.2 External analysis----------------------------------------------------------------------------1415
3. Issue analysis---------------------------------------------------------------------------------------------------16
3.1 Critical Success Factors---------------------------------------------------------------------16
3.2 Alternatives-------------------------------------------------------------------------------------------17
3.3 Evaluation of the Alternatives-------------------------------------------------------------18
3.4 Recommendations------------------------------------------------------------------------------19
4. Marketing Goals and objectives----------------------------------------------------------------------20
4.1 Mission Statement-------------------------------------------------------------------------------20
4.2 Market Definition----------------------------------------------------------------------------------20 4.3 Technological Changes----------------------------------------------------------------21, 22
4.4 Financial Objectives----------------------------------------------------------------------23,
24
5. Target Market and positioning------------------------------------------------------------------------25
5.1 Market Segments and Target Analysis--------------------------------------25, 26
5.2 Recommended Target Market------------------------------------------------------27-28
5.3 Positioning--------------------------------------------------------------------------------29,
30, 31
6. Marketing Mix-----------------------------------------------------------------------------------------------------32
6.1 Product Mix------------------------------------------------------------------------------------32, 33
6.2 Price Mix------------------------------------------------------------------------------------------------34
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6.3 Place Mix----------------------------------------------------------------------------------------35, 37
6.4 promotion Mix--------------------------------------------------------------------------------------38
* Works cited----------------------------------------------------------------------------------------------------------39
* Appendix-------------------------------------------------------------------------------------------------------------1-4
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Executive Summary
Nutella’s company, Ferrero is the largest confectionary group in Italy and the fourth
largest in the world (www.nutellausa.com). As written on the jar, Nutella is a “delicious blend
of fresh hazelnut, skim milt, and coca.” Unlike any other spreads available in the U.S., Nutella
offers a unique and high-quality tasting product that is nutritious and offers convenience and
versatility.
We have identified and divided the American market into three promising segments:
 Children between the ages of 4 and 13 and their parents (targeted for peanut butterNutella swirls and Nutella-peanut butter swirls)
 College students (targeted for Nutella bars)
 Southerners along with wealthy/successful individuals and elders (targeted for Original
Nutella chocolate hazelnut)
By implementing our marketing plan, we hope to achieve several goals and objectives
within 3 years:
 Improve brand awareness
 Become leading general spread and breakfast in the U.S.
 Achieve greater market share by 35% increase in profits.
We will use a differentiated strategy to position ourselves as the leader in the breakfast
market by emphasizing out uniqueness, as well as our excellent quality through our taste, and
through the positive image and high prestige of our company name.
Moreover, we will focus our marketing efforts on shelving Nutella in an eye-catching
spot in supermarkets, as well as advertisements on the radio, television, newspapers, and
magazine. Also, our sale promotion will include samples and coupons.
1. Situation Analysis
1.1 Macro environment Situation
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Economic ConditionsIn times of economic recession, people are less willing to spend money on shopping goods like
chocolate spreads. Nevertheless, Americans are always looking for a “good deal.” That’s
why; we will price Nutella and its extensions at the most economical value and price for
consumers as possible.
TechnologicalModern technology can help in production of Nutella by making it more efficient and effective.
As a result, Nutella can be price lower to serve the target market.
Social and CulturalIn today’s society in the U.S., life in general is very fast passed. Thus, people are looking for
more convenient products. In addition, there is a growing concern and awareness about a
healthy diet. According to a survey taken by 100 people who were told about Nutella and
asked if they would try it and the overwhelming majority that said that they would not try
Nutella said that it is because chocolate is an unhealthy and bad way to start your day with
(please refer to the survey in the appendix). Nevertheless, we will emphasize that Nutella is in
fact nutritious and contains vitamins and minerals from several ingredients like skim milk.
DemographicsAs “baby boomers” are reaching senior status, many of them are living longer and spending
lots of money on luxury items, entertainment, and travel. Therefore, we can take advantage of
this growing trend, especially with Original Nutella chocolate hazelnut, to market our product,
and encourage sales.
1.2 Market Situation
The producer of Nutella is the Ferreo Company, which is a private company in Italy.
The group is headed by Ferrero International from Luxembourg, “has sped up its propensity for
advertising investments and structure. For the second consecutive year since the beginning of
the 1960’s, Ferrero has suffered a slowing down” (www.dowjones. com).
Using the Boston Consulting Group (BCG) approach, Nutella is more like a “question
mark” right now, that is trying to become a “star.” Ian another words, Nutella has a somewhat
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4
high market growth rate with a slightly high market share. A question mark is basically
defined as “a company with low-share business units in high growth markets.” Besides, they
“require a lot of cash to hold their share” (Principals of Marketing: 54). The red circle below
denotes approximately where Nutella is currently and the Blue arrow denotes where Nutella
want to go.
Market
Star
Question mark
High
Cash cow
Dog
Low
Growth
Rate
High
Low
Relative Market Share
Using the General Electric strategic business-planning grid we can show that Nutella
has a high-Medium industry attractiveness and a strong business strength. In the chart below
Nutella is denoted by the black circle. This suggests that Nutella should invest and as a result
it will grow. The GE approach considers “[the industry attractiveness index, [determined by]
market size and growth, industry profit margin, amount of competition, demand, and industry
cost structure (Principals of Marketing: 55).
Business Strength
Strong Average
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Weak
5
High
Industry attractiveness Medium
Low
Invest and Grow
Maintain Investment
Harvest or Divest
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1.3 Competitive Situation
Key competitors for Nutella and its product extensions are listed below:
TWIST: is a “real Dutch chocolate” it is banana flavored milk chocolate spread imported
from Holland. It is manufactured by De Boer food Importers, Inc.
 We don’t believe that Twist will have a significant impact on our company, because
Nutella and peanut butter swirl’s such high quality taste, nutrition, and natural
ingredients. In addition, they do not have high market share or sales in the U.S. or
world market.
Strengths

Low price ($1.99)
Weaknesses

Low company name and brand awareness

Artificial flavoring

Not as nutritious as Nutella

Not advertised much
MILKY WAY: is a chocolate flavored spread imported from Poland by master foods Polsa.
 Milky way is not very well known by the world or U.S. market. Also the
company; Kozuszki Parcel is not well known. In addition, the product is not
selling well and has very little awareness and market share.
Strengths

Slightly bigger jar than Nutella’s
Weaknesses

Low company name and brand awareness

Artificial flavored chocolate

Not advertised much

On average priced .60 cents higher than Nutella.
JIF: is a peanut butter.
 Originally a product of Crisco and Proctor and Gamble, now is part of the
Smucker Company. Jif is the top selling peanut butter in the U.S. with
significant market share and sales.
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7
Strengths:

All American breakfast

Well known brand name and awareness

Lot’s of advertisement

Priced on average two dollars less than Nutella
Weaknesses:

Not unique

Not as healthy as Nutella

Not very versatile
NUTRI-GRAIN: are cereal bars with whole grain oats, wheat, and fruit.
 Nutri-grain bars might have a potential impact on the sale of Nutella bars. Not
only is Nutri-grain one of the top selling breakfast bars in the U.S it is very well
known, and might pose a potential threat to Nutella bars. It is also
manufactured by Kellogg's, one of the top breakfast companies in the U.S.
STREANGHTS

Well known brand and in U.S. market

Very healthy, specially for breakfast
WEAKNESSES

In general does not taste as good as chocolate or Nutella

Not unique
1.4 Target Buyer or End User Situation
Our target buyers will include, children between the ages of 4 and 13 and their parents,
college students, and southerners and wealthy or successful Americans and elders. As
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discussed in detail in the market segments and target analysis these groups will be target
further buy their:

Demographics

Psychographics

Lifestyles
In addition their wants, needs, attitudes, and perceptions are define in detail in the market
segments and target analysis in section five of this marketing plan.
It is important to point out that many of our target consumer markets are growing in the
U.S. Children between the ages of 4 and 13 make up over 6.5 million of the U.S. population
(www.census.gov). In addition, seniors are growing because of longer life span to a whopping
26 million of the U.S. population (www.census.gov).
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1.5 Product Situation
So, how is Nutella doing presently?
SALES
Gross profit: 1,200,000
Net profit: 610,000
PROFITS
Decline in profits from 1997 to 1998, from 1,346,189 to 1,392,000
TURNOVER RATE: 3.3 percent
Distribution trends and development
Nutella is available on-line at www.nutellausa.com and www.yahoo.com amongst
others. In addition, Nutella's web cite offers a store locator for U.S. consumers. Evidently
Nutella is available at all major supermarkets nation wide. From our research, we discovered
that Nutella is available in all major supermarkets in southern California and other major cities
around the U.S. including: Food-for-less, Alberson’s, Vons, Ralphs, and Pavilions.
Marketing spending history
In recent years, Nutella has been getting increasing promotions. For example,
currently, Kobe Bryant of the Los Angeles Lakers is featured on the Nutella jar with his
favorite recipe. In addition, there is a contest to win season tickets to Lakers games.
Moreover, in 1998 the “Got milk?” campaign gave away goodie bags containing of sample size
products and inserts from various products including Nutella (www.dowjones.com/ptg.djnr).
After the program, a research was conducted that revealed that Nutella “showed a 75 percent
increase in product sale in participating stores during the sampling event, as well as a sustained
25 percent increase the month following the promotion” (www.dowjones.com/ptg.djnr).
1.6 Distribution Situation
DOMESTIC MARKET
Risen by 2.4 percent
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VOLUME
Risen by 6.7 percent
GROWTH POTENTIAL

Growth of sales volume is the result of growth of praline and snack divisions, as well as
Estathe and Nutella products world wide, specifically in Europe
(www.dowjones.com/story_clean).

Great success of other Ferrero products in the U.S. yield a strong potential for growth
of Ferrero company as a whole, as well as Nutella and its product extensions.

So, Nutella bars and Nutella and peanut butter swirls have very strong potential to
raising profits and market share for Ferrero in the U.S.
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2. SWOT Analysis Summary
2.1 Internal Analysis Summary
2.2.1. STRENGTHS

Nutella has captured the European marketNutella is already the leading breakfast spread in Germany, and a popular after-school
snack in France and Italy. Nutella is to Europeans what peanut butter is to Americansa tradition. Europeans love Nutella and have it with everything. It is widely available
everywhere. However, Nutella has not been as popular in the US.

Product is positioned as unique and of high-quality in taste and nutritionNutella is a very unique product in the U.S. and is of high quality. It has a one of the
kind taste that is very delicious. There are not many chocolate hazelnut spreads from
Europe available in the U.S. There are a few imitation brands, but Nutella is the
original brand that has been available in the US for 15 years. Nutella is a high quality
product with fine ingredients that offers nutrition as well as taste.

Broad appeal to many market segmentsNutella appeals to a wide variety of people, not just specific segments. Most people
like to have various spreads like: peanut butter, jam, chocolate, hazelnut, and banana,
on their breads to add flavor. Nutella appeals to so many different segments ranging
from children, to upper middle class mature adults. However, these different segments
can be recognized and targeted differently because different groups react differently to
different marketing mixes, promotions, and advertisements. Since Nutella appeals to so
many people, they do not have to depend only on sales from a small market; there are
many profitable opportunities.

Variety of consumption methodsNutella can be eaten in a variety of ways on many different things- it can be eaten on
bread, donuts, bagels, crackers, fruits, anything! There are several recipes that can be
made from Nutella as well. It is a versatile spread put on anything that needs some
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flavoring. It can be personalized to the way the consumer wants it. Therefore, the
customer is more likely to be satisfied with the product.

High company awareness from other popular brands (Tic Tac, Rocher)Many people already know about other brands that Ferrero makes like Tic Tacs, Kinder
Surprise Eggs, and Rocher candy. Tic Tac is very popular in the US and advertised
well on television. If Nutella is linked with Tic Tac somehow through price bundles or
joint advertising, Nutella brand awareness can increase. Also, if one brand has a good
name, it can have a good effect on another brand from that same company.
2.2.2.

WEAKNESSES
Low Nutella brand awareness in the USMany people do not even know what Nutella is in the US. Results from surveys taken
at CSUN show that not many people are even aware of the product. The select few
who have heard about it, do not really know much about it. If Nutella were better
known more people would probably be willing to buy it. It should be advertised on
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television and with coupons in supermarkets. Television ads would really increase
awareness because there are so many Americans who watch television.

Not advertised wellNutella has not been advertised well in the US. No advertisements of any type have
been made besides the Kobe Bryant pictures on the jar. However, these Kobe Bryant
ads don’t really help because people have to find Nutella first before they realize that
Kobe Bryant is associated with it. There are a few ads in sports magazines, but this is
only reaching a small portion of the US market. Nutella needs to be widely advertised
with television commercials and in-store samples, promotions, and coupons. If Nutella
is advertised better, sales will most likely increase because Americans will be more
aware of the product.

Higher price than peanut butter competitorsNutella is priced higher than its biggest competition in the US- peanut butter. Peanut
butter is a long-standing tradition in the US, so Nutella should kept its price comparable
to peanut butter. Many Americans will not pay more for Nutella over peanut butter
unless they are convinced that Nutella is somehow better and of higher quality. If
Nutella wants to keep their high price, they rally need to convince the American market
that it is worth that price. Nutella must emphasize their uniqueness and high quality to
the market. Buyers must become loyal to the Nutella brand, so that price does not
matter because they must have the product.

Not placed on shelf in eye-catching spotNutella is not really placed on the shelves in an eye-catching spot. It is placed right
next to its biggest competition, peanut butter. This is not a good place for it to be
shelved because most Americans would just buy peanut butter without even looking for
Nutella. Also, Nutella is usually placed down low or in a spot not easy to find. If it paid
stores to put it in a better spot, it would probably sell better. Maybe some coupons
placed under it would attract buyers as well.
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
Americans perceive chocolate as being unhealthyFrom the CSUN poll, it was found that many people perceive Nutella as being
unhealthy (please refer to Appendix for further data on survey). Since it contains
cocoa, Americans think peanut butter is healthier. The thought of spreading chocolate
on bread for breakfast every morning does not do much for many Americans. This is
not a big part of their culture as it is in Europe. Nutella should advertise to the
American market that their product is indeed healthy. The ingredients including skim
milk and hazelnuts should be emphasized in the advertisements.
2.2
External Analysis Summary
2.2.1.

OPPORTUNITIES
Faster pace of life, less time to cookIt is currently the information age. The pace of life is much faster, especially in
America compared to Europe. People have less time to cook in the morning, and want
to make something that is quick. Nutella hazelnut spread solves this problem. All one
has to do is spread it on bagels, bread, muffins, crackers, anything. It is fast and adds
instant flavor to any breakfast.

Internet usage has greatly increasedInternet usage keeps on increasing and computers are working their way into every
aspect of business. Many companies sell products online in addition to their regular
stores. This is a big opportunity for Nutella to increase awareness and advertising
online.

Americans watch many hours of TV per week-
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15
When Americans watch television, they are exposed to many advertisements during
commercial breaks. Most people find out about products from the ads they see on TV
or hear on the radio. This is a big opportunity to advertise Nutella. If some television
ads for Nutella are aired, the millions of TV viewers will see these ads and become
aware of this product.

American love of European trendsMany Americans love the European culture. European lifestyles and cultures are
portrayed as cool in the media through magazines, TV shows, and European films.
Nutella can be seen as a trendy European spread. Those who like Europe and all the
things that go along with it should be targeted.
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2.2.2.THREATS

High competition from leading peanut butter brandsPeanut butter is a long-standing American tradition. Nutella can set itself apart from the
competition with a more-for-more competitive advantage. This can be accomplished by
emphasizing Nutella’s variety, quality, uniqueness, and personalization of spread on
different foods

Imitation chocolate spreadsNutella’s popularity has led to many imitation brands trying to outdo Nutella. Many of
these brands, although imitations, are becoming threats. Some of these brands are doing
well and are trying to get ahead of Nutella. Nutella must watch these competitors to
make sure they don’t take over.

Bad economic cycles / statesPeanut butter and spreads are generally shopping goods. Therefore, during times of
economic downturn and recession people will not be as apt to buy peanut butter or
special chocolate and hazelnut spreads. Instead, people will be concerned with first
buying the necessities like water, fruits, meats, and soup. During economic downturns,
advertising must be increased and reasons given as to why it is so important to buy this
product.
SUMMARY OF SWOT ANALYSIS
INTERNAL
EXTERNAL
Strengths
Opportunities
S1: Nutella has captures European Market
O1: Faster pace of life, less time to cook
S2: Unique product with high quality in taste & nutrition O2: Internet usage has greatly increased
S3: Broad appeal to many market segments
O3: Americans watch many hours of TV per week
S4: Variety of consumption methods
O4: Americans love of European trends
S5: High company awareness
Weaknesses
Threats
W1: Low Nutella brand awareness in U.S.
T1: High competition from leading peanut butter brands
W2: Not advertised well
T2: Imitation chocolate spreads
W3: Higher price than peanut butter competitors
T3: Bad economic cycles / states
W4: Not placed on shelf in eye-catching spot
W5: Americans perception that chocolate is unhealthy
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3. Issue Analysis
3.1.Critical Success Factors
Nutella has four main critical success factors:

Establishing more brand awareness in the US with Nutella bars and Nutella and peanutbutter swirls

Providing a high-quality product through its taste, and natural and nutritious ingredients

Providing a product that is unique

Proving a product that on versatile
The combination of these three success factors will give Nutella a competitive advantage in
the peanut butter and chocolate spread markets. Nutella must be positioned as it is- a highquality tasting and nutritious, unique product. Americans must be aware of Nutella and know
that it is a special product that is worth paying a few extra dollars for.
We want to emphasize Nutella as a product that is very unique with a taste unlike any other
spread brands. Besides, many imitation brands do not even come close to the great blend of
taste created by Nutella’s ingredients. Nutella is a unique product that has been around for
many the early 1900’s. Thus, Nutella’s attributes will most likely increase sales and market
share. Furthermore, Nutella can increase brand awareness in the U.S. with advertisements, and
line and brand extensions.
3.2 Alternatives
To make its business even more successful, Nutella can choose from several strategies to
implement. These include the following:
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
Market Development: Nutella must develop its American market. Although it has
gained great popularity in Europe, many Americans still are not even aware of this
product. A concentrated strategy can be used here to segment the American market into
a few sub-segments that can be targeted individually. Different advertising themes can
be used to appeal to different segments.

Market Penetration: expand market share in current U.S. chocolate and peanut butter
spread markets with radio and television ads, using Nutella promotions linked with
other Ferrero brands, and gaining better shelf locations.

Product Development: create two other types of Nutella line extensions:
 Nutella bars- for those with a busy lifestyle and who do not have much time to
prepare meals
 Peanut butter-Nutella swirls and Nutella-peanut butter swirls- used as a
transition product to gradually bring peanut butter users to try Nutella.

First, Peanut butter-Nutella swirls (more peanut butter, less Nutella) will
be marketed; then, Nutella-Peanut butter swirls.
3.3 Evaluation of the Alternatives

Concentrated market development: Segmenting the various groups of the American
market with help Nutella focus its advertising on specific segments. This will have a
more lasting impact and affect because the ads will relate more to the target groups.
However, this will be more costly than mass marketing because it requires more time,
research, and advertising money. Yet it may be worth the extra effort if it makes a more
lasting impact on potential customers.
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
Penetrate: Creating and airing television and radio ads for Nutella will increase brand
awareness to a great extent. Ads can be costly, but the increased awareness and sales
will make up for it. Better, more noticeable shelf locations and joint promotional
efforts will also increase brand awareness and hopefully market share in turn.

Product Line Extensions: Nutella bars will bring in an additional source of revenue
and create awareness of the original Nutella spread. In addition, peanut butter-Nutella
swirls and Nutella-peanut butter swirls will help the company gradually recruit new
users from peanut butter spreads to chocolate spreads. The production of these products
is costly, but if awareness and profits increase as a result, and eventually these costs
will be canceled out.
3.4 Recommendations
In order to take advantage of the full potential of Nutella, we have decided to try four of
the alternatives in the Unites States: Original Nutella chocolate-hazelnut spread, Peanut
butter-Nutella swirls, Nutella-Peanut butter swirls, and Nutella bars. All of these three
strategies will work well to:
 Increase market share
 Increase brand awareness
 Increase profits
It should be noted that Peanut butter-Nutella swirls will be marketed first, then depending
on interest and sale of product, we will introduce Nutella-peanut butter swirls about 4-6
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20
months later, after which we will promote Original Nutella chocolate hazelnut to this
segment (kids 4-13 year old and their parents) as well.
Moreover, concentrated market development will increase brand awareness, which in
turn can increase sales and market share. Penetration increases awareness and Product
development provides an additional way to gain extra revenue.
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4. Marketing Goals and Objectives
4.1 Nutella’s Mission Statement:
Due to their great success in the European market, Ferrero is ready to introduce Nutella
to all American people, from various backgrounds, ages, and lifestyles. At Fererro, our
primary mission is to introduce Nutella to all people around the U.S., as being a unique and
of excellent quality in taste and ingredients. In addition, we want all Americans to gain
confidence that Nutella- the original and most delicious chocolate hazelnut spread in the
world- is the best choice for them.
4.2 Market Definition
Nutella- the original and supreme chocolate hazelnut spread in the world- will deliver
taste, nutrition, versatility, and convieneince to the American breakfast tables. In addition,
both the mission statement and the market definition for Nutella indicates Ferrero’s
incentive to introduce itself to the U.S market as a unique product that will promise
ultimate satisfaction and excellence to its buyers.
4.3 Technological Changes
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Since Nutella has been produced for many years in Italy where it was first originally
made, Fererro the producer of Nutella has all the capabilities to meet the demand with the
present facilities. However the fact that we are developing a new market, which is far from
our origin, will change the way we’ll meet the demand in the U.S. Besides, the distance
that exists between United State and Europe can cause a potential delay for distribution.
Also the duration and time period that takes to manufacture the goods to the American
market will most likely take a longer time period than needed. As a result, customers
might not purchase Nutella products because it might not be available when wanted, which
will hurt Nutella’s image and demand of potential customers. Hence, in order to prevent
Nutella from these two possible threats, the following options will be concisely reviewed.
Option one
The first option is to build a factory in the U.S. Presently, Ferrero- the manufacturer of
Nutella- produces some of its product in state of New Jersey. But still Nutella is shipped
from Italy to Europe. Hence, if a factory is built, it can cut cost and help make the delivery
Nutella faster. Although, the factory should be set up so it only meets 50 percent of
expected future demand in the U.S. market. The reason for the limitation is to safeguard the
investment of a new factory, so that incase of a loss or low demand, the damage won’t be
so extreme.
Option two
The second option could be to improve our delivery as well as communication to our
consumers. In order to achieve this alternative we need to improve our time efficiency cost
to cost in the U.S. So, we will build a warehouse in five regions around the U.S. The
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23
approximate location of each warehouse will in following cities: Los Angeles, Utah,
Houston, Springfield, and New Jersey.
Furthermore, a developed computer system will be connecting all of these warehouses
to one another. This system will provide a place for inventory, and will serve as a
warehouse for distributors and retailers. In addition, this system will be beneficial to
distributors and retailers around the U.S. Moreover, this system will be beneficial to those
distributors and retailers who have stores in different states, as it will help them receive
shipments faster. To sum it up, this system will help us be more efficient and cost effective
in distributing Nutella products.
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4.3 Financial Objectives
Increase the overall sale by 35% within the first 12 months and 50 percent within the
following two years.
 Ferrero will try to increase sale by 35 percent by 2003, and 50 percent
by 2005.
 The first year increase in sales wont be affected by technological
changes.
 Nutella’s annual sales has bee estimated to be 1.2 million a year in U.S.
market, which is relatively low compared to overall spreads in the U.S.
Allocation of the required funds for our advertising campaign.
 Proctor and Gamble, the manufacturer of Jif Peanut butter spends several
million on advertising for an established name brand, which has accounted
for its success.
 Accordingly, for Nutella, in order to create strong brand awareness, a
similar size budget will be required.

We estimate that we will spend approximately between 35-45
percent of our profits on advertising and promotions.
Allocation for required funds for improving shipping and handling
 By comparing and contrasting the two options reviewed in section 4.2, we
conclude that the second option- which will help us achieve faster and effective
delivery service- will help Nutella be distributed in a more efficient and cost
effective way.
 This option will acquire, a great budget estimated to be about $1,368,000
annually for five warehouses.
The chart below specifies the costs of 5 warehouses:
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25
Estimated rent per 6000 square feet
(Average 8000*12)
Estimated direct labor cost
[($1200 per month*4) *12]
(Four required in each warehouse full time)
Estimated administrative expenses
(1600*12)
Estimated utility Cost
(700*12)
Estimated Manager Salaries
(2500*12)
(One per warehouse)
Estimated Office Secretary Salary
[(15,00*12)*2]
(2 per location)
Estimated cost of lease truck
[(15,000*12)*2]
(Two per location)
Miscellaneous Cost
(800*12)
$
$
96,000.00
57,600.00
$
$
$
19,200.00
84,000.00
30,000.00
$
36,000.00
$
16,800.00
$
9,600.00
Total
Total for all five locations
$ 273,600.00
$ 1,368,000.00
Nutella
($273,600 * 5)
26
5. Target Market and Positioning
5.1 Market Segments and Target Analysis
Breakfast market in the U.S.
The breakfast market world wide consists generally of Jam, Marmalade, chocolate
spread, lemon curd, sweet spreads (honey, syrup, and treacle), and peanut butter. To get the
statistics for the U.S. market, we have multiplied each number by 50 percent, since the U.S.
generated 50 percent of sales in the world.
Breakfast item
Percentage up or down
Jam
Down 0.05 %
Marmalade
Down 2%
Chocolate Spread
Up 5%
Lemon Curd
Down 1%
Honey, Syrup, and Treacle Up 2.5%
Peanut butter
Up 2.5%
Hence, it is evident from the table above that sale of chocolate spread is up by approximately
5% in the America. Accordingly this is an opportunity for Nutella: to become the leader and
raise the sales of the Chocolate spread market.
(www.dowjones.com/story_clean)
Geographics, psychographics, and segmentation.
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27
Target Market
4-13 year olds and
their parents
Income/class
Middle-low class
Generation
Gen. X
Echo Boomers
College students
Middle-low class
NA
Southern U.S.
Wealthy/Successful Individuals
And elders
Middle-Upper class
NA
Benefits
Quality
Economic Pricing
Convenience
Convenience
Speed
Economic pricing
Quality
Uniqueness
As shown in the table above the first target market, the 4-13 year olds and their parents, will
generally be targeted toward middle and low class income families, generation X and echo
boomers, and will offer benefits such as quality taste and ingredients, economic pricing, and
convenience. Similarly, the college students will be targeted for behavioral variables such as
convenience, speed, and economic pricing, as well as their income and lifestyle. Finally, the
Southern U.S, and seniors along with middle and upper class individuals will be targeted
because studies show that they are more likely to have breakfast (U.S. News & World Report:
11/97).
5.2 Target Market
Extend the Nutella success to the U.S.
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28
For the most part, Ferrero has captured the European market with Nutella hazelnut
chocolate spread. Some of these countries include: Germany, France, and Italy. In general,
Nutella has been marketed and has captured kids twelve and younger, as well as adults and
teens. Like peanut butter is “America’s favorite,” Nutella is European’s choice. We propose a
plan to expand the market segments from the European market to the United States market.
Our goal is to make Nutella an all American Breakfast and convenient spread.
Three market and three versions of Nutella
Product line extension of Nutella will consist of:
 Original Nutella chocolate-hazelnut spread
 Peanut butter-Nutella swirls and Nutella-Peanut butter swirls
 Nutella bars
Target market
4-13 year olds and
parents
College Students
Nutella product
Peanut butter-Nutella swirls
Nutella-Peanut butter swirls
Nutella bars
Southerners and elders
Original Nutella
Wealthy/Successful individuals Chocolate-Hazelnut
Children Between 4-13 And Their Parents
Concisely, for the children between the ages of four and thirteen along with their
parents we will propose a combination of Nutella and peanut butter spread swirls as a transition
product. In a recent publishing by The Grocer, it has been detected that “sales of chocolate
spreads and peanut butter [are] healthy, indicating greater parental indulgence in children’s
products” (lexis-nexis.com/universe). Thus, with the Nutella swirls we will attempt to offer this
group something similar to their traditional “American” spread (peanut butter). As a result, we
predict that this group will like the Nutella chocolate and peanut butter swirls so much, that
they will eventually go for a Jar of original Nutella hazelnut spread instead of a jar of peanut
butter or Nutella and peanut butter swirls.
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29
College Students
Similarly, for the college students, we will propose the Nutella bars. Since most
college students are busy and don’t have much time to cook breakfast, Nutella bars will be a
great alternative. It is made especially for people on the go who want to have a quick
breakfast.
Southerners and Wealthy/Successful People and elders
Finally, we will target wealthy and or successful individuals along with southern
Americans. Statistics show that this group is more likely to eat breakfast (U.S. News 1997).
Thus, It is evident that this group has the time and money to have a traditional breakfast.
Hence, we will attempt to encourage this group to try and buy original Nutella chocolatehazelnut spread since they can afford the higher price. Also, it is important to point out that
elders (seniors) are living longer, and consuming luxury or shopping goods, which Nutella fits
into.
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5.3 Positioning
Differentiation strategy approach
In trying to implement our plan, we will take a differentiation strategy approach. Not
only is the maker of Nutella, Ferrero a well-known and top company world wide, it is
especially regarded for its prestige and line of fine products, such as Rocher, Tic Tac’s, and
Kinder- eggs. Similarly, Nutella’s position is based on its:
 Uniqueness
 Excellence in quality through our

Great taste

Notoriousness
 Convenience and Versatility
In addition, the different lines of Nutella: including the original Nutella-chocolate hazelnut
spread, the Nutella and peanut butter swirls, and the Nutella bar appeal and meet the specific
wants of each market segment. Furthermore, we predict that Nutella will be a chocolate spread
market leader in the United States as it has been in Europe.
Furthermore, to paint a more clear picture we have demonstrated Nutella’s position as
compared with Twist and Peanut butter on various characteristics.
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31
Nutella=red
V= Versatile
Twist=blue
U= Uniqueness
Peanut butter=green N=Nutritious
D= Delicious
Fig B-1
Fig B-1
When we compare Nutella with twist and
Peanut Butter we will position Nutella as
a more versatile and more unique product
compare with its competitor
UV
NUTTELA
TWIST
PEANUT BUTTER
U
V
Fig B-2
NUTTELA
TWIST
PEANUT BUTTER
N
Nutella
Fig B-2
Since Nutella has been positioned as a
more nutritious product compare to its
competitors.
In here we place Nutella
higher compare to Twist and Peanut Butter
32
V
Fig B-3
NUTTELA
TWIST
PEANUT BUTTER
D
Nutella
Fig B-3
This Graph shows Nutella as a more versatile
product compare to its competitors twist
and peanut butter. Also Nutella has been
proved to be more delicious and for this reason
we place Nutella in a higher place.
33
6. Marketing Mix
6.1 Product Mix
Nutella provides “The Ultimate Chocolate Experience” by offering a hazelnut spread
that can be eaten with a variety of foods and enjoyed any time of the day. The combination of
roasted hazelnut, skim milk and cocoa create a creamy, chocolaty taste with a hint of that
roasted nut flavor that will delight your taste buds as you enjoy each delicious mouthful.
Nutella will use its company name Ferrero to launch our new product development
plans for Original Nutella chocolate hazelnut Spread, Peanut butter-Nutella swirls, NutellaPeanut butter Swirls, and Nutella Bars. Nutella will capitalize on its company name to promote
brand awareness.
Original Nutella chocolate hazelnut is a delicious creamy chocolaty
hazelnut spread that can be eaten with a variety of foods and enjoyed
any time of the day.
Peanut butter-Nutella swirls and Nutella-peanut butter
swirls are delicious peanut butter spread with creamy
Nutella swirls.
Nutella Bars are delicious for an on-the-go meal
or an easy after-school snack.
Packaging
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34

Sales Task: Our promotional trial pack will be shaped like a squirrel. The squirrel
shaped design will attract consumer attention. The jar attracts children to purchase the
product because of its unique characteristic. The dispensing method for this package is
more convenient and cleaner than the traditional jar shape attracting more sales
revenue.

Competitive advantages: Our jar will be 5% larger than our competition spread jars
that are traditionally 18ozs. The larger jar will give our company a competitive edge by
attracting American consumers that believe that “bigger is better.” (please note that this
alternative will be looked into in the future; 3 year or more)

Product safety: Our Company, like many others will support the benefits of our
packaging to consumers directly and even initiate recycling programs to save the
environment. Not only is this packaging more environmentally responsible, it also
provides economic and distribution advantages. To this means we have been
continually reworking our packaging for better corporate identity, providing a more
attractive package, a very important ingredient in the food industry.
6.2 Pricing Mix
Pricing strategy for various products

Nutella original chocolate hazelnut will set its prices so that it can achieve product
quality leadership above its competitors. Price says a lot about our product. Their
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35
higher prices will give the illusion that their product is worth more. We are not afraid of
establishing premium pricing for a premium product.
o Its price is on average $3.99-$4.29

Peanut butter-Nutella swirls and Nutella peanut butter swirls will be priced below
the industry average for the spreads market. Although we will make money off the
Nutella Swirls, we consider this a “Loss Leader” strategy. Whereby unique product
taste and quality will make customer curious and attracted to our additional product
lines.
o These products will be price similar to Peanut butter prices: between $1.99 and
$2.95

Nutella Bars will be priced competitively. Even though we are subject to some impulse
buying, we can provide a product to be resold at a generous mark-up for our dealers,
while still providing a satisfactory experience for the customer.
o At a retail range of $2.79 to $3.05 per box of (6-8) Nutella Bars, we cover the
mid-to-upper price range of the breakfast market, while providing a 33% margin
for the dealers.
6.3 Promotion Mix
Sales promotions and public relations
Sales promotions and public relations strategies will work together to inform customers
of new products, to encourage an image of community involvement, and to limit environmental
impact. Nutella will spend close to half a million dollars to build brand awareness and a loyal
customer base. Marketing efforts will be focused on the target market, and the campaign will
Nutella
36
run the entirety of 2001-2003, increasing roughly 35 percent per year to match interested sales
revenue. The marketing budget will consistently equal almost 35-45 percent of sales.
Advertising
We will differentiate Nutella from imitation brands through aggressive advertising and
promotional campaigns that demonstrate our unique quality taste, ingredients, as well as
convenience, versatility and commitment. The advertising strategy Nutella will consist of
advertising in the following media:

Radio: Our ads will be concentrated strongly on the city’s top radio station among our
target market segments. We will run regular ads to create brand awareness.

Television: Through commercial repetition, a teaser campaign, and the use of catchy
phrases, we hope to obtain intellectual ownership of our target market segments: when
they think of a delicious and nutritious breakfast food they’ll have to think of Nutella.

Newspaper: Sunday News, Daily Times

Magazines: Highlights, People, Times, and various cooking magazines.

Direct Mail: Flyers sent to mailing list
The initial media blitz will be allocated as 10% radio, 45% television, 25% newspaper, 15%
magazines, and 5% direct mail. These expenders will be based on 35-45 percent of total sales
for the first two years, and then reduced to 25-35 percent of total sales thereafter.
Sales promotional advertising

Samples: Nutella samples will be handed out in grocery stores to introduce new
product line. The samples will be accompanied with a “bounce-back offer” using a buy
one get one free offer that promotes the customer to make an after sample purchase.

Coupons: According to a survey published by Dartnell Corporation “customers clipped
4.8 billion coupons last year with an average face value of 70 cents, for a total savings
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37
of 3.4 billion dollars.” Coupons will stimulate sales of Nutella and promote early trial
of our new products.

Point-of-Purchase (POP) promotion: Our Company will offer a five-foot high
cardboard display of Nutella next to Nutella spreads. Our company will offer a variety
of POP materials, tying them in with television and print messages, and offering to set
them up.

Allowance: Promotional money will be offered to persuade resellers to carry our brand,
give it eye-catching shelf space, promote it in advertising, and push it to customers.
Currently Nutella is placed on the very top shelves and not in the center shelves where
is about eye-level.
Public Relations
 Press relations or press agentry: we will spend some of our Television advertising
budget to have Nutella and its products be marketed in the news media to attract
Americans to trying Nutella and its extensions.
 Investor relations: we hope to maintain and gain relationships with shareholders and
others in the financial community. In addition, we will look into offering stock to the
U.S. market exchange (currently Ferrero/Nutella only trades in the European market).
 In the future (5 years or more) we will consider building brand awareness through our
Nutella Café, leading greater word of mouth marketing. Nutella Café will implement a
pull strategy in order to build consumer awareness and demand. Nutella Café has
budgeted $6,000 for promotional efforts that will include advertising with coupons in
local publications to attract consumers to Café shops.
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6.4 Place Mix
Distribution Strategy for retailers
Our Company will use intensive distribution. Nutella will be found in
supermarkets throughout the United States. Our goal is to place Nutella in many
locations to make them readily available for customers to provide maximum brand
exposure and consumer convenience. We will offer positive motivators such as
premiums, cooperative advertising allowances, and display allowances to our
intermediaries. Furthermore, will periodically check the channel member’s performance
against standards such as sales quota and company promotion and training programs.
Distribution Strategy for the manufacturer
As discussed in detail in section 4.3 technological changes will yield five new
manufacturing warehouses for production, inventory, and distribution. With five
convenient locations in major cities in the U.S. we will have faster distribution and
delivery of our products. In addition, we will be able to fill orders faster and more
conveniently.
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Works Cited
Armstrong, Gary and Philip Kotler. Principals of Marketing: ninth edition.
Saddle River, NJ: Prentice Hall, 2001.
“Billion dollar Brand advertising.” Age’s Business Marketing. May,
1999.
“Coupons, discounts, store news.” Pp. 4 in DSN Charts. 3 May 1999.
Ethridge, Mary. “Smucker to Buy Jif, Crisco Brands from Procter &
Gamble” in Knight Ridder/Tribune Business News and Akron Beacon Journal.
2001. Retrieved 6 November 2001. <http://
dowjones.com/ptg.djnr.com/ccroot/asp/publib/story>
“Jam and spreads” Pp. 39 in The Grocer. 10 January 1998. William
Reed publishing Ltd. 1998. Retrieved 13, 2001. <http://www.lexisnexis.com/universe/printdoc>
“Milk Sampling Plan to Splash into 1,800 Stores” in Supermarket News.
24 August 1998. Capital Cities Media Inc. 1998.
“II Sole 24 Ore.” World Reporter: 15 May 1999. Retrieved 6 November
2001. <http://www.lexisnexis.com/universe/story_clean-cpy.asp?articles>
Supermarket News, 1998, capital Media Inc., August 24, 1998
The Grocer, 1998, William Reed Publishing Ltd., January 10,1998
U.S. News and World Report. November 1997.
Websites used
www.nutellausa.com www.dowjones.com
www.census.org
www.lexis-nexis.com
www.csun.edu
www.teleportage.com
Appendix
Nutella
Please circle appropriate answers:
 Do you know what “Nutella” chocolate hazelnut spread is?
 (Yes or No)
 If yes, answer section A only
 If no, answer section B only
Section A:
1. How old are you?
a. 18-28 b. 29-38 c. 39-49 d. 50 or older
2. How often do you buy Nutella?
a. Regularly (every few weeks)
b. Often (every few months)
c. Rarely (couple times a year)
4. If you don’t buy and eat Nutella on a regular basis, why not? (Circle all
that apply)
a. Too expensive
b. Don’t like it so much
c. Can’t find it easily
d. Other, please specify:
3. Can you find Nutella easily in supermarkets? (Yes or No)
4. What do you eat usually for breakfast?
a. Creal
b. Peanut butter
c. Cream cheese
d. Other, Please specify:
Nutella
Section B:
 “Nutella is a chocolate hazelnut spread made primarily for breakfast.
It is a very popular breakfast in European countries, such as Italy,
France, and Germany.
(1) Do you think you would try this product? (Yes or No)
(1a) Why or Why not? Please specify:
(2) What do you usually have for breakfast?
a. Creal
b. Peanut butter
c. Cream cheese
d. Other, Please specify:
(3) How old are you?
a. 18-28 b. 29-38 c. 39-49 d. 50 or older
Nutella

The survey was given at California State University, Northridge, and so it applies
primarily to 18 to 28 year olds.

100 people were surveyed: 26 of which had heard of Nutella, and 74 whom had
not heard of Nutella.

There were two sets of surveys one for the people who have heard of Nutella and
one for the people who have not heard of Nutella.

These charts briefly summarize the results.
People who knew what Nutella was:
How old are you?
18-28
29-38
39-49
50 or older
100%
0%
0%
0%
How often do you buy Nutella?
Regularly
Often
Rarely
0%
4%
96%
If you don't buy and eat Nutella
Too expensive Don't like it Can't find it easily Not motivated
on regular basis, why not?
33%
11%
11%
44%
Can you find Nutella easily in supermarkets?
Yes
No
55%
45%
What do you eat usually for breakfast?
Cereal
Peanut butter Cream cheese
Other
44%
11%
11%
44%
People who did not know what Nutella was
Do you think you would try this product?
What do you usually have for breakfast?
How old are you?
Yes
66%
Cereal
40%
No
34%
Peanut butter
1%
Cream cheese
20%
Other
39%
18-28
73%
29-38
20%
39-49
6%
50 or older
0%
The second question for the people who have not hear of Nutella was: Why would they
not try Nutella or why would they try Nutella. The people who said that they would try
Nutella (66%), said that they would try it for various reasons, such as:

It seems interesting

I like chocolate

Something different

Sounds good/yummy/ tasty
Nutella

Curious
The people who said they would not try it (34%), said no for various reasons, suck as:

Seems too sweet

Does not seem healthy

Don’t like chocolate

Don’t like hazelnut

Does not seem like a good breakfast
Nutella