Running head: MARKET ANALYSIS
Market Analysis
Nestlé Global Gluten-Free Cookie Dough
Whitney Chadwick, Chris Holle,
Erin Howard, & Brittanie Turner
California State University, Monterey Bay
BUS 306-81
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MARKET ANALYSIS
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Table of Contents
EXECUTIVE SUMMARY
5
SITUATION ANALYSIS
6
MARKET SUMMARY
7
Geographics
7
Demographics
7
Psychographics and Behavioral Factors
7
Market Needs
8
Market Trends
8
Market Growth
8
SWOT ANALYSIS
9
Strengths
9
Weaknesses
10
Opportunities
10
Threats
10
COMPETITION
11
PRODUCT OFFERING
14
Ingredients and Nutritional Factors
14
Different Packaging Types
15
Customer Satisfaction Guarantee
15
KEYS TO SUCCESS
16
Growing Population with Gluten-Intolerance
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Increasing Level of Health Awareness
16
CRITICAL ISSUES
17
MARKETING STRATEGIES
17
MISSION
18
MARKETING AND FINANCIAL OBJECTIVES
18
TARGET MARKET
18
POSITIONING
19
MARKET ANALYSIS
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STRATEGIES
19
MARKETING MIX
20
Price
20
Distribution
21
Marketing Communications
21
MARKET RESEARCH
21
FINANCIALS
22
Break-Even Analysis
22
Sales Forecast
24
Expense Forecast
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CONTROLS
25
IMPLEMENTATION
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MARKETING ORGANIZATION
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CONTINGENCY PLANNING
27
REFERENCES
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MARKET ANALYSIS
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Table of Figures
Figure 1: 4 P’s PillsBury Model
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Figure 2: 4P’s Betty Crocker Model
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Figure 3: 4 P’s Kellog Model
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Figure 4: 4 P’s Pamela’s Products Model
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Figure 5: Break -Even Analysis Chart
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Figure 6: Break-Even Analysis Graph
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Figure 7: Sales Forecast
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Figure 8: Expense Forecast
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Figure 9: Marketing Organization
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MARKET ANALYSIS
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Executive Summary
Nestlé Global is a food-manufacturing corporation whom aims to provide consumers
with great tasting products, as well as lead the industry in nutrition, health, and wellness. The
purpose of this report is to introduce a new product line within the Nestlé Company. Launched
alongside the current Nestlé Toll House products, this new product line will introduce gluten-free
cookie dough products to its consumers. This enhances Nestlé's mission to establish more
healthy lifestyles for its consumers.
The target market of the product was aimed at the mothers demographic, along with
people who have celiac disease (or other gluten intolerances). Due to expanding health trends
and increases in gluten-free popularity, this product has the potential to become something big.
Before the product is launched, it is the goal of Nestlé to see which stores want to carry
the product. Out first targets will be the stores that currently carry Nestlé Toll House items. If
agreed upon, we estimate that the new gluten-free cookie dough will stock roughly 25% of total
Nestlé Toll House products in each store. Depending on how well the product succeeds in
penetrating the market, the gluten-free cookie dough product can be expanded up to 50% of Toll
House products stocked, or down to 10%. This may also vary from store to store.
To break even, we estimate the total units sold per year to be 2,613,551 units. However,
with this goal in mind, we realize this may not be achievable in the first year. By the end of the
first year, we estimate that Nestlé will miss the break-even point by 10%, reaching around
2,350,000 units sold. By the second year we expect to hit our break-even point, and when the
product has gained enough traction, it is by our estimation to be at least 10% above our breakeven.
MARKET ANALYSIS
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Situation Analysis
In a growing health food trend, the gluten-free movement has been gaining traction. With
the knowledge of celiac disease and many other gluten intolerances, many consumers have an
increasing need and desire for gluten-free products. According to a survey, nearly 18 percent of
Americans prefer gluten-free products (Amidor, 2014). This is a vast market that is virtually
untapped. The plan is for Nestlé to make a gluten-free cookie dough. The current problem with
most gluten-free products is they sacrifice taste to provide a product that many people can eat.
Nestlé can provide the same great quality taste they have always offered, while also providing a
product that offers health benefits to many Americans. Another advantage is that the price will
stay relatively the same as the current Nestlé Tollhouse Products.
On a global scale, Nestlé scored 54th in brand recognition (Ranking The Brands).
Competitors like Pillsbury and Betty Crocker did not even place in the top 100. Nestlé has the
tools to not only infiltrate the gluten-free snack market and have success, but also the ability to
enter the market and dominate it. Nestlé has been known to provide great tasting snacks and
always aims to improve the healthiness of its products. According to the Smart Cookie Dough
Cook, a website that reviews various cookie dough brands, Nestlé’s Tollhouse cookie dough was
not only better tasting than Pillsbury’s cookie dough, but also had better texture (The Smart
Cookie dough Cook, 2014). On top of that, Nestlé has the resources to make this cookie dough
happen. According to Nestlé’s official webpage, it owns four corporate locations, thirty-two
manufacturing locations, and five distribution centers. This is sufficient to use existing
machinery to produce gluten-free cookie dough. In order to do so, Nestlé must clean and retool
the machinery and production area to make the facility safe to produce products.
Currently, local companies are the main source of competition. However, there are also
several major brands that are already in the existing market. These brands include Pillsbury and
Betty Crocker, which offer gluten-free cookie dough that is sold in stores.
The product Nestlé would be offering is pre-packaged, gluten-free cookie dough. The
current price of its regular Tollhouse products is approximately five dollars. The goal with the
new gluten-free dough (16.5 oz.) would be to keep it at a consistent price with the regular
Tollhouse products. Nestlé holds vast resources and numerous market connections. Nestlé
products are featured in nearly every chain supermarket in the U.S. This allows them to enter a
MARKET ANALYSIS
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new market fairly easily. According to CBS News, Nestlé already holds a 41% market share of
the prepared cookie dough market (CBS News, 2014). The main distribution channel for the
Nestlé gluten-free Tollhouse cookie dough will be through large chain stores, including:
Safeway, Target, Wal-Mart, Albertsons, Kroger, and many more. This in itself creates a big
opportunity for Nestlé. The gluten-free market is vastly untouched by large corporations, and
under the right management and utilizing the right resources, Nestlé has the ability to market
gluten-free cookie dough successfully.
Market Summary
Geographics
For the purpose of the project, the geographic focus will be the United States of America
as a whole. This will be a good testing grounds to see how the product does. If it does well, the
product could expand into Canada and then move into Europe. According to the European Food
Information Council (EUFIC), celiac disease is on the rise. This would be a great investment into
the future as the more people that have celiac disease, the more awareness there will be.
According to Statista (2009), the gluten-free market was worth $2.3 billion globally. This is a
great financial opportunity.
Demographics
As for the demographics, the main focus is on people with celiac disease or other gluten
intolerances, and targeting families. Targeting people with celiac disease (and other gluten
intolerances) is an obvious choice, since this product will allow them to have a healthy and
delicious snack. The second option is seeking a healthier alternative to families. According to
Celiac Central (n.d.), “it is estimated that 83% of Americans who have celiac disease are
undiagnosed or misdiagnosed with other conditions.” Providing gluten-free cookie dough will
allow families to play it safe and provide a delicious cookie dough that is healthier than a
traditional cookie dough.
Psychographics and Behavioral Factors
A large portion of the target market is people who are gluten conscious. This
consists of people who have celiac disease, or other gluten intolerances, people on glutenfree diets, or families trying to eat healthier.
MARKET ANALYSIS
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Market Needs
Within the food industry, there is a constant struggle between health, flavor, and cost. It
is difficult to create product that fulfills all three criteria; this is especially true for gluten-free
cookie dough. In the current market, there are limited options for gluten-free cookie dough. The
options that are currently available generally consist of local companies with products more
expensive than their mass-produced counterparts. According to the Statistics Portal’s survey
(2012) conducted in 2012, “U.S. Gluten-Free Target Market,“ concluded that nearly 18 percent
of the population in the U.S. prefers and buys gluten-free products. However, there is a huge
need for affordable, healthy, mass-produced gluten-free cookie dough.
Market Trends
As the health trends throughout America continue to grow, the average consumer is
becoming more health conscious and more aware of how their bodies react to the foods they eat.
For example, five years ago, a consumer may not have known that they had celiac disease or had
gluten sensitivity. Now, over 3 million Americans have been diagnosed with celiac disease and
18 million suffer from gluten sensitivity (National Foundation for Celiac Awareness: Celiac
Disease: Fast Facts, 2014 & National Foundation for Celiac Awareness: Non-Celiac Gluten
Sensitivity, 2014). Of the 68 people surveyed, nearly 50 percent responded that they or someone
they know has celiac disease or other gluten-intolerance (Survey Monkey, 2014). Though the
demand for healthier, and more specifically, gluten-free products increases, the supply has yet to
meet the needs of the consumers (The Gluten-Free Agency, 2012). This marketing plan focuses
specifically on the gluten-free cookie dough market, as there are very few affordable, healthy,
mass-produced gluten-free cookie dough options within the market today.
Market Growth
In the 2000s, terms such as “celiac disease” and “gluten-free” were unfamiliar to those
even in the culinary industry. Today, with an estimated 1 in 133 Americans having celiac
disease, the appearance of allergen-related claims such as “gluten-free” on restaurant menus has
increased by 200 percent (Amidor, 2014). According to market research by Mintel, a market
research firm, the gluten-free food category is expected to generate more than $15 billion in
annual sales by 2015. Furthermore, the household purchases of gluten-free products more than
doubled from 5 percent in 2010 to 11 percent in 2013 (Amidor, 2014).
MARKET ANALYSIS
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SWOT ANALYSIS
Strengths
Unmatched Product Offerings and Brand Portfolio
Nestlé upholds supreme brand portfolio and manufacturing capabilities (Nestlé Global,
2014). The company placed within the top three global food and beverage manufacturers in the
Access to Nutrition Index, March 2013 (Nestlé Global, 2014). Nestlé recognizes offering
diversity within their brand portfolio allows them to serve a broad range of demographics (Nestlé
Global, 2014).
R&D Capabilities
Nestlé devotes extensive funds - averaging $1.5 million - toward research and
development annually (Nestlé Global, 2014). The company continuously brings to market new
and redesigned products corresponding to market trends, ensuring the firm’s competitive edge
(Nestlé Global, 2014).
Distribution Potential
Nestlé maintains widespread distribution channels and geographic presence, which
supports its operation globally (Nestlé Global, 2014). Currently, the company operates 14
product categories, manufacturing more than 2,000 brands worldwide (Nestlé Global, 2014).
Moreover, the company operates in 86 countries with employee strength of more than 330,000
(Nestlé Global, 2014).
Expansion Aptitude
Over the years Nestlé has been successfully generating increased joint ventures and
acquiring other businesses in order to continue growth over market shares (Nestlé Global, 2014).
The company’s brand is recognized globally with highly regarded customer loyalty (About Us
Nestlé Global, n.d.). APCO Worldwide ranked Nestlé number five in the global survey regarding
The 100 Most Loved Companies (Nestlé’s Brand Ranking, 2014).
MARKET ANALYSIS
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Weaknesses
Inconstant Quality
Nestlé has been recalling several goods from the market due to food contamination,
package mislabeling, and/or inability to provide constant quality within supplies (Nestlé Global,
2014). The most recent recall occurred June 2014, regarding unidentified allergy prone
ingredients within Häagen-Dazs® Chocolate Chip Ice Cream (Recalls, Market Withdrawals, &
Safety Alerts, 2014). This does not only decrease the company’s sales but lessens their consumer
trust when presenting new allergen free products, such as gluten-free cookie dough.
Opportunities
Increasing Demand for Healthier Products
Food allergies and health benefits are a rising consumer purchasing concern. As a result
increased demand of customized products meeting distinct dietary requirements are occurring.
Particularly, the market for gluten-free products has begun to skyrocket. Calculated from U.S.
retail sales statistics, by the year 2020 the gluten-free market is estimated to be valued at $23.9
billion. Nestlé now has the opportunity to introduce a gluten-free health-based snack product,
and expand possible consumer demographic. (U.S. Gluten-free Foods Market - Statistic &
Facts|Statista, n.d.)
Acquire Health Based Startups
Several new businesses are generating and introducing products for health conscious
consumer, as well as developing sustainable manufacturing methods. Nestlé is currently
concentrating on providing healthier products with added nutritional value, and acquisitions such
as these are great opportunity to expand the company’s brand portfolio. (Nestlé Global, 2014.)
Threats
Company Reputation
Due to Nestlé’s continual recalls because of mislabeling and food contamination, the
company’s manufacturing reputation has decreased (Nestlé Global, 2014). It is the company’s
responsibility to regulate quality checks to prevent consumer dissatisfaction. Repeated
contamination will lower the company’s ability to successfully enter the allergen free market.
MARKET ANALYSIS
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Failure to expand with current market trends will result in declined revenue (Nestlé Global,
2014).
Cost of Raw Materials
The global increase in the cost of raw materials is cutting into corporate profits, causing
stock prices to decline and leading to increased consumer prices (Gandel, 2011). As a result
Nestlé’s cost of production has increased (Nestlé Global, 2014). For example, dairy – key
ingredient in chocolate products – costs have increased by more than 25% in the year of 2013
(Sheets, 2014).
Growth of Private Labels
The expanding number of supermarkets generating their own label products that cost less
will increase competition for Nestlé’s product portfolio (Nestlé Global, 2014).
COMPETITION
Within the niche market of gluten-free prepackaged cookie dough products, a few
competitors are notable. One of the competing firms, Pillsbury, makes gluten-free chocolate chip
cookie dough, and Betty Crocker also produces a few gluten-free cookie dough dry mixes. Both
organizations are owned by General Mills, but operate independently. Nonetheless, in the
general gluten-free snack market competition would include several gluten-free items: cereals,
pre-baked cookie dough, health bars, and chips etc. Some major competitors in the gluten-free
snack market are companies like Kellogg and Pamela’s Products.
Pillsbury has been providing families’ mealtime specials for nearly 150 years, whether
it’s breakfast, lunch, dinner or dessert (General Mills: Pillsbury). Pillsbury has their brand
recognition in place. The company primarily targets families, and distributes products throughout
major retailers, such as Safeway or Target (General Mills: Pillsbury). The company launched
their first gluten-free products line on August 6, 2013 (Food Business). These products contain
items such as pizza dough, pie and pastry dough, and most importantly, cookie dough (Food
Business). Pillsbury, which is owned by General Mills, has a head start in a market that is
MARKET ANALYSIS
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currently dominated by local bakeries.
Product
• Gluten-free
Chocolate
Chip Cookie
Dough
Price
Place
Promotion
• Varies
Between
Reseller
• Major
Grocery
Chains
• Leading
Retailers
• Mothers
Demographic:
Women
ranging mid
30s to 40s,
leading active
lifestyles.
Figure 1: 4 P’s Pillsbury Model
Betty Crocker has been accepted as a part of families’ food traditions for more than 90
years, providing packaged goods as well as wonderful recipes. Recently, the company had first
hand experience with employees that could not partake in the company’s products due to gluten
intolerance. The experience drove them to develop great tasting gluten-free items everyone could
enjoy. The company began marketing towards the idea nothing should affect sweet moments
with friends and family. Targeting the modern families, the company distributes their product
through several major retailers. (Our Story - Betty Crocker, n.d.) .
Product
• Gluten-free
Dry Mix
Cookie
Doughs
Price
• Varies
Between
Reseller and
Product
Place
• Major
Grocery
Chains
• Leading
Retailers
Promotion
• Modern
Families
Figure 2: 4 P’s Betty Crocker Model
Kellogg is a company of devoted individuals producing quality products for a healthier
world. The company has innovative marketing strategies, governance structures, and corporate
MARKET ANALYSIS
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policies that help to implement their social and corporate responsibilities into everyday
operations. Currently, Kellogg’s is capitalizing on the gluten-free cereal market by reformulating
or relabeling in some cases their existing brands. The idea behind this movement is to offer
families healthier options to start their busy mornings. Kellogg’s is taking gluten-free rice/corn
based products and turning them mainstream through distribution in major retail chains. (Cereal:
The Complete Story, n.d.).
Product
• Gluten-free
Cereals
Price
Place
• Varies
Between
Reseller
• Major
Gorcery
Retailers
Promotion
• Mother
Demographic
Figure 3: 4 P’s Kellogg Model
Pamela’s Products is primarily an online gluten-free product line with baking mixes,
cookie dough, crackers, chips and snack bars. The company, established in 1988, focuses on
providing consumers affordable natural and gluten-free options, made from top-quality
ingredients. Pamela’s Products currently remains a top leader within the gluten-free snack
industry, marketing to the preferred gluten-free and natural food consumer. With ongoing
research and development, Pamela’s Products continues to grow and embrace the many
upcoming opportunities this industry is predicted to offer. The company is determined to remain
the top provider of gluten-free snacks. (Pamela's Products: About Us, n.d.).
MARKET ANALYSIS
Product
• Gluten-free
Baking
Mixes
• Cookies
• Chips
• Crackers
• Snack Bars
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Price
Place
Promotion
• Varies
Between
Reseller and
Products
• Purchasing
Made
Online or by
Phone
• Health
Market
Resellers
• Gluten-free
Food Market
• Natural
Food
Industry
Figure 4: 4 P’s Pamela's Products Model
PRODUCT OFFERING
Ingredients and Nutritional Factors
The Nestlé corporation will offer this product with the currently used ingredients. The
current ingredients include: bleached enriched flour, semi-sweet chocolate, sugar, margarine,
sodium benzoate (preservative), flavor and artificial flavor, citric acid, vitamin A, palmitate,
color, liquid whole eggs, cooking molasses, corn syrup, sodium bicarbonate, flavor, and salt
(Nestlé Professional, 2013). However, the current bleached enriched flour will be replaced by
gluten-free flour substitute. The options for the gluten-free flour substitute include: quinoa flour,
teff flour, and almond flour. Quinoa flour is a nutritious grain that contains protein, calcium, and
iron. Teff flour is a gluten-free whole grain. It offers protein, calcium, and iron nutritional
factors. Lastly, almond flour is a low-carb alternative. It offers calcium, iron, and protein as well.
All three of these options are capable of replacing the bleached enriched flour completely
(Nuts.com, 2014).
Price and taste are two factors that must be considered when choosing the gluten-free
flour substitute. Quinoa is the highest priced at $9.99 per pound (Nuts.com: Organic Quinoa
Flour, 2014). It can also hold a bitter taste. Teff flour is the cheapest price offered at $4.99 per
pound. Teff flour has a mild, nutty flavor (Nuts.com: Teff Flour, 2014). Almond flour is
moderately priced at $8.99 per pound. Almond flour is considered to be flavorful with its nutty
MARKET ANALYSIS
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taste. Furthermore, it contributes to a light and moist product while baking (Nuts.com: Almond
Flour, 2014). However, the only drawback of almond flour is the need to consider nut allergies.
Of all the flours listed, teff flour would be the most ideal option. Not only is teff the
cheapest, but it provides the health benefits that Nestlé is striving for. By providing protein,
calcium, and iron, Nestlé is adding more nutritional value than their traditional bleached enriched
flour. This will ensures a healthier product to their consumers, and keeps the goal of providing a
gluten-free cookie dough product.
Different Packaging Types
Nestlé offers its cookie dough products in a variety of packaging. This variation of
packaging will be transferred to the gluten-free cookie dough product line. There are four types
of packaging: refrigerated cookie bar dough, refrigerated cookie dough in a tube, refrigerated
mini cookie bar dough, and refrigerated cookie dough tub (Nestlé Toll House: Products, n.d.).
The first packaging type is the Nestlé Toll House refrigerated cookie bar dough. This
packaging offers a rectangular sheet of cookie dough that makes 24 cookies from pre-cut bars
(Nestlé Toll House: Products, n.d.). The second packaging type offers the product inside a long,
cylinder tube. It makes approximately 16 cookies (Nestlé Toll House: Products, n.d.). The third
type of packaging is essentially the same as the first type; however, the dough is cut into mini
bars, which makes smaller cookie dough. This package will make 40 mini cookies (Nestlé Toll
House: Products, n.d.). The last packaging type is in a tub. The tub allows the consumer to scope
out the desired amount and size of the cookie they wish to bake (Nestlé Toll House: Products,
n.d.).
Customer Satisfaction Guarantee
Nestlé can implement a customer satisfaction guarantee on the new gluten-free cookie
dough product line to further the line’s success. According to U.S. Legal Definitions (2014), a
customer satisfaction guarantee gives “the buyer…the sole discretion to decide whether or not
the goods or services tendered by the seller are acceptable.” By offering a guarantee on its
product, Nestlé is keeping attuned to its consumers’ demands. It can also raise the quality of the
product. Quality is defined as the “characteristics of a product or service that bear on its ability to
satisfy stated or implied customer needs” (Kotler, Armstrong, 2014, pg. 231). This can help
create customer loyalty and adjust the gluten-free cookie dough products accordingly.
MARKET ANALYSIS
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KEYS TO SUCCESS
Growing Population with Gluten-Intolerance
The growing population with gluten intolerances is a major component for Nestlé’s
gluten-free cookie dough’s success in the market place. As previously mentioned, three million
people are diagnosed with celiac disease and over 18 million people suffer from a glutenintolerance (Celiac Disease: Fast Facts, 2014, Non-Celiac Gluten Sensitivity, 2014).
Additionally, according to Partnership Capital Growth (2010), “one in three (34%) people have a
household member with celiac disease or wheat intolerance.” These populations make up a
significant portion of the United States that will become a critical target market for Nestlé’s
gluten-free cookie dough products.
For this to be successful, the growth of the population with gluten intolerance must
continue to rise. A statistic from National Foundation for Celiac Awareness estimates that “83%
of Americans who have celiac disease are undiagnosed or misdiagnosed with other conditions.”
This large percentage of undiagnosed or misdiagnosed Americans with celiac disease determines
a continual growth of the gluten-intolerance population. Thus, the future growth is a key to
success for the gluten-free cookie dough product offered by Nestlé.
Increasing Level of Health Awareness
The current nationwide growth of health awareness is a major factor to this product’s
success. Moreover, people are becoming more aware of the health benefits a gluten-free diet can
bring. An article written by Simmons (2013) indicates, “sixty-four percent of consumers today—
up from 57 percent in 2010—agree that it is important to eat healthy and pay attention to
nutrition.” The rise of health conscious Americans entails a greater market demand for healthier
food options. According to an article written by Kannall (n.d.), changing to a gluten-free diet
contributes a positive effect on digestion, inflammation, neurological, and energy levels within
the human body. This article signifies that a gluten-free diet has additional health benefits. In
order for Nestlé’s gluten-free cookie dough product to reach optimal success, the rise of health
awareness within the United States must continue.
MARKET ANALYSIS
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CRITICAL ISSUES
Higher Price for Raw Ingredients of Gluten-Free Products
A critical issue that can be detrimental to the success of Nestlé’s gluten-free cookie
dough products is the high price of raw ingredients. The price of all-purpose flour is significantly
cheaper than its gluten-free alternatives. As previously stated, the gluten-free alternative price
range is approximately $5 to $10 per pound (Nuts.com, 2014). However, typical all-purpose
flour costs approximately 50 cents per pound (Walmart.com, 2014). This will increase the cost of
production; thus, increasing the sell price of the gluten-free cookie dough product to consumers.
According to a CBS news article (2014), a consumer went from spending $90 a week to
spending at least $130 per week on groceries, after being diagnosed with celiac disease.
Furthermore, it is estimated that it is twice as expensive to purchase gluten-free groceries (CBS,
2014). The cost to produce and the market price of gluten-free products can have a negative
effect on Nestlé’s market success.
E. Coli Outbreak
In an article published by the FDA on July 13, 2009, the FDA found positive samples of
the bacteria E. Coli inside Nestlé Toll House cookie dough products. Although Nestlé recalled
the products, it still affected 76 people from over 31 different U.S. states in which 35 people
have been hospitalized. Fortunately, there were no deaths attributed to this outbreak and Nestlé
has fully cooperated with government agencies during this crisis. Issues like these can cause
serious disruption and harm to both Nestlé and their consumers. It is important for outbreaks
such as E. Coli to be monitored extensively.
Marketing Strategy
With the limited market for affordable, gluten-free cookie dough, our value proposition is
simple: Providing a healthy, gluten-free cookie dough that is available to a large amount of
consumers. The value proposition is being able to offer the product in chain stores like Safeway
and Target, while also being able to sell the product in stores such as New Leaf and Trader Joes.
This makes it easy for our target market (mothers) to find our product. By having a healthy and
delicious product that is affordable and easily available gives us a superior value proposition
MARKET ANALYSIS
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over any competitor. In addition, the product also aims to increase awareness for Celiac disease
and other gluten intolerances.
Mission
Nestlé Global is the world's leader in nutrition, health and wellness. Our mission when
providing gluten-free cookie dough is to offer consumers the finest tasting, most nutritious
choices for a variety of dietary restrictions and eating occasions.
Marketing and Financial Objectives
The marketing objectives for this product are not just selling a healthy product, but to
bring awareness to such diseases like celiac and offer more products that cater to the people with
celiac, and to those that prefer healthier and gluten-free options. To emphasize this point,
Nestlé has partnered with Celiac Central that 10% of all profits from the product will go towards
Celiac Central, an organization that aims to provide awareness for Celiac disease.
Nestlé also aims to keep the product under five dollars. The point is to make the product
affordable, making it absolutely necessary that this product is sold for less than five dollars in
stores.
Target Market
First, Nestlé should market to the mothers demographic. This group consists of mothers
ranging from mid 30s to 40s, leading active lifestyles, thus value their time by using easy and
convenient products. They will want our product for the nutritional improvements, convenience
it provides, as well the given perception of homemade cookies. Furthermore, the brand message
should include the benefits our research has identified due to growing health trends. Playing up
the healthier alternative to families will reinforces in current consumers minds the product
advantages.
Nonetheless, Nestlé additional target market will focus on people with celiac disease or
other gluten intolerances. Targeting people with celiac disease (and other gluten intolerances)
MARKET ANALYSIS
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within the U.S. accommodates the 44 million untouched gluten-free consumers (The Gluten-Free
Agency, 2012). Moreover, this product will allow them to have a healthy and delicious snack in
which meets dietary restrictions. Advertisements will be similar to those focused on the mothers
demographic, playing up product benefits. Nestlé’s market goal will be to offer consumers
healthy, flavorful, and affordable gluten-free cookie dough as the health trends throughout
America continue to grow.
Positioning
The introduction of gluten-free cookies into Nestlé’s current product line-up will be
positioned as a “more for the same” product. As stated in the Situation Analysis, Nestlé can
provide the same great quality taste they have always offered, while also providing a product that
offers health benefits to many Americans. Additionally, the price will stay relatively the same as
the current products offered by Nestlé Toll House. Few companies currently offer gluten-free
cookies, let alone at the same price as similar cookie products.
Current gluten-free cookies offered are expensive and/or made by off-brand companies.
Consumers with celiac disease (and other gluten intolerances), as well as families seeking a
healthier alternative, will perceive greater value in gluten-free cookies by Nestlé Toll House than
competing offers because it is a brand name company that is committed to enhancing the quality
of consumers’ lives through nutrition, health, and wellness (Nestlé – Cited from Section 3 of
Two-Page Summary).
Strategies
Nestlé’s goal is to produce a cheaper, healthier alternative snack that will appeal to the
average mother in her 30 to 40-age range and create awareness for gluten-intolerant diseases (i.e.
celiac disease). Thus, this goal is reached by offering the product at rates less than five dollars.
By keeping prices low, Nestlé is fulfilling its pricing objective as entailed further below under
marketing mix. These lower prices will ideally entice the target market to purchase the glutenfree cookie dough product. Furthermore, by Nestlé’s incorporation of 5% donations partnered
with Celiac Central, it is establishing additional awareness within its target market. The target
MARKET ANALYSIS
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market including people with celiac disease or other gluten-intolerances will now be reached.
This exemplifies Nestlé’s awareness for a healthier snack option that will also benefits
society. The final factor in the marketing strategy is to focus on the value proposition of being
able to integrate the product in larger quantities per product within prominent chain stores. This
step in the marketing strategy will become attainable by appealing to the needs of the target
market: a healthier and cheaper snack alternative. The product’s cheap pricing, healthier aspects,
societal awareness, and mass production will lead consumers to purchase it; ultimately, leading
to the gluten-free cookie dough product’s success.
Marketing Mix
Price
The decision was made that the gluten-free cookie dough product will be offered at five
dollars or less. This will enable the product to enter the market with a price similar to the current
market offerings of cookie dough. By doing so, Nestlé will be able to compete directly against
non-gluten-free cookie dough products within the same price range. The five dollars or less price
can be reached by calculating the cost of raw ingredients replacing the current enriched wheat
flour with teff flour.
The current market offering of Nestlé’s cookie dough products is priced at approximately
$3.99 depending on location and packaging type (Nestlé Toll House, 2014). According to
Nuts.com (2014), bulk purchase of enriched wheat flour is approximately $1.99 per pound.
Furthermore, the price of teff flour in bulk is $3.69 per pound (Nuts.com, 2014). That creates a
difference of $1.70 per pound of flour purchased. The Nestlé Toll House cookie dough recipe
calls for 2 ¼ cups of enriched wheat flour, making a total of five dozen cookies (60 cookies)
(Original Nestlé Toll House, 2014). It takes .0375 a cup of flour per cookie. There is a total of 3
⅓ cups per pound of flour (My Recipes, 2014). There is a difference of 1.08 cups of flour
between the recipe and a pound of flour. This calculates that another 28 cookies can be made,
with a total of 88 cookies made per pound of flour. The current market offerings of Nestlé cookie
dough products range between 18 to 24 cookies per package in a price range of $3.99 to $4.48
(Nestlé Toll House, 2014). With the enriched wheat flour, it costs .002 cents per cookie. Using
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21
teff flour, it cost will cost .004 cents per cookie. This calculates that the gluten-free cookie dough
product with 18 to 24 cookies per package will cost in a price range of $4.03 to $4.53.
Distribution
Currently, Nestlé has a complex distribution method in order to produce the best products
for its consumers. The distribution method is created by using a nutritional value chain produced
by Nestlé. This value chain includes in order: science (research and development), sourcing and
ingredients, packaging, manufacturing, distribution, marketing and communication, health and
wellness, and lastly, society (Nestlé Nutritional Value Chain, 2014). This value chain ensures the
best products are made oriented towards the consumers’ health and wellness. The distribution
section is enacted through the use of micro-distributors, using locally adapted methods (Nestlé
Global, 2014). The micro-distributors focus on the triple P’s or popularly positioned products
(Nestlé Global, 2014). This focuses the triple P’s towards providing its consumers “the
opportunity to consume high-quality food products that provide nutritional value at an affordable
cost and in an appropriate format” (Nestlé Global, 2014). Overall, Nestlé’s distribution methods
are highly customer-oriented within its local markets.
Marketing Communications
The marketing communications mix utilized by Nestlé Toll House accentuates advertising and
public relations. The specific emphasis in these two characteristics of the marketing mix was
chosen due to the current, rising trends of gluten-free and other healthier-choice products. The
marketing mix is comprised of non-personal promotion of the gluten-free cookies within
advertising. Additionally, Nestlé Toll House will be fostering and building good relations with
the public and the health community through public relations.
Market Research
Formerly, research for development and manufacturing of a gluten-free cookie dough
brand began by discussing current food trends within America. After deciding on how to
presume development, the primary research began. Methods of analysis include: textbook
references, consumer surveys, original survey, competition analysis, annual corporate reports,
and general online research. This research details an organization overview of Nestlé, a food-
MARKET ANALYSIS
22
manufacturing corporation whom aims to provide consumers with great tasting and nutritional
products.
Secondary research consisted of manufacturing and financial analyses. This area of
research demonstrates the expected product cost, target markets, marketing needs,
etc. Information will be used within implementation of product development for Nestlé. Market
goals require continuation of previous research to ensure all areas of growth will be sufficiently
covered.
Financials
In 2013, Nestlé’s total sales in its confectionary line $10,283,000,000 (Nestlé Annual
Report, 2013). Since Nestlé is an international brand, its cookies within the financial statements
are considered biscuits. The total biscuit sales reached $1,576,000,000 (Nestlé Annual Report,
2013). This is considered 15.3% of the confectionary sales at Nestlé in 2013 (Nestlé Annual
Report, 2013).
Break-Even Analysis
MARKET ANALYSIS
23
Cost of Goods Sold
In 2013, the total cost of goods from Nestlé is approximately 49% of the total sales
(Nestlé Annual Report, 2013). Therefore, for every dollar in sales, .49 cents is considered the
cost of goods sold. This was calculated by taking the total sales in 2013 from the income
statement, which was $92,158,000,000, and dividing it by the cost of goods sold, which was
$48,111,000,000 (Nestlé Annual Report, 2013).
Packaging Costs
We estimate that the packaging cost per unit is roughly 10 cents.
Labor Costs
Currently, Nestlé has 80 factories within the United States (Nestlé Annual Report, 2013).
For our first year, we chose to have four factories for each region of the United States: west
coast, midwest, southeast, and northeast. The average Nestlé factory holds approximately 230
employees (The Desert Son, 2014). This will indicate 920 employees dedicated to these four
regions.
According to the Fair Labor Standards Act, the federal minimum is $7.25 (U.S.
Department of Labor, 2014). The workers will be part-time at an average of 20 hours per week.
With four weeks per month, the total monthly wages will be $580 per worker. The yearly wage
per worker with approximate to $6960.
The total cost of labor per month for the 920 employees is $533,600. Furthermore, the
total cost of labor per year for the 920 employees is $6,403,200.
*Revenue includes price per unit-variable
costs
MARKET ANALYSIS
24
Sales Forecast
The gluten-free cookie dough will be considered a new product line within Nestlé. Thus,
it is expected to work below the break-even point during the first year of production. We
estimated that the 1st quarter will total in sales 25% less than the break-even point. The second
quarter will total in sales 20% less than the break-even point. The third quarter will then total in
sales 15% less than the break-even point. Lastly, the fourth quarter sales will total in sales 10%
less than the break-even point. The second year in sales, we estimate that the product’s line will
break-even. Lastly, in the third year of sales, we estimate the total sales of the gluten-free cookie
dough will exceed 10% above the break-even point.
Through the above analysis, our goal is to sell approximately 600,000 per quarter within the four
geographical areas of the United States: west coast, midwest, northeast, and southeast.
Expense Forecast
The expense forecast will include the additional expenses needed to sustain the
advertising and public relations efforts as mentioned in the marketing communications section.
The average cost of salary in the public relations department is $55,460 (Belt, 2014). The public
relations department will enact traditional advertising methods within. These traditional
advertising methods include in-store advertisements at the various locations and an online page
within the Nestlé website. The average cost to maintain a website is $20,000 per month
(Government and Law, n.d.). In-store advertisements range from $800 to $1,500 per store per
four-week period (BlueLineMedia, 2014). We decided to estimate the in-store advertising costs
at $1,150. Furthermore, the expense forecast will identify the management salary for the leading
manager of marketing. According to U.S. News (2014), the average salary for a marketing
manager in 2012 was $119,480. These costs will be considered fixed rates per year.
MARKET ANALYSIS
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The variable costs per unit will include the costs of goods sold at $2.45 and packaging costs at
approximately 10 cents.
Controls
The variables that will be measured to monitor the progress of the gluten-free cookies are
the quantity of units sold quarterly as well as the amount of retail locations, both new and
existing. The regions that Nestlé will be analyzing of the United States will begin with
California, more specifically such areas that are prone to a healthier lifestyle.
Implementation
To initiate the implementation process of Nestlé Toll House gluten-free cookies
marketing plan, the company will contact all current retailers of Nestlé Toll House products.
Upon contact, Nestlé will inform the current retailers of the gluten-free cookie line and allow
retailers the opportunity to carry the product before approaching new retailers. Concurrent with
the contact process, Nestlé will commence the promotional process. Both processes will incur
two months before the product release date. The promotional process shall consist of both upon
release of the Nestlé Toll House gluten-free cookies; the product will be stocked in each
contacted retailer as 25% of the total Nestlé Toll House products stocked in each individual
MARKET ANALYSIS
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location. Dependent on the success measured after the first quarter after product release, Nestlé
Toll House gluten-free cookies will account for a maximum of 50 percent of the total Nestlé Toll
House products stocked, increasing quarterly according to demand. One year after
implementation, Nestlé Tollhouse gluten-free cookies will be available at not only grocery
stores, but also health food stores such as Trader Joe’s and New Leaf.
Marketing Organization
Initially, Nestlé will conduct business-to-business marketing. Nestlé currently employs
personal selling when interacting with potential reseller and clientele (Nestlé Annual Report,
2013). Personal selling consists of face-to-face conferences, telemarketing, or
digital/videoconferencing, depending on clients’ communication preferences. Objective of initial
personal selling will be to generate an agreement to supply our product throughout prospective
resellers’ establishments. Furthermore, Nestlé will carry out business-to-consumer marketing
through social media, commercial networking, publications, and VeryBestBaking.com.
VeryBestBaking.com is Nestlé’s Toll House recipe based consumer interaction website (Nestlé
Annual Report, 2013). This form of direct marketing will produce the consumer interest and
knowledge needed when introducing a new product.
MARKET ANALYSIS
27
Contingency Planning
One of the biggest issues for a product like Nestlé’s gluten-free cookie dough is the
possibility of selling dough that contains E. Coli. This has been a problem for Nestlé and similar
companies in the past.
In order to combat E. Coli, Nestlé will offer full refunds on all purchases of the product at
the first sign of the outbreak. In addition, stores that sell the product will have their inventories of
the item be completely restocked for no charge. At Nestlé, our aim is to provide healthy foods
with a great taste. If customers are unable to taste the product due to possibly getting E. Coli
during an outbreak, it is the duty of Nestlé to refund the purchase for 100% of the price paid by
the customer.
Another issue Nestlé must be prepared for is trying to infiltrate health food stores such as
Trader Joes and New Leaf. Many health food stores will not sell name-brand products. If Nestlé
has a difficult time pushing the product into these stores there are two options to pursue. If the
stores do not want to sell the product, Nestlé can start by showing the health benefits compared
to other cookies. If this plan does not work, a second option of opening a Nestlé gluten-free
subdivision may be the next step forward. Perhaps by rebranding the product, we can appeal to
both stores and customers that associate Nestlé with unhealthy.
The last issue is any potential rise in raw ingredients. The simplest solution is to seek a
new supplier for the good. In the case of teff flour, there are a variety of different suppliers to
choose from. The most concerning item would be an egg shortage. In 2012, there was a global
outbreak of the avian flu, which attacked chicken populations and caused an egg shortage. The
cost of eggs rose as supply fell. The simplest solution would be for Nestlé to ride out the
problem. Nestlé has the resources to deal with the price increase and not have to increase the
price on consumers. This keeps loyal customers and shows the commitment to keeping the
product at five dollars or less.
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28
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