Nabisco is one of the largest food companies in the world. Since its inception in 1898, the company has grown tremendously through mergers, acquisitions and exceptional marketing strategies. The vision, mission and long-term objectives had enabled Nabisco to become the leading snack food producer and the company diversified into six consumer sectors, such as Beverages, Confectionery, Snacks, Grocery, Cheese Products and Convenient Meals.
However, in past few years the company could not manage the changing market trends and buying behavior of consumers. The company focused on producing new versions of current products to make them more delicious and healthier. In such process, Nabisco ignored the fact that the competitors were involved in introducing similar products, which were healthier and cheaper, as well. Recently, Nabisco realized changing preferences of consumers and launched healthier snack foods, such as low carbohydrate foods, low-fat foods and 100-calorie snack packs. With a new product range, the company has been able to target health cautious segment and changed the eating habits of Americans from high-calorie snacks to healthier living. The company plans to introduce a wide range of Fat-Free Oreo Cookies in the next year to solidify its market position expecting that Fat-Free OREO cookies would strengthen its position in the international market.
Nabisco’s Cool Mint Creame Oreo Cookie has become a successful product of Kraft Foods because the Oreo brand supports it. The formation of Cool Mint Cr?me Oreo cookie consists of a mint flavored cream, which is compressed between two round shaped golden cookie pieces. In addition, the company plans to expand to other fat-free specialties, such as OREO ice-cream cones, OREO piecrust and Fat-Free OREO snacks.
Current paper evaluates the marketing operations of Nabisco and draws a new comprehensive marketing plan that will differentiate its new products with that of competitors, as well as helps the company in sustaining competitive advantage. Moreover, the paper will examine external and internal environment of the company with the help of SWOT tool analysis and suggest appropriate marketing strategies. Besides, the paper highlights how marketers usually adopt different strategies by implementing the marketing mix techniques for segmenting, targeting and positioning the market.
A Brief History
The National Biscuit Company was incorporated with the merger of regional baking and confectionery firms in 1898. In 1953, the NBC included the logo of Nabisco as a brand for its products and subsequently changed its name to Nabisco. In December, 2000, Philip Morris Company acquired Nabisco Inc. for global expansion, as well as strengthening their position in the snack foods sector of the US domestic market. Since then, Nabisco showed tremendous growth with its products, such as cookies and crackers, becoming popular in the European markets. The popularity of Nabisco brand encouraged Philip Morris Company Inc. to merge Nabisco with Kraft Foods Inc.
The SWOT tool will help determine the external and internal environment of the company. The external environment is studied by analyzing opportunities and threats to the company, whereas internal environment refers to its strengths and weaknesses.
Kraft Food’s products are largely consumed by the American society. Statistics shows that approximately seventy-five five percent of Americans prefer buying Nabisco products instead of competitors’ identical products. Cool Mint Oreo Cookies, a product of Nabisco, have been extremely popular with youngsters and teenagers recently. By achieving a status of America’s Favorite Cookie, the product has largely replaced consumption of high-calorie snacks, burgers and pizzas.
Nabisco is one of the eleven Kraft brands, which contribute more than $2 billion revenue each year. Nabisco Oreo Cookie was the first ranked brand among different cookies brand with approximately US$ 535.5 million sales in the US during the year 2009. The company has consistently maintained the leadership in the industry, marketing ten of the top twenty cookies brands worldwide, including OREO, which is the largest selling cookie brand worldwide. The key strength of Nabisco is the popularity of powerful brands because the company emphasizes on health and wellness issues of consumers and invests in research and development activities. Such developments enable the company to introduce fat and sugar free products, while retaining the vitamins, minerals and other necessary contents, which are usually demanded by customers in the snack food market.
Nabisco’s organizational structure is centralized because the decision power belongs to the top management. Such system deprives opportunities of middle-level management to offer new marketing ideas. Thus, the company has a weak market structure affecting the market performance. Kraft Foods acquired Cadbury, which undoubtedly increased its profits and income, but it has raised a huge debt pressure on the Nabisco, as well. Besides debt pressure, Nestle and Hershey offer a severe competition in the cookies markets. Despite the company presence in the international and the US markets, its geographical concentration is still uneven and weak. All the above factors influence effective marketing, distribution and promotion of Nabisco products, including Cool Mint Creame Oreo cookies.
Since the Kraft Foods Inc. has eleven more brands, it is still learning how to balance sales of Nabisco products, which is a serious disadvantage to the company. Moreover, Kraft Foods had determined the pricing of Cool Mint Creame Oreo Cookies without consulting the management of Nabisco and such factor had overall affected the sales of Oreo cookies. Such non-coordination between two companies impacted the growth of other firm’s products in Asian and European markets. In most of the Asian countries, Oreo is still considered a premium snack meant for a certain section of the society. Nabisco should offer economically priced Oreo packing, as it did in India, Vietnam and China.
Nabisco required much time to succeed. The takeover of Cadbury Company by Kraft Foods Inc. has opened new international markets for Nabisco products. Cadbury is a powerful competitor in the market earning billions of profits and income from China, India and other Asian countries. The company can use Cadbury’s brand image for marketing Cool Mint Creame Oreo Cookies alongside with other Oreo snack food products and in such way it would capture the market quickly. In many Asian countries, since Nabisco products are marketed by Kraft Foods, it will be easier for the company to win its market share, which is still characterized by the brand image of Kraft Foods.
The company should focus on China, India and Brazil for expansion of its products because these countries have shown a significant increase in GDP resulting in considerable growth in spending by people. Nabisco has an opportunity to reposition in the given emerging countries with more healthy products that contain zero level of fat and are sugar- free.
The company consistently faces threats from competitors, such as Nestle, Hershey and Keebler, which are trying to dominate in the US and international markets with their product differentiation strategies. The competition directs Nabisco to invest greatly in research activities for development of new products. The changing trends of consumers buying behavior with respect to obesity and low calorie diet foods also poses significant challenges for the company because the competitors continue attracting consumers of such products by lower prices than that of Nabisco in the markets. Besides, the US people did not welcome Kraft Foods acquisition of Cadbury causing a stiff resistance and condemning of Nabisco products. The customers stopped buying Nabisco’s Oreo cookies and other offered products, hence, damaging the positioning of the company. Further, political, economic and financial instability of some countries are major factors that affect the overall growth of the company where Nabisco has already established manufacturing and marketing infrastructure. In addition, the governments of such countries impose high taxes and repatriation of profits to its origin country.
Marketing Mix of Nabisco’s Cool Mint Creame Oreo Cookies
The conventional 4P’s of marketing mix focuses the business, whereas the 4C’s of marketing refers to consumers. The combination of 4Ps and 4Cs enables marketers to formulate appropriate marketing strategies that are useful for segmenting and targeting the niche marker, as well as positioning of products with promotional strategies.
Product Offers a Customer Solution
The marketing principle states that the companies should focus on customers. The product must satisfy wants and needs of buyers, hence, offering a solution to the buyer. Nabisco adopts the product differentiation strategy to differentiate its products from that of competitors. Nabisco’s Cool Mint Cr?me Oreo cookie is a customized product for the mass market. In all American families, members consume Oreo cookies and Cool Mint cookies, which have become their best choice. Thus, Nabisco has succeeded in promoting the Oreo culture among the Americans and cookies have gained popularity in the foreign markets. Nabisco products target soft segment of the market because the company can customize products according to buying preferences of customers. In 2002, in response to growing need for snack foods, Nabisco introduced Mini Oreo Cookies followed by regulations of the federal government, which limited the fat, calories and sugar contents in the organic varieties of snack foods.
Place Should be Convenient to Customers
Convenience is equally significant in distribution and placement of goods. Since, Nabisco’s customer base is scattered in different geographical locations, the convenience of its consumers in locating Oreo snack foods items plays an important role. Currently, Cool Mint Oreo Cookies are available in all leading supermarkets of the US and European markets. The company is maintaining warehouses and distribution centers in several locations and, with its effective logistic services, supplies Oreo products throughout the USA. In Indian market, Nabisco has adopted distribution network with four different approaches, such as Oreo products are available at large and small supermarkets, convenience stores, filling stations, mom-and-pop shops. Moreover, the Chinese famous supermarket chain, Deli de Luca, sells Oreo products.
Price is Customer Investment
Nabisco should offer Cool Mint Creame Oreo in small packages, economically priced for entering into developing economies as it did in China and India. However, the company has maintained higher prices of Oreo products due to large debts resulted from the acquisition of Cadbury. Such situation is bound to create disadvantages for achieving competitiveness, unless the company amends its current pricing strategy. The American consumption level should not be considered while determining prices for Oreo products in the emerging markets.
Promotion with Effective Customer Communication
The prime factors contributing to the continuous growth of Oreo cookies are the best-in-class promotions and its award-winning advertising campaigns. One of its exclusive advertisements is a huge panoramic view of Oreo cookies on an elevator display in shopping malls showing the OREO cookies and milk connection: a live picture of Oreo cookie dipping into a glass of milk appears when the elevator moves down. Since, the OREO cookies and milk connection focuses on the identity of a brand, the advertisement has become popular as “Milk’s Favorite Cookie” rather than earlier known as “America’s Favorite Cookie.” Over the last five years, three signature marketing campaigns, the DSRL league and OREO Global Moments contest and quiz contest for children on the television have become a center of attraction for American people. Besides, social networking sites, such as Twitter, Facebook and You Tube, offer the attractive platform for Oreo products, whose motive is to connect friends and family.
Nabisco launched its unique marketing campaigns in 2010, advertising the promotion of Oreo range of cookies with a special focus on Cool Mint Oreo Cookies. Such campaigns were extremely popular as an entertainment media among the Americans. Peyton Manning and Eli Manning had endorsed its promotion. Sisters Serena and Venus William also contested the Manning. The show was telecasted on television on January 25, 2010. The third campaign of Oreo Cookies was supported by the Manning brothers. Another popular TV serial “Hooded Menace” became popular among school children. Additionally, Nabisco organized a worldwide Oreo Stacking Competition that was won by Jordan White from the USA in the final contest.
In 2006, Nabisco introduced Oreo cookies in the Chinese market, and with its unique advertising rapidly captured the Chinese cookies market. The promotional techniques enabled Cool Mint Cr?me Oreo cookies to become one of the favorite cookies.
Nabisco launched a local advertising campaign in China to acquaint Chinese the uniqueness of American culture to combine Oreo cookies with milk moments. Kraft Foods designed an Oreo program at twenty-five Chinese universities. Approximately 5,000 applications were received from students. The company offered attractive incentives and trained four hundred students to become the ambassadors of Oreo products. The students drove in different cities on their bicycles painted with designs of Oreo cookies packaging and a logo of Nabisco on their t-shirts and caps. They distributed Oreo cookies to more than 200,500 people. In schools, Oreo thematic basketball games were organized to convey the benefits of dipping cookies in milk. Television commercials showed small kids stopped crying when they were offered Oreo cookies. They twisted Cool Mint Cr?me Oreo cookies, licked the cream and dipped the cookie into a glass of milk.
Oreo products are also endorsed by Yao Ming, a famous player of the nation’s basketball team. Nabisco projected the famous Chinese actress Zhang Ziyi as a brand ambassador of Cool Mint Cr?me cookies. Her popularity has boosted the sales of Oreo cookies in Chinese markets. The reason for brand endorsement is to psychologically create desires of people. Consequently, such people usually tend to buy same products, which are endorsed by their favorites.
The Target Market
Segmentation: Nabisco starts market segmentation with the identification of new markets. Large markets are divided into smaller markets depending on shared characteristics. Segmentation is further segregated into socio-demographics, psychographics and behavior variables.
Demographic: Nabisco has launched a wide range of Oreo cookies after consideration of demographic factors. The products are economically priced, which are consumed by people of all age groups and extremely popular among teenagers and office workers.
Psychographic: Oreo cookies are produced by considering and evaluating changes in the buying tendencies of American consumers. The company continues investing in research activities for developing new snack foods free from fiber, which does not cause obesity.
Behavioral: Nowadays most of the Americans have become calorie cautious and prefer snack foods that do not contain fat, fewer carbohydrates and are free from sugar. It has been observed that Oreo cookies have been successful in replacing burgers and pizzas to a large extent.
Nabisco current target market for Cool Mint Creame Cookies focuses on children from six to nineteen years. The cookies contain attractive color of the creame filling that generate interest among small children and teenagers, who, in turn, force their parents to buy the product. Nabisco also plans to create an entirely new market for its Fat-Free Oreo Cookies by targeting women in age group of 18- 45 years. Females are more health conscious than males, yet they still enjoy consuming sweet products and Oreo cookies are the best option for them to satisfy their needs.
The middle and upper-middle income people living in urbanized locations will also be targeted. Such sections of people enjoy recreational activities, such as biking, tennis, baseball, swimming or jogging and are extremely health cautious people. Such group has a tendency to indulge in high-calorie food but at the same time look for various options that can replace their needs with low-calorie snack foods.
Nabisco will organize promotion campaigns at supermarkets, shopping malls and filling stations throughout the country. The campaigns enable the company to receive feedbacks from consumers. The company will offer coupons in exchange for filling out a consumer survey. Moreover, the customers can participate in the survey on the company’s website and avail 100% discounted coupons. Such surveys help the company in improving the features of products, understanding the consumer buying behavior, as well as designing the appropriate marketing strategies. In addition, from time to time, the company will organize quiz competitions/debates in school and colleges. The company will offer a scholarship to the prospective winners and employment offers to deserving candidates, as well.
Nabisco is the second largest snack foods manufacturer worldwide. In order to sustain its position in the markets, as well as global expansion in unrepresented markets, the company has ambitious plans to create the new range of 140 Oreo products by using rice, maize and corn in the manufacture process of cookies. The products will be 100% fat and sugar free and offer a healthy lifestyle to its consumers. The new Fat-Free Oreo has great potential in the market because it permits females maintaining their low-fat diet without depriving of sweet snacks. Such product can also be popular during flights, railways and for workers who want a quick bite and are lack of time.
Micro Environmental Analysis
The micro-environment factors are under the control of the firm. With the help of such factors, the company gathers the information that helps it in its marketing activities and formulation of strategies. Mostly, all businesses use Porter’s five forces to examine micro factors impacting the organizational activities.
The Bargaining Power of Suppliers
The snack food industry is competitive and sensitive in character. The pricing policy is a competitive tool of the company in retaining the market share because Nabisco determines the procurement prices of raw materials from the suppliers. The suppliers do not possess enough power to hold the Nabisco for demanding high profits. Since, it is a large company, it prefers to maintain relationship with the company for regular business. Hence, bargaining power of suppliers is less.
The Bargaining Power of Customers
Buyers dominate in snack food sector and their bargaining power is high. Frequently they change preferences and switch over to the products that offer less prices and superior quality. Such tendency is a serious challenge to Oreo cookies. The company has to invest into research activities and continue introducing a new variety of products for retaining the market power.
The Possibility of Threats from the New Competitors
At present, many world reputed companies are operating in the snack food market. It is nearly impossible for the new companies to enter the industry. The existing organizations have invested greatly and continue investing in positioning, improving quality and branding their products. As a result, it is not feasible for new entrants to influence buyers switching over to the absolutely unknown product. Hence, the company does not face a threat from new entrants.
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Rivalry among Established Competitions
The competition is fierce in the industry as each competitor tries to capture maximum market share with different marketing strategies. The companies’ huge investments into promotional activities increase competition to preserve their market share through brand loyalty and diversification. In general, the products marketed by competitors are flexible in nature with buyers weighing the trade-off between price and quality, companies and products. The rivalry among competitors benefits customers, as well as causes maintaining by the companies parallel prices and quality for retaining customers and competitive advantage they enjoy.
Threat of Substitute Products or Services
It is a well-known fact that the buyers have their wants and needs. They compare the quality and prices of products before making a buying decision. The threat of substitutes is negligible because private label products cannot offer the same ingredients, which are offered by Nabisco, and do not possess ability in seizing the market share of Oreo cookies and firm’s position in the international market.
With massive investments and support of powerful tools of marketing, promotion and advertising campaigns, Nabisco has been successful in forming strong and lasting connection of Cool Mint Creame Oreo Cookies with consumers. Nabisco was successful in anticipating that its Cool Mint Cookies can become more than a brand and can be connected with memories of people of different generations. Oreo cookies, due to superior contents, have become a part of consumers’ lives.
It is surprising that Oreo, which was established in the 20th century, continues being a powerful brand of Nabisco, as well as most powerful driver of company’s growth in twenty first-century. It is the appropriate time for Kraft Foods to derive the benefits from the branding image of Cadbury by devising novel concepts of popularizing Oreo cookies in the domestic and international markets. In the countries where Nabisco products are marketed under the banner of Kraft Foods, the company has an advantage in popularizing Oreo cookies with the support of its parent company.
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