28443502 market-research-on-oreo


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28443502 market-research-on-oreo

  1. 1. Stargate InstituteExecutive SummaryNabisco is a company that has been in existence since 1898. During their 109 years inexistence, they have grown through natural growth, mergers, and acquisitions. This hasallowed Nabisco to be the leading snack maker in the world. The Oreo chocolatesandwich cookie was first introduced in Hoboken, N.J. in 1911. Oreos today are far andaway the world’s most popular cookie. The Oreo family accounts for approximately 10percent of all store cookie sales--a $3 billion market.However in recent years Nabisco has been reluctant to adapt to current market trends.The company was focusing on producing new versions of existing products to make themmore convenient.Situation AnalysisIn 1898, the New York Biscuit Company and the American Biscuit and ManufacturingCompany merged over 100 bakeries into the National Biscuit Company, later calledNabisco. Founders Adolphus Green and William Moore, orchestrated the merger and thecompany quickly rose to first place in the manufacturing and marketing of cookies andcrackers in America. To expand their global presence and to strengthen their position inthe fast-growing consumer snacks sector, Philip Morris Co. Inc. acquired NabiscoHoldings in December 2000. Philip Morris purchased Nabisco for $14.9 billion in cashplus assumed $4 million in debt.Eventually, Philip Morris integrated the Nabisco brands with its Kraft Food operations.And now it includes brands such as Chips Ahoy, Fig Newtons, Mallomars, Oreos,Premium Crackers, Ritz Crackers, etc…..Nabisco Arabia Company Ltd. (NAARCO) was formed in 1995 as a joint venturebetween Nabisco International and The Olayan Group of Saudi Arabia.In 2000, NAARCO made a major investment in a new plant to produce OREO, theworld’s most popular cookie. OREO cookies were launched in the Saudi market in March2001 with a major TV campaign.Internal AnalysisThe $3 million plant upgrade included a whole new production line, new offices,additional warehousing, and new mess rooms for the increased work force. Equipmentfrom Spain, Italy, India, France, and Austria went into the world-class facility, under thesupervision of Nabisco Technical Director Frank Willemsen and the Technical ServicesManager Anselmo Codina.The people of Kraft have recognized that the business has an important role in society- aresponsibility that included understanding and meeting the public’s expectations, helpingto address important social, environmental and economic issues and making a differencein local communities and the world. They firmly believe that “Our success will dependimportantly on our willingness and ability to listen, get feedback on what we’re doingfrom those both inside and outside Kraft and act responsibly on issues of importantconcern.” 1
  2. 2. Stargate InstituteMarket AnalysisTarget Market:The current target market for the original vanilla filling Oreo is children. The originalOreo cookies have previously focused on and promoted the new colors for the crèmefilling and change the round shaped cookies into rolls, which would generate new interestamongst children, who would in turn convince their parents to buy the new cookie.Geographic Factor:This project is done and carried on in Riyadh, the capital and largest city of Saudi Arabia.Riyadh belongs to the historical regions of Nejd and Al-Yamama.The population of the city is 4,700,000 of which 60% are Saudis and 40 % are foreigners.And the density is 3,024 km square.Demographic Factor:As Riyadh is known for its restrictions and being an Islamic country, the family lifecycles followed here are usually all family members. Young single people can not liveseparately and independently, fearing for them young mature boys/girls will live undertheir families until its time for them to start up their own families.And generally Saudi people are well known by their family sizes. Most of the familysizes are more then 6 or even far more than that. This is what makes the youth populationreally high in the kingdom. And it is something obvious and general that Saudi people areknown for their wealth and considered as rich people and in return earn high incomes.Behavioral Factor:As Riyadh is developing, people now are becoming aware of various new brands whichare attracting them to explore and investigate things. Women here are obsessed aboutshopping and show a favorable attitude and interest towards the different brands.They are also considered as heavy users when it comes to brand loyalty. 2
  3. 3. Stargate InstituteMarketing NeedAs Oreo is a biscuit, and biscuits are food, so the most important need the Oreo biscuitssatisfy is Hunger.But if we further narrow down the needs, Oreo can be satisfying more than just the drive(hunger).*Oreo satisfies the nurturing need example, a mother having difficulties in feeding her 4to 6 years old child with some nutrition food, can consider Oreo to feed her child with asip of milk.*Oreo satisfies the imitation need example, kids watching the Oreo ad on TVs while theother kids are enjoying twisting, licking and dunking the cookie into a glass of milk. Thisforces the kids to want that cookie right away and imitate the same steps.*Oreo also satisfies the fun need, and in this case not only kids will want to have fun andenjoy Oreo even adults like to have fun once in a while individually or even with theirkids.Market TrendsVarious on-going and changing trends in the consumer market affect the business of anorganization. Some of those having an impact on Oreo chocolate sandwich biscuits are:A 2004 TNS study amongst Saudis has found a trend towards smaller families. Itrevealed that Saudis - realize the need for smaller families to provide a better quality oflife for their children.Females have been given permission by the government to work which resulted in theincrease of purchasing power.Driven by changing lifestyles and population growth the impact on the food market hasbeen positive. The market therefore witnessed rapid growth over the review period.The consumers in Saudi market are seen as active switchers with a medium brand loyaltylevel.Lastly, a study was conducted by TNS in 2007 which showed that 99 per cent of Saudirespondents in the study consumed chocolate "food" (chocolates, chocolate milk, biscuits,etc.) in the last seven days, an increase from 95 per cent in 2004. 3
  4. 4. Stargate InstituteMarket GrowthGrowth in the Saudi Arabian biscuit market is being driven mainly by two factors –firstly, the marked increase in advertising spend by multinationals such as Nabisco,Master Foods and Danone. Secondly, the popularity of emerging products such aschocolate-coated biscuits and bread substitutes, which have recently been launched in themarket.Researches have shown that biscuits, particularly sweet biscuits, are generally sold at lowprices, averaging between SR0.25 and SR2 (US $0.06 – US $0.53), for a single-servepack and enjoy excellent distribution in all outlets.The biscuits sector is highly developed owing to the strength of the local industry inSaudi Arabia, represented by large manufacturers such as United Food Industries.Oreo sales showed a fluctuating result during the past 13 years. When Oreo initially waslaunched into the market, sales increased to a high extent for about 3 years but then salesdecreased for a long period during 1997 to 2002. Oreo marketing managers becameaware of their loses and immediately went back to action and changed their marketingmix and started to introduce several different new products. This effort resulted with highsales in 2008. Sales were amounted to $4 billion and market share 41%. 4
  5. 5. Stargate InstituteSWOT Analysis Strengths Weaknesses 1. Nabisco is ranked as the top cookie 1. Sales have slowly declined the past maker, selling nine of the top twenty few decades. cookies worldwide, including Oreo, 2. They do not manufacture products the world’s largest selling cookie that serve the health conscious brand. society. 2. Oreo recipes are confidential and 3. Poor advertisements and marketing not led to the public, that’s why they promotions. stand out uniquely. 4. Nutritional problems, high fat 3. Over 491 billion Oreo cookies have content and calories. been sold since they were first 5. Not all the varieties and flavors are introduced, making them the best available everywhere. selling cookie (biscuit) of the 20th 6. Oreos all different products are not century. available in the kingdom only in 4. Oreos have been produced in many Europe countries. different varieties since they were 7. limited ability to raise price due to first introduced. competitors’ low prices 5. Oreo has formed acquisitions with 8. Not properly defined target market. Dominos Pizza, Mc Donalds, Cakes, and Baskin Robbins etc…. 6. Nabisco began a marketing program in 2008, advertising the use of Oreos in a game called DSRL, which stands for "Double Stuf Racing League." 7. Every day more than 20.5 million Oreo cookies are consumed internationally. 8. First purchase would look at packaging- blue color stands out the most. 9. A well known Brand Name. 10. Affordable products. 11. Established distribution channel (retailers, supermarkets). 12. More value added through packaging and distribution. 13. Established customer relationships 14. Stock of technology including patents, trademark and copyrights. 15. Brand reputation. 16. High quality product reputation. 17. Reputation with inputs suppliers, labor, etc. 5
  6. 6. Stargate Institute Opportunities Threats 1. Kraft holds the number one share 1. Large market of biscuits exists in position in 21 of the top 25 country KSA, which results with many categories internationally. This competitors like Prince chocolate, advantage places Kraft in the Ulker biscuits, etc…. position to obtain a significant share 2. Low involvement product and of a category’s growth and profit, consumers can easily switch. generating additional resources to 3. Growth of private label products. reinvest in marketing and 4. Threat of New Entrants innovation. 5. No immediate advertising/marketing 2. Invest in advertising/marketing campaigns. campaigns. 6. Rising commodity, packaging and 3. Introduce health and nutritional other input costs (sugar, cocoa). products (fat free Oreo) in KSA. 7. Changing preferences and demands 4. Add more flavor fillings. of consumers. 8. Lifestyle changes towards health and nutrition. 9. Declining fraction of income spent on snack food by consumers. 6
  7. 7. Stargate InstituteCompetitionThe food industry in kingdom is really wide and the competitions exist at a high range.Biscuits, cookies or sandwiches have a large market which makes it a tensed environmentfor Oreo.There are a lot of competitors in the same industry providing the same products but themost competitive companies are:Prince Chocolate BiscuitProduct Strength weakness Taking advantage of their weakness Strong brand name Lack of varieties Produce more and image and flavors varieties with different appealing flavorsAmericana Strength weakness Taking advantageProduct of their weakness The recipe of this Weak promotional A strong TV unprecedented media through TV commercial that will ascent to success ads. attract existing, and mainly came from new customers. the deep understanding for Arab taste, strong technical capabilities and experienced manpower. 7
  8. 8. Stargate InstituteUlkerProduct Strength Weakness Taking advantage of their weakness Strong Packaging Weak A strong TV Division Ülker Group is promotional commercial that one the worlds leading media will attract packaging materials through TV existing, and new manufacturer. ads. customers. IT Division Ülker Group has been active in IT sector for a long time, this division has several companies in software development, PC and notebook manufacturing, retail chain, and a distribution company. 8
  9. 9. Stargate InstituteDigestive Dark ChocolateProduct Strength Weakness Taking advantage of their weakness Introduced into the Maintain stable and kingdom’s market lower prices to High prices. “The Orginal Light attract more Digestive” . customersProduct Offering Serving Product Image Flavor Size per containerOREOSANDWICHCOOKIESOREO Vanilla 18 oz 15OREOSANDWICHCOOKIESGOLDENORIGINAL Vanilla 18 oz 15 9
  11. 11. Stargate InstituteOREO 6SANDWICHCOOKIESPURE MILKCHOCOLATE Chocolate 7.5 ozCOVEREDMINTOREOSANDWICHCOOKIESWINTERWITH RED Red cream 18 oz 18CREMEOREOSANDWICHCOOKIESSPRINGPURPLE Purple 18 oz 18CREME creamOREOSANDWICHCOOKIESGOLDEN UH-OH WITH Chocolate 18 0z 15CHOCOLATECREMEStock Keeping Unit and Products AvailableThese products shown below are those of which exist in the kingdom’s market. And thestock keeping unit chosen for this project is 66gram, SR 1. Name Weight PriceOreo Sandwich 66 gram SR 1 11
  12. 12. Stargate InstituteVanilla/chocolateOreo Sandwich 176 gram SR 2.95Vanilla/chocolateOreo Sandwich 792 gram SR 11.50Vanilla/chocolateNabisco Oreo Sandwiches, a brand that is older than the automobile assembly line. It isestimated that an average of 4.3 billion sandwiches have been eaten each year over thelast 90 years.Marketing StrategiesMission Statement“We want our consumers to regard us as their primary snack food. We want ourcustomers to know that we have their wants and needs in mind along with working tocreate products that will cater to their health conscious lifestyles.”Marketing Objectives: • Maintain demand of customers • Introduce new sandwiches • Create Awareness through effective media • Attract more customers • Retain current customers • Stay ahead of competitors• Reduction or elimination of other supply chain inefficiencies• To achieve superior consumer exposure• Establishment of regional marketing specialists• To reinforce and reaffirm the Oreo cookie brand position.Tagline: 12
  13. 13. Stargate Institute“Twist, lick, dunk”Positioning:The Oreo has long been the best-selling sandwich in the whole world. Whenever thename of Oreo comes into the minds of consumers, the 1st thing that jogs their memory is-twisting it, licking the middle portion and dunking the chocolate sandwich into the milk.Beside kids, it also emotionally attracts adults as their childhood memories are connectedto Oreo. Though couple of adults have a negative positioning about the Oreo sandwichand the association but in the point of view of kids, Oreo is strongly and highlypositioned.Current StrategiesOreo, by observing its product lines and what it has been offering the past years, we canrealize that they are adopting the Product Development Strategy.Product development means offering new or improved products for present markets. Inthis manner Oreo can find different ways to satisfy the customers.Market ResearchSampleThe sample selected for the research is kids, youngsters and adults. The sample sizechosen for quantitative research is 30 and for qualitative 4 people of different ages.Sampling TechniqueTo accomplish the market survey, hybrid research (qualitative and quantitative) has beenperformed. ∙Qualitative research – in-depth interview (triad as well as diad) and ethnography havebeen chosen. ∙ Quantitative research- questionnaires containing open and close ended questions havebeen selected.QUALITATIVE RESEARCHObjectives: 1. Whether people are aware of the brand Oreo 2. Find out the time (weekends, monthly,etc.) when customers buy OREO 13
  14. 14. Stargate Institute 3. How often do people purchase and use Oreo products 4. Find out whether customers are contented 5. Will customers go for close substitutes of Oreo 6. Find out what they think and see from the brand’s association “Twist, Lick, Dunk” 7. The reason for purchasing this particular product 8. Suggestions for new features (if any) 9. Will customers remain loyal and profitable Summary: Name: Sana Saeed Age: 7 Occupation: Student Name: Israa Age: 10 Occupation: Student Name: Sami Age: 15 Occupation: Student Name: Mrs. Tahseen Age: 37 Occupation: Housewife Everyone is attentive towards the Oreo sandwich in the market. Kids reacted energetically when they saw Oreo sandwiches in TV ads and insisted their parents to buy one for them. Almost all the kids loved the tagline ( Twist,Lick,Dunk) but some of them disagree, “I love to dunk it only but don’t like to twist and lick it.” as said by Sana Saeed. Though teenagers and parents love Oreo too, but they consider the tagline as “kiddish”. For some people these steps remind them of their childhood memories. The grown ups purchase the sandwiches on occasions when it is their child’s birthday or any celebration. But young people buy immediately when they crave for it and satisfy their hunger drive. People purchase Oreo Sandwiches for different purposes. “Have fun eating chocolate biscuits, tastes good”said by Isra. “Because I love dark chocolate” as said by Mrs. Tahseen. Oreo is a low involvement product and due to this prospect customers can easily switch to the close substitutes. But still, brand loyal customers are devoted to their brands and won’t let go easily. When 7 year old Sana was asked if she went to the market and didn’t find any Oreo sandwich, she replied, “I will search in the next store and if I didn’t find there, I will wait for tomorrow and go to my school and purchase one there.” Finally, due to the different needs, wants, and tastes of the consumers, they all have suggested different recommendations. “Not to sell the chocolate filling Oreo” said by Sami. “Improve the present flavor to some extent” said by Israa 14
  15. 15. Stargate InstituteQuantitative ResearchObjectives: 1. Identify the target customers 2. Find out the level of brand awareness 3. Find out the time (weekends, monthly,etc.) when customers buy OREO 4 .Find the percentage of product usage among consumers 5. Find out their level of satisfaction 6. Find out the level of brand loyalty among customers 7. Find out what they think and see from the brand’s association “Twist, Lick, Dunk” 8. The reason for purchasing this particular product and suggestions for new features (if any)Result Analysis 15
  16. 16. Stargate Institute Why do you like Oreo cookies? 80.00% 60.00% 40.00% 20.00% 0.00% Its shape Love for dark Like the chocolate chocolate/v anilla combination 70% 60% 50% 40% 30% 20% 10% 0% Positive Negative 16
  17. 17. Stargate InstituteThe positive associations were “OK, GOOD, FUN, YUMMY, CATCHY,LOVE TO WATCH MY KIDS DOING IT, DELICIOUS, TASTES BETTER, NICE,And TASTY.”The negative associations were “KIDISH, WHATS THAT, ONLY DUNKING,CHANGE IT, DON’T LIKT IT.” How often do you purchase Oreo cookies? 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Weekly Occasions Whenever you desireTable 17
  18. 18. Stargate Institute Decision Making Process Evaluation Need Information Purchase Cognitive ofRecognition Search Decision Dissonance alternatives When the customers recognize the various needs of hunger, nutrition, imitation and fun they enter the first step of decision making process. Now, they come across various cues of different products to satisfy those needs for example TV commercials, billboards, information from friends or relatives or their own previous experience. 18
  19. 19. Stargate Institute In the next step, customers evaluate the various alternative ways and brands that can satisfy their specific needs. (Here customers also compare the different products and brands based on benefits, price, quantity, etc.) Finally, the customer decides on either purchase of OREO or rejection If the customer after consuming OREO sandwich feels dissatisfied then he is said to have entered cognitive dissonance.Current Marketing mixProduct:Oreo makes sandwiches with premium quality two thin chocolate which is enclosed withwhite, rich cream filling. They associate their product with beautiful human emotions oflove and care. Oreo comes in a variety of flavors such as: Oreo Fudge Rings Golden OreoStrawberry OreoOreo also offers Reduced Fat Oreo, Golden Chocolate Cream Oreo, Oreo Wafer Stix,Banana Split Cream Oreo etc. Oreo’s recognized for its beautiful product designing. Oreois best to be used for breakfast, snacks as well as party purposes.Price:“A product is only worth, when customers are ready to pay for it.” – keeping that inmind, Oreo has developed a price range which is affordable by everyone. In times ofRamadan season, Oreo gives special offerings and discounts.Small size – SR 1Medium size – SR 2.95Large size – SR 11.50 19
  20. 20. Stargate InstitutePlace:As being famous, Oreo sandwiches can be found everywhere. They can be easilypurchasable in any supermarkets such as Sunbulah, Al-Halwani Bros etc or even in thewell known malls like Granada center, Carrefour, Hyper Panda etc. The distribution channel of Oreo is given below- Producer Retailer ConsumerPromotion:Promotion is the way a company shows what it does and what it can offer to thecustomers. Oreo adapted an aggressive promotional campaign. Beside magazines, Oreo’sdoing promotional campaigns through television and their website too. Although it is themost expensive form, it is also most effective. Among TV networks, one of the networkthey chose is MBC (MBC 3) because it has the ability to reach the younger portion oftheir target market. They also offer coupons on their website. Oreo aims at making theircustomer’s life beautiful with their mouth watery products by filling those with thebeautiful colors of love and care.Suggested Marketing MixProduct: • Develop new sandwiches which contain less calories, less fat, less cocoa powder and less salt. • Customers have been complaining about the packaging for the past years. And in order to overcome this issue, the package should be given a new look to attract more customers. • The labeling should be clear and nutritional information should be specific and not hypothetical such as “May contain milk protein”!!!Price: 20
  21. 21. Stargate Institute • Maintain their current prices. • Maintain a fixed price for all specific products overall the Riyadh market.Place: • Oreo should improve their market existence. Example: In Hail-Al-Wazarat, the cold stores “Bagalas” don’t have Oreo products. • Nabisco Arabia Inc. should improve their Import/Export channels. They should also import the extra features of Oreo products ( Oreo cereal, cakes, and ice creams ) into the kingdom.Promotion: • Their promotions haven’t shown much about their organizations. TV commercials were for a short time and ever since they haven’t shown any other particular promotions. • They should get in contact with Advertising Agencies for better improved commercials. • Their websites provide less information about the whole organization ( Internal /External). • Redesign the website ( http://www.nabiscoworld.com/oreo/) and provide more corporate information. • Aim for different promotional medias such as Bill boards, Flyers, etc………Production:According to a statement from Kim McMiller, an Associate Director of ConsumerRelations, a two-stage process is used to make Oreo sandwiches. The base cake dough isformed into the familiar round sandwiches by a rotary mold at the entrance of a 300-foot-long oven. Much of current Oreo production is done at the Kraft/Nabisco factory inRichmond, Virginia. Oreos for the Asian market are manufactured in Indonesia.Australian Oreos are made in China. Oreo Kingdom sandwiches are manufactured byNabisco Arabia Inc.(NAARCO) which’s located in Dammam. These sandwiches are alsoexported to Gulf areas.ControlsAny branded product can’t be perfectly flawless. 21
  22. 22. Stargate Institute • Previously, Oreo sandwiches were made of animal fats which weren’t halal in the Islamic Law. This caused a huge problem for the organizations’ products. Later on, when their sales were getting affected, they realized the concept and switched to the use of vegan fats. • Customers complained of deceptive packages because they found that some of the packages were double sized than the contents. This leads to a negative positioning in customers’ mind and affects the brand image. • Families are suffering from the obesity problem of their children due to the continuous consumption of Oreo sandwiches. The products should be amounted with less cholesterol and fats for a healthy life. • Mothers are complaining about the bitterness of the Oreo sandwiches. Due to that they should lessen the amount of Cocoa powder. • Kids getting frustrated about the sandwiches being cracked before they even implement the steps (Twist, Lick, and Dunk). This may be due to the hard fillings or the softness of the two layers.Contingency Plan • If their current marketing mix is resulting with unsatisfactory outputs they should consider the suggested marketing mix. • “A future forecast plan” for the entrance of competitors into the market, price inflation, and changes in the external marketing environment. • Technology plays a vital role and directly affects businesses. To increase sales and to provide quality products, Oreo may take the advantage of the latest equipments available. • Oreo factory should have high density voltage stabilizer in case, anything goes wrong with the electricity. • If current promotions through TV commercials are not giving them much satisfying sales, they should go for flyers pamphlets and maybe newspapers.Recommendation• Oreo has targeted only kids as their main target customers. Our research hasshown that not only kids eat Oreo but also a large percentage of teenagers and adultsadore it too. So, Oreo must re-target their customers and include these segments. 22
  23. 23. Stargate Institute• They should try to maintain a stable sales growth. Because too manylosses and sales fluctuations affects the company’s image and positioning.• Introduce other product features of Oreo into the kingdoms market, e.g. cereals,different flavors and shapes.• Make people more aware of the nutritional facts.• They should get an expert web designer to redesign their site because instead ofuseful information about their organization, it’s full of useless games. • Improve their marketing campaign by sponsoring bill boards. Because kids want to see their favorite Oreo in Bill board rather than TV ads. • Oreo should introduce a zip lock package as it keeps the cookies fresh for a longer time. • They should make sure all of their products are available in all the stores of KSA as well as the Gulf countries.Conclusion:For Over 90 years, the Oreo sandwich has remained as an icon. Millions of people canrecall childhood memories with dunking Oreos in milk, and spark that emotionalexperience to life by hearing the famous jingle or watching a commercial.Nabisco/Kraft Company enjoys brand loyalty and has stretched the brand to retain 28%of the market maintaining strong sales within an oligopoly market like snack foods.Oreo Sandwiches have touched people’s heart of different ages, lifestyles, andcharacteristics in a way or another. Oreo was capable to show its customers that it is oneof a kind when it comes to taste, flavor and experience. Though the food industry is anedgy market, but yet no competitors were capable to pinch the undisclosed ingredients ofOreo Sandwich Cookies.Referenceshttp://www.nabiscoworld.com/http://www.nabiscoworld.com/Oreo/ 23
  24. 24. Stargate Institutehttp://www.nabiscoworld.com/BRANDS/BRANDLIST.ASPX?SITEID=1&CATALOGTYPE=1&BRANDKEY=OREO&BRANDLINK=/OREO/MEMORIES/&BRANDID=78&PageNo=1http://www.lotsofessays.com/viewpaper/1712722.htmlhttp://eathalalfood.blogspot.com/2009/02/oreo-cookies-halal.htmlhttp://www.brandchannel.com/features_webwatch.asp?ww_id=283http://www.reuters.com/article/ousiv/idUSN0243513620080903?pageNumber=2&virtualBrandChannel=10216&sp=truehttp://en.wikipedia.org/wiki/Riyadhhttp://www.olayangroup.com/group.asp?groupid=7http:// 24