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28443502 market-research-on-oreo
- 1. Stargate Institute Executive Summary Nabiscois a company that has been in existence since 1898. During their 109 years in existence, they have grown through natural growth, mergers, and acquisitions. This has allowed Nabisco to be the leading snack maker in the world. The Oreo chocolate sandwich cookie was first introduced in Hoboken, N.J. in 1911. Oreos today are far and away the world’s most popular cookie. The Oreo family accounts for approximately 10 percent 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 them more convenient. Situation Analysis In 1898, the New York Biscuit Company and the American Biscuit and Manufacturing Company merged over 100 bakeries into the National Biscuit Company, later called Nabisco. Founders Adolphus Green and William Moore, orchestrated the merger and the company quickly rose to first place in the manufacturing and marketing of cookies and crackers in America. To expand their global presence and to strengthen their position in the fast-growing consumer snacks sector, Philip Morris Co. Inc. acquired Nabisco Holdings in December 2000. Philip Morris purchased Nabisco for $14.9 billion in cash plus 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 venture between Nabisco International and The Olayan Group of Saudi Arabia. In 2000, NAARCO made a major investment in a new plant to produce OREO, the world’s most popular cookie. OREO cookies were launched in the Saudi market in March 2001 with a major TV campaign. Internal Analysis The $3 million plant upgrade included a whole new production line, new offices, additional warehousing, and new mess rooms for the increased work force. Equipment from Spain, Italy, India, France, and Austria went into the world-class facility, under the supervision of Nabisco Technical Director Frank Willemsen and the Technical Services Manager Anselmo Codina. The people of Kraft have recognized that the business has an important role in society- a responsibility that included understanding and meeting the public’s expectations, helping to address important social, environmental and economic issues and making a difference in local communities and the world. They firmly believe that “Our success will depend importantly on our willingness and ability to listen, get feedback on what we’re doing from those both inside and outside Kraft and act responsibly on issues of important concern.” 1
- 2. Stargate Institute Market Analysis TargetMarket: The current target market for the original vanilla filling Oreo is children. The original Oreo cookies have previously focused on and promoted the new colors for the crème filling and change the round shaped cookies into rolls, which would generate new interest amongst 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 life cycles followed here are usually all family members. Young single people can not live separately and independently, fearing for them young mature boys/girls will live under their 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 family sizes are more then 6 or even far more than that. This is what makes the youth population really high in the kingdom. And it is something obvious and general that Saudi people are known 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 which are attracting them to explore and investigate things. Women here are obsessed about shopping 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. Stargate Institute Marketing Need AsOreo is a biscuit, and biscuits are food, so the most important need the Oreo biscuits satisfy 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 4 to 6 years old child with some nutrition food, can consider Oreo to feed her child with a sip of milk. *Oreo satisfies the imitation need example, kids watching the Oreo ad on TVs while the other kids are enjoying twisting, licking and dunking the cookie into a glass of milk. This forces 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 and enjoy Oreo even adults like to have fun once in a while individually or even with their kids. Market Trends Various on-going and changing trends in the consumer market affect the business of an organization. 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. It revealed that Saudis - realize the need for smaller families to provide a better quality of life for their children. Females have been given permission by the government to work which resulted in the increase of purchasing power. Driven by changing lifestyles and population growth the impact on the food market has been 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 loyalty level. Lastly, a study was conducted by TNS in 2007 which showed that 99 per cent of Saudi respondents 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. Stargate Institute Market Growth Growthin 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 as chocolate-coated biscuits and bread substitutes, which have recently been launched in the market. Researches have shown that biscuits, particularly sweet biscuits, are generally sold at low prices, averaging between SR0.25 and SR2 (US $0.06 – US $0.53), for a single-serve pack and enjoy excellent distribution in all outlets. The biscuits sector is highly developed owing to the strength of the local industry in Saudi Arabia, represented by large manufacturers such as United Food Industries. Oreo sales showed a fluctuating result during the past 13 years. When Oreo initially was launched into the market, sales increased to a high extent for about 3 years but then sales decreased for a long period during 1997 to 2002. Oreo marketing managers became aware of their loses and immediately went back to action and changed their marketing mix and started to introduce several different new products. This effort resulted with high sales in 2008. Sales were amounted to $4 billion and market share 41%. 4
- 5. Stargate Institute SWOT 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. 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. Stargate Institute Competition The foodindustry 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 environment for Oreo. There are a lot of competitors in the same industry providing the same products but the most competitive companies are: Prince Chocolate Biscuit Product Strength weakness Taking advantage of their weakness Strong brand name Lack of varieties Produce more and image and flavors varieties with different appealing flavors Americana Strength weakness Taking advantage Product 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. Stargate Institute Ulker Product Strength Weakness Taking advantage of their weakness Strong Packaging Weak A strong TV Division Ülker Group is promotional commercial that one the world's 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. Stargate Institute Digestive DarkChocolate Product 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” . customers Product Offering Serving Product Image Flavor Size per container OREO SANDWICH COOKIES OREO Vanilla 18 oz 15 OREO SANDWICH COOKIES GOLDEN ORIGINAL Vanilla 18 oz 15 9
- 10. Stargate Institute OREO 8 SANDWICH COOKIES MINI BITE SIZE SNAK Vanilla 8 oz SAKS OREO SANDWICH COOKIES CHOCOLATE 2 oz Chocolate 6 OREO SANDWICH COOKIES CHOCOLATE SANDWICH Vanilla 8.46 oz 7 WITH ORGANIC FLOUR & SUGAR OREO SANDWICH COOKIES DUO VANILLA & Vanilla, 13.8 oz 11 CHOCOLATE chocolate OREO SANDWICH COOKIES PURE WHITE FUDGE Vanilla 8.5 oz 12 COVERED 10
- 11. Stargate Institute OREO 6 SANDWICH COOKIES PURE MILK CHOCOLATE Chocolate 7.5 oz COVERED MINT OREO SANDWICH COOKIES WINTER WITH RED Red cream 18 oz 18 CREME OREO SANDWICH COOKIES SPRING PURPLE Purple 18 oz 18 CREME cream OREO SANDWICH COOKIES GOLDEN UH- OH WITH Chocolate 18 0z 15 CHOCOLATE CREME Stock Keeping Unit and Products Available These products shown below are those of which exist in the kingdom’s market. And the stock keeping unit chosen for this project is 66gram, SR 1. Name Weight Price Oreo Sandwich 66 gram SR 1 11
- 12. Stargate Institute Vanilla/chocolate Oreo Sandwich 176 gram SR 2.95 Vanilla/chocolate Oreo Sandwich 792 gram SR 11.50 Vanilla/chocolate Nabisco Oreo Sandwiches, a brand that is older than the automobile assembly line. It is estimated that an average of 4.3 billion sandwiches have been eaten each year over the last 90 years. Marketing Strategies Mission Statement “We want our consumers to regard us as their primary snack food. We want our customers to know that we have their wants and needs in mind along with working to create 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. Stargate Institute “Twist, lick,dunk” Positioning: The Oreo has long been the best-selling sandwich in the whole world. Whenever the name 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 connected to Oreo. Though couple of adults have a negative positioning about the Oreo sandwich and the association but in the point of view of kids, Oreo is strongly and highly positioned. Current Strategies Oreo, by observing its product lines and what it has been offering the past years, we can realize that they are adopting the Product Development Strategy. Product development means offering new or improved products for present markets. In this manner Oreo can find different ways to satisfy the customers. Market Research Sample The sample selected for the research is kids, youngsters and adults. The sample size chosen for quantitative research is 30 and for qualitative 4 people of different ages. Sampling Technique To accomplish the market survey, hybrid research (qualitative and quantitative) has been performed. ∙Qualitative research – in-depth interview (triad as well as diad) and ethnography have been chosen. ∙ Quantitative research- questionnaires containing open and close ended questions have been selected. QUALITATIVE RESEARCH Objectives: 1. Whether people are aware of the brand Oreo 2. Find out the time (weekends, monthly,etc.) when customers buy OREO 13
- 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. Stargate Institute Quantitative Research Objectives: 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. 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. Stargate Institute The positiveassociations 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 desire Table 17
- 18. Stargate Institute Decision Making Process Evaluation Need Information Purchase Cognitive of Recognition 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. 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 mix Product: Oreo makes sandwiches with premium quality two thin chocolate which is enclosed with white, rich cream filling. They associate their product with beautiful human emotions of love and care. Oreo comes in a variety of flavors such as: Oreo Fudge Rings Golden Oreo Strawberry Oreo Oreo 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. Oreo is 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 in mind, Oreo has developed a price range which is affordable by everyone. In times of Ramadan season, Oreo gives special offerings and discounts. Small size – SR 1 Medium size – SR 2.95 Large size – SR 11.50 19
- 20. Stargate Institute Place: As beingfamous, Oreo sandwiches can be found everywhere. They can be easily purchasable in any supermarkets such as Sunbulah, Al-Halwani Bros etc or even in the well known malls like Granada center, Carrefour, Hyper Panda etc. The distribution channel of Oreo is given below- Producer Retailer Consumer Promotion: Promotion is the way a company shows what it does and what it can offer to the customers. Oreo adapted an aggressive promotional campaign. Beside magazines, Oreo’s doing promotional campaigns through television and their website too. Although it is the most expensive form, it is also most effective. Among TV networks, one of the network they chose is MBC (MBC 3) because it has the ability to reach the younger portion of their target market. They also offer coupons on their website. Oreo aims at making their customer’s life beautiful with their mouth watery products by filling those with the beautiful colors of love and care. Suggested Marketing Mix Product: • 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. 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 Consumer Relations, a two-stage process is used to make Oreo sandwiches. The base cake dough is formed 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 in Richmond, Virginia. Oreos for the Asian market are manufactured in Indonesia. Australian Oreos are made in China. Oreo Kingdom sandwiches are manufactured by Nabisco Arabia Inc.(NAARCO) which’s located in Dammam. These sandwiches are also exported to Gulf areas. Controls Any branded product can’t be perfectly flawless. 21
- 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 has shown that not only kids eat Oreo but also a large percentage of teenagers and adults adore it too. So, Oreo must re-target their customers and include these segments. 22
- 23. Stargate Institute • They should try to maintain a stable sales growth. Because too many losses and sales fluctuations affects the company’s image and positioning. • Introduce other product features of Oreo into the kingdom's 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 of useful 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 can recall childhood memories with dunking Oreos in milk, and spark that emotional experience 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, and characteristics in a way or another. Oreo was capable to show its customers that it is one of a kind when it comes to taste, flavor and experience. Though the food industry is an edgy market, but yet no competitors were capable to pinch the undisclosed ingredients of Oreo Sandwich Cookies. References http://www.nabiscoworld.com/ http://www.nabiscoworld.com/Oreo/ http://74.125.77.132/search? q=cache:UPbD7GT7HR8J:www.americasgreatestbrands.com/volume6/pdf/Oreos.pdf+m arketing+plan+of+original+oreo&cd=3&hl=en&ct=clnk http://www.nabiscoworld.com/Brands/ProductInformation.aspx? BrandKey=oreo&Site=1&Product=4400000820 23
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