PART 1

1.0 Introduction

Nestle is the largest food and beverage company in the world which was founded by Henry

Nestle in 1866.The company owns several major consumer brands including KitKat, Nescafe

etc. The main products of the company includes milk products, powered beverages, ice-cream,

chocolate and confectionary. As for this assignment, the chocolate from Nestle, specifically

Nestle KitKat has been chosen and will be discussed (Armstrong, 2010).

Companies such as Cadbury with its well-known Dairy Milk, Mars with its famous M&M,

Hersheys with its well-known Kisses are the main competitors of Nestle with its well-known

KitKat in Malaysia. In this highly competitive market, KitKat must use clever marketing tactics

to be able to appeal to different cultures in Malaysia (Jannat, 2015).

1)Hersheys kisses 2) Bounty,Twix,Mars,snickers,M&M 3) Hersheys milk

chocolate

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4)Cadbury dairy milk chocolate

BCG Matrix of Nestle

Market Share

High Low

Stars

Q uestion Marks

KitKat

Pure Life Maggi

Noodles

Mineral
Water

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High

Cas h Cows
Dogs

Nesquik
Powerbar

Market Growth
Energy
Nescafe Barr

Low

Cash flow is indicated by high market share and low growth rate of the industry. The brand

Nesquik of Nestle together with Nescafe can be regarded as cash cows (Jain, 2005). The business

units that are regarded as stars, have high market share as well, however; the growth rate of

industry is faster and higher. The mineral water packaged by Nestle as well as the brand Nestle

Pure life can be regarded as stars. The Question marks is indicated by low market share and high

growth rate of industry (Moon, 2012). Maggi noodle can be considered as Question Marks. The

business units that are regarded as dogs hold a small and low market share with low potential of

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market growth. The brand named Power bar and the main product that was developed under the

brand name, an energy bar, can be regarded as Dogs (Jain, 2005).

2.0 SWOT

Strengths Weaknesses

1. KitKat has strong brand name of 1. The fine quality products of

Nestle (Rth and Netzer, 2016) KitKats are not provided in the

remote areas (Modi, 2013)

2. It is well demanded in the public

and bestselling products of Nestle 2. The products of KitKat have

(Rennhak, 2017) limited shelf life and cannot be

stored for a long time (Machmud

3. It has creative, simple and visible
and Sidharta, 2014).
advertising (Berry, 2014).

3. Kit Kat has not changed its

4. KitKat products are easily
packaging style for quite a long
available (Rth and Netzer, 2016)
time (Machmud and Sidharta,

5. It has strong research and 2014).

development capability(Rennhak,

2017)

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Opportunities Threats

1. KitKat can expand market growth 1. Rising price of raw materials

in emerging countries (Stevens et (Stevens et al., 2012)

al., 2012)
2. Increased competition in the

2. KitKat can produce Cocoa by market with Mars, Cadbury and

itself through the companys The Hershey (Suh, 2014)

Cocoa Plan(Baines et al., 2017)

3. Currency fluctuation (Syazwan Ab

3. The companies can reduce Talib and Bakar Abdul Hamid,

production cost by producing 2014)

Cocoa itself (Baines et al., 2017)

4. cocoa sustainability (Stevens et al.,

4. KitKat can improve its product 2012)

into quality and environmentally

friendly ones through growth of

technology(Stevens et al., 2012)

The strength and opportunities of KitKat are very significant. One of the most important

strength of KitKat is being owned by Nestle which is the largest food and beverage

company in the world. This is a very big promotion for KitKat and facilitate the market
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penetration whereby Nestle productions are of high quality standard and image in the

eyes of consumers. Besides, the main opportunity of KitKat is expanding market growth

in emerging countries such Malaysia and in the rural areas of this country.

PESTLE

Political Different laws are used in different countries (Cherry, 2011)

There are different political concerns that the company need

to face in different countries (Macdonald, 2012)

Malaysias concern is on growing obesity in people

especially obesity rate in kids and teenagers (Cherry, 2011)

Economic The main economic factors that have an effect on the sales of

KitKat includes: Wage rates, taxes and interest rates

(Makos, 2015)

If the interest rate, tax rate goes up, then the price of KitKat

might also go up (Team, 2013b).

If the wage rate goes up, this may affect the demand of

KitKat through reducing the purchasing power of consumers

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 (Makos, 2015)

Social Consumers has become more demanding and health

conscious (Team, 2013b)

Consumers want to know the ingredients of products and

their overall effects (Makos, 2015)

The company must be responsible for using only certain

amount of specific ingredients (Team, 2013a)

Technological Machinery should be used to increase the production (Team,

2013b)

The company should know that the maintenance cost of the

machinery is very high (Makos, 2015)

The company need to adopt the latest technology in

production (Team, 2013a)

The company can involve consumers in its production

through idea generation phase (Makos, 2015)

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 Legal The company has to deal with changing nature of regulations

across different markets (Team, 2013b)

Disobedience from the rules and regulation will lead to

problem of production as well as distribution of the product

(Team, 2013a)

Environmental KitKat is using foil covering to reduce environmental

pollution coming from plastic covering (Makos, 2015)

KitKat uses environmentally-friendly packaging (Team,

2013a).

KitKat knows that the main economic factors that have an effect on its sales includes:

Wage rates, taxes and interest rates. Moreover, the company needs to be responsible for

both the ingredients that are used in the manufacture of the product together with utilizing

certain amount of specific ingredients (Association, 2011). The company need to use

machinery to increase the production. KitKat at also needs to adopt the latest technology

in production. Besides the company can involve its customer in production of KitKat

through idea generation using online platforms (Team, 2013a).

PART 2

3.0 Objective

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Kit Kat objectives are below

KitKat wants to increase its market share by 10% in 2018

KitKat aims to increase its profit to 946.7 million Ringgit in 2018.

4.1 ANSOFF MATRIX

4.2 Market Penetration

This strategy attempts to increase market share within the existent industries, either through

finding new customers or selling more products to the established customers usually through

adopting marketing mixs promotion element. KitKat tried to sell more products to the

established customers and used market penetration on an annual basis through KitKat

christmas packaging and advertisement which helped increase sales throughout festive

period.

Figure 4.2.1 Christmas packaging for kit kat

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4.3Product Development

This strategy needs the company to develop new competencies which can appeal to the

current market. KitKat can adopt product development strategy and focus on developing

extensions of products such as Kit Kat Green Tea or other flavors like KitKat Durian in

Malaysia. The company can develop KitKat durian because this fruit known as king of fruit

is one of the Malaysian most favorable fruit and it has been known that is very beneficial for

health so KitKat with durian is expected to attract the attention of many people in Malaysia

(Steel, 2010).

KitKat Durian

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 Kitkat Green tea

4.4 Market Development

This strategy needs the company to sell its existing products to new markets which could be

new geographic base or new consumer base. Due to the nature of the product, KitKat cannot

target anew customer base, therefore; the company need to emphasize on selling its existing

products to new markets such as rural areas in Malaysia (Poh Chuin and Mohamad, 2012).

4.5 Diversification

Under this strategy, the company is required to introduce new offerings in to new markets in

order to increase its market share. This strategy is very risky as product together with market

development is needed. KitKat Oat Bar is considered a new product because it is no longer

just plain chocolate bar but more to a healthy snack like granola or energy bar. It also

ventures into a brand new market where health is the main issue. The target consumers are no

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 longer limited to those who are simply looking for a snack but also those who are leading

healthy lifestyles (Silva et al., 2012).

New Kitkat Oat bar

5. Segmentation

Geographic segmentation

This segmentation will divide the market in to different geographic units such as regions, areas,

etc. The focus is on South East Asia region, Malaysia. The company will focus on urban and

suburban and rural area of Malaysia (Madahi and Sukati, 2012).

Demographic Segmentation

There is no age, sex, income and any other kind of limitation on use of the KitKats products.

KitKats products are for all including children, adults and aged people. Any age group can use

the products as per need (Sheena et al., 2015).

Malaysia is multi race country and KitKat products can be used by all races in this country. In

addition, there are various religions in Malaysia including Muslims, Hindu and etc but the

company does not have any limitation for any religion and its product will serve the needs of all

religious (Mazilu and Mitroi, 2010).

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Psychographic Segmentation

In terms of lifestyle, KitKat segments believers, achievers and active people who works a lot and

needs energy during the day. In terms of personality, KitKat segments cautious, predictable and

enthusiastic individuals (Baharun et al., 2011).

Behavioral Segmentation

In terms of benefit, KitKat provides its products to the individuals who want to eat healthier and

less calorically snacks, convenient, easy and quick to bite and bring. Moreover, KitKat offers its

products to regular users with medium user rates who have positive attitudes toward the product

and medium loyalty status (Wells et al., 2010).

5.1 Targeting

5.1.1 Target market

The target market of KitKat is men and women of all age, race and religious who are enthusiastic

who have a positive attitude and look for healthier and less calorically, convenient, easy and

quick to bite snacks.

5.1.2Targeting Strategy

The Malaysian market is heterogeneous and customers have different wants for a product.

Malaysian want different mixes of benefits from KitKat but they have different priorities for

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each benefit. Therefore, KitKat will use differentiated Segmentation strategy in Malaysia and

will target two or more segments with a marketing mix for each segment. He provides different

product for many segments based on different ages.

5.2 Positioning

KitKats position itself in the mind of the customers as a chocolate to be eaten every time one

takes a break through its slogan have a break, have a Kit Kat

PART 3

6. Marketing Mix

6.1 Products

KitKat is the leading global brand. Therefore, it has leader product strategy. Moreover,

another, product strategy of KitKat is establishing a quality image through developing

high quality products. In addition, KitKat adopted differentiation strategy and introduced

new products with new flavours like KitKat Green Tea Chocolate in Malaysia. Besides,

KitKat distinguished its products from its competitors products in the eye of its

customers through changing its packaging before competitors has an opportunity to

respond (Goi, 2009).

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 There are 3major product mix width: 4finger, 2finger and chunky bar. The product mix

width can be further broken down into their respective product lines such as chocolate,

dark chocolate, hazelnut, green tea flavors.

KitKat is in Maturity stage because it has already reached wide acceptance in the market

and its sale is peak and it is going to slow down, therefore; it should adopt product line

extension strategy in order to achieve sustainability in the competitive market (Anderson

and Zeithaml, 1984).

6.2 Place

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KitKat is available in 100 countries of the world. KitKat has complicated network of distribution

channel that makes the products available to consumers everywhere and anytime that they desire.

KitKat use intensive distribution strategy. Since KitKat products is a very common product in

the market and many different alternatives are available; hence, this strategy is used to push

towards vast distribution of KitKats products. This strategy covers all the possible outlets and

display points that can be used to distribute and sell KitKats products. Moreover, KitKat use

push strategy to promote its product directly to end customers to pull through channel

(Rosenbloom, 2012).

6.3 Price

KitKat has maintained a low price throughout years for the purpose of increasing the volume and

keep its loyal consumers. One of the price strategy that KitKat use in its Malaysian market is

market penetration pricing. The company has set low price for its new product to achieve high

unit sales and maximum market share. Malaysian Market is very price sensitive due to inflation

and New Goods and Service tax rules. Therefore, this strategy may be effective in this market.

Furthermore, KitKat use psychological pricing strategy such as odd-number pricing (like RM

4.99 for Kit Kat 4 Finger) and multiple unit pricing. As such the company can package together

two or more identical KitKat products and sell them at single price. The company can also use

odd numbers that are slightly below whole-Ringgit amount (Goi, 2009).

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6.4 Promotion

KitKat promote its products using offline media including newspapers, magazines, billboards,

posters, and televisions together with online media such as websites, blogs and social media. The

company gives free sample as promotional strategy. In Malaysia, Value for money is the top

priority when shopping confectionary and chocolate products, therefore KitKat offer extra

product free of charge. KitKat advertise on YouTube and social media (Berthon et al., 2012).

This brand also advertise through pop display in mob apps. Moreover, KitKat gives coupon and

tie a coupon on the product itself. Besides, to increase consumer engagement and publicity,

KitKat organize contests yearly through social media sites such as Facebook and Instagram that

have a large number of users. In addition, KitKat, hold some events to promote its products.

KitKat try to add value to the experience of consuming KitKat by holding campaign and

providing customer information on food shortage. Moreover, KitKat holds campaign to

encourage businesses and donate its benefits to hospitals.

7.0 Action Plan

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2018 Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec

Website

Billboard

Brochure

TV

YouTube

Social

Media

Contest

Event

Public

Relation

KitKat promotes its products through online and off-line media. The company advertise its

product in different websites throughout the year, on billboards for 6 months starting March

2018, on TV for 6 months staring July, on YouTube for 3 months starting February, on social

media throughout the year. Moreover, the Company publish brochure to advertise its products in

September, October and November 2018. The company holds contest to promote its products in

December 2018 and events in January and February 2018. Besides, public relation is used as a

medium to advertise KitKat for 4 months starting March.

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 Marketing Tools Cost

Advertising RM 98,000

Public Relation RM 82,000

Sales Promotion RM 62,000

Direct Marketing RM 67,000

Personal sale RM 55,000

TOTAL RM 364000

Promotion Mix

RM 55000

RM 98000

RM 67000

RM 82000
RM 62000

Advertising Public Relation promotion sales Direct Marketing Personal Sale

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8.0 Contingency plan

Distribution channels such as supermarket store may have limited available slots for Kit Kat.

This threat can be prevented through early planning and giving notice to retailers.

The value of Ringgit to Dollar may suddenly drop sharply. The Malaysian consumers are price

sensitive due to inflation and New Goods and service tax. So, considering the change in the value

of Ringgit, they wont buy KitKat products if it becomes more expensive. Therefore, KitKat has

to deal with this challenge through resizing its product or repacking instead of increasing the

price.

9.0 Conclusion

KitKat is one of the main brand of the Nestle. In the highly competitive market that KitKat

operates, the Company must have very good marketing plan and strategies to be able to appeal to

different cultures in Malaysia. KitKat tries to target men and women in all ages, races and

religious who are enthusiastic who have a positive attitude and look for healthier and less

calorically, convenient, easy and quick to bite snacks. KitKat promote its products using offline

media including newspapers, magazines, billboards, posters, and televisions together with online

media such as websites, blogs and social media.

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