marketing managment plan

Master of Business Administration

Marketing Management

Assignment

Name: Heba M. Ali

Student No.: STU20199

Prof.: Dr. Ian McPhee

Word count: 3800

Due Date: 15 October 2012

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Table of Contents

Topic Page

Executive Summary.................................................................................................3.

Situation Analysis......................................................................................................5

The Marketing Objective........................................................................................8

The Marketing Plan...............................................................................................10

Marketing Budget & Appendicies........................................................................15

Recommendation:....................................................................................................16

Reference:.................................................................................................................17

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Kraft Foods’ Marketing Plan

Executive Summary

Kraft is the 2nd largest producer of Consumer food products after Nestle, it operates in around 70 countries across the world with around 98000 employees and sells its products in over 150 countries in Latin America, Asia Pacific, Europe, Middle East and Africa through its subsidiaries, Kraft Foods International Inc and Kraft Foods North America Inc (Kraft Foods, 2010).

Kraft manufactures and markets packaged retail food products like cookies, confectionery, coffee, juices, powdered beverages, cheese products, ready-to-cereals, desserts, meals and processed meats. All these products cover major costumer sectors like Snacks, Beverages, Cheese, Grocery and Convenient Meals under the major brands like Kraft, Jacob’s, Philadelphia, Maxwell house, Nabisco, Oscar Mayer, Post, Oreo and LU (Kraft Foods Brands, 2011).

The Kraft products are being sold via many distribution channels like distributers, satellite warehouses, operated companies and public cold-storage facilities, depots, and other.

Having realized that it was losing the market, Kraft carried out research which enabled it to be able to serve people well it had to start producing healthy foods. This is the only way it would ensure that it continued enjoying the market it already has. Its focus has shifted to healthy eating styles and this explains why it has introduced the new Fat Free OREO whose objective is to solidify its grip on the market and portray it as a company that supports healthy eating life styles .The fat free OREO is expected to become a leading fat free snack in the market in the whole world. There are other products such as OREO piecrust, OREO ice cones, and OREO Fat Free snacks that are available for vending machines which Kraft is using to enhance its sales (Kraft foods, 2011).

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Figure 1 (Carnegie Research Inc., 2009: p. 2-2)(Note: All dollars in million)

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Situation Analysis:

a- PESTEL Analysis

1- Political

The Political environment is suitable for Kraft foods to introduce its new product to the market. The UAE political status is stable and encourages even new investments.

2- Economic

As mentioned the economic and political environment in UAE are in a good condition for Kraft to launch its new product, the country became a centre in the Gulf/ME area attracting investments and job seekers too.

3- Social

Kraft products are well known in UAE and its advertisement about Oreo (Children oriented) is well known too. Not only Oreo but all of its brands some are in the second place after Nestle and other are in the first place already.

4- Technological

Kraft implemented successfully innovative ideas and processes to create values to its customers; it gives care to the customer needs before building its strategy, the company has SAP Net weaver technology platform to make ensure that information and business support transformation flow to every unit (FBR, 2008).

5- Environmental

Kraft has committed to reduce the effect of its operations on environment; it reduces the intake of water, carbon dioxide release and materials use in packaging (KFSPFS, 2009).

6- Legal

Kraft has a long history maintaining corporate compliance along with all local or international implication; the company obeys laws, rules and regulations in order to sustain its business profitability and credibility (Kraft Foods, 2011).

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b- Internal Analysis

Kraft core competencies: Kraft has donated average of $770 million over the past 25 years in both cash and food, implemented community programs and supported charity like the mobile food pantry (Kraft foods, 2011).

- Kraft has a very market resistance and popular to its investors, the company shows significant pricing expansion; the firm’s top-line advanced 11.5% led almost exclusively by organic expansion, which was 8.4% in the quarter; Kraft’s adjusted operating income over 12%, productivity enhancements, foreign currency; and earnings per share jumped from 23.4%, to $0.58 in the quarter. Nestle, for example did 60.9 billion in sales but only had 7.3% inorganic growth and 4.1% real internal growth (Yahoo! Finance, 2011).

c- SWOT ANALYSIS

Strengths

World’s second largest food company

Strong brand Brand recognition & loyalty Distribution network

Weaknesses

Sharp rise in the prices of ingredients

Increase the expenses of ads Geographic concentration Limitation in rising the price of

the productOpportunities

Expansion in developing markets

Repositioning Offer organic products Offer Fat free/Sugar free

Threats

Purchase issue Competition Decrease the consumption Price issue

Strength

Kraft foods stand out as the largest branded foods and beverages in the Middle East Asia and the entire UAE market. The products are found in almost 99 Percent of all households in the UAE market. Kraft Food Inc. is one single brand that nets approximately $1 billion every single year. By 2006, it was ranked as one of the top cookies maker with sales exceeding $1,432,539,000. Kraft Food Inc. still remains one of the leaders in this market

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commanding the nine topmost slots in as far as the best 20 cookies are concerned. OREO is one of the products that Kraft food relies on to continue commanding and controlling a big share of the market. It is one of the products that make Kraft Food Inc. a house hold name in the UAE market (Kraft Foods Fact sheet, 2011).

Kraft has several brands that it wants to grow, it does this by:To strengthen its presence in the market, plans are underway to introduce new fat free OREO cookies. This strategy is not only intended to accommodate the whims of the customers who do not purchase products from Kraft Food Inc., but it is intended to adapt to the ever changing eating habits of the consumers. It also aims at develop products that are in line with the current trends in the UAE market. The strategy is to develop a new Fat Free ORERO product that contains 0 grams fat, 0 grams of sugar per every serving. This product is targeting the UAE and other markets.

Weaknesses

Kraft Food Inc. sales have in the recent past declined a thing that has been attributed to the sudden increase in the prices of the products in the 1980’s. This sudden increase in prices made consumers cut down on their expenditures on the products. The number of products purchased by every consumer declined steadily. Similarly, the introduction of private labels heavily ate in to the market that had for a long time been a preserve of Kraft Food Inc. cookies.

The fact that the sudden increase in the prices of Kraft Food Inc. cookies was exogenous for instance increases in the prices of ingredients made it difficult for the prices to be lowered below the current prices because this would make the firm make losses. This implies that the new Fat Free OREO was to be sold at prices that were slightly above the original OREO which was $3.00 per package. The price for the new OREO would thus be $3.15 per package.

The other factors that could be blamed for the decline in the overall sales is that the products that Kraft Food Inc. had been producing did not initially target a society that is health conscious. Kraft Food Inc. has since then introduced fat reduced products to try and lure the consumers back. Currently the consumers’ attention has shifted to no fat products. For instance OREO has a fat content of 7 grams and 14 grams of sugar for every serving. This is high especially if the same is compared with the competitors whose cookies have only 4.5 grams of fats and 5 grams of sugar for every serving. This is what prompted Kraft Food to introduce some new products that are fat free. One such product is the new Fat Free OREO which is expected to help Kraft

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food Inc. is able to capture the lost market and raise the sales to the targeted levels. Kraft has also focused on the fact that it needs to produce products that are not only healthier but ones whose quality is assured.

Opportunities

There are a number of opportunities Kraft Food Inc. is bound to benefit from. The fact that the firm is among the leaders in this industry makes it better placed in terms of consumer loyalty and attracting new clients. The benefit of scale and the fact that retailers are already aware of the products Kraft Food Inc. deals in makes it well placed to command a big following in the market. Kraft Food Inc. being rated 21 of the top 25 companies across the globe gives it an upper hand on the international market it has its products sold in various markets including the most advanced Economies of USA, European Union and UAE market. The new packaging for the Fat Free OREO has a label ‘‘Weight Watchers for points for servings’’ is expected to draw more attention and generate great interest and it is expected that it will increase the level of confidence (Steven Goer, 2008).

Threats

As an international company, Kraft Food Inc. faces competition from several other firms that Manufactures cookie brands such as Nestle or national companies. The firm commands a larger market with an annual sale of $554318700. Its market is part of the market that Kraft Food Inc. wants to cut in to while at the same time retaining its existing customers. The other competition that Kraft Food Inc. is expected to wade off is AngelLite that specializes in the manufacturing of fat free sandwich cookies. AngelLite has about 140 products which are fat free, and whose sales are on the rise. This is expected to continue giving Kraft Food Inc. competition. There are also new companies in the market whose continued product appeal and the firms growing fame is a major threat which Kraft Food Inc. has to urgently address (FBR, 2008).

Marketing Objectives

The original OREO targets majorly children. The cookies focused on attracting children with new colours such as cream which was aimed at ensuring that there is a new interest generated among children who are better placed to convince their parents to buy the new cookies. The Fat Free OREO on the other hand targets women between the age of 18 -45 who in most cases are health conscious but still have unquenchable desire for sweets. These groups of people are mostly city residents who fall in the middle and upper income

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classes. The focus is on the group of people who enjoy recreational activities because this is the time they get to consume Fat Free ORERO products. Among the groups that are targeted by Kraft foods are those who engage in swimming, jogging, power walking etc.

This group is targeted because of their wish to lead a health life but have unending crave for sweets. To turn them from such products as sweet, our target market will substitute such high calorie products with Fat Free OREO cookies. They will not only buy our product for themselves but will also carry home a few packets for their loved ones. Children who have become vulnerable to obesity are considered by Kraft as secondary targets. The primary target is therefore provided with an opportunity of engaging in what they like most without running risks of developing health related complications. To be precise the targeted market will consume approximately three cookies per day which will quench their craving for that day.

Kraft Food Inc. is determined to maintain a reputation of manufacturing tasty cookies though it faces a problem where its products are known to be fattening and hence it becomes difficult to distance itself from the image created in the customers. To be able to mitigate the losses that may result from this, Kraft shall engage in promotional activities so that the targeted audience may feel its presence and notice its products. This is what will ensure that they choose products from Kraft and not those from competitors.

Mission StatementWe are committed at ensuring that our customers are aware of the fact that we have the snack food they have been looking for. We also want them to know we are in business to provide for their wants and needs while we work hard to ensure that the products we manufacture are health conscious and in line with their lifestyle.

ObjectivesThe OREO product has been very successful and Kraft Food Inc. is determined to venture in other areas that have recently attracted a number of customers. The focus is to improve on the quality of the products and reduce marketing that target children. We focus on increasing the public awareness of the disadvantages derived from excessive fat in intake to actual providing them with products that are fat free such as Fat Free OREO.

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Marketing Plan

Kraft Foods Inc. in UAE: MEA Regional Office, Employees: 130

Figure 2 (Carnegie Research Inc., 2009: p. 2-16)

Projected Goals Accessing new markets that consist of customers who watch what they eat

with an intention of losing their body weight by reducing their fat intake. Introducing in the market Fat Free OREO Marketing OREO snacks as one of the top Fat Free product in the market. Diversify in to other Fat Free products such as OREO pie crust, OREO ice

cream, and repackages of Fat Free OREO for vending machines.

Financial Objectives Targeting to sell 5 million bags of Fat Free OREO products To increase the market by aggressively marketing OREO product to

women who are between 18-45 Focus at increasing OREO sales.

Marketing Objectives Focus on people who are on strict diet such as weight watchers and south

beach. (See appendix C) Promote Fat Free OREO packaging by making use of new and attractive

colors. Promote a healthier product to consumers who are health conscious.

Marketing Strategy/TacticsOne of the strategies to be used by Kraft is to target and reach out to health conscious women aged between 18 -45. In this case the strategy would be to focus on encouraging those who are already purchasing and using the products to increase the frequency at which they buy our product. The media targeted for advertisement includes magazines and the TV because of the wide range of people it is able to reach. (See Appendix C)

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Financial Analysis

It is estimated that Kraft Inc. spends about $10million to researching and developing a formula for the Fat Free OREO. This effectively increased the cost of production by $0.75 per package if this is added to the package cost of 0.15cents; each Fat Free OREO must then be sold for 15cents per package. The marketing costs will be taken from Kraft Foods marketing budget which means the marketing cost is not factored in to the cost of production.

Break Even Analysis

Kraft foods expects to continue operating on the same profit margin , the price of one Fat Free OREO is $ 3.15 which is double the cost of producing the same and stands at $1.57. If we divide this figure with $10 million, it shows that 6.4 million packages are required to break even (Kraft Foods, 2011).

Marketing Mix

Consumer Promotions

Promotions on all Kraft Food products to be run in most of the retail outlets while at the same time soliciting for the feedback from the consumers. Coupons are targeted and should to be used to promote the products by placing them on the website for people to download free of charge. When carrying out the survey, the interviewee who provide a feedback and fill the questionnaire to be provided with the coupons. Other seasonal promotional activities to be organized to coincide with the media schedule with contests being organized so that they win membership to various fitness institutions in this region. . Other promotional activities to be organized during the months of December where presents to be given to those who participate and win in the promotions.

Positioning

For Kraft to be able to maintain its 21 position out of the best 25 in the world, focus will be to create fat free products to compliment the products it is already producing. Kraft uses the same reasoning to expand and target a wider market by reaching to the new target audience. To educate the masses

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on the importance of the new Fat Free OREO this helps women to abide to the low fat dieters without necessarily having to starve themselves.

Packaging

The packaging to be meticulously modified for the purpose of packaging the Fat Free OREO which is featured in red and blue colours. Red is associated with health life style while blue is maintained to honour the original OREO which is blue in colour. Furthermore, the red colour is to be used to differentiate between the fat Free OREO and the original OREO. The zip locks seal to be used on the package to maintain freshness for a very long period of time.

Communication Strategy

To inform the public that it is possible for it to watch what they consume and satisfy their cravings without necessarily depriving themselves the delicacies they crave for. The new product and the message are to be marketed in print, electronic, and outdoor advertisements.

Press Release

To send out press releases that explains the new products and when the actual distribution will be commenced. Press releases tend to be dispatched through the media, retailers, editors of food and science and magazines editors.

Public Relations

A few foundations to be chosen in the UAE market, sponsored so as to popularize Fat Free OREO. The focus would be to contribute a certain percentage of all the money collected from the sales that we make. The foundations to be targeted are those that directly deal and help women.

Print Media

Magazines and newspapers should be used to disseminate information to particular demographics of the targeted audience. The fact that the magazines have a longer shelf life means that it should be used as it w always remind the readers of our products and the benefits that can be derived from them.

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Electronic Media

Kraft food tends to specifically focus on the use TVs and websites for marketing purposes. This methods are a little bit expensive but they have the ability to reach the targeted market hence they are very effective. Our website is to be tailored so that it features information on our products with special emphasis on the Fat Free OREO.

Magazines

Running advertisement in almost all magazines and prints in the UAE, the magazines to feature the advertisement should be those that can be able to reach diverse group of women and should appeal to the targeted market. Among those that will feature most of the advertisements includes health magazines that focuses on good eating habits. And any other magazine considered commanding a wide group of readers.

Television

The TV station chosen should be able to reach as many people as possible and should have the ability to connect to a wide range of women being targeted. TV stations such as Aljazeera, BBC and many other that have a wider coverage in the UAE would be targeted (See appendix B). The TV net work chosen must be popular and should be able to run the advertisement during morning and evening news and during any other prime time. The advertisements should also be run during times when health related programs are being run. They should also be featured when women tailored programs are being aired.

Outdoor Advertisement

Billboards erected to be erected along high traffic roads and highways and be effectively used so that the advertisement reaches a large audience. This is how motorists and their passengers will be able to know more about our products and increase the possibility of having the products bought.

Media schedule

Though the advertisement program is scheduled to run throughout the year, there are specific months which are important since they have more than one activity taking place. The months in which advertisement activities will be

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enhanced includes January, February, April, may, September, October and December (See Appendix C). The months of January and February are important since this is the time people make New Year resolutions. This is the appropriate time to promote Fat Free OREO since most people are expected to resolute to reduce fat and sugars in their diets. Product such as OREO will be available to such clients. The months of April and May are crucial months since this is the time people begin to watch their diets and their weights. This is the swimsuit season as people prepare for summer. September and October are significant because this is the Halloween time. Promoting our products at this period with a few offers could help them a great deal. In conclusion, the month of December is a holiday month that comes with a number of festivities. Watching your diet is a must since it helps in cutting down weight. This is the time one has to eat Fat Free OREO so that he does not add on unnecessary weight during this festive season.

Performance Evaluation

The public opinion is very important consequently, for evaluation purposes, a survey needs to be carried out to monitor the public opinion and the feedback that helps to determine the strength and the weaknesses of our product. The public should also be able to state the modifications that they think are necessary to make the product serve them better. The survey questions should be posted on Kraft website and inside the packages of our products. For every completed survey, a reward of $1 should be given in terms of reduced price for the extra OREO purchased.

Sales Forecast

Kraft foods estimate that the sales for the first year will be around 5 million packages. Most of these products are expected to be sold in the second half of the year. The second half of the year will realize greater sales because it will take some time before the consumers learn about this new product. In the second year it is projected that the sales will hit the 7million packages because most of the store will be stocking this product and more customers will be aware of the existence of the product following aggressive marketing campaigns. By the end of the first quarter of the second year, the Fat Free OREO will have sold enough packets to earn profits (Kraft Foods, 2011).

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MARKETING BUDGET

Appendix A

ADVERTISEMENT& MARKETING AMOUNT IN US $MAGAZINE 10,000,000TELEVISION 100,000,000PROMOTIONAL ACTIVITIES 1,000,250SALES INCENTIVES 5,000,000PUBLIC RELATIONS 1000,000,000CONTIGENCIES 2,000,000TOTAL 1,118,000,250

Note. The above budget caters for the companies expenses on 12 products namely OREO, Cadbury, Trident, milka, Tang, Kraft Food Inc. kraft, Jacobs,LU, Philadephia, Oscar mayer, and Maxwell house ( Trefis 2011). When we divide 1,118,000,250 by 12, it is estimated that OREO alone contributes$ 93,166,687.5 towards the expenses.

Appendix B

Promotional activities for Fat Free OREO in the UAE marketNumber of people targeted

Number of people converted in to customers

Newspapers /magazine 100 millions 2millionTelevision advertisement 200 millions 1 millionBillboards 500,000 10,000Sales incentives 300,000 100,000Other Promotional activities

1 million 100,000

Appendix C

Month Amount spend on advertisement

Product targeted

Jan, Feb $500,000 Fat Free OREOApril &May $ 200,000 Fat Free OREOSeptember &October $300,000 Fat Free OREODecember $200,000 Fat Free OREO

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RECOMMENDATIONS

In my opinion, Kraft is one of the most respected companies in snacks whose portfolio is unrivalled because they produce brands that people love. To maintain this position, it is important that;

They produce snacks that are healthier but delicious and capable of satisfying customers’ desire.

Hold on its iconic heritage brands and increase resources for marketing in their respective market specifically to market its Tang powdered product in Asia more aggressively

Deliver the best services so as to win the customers and consumers, colleagues, suppliers and communities.

To maintain acceptable quality so as to gain new consumers and maintain the loyalty of those that already exist. Nutritional value of its products must be maintained, with appropriate package integrity maintain because it is key to customers at point of sale.

Maintain a strong upstream collaboration with the suppliers

RERERENCES

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1- Carnegie Research Inc., 2009. Legal and Regulatory Issues, Retrieved on 3rd October, 2012 from http://www.angelfire.com/jazz2/vernonhead/carnegie/kraft.pdf

2- KFSPFS, 2009. Kraft Foods Sustainability Progress Fact Sheet, Retrieved on 30th September, 2012 from http://www.kraftfoodscompany.com/assets/pdf/KFTfactsustainabilityProgress2009.04FINAL.pdf

3- Kraft Foods is Creating a More Delicious World2011.CSRwire Website, retrieved on 4th Oct, 2012 from http://www.csrwire.com/press_releases/32274-Kraft-Foods-is-Creating-a-More-Delicious-World

4- Food Business Review (FBR), 2008.Kraft foods deploys SAP Net weaver technology. Retrieved on 1st October, 2012 from http://www.food-business-review.com/news/kraft_foods_deploys_sap_netweaver_technology_platform

5- Kraft Foods, 2011.Financial News Release, Retrieved on 7 th October, 2012 from http://phx.corporate-ir.net/phoenix.zhtml?c=129070&p=irol-newsArticle&ID=1560472

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7- Kraft Foods Brands, 2011.Retrieved on 25 th September, 2012 from http://www.mondelezinternational.com/Brands/Largest-brands/index.aspx

8- Kraft replaces AIG in Dow Jones Industrial Average.USA TODAY, Associated press, and Retrieved on 1st October, 2011 from http//www.usatoday.com/money/markets/2008-09-18-dow-adds_N

9- Form 10-Q for KRAFT FOODS INC, Yahoo! Finance 2011 report retrieved on 10 October, 2012 from http://biz.yahoo.com/e/111104/kft10-q.html

10- Steven Goer, 27th October, 2008. Fostering Innovation at Kraft Foods, retrieved on 1st October, 2012 from http://www.ideaconnection.com/interviews/00058-fostering-innovation-at-kraft-foods.html

11- Kraft Foods, 2011. Kraft Foods Fact sheet 2011 retrieved on 5 th October, 2012 from

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