The company Project

Name : RAHUL . J . BHATIA

Company : NESTLE
product : KIT KAT
course : BBA
year : 2nd YEAR ( SML )
Registration number : 091607278

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Contents Page No.
Executive Summary 3

Introduction 4

Market Environment 5

PEST-G analysis 6

The Competition 8

The Company 9

SWOT analysis 10

Product Life Cycle 12

The company’s marketing strategy 14

BCG Matrix 16

Marketing Mix 18

Evaluation of Company’s Strategies and Tactics 20

Conclusion 21

Appendices and Referencing 22-23

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Executive Summary

This project gives and introduction of the company Nestlé and aims at providing
detailed information of one of its famous product Kit Kat. This company project also
aims at allowing understanding of important marketing aspects of Kit Kat like the SWOT
analysis and the Marketing Mix ( 4 P’s) . Nestle and Kit Kat’s sales and profit trend have
been explained. This company report also aims at explaining the product life cycle of
Nestle’s Kit Kat. Other key points to be looked at in this report are its main competitors
and their market share, also the evaluation of the company’s strategies and tactics have
been explained. The company’s marketing strategy has also been elaborated in the
company report. By the end of this report we will be able to understand where Nestle
and its product Kit Kat stand.

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Introduction

Nestlé S.A is the worlds largest consumer-packed-goods company with its headquarters
founded in Vevey, Switzerland. Nestlé was a company that was formed after merging
two companies i.e., Anglo-Swiss milk company which was owned by brothers George
Page and Charles Page and was formed in 1866 and Farine Lactée which was formed
by Henri Nestlé in 1866. During the First world war and the Second world war the
company grew significantly, eventually expanding its offers and products beyond
condensed milk products and infant/baby formula products. Today Nestlé has a large
variety of products to offer like infant food, ice creams, chocolates, and beverages like
coffee and bottled water. The product of Nestlé that has been chosen to work on for this
company project is Kit Kat.

Kit Kat was launched in 1911 by the name of “Kit Cat” by a company named Rowntree a
confectionary company which was based in York, United Kingdom. It was discontinued
after 1930’s for a while as the company gave promotional importance to other products.
It eventually came back in the market in 1939. It picked a global name by the 1950’s
and was later acquired by Nestlé in June 1988 through the purchase of Rowntree. This
gave Nestlé a global control over the brand except it had no control over the North
American region as The Hershey Company already acquired the license to produce Kit
Kat all over North America.

Kit Kat is a chocolate bar that consists of creme-filled wafer which is covered with
smooth milk chocolate. Each of the finger of the traditional four-fingered bar can be
snapped of one at a time.

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The Market Environment

 The Geographical Market :

Kit Kat has a big geographical market. Even though it was acquired by Nestlé in
1988, it did not struggle under it at all since Kit Kat was already internationally
recognized. It is produced in 17 countries by Nestlé namely UK, India, Japan,
China, Australia, Canada, New Zealand, Egypt, Algeria, Turkey, Malaysia, South
Africa, Germany, Venezuela, Mexico, Bulgaria and Spain.

Kit Kat in the USA is produced under the license by The Hershey Company due
to the prior licensing done by Hershey’s to produce Kit Kat in the North American
region.

 What Business Are They In :

Nestlé is into food industry. They are basically a multi-food industry to be precise.
They products in almost every food sector from infant food for children from the
age of two-to-five, to beverages, chocolates, seasonings, frozen food, cereals,
coffee, tea, water, ice creams etc., for adults to pet-care food for pets. Their
product Kit Kat has its separate marketing done and it is into the chocolate
business with a range of different Kit Kat flavors.

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The Competition
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 Who Are The Main Competitors :

Kit Kat is a brand that has been in the market from the past 75 years, but still is
not a monopoly. It has some serious competition with companies like Cadburys
and The Hershey Company.

 Sales and Profit Trend :

Cadbury’s sales trend as always been good. Being in the market for over 50
years, this brand originated in UK itself and is considered as the toughest
competitor of Kit Kat. Cadbury has seen a rise of over 10% of sales in the UK
industry this year 2010. Whereas The Hershey Company’s net sales reached
$1.4 billion in the fourth quarter of the year 2009 that means a 2.2 per cent
increase in sales.

 Market Share :

Cadbury’s market share in UK slipped down to 30 per cent by end of 2009 where
as till date Cadbury has the highest market share in India i.e., 70 per cent.

Whereas Hershey’s owns 42 per cent of the market share in the US.

 Target Markets :

Be it any chocolate company, Kit Kat, Cadbury or Hershey’s chocolates are

something that have always targeted children and women in the recent past, but
these days chocolates are targeting men, women and children as it is something
that is meant for both the sexes and all age groups.

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The Company

 Sales Trend :

Kit Kat is a brand which is internationally recognized. The sales trend of Kit Kat
has been positive all throughout. Being spread out in 17 countries, Kit Kat has
always had abundant sales. Recently in the month of October 2010, Kit Kat
declared that its sales had gone up by 10 per cent and at the same time Kit Kat
celebrated its 75th birthday.

 Market Share :

Kit Kat’s market share is at a hike in UK recently as it completed 75 years which

add to the name of the brand and has increased its market share by 4.1 per cent.
Comparing this with the market share of Kit Kat in India its good enough as the
market share in India is dominated by Cadburys with 70 per cent market share.

 Business Sector :

Nestlé’s business sector comes under the food industry. They have spread their
business in various numbers of food sectors starting from infant foods to foods
consumable by children and adults like ice cream, chocolates, frozen food, milk
powder etc. to pet care products. Kit Kat belongs to the chocolate sector of their
business and is the leading brand of chocolates of Nestlé .

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 Project Focus :

Its not that Nestlé has a specific focus on only the chocolate sector of their
business i.e., Kit Kat, they have an equal amount of focus on every business
sector of theirs and have made no compromise on any products growth. Though
in countries like UK and India Nestlé has put in more focus on the chocolate
sector of their business and have done no compromise on promoting Kit Kat. So
therefore Nestlé in regions of UK and India has main focus only on Kit Kat
because of its brand recognition.

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The Company’s Marketing Strategy

 Segmentation :

Prior to Kit Kat’s takeover, Rowntree, the founders of Kit Kat, had set a
foundation of the product by cementing it in the heavily populated areas of York
later in almost all urban and rural places of UK. This was followed by global
recognition to Kit Kat by 1950 which led to diversification of the product when
Hershey bought the rights of producing Kit Kat in North America whereas Nestle
bought the rights of producing and supplying Kit Kat to the rest of the world
except for North America. Nestle segmented the market for Kit Kat in the
following ways :

• Geographical :

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 The market is broadly divided into Urban (cities and towns) and Rural
(villages). Kit Kat caters the high urban need by making products available
that too with a variety with the help of which the rural crowd can be kept
attracted.

Rural needs are also kept in mind and there is nothing even required for
Kit Kat to make an effort to attract rural crowd because of the price. Kit
Kat’s price is very reasonable that attracts rural crowd and gives them
proper quantity of chocolate as well be it the two-finger Kit Kat or the four-
finger.

• Demographic :

With the youth population getting larger, Kit Kat looks to take an
advantage of that. They have also segmented the market for children,
adults and aged people. Kit Kat is a type of a chocolate that is light and
can be consumed by every age group.

• Income Groups :

Majority of the customer base in market comprises of middle class and

upper middle class. But income groups have never been a concern for Kit
Kat, as mentioned earlier the prices of Kit Kat have been stable for
decades and the prices are such that any income group can afford it.

 Targeting :

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Kit Kat has implemented a strategy of offering itself to its segments in the market.
The following are the target customers of Kit Kat.

• Women & Children :

Women and children are the two targets that every chocolate company
values the most. They are those to segments of the crowd that are highly
into chocolates. For women chocolates can be given as a gift for example
the new Kit Kat Senses 8 finger box which is usually meant for gifting it to
someone, whereas for kids chocolates are just another reason to avoid
boring home food.

• Rural Population :

Since Kit Kat has its price stable and has a very minor change in its price,
it can still target the rural crowd by making them aware that compared to
their competitors Cadbury their product is cheaper and much affordable.

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Evaluation of the company’s Strategies and Tactics

 Evaluation of company’s current position :

Keeping in mind the company, Nestle is doing pretty well currently at the
market and still is the leading producer of different types of foods ranging
from infant foods, adult foods to foods meant for pet care.

 Evidence of company’s success (Growth in sales and profit) :

Recently in Nestle completed 100 years in Australia, and chose Sydney as one
of its three global IT support centre. In the Oceanic region, Australia is the
headquarters of Neslte’s operations covering Australia, Papua New Guinea, New
Zealand and the South Pacific islands.

Nestle has fifteen factories, eight distribution centres and over 50 offices and
5,700 employees across the region. Annual sales revenue only from Australia
alone totaled up to A$ 2.8 billion in 2007.

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 Nestle is the largest industrial company of Switzerland, and the biggest food
company in the world. It runs a global workforce of 265,000 people in over 481
factories, selling over 1 billion Nestle products every day.

 Prospects for future growth/success :

Invest in new products and bring out a new product in the market. Market
expected to emerge rapidly and sales to be up by 45 per cent by 2020.

Conclusion

After all the research, and with the help of PEST-G , SWOT analysis, BGC matrix
and the Product Life Cycle, we come to a conclusion that Nestle was and still is
the largest food company in the world. Its product Kit Kat till date is highly
recognized and preferred by people. The price of a Kit Kat bar is very reasonable
to an extent where not only the rich people can afford it but even consumers who
are below middle class can purchase it and enjoy the quality of wafer coated with
milk chocolate. Though Kit Kat went through ups and downs, but it never
vanished from the market despite of loads of attempts from its competitors Kit
Kat still stood out to be the brand that is highly preferred. Nestle. In future, also

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plans to bring out new products and Kit Kat in the near future plans to bring out
new seasonal flavors to new markets and increase its sales globally. Kit Kat is
ranked one in the UK and aims to be ranked one amongst all other chocolates in
the whole world.

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 References

http://www.nestle.com/Resource.axd?Id=4FF18A81-0D77-43B4-949D-FC5F740E4EB3

http://en.wikipedia.org/wiki/Kit_Kat

http://en.wikipedia.org/wiki/Nestle

http://www.kitkat.com/about_kitkat

http://www.thestudentroom.co.uk/showthread.php?t=64830

http://www.foodanddrinkeurope.com/Financial/Kit-Kat-sales-up-in-UK-and-Ireland

http://candy.amplify.com/2010/02/03/hershey-sales-earnings-increase/
http://www.scribd.com/doc/11274954/Nestle#

http://www.foodanddrinkdigital.com/sectors/food-manufacturing/how-good-does-green-
taste-nestle-kit-kats-made-sustainable-cocoa

http://www.austrade.gov.au/Nestle-celebrates-a-century-of-success-in-
Australia/default.aspx

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