BPMM: MARKETING MANAGEMENT

GROUP PROJECT 2:
KING’S BISCUITS BERHAD:
CRAFTING
THE NEXT MOVE?

GROUP MEMBERS:

1. AHMAD FADZIL BIN MOHAMAD (825601)

2. SHUHD SALEH BASURRA (826427)

NAME OF LECTURE: DR. NOR PUJAWATI MD SAID

SUBMISSION DATE: 16 AUGUST 2020

 1.0 INTRODUCTION

King’s Biscuits Berhad is a leading biscuit manufacturer in Malaysia that founded

in 1979 at the north of Malaysia and by 1992 the company was acquired by Cheng
family. The company was famous by its main product which is cakes with specific
characteristic that not need to be stored in refrigerator for around six months. Using
this strategy KBB managed to get through the logistics issue due to limit of storage
in a developing country such Malaysia. Moreover, KBB used this advantage to
export the product to outside Malaysia to countries that have similar conditions
Malaysia has, like China, Indonesia, etc.

Starting form 1997, KBB start to have some problems because of financial crisis
in Asia which caused the Malaysian ringgit to be weak. Also, the company faced an
issue with great cost pressure as flour is the main ingredient for the company
product while Malaysia is not a famous with producing wheat. Although Cake is the
main product produced by the company, it was not the only product. KBB also
manufactures a wide range of other products such as assorted chocolate including
chocolate-coated peanuts and biscuits, pancake cookies, jelly and puddings, wafer
sticks, cup sticks and snack noodles. The below table shows the names and
characteristics of each of these new products.

# Product Name Characteristics For who

1 Kingsco Rich chocolate snacks The youngsters
2 Ratu Candy “fruity flavours of Young girls
chocolate”
3 Aldinos Mixture of peanuts and Pre-meal or after meal
cashew nuts snacks
4 Vegas Fusion between pancake Children
and cookies
5 Zulen A flavoured jelly Quench the thirst in a hot
weather
6 Rino Biscuit in three variants (oat, Young adults
chocolate, corn)
2.0 CHALLENGE

One of the main symptoms that you have a marketing problem is when your
customer can’t tell your difference from a competitor. For example, the first
competitor that KBB is facing in Malaysia is a company named Apollo Food
Holdings Berhad as almost they have the similar cake product that KBB has.
Moreover, Apollo has an advantage against KBB that they market its product under
the single family brand of ‘‘Apollo’’ alone which helps to reduce the complexity in its
operations and marketing, and also the price is slightly lower than the cakes from
KBB.

The second major competitor is company called Silver Bird Group Berhad (Silver
Bird). This company is bigger than KBB in term of size but also less profitable. The
advantages that Silver Bird has over KBB is that Silver Bird not only manufactures
cakes but at the same time it is using its wide distribution channels to distribute fixed
and mobile phone cards to capture on the increasingly affluent consumer market in
Malaysia. As a result, Silver Bird made a big jump by launching their own non-
refrigerated ready-to-eat cakes through capitalizing on its wide distribution retail
outlets to compete with KBB and Apollo. Moreover, there are other small
competitors which competing KBB in price and locality. All mentioned competitor
which caused this marketing problem had led to decrease the profit of the company
by RM 2.4 million when KBB reported its annual result in 2010.

The management of KBB decided to carry out a marketing environment scanning

to look into this issue and challenges they faced and we will look in the next section
for the situational analysis and the proposed solution they may implement.

3.0 SITUATIONAL ANALYSIS

 In SWOT analysis we should often ask and answer questions to generate
meaningful information for each category to make the tool useful and identify their
competitive advantage. Strengths and weakness are frequently internally-related,
while opportunities and threats commonly focus on the external environment. In
KBB we can conclude the below in regards to SWOT Analysis:

Strengths: A spotlight of KBB product is cakes where it could be stored in a

room temperature and last long for six months. The innovative idea is convenient in
Asian market as not all suppliers have refrigerator. If they insist, not all supplier able
to do so, only a few of them. So, the product can be supply at limited store only.
Knowledge is important to enable a person to success in their future undertaking.
For example, KBB had a professional, knowledgeable and experience advisor as
one of the youngest son pf Cheng family had graduated from USA in MBA. KBB
may refresh and rearrange their strategy suit with the advance technology so that
they can have a competitive advantage in a market. KBB can segment the brand
according to focus customer. They may have different strategy for different focus
customer. This is because different customer may have different necessity. For
example, focus customer for gummy bear sweet is children in range 6 to 12 years
old. So, KBB can make various colors of gummy bear sweet instead of focusing on
one color to attract children.

Weaknesses: Since Malaysia is not a wheat producer and flour is a major

ingredient for KBB’s products, this company facing the cost pressure greatly since
the 1997/1998 financial crisis in Asia due to the weak ringgit. In its operations and
marketing due to complication in terms of product mixes and stock keeping units
(SKUs). Apollo priced slightly lower than the cakes from KBB and the target market
is children where it is consumed as healthy snacks and this family brand strategy is
adopted by Apollo.

Opportunities: KBB embark on cost reduction program through reducing waste,

improving manpower and machinery efficiency. Also managed to pass some costs
down to the consumers through increasing price.
 Threats: Elements in the environment that could cause trouble for the business
or project. Different countries may impose a different regulation to the seller. The
purpose of the regulations is to protect a local product and to control the volume of
an imported product in their country.

4.0 PROPOSED SOLUTION

We can suggest some sort of solution for KBB in order to overcome its
weaknesses and improve their current situation. One of these solution that KBB can
implement is to do more variety of products aside cake which is milk, butter and
many more. Besides that, make a healthy snacks or food. By using this strategy
KBB can also need do marketing not only in Asia but worldwide this can increase
the sales and profit. Thus, KBB products becomes well known in worldwide and
increase the profit.

Another solution is the ability of a person to buy the specific product base on the
market segment. For example, Vegas product is focusing on children, so, KBB may
charge a lower price range compare than others. This is because, this product could
be selling at school or nearest stall whereby the children may have a little money
with them. Besides, KBB can organize an event which involve public such as
drawing contest for children and race or run for an adult. By organize event, the
public will acknowledge and KBB can build a trust in consumer.

Revising the price strategy could also be one of the solutions. A review of pricing
strategy may also become necessary because of shifts in demand. An examination
of the existing prices may lead to one of three strategic alternatives: (1) maintaining
the price, (2) reducing the price, (3) or increasing the price. In KBB case we suggest
to use the first strategy which is maintaining the price as we already decrease the
cost of production so this might help to increase the profit at the end.