ASSIGNMENT NO - 02

MINI PROJECT

SUBMITTED BY: - YASHAVANTH KUMAR H

CLASS: - II MBA (MARKETING)

REG NO: 20OKCMD151

SUBJECT: - STRATEGIC MANAGEMENT & CORPORATE

GOVERNANCE

SUBMITTED TO: - Pro. P. MADHAN KUMAR

SUBMITTED DATE: - 24/01/2022

ABOUT KIT KAT
Kit Kat is a chocolate-covered wafer bar confection created by Rowntree's of York, United
Kingdom, and is now produced globally by Nestlé (which acquired Rowntree's in 1988), except
in the United States, where it is made under licence by the H. B. Reese Candy Company, a
division of the Hershey Company (an agreement that Rowntree's first made with Hershey in
1970).
The standard bars consist of two or four pieces composed of three layers of wafer, separated
and covered by an outer layer of chocolate. Each finger can be snapped from the bar separately.
There are many flavours of Kit Kat, including milk, white, and dark chocolate.
The original four-finger version of the bar was developed after a worker at Rowntree's York
factory put a suggestion in the recommendation box for "a chocolate bar that a man could take
to work in his pack up". It was launched in September 1935 in the UK as Rowntree's Chocolate
Crisp, and the later two-finger version was launched in 1936. It was renamed Kit Kat Chocolate
Crisp in 1937, and just Kit Kat after World War II.[4] Since making its first television
appearance in a UK commercial in 1958, the slogan for the Kit Kat in the UK and elsewhere
has been "Have a break... have a Kit Kat". Since 1986 in the U.S., the jingle used in television
advertisements has been "Gimme a break, Gimme a break, Break me off a piece of that Kit Kat
bar!.
Kit Kat bars are produced in 16 countries by Nestlé: Brazil, Mexico, United Kingdom, Canada,
Australia, New Zealand, South Africa, Germany, Russia, Japan, China, Malaysia, Thailand,
India, Turkey, United Arab Emirates, Bulgaria, and Algeria. Kit Kat bars in the United States
are produced under licence by The Hershey Company, a Nestlé competitor, due to a prior
licensing agreement with Rowntree. The year 2003 was a turning point for the Kit Kat bar as
well as the confectionery industry in general. The popularity of low carb diets, and the push to
healthier eating stifled sales growth in many parts of the world. In addition, fierce competition
from Cadbury's newly formed Dairy Milk superbrand also contributed to Kit Kat sales
decreasing considerably in its home market of the UK, and threatened to depose it from its
No.1 position. The solution adopted by Nestlé and others was to increase dramatically the
number of new and unique variations of their confections and market them as limited or special
editions, usually only available for a few months at a time so as not lose sales of their standard
products. The strategy initially reversed the decline of the Kit Kat[21] and has been adopted
worldwide by Nestlé, Hershey, Mars, and others with similar success. This has resulted in
many new flavours and varieties of the Kit Kat and other confections appearing globally since
then.

Business Model:

Kitkat has managed to find a comfortable position in every family with its business approach
of value building and its rock-solid marketing mix. Naturally, since its inception, it has come a
long way. And this makes FMCG the world’s number one brand. Nestle has seven vertical
businesses with health, nutrition, and health goods. The stars in the BCG Matrix include dairy
goods, powdered, and liquid drinks, ready dishes and culinary aids, and clothing business
sectors. So, here is the business model of Nestle.

Revenue Model of Nestle:

Net profit for the Nestlé Group increased from approximately CHF 7 billion in 2017 to over
CHF 12.2 billion in 2020. Nestlé has more than 2000 brands in over 180 nations and is one of
the largest food and beverage companies in the world. In Vaud, Switzerland, Nestlé is a
worldwide food and drink company. In 2019, Nestlé’s largest market, the Swiss enterprise,
accounted for almost 46% of its global turnover in America. In Europe, the Middle East, and
North Africa, almost 29 per cent were earned that year. Powdered and liquid beverages, which
amounted to 23 billion Swiss francs this year, were the best-selling items of the Nestlé Group
based on global trade. in 2019. With a total of just around 15 billion Swiss francs, Nutrition
and Health Science came in second, yet in terms of organic growth, it was the highest in the
product category that year. The category increased in the measured period by approximately
four and a half per cent.
Brand Positioning:
Kit Kat’s target market is men and women of all ages. The brand is youthful in nature, and
focuses on the consumer segment who love chocolate, and are willing to indulge themselves
with chocolaty snacks. What draws consumers to this brand is its association with “breaks” due
to its tag line “Have a Break, Have a Kit Kat”. It’s low prices, constant over the past 100 years,
allows it to target the mass consumer market, as opposed to other high-end chocolate brands
such as Godiva.

Competitor Analysis:

Kit Kat is owned by Nestlé SA which also owns a range of other product brands, e.g. baby
food, bottled water, cereals, coffee, etc. In 2012, Nestlé’s company share in Singapore’s
confectionary market was 9.4%. This has remained fairly constant since 2009, following a drop
from 10.1% in 2007 to 9.6% in 2008. This shows us that introduction of competitor brands, as
well as increased in market share in existing competitor brands such as Ferrero Group since
2009 has led to a drop in brand share for Nestlé.

This is depicted by the bar chart showing company shares by global brand owner. As can be
seen, overall since 2007, Ferrero Group and Mars Inc.’s brand shares have increased whereas
Nestlé SA’s brand shares have reduced.
Brand Analysis:

As can be seen via the brand shares table below, despite the decrease in Nestlé’s company
shares in Singapore’s confectionary market since 2007, the brand share of Kit Kat has increased
from 2007, from 3.2% to 3.7%. However, it still lags behind competitors such as Ferrero
Rocher, Ricola, Fisherman’s Friend and Mentos in the confectionary market. However, through
filtering out of products such as Ricola, Fisherman’s Friend and Mentos, which are not
chocolate brands, it can be seen that Kit Kat is second behind Ferrero Rocher.

The comparison of change in brand shares between Ferrero Rocher and Kit Kat can further be
seen in the chart below. Our team chose M&Ms as the second brand competitor as Cadbury
had insufficient data based on the brand shares table. Furthermore, in the Company Shares by
Global Brand Owner table, it can be seen that Mars Inc. is Nestlé’s second competitor.
Applying this to the brand shares table, we chose to compare Kit Kat to M&M’s, which is
owned by Mars Inc.

How Kit Kat Differentiates Itself?

Points of Parity (POP):

1. Wafer: Kit Kat’s use of wafer is a POP as though it may not be unique to the brand as M&M’s
also has a version which uses wafers, it is one of the key features which is associated with Kit
Kat. On the other hand, M&M’s key feature is its small, round and colorful look, and Ferrero
Rocher is known for its spherical

2. Milk / Dark / White Chocolate: Kit Kat’s use of milk, dark and white chocolate variances in
its products is a POP for the brand as it is one of the features which helps Kit Kat target a range
of different consumers. This feature is also seen in Ferrero Rocher, which provides milk and
dark chocolate variations. On the other hand, M&Ms provides a range of flavors through its
difference in fillings: plain chocolate, peanut, and wafer.

3. Packaging size varies: Kit Kat’s two-stick and four-stick versions come in varying package
sizes and types. Boxes of twelve and twenty-four are common for both the two-stick and four-
stick versions, as are long packets containing six to nine of the two-stick version of Kit Kat.

We feel that this is something which differentiates Kit Kat as the normal size M&M’s come in
three packet sizes, one newly released box format and the mini sized M&M’s come in a single
column. On the other hand, Ferrero Rocher comes in either large boxes, or its newly released
three-in-a-box size.

Points of Difference (POD):

1. Wafer stick: our team feels that the fact that Kit Kat is essentially a wafer stick is one of they
key PODs for the brand. Though M&M’s has a version that incorporates wafer, we feel that
being a chocolate wafer stick is a unique attribute for Kit Kat. On the other hand, Ferrero
Rocher is primarily recognized for incorporating Almonds into the centre of the chocolate. The
newly released Ferrero Rocher dark chocolate version has a chocolaty centre.

2. Associated with snacks: Kit Kat is often associated with the word “snack”, as opposed to
Ferrero Rocher and M&M’s which are primarily associated with being chocolates, a sweet. Kit
Kat was able to achieve the “snack” status as a result of its highly recognized tagline “Have a
Break, Have a Kit Kat”. Furthermore, Kit Kat is considered more affordable in comparison to
Ferrero Rocher which is considered one of the higher-end chocolates.

3. The chocolate comes in various sizes: we feel that this is another key POD for Kit Kat
compared to Ferrero Rocher and M&M’s. Kit Kat has many versions: the single stick version,
two-stick, four-stick, and chunky – which is a larger version of single stick. On the other hand,
M&M’s only come in normal and mini size and Ferrero Rocher have a fixed size for each
chocolate.

Marketing Strategy:

Kit Kat has various marketing strategy. One Marketing Strategy of Kit Kat is having a
consistent tagline. An example of this is “Have a break, Have a Kit Kat”. The tagline caught
the attention of the consumers. Kit Kat’s catchy tagline has branded itself as the social snack
for all ages. They feature their tagline on their packaging, online, and in print advertisement.
The aggressive branding tagline has a consistent message, which becomes ingrained in the
consumers’ mind. Another marketing strategy Kit Kat did was that they innovated their product
with special flavors available in different markets. This made the consumers interested in their
product. There are more than 200 different flavors and editions of Kit Kat which most are being
produced was in Japan. The hype of the different flavors of Kit Kats were criticized in youtube,
which gathered consumers across the world. Popular Youtube artist EmmymadeinJapan has
videos of herself, trying out the different Kit Kat flavors. Buzzfeed also posted a two-part video
series in youtube titled “Americans Try Exotic Japanese Kit Kats” that gathered 9 million
viewers and hundreds of comments from people around the world expressing their cravings to
try out the unique flavors. Another Marketing Strategy Kit Kat did was to connect with social
media in terms of advertisements. Since social media is the medium of delivering message to
people today, they had advertisements in youtube, Facebook, and Twitter. They recognize
social media in influencing consumer choice. The global head of Nestlé Kit Kat, Kristen
Drybugh, refers to this strategy as moment marketing. Moment marketing is where brand
interacts with other brands and consumers online. Examples of these are Oreo Kit kat, Tic Tac
Kit Kat, which they collaborate with another famous snack brand. Lastly, because Kit Kat
recognize the digital world, they also connected with Google in 2013, with a proposal name of
an operating system of android version 4.4 Kit Kat. Which made Kit Kat boom in the 21st
century. Basically, the marketing management of Kit Kat adapt and innovate their products in
the fast-paced world today.
Strategies that the firms have been adopted to reduce the tax burden in Indian market:

For Chocolate-20% Tax

For Waffer- 10% Tax

In the year of 1999 the government announced tax on chocolate was 20% because it is made of
cocoa plant and for wafer it was 10%. So the Kitkat company they thought to save tax on this
Chocolate, so they have come up with a wafer with chocolate coated. From this they have saved
tax.
Kitkat they have not intention to sale their product in a higher price their intention to save their
cost from tax and their intention to give their products at a lower price compared to competitors
in the market so they have coming with these ideas to save cost.
The strategies mainly applied by the Kitkate company to reduce tax burden and sustain in the
market long run. And they have saved 10% tax and even they are the leading chocolate
manufacturer in India.