ASSIGNMENT NO.

1
BUSINESS ECONOMICS-MICRO

QUESTION : Choose a product from the market and analyze the

product on the base of following dimensions.

PRODUCT : Kit Kat

Kit kat is a chocolate covered wafer bar

confection created by Rowntree’s of New
York, United Kingdom, and is now produced
globally by Nestle (which acquired Rowntree’s
in 1988), except in the United States, where it
is made under license by the H.B Reese Candy
Company, a division of the Hershey Company.
It is a confectionery type of product.
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 “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 lated two
finger version was launched in 1936. It was renamed Kit Kat Chocolate Crisp in
1937, and just Kit Kat after World War II. Since 1957, slogan for the Kit Kat in the
UK and elsewhere has been, “ HAVE A BREAK, HAVE A KIT KAT “. Since 1986 in
U.S the jingle used in television advertisement has been “Gimme a break,
Gimme a break, Break me off a piece of that kit kat bar.

USES OF THE PRODUCT

KitKat chocolates are a popular confectionary item amongst children and adults
alike. They can be used to decorate puddings, cakes, biscuits, homemade
chocolates and cookies. They may also be added as a topping on ice-creams,
custards and frozen yoghurt desserts.
KitKat chocolates are a quick source of carbohydrate, and help ward off hunger.
Since KitKat has layers of milky chocolate, it is high in calories and sugar content
and should be eaten in moderations. Else, it may cause dental caries.

FACTORS AFFECTING THE DEMAND

Economic Factors: Economics factors like inflation, purchasing power, wages
rate plays a very important role in context of business. Any problem in the
country from where it is sourcing the
Cocoa can cause a great distress to the company. The increase in the prices of
cocoa will negatively affect the business of KitKat.
Social Factors: KitKat is very popular among people everywhere in the world.
People knew this brand by heart and its four fingered bars are very famous
among the people. But nowadays with the increasing concern of people about
their health, they have started
avoiding sugary products. Any deviation from the ratio in which nutrition is
mixed or any adulteration can put company into great danger just like what
happened in case of Maggi.
Technological Factors: As the world is making great progress day by day and
taking great leap in technology advancement, it became very necessary for the
company to keep itself technologically updated. Technology upgradation helps
the company in working more efficiently and with less wastage of time, efforts,
and money. KitKat is regularly engaging itself with the customers through social
media and advertise on different media platforms to marks its presence
everywhere.
Legal Factors: The whole chocolate industry has been under allegations that it is
sourcing cocoa from the countries where child labour is prevalent. Specially it
met major chunk of its cocoa requirement from Ivory Coast which is very
infamous for child labour abuses and inhuman worker treatment. This has
created a negative image for the company as people now are becoming very
conscious regarding these matters. KitKat has proved itself by achieving the
target to source 100% cocoa from certified and sustainable sources only. For a
company, its trademark is its very valuable asset, but the company in 2018 lost
its trademark case. Now the company doesn’t have exclusive right over its four
fingered bar.
Environmental Factors: When nearly every major companies are making great
progress towards sustainability, how KitKat can fall behind. In fact, KitKat is the
front runner in achieving sustainability in its operations. It has become the
world’s source 100% certified sustainable cocoa. It not only helps in making
environment sustainable but also it improves the lives of the farmers from
whom cocoa is sourced and at the same time get quality seeds. In one attempt
it is doing three good things. It has also started using foil covering instead of
plastic covering in an attempt to reduce the environmental pollution.
RELATED PRODUCTS OF THE PRODUCT
• Substitute products:
1) Cadbury
2) Ferrero Rocher
3) Mars
4) Hershey’s
5) Ricola
6) Lindt

• Complementary products:
1) Marshmallows
2) Churros
3) Ice-cream

Present The Trend Of Change In Price And Change In Quantity

Demanded For A Long Period Of Time
Nothing beats a KitKat. The rustle of silver foil and satisfying snap as you break
apart those fingers of crispy, chocolate-covered wafer is a pretty unrivalled
eating experience. In an effort to reduce sugar in its products by 10% before
2018, the company will now make KitKats with less sugar, but higher amounts of
milk and cocoa. It’s the first time the original recipe has changed since the
chocolate bar was launched in 1936.
Trend of Change In Price:- The price of Nestle chocolate bars such as KitKat
could be increased due to Brexit. The development would hike in price for
KitKats and other popular confectionery.
Change in Quantity Demanded for a Long Period of Time:- The bars now weight
41.4g down from 45g but have remained at the same price. Also it increased the
gap between the peaks to reduce the weight of a 400g bar to 170g.

Change in Quantity Demanded for a Long Period of Time

The bars now weight 41.4g down from 45g but have remained at the same
price. Also it increased the gap between the peaks toNature Of Elasticity Of
Demand Based Upon A Calculation: Price Elasticity of Demand of KitKat
chocolate refers to the extent of change in prices. It is measured as percentage
change in quantity of a product demanded divided by percentage change in the
price of the product. The product KitKat is elastic; therefore the price cannot be
changed indiscriminately as its quantity is relatively responsive to the price
changes. Price elasticity is determined by a number of factors. There are
number of substitutes, time and definition of the market. As the product has
more substitutes then its price elasticity of demand will be more elastic. This is
because once the price of the product increase, people will try to buy
alternative products. Individual demand for KitKat was very elastic -2%.
Aggregate demand was elastic as well as but a little bit lower – 1.12%.
 ❖ Price Elasticity
MRP of KitKat ( 37.3 gm ) is Rs.25
At this price, 96 out of sample size 100 are willing to purchase KitKat. If
there is increase in the product by 10%, there is decrease in quantity
demanded from 96 to 42.

INITIAL PRICE = Rs.25

CHANGE IN PRICE = Rs.27.5
PERCENT QUANTITY DEMANDED = 96%
PERCENT QUANTITY DEMANDED AFTER INCREASE IN PRICE BY 10%=
42%

𝑄2−𝑄1
% Change in quantity = (𝑄2+𝑄1)÷2 × 100

96−42
% Change in quantity = (96+42)÷2 × 100 = 78%

𝑃2−𝑃1
% Change in price = × 100
(𝑃2−𝑃1)÷2

27.5−25
% Change in price = (27.5+25)÷2 × 100 = 9.5%

% 𝑐ℎ𝑎𝑛𝑔𝑒 ∈ 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑑𝑒𝑚𝑎𝑛𝑑𝑒𝑑

Price Elasticity of demand =
% 𝑐ℎ𝑎𝑛𝑔𝑒 ∈ 𝑝𝑟𝑖𝑐𝑒

78
Price Elasticity of demand = = 8.2
9.5

CONCLUSION
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 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/dark chocolate.
Though Kit Kat went through ups and downs, but 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. Kit Kat in future, also plans to bring out
new seasonal flavours 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.
reduce the weight of a 400g bar to 170g.

NAME : SHRAVANI MIRAJKAR

CLASS : FYBBA A
ROLL NO : 13001