PRODUCT LIFE CYCLE-

KITKAT
Submitted by-
Group-1
 SUMMARY

• Introduced
in the year 1935 Kitkat (4 Bars) was initially named as Rowntree’s chocolate crisp
which was eventually changed to Rowntree’s Kitkat in 1937.
• After
the decline in sales post world war in 1945, Kitkat started expanding in all other
countries and it became a recognized brand in 1950’s.
• Later
in 1988 Nestle bought the rights to produce KitKat from Rowntree for $4.5 billion and
increased production and distribution by providing new facilities in various parts of the world.
• After
the decline in sales of Kitkat due to a new product launched Kitkat Chunky in early
2000’s, in came up with a new marketing plan of spending over $24 million in to bring back
the brand name of KitKat.
• The
sales of Kitkat grew exceptionally at a high rate that in got featured in the Guinness Book
of Records in March 2010.
• KitKat
has faced a lots of Ups and Down in the journey, but now KitKat is in its maturity stage
but is facing competition from various other chocolates including chocolates from its own
I N T R O D U C T I O N S TA G E ( 1 9 3 5 – 1 9 4 5 )
• Introduced in the year 1935 as a four finger chocolate (4 Bars),
KitKat was initially named as Rowntree’s chocolate crisp. Later in
1937, two finger (2 Bars) KitKat was launched. The value delivered
by the product was “A snack that a man could take to work in his
pack and can have a break during their tea time”.

• Later in the year 1937, the KitKat brand name and logo was
introduced on the packaging.

• When Kitkat was first introduced to the market, a lot of promotion

efforts were necessary to ensure the product penetrates into the
market in no time. Sales at this stage were low because customers
were not aware of the existence of the product. Revenues were still
non-existent at this stage.
 DECLINE (1945-1947)

KitKat faced a big hit post world war 2 (1945 – 1947), due to economy
crash and raise in milk prices. To overcome the situation, KitKat used
dark chocolate for coating and stopped using milk coating. Doing this
people didn’t like the taste of KitKat, Thus the sales of KitKat started to
decline and moreover traditional Red packaging was changed to Blue
colored packaging during this period.
• GROWTH
It is the second stage STAGE (1947-1970’S)
of product life cycle where the
customers and consumers of the product start increasing
that is the customers start accepting the product in the
market. the profit during this time is high as customer
requirement is fulfilled by a new product.

• During 1950’s, Rowntree’s KitKat started expanding in all

other countries and it became a recognized brand

• International expansion of the brand starting in

Commonwealth countries, such as Australia, New
Zealand, South Africa, Rhodesia and Canada, where
Rowntree already had an established base.

• In the year 1958, Donald Gilles created an iconic

advertisement “Have a break…Have a KitKat”, which
created a big positive impact on its sales and till date
KitKat is following the same Ad Campaign.

• In the 1970’s, Rowntree’s created a new factory in

Germany to meet the European demand ,established an
agreement to distribute in USA through Hershey’s and in
Japan through Fujiya.

• In the year 1969, the Hershey’s company bought the

rights to produce KitKat in North America.
 MATURITY (1970-1988)

• This Maturity stage was a quite challenging period for Kitkat to

stay in the market. There were potential threats for Kitkat from
form various competitors such as Cadbury, Ferrero Rocher,
Mars, Hershey’s etc.

• The stagnancy in the sales over the years for Kitkat shows that
the product was still relevant in the market. Hence, the product
had an emotional connect with the customers.

• Rowntree’s Kitkat decided to grow its market by going global by

setting up manufacturing units across the globe.
 GROWTH (1988-2002)
• Later in 1988 Nestle bought the rights to produce KitKat from
Rowntree for $4.5 billion and increased production and distribution by
providing new facilities in Japan and additional manufacturing setup
in Malaysia, India and China.

• In the year 1999, KitKat launch a new product called “KitKat Chunky”,
which aimed at younger consumers and its first major extension of
brand. It was a big success for Nestle.

• Nestle acquired Fujiya a Japanese brand and expanded in Russia,

Turkey, Venezuela and also in eastern Europe.

• KitKat started its global manufacturing to boost their sales in

countries like India, USA, Canada, UK etc.
 DECLINE (2002-2005)

• Success of KitKat chunky cannibalized the sales of four finger KitKat. Moreover it had to
cover the losses, as another brand extension of KitKat had taken place.

• The brand KitKat in 2002 globally grew by 0.8% and after that in the next year (2003) it
had to face a decline of 4.2% to $8.8 Billion. KitKat Kubes struggled after its launch in
2003.

• In 2004 to overcome the sales problem, they launched too many flavors which later on
they discontinued as they were not that successful in the market.

• In 2005 the sales of KITKAT went down by almost 18% due to the new product launched
by Galaxy.

• Sales of Galaxy’s Mars top-selling U.K. candy grew to $264 million, up 10.8% over 2004,
according to ACNielsen. Meanwhile, KitKat's whole range declined by 16.8% to $260
million 2005

• Moreover they dumped their famous slogan “Have a break…Have a KitKat” to “Make the
most out of your break”.

• From 2000-2005 the traditional KITKAT (Four finger) sales dropped by 12%.

• Hence KitKat's whole range declined by 16.8% to $260 million by 2005. With this they
 GROWTH STAGE (2006 – 2015)
• KitKat became a global brand with $1.6 billion in 2006 sale.

• KitKat came up with a marketing plan spending over $24 million in 2007 to bring
back the brand name of KitKat.

• Moreover they also brought back the famous slogan “Have a break…Have a KitKat”
slogan in all their advertisements.

• As lacking in alternatives, KitKat launched Chunky Peanut Butter. Compared to 2000

sales, KitKat Chunky and KitKat Chunky peanut butter sales went by 66% and the
sales of four finger (4 Bars) sales went up by 12%.

• In September 2006, Nestlé announced that they would be cutting 645 and will move
towards all Smarties production. They stated that this move would allow for a £20
million investment to modernize the antiquated York factory and improve Kit Kat
production

• With around 540 KIT KAT fingers consumed every second worldwide and 17.6 billion
fingers sold every year, KIT KAT got featured in the Guinness Book of Records in
March 2010.

• In 2010, a new £5 million manufacturing line was opened by Nestlé in York, to

produce more than a billion Kit Kat bars each year.

• In 2014, Kit Kat was ranked the third best selling chocolate bar in the United
 DECLINE (2015 – 2016)

• Nielsen data ending 30 September,

2015 showed that Kit Kat sales had
dropped by 11% to £71m year on year
causing the brand to maintain its fourth
position in the sweet biscuits category.
 MATURITY (2016 – PRESENT)
• Kit Kat is doubling its media spend in 2015 with the launch of a £10m multimedia
campaign after losing sales in the sweet biscuits category last year decline 2015.

• In 2016, KitKat became the first global confectionery brand sourced from 100%
sustainable cocoa, supplied through the Nestle Cocoa Plan that aims to improve
lives in farming communities and the quality of beans.

• KitKat has faced a lots of Ups and Down in the journey, But now KitKat is in its
maturity stage but is facing competition from various other chocolates including
chocolates from its own brand nestle.

• In 2015 there was an addition of 0.4% sales amounting to $64.9 Billion which
indicate the maturity stage.

• In 2017, sales reduced by sales growth rate by 0.4% amounting to $65.3 Billion.

• In 2018, sales increased by 2% amounting to $66.4 Billion.

• The changes in the growth rate or decline can be seen to be almost constant over
the years. Hence, it can be said that it has reached a Maturity stage.
PRODUCT LIFE CYCLE
BIBLIOGRAPHY-
• https://www.nestle.com/brands/allbrands/kit-kat
• https://www.wsj.com/articles/SB11521525755669
9199
• https://www.nestle-esar.com/brands/chocolatesand
confectionery/kitkat
• https://www.nestle.com/brands/chocolateconfecti
onery
• https://
www.hersheys.com/kitkat/en_us/products/milk-cho
colate-wafer-bars.html
• https://
www.nestle.com/sites/default/files/asset-library/
documents/library/events/2018-nine-month-sales/pr