MKT 5125: Marketing Decisions for Managers Expanded Information on PACADI Approach Problem Definition The problem statement should be a clear, concise statement of exactly what needs to be addressed. Many times the problem(s) is/are given in the case. Therefore, this section should not be that difficult, since (for the most part) you should be able to restate the problem(s) facing the organization. However, if the problem is not that obvious, asking yourself the following questions may help: 1. What appears to be the problem(s) here? 2. How do I know that this is a problem? Note that by asking this question, you will be helping to differentiate the symptoms of the problem from the problem itself. Example: while declining sales or unhappy employees are a problem to most companies, they are in fact usually symptoms of underlying problems that need to addressed. 3. What are the immediate issues that need to be addressed? This helps to differentiate between issues that can be resolved within the context of the case, and those that are bigger issues that needed to addressed at another time. 4. Differentiate between importance and urgency for the issues identified. Some issues may appear to be urgent, but upon closer examination are relatively unimportant, while others may be far more important (relative to solving our problem) than urgent. You want to deal with important issues in order of urgency to keep focused on your objective. Important issues are those that have a significant effect on: 1. profitability, 2. strategic direction of the company, 3. source of competitive advantage, 4. morale of the company's employees, and/or 5. customer satisfaction. The problem statement may be framed as a question, (e.g. What should the company do regarding? or How can the brand improve market share?). The problem statement may have to be rewritten during the analysis of a case, as you peel back the layers of symptoms or causation. Additional questions regarding Problem Definition: 1. Who is affected most by this issue? You are trying to identify who are the relevant stakeholders to the situation, and who will be affected by the decisions to be made. 2. What are the constraints and opportunities implicit to this situation? It is very rare that resources are not a constraint, and allocations must be made on the assumption that not enough will be available to please everyone. 3. What do the numbers tell you? You need to take a look at the numbers given in the case study and make a judgment as to their relevance to the problem identified. Not all numbers will be immediately useful or relevant, but you need to be careful not to overlook anything. When deciding to analyze numbers, keep in mind why you are doing it, and what you intend to do with the result. Alternatives This section deals with different ways in which the problem can be resolved. Typically, three to five alternatives should be given in this section. Many times a few alternatives are already given in the case. Usually these are stated as something like “The company is considering ____ or ____”. Feel free to use these and to name one or two extra alternatives of your own, if any relevant ones become noticeable to you. Things to remember at this stage are: 1 1. Be realistic! Keep in mind alternatives should be realistic and fit within the constraints of the situation. 2. Waiting to make decision pending further investigation is not an acceptable alternative/decision for any case study that you will analyze. The whole point to this exercise is to learn how to make good decisions, given the imperfect information that we have (which is normal for most business decisions). 3. Doing nothing as in not changing your strategy can be a viable alternative, provided it is properly justified and being recommended for the correct reasons (as will be discussed below). 4. Avoid providing clearly undesirable alternatives to make a reasonable alternative look better by comparison. 5. Keep in mind that any alternative chosen will need to be implemented at some point, and if serious obstacles exist to successfully doing this, then this alternative thus becomes unrealistic. Criteria Once the alternatives have been identified, a method of evaluating them and selecting the most appropriate one needs to be used to arrive at a decision. The concept of Criteria is very important concept to understand. It answers the question of how you are going to decide which alternative(s) is/are the best one(s) to choose. Other than choosing randomly, managers employ some criteria in making any decision. Think about the last time that you made a purchase decision for an article of clothing. Why did you choose the article that you did? The criteria that you may have used could have been: 1. fit 2. price 3. fashion 4. color 5. approval of friend/family 6. availability Note that any one of these criteria could appropriately finish the sentence; “The brand/style that I choose to purchase must…”. These criteria are also how you will define or determine that a successful purchase decision has been made. For a business situation, the key decision criteria are those things that are important to the organization making the decision, and they will be used to evaluate the suitability of each alternative recommended. The criteria should be brief and direct. Some key criteria could be: 1. improves (or at least maintains) profitability 2. increases sales, market share, or return on investment 3. improves/maintains customer satisfaction or corporate image 4. is consistent with the corporate mission or strategy 5. is within our present (or future) resources and capabilities 6. has acceptable risk parameters (i.e. is not too risky) 7. ease or speed of implementation 8. accounts for employee morale, safety, or turnover Key decision criteria should also be: 1. Measurable: at least to the point of comparison, such as alternative A will improve profitability more that alternative B. 2. Be related to your problem statement, and alternatives: If you find that you are talking about something else, that is a sign of a missing alternative or key decision criteria, or a poorly formed problem statement. 2 People tend to find the concept of key decision criteria a little confusing, so you may need to rewrite them as you analyze the case. Also, it may help to think of criteria as similar to that of constraints or limitations that you are using to evaluate your alternatives. Analysis If you have done the above properly, this should be straightforward. You measure the alternatives against each key decision criteria. A method that can be used is to list the advantages and disadvantages (pros/cons) of each alternative, and then discussing the short and long term implications of choosing each. Note this implies that you have already predicted the most likely outcome of each of the alternatives. Some students find it helpful to consider three different levels of outcome, such as best, worst, and most likely, as another way of evaluating alternatives. Decision You must have a decision/recommendation based on your analysis! Marketing managers are decisionmakers; this is your opportunity to practice making decisions. Give a justification for your decision. Check to make sure that it is one and only one of your Alternatives and that it does resolve what you defined as the Problem. Be sure to explain why the decision made is the best fit to the criteria (i.e. why the alternative you choose was the most best one for the company in this case). Implementation This is an important step to bring your recommendation to life. Many decisions fail on the basis of poor implementation rather than a poor decision. What are the key steps to implement your recommendation? Do you need to add more sales people, change the advertising message, focus sales efforts against a particular customer segment, increase advertising expenditures, restructure the marketing department, etc? You need to outline your implementation plan including sequence and timetable, expected competitive reaction, metrics to measure success, unplanned for costs, and any risks in the plan. 3 MKT 5125: Marketing Decisions for Managers Case Analysis Framework - PACADI Approach PACADI Approach This approach normally begins with a Situation Analysis (including SWOT), and initial market research. However, given the abbreviated strategic analysis, we will skip this step* Problem definition – major challenge or key opportunity Alternatives – identification and discussion (generally 3-5 alternatives) Criteria – list of key factors, rationale, and weights that are used in the analysis, and impact how the decision is made Analysis – how you made/will make your decision (brief analysis) Decision – your proposed solution to the problem Implementation plan – recommendations, expected competitive reaction, budget (if needed), actions, timetable, other useful metrics *Note - For the purposes of case studies (where the facts are given to us) we will not conduct a formal situation analysis, but this is a critical first step since marketers must know their market! Your task is to provide an approximate 2-page, single-spaced PACADI critique (there is a 3 page maximum, excluding appendices; a single page will not get it done). Use each part of the PACADI as a header/section for your paper (i.e. Section 1 will be Problem Definition). Also note that any figures or tables shown in an appendix of your paper should be original material or analysis not an exhibit extracted from the case. In completing any case analysis, DO NOT conduct any outside research on the company, its history, or its progress since the case was written. Only use the information presented in the case. Due date and Submission Instructions Submit paper as a Word file via uploading it using the assignment function in Bb by the assignment due date posted in the syllabus. Also, don’t forget to include HCBE Cover Page (see syllabus if you need one). *Note – no email or digital drop box submissions please How to name your files Name – MKT 5125 – Case Name For Example: Ricky Fergurson – MKT 5125 – Marketing at Nyassa Case Improper File Names or Submissions = 5pts taken off assignment The Guide to Writing A Case Analysis (see link in Blackboard) may also have some useful information regarding cases in general. See rubric on next page. Case Grading Rubric Scale Evaluative Criteria (Possible Points) ProblemAlternativesCriteria (35) Proficient Very Good Exemplary Does not provide an analysis of P-A-C (0) Inadequate Provides a limited analysis of P-A-C (15) Developing Provides a basic analysis of P-A-C (20) Provides a comprehensive analysis of P-A-C (27) Analysis-Decision (35) Does not provide a strategic analysis (0) Provides a limited strategic analysis (15) Provides a basic strategic analysis (20) Provides a comprehensive strategic analysis based on relevant data (27) Implementation (20) Does not provide an implementation plan (0) Provides a limited implementation plan (10) Provides an implementation plan (14) Provides a thoughtful and reasonable implementation plan (17) Writes at the graduate level (10) Does not use designated format or standard. (0) Does not write clearly or in an organized format. Numerous errors in grammar and spelling. (4) Occasional errors in grammar and spelling. (6) Uses effective format and writes at the graduate level. (8) Provides a well written, comprehensive and insightful analysis of P-A-C (35) Provides a well written, comprehensive, data-based, and insightful strategic analysis (35) Provides a well written, indepth, and strategically sound implementation plan (20) Writes clearly and concisely at a very high graduate level throughout the paper. (10) Scores Total Writing Help - NSU Tutoring and Testing Center I would encourage everyone (even if you’re already a good writer) to use the NSU Tutoring and Testing Center, which offers free writing tutoring, both online and in-person. They are happy to look over drafts of your work and offer suggestions for writing improvements. Here is a link with more info: http://www.nova.edu/tutoring-testing For the exclusive use of T. Henderson, 2019. W16335 KRAFT FOODS CANADA: TARGETING THE MILLENNIALS 1 R. Chandrasekhar wrote this case under the supervision of Professor Allison Johnson solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-06-06 In September 2014, Kraft Foods Canada was working on an action plan for Kraft Singles, the company’s brand of processed cheese slices. Although Kraft Singles had thus far been targeted at Canadian families, it now needed to be marketed to a new segment—Canadian millennial moms (born between 1981 and 2000). The company was in the middle of developing a marketing plan aimed at attracting millennial moms. During the five decades since its launch, Kraft Singles had acquired an iconic status in the foods and beverages industry. An entire generation of consumers, in the developed world in particular, consisting of both baby boomers (those born between 1946 and 1964) and Generation Xers, or Gen Xers, (those born in the years 1965 through 1980), had grown up watching Kraft Singles melting into grilled cheese sandwiches and atop barbecued burgers. Peeling off an individual slice of Kraft Singles cheese and layering it on bread toast was a breakfast ritual in many families. The orange colour and the square shape of each slice and the blue colour of the packaging had remained unchanged over time. The need to reposition Kraft Singles had arisen because of reasons that were both external and internal. The number of millennials had been progressively increasing in Canada. In 2014, millennials had outnumbered baby boomers and Gen Xers. It was a tipping point. Millennials represented 36.8 per cent of the Canadian workforce in contrast to 33.9 per cent of Gen Xers and 31.1 per cent of baby boomers (see Exhibit 1). Internally, cheese was an important category for Kraft Canada (and for Kraft Food Group, of which it was part), generating 25 per cent of sales revenue. But overall sales volumes for cheese were falling by approximately 1 per cent every year, while annual sales value was growing at about 2 per cent. The market for unprocessed cheese was expanding, whereas the market for processed cheese was falling. Kraft Singles, a processed cheese product, needed revival. Canada’s per capita consumption of cheese had been static since 2008, at approximately 12 kilograms, which showed signs of market maturity. In contrast, per capita consumption of cheese was 17 kilograms in Europe and 15 kilograms in the United States, which indicated some room for growth in Canada. 2 1 This case has been written on the basis of published sources only. The interpretations and perspectives presented in this case are not necessarily those of Kraft Canada Inc. or any of its employees. 2 Government of Canada, “Global Cheese Consumption,” accessed November 13, 2015, www.dairyinfo.gc.ca/pdf/consumption_global_cheese_e.pdf. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. For the exclusive use of T. Henderson, 2019. Page 2 9B16A015 Kraft Canada was facing three dilemmas. How should it make the brand messaging of Kraft Singles compelling to Canadian millennial moms? What product innovations should the company bring to Kraft Singles, coinciding with the new messaging? How should Kraft Canada ensure that, in pursuing Canadian millennial moms, it would not alienate its traditional customer group—Canadian families? CANADIAN CHEESE MARKET The Canadian cheese market had sales revenue of CA$3.8 billion 3 in 2014. The market was consolidated, with the four largest players holding 84 per cent of the market share. The overall market was led by Saputo, which had nearly 28 per cent market share (see Exhibit 2). While Saputo also led the unprocessed cheese segment (which was growing but was largely undifferentiated), Kraft led the processed cheese segment (which was witnessing slow growth but was sharply differentiated and competitive).4 Cheese was a staple product in Canadian households and in Canadian foodservices. Recently, cheese consumption had undergone some noticeable trends. For example, food consumption outside of meals was had previously trended toward snack food such as chips and snack bars (e.g., candy bars, granola bars). But a growing trend in health-consciousness had led to cheese emerging as a preferred snacking option for young Canadians, who were also inclined to try new flavours. As a result, flavour blends such as jalapeno cheese were becoming popular. The prices of dairy products in general were regulated in Canada. Manufacturers did not have much room for price increases. To maintain the price point on the shelf, cheese manufacturers were seeking alternatives such as reducing the size of cheese packaging. For example, a 500-gram pack of cheese would gradually be reduced to 460 grams at the same price point. A major trend in packaging was retailers’ demands for exclusive pack sizes, which was intended to avoid the phenomenon of “price matching,” which was growing among competitive retailers for products with the same pack sizes. In Canada, 99.8 per cent of cheese sales occurred through the store format. Grocery retailers, in particular, accounted for 96.9 per cent of cheese sales. For retailers, cheese was a higher margin business compared with other dairy categories such as milk. As a result, retailers were regularly strengthening their cheese sections. In-store sampling displays were common, and some stores had appointed cheese ambassadors to promote cheese and expand the occasions for its use. MILLENNIALS The interpretation of the term millennials differed by geography. In Canada, millennials were considered in 2014 to be in the age group 14 to 33 years, whereas in the United States, they were considered to be in the age group 18 to 34 years. In both countries, however, millennials were not only the single largest demographic cohort but were on the way to their prime years of working and spending. Millennials accounted for 6.3 million people in Canada5 and 68 million in the United States. 6 3 $ = CA$ = Canadian dollar; All currency amounts are in CA$, unless otherwise specified; US$1 = CA$1.06 on January 2, 2014. 4 “Cheese in Canada,” Euromonitor International, August 2015. 5 Statistics Canada, “Table 282-0002: Labour Force Survey Estimates, by Sex and Detailed Age Group,” accessed November 15, 2015, www5.statcan.gc.ca/cansim/a26?lang=eng&id=2820002. 6 “Target: Millennials,” Ad Age, accessed April 28, 2014, http://brandedcontent.adage.com/cableguide2013/article.php? id=355. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. For the exclusive use of T. Henderson, 2019. Page 3 9B16A015 Millennials had come of age in an era characterized by disruptive phenomena (e.g., 9/11, protracted wars, and economic downturns) and anti-establishment movements (e.g., Occupy Wall Street and the Arab Spring). Their shopping and consumption habits were influenced by the unique experiences of their time. A study by Goldman Sachs 7 found, for example, that even at the peak of their home-buying years, millennials were reluctant to enter the housing market. Instead, many preferred to live with their parents, postponing both marriage and having children. They were unwilling to take on the burden of ownership of goods and services, giving rise to what was being called a “sharing economy.” They were not brandconscious, turning to products offering maximum convenience at the lowest cost — such as private-label products. Wellness was an active pursuit. They exercised more, ate smarter, and smoked less than the baby boomers. They avoided soft drinks, candy, and pre-packaged foods, while being receptive to natural foods that promised health. Millennials were value-conscious, which was evidenced by a study by The NPD Group showing that the dollar store retail channel was attracting millennials. While the brick-and-mortar retail segment saw a 4 per cent decline in store visits during the second quarter of 2014, the dollar store sub-segment saw a 14 per cent increase during the same period. The study attributed the increase to the attraction of millennials to dollar stores for their low prices.8 Food was one category where millennials did not mind spending money. According to the Specialty Food Association, millennials were willing to spend more money than their parents on products such as highend chocolates, olive oil, and cheese.9 A report by Morgan Stanley in early 2015 showed that the millennials had distinctive food consumption habits, 10 including eating out more often. Of all millennials, 53 per cent ate out once a week compared with 43 per cent for the general population. Millennials were also more likely than their parents to patronize eateries that portrayed good social ethics, which explained the popularity among millennials of such socially progressive brands as Starbucks. Millennials preferred the category of fast casual restaurants (FCR), such as the restaurant chain Chipotle Mexican Grill, which served casual-dining quality food at fast-food speeds. Millennials comprised 51 per cent of FCR customers. The Morgan Stanley report also noted that while millennials also frequented quick service restaurants (QSRs) such as McDonald’s, most were too embarrassed to talk about QSRs with their peers. The millennials’ metrics of healthy food also differed. For example, for millennials, it mattered more that food was “fresh, less processed and with fewer artificial ingredients” 11 in contrast to their parents’ tendency to focus on calories. Millennials were prone to snacking throughout the day, which meant that portable food products appealed to them. It also meant that the food products had to satisfy their need for both health and indulgence. Millennials were a generation that had grown up on technology, but technology was not the be-all and end-all. A survey of millennials by WD Partners, a Canadian grocery retail advisory (which considered millennials to be “grocery’s next generation”), showed that hi-tech ambience meant little for them in a 7 “Millennials Coming of Age,” Goldman Sachs, accessed November 16, 2015, www.goldmansachs.com/ourthinking/pages/millennials/index.html. 8 Ibid. 9 Keith Nunes, “Putting Millennials in Perspective,” Food Business News, July 10, 2014, accessed November 15, 2015, www.foodbusinessnews.net/Opinion/Keith%20Nunes/Putting%20millennials%20in%20perspective.aspx?cck=1. 10 Ashley Lutz, “55 Ways Millennials’ Dining Habits Are Different From Their Parents,’” Business Insider, March 25, 2015, accessed November 11, 2015, www.businessinsider.com/millennials-dining-habits-are-different-2015-3. 11 Ibid. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. For the exclusive use of T. Henderson, 2019. Page 4 9B16A015 store. For millennials, technology meant getting real-time information about things that mattered. For example, while cruising a grocery store aisle displaying farm produce, millennials wanted real-time access to recipes and meal solutions based on the foods they saw in front of them. That was the experience they sought. They did not mind bypassing the convenience provided by a nearby store if, instead they could drive to a store, however far away, that offered the kind of experience they were seeking. 12 They also wanted to connect with brands completely, to the extent that the in-store experience with a product was only the beginning. The experience would go beyond the purchase of the product.13 As consumers of social media, millennials were open to sharing personal information with retailers; however, they expected retailers, in turn, to customize their offerings. Millennials wanted to be individually catered to. For example, according to a survey conducted by Aimia, a Canadian company that analyzed marketing and loyalty programs, 53 per cent of millennials cited relevancy of rewards as a top reason for joining a loyalty program, compared with just 32 per cent of older consumers. 14 In a 2012 study, The Boston Consulting Group classified millennials into six segments: Hip-ennial, Gadget Guru, Millennial Mom, Clean & Green Millennial, Anti-Millennial, and Old School Millennial, each with unique characteristics 15 (see Exhibit 3). Canadian Millennial Moms BabyCenter, a web and mobile platform, surveyed 1,600 Canadian moms, comprising 804 millennial moms aged 18 to 32 years and 829 Gen X moms aged 33 to 44 years (see Exhibit 4). The survey found that, beyond the smartphone, millennial moms spent 4.6 hours consuming media digitally of their 7.8 hours of total media consumption in a day. It also showed the average age of first-time moms to be 28.5, and that 88 per cent of millennial moms were college- or university-educated, with an average college debt of $26,000. They were 38 per cent more likely to live with extended family than Gen X moms. Of all Canadian millennial moms, 22 per cent were considering cancelling their cable television subscriptions and 8 per cent had never had cable television. One in 10 watched online videos and movies on a mobile device daily. Canadian millennial moms spent 47 per cent more time online on their smartphones than Gen X moms. 16 KRAFT FOODS INC. COMPANY BACKGROUND Kraft Canada was one of Canada’s leading consumer packaged goods companies, with a product portfolio comprising 17 food and beverage categories. The company had two manufacturing plants in Canada, where it marketed refrigerated meals, refreshment beverages, coffee, cheese, and other grocery products. Its brands included Cracker Barrel, Philadelphia, Nabob, Kraft Dinner, Kraft Peanut Butter, Kraft Singles, Maxwell House, TASSIMO, and Kraft Salad Dressings. 12 WD Partners, “Grocery’s Next Generation: How Millennials Will Change Food Shopping,” accessed November 15, 2015, www.wdpartners.com/research/grocerys-next-generation. 13 International Dairy-Deli-Bakery Association, “What’s in Store 2015,” Trends Report (Madison, WI: IDDBA, 2014). 14 “For the Next Generation of Shoppers, It’s About Me!” Canadian Grocer, accessed October 16, 2014, www.canadiangrocer.com/top-stories/for-the-next-big-generation-of-shoppers-its-about-me-26367. 15 Christine Barton, Jeff Fromm, and Chris Egan, “The Millennial Consumer: Debunking Stereotypes, Center for Consumer and Customer Insights,” The Boston Consulting Group, 2012, accessed January 6, 2016, www.bcgperspectives.com/content/articles/consumer_insight_marketing_millennial_consumer/. 16 Matthew Chung, “Millennial Moms by the Numbers,” Strategy, April 25, 2014, accessed Aril 28, 2014, http://strategyonline.ca/2014/04/25/millennial-moms-by-the-numbers/. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. For the exclusive use of T. Henderson, 2019. Page 5 9B16A015 Kraft Canada was part of the Kraft Foods Group, a global enterprise with net revenues of US$18.2 billion and pre-tax earnings of US$4.1 billion in 2013 (see Exhibit 5). The portfolio of Kraft Foods Group included two brands with annual sales exceeding US$1 billion each—Kraft cheeses, dinners, and dressings and Oscar Mayer meats—plus more than 25 brands, each with annual net revenues between US$100 million and US$1 billion. The group was founded in 1903 by Canadian-born James L. Kraft who, at his Chicago boarding house, had perfected the process of taking a milk-based product and making it long-lasting, consistent in quality, and easy to slice. In 1916, the entrepreneur received a patent for what he called “process cheese,” a sterilized product made by heating cheddar to 175 degrees Fahrenheit (79.4 degrees Celsius) for 15 minutes while whisking it continuously. The invention helped turn cheese into a shippable commodity that had a long shelf life. By 1930, cheese was no longer a standalone product; it was being used as an ingredient in such food products as salads and sandwiches. In 1965, the company launched Kraft Singles as “a slice like slab of cheese in a transparent, pliant wrapper.”17 The Kraft Foods Group was known for its decentralized operations wherein local managers had considerable autonomy. For example, the Oreo cookie marketed in China was in the form of a wafer instead of the globally marketed form of a sandwich. The change recognized the local preferences for cookies in the form of wafers. Following the change, Oreo had the fastest growing market share of cookies in China. 18 In Canada, the company had developed a line of products suitable for people following the Halal diet, in observance of the Islamic dietary laws.19 Kraft Foods Group sold its products primarily to supermarket chains, wholesalers, supercentres, club stores, mass merchandisers, distributors, convenience stores, drug stores, value stores, and other retail food outlets. Its five largest customers accounted for approximately 43 per cent of net revenues in 2013, while its 10 largest customers accounted for approximately 56 per cent of net revenues. Walmart accounted for approximately 26 per cent of the company’s net revenues in 2013. Kraft Foods Group had embarked on a brand rejuvenation plan in 2013. In addition to deploying traditional tracking tools such as scorecards and metrics, it started using a dedicated team approach to promote innovation. It set up what it called innovation garages, where designated teams could act like start-ups within the framework of a large organization. The outcomes to date included a rejuvenation of Kraft Singles American cheese (involving the elimination of artificial preservatives) and Philadelphia soft cream cheese (which acquired a fruity texture).20 At the retail level, Kraft Foods Group was tracking three key consumer segments in North America: lowincome populations, Hispanics, and millennials.21 17 Charles Wilson, “Who Made That Kraft Single,” The New York Times, June 1, 2012, accessed November 11, 2015, www.nytimes.com/2012/06/03/magazine/who-made-that-kraft-single.html?_r=0. 18 Julie Jargon, “Kraft Reformulates Oreo, Scores in China.” The Wall Street Journal, May 1, 2008, accessed November 11, 2015, http://online.wsj.com/article_print/SBI120958152962857053.html. 19 Ibid. 20 Kate MacArthur, “Why Kraft Changed Its Innovation Strategy and What Happened Next,” Chicago Tribune Blue Sky, April 17, 2014, accessed December 28, 2015, http://bluesky.chicagotribune.com/originals/chi-barry-calpino-kraft-foods-bsi20140416,0,0.story. 21 Keith Nunes, op. cit. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. For the exclusive use of T. Henderson, 2019. Page 6 9B16A015 PRIOR PRODUCT LAUNCHES AT MILLENNIALS Mio The liquid concentrate category had been in decline in Canada for five straight years when, in March 2012, Kraft Canada decided to revive it with the launch of Mio, targeted at male millennials.22 Mio (meaning “mine” in Italian) was a concentrated-liquid water enhancer. Kraft already had water enhancers “for her” (Crystal Light) and for kids (Kool-Aid), but nothing for men. The immediate triggers were two-fold: Soft drink consumption (among the number of young Canadian males surveyed) had fallen from 37 per cent in 2007 to 33 per cent in 2011. During the same period, water consumption had increased from 58 per cent of all young Canadian males surveyed to 65 per cent. 23 Kraft Canada saw an opportunity in the growing popularity of water among young males. As a new product, Mio represented several firsts in the market for water enhancers: the first move from a powder to a liquid, the first convenient sizing, the first mess-free and resealable package, and the first product to offer flexibility in how much flavour it delivered. Kraft invited some YouTube stars to find inventive ways to make Mio squirt. The Texas-based group Dude Perfect, known for its online videos of basketball trick shots, took on the challenge on YouTube, blowing up bottles of Mio with explosives, hitting them with a sledgehammer, and shooting the concentrated red liquid into a glass several feet away by squeezing the little bottles in a vise—all in the name of discovering the most unusual ways to “trick squirt” the product into water. The online video went hand-in-hand with Kraft Canada’s goofy television ad used to launch Mio. Featuring nonsensical humour targeted at younger viewers, the ad demonstrated how the product could be customized by the amount of liquid added to water. The media buy was focused on TV programs that not only were skewed towards males but also leaned heavily on digital media placements. Kraft Canada bought much more pre-roll (the ads that play before videos online) than usual on sites such as TSN.ca and MTV.ca. And on YouTube, it bought “True View” ads, which allowed viewers to opt out of ads they did not want to watch. The promotion was in response to research showing that male millennials watched videos on their computers more often, but were reluctant to watch advertising. Because Kraft Canada knew that many males would not know where the mixed beverages section would be among store aisles, in-store executions made Mio visible both at the periphery of stores and at the point of sale. Promotions were run with water brands such as Co-op Gold Spring Water H20. The company established relationships with gas station stores to carve out some space in a channel where men shopped. By year-end, sales had grown 350 per cent over the previous year, racking up $17.19 million in revenue. 24 Peanut Butter Research by Kraft Canada showed that Canadian millennial moms were buying 13 per cent less peanut butter than the average consumer. The company decided to rebrand its peanut butter in April 2014, to target it specifically at millennial moms. It developed an advertising campaign that told the story of a girl growing up with the bear her mother had given her, and then giving a similar bear to her own child. The 22 Matthew Chung, “Marketers of the Year: Kristi Murl Changes Things Up at Kraft,” Strategy, December 13, 2013, accessed April 18, 2014, http://strategyonline.ca/2013/12/13/marketers-of-the-year-kristi-murl-changes-things-up-at-kraft/#ixzz2zFRX 9SiR. 23 Susan Krashinsky, “Staking the Elusive Millennial Male,” The Globe and Mail, July 19, 2012, accessed April 18, 2014, www.theglobeandmail.com/report-on-business/industry-news/marketing/stalking-the-elusive-millennial-male/article 4428728/. 24 Matthew Chung, op. cit. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. For the exclusive use of T. Henderson, 2019. Page 7 9B16A015 campaign tried to establish an emotional connection with the target group and build their affection for its peanut butter brand by making the teddy bear central to the package design. A teddy bear was a symbol of childhood, home, and security, often among the only items to survive countless purges and to be carried sheepishly into adulthood. It was a soft sell. The rebranding was so successful that Kraft Canada launched a line of bears for sale. Unlike many pieces of brand-related merchandise, however, the bears were logofree. The Kraft name appeared only on the tags that most customers cut off. 25 ISSUES BEFORE KRAFT CANADA Making a Compelling Brand Message for Kraft Singles Kraft Singles was a local product in the Kraft universe, where each country was free to develop its local communications strategy. At Kraft Canada, the dilemma around messaging was compounded by a commercial that had been launched by U.S. Kraft Foods in February 2014 that was doing the rounds on some Canadian TV channels. The U.S. commercial promoted Kraft Singles (the American version, though this was not specified in the commercial) as containing no artificial preservatives. In Canada, consumers had a lower tolerance for food preservatives than in the United States. But with U.S. commercials being aired freely on Canadian channels, longstanding Canadian consumers of Kraft Singles watched the commercial and wondered: What is going on? The best way for Kraft Canada to attract millennial moms was to play on Kraft Singles’ four core brand attributes: health, nutrition, taste, and convenience. The messaging needed to be rooted in these attributes. It was only then that the messaging would be authentic. The issue before the company was determining which attributes needed to be played up in the context of the unique needs of Canadian millennial moms. Kraft Singles would not rank high on the attribute of health because it was processed cheese, which was a limitation. However, millennial moms were influenced by practices that ensured environmental sustainability. Therefore, highlighting the operational processes would likely make the messaging authentic. For example, the messaging could focus on the origin of cheese, (including the manner in which cows were raised and fed on dairy farms) and the production of cheese (including the efforts at reducing the carbon footprint at various steps in the value chain). Kraft Canada faced a contradiction in a larger sense. Consumers were constantly evolving. It was also inevitable that Kraft Singles, too, needed to evolve, which was the only way the brand could stay relevant to consumers. However, Kraft had remained unchanged over decades. Its shape, size, and color had remained the same. Consistency was its main virtue. The brand was, in that sense, iconic. As a product, it also seemed perfect. Nowhere was it more pronounced than when chefs (e.g., Linton Hopkins) who used only homemade ingredients as a matter of faith in their cooking, turned without hesitation to Kraft Singles when it was time to add the cheese. The dilemma before the company was around the brief it had to provide to its advertising agency in terms of developing a new TV commercial for Kraft Singles aimed at attracting millennial moms. 25 Susan Krashinsky, “Sticky Symbols,” The Globe and Mail, October 17, 2014, accessed October 17, 2014, https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20141017/RBCDPERSUASIONSYMBOLS. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. For the exclusive use of T. Henderson, 2019. Page 8 9B16A015 Product Innovation for Kraft Singles Snacking was an important millennial eating habit, and cheese was an important snack for millennials. Each meal skipped was thus a sales opportunity for Kraft Singles, as was each snack break. Out-of-home eating was another defining characteristic of millennial mealtimes, although in contrast, millennial snack times were more likely to occur at home. Were there hidden opportunities in millennial eating patterns for some product innovations in Kraft Singles? Kraft Singles could pique the interest of millennial moms by bringing the foodservice experience into the home. This approach would be consistent with the new social trend of “home chefs”—persons cooking at home for pleasure and aspiring to be recognized by friends and family for their professional approach to cooking. Home appliance companies (e.g., Electrolux) had already begun to develop cooking systems (e.g., Grand Cuisine) that were targeted at home chefs. This trend was another potential area for innovation. Kraft Canada could also provide recipes and cooking tips to millennial moms, ideally by focusing on recipes that required less preparation time and fewer ingredients than typical meals. The company could also work with retail stores to develop innovative promotions. Some of the retail innovations that Kraft Canada could work on included encouraging retail customers to linger at the cheese counter during store promotions; establishing unique “brand elements”—such as a logo, a colour, a melody, or symbol—to accompany Kraft Singles; developing flavours that were bold and adventurous; creating in-store cheese experiences; educating consumers at a store’s point-of-sale; appointing a cheese ambassador in each store; promoting sampling; suggesting how to cook with cheese and how to serve cheese; and even pairing wines with cheese. Avoiding Alienation of Core Customer Group Although Canadian demographics witnessed a tipping point in 2014, when the number of millennials represented 36.8 per cent of the country’s population, the fact remained that baby boomers and Gen Xers together represented a major segment. Older shoppers were still the most promising for the company to target. Unlike the millennials who were a new segment and whose shopping behaviours were untested, baby boomers and Gen Xers were easy to serve because Kraft Canada was familiar with their preferences. Unlike millennials who were hindered by their unique economic circumstances, older shoppers had experienced growth in real incomes since the 1970s and had driven shopping volumes. Over the past 40 years, shoppers aged 35 and older had consistently controlled 70 per cent or more of all shopping spending in the United States. 26 No similar data were available for Canada but the figures seemed close and comparable. 26 Sucharita Mulpuru, The Future of Shopping, Forrester Research, April 9, 2015. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. For the exclusive use of T. Henderson, 2019. Page 9 9B16A015 EXHIBIT 1: CANADIAN WORKFORCE DEMOGRAPHICS, BY PERCENTAGE, 2009–2014 Millennials Gen Xers Baby Boomers 1999 7.2 41.3 51.4 2004 17.8 38.4 43.8 2009 27.4 35.8 36.8 2014 36.8 33.9 31.1 Source: Graham F. Scott, “Millennials Are Now the Biggest Generation in the Canadian Workforce,” Canadian Business, June 3, 2015, accessed August 15, 2015, www.canadianbusiness.com/innovation/the-millennial-majority-workforce/. EXHIBIT 2: CANADIAN CHEESE MARKET SHARES Source: “Cheese in Canada,” Euromonitor International, August 2015. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. • Successful, wired, free spirited, and at ease • Feels this is his best decade • Greatest device ownership, pushes/contributes to content • Male-dominated, above-average income, single • Cautious, globally aware, charitable, and informationhungry • Greatest user of social media but does not push/ contribute content • Femaledominated, belowaverage employment (many are students and homemakers) 29 13 “It is a great day to be me.” Gadget Guru “I can make the world a better place.” Hip-ennial 22 • Wealthy, family oriented, works out, confident, and digitally savvy • High online intensity • Highly social and information-hungry • Can feel isolated from others by her daily routine • Older, highest income “I love to work out, travel, and pamper my baby.” Millennial Mom 10 • Impressionable, cause-driven, healthy, green, and positive • Greatest contributor of content, usually cause-related • Male-dominated, youngest, more likely to be nonwhite, full-time student Clean & Green Millennial “I take care of myself and the world around me.” EXHIBIT 3: MILLENNIAL SEGMENTS 16 “I am too busy taking care of my business and my family to worry about much else.” • Locally minded, conservative • Does not spend more for green products and services • Seeks comfort and familiarity over excitement, change, or interruption Anti-Millennial 10 Old-School Millennial “Connecting on Facebook is too impersonal, let’s meet up for coffee instead.” • Not wired, cautious, and charitable • Confident, independent, and self-directed • Spends least amount of time online, reads • Older, more likely to be nonwhite 9B16A015 Source: Christine Barton, Jeff Fromm, and Chris Egan, “The Millennial Consumer: Debunking Stereotypes, Center for Consumer and Customer Insights,” The Boston Consulting Group, 2012, accessed January 6, 2016, www.bcgperspectives.com/content/articles/consumer_insight_marketing_millennial_consumer/. Ratio Attributes Personal Statement Page 10 For the exclusive use of T. Henderson, 2019. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. Inference: Mobile mom uses mobile for a range of activities. Inference: Millennial mom is more laid back than Gen X mom. One (13%) Two (49%) Three or More (24%) Not Sure (15%) Inference: Millennial mom is comfortable considering a bigger family. Do you have any of these devices or services? Millennial Mom Gen X Mom Smart phone (87%) Smart phone (86%) Laptop (74%) Laptop (81%) Tablet (58%) Tablet (69%) Landline phone (36%) Landline phone (58%) Desktop (37%) Desktop (46%) Inference: Millennial moms are mobile moms. Source: “2014 Millennial Mom Report: Canada Insights,” www.babycentersolutions.com/research-and-insights.html, accessed October 30, 2015. Inference: Millennial mom was raised differently than Gen X mom. How often do you do the following on your mobile phone (weekly or more often)? Millennial Mom Gen X Mom Texting (98%) Texting (93%) Seeking advice (82%) Seeking advice (69%) Finding recipe (66%) Finding recipe (64%) Watching video (46%) Watching video (35%) Forgiving (43%) Involved (47%) Enabling (21%) Conservative (48%) Strict (46%) Traditional (54%) Forgiving (54%) Involved (54%) Enabling (31%) Conservative (43%) Strict (41%) Traditional (50%) One (4%) Two (45%) Three or More (33%) Not Sure (18%) Millennial Mom Gen X Mom Millennial Mom Gen X Mom How many children, in total, do you plan to have? 9B16A015 Which words best describe the way your parents or guardians raised you? EXHIBIT 4: SURVEY OF CANADIAN MILLENNIAL MOMS On average, how many hours in a typical weekday do you currently spend doing each of the following activities? Fewer for Herself Parenting Time (−13 hours) (+13 hours) Working (−2.9) Cooking (0.7) Partner Time (−2.8) Cleaning (0.9) Socializing (−2.2) Laundry (0.9) Sleeping (−1.7) Morning Routine (1.9) Hobbies (−.5) Bedtime Routine (2.2) Exercising (−1.2) Kids’ Activities (2.6) Watching TV (−1.1) Feeding Children (3.9) Inference: Millennial mom spends her time differently than Gen X mom. Which words best describe your parenting style? Millennial Mom Gen X Mom Involved (84%) Involved (75%) Supportive (83%) Supportive (79%) Realistic (69%) Realistic (62%) Relaxed (54%) Relaxed (47%) Page 11 For the exclusive use of T. Henderson, 2019. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019. For the exclusive use of T. Henderson, 2019. Page 12 9B16A015 EXHIBIT 5: KRAFT FOODS GROUP’S INCOME STATEMENT, 2011–2013 (IN US$ MILLION) Year ending December Beverages Cheese Refrigerated meals Meals & desserts Enhancers & snack nuts Canada Other businesses Total Revenues Cost of Sales Gross Profit Net Profit 2013 2,681 3,925 3,334 2,305 2,101 2,037 1,835 18,218 11,395 6,823 2,715 2012 2,718 3,829 3,280 2,311 2,220 2,010 1,903 18,271 12,499 5,772 1,642 2011 2,990 3,788 3,313 2,271 2,259 1,967 1,988 18,576 12,813 5,763 1,775 Source: Kraft Foods Group Annual Report 2013, 40, accessed October 15, 2015, http://ir.kraftfoodsgroup.com/annuals.cfm. This document is authorized for use only by Twila Henderson in MKT 5125 Case Study taught by RICKY FERGURSON, Nova Southeastern University from Apr 2019 to Jul 2019.
Purchase answer to see full attachment