Kraft Singles Case Study Solution
Porters Five Forces Analysis:
Rivalry:
The Kraft foods has great competitors in the food and beverage industry which mainly includes Nestle SA, Con Agra Foods, Hain Celestial Group and many others. It is the rapidly growing industry around the world. This industry competitors face intense competition with each other. The only thing that differentiates each company with other is their variety of products and the customers trust over their brand. Thus, the product’s switching cost is not high which allows Kraft Foods to provide their customers with reasonable price products. However, there is a threat of private labels imposed in the food and beverage industry. Hence, Kraft Foods keeps on restructuring its products instead of increasing product price.
Threat of New Entrants:
The threat of new entrants in the food and beverage industry is quite low because of the strict policies of government. This is due to the high investment and the requirement of strong network of distribution to remain in competition with other competitors. Kraft Foods and its other competitors thus has strong network of distribution which makes it impossible for the new entrant for its survival in the food and beverage industry. On the other hand, Kraft Foods has strong reputation in the market and a remarkable image of its brand.
Threat of New Substitute:
The substitute products with low quality does not attract buyers towards them and let not switch the buyers to other brands from Kraft Foods. In this case, the threat of substitute is less and it may range from low to medium to high. The substitute products launched by the private labels in the market might pose a threat. So, the customers who compromise quality over the price should be taken in trust for their products in order to let not customer switch.
Bargaining Power of Suppliers:
In the industry of food and beverage, the raw material is considered as redundant. Due to the presence of number of input substitutes, no pressure is imposed on Kraft food by its suppliers. But due to the purchase of volume, the suppliers are facing pressure.
Bargaining Power of Buyers:
The buyers bargaining power is moderate as the preferences of the buyers keeps on changing on the basis of product quality and its reasonable cost. These types of customers are better understood and dealt by Walmart providing customers with a chance to gain profit. Thus, buyers bargaining power is considered as high. But there are customers who do not compromise on the product quality and their association with the renowned brand. Hence, bargaining power of buyer is low.
Competitor Analysis:
The four key competitors present in the market were Saputo, Parmalat, Agropur and Kraft Canada. Saputo was dominating in the unprocessed cheese market whereas Kraft Canada was leading the market of processed cheese though the preferences of the market consumers were shifting towards healthier food market therefore the demand for unprocessed cheese was growing which was resulting in slow growth for Kraft Canada. Considering the current trends, unprocessed cheese was preferred more by the millennial moms, who were currently considering Saputo as their preferred choice.
Key Solutions to the Problems:
According to the case study, millennial moms were more inclined towards online media since they were spending around 4.5 hours on digital media out of their total 7.8 hours spent on media in a day. it was also observed that around 90% of the millennial mom were undergraduate and spent much of their time on phones and tablets instead of watching television.
3 alternatives were taken into consideration to counter the issues faced by Kraft Canada.
- In order to appeal the emotions of the consumers, a television ad should be made.
- Nutritional aspects of cheese should be increased
- Social media presence should be increased.
Alternate-1:
The campaigns ran for the effective marketing of Mio and Peanut butter products in order to increase the emotional appeal went really well in the past. In order to position Kraft Singles in the minds of the consumers, Kraft Canada may make their cheese products more compelling through television campaigns which target the emotions of the consumers. Considering the short lengths of TV commercials and their costs, they are at times underestimated by the marketers. Regardless of what the sentiments prevail within the marketing community, the advertisement would advertise the potential benefits of the product and arouse emotions to purchase it while focusing on how cheese slices would influence the millennial moms for providing it to their children. The potential benefit of TV commercials is that it appeals to the mass market which increases brand recalling on a wider scale but it should also be noted that millennial moms spend more of their time on digital media and the purpose is to influence the lives of millennial moms.
Alternate-2:
Another strategy would be to influence the interest of millennial moms through highlighting the benefits of Kraft Singles cheese slices through marketing campaigns. Company would have to modify their formula of providing unprocessed cheese instead of providing processed cheese since market preferences are shifting towards healthier products. This would ultimately increase the appeal for unprocessed cheese slices in the market since Kraft foods is already a well-developed brand. But the costs associated with providing a natural product is comparatively higher than providing a processed cheese. This would that the prices of the cheese slices would increase thereby not allowing the young millennial moms to purchase it since they already have to pay their college debt and they are also price sensitive consumers.
Alternate-3:
The third alternative considers promoting cheese slices over the digital media since millennial moms spend most of their time over digital media as compared to watching television. They are more inclined towards using tablets and mobile phones therefore promoting the brand over social media would provide the most benefits to the company. This strategy would ensure penetrating different markets at the least cost whereas company would be able to invest more over positioning its cheese slices as a healthier product to a wider audience. Social and digital media is the least expensive channels to promote a brand as compared to print media and Television commercials.
Recommendation:
The third alternative can be considered for promoting Kraft Single as it will address all the issues facing Kraft Canada. Digital media will not only differentiate the Canadian Kraft Single from the American version but also demonstrate the key benefits of the product. By adopting to promote the brand through digital media, company will also learn how millennial moms are reacting to their campaign which would be realised cost effectively and if any changes are required then they could be implemented easily without incurring huge costs............
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