School of Management and Entrepreneurship

Marketing Strategy
(MKT631)
MBA 2019-21

Energy Bars Case Analysis 3

SUBMITTED BY:
GROUP - 5
Ritika Sharma (1910120028)
Ashutosh Choudhary (1910120007)
Anuj Yadav (1910120163)
Atul Mishra (1910120135)
Mayank Sharma (1910120021)
Morvi Dhawan (1910120022)
 CASE ANALYSIS 3 (COMPETITIVE POSITION)

Factors underlying Competitive Position (Ref. Exhibit 6.8):

1. Opportunity for competitive advantage:

➢ Can we Differentiate? We can differentiate on the ingredients which are included in

the Energy bar of Nestle, Kind, Kraft.

Nestle Energy Bar – Nestle Energy Bar include following Ingredients.

Cereal Grains (48.2%) [Whole Grain Wheat (Contains Gluten) (27.4%), Rice (17.6%), Whole
Grain Wheat Flour (Contains Gluten) (2.2%), Maize Semolina (0.8%), Rice Flour (0.2%)],
Chocolate (17%) [Sugar, Cocoa Mass, Skimmed Cow’s Milk Powder, Cocoa Butter, Whey
Powder (From Milk). Emulsier from Plant Origin: Soya Lecithin, Natural Flavouring: Vanilla
Flavour], Glucose Syrup, Sugar, Invert Sugar Syrup, Barley Malt Extract (Contains Gluten),
Humectant: Glycerol, Vegetable Oils (Palm Oil and Sun ower Oil), Partially inverted Brown
Sugar Syrup, Salt, Cocoa Powder (0.2%), Emulsifer from Plant Origin: Sunflower Lecithin,
Acidity Regulator: Trisodium Phosphate, Natural Flavouring: Chocolate Flavour, Fat-Reduced
Cocoa Powder (0.02%), Antioxidant: Tocopherols, Dextrose.

Calcium, Iron, Niacin, Pantothenic Acid, Vitamin B6, Folic Acid, Riboflavin.

Contains cereals containing gluten, cow's milk and soya.

Kind Energy Bar – Kind Energy bar include following ingredients:

Oats, tapioca syrup, sugar, canola oil, peanut butter (peanuts, sea salt), honey, brown rice,
brown rice flour, palm kernel oil, peanut flour, chicory root fiber, millet, quinoa, non-fat milk
powder, sea salt, peanut oil, soy lecithin, natural flavour, Vitamin E (tocopherols to maintain
freshness).

Allergen Information: Contains peanuts, milk and soy. May contain tree nuts.
Kraft Energy Bar – Kraft Energy Bar Contains Following ingredients

Sugar, Sunflower oil, Hazelnuts, Cocoa, Skim Milk Powder, Whey Powder, Cocoa Butter,
Sunflower, Lecithin, Artificial Flavours, Citric Acid.

➢ Can we Perform Against Critical Success Factor? Yes, we can perform against
Critical success factor.

Marketing and Distribution: The study involves in-depth risk analyses of the company's
product delivery strategy (how well the company adapts to retailer needs, how well the
distribution suits retail types, how well the company manages distributors, and what kind of
linkage/relationship/agreement the company has with distributors). examinations of other
relevant variables that can help to ensure that a commodity is always available on the market
to promote sales Risk evaluations for the company's marketing, including promotional
commitments, advertising innovation, the ability to recognise targeted consumers and markets,
the ability to capture patterns in consumer preferences, and the ability to sustain a clear
marketing Strategy.

➢ Stage of Competing Products in the product life cycle: Is the timing, right? Growth
stage is the stage of Competing in the product life cycle: Yes, the Timing is Right.

Growth: If a product makes it through the introduction stage of the life cycle, it moves on to
the development stage. Sales are rising at this stage, profits are healthy, and a slew of new
entrants have entered the market. Large corporations may begin to acquire small pioneering
businesses that have progressed to this point. The focus shifts away from primary demand
promotion and toward aggressive brand ads and communicating brand differences. For
Example, to keep this cycle from degrading, a range of items, such as those offered by Power
Bar, can be given. They have a variety of flavours in bars, as well as bars that cater to various
needs. People's needs change all the time, so if you are looking for energy, nutrients, or a
healthy snack, you will find it in energy bars.

✓ Justification for Weight and Rating: Growth stage is the stage of Competing in the
product life cycle, it is identified and is understood well. Also, KIND energy bars will
be differentiated but can be intimated easily, hence, Weight is 0.2 and Rating is 6.
2. Firm and Competitor Capabilities and resources:
➢ Management Strength and Depth:

Nestle: Nestle’s executive management and board is composed of highly-qualified leaders in

business, technology, nutrition, fast-moving consumer goods and other relevant disciplines.
Each member has proven experience, skills and current expertise aligned to Nestle’s business
goals. The members, in the past, have had leadership roles like former CEOs and CFOs of
Amway, Adidas, EPFL, Avon, Xerox etc.

Kraft: Miguel Patricio (CEO), Nina Barton (CGO), Paulo Basilio (CFO), Marcos Eloi Lima
(CPO), Flavio Torres (Head of Global Operations) etc., each and every member of the senior
management team has years of experience in FMCG and consumer goods industry, in a senior
leadership role in various domains such as IT, marketing, innovation, strategy, finance etc.

Kind: KIND bolstered its executive management team recently to further propel health and
wellness leadership. Mike Barkley, Chief Executive Officer brought to KIND an impressive
track record at a variety of food and beverage consumer packaged goods companies, including
Pinnacle Foods, Campbell Soup and PepsiCo. Dan Poland, Chief Operating Officer, brings a
wealth of experience leading a broad range of operating functions at fast growing and mature
businesses.

Doug Behrens, President and Chief Customer Officer has extensive Sales leadership and
General Management expertise within the health & wellness space. Rebecca Bagin, Chief
Human Resources Office, has deep experience building scalable HR practices both within food
and founder-led spaces. Rebecca served most recently as Chief Human Resources Officer at
Tory Burch. Prior to that, as VP of Human Resources for Campbell North America.

➢ Financial and Functional resources:

Nestle:

R&D: Nestle invests CHF 1.7 billion every year in R&D to meet the needs of the modern
consumer with healthy, delicious, convenient products for conscious, time-constrained
lifestyles. Specific to energy bars, nestle is innovating at a high pace. Nestlé launched a new
range of its YES! bars, with each bar containing 10 grams of plant protein from a delicious
natural combination of nuts and peas, launched in new recyclable paper wrapper. In a
breakthrough innovation, for the first time a confectionery bar has been packaged in paper
using a high-speed flow wrap technology. Up until now, high-speed production of shelf-stable
snacks was only achieved using plastic films and laminate. Nestlé has filed a patent for high-
carb and high-protein bite-size dough snacks for athletes and health-conscious consumers
looking to manage nutritional intake before and during exercise.

Manufacturing: Nestle has strong manufacturing capabilities with over 418 factories in 86
countries. It’s not only the sheer scale of manufacturing that gives Nestle an edge over its
competitors but, the innovation in the manufacturing processes and the multidisciplinary team
working behind the various aspects of manufacturing such as engineering, safety, health &
environment, operations excellence, regulatory and quality.

Distribution: Nestle has a multi-channel distribution network, from manufacturing unit to

distributors and stockists to re-distributors and wholesalers and retailers, appointed their own
major distribution points and transportation appointed by and dedicated to Nestle.
Hypermarkets, Supermarkets, specialty retail, online retail are the main distribution channels.

Marketing: Nestle, being a global company, essentially has a heterogeneous consumer market
since people in different regions and with varying demographics have difference needs, tastes
and preferences. Despite these differences, in the various market segment form homogenous
groups that can help in making marketing efforts more coherent, especially for its energy bar
business. Nestle has presence is almost all the marketing channels, offline to online and the
marketing strategies, from the form of promotion, channels where to promote, creative are
carefully chosen as per the target market and the product which is to be positioned.

Financials: In 2020, Nestle’s net sales was CHF 84 Billion, earnings per share increased by
3.5% in constant currency, growth reached 3.6%, supported by strong momentum in the
Americas, Purina PetCare and Nestlé Health Science. Free cash flow was CHF 10.2 billion.

Kraft:

R&D: Kraft has approximately 2,300 world-class scientists and engineers in seven R&D
centers and 40 satellite laboratories around the world. The R&D center in Munich, one of its
seven global R&D centers focuses on the energy bar product category. Blending sharp
consumer insights with advanced technologies to develop dozens of innovative new products
that people want, to deliver a higher rate of revenue from new products, Kraft Foods' increased
investments in its R&D centers, its people and its ways of working have led to new products
that better seize upon emerging consumer trends. The company's R&D team recently has
created Kraft MilkBite Milk & Granola Bars.

Manufacturing: Kraft Foods' products are made at more than 220 manufacturing facilities
around the world. In 2020, 38 of The Kraft Heinz Company’s manufacturing facilities were
located in the United States. One facility is located in neighboring country, Canada. Using
innovation to not only better its products and coming up with new products but also focusing
sustainability and protection of environment. For example, over the past three years, Kraft
Foods has reduced water used in manufacturing processes by more than 3 billion gallons
(nearly 12 billion liters) – enough water to fill nearly 5,000 Olympic swimming pools. That’s
a 21 percent reduction since 2005, exceeding the company’s goal two years early.

Distribution: Kraft Foods has its presence in most parts of US. Its international presence
accounts for 170 countries like India, Germany, etc. It has wide distribution network as well
and includes intermediaries as well like distributors, retailers and consumers via convenience
stores, supermarkets, etc. Adding to this, it has for its brands personalized distribution network.
With the growth in e-commerce Kraft Foods’ products are now available at even doorsteps
through online orders.

Marketing: Kraft Foods has adopted aggressive and extensive promotional plans for its
product and brands. It distributes circulars, advertises nationally via television, radios and
newspapers. One of the highlights in its marketing strategy is that it uses content marketing
technique in its recipes found on the company’s website. The company creates positive
association with the brand by letting its users take create a large portion of content and the hints
are dropped to aid them. As opposed to this strategy, Kraft Foods also uses direct marketing
strategy. In addition to this, it advertises heavily on social media platforms and has associated
itself with several sports and events to create awareness among its consumers. Due to a
reduction in consumer spending on packaged goods, Kraft decided to tap the mobile channel
to promote its products as this channel had the capacity to enable value-added marketing. The
company's mobile marketing campaigns were designed to meet the needs of customers and to
help them integrate the company's brands into their everyday lives.

Financials: Krafts foods have over $26.0 billion in annual sales as of 2020 with a net income
$ 1 billion. Net cash provided by operating activities increased to $4.9 billion in 2020, up 38.7
percent versus the prior year reflecting Adjusted EBITDA growth, as well as favorable changes
in current liabilities, primarily due to the timing of payments. These factors, together with lower
capital expenditures versus the prior year period, resulted in Free Cash Flow of $4.3 billion in
2020, up 55.5 percent versus the prior year.

KIND:

R&D: Kind’s R&D team keeping in line with Kind snacks no compromise philosophy
experimented with spices instead of using the easy way out options like artificial sweeteners
and sugar based alcohols, which was a major breakthrough for Kind Snacks. KIND fruit bites
really disrupted the fruit snacks category as they are made only with three ingredients and no
added sugars, so it is like a real fruit being pressed into a snack for kids.

Manufacturing: Kind Snacks has no manufacturing facilities, using external manufacturers

and co-packers extensively.

Distribution: KIND Snacks’ distribution network began with one 3PL provider and their
inventory in one place but, as they grew, their distribution management needs grew as well. As
it grew it relied on third party wholesalers. In a recent initiative, KIND’s Wholesale Program
is a self-service ecommerce platform that is exclusively available for wholesale purchasers of
KIND product for bulk consumption or resale, that are unable to reasonably purchase KIND
products through third party distribution partners.

Marketing: Kind energy bar promotes its bars by focusing on functional (healthy option for
snacking), emotional (makes you feel better about eating something good) and self-expressive
(you are disciplined in wanting to eat something beneficial for your health). In an edgy
campaign, Kind is sending out its competitors' products to 10,000 consumers in an edgy
marketing stunt. Kind Snacks is shipping its competitors' products alongside its own to 10,000
consumers for them to the two try side-by-side. The stunt is to mark its foray into the protein
bar category, which is the fastest-growing category within the energy and nutrition bar category
as a whole. It is also running a digital ad featuring Anna Faris modeled after Jimmy Kimmel's
infamous 'Celebrities read mean tweets' video series, in which she reads a series of unsavory
Amazon consumer reviews about other protein bars on the market.

Financials: It is estimates that Kind is conservatively worth $2.9 billion and has had an
estimated $800 million in sales overall. It generated $110.17 million in sales last year.
Brand image:

Nestle: Nestle aims for ‘Innovative, Health and Sustainability ’as their brand image for
customers. To attain this aim, those products such as coffee, healthy cereals and pure mineral
waters are used to resonate with those brand offering. The ways that Nestle used to increase its
brand image through always attain customer expectation and met customer satisfaction all the
time by their products. The interaction between Nestle brand and sensory emotions and feeling
of the people can be served as an additional advantage by its simplicity and secure prices.
Nestle perceived by customers as an innovative food market player in recent years and also
gain its global image through strong branding and marketing practices. Nestle has positioned
itself to the extent of providing superior value to gain competitive advantages.

Kraft: Kraft foods has an image of globally trusted producer of delicious foods, that provides
high-quality, great taste and nutrition for all eating occasions whether at home, in restaurants
or on the go with a long and deep relationship with consumers. By focusing on renovating
brands by leaning into emerging trends with clear purpose, Kraft’s diverse portfolio allows
them to be sharp on defining the spaces for their brands so that they continue their relevance
with today’s consumers.

KIND: The brand image of KIND is that of the snacks manufacturer that believes the quality
of its products is more important to most shoppers than its underlying brand purpose, which is
based around recognizing everyday acts of altruism and generosity. Kind cares about the whole
being, being kind with no compromises to your taste buds, to your body, and to the world.

✓ Justification for Weight and Rating: Although Kind bars has a unique value
proposition among its competitors and has a great brand image with relatively
competitive management strength and depth, still in terms of capabilities like R&D,
manufacturing, distribution and financials it will have to improve to compete with the
likes of Nestle and Kraft foods. Hence, Weight- 0.4 and Rating- 6.
 3. Attractiveness of Industry in which we would compete:

Nestle Kraft Kind

Threat of new entrants Low Low Moderate

Threat of substitutes High High High

Buyer power Moderate High High

Supplier power Low Low Low

Competitive rivalry High High High

Industry capacity High High Low

Threat of new entrants: Threats of new entrants for the companies Nestle, Kind, Kraft are
low as there are many well established companies within this market. To enter in the business
the new entrants need high capital and establishing distribution channels also takes a lot of
time. But out of three the Kind has higher threat of new entrants as it is unlikely that new rand
can dent the Nestle’s market share in the market.

Threat of substitutes: The threat of the substitutes is high for all the three companies Nestle,
kind, kraft. The substitutes are easily available in the market and even can be made at home
such as smoothies, fresh juices, oats which can easily substitute their product’s benefits. Also,
there are many products in the market which tastes similar.

Buyer power: Bargaining power of customer in this industry is high as there is a high level of
competition. A customer can switch from one brand to another without any switching cost and
do not need any information to do so. In case of Nestle, Bargaining power of customer is less
as compared to Kind and kraft , as they are bigger brand and enjoy customer loyalty .
 Supplier power: The supplier power is low in the industry and has large number of suppliers
but when we compare between all the three companies it can varies from low to moderate. The
nestle is the biggest of three and the kraft Heinz is the fifth biggest in the world so the supplier
power is low in both the cases but when it comes to kind the supplier enjoys more bargaining
power than other two companies.

Competitive rivalry: The competitive rivalry is high as the industry has intense competition.
The industry has several large players like Kellogg’s, Cadbury, PepsiCo Inc., General Mills
Inc., etc., fighting to retain the market share. All these firms spent a huge amount on marketing
and advertisements.

Industry Capacity: Nestle has the highest industry capacity amongst all the three whereas
kind snacks have the lowest. Kraft Heinz is the fifth largest company in the world in terms of
market share s it can be said that it also has the high industry capacity.

✓ Justification for Weight and Rating: Entry barriers are very low, buyer power is high
and supplier power is low, there is high threat of substitutes, rivalry amongst existing
firms and industry capacity is also high. So, the rating would be 9 and weight would be
0.4, as KIND Energy Bars is yet to achieve a better place in terms of competitiveness
in the industry.

Competitiveness Position Factors Weight Rating (0-10) scale

Opportunity for Competitive advantage 0.2 6

Capabilities and resources 0.4 6

Industry Attractiveness 0.4 9