Milka Lila Pause in the German market of chocolate bars - How to develop a new position

Inhaltsverzeichnis

1. Problem definition and way of procedure

2. Segmenting the market of chocolate bars in Germany
2.1. Identifying segments of the market
2.2. Choosing profitable segments by analysing competitors

3. Market targeting
3.1. Develop measure of segment attractiveness
3.2. Differentiate Milka Lila Pause from other chocolate bars

4. Market Positioning
4.1. Differences to promote
4.2. Positioning strategies to be used
4.2.1. Suggested positioning strategy

5. Conclusion

6. References

7. Bibliography

8. Appendix A

9. Declaration C

1. Problem definition and way of procedure

The average consumer is eating 23 pounds of chocolate each year. This is quite a lot, which is one reason why there is an incredible high competition on the market of chocolate nowadays. Because of this, it is getting more and more important not to leave the position of products by chance.

During the past few years, the market share of Milka Lila Pause has decreased continuously. “…Once a shooting star…” ¹ (Http, p.1) Milka Lila Pause’s market share felt down to 1.4 % compared to its competitor Mars which has on of the greatest shares of share of 8.9 %² (Appendix p.A). According to market research Milka Lila Pause got less attractive and the consumers are not sufficiently satisfied after consumption.

In following it will be examined how to segment the market of chocolate bars, and suggestions for differentiation as well as for positioning will be given.

2. Segmenting the market of chocolate bars in Germany

2.1. Identifying segments of the market

The first step to develop a new position for Milka Lila Pause is to segment the market of chocolate bars, which means, “…to divide the market into distinct groups of buyers who might require different products…”³ (Kotler. p.379). It is important to segment the market in order to find a ´gap´ for positioning Milka Lila Pause more favourable within the product field of chocolate bars⁴ (Crimp, M. pp.110ff.).The market of chocolate bars in Germany first calls for demographic segmentation, which means to divide the market into sections according to age, sex, family size, life cycle.

Demographic data are to be preferred, because they are relatively easy to measure.⁵ (Hörschgen, H.). The market of chocolate bars appeals most to the age group 5- 49 and to every kind of family size. There are lots of possibilities to proof this, by using primary information within the own company and/or secondary information, for example SAGACITY or market research databases ⁶ (West, C.).

Looking at the Behavioural variables, the chocolate bar market is also a market for heavy to medium users, because they can be eaten at any daytime (e. g. snacks within breaks). Observing the benefit segmentation is a good way for Kraft to define a more profitable segment for Milka Lila Pause⁷ (Kotler. p.398).

Abbildung in dieser Leseprobe nicht enthalten

It is now the task to find parts of this market that Milka Lila Pause can serve best.

2.2. Choosing profitable segments by analysing competitors

In order to find a good segment to be served in future, Kraft has to find segments which are

- measurable for knowing the purchasing power of the segment,
- accessible in order to be able to serve the market,
- substantial in order to get a profit
- actionable for finding a suitable design of effective marketing mix programs⁸ (http.p.1)

The first thing to find out is where and who the competitors are. Based on the data given, the dispersion of companies serving the chocolate bar market would look like this ⁹ (Appendix p.A):

Abbildung in dieser Leseprobe nicht enthalten

Looking at this figure, it is obvious that the segment “Fruit taste-Healthy” is very poorly served in the industry, and also in the segment “Nut taste- Healthy” has not as much competition as the others. Those segments would give Kraft a good possibility to develop a new position and give it a great chance for potential growth of the market share of Milka Lila Pause.

3. Market targeting

3.1. Develop measures of segment attractiveness

It is a fact that those segments are potential for a new position. Kraft has to evaluate those segments by gathering data on sales, growth and expected profit. Those data can be accessed by constantly reviewing internal records as well as reviewing secondary information¹⁰ (Kotler. pp.317ff). But there are still a few questions to be answered: Are those segments compatible to the objectives and resources of Milka Lila Pause? Does Milka Lila Pause have superior skills in comparison to competitors to succeed in this segment?

Milka could serve both segments, nut “taste-healthy“ as well as “fruit tastehealthy“, very well because there is low competition and they meet the objectives of Milka Lila Pause. It is now necessary to find out how Kraft can serve these segments best and how it can maximize the attractiveness to the customers of Milka Lila Pause.

In order to do this, Kraft has to identify a group of customers for whom the firm has a differential advantage. First thing to think about is “Are we really serving the right product?” The success of Milka Lila Pause in 1998 is very limited, which may be a result of less attractiveness to buyers and not sufficient fulfilment of expectations. While trying to satisfy customers needs and wants, it is the main task to be different compared to other offers in this market of chocolate bars. To gain competitive advantages, Kraft has to differentiate its products from all the others by product differentiation, personnel differentiation as well as through image differentiation¹¹ (Kotler. pp.434ff.)

3.2. Differentiate Milka Lila Pause from other chocolate bars

A good way of product differentiation for Milka could be to supply a chocolate bar, which is light, good tasting and healthy at the same time.

Kraft could promote the fact that Milka Lila Pause does not only give new energy but it contents important nutrients as well. This would probably call for a detailed analysis of ingredients and maybe, make a new healthier recipe necessary. One more way of differentiation is to show the wide variety of Milka: Not only nut taste is offered but also different fruit tastes, always serving the same quality.

The product can also be differentiated in terms of personnel and service by serving a constantly high quality and having a better company service (Total Quality Management, friendly and well-trained employees etc.) than the competitors.

Probably the most important tool to differentiate Milka Lila Pause in comparison to competitors could be done through image differentiation. Kraft has already built a strong image with the brand Milka, which can be used to promote aggressively Milka Lila Pause. In order to be different it would be a good idea to support especially the target group 16 - 30, out of the main target group 5-49, as users who see themselves as young energetic and sporty, by promoting the health efficiency of Milka Lila Pause for example that it gives new power without being filled up.

Summarizing, the final segments to be served would look like this:

Abbildung in dieser Leseprobe nicht enthalten

This means that Kraft has to concentrate showing its differences and advantages especially to the age group 16-30, who are medium to heavy users, really active and want a light and healthy chocolate bar, not as heavy as those of the competitors like Mars or Snickers. But it is still the task to keep in mind those younger and older ones, which are also looking for a light chocolate bar with taste variety.

4. Market positioning

4.1. Differences to promote

After having segmented the market, finding the target group and differences compared to the competitors it is now the task to promote these differences. Contrary to its main competitors Mars, Ferrero and Nestlé, Kraft did not invest in advertising in 1998 at all. For finding a new position, Kraft also has to know about the mind of the prospect, the consumers. To find a new profitable product position, which is “…the way the product is defined by consumers on important attributes…”¹² (Kotler. p.443), Kraft has to find a marketing strategy, which can successfully change the perceptions of the chosen target group.

First of all, it is necessary to build a unique bundle of competitive advantages that appeal to a substantial group within the segment. When choosing the differences to be promoted it is essential that they are important enough, distinctive, superior, affordable as well as profitable¹³ (Kotler p.458). The question is now, how to do this. Like mentioned before, it may be profitable to divide up the target group and try aggressively to reach those between 16-30 years. Within this target group, Kraft can influence the perception of its product by using different positioning strategies with associations, reaching this target group. The goal is to reach a unique selling proposition, by giving the selected target group an ideal profile¹⁴ (Kress, S. p.2). When finding a new position in a market it is important to see the attributes how they are seen by the consumers. That is why it might be useful to do some research before, like surveys or questionnaires, to get to know what consumers in this target group expect from the product¹⁵ (West, C.)

4.2. Positioning strategies to be used

Milka Lila Pause wants to find a new position and does not want to leave it by chance, so it is necessary to promote the mentioned differences by visualization (e.g. TV advertising). It will be the goal to reach the target group by promoting Milka Lila Pause according to the demanded attributes and benefits as well as by looking for associations with activities, user classes or personalities for successfully distributing Milka Lila Pause.

4.2.1. Suggested positioning strategy

Considering all the facts discussed previously, to increase the valued image and market share it will be a good choice for Kraft to change its strategies and to invest aggressively in advertising.

To appeal to the target group chosen, it is necessary to create a visualization, which shows an association to the target group like activeness, energy, and lightness. A promotion supported by sport celebrities would be a good start to change the position of Milka Lila Pause positively. Kraft also has to show that the difference of offering variety and good nutrients is rarely served in the market and they need to establish a greater image especially for the appealed target group. This can be done by creating advertising strategies, which are referring to the lifestyle of the target group, like being active, sportive or even a little alternative. The suggested way of visualization has several advantages: More people will be aware of the product and it is the best way to show its benefits. One suggestive example would be an advertisement with a successful skier, promoting the image of Milka Lila Pause well. The commercial should include some kind of easy slogan, for example “Milka the light and tasty chocolate bar for the special break”. This way a trustable celebrity is presenting the product, which will be remembered and bought by the target group.

5. Conclusion

After having developed a new position for Milka Lila Pause it is easy to see which place takes now in the market. With the objectives of tastes and health it is now serving the target group, which is actively involved in sport activities and those who see themselves as young. They wish to have a light, good tasting chocolate bar, which also offers a consistent quality as well as variety in tastes. By serving this target group, Milka Lila Pause could fill a gap, which is little served in the market and therefore gives great competitive advantages.

It will still be important, to constantly review the position of Milka Lila Pause, by doing researches and recording all necessary data to see if it is still successful. But so far, Milka Lila Pause will be a chocolate bar for healthy living, sportive and young people as well as for all those who see themselves as young and active.

6. References

Books:

Crimp, M.(1990).Marketing Research Process.(3rdedn).Prentice Hall international.

Hörschgen, H. (1993).Marketing-Strategien-Konzepte zur Strategienbildung im Marketing.(2nd extended edn).Berin.Verl. Wiss. und Praxis.

Kotler, P. (1998).Principles of Marketing.(2nd edn).Prentice Hall.

West, C.(1999).Marketing Research.Macmillan Business Masters.

Websites

Chwallek, Andreas.(2000).Saisonprodukte und Relaunch sollen Mila- Power bringen. Retrieved on April 21st 2001 online in the internet: http://www.lz-net.de/specials/ism2000_03_02_004.html.

Kress, S.(2000).Segmentierung/Positionierung.retrieved on April 21st 2001 online in the internet: http://www.hausarbeiten.de/index.html

Luxton,S.(2000).Market Segmentation.retrieved on April 21st 2001 online in the internet:

http://www.buseco.monash.edu.au/Subjects/MKT/MTPonline/requirements. html.

7. Bibliography

Books:

Crimp, M.(1990).Marketing Research Process.(3rd edn).Prentice Hall international.

Ford, D. et al. (1990).Understanding Business Markets.London: Academic Press Limited.

Hörschgen, H. (1993).Marketing-Strategien-Konzepte zur Strategienbildung im Marketing.(2nd extended edn).Berin:Verl. Wiss. und Praxis.

Kotler, P. (1998).Principles of Marketing.(2nd edn).Prentice Hall. Schwalbe, H. (1993). Marketing-Praxis für Klein-und Mittelbetriebe. (7th extended edn). Freiburg im Breisgau: Haufe

West, C.(1999).Marketing Research.Macmillan Business Masters.

Websites:

Chwallek, Andreas.(2000).Saisonprodukte und Relaunch sollen Mila- Power bringen. Retrieved on April 21st 2001 online in the internet: http://www.lz-net.de/specials/ism2000_03_02_004.html.

Kress, S.(2000).Segmentierung/Positionierung.retrieved on April 21st 2001 online in the internet: http://www.hausarbeiten.de/index.html.

Luxton,S.(2000).Market Segmentation.retrieved on April 21st 2001 online in the internet:

http://www.buseco.monash.edu.au/Subjects/MKT/MTPonline/requirements. html.

[...]

¹ Chwallek, Andreas.(2000).Saisonprodukte und Relaunch sollen Mila-Power bringen. Retrieved on April 21st 2001 online in the internet: http://www.lz-net.de/specials/ism2000_03_02_004.html, p.1

² see Appendix p.A for further information

³ Kotler, P. (1998).Principles of Marketing.(2nd edn).Prentice Hall. p.379

⁴ More information about Segmentation in: Crimp, M.(1990).Marketing Research Process.(3rd edn).Prentice Hall international.pp.110ff.

⁵ More information about demographic segmentation in: Hörschgen, H. (1993).Marketing-Strategien- Konzepte zur Strategienbildung im Marketing.(2nd extended edn).Berin.Verl. Wiss. und Praxis.

⁶ More information about Market research in: West, C.(1999).Marketing research.Macmillan Business Masters

⁷ More about benefit segmentation in: Kotler, P. (1998).Principles of Marketing.(2nd edn).Prentice Hall.p.398

⁸ cf.Luxton,S.(2000).Market Segmentation.retrieved on April 21st 2001 online in the internet: http://www.buseco.monash.edu.au/Subjects/MKT/MTPonline/requirements.htm p.1

⁹ see appendix p.A

¹⁰ More about information in: Kotler, P. (1998).Principles of Marketing.(2nd edn).Prentice Hall.pp.317ff.

¹¹ More about Differentiation in: Kotler, P. (1998).Principles of Marketing.(2nd edn).Prentice Hall.pp.434ff.

¹² Kotler, P. (1998).Principles of Marketing.(2nd edn).Prentice Hall.p.443.

¹³ Kotler, P. (1998).Principles of Marketing.(2nd edn).Prentice Hall.p.458.

¹⁴ Kress, S. (2000).Segmentierung/Positionierung.retrieved on April 21st 2001 online in the internet: http://www.hausarbeiten.de/index.html. p.2.

¹⁵ More about research Methods in: West, C.(1999).Marketing Research.Macmillan Business Masters.