INTRODUCTION TO RETAIL ARAVIND – 09901366442 – 09902787224
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INTRODUCTION
TO RETAIL
1. Citing from your own experience which are the factors which are
important in the retail scenario for a store of supermarket to succeed?
2. How would you go about starting an exclusive potato chips store
and ensure its success?
3. Case Study
For most of its 100-year existence, Oreo was America's best loved
cookie, but today it is a global brand. Faced with stagnation in the domestic
market, Kraft Foods moved it into emerging markets where it made some mistakes,
learnt from them and ultimately triumphed. This case study looks at the
strategies used to win over customers in China and India.On March 6, 2012, the
famous cookie brand, Oreo, celebrated its 100th birthday. From
humble beginnings in a Nabisco bakery in New York City, Oreo has grown to
become the bestselling cookie brand of the 21st century generating $1.5 billion
in global annual revenues. Currently owned by Kraft Foods Inc, Oreo is one of
the company's dozen billion dollar brands. Until the mid-1990s, Oreo largely
focused on the US market - as reflected in one of its popular advertising
slogans from the 1980s, "America's Best Loved Cookie". But the
dominant position in the US limited growth opportunities and spurred Kraft to
turn to international markets. With China and India representing possibly the
jewels in the crown of international target markets due to their sheer size,
Oreo was launched in China in 1996.The China launch was based on the implicit
assumption that what made it successful in its home market would be a winning
formula in any other market. However, after almost a decade in China, Oreo
cookies were not a hit as anticipated, according to Lorna Davis, in charge of
the global biscuit division at Kraft. And the team even considered pulling Oreo
out of the Chinese market altogether.In 2005, Kraft decided to research the
Chinese market to understand why the Oreo cookie that was so successful in most
countries had failed to resonate with the Chinese. Research showed the Chinese
were not historically big cookie eaters. According to Davis, Chinese consumers
liked the contrast of sweet and bitter but "they said it was a little bit
too sweet and a little bit too bitter".Without the emotional attachment of
American consumers who grew up with the cookie, the taste and shape could be
quite alien. In addition, 72 cents for a pack of 14 Oreos was too expensive for
the value-conscious Chinese.Kraft's Chinese division used this information to
formulate a modified recipe, making the cookie more chocolatey and the cream
less cloying. Kraft developed 20 prototypes of reduced-sugar Oreos and tested
them with Chinese consumers before arriving at a formula that tasted right.
They also introduced different packages, including smaller packets for just 29
cents to cater to Chinese buying habits.
The changes had a positive impact on sales and prompted the
company to ask some basic questions challenging the core attributes of the
traditional Oreo cookie. Why does an Oreo have to be black and white? And why
should an Oreo be round? This line of questioning and an ambition to capture a
greater share of the Chinese biscuit market led Kraft to remake the product in
2006 and introduce an Oreo that looked almost nothing like the original. The
new Chinese Oreo consisted of four layers of crispy wafers filled with vanilla
and chocolate cream, coated in chocolate. The local innovations continued and
Oreo products in China today include Oreo green tea ice cream and Oreo
Double-Fruit.
Another challenge for Kraft in China was introducing the typical
twist, lick and dunk ritual used by American consumers to enjoy their Oreos.
Americans traditionally twist open their Oreo cookies, lick the cream inside
and then dunk it in milk. Such behavior was considered a "strangely
American habit", according to Davis. But the team noticed China's growing
thirst for milk which Kraft tapped with a grassroots marketing campaign to tell
Chinese consumers about the American tradition of pairing milk with cookies. A
product tailored for the Chinese market and a campaign to market the American
style of pairing Oreos with milk paid off and Oreos became the bestselling
cookies of that country.
a) How old is the “Oreo” brand and what are the factors that have
contributed to its success in the US?
b) Why did the brand Oreo not succeed in China?
Assignment Solutions, Case study Answer sheets
Project Report and Thesis contact
ARAVIND – 09901366442 – 09902787224
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