Kraft Foods' Guarana Drink: A Marketing Strategy Case Study

Positioning Guarana Energy Drink: Kraft Foods' Plan

1. Goal Overview

a. Strategic Vision and Mission of Kraft Foods

The vision of the company is to make today delicious for consumers as Kraft Foods deals in processed food. The mission of the company is to help people around the globe eat and live a healthy life (Kraft Foods, 2023). With the motive to gain competitive edge over rivals new product development strategy has been selected by Kraft Foods. In order to create an action plan for the near future, Kraft Foods has an established strategic objective. Its entire goal for the UK's present marketplace is to offer a range of guarana-based energy drinks for its health-concerned clients, notably children. Instead of cola and sparkling water, which are unworthy of consumption, moms want their young ones to drink nutritious beverages. The mission statement for Kraft Foods is clear, succinct, comprehensive, and direct. In connection with the creation of an innovative product, stakeholders can also create a company perspective, aims, and approach.

The strategy goal is to satisfy the needs of its health-conscious clients and give them choices so they can also take pleasure in drinking healthfully without feeling accountable. The company's major objective is to achieve this. The new product introduction, a guarana energy drink, has as its objective to boost consumer satisfaction.

b. Marketing goals

The following are the marketing goals of Kraft Foods:

• To increase market share by 15% at the end of first year.
• To build and sustain a competitive edge by offering innovative products.
• To increase sales by 10% at the end of third quarter.

Research and development

Prior to the release of the Guarana energy drink, Kraft Foods' marketing objective was primarily R&D. The business employs a fantastic team to oversee the nutritional value & wellness and components utilized to create the drinking beverage.

Bringing new and affordable products

Kraft Foods’ main marketing goal is to bring healthy drinks for adults and children to ensure their wellness and health. Kraft Foods generally deals in solid food products but this time it’s focusing on adding guarana and making a new kind of energy drink. This drink will make sure to give a cola effect and will be tasty to drink. It will be economical to buy also for adults who are studying in college.

Connecting with the customers

Kraft Foods’ main target is adults and children who want to drink good and tasty. In order to build a strong connection with them the company indulges in playing tactics which include advertisement, marketing, experiential marketing and conducting sessions in schools for parents and children to promote their product.

2. PRroduct Brand Positioning

a. Assess the existing product/service brand

Brand value

Kraft Foods’ brand value is $41.96 billion as of September 25, 2023 (Macrotrends, 2023). Due to its substantial investments in digital change and long-term strategy for branding, the enterprise was able to continue to be competitive.

Brand equity

The variety of foods that Kraft Foods supplies and substantial expenditures in the localization of goods marketing, advertising are the reasons for its great brand equity. Kraft Foods is popular among Gen Z and it ranked 18th in the 2022 quarter. About 5.7 per cent increase Kraft Foods has in its equity from Quarter 1 to Quarter 2 in the year 2022 (The Harris Poll, 2022).

Brand awareness

With a direct marketing strategy, Kraft Foods creates awareness among consumers. The company spends a lot on social media marketing and also it has linked itself with other sports brands and events in order to create awareness.

Brand salience

The brand salience of Kraft Foods is offering a different range of products starting from classic food to modern food products. Kraft Foods products are cheap, healthy and delicious. Customers view Kraft Foods as a trustworthy, reliable, and compassionate company.

Brand association

The goals and objectives it set are associated with Kraft Foods' work. Since its founding, the corporation has established an established brand reputation through production originality, imaginative thinking, and the creation of new products. The packaged food business of Kraft Foods is known worldwide.

Brand loyalty

Kraft Foods greatly focuses on brand loyalty by making its products available in every household. Kraft Foods works really hard in creating a place for themselves to do this the company mold itself according to the consumer demand. The company focuses on anticipating creativity and responding to consumer needs by delivering appetizing food to the customers.

b. New positioning strategy

Guarana energy drinks are focused on providing a tasty, nutritious option with no sacrificing ease of use or quality. The drinks are available in plastic bottles which are recyclable as well. The bottles are available in different sizes so that people can carry them with them and drink them as an alternative to cola and caffeine drinks whenever they are feeling thirsty. While still allowing consumers to maintain their taste preferences, the drinks will give them energy as well. Considering the taste inclinations, the drinks are flavored with extracts of fruits such as blueberry, peach, apple, fig, lemon, dragon fruit, raspberry and other seasonal & tropical fruits. Consumers can drink guarana energy drinks after doing their workout and can mix these drinks in their smoothies and cakes. The guarana ingredient has medical advantages it is used to increase energy levels, reduce inflammation and enhance cognition.

The organization will be able to strengthen its position as a brand with the aid of personalization. The strategy for product development employed by Kraft Foods to satisfy the needs of its current target demographic is one in which its goods are intended to satisfy consumer preferences while delivering a high degree of consumer satisfaction. It is the responsibility of Kraft Foods to educate its customers about these guarana drinks and to explain the distinction between these drinks and other beverages that include sugar. In this approach, Kraft Foods can continue to serve its current customer base with its newly developed items.

c. Marketing models

The Ansoff matrix is how Kraft Foods defines the process of product development. Guarana drinks, a new product from the brand, are chosen over other cola and caffeine drinks by athletes who care about their health and by moms who want their kids to drink plenty of liquid when they're thirsty. The aforementioned drinks still had a flavor that was comparable to the traditional caffeine- and sugar-filled drinks. For the creation of these beverages, Kraft Foods only uses organic ingredients, including seasonal and tropical fruits without the use of sugar or artificial flavors. The idea of offering healthy beverages is reasonable in these times, which also opens the possibility of implementing this guarana drink, as more adults are beginning to understand the importance of maintaining their own excellent health.

3. Target Market

a. Customer behaviour for Guarana energy drinks

Individual influences

The target market's composition depends on personal characteristics including gender, age, lifestyle, earnings, and occupation. The target group includes those who worry about their health and mothers who are concerned about their kids' drinking patterns (Mogaji, et al., 2020). A healthy lifestyle is more likely to be maintained by those who think about diet and nutrition. Due to the drinks' affordability, those with limited funds can also buy them. Athletes, gym junkies, dietitians, and particularly mothers who wish to provide their children with healthy beverages are the target market, according to the occupation.

Social influence

The purchasing habit is influenced by social factors such as reference groups, friends, and family. If a person among the extended family members is concerned about their health, it will affect the other family members as well as their acquaintances and coworkers. Sometimes an individual's position also affects their purchasing decisions. For example, a CEO who enjoys working out can suggest to his staff that they purchase a guarana energy drink.

Situational influence

Customer purchasing behavior is influenced by situational elements such as emotion, period of time, profession, circumstances, economic status and life cycle stage. Stores with high foot traffic should have guarana drinks on display to encourage sales. Guarana drinks are simple to find and can be purchased by consumers who are pressed for time or don't want to waste it searching for nutritious beverages (Kaynak, et al., 2022). The mothers, on the other hand, will take their time reading the contents list together with the nutrition facts on the back of the bottle. Last but not least, emotion affects actions. Customers who experience anxiety, mood swings, or exhaustion may easily buy guarana energy drinks because the component is utilized for medicinal purposes and this will improve their general state of affairs.

New customer buying process

The choice a consumer makes when purchasing a new product is known as buying process. Researching problems, evaluating alternatives, looking for details about the product, making judgments about purchases, and reviewing those decisions all pertain to it. A review of a product will be done by the end-user before deciding whether or not they will use it. Once customers are happy, they will purchase the drinks and then review the product after using it. It will compile knowledge on the commodity before contrasting it to similar products from different brands.

The influence of technology

Target market influence can be significantly increased by using technology such as digital marketing, website tracking, product content writing, web-based management tools, communications, social media platforms (Facebook, Youtube, and Instagram), multimedia means, search engine optimization, etc. (Phua et al., 2020) It aids in boosting interaction between users. Innovation can aid Kraft Foods' company affairs, customer interactions, and partnerships with clients, among other things. Developing new software will help Guarana Energy Drinks to set target customers in product purchasing.

b. Segmentation strategy

Focusing on consumers who are concerned about their health is Kraft Foods' segmentation strategy. Guarana energy drinks are ideal for persons who do not want to sacrifice either their health or taste. In order to attract repeat consumers, Kraft Foods has produced nutritious guarana drinks in place of the more common sugary chocolate drinks (Kalogiannidis, et al., 2022). In accordance with the demography, the population is between the ages of 10 and 59. People with low incomes can buy because the item is inexpensive. The drinks are offered on both online and offline booths; customers may send these drinking bottles as treats to close friends who live abroad and can purchase them in actual stores as well. This is the rationale behind constructing the plan in accordance with availability, income, and age.

4. SWOT Analysis

a. SWOT analysis of Guarana energy drinks

Strengths

• Having quick access to significant financial resources for the development and commercialization of technologies.
• Established connections with vendors and business partners
• The founders of the firm possess significant and relevant knowledge.
• Excellent brand awareness and reputation across important target markets.

Weaknesses

• They appear to be less skilled in any one sector as a result of their wide variety of products.
• Sometimes, a lack of competence is a weakness.
• Lack of significant campaign investment to build extensive impressions of the brand and awareness
• With a small selection of items, consumers don't have many options.

Opportunities

• An increase in the popularity of healthy drinking.
• Rising worries about physical health and fitness are the cause of the rising obsession with more nutrient-dense diets.
• Increase in sales as the guarana energy drinks are available at low prices.
• Changes in consumption patterns of the consumers

Threats

• Improving the standards for food labelling by others.
• Modifications in component cost raise competition from a smaller number of more informed companies.
• Consumption of raw materials changing due to the global impact of the environment.
• Customers' changing tastes and preferences.

b Visual presentation of analysis

c. Competitive advantage for Guarana energy drink

Porter’s five force analysis model

Threats to new entrants

The food business faces only a modest threat from new entrants since customers don't switch brands frequently (Stone et al., 2020). Expensive capital needs to deter other people from reaching the market. It is challenging for new competitors to start up their businesses and do development and research. The medicinal benefits that Guarana energy drinks provide to their users after consumption are what give them an edge over others.

Threats of substitutes

In the context of Kraft Foods, substitution threat levels are modest. Buyers today place a greater emphasis on their general well-being and include drinks that are nutritious in their dietary habits. This prevents customers from switching to other companies that don't provide them with healthy alternatives (Percy, 2023). If Kraft Foods encounters any dangers, it should improve its quality and make the most of its resources.

Bargaining power of consumers

When Guarana beverages are introduced, Kraft Foods can lessen buyer segmentation and draw in more new customers due to the distinctiveness of their offering (Schmidt et al., 2021). In order to strengthen its customer base, the business entity created guarana drinks.

Bargaining power of suppliers

As Kraft Foods is a processed food firm and the concentration of sellers is strong in this specific market, suppliers have little negotiating leverage (Rietveld et al., 2020). In spite of the abundance of manufacturers, Kraft Foods may quickly switch between them. Due to the reduced costs of switching, Kraft Foods has better negotiating leverage with all producers.

Competition against rivalry

Kellogg, General Mills, ConAgra Foods, Nestle, Mondelez International, Red Bull, Monster, etc. are some of Kraft Foods' main rivals. Entry is simple, which increases competitiveness. Guarana energy drinks from Kraft Foods are a healthier alternative to sugary cola and caffeinated beverages and stand out from the rest of these companies' goods (Fernando et al., 2022). Additionally, people choose these energy drinks because of their low cost.

5. Determining Marketing Mix

Price strategy

The true worth of the guarana beverages must be taken into account by Kraft Foods before determining the pricing (Nguyen et al., 2020). The beverages' controllable and appropriate pricing will aid the business in retaining its position. By taking into account the break-even pricing analysis, Kraft Foods must keep the cost competitive in order to make a profit. This will assist the business in calculating the cost of producing the beverages, in future revenue analyses, and also in avoiding failure. Maintaining low costs would enable Kraft Foods to increase sales more quickly since consumers will purchase more from the company as opposed to rival brands that charge more for the same product. People from low-income groups can also purchase these energizing beverages. This will provide the business with a new competitive advantage.

Promotion strategy

To promote the recently launched item, several strategies are utilized, including social networking marketing, publicity campaigns, direct marketing, ads, etc. (Gerritsen and van Olderen, 2020). Promotion of new products is necessary to let customers know when they are available and to offer them an incentive to buy them. For its product to see an uptick in sales, Kraft Foods must expend a lot of money on marketing. The finest promotion tactics include the use of the Internet, posters, celebrity endorsements, and billboards. Promoting exclusively can help you make more money and increase sales. This is the primary distinction between our competitive edge and others'. Social media marketing will have a significant impact on the target market, which consists of children and adults who use electronic gadgets.

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Distribution strategy

When a new product is introduced to the market, location is crucial. Sales will rise if consumers have quick access. Additionally, the target market determines the place in which the thing will be supplied. In order to generate income from online as well as traditional sources, Kraft Foods must employ both of these channels of distribution (Agnihotri and Bhattacharya, 2021). The most crucial element that affects sales is the availability of goods. In order to solve this issue, online serving is crucial.

6. Evaluating And Controlling Activities

In order to effectively carry out its marketing plan, Kraft Foods must set up goals and objectives that are consistent. It will be advantageous for Kraft Foods to use all of its resources if fresh possibilities and strengths are identified. The vulnerabilities and hazards associated with guarana beverages, on another hand, should also be recognized by Kraft Foods before any unfavorable consequences arise. To guarantee that the plan is carried out as intended, a budget must be established and financial backing must be allotted before beginning the process. The business needs to monitor and measure customer purchase habits, fluctuations in taste and preferences, buying behavior, etc. for simple evaluation. The corporation will produce products more quickly if it has control over its competitors, unfavorable effects, and shortcomings.

References

Books and Journals

Agnihotri, A. and Bhattacharya, S., 2021. Growth Strategic Options of Kraft Heinz. SAGE Publications: SAGE Business Cases Originals.

Fernando, I., Schmidt, K.A., Cromer, G., Burhans, M.S., Kuzma, J.N., Hagman, D.K., Utzschneider, K.M., Holte, S., Kraft, J., Vaughan, T.L. and Kratz, M., 2022. The impact of low-fat and full-fat dairy foods on symptoms of gastroesophageal reflux disease: an exploratory analysis based on a randomized controlled trial. European Journal of Nutrition, 61(5), pp.2815-2823.

Gerritsen, D. and van Olderen, R., 2020. Events as a strategic marketing tool. CABI.

Kalogiannidis, S., Kontsas, S. and Papaevangelou, O., 2022. Influence of Strategic Marketing Approaches in Business Communication. Business Management and Strategy, 13(1), pp.48-63.

Kaynak, E., Kara, A. and Maksüdünov, A., 2022. An empirical investigation of home buying behavior in a high-context culture: a strategic marketing-oriented approach. International Journal of Housing Markets and Analysis.

Lahtinen, M.H., Mikkila, J., Mikkonen, K.S. and Kilpelainen, I., 2021. Kraft Process—Formation of Secoisolariciresinol Structures and Incorporation of Fatty Acids in Kraft Lignin. Journal of Agricultural and Food Chemistry, 69(21), pp.5955-5965.

Mogaji, E., Maringe, F. and Hinson, R.E. eds., 2020. Strategic marketing of higher education in Africa. Routledge.

Nguyen, K.H., Glantz, S.A., Palmer, C.N. and Schmidt, L.A., 2020. Transferring racial/ethnic marketing strategies from tobacco to food corporations: Philip Morris and Kraft General Foods. American journal of public health, 110(3), pp.329-336.

Percy, L., 2023. Strategic integrated marketing communications. Taylor & Francis.

Phua, J., Jin, S.V. and Kim, J., 2020. The roles of celebrity endorsers’ and consumers’ vegan identity in marketing communication about veganism. Journal of Marketing Communications, 26(8), pp.813-835.

Rietveld, R., Van Dolen, W., Mazloom, M. and Worring, M., 2020. What you feel, is what you like influence of message appeals on customer engagement on Instagram. Journal of Interactive Marketing, 49, pp.20-53.

Schmidt, K.A., Cromer, G., Burhans, M.S., Kuzma, J.N., Hagman, D.K., Fernando, I., Murray, M., Utzschneider, K.M., Holte, S., Kraft, J. and Kratz, M., 2021. Impact of low-fat and full-fat dairy foods on fasting lipid profile and blood pressure: exploratory endpoints of a randomized controlled trial. The American Journal of Clinical Nutrition, 114(3), pp.882-892.

Stone, M., Aravopoulou, E., Ekinci, Y., Evans, G., Hobbs, M., Labib, A., Laughlin, P., Machtynger, J. and Machtynger, L., 2020. Artificial intelligence (AI) in strategic marketing decision-making: a research agenda. The Bottom Line, 33(2), pp.183-200.

Thaichon, P. and Quach, S. eds., 2022. Artificial Intelligence for Marketing Management. Taylor & Francis.

Online

Kraft Foods’ Stock Value. 2023 Online Available through: < https://www.macrotrends.net/stocks/charts/KHC/kraft-heinz/market-value>

Kraft Foods’ Gen Z’s favorite food products. 2022 Online Available through: < https://theharrispoll.com/briefs/kraft-heinz-a-childhood-classic-remains-a-gen-z-favorite/>