FORE School of Management, New Delhi AN EXTENSIVE CONSUMER RESEARCH ON OREO BISCUITS CONSUMER BEHAVIOUR Submitted to: Dr. Anupam Narula Professor (Marketing) Group 5 (IMG VI): Avneesh Luthra (063012), Deepak Arora (063014), Nikhil Gurg (063030), Pooja Juneja (063035), Rohit Batta (063042), Shikha Mittal (063048) 1 | Page
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Table 1: Oreo Product-wise Segments...................................................................................................7Table 2: Indian Biscuits Market Growth...............................................................................................10Table 3: Segments in the Indian Biscuits Market.................................................................................11Table 4: Biscuits Penetration in India...................................................................................................12Table 5: Biscuits Consumption Pattern across India............................................................................12Table 6: Kraft Foods SWOT..................................................................................................................18
LIST OF FIGURES
Figure 1: Oreo - Twist, Lick, Dunk..........................................................................................................9Figure 2: Biscuits Market in India..........................................................................................................9Figure 3: 2011 Market Share (Overall Biscuits Market).......................................................................13Figure 4: Market Share in Cream Biscuits............................................................................................13Figure 5: Oreo Distribution..................................................................................................................22Figure 6: User Preference to Taste......................................................................................................34Figure 7: User Preference to Price.......................................................................................................35Figure 8: User Preference to Variety...................................................................................................35Figure 9: User preference to Flavor.....................................................................................................36Figure 10: User preference to Brand...................................................................................................37Figure 11: Brand Preference in terms of Taste....................................................................................37Figure 12: Brand Preference in terms of Price.....................................................................................38Figure 13: Brand Preference in terms of Flavour.................................................................................39Figure 14: Brand Preference in terms of Brand...................................................................................39
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ACKNOWLEDGEMENT
We take this opportunity to express our gratitude to Professor Anupam Narula for
giving us the opportunity to conduct a consumer research and analyze how Oreo has
responded to the preferences of Indian consumers with its unique taste and special ritual of
twist, lick, and dunk. as part of our Mini Project for the course ‘Consumer Behaviour’,, and
subsequently guiding, monitoring and encouraging us throughout the course of the project.
The project was a great learning experience for all of us.
During the course of the project, we gained immensely valuable insights on the
strategies adopted by Kraft Foods for its product – Oreo Biscuits. There was also a great
deal of learning with regard to the Biscuits Industry in India.
We also take this opportunity to express our thanks to FORE School of Management,
New Delhi for providing us with the resources and environment required to carry out the
project.
Avneesh Luthra (063012)
Deepak Arora (063014)
Nikhil Gurg (063030)
Pooja Juneja (063035)
Rohit Batta (063042)
Shikha Mittal (063048)
Group 3, IMG VI
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EXECUTIVE SUMMARY (Shikha Mittal)
Kraft Foods and Cadbury’s launched Oreo (Premium Segement Cream Biscuit ) in India in
2011. India is the world’s largest Biscuit market (as per volume) growing at a rate of 17% per
annum. The cream segment is leading the growth of biscuit industry with 25 % - 30%
growth.
Oreo has built its positioning on ‘Togetherness’ in India. It’s ritual of ‘Twist, Lick and Dunk’ is
internationally known, and has also caught up with Indian consumers. This positioning has
helped Oreo in differentiating itself, in an industry where competition and rivalry is high. At
the same time suppliers have low bargaining power.
Nielsen Group had conducted a research ‘Togetherness Quotient’ for Oreo. The findings for
the research have been extensively used by the company in modelling and understanding
consumer behaviour with respect to Price, Promotion, Place and Product. Various concepts
like perceptions. Motivation and Learning of consumer behaviour have been leveraged by
Cadbury Oreo.
A Primary research was conducted to analyse the preference of Oreo with respect to its
competitors and understand he attributes important in buying behaviour of the consumers
for Cream biscuits.
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LITERATURE REVIEW (Deepak Arora)
Consumer Behavior is the behavior that consumer displays in searching for, purchasing,
using, evaluating and disposing of products and services that they except will satisfy their
needs. (Sciffman, Kanuk & Kumar).
Krishnan (2011) showed that in consumption environment a person chooses a product or
brand which seems to possess a maximum possibility or elaboration of his lifestyle identity.
A complete picture of consumer cannot be given by demographics alone and thus might
affect the perfect segmentation of market (Cooper, 1984).
Forrest and Blumberg (1981) sees life style as a basis that allows marketers to assess
accurately the needs of appropriate segments, as demographic descriptions have proved
inadequate for this task.
From the past work it can be concluded that values and lifestyle (VALS) plays an important
role for marketing of product and services. This would facilitate reduction of large and
heterogeneous population into few homogenous groups.
Sivan(2000) showed that 18% of buying decisions are influenced by advertisement . Ibrahim
and Alnawas (2010) that there is tremendous influence of using the celebrities on consumer
buying behavior. Thus, Promotion is of great importance for marketing.
Padberg and Westgren(1979) has also shown that along with product quality the
communication, distribution and pricing are other important factors that affects the
consumption process.
Sehrawet and Kundu(2007) has shown that packaging is the key component that affects the
consumer behavior. Ease of carriage, lightness of weight, simplicity, transparency and
consistency of package are the key factors and are more important for urban consumers.
Packaging plays an important role and is an important tool for marketing a product.
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Thus Packaging, promotion, distribution, Lifestyles and values and pricing determines the
consumer behavior to larger extent.
The Asia Pacific Biscuits market has grown by 7.5% in year 2011 and has reached the value
of $9974 Million. The compounded annual growth rate of market in the period 2007-11 was
5.9 %.( Market line).
Jago (2000) considered the functional food and beverage category one of the most
important drivers of new product development (NPD) in recent years
Longman (2001) stated that increased demand for functional foods amongst consumers is
due to maturation of the general healthy foods market.
Kraft’s multi category distribution (warehouse delivery and direct store delivery) and
consumer awareness are its key strengths (Data monitor). The Biscuit Market has reached
the value of $9974 million and thus it has a lot of potential and to study various factors
affecting the consumer behavior in this category of product is important. But a very less
work has been done towards specifically biscuit market; more focus is on Food and
beverages industry.
According to Deloitte (2012) convenience, health/nutrition benefits, affordability, taste/
freshness, functionality, product availability and corporate responsibility issues are the key
consumer drivers in food and beverage industry. Since this biscuit industry provides
immense opportunity, so still a lot of researches can be conducted in particular to Biscuits
industry and study of consumer behavior can be made which will allow marketers and
managers to better serve the customer and increase the profitability.
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INTRODUCTION (Avneesh Luthra)
Kraft Foods
Kraft Foods Group Inc. is a North American grocery manufacturing and processing
conglomerate, which is headquartered in Northfield, Illinois, a Chicago suburb. Kraft Foods
Inc. (Kraft Foods) manufactures and markets packaged food products, including biscuits,
confectionery, beverages, cheese, convenient meals and various packaged grocery products.
Its product categories span breakfast, lunch and dinner meal occasions, both at home and in
foodservice locations. The company sells its products to consumers in approximately 170
countries (Forbes, 2013). Kraft Foods operates in three broad segments:
1. Kraft Foods North America
2. Kraft Foods Europe
3. Kraft Foods Developing Markets.
Kraft Foods currently have operations in more than 75 countries and made its products at 223
manufacturing and processing facilities worldwide.
In February 2010, the company announced that it has acquired the control of Cadbury plc.
The company operates in the following five segments (Product-wise):
Table 1: Oreo Product-wise Segments
Segment Description
US Beverages This segment is responsible for the
manufacturing of packaged juice drinks,
powdered beverages and coffee.
US Cheese This segment is involved in the
manufacturing of manufactures processed,
natural and cream cheeses
US Convenient Meals The segment deals with the manufacturing
of processed meats and lunch combinations.
US Grocery This segment is involved in the
manufacturing of spoonable and pourable
dressings, condiments, desserts, packaged
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dinners and snack nuts.
Canada and NA Foodservice This segment sells products that span all of
its segments and includes the Canadian and
Puerto Rico grocery business, the North
American Foodservice operations and the
North American Grocery Export Business.
(Source: Reuters, 2013)
Kraft Foods have set upon themselves a target of achieving 40% of its revenues from the
emerging markets and is particularly keen to expand its presence in the BRIC countries—
Brazil, Russia, India and China. Kraft Foods acquired Cadbury Plc. to further develop its
footprint in the developing countries. The Chicago-headquartered parent company in 2010
said the combination of Kraft Foods and Cadbury provides the scale necessary to grow sales
and distribution in new and existing markets, delivering $1 billionn in incremental revenue
synergies by 2013.
Oreo Biscuits
First introduced in 1912 in the United States, Oreo Biscuit is an iconic product of the Kraft
Foods Group. It is a sandwich biscuit (called cream biscuit in India) with the delicious
combination of dark chocolate cookie and smooth vanilla cream. Today it stands as the
world’s No.1 biscuit with approximately 25 billion Oreos eaten per year (About 70 million
per day, or 800 per second!).
Although a well-established brand globally, Oreo is new to India. It was launched in India in
March 2011 under the Cadbury brand. Since its launch, the company has gained
considerable market share in the cream biscuits segment in India, making a name for itself
minds of the Indian consumers. According to Cadbury India Managing Director Anand
Kripalu, the launch of Oreo resulted in a growth in Cadbury India’s sales by 40% between
January-September 2011.
SEPARATE STRATEGY FOR TANG
Kraft opted to keep Tang Brand with itself while launching Oreo through Cadbury. There
were two major reasons for this:
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1. Launching Tang through Cadbury would’ve resulted in a brand conflict. Cadbury is
known for its association with chocolates and launched a fruit concentrate would’ve
been in stark contrast to their existing strategy.
2. Cadbury didn’t have the necessary infrastructure to manufacture Tang through their
existing facilities. Hence, it would’ve needed considerable investment from the
company to manufacture Tang.
‘Twist, Lick and Dunk’
Based upon the habits of Americans, Kraft designed the ‘Twist, Lick and Dunk’ slogan for
Oreo as a ritual or a fun way to eat the biscuits.
This is described in the picture below:
Figure 1: Oreo - Twist, Lick, Dunk
(Source: Official Company Website – India)
The Indian Biscuits Industry
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Figure 2: Biscuits Market in India
(Source: Business Today)
As per Nielsen’s study, India is the biggest market for biscuits in the world with a market
share of 22% in terms of volume as compared to 13% in the United States. The size of the
biscuits market is estimated to be Rs. 13,000 Crores. The way for biscuit companies to the
Indian consumer’s stomach is through competitive pricing, high volumes and strong
distribution, especially in the case of rural areas.
The market is dominated by Britannia, Parle and ITC majorly due to their presence in the
low-cost glucose biscuits. Britannia was the first organized company that started
manufacturing of biscuits in India followed by Parle. Other popular brands of biscuits in the
country are Priyagold, Anmol, Biskfarm, Dukes, Cremica, Priya, Veeramani, Bonn, Bhagwati,
Raja, Sobisco, Madhabi, Nezone, Ankit and Nalanda. Over the years, cream biscuits have
gained popularity in India. The market size for premium creams in India currently is
estimated to be Rs. 5,500 crores.
Industry Growth
Growth in the Industry has been stable, ranging from 13-15%, although there has been a
slight decline in the growth pace after 2010-11
Table 2: Indian Biscuits Market Growth
Market Growth Growth in Production
Year Growth
(%)
Year Annual Production
(Lakh Metric Tonnes)
2003-04 13% 2003-04 11
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2004-05 14% 2004-05 12.55
2005-06 14% 2005-06 14.29
2006-07 13% 2006-07 16.14
2007-08 14% 2007-08 16.85
2008-09 16% 2008-09 17.50
2009-10 14% 2009-10 18.50
2010-11 11% 2010-11 19.00
2011-12 11% 2011-12 20.50
2012-13 9% 2012-13 10.50 (April to Sept)
(Source: Indian Biscuits Manufacturer Association)
Segments:
The industry is dominated by the organized sector. However, unorganized players also
make a vital contribution mainly due to their presence in rural and semi-urban regions.
Table 3: Segments in the Indian Biscuits Market
Sector Wise Organized Sector 70%
Approximately 9100 crores
Unorganized Sector 30%
Approximately 3900 crores
Import/Export Wise Exports 14% of annual production in
2010-11. This declined to
around 12.5% in 2011-12.
Imports Has not shown any
considerable growth during
the last five years
Categories of Biscuits Functional
(includes Glucose, Marie and
Digestives)
This segment has
dominated Indian
market, showing a steady
growth of 8% per annum.
Smaller Indulgence
(includes Cream, chocolates
This segment has grown by
25 % - 30% recently, mainly
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and cookies) because of reasons like,
rising disposable incomes
and growing modern retail
outlets.
(Source: Indian Biscuits Manufacturer Association)
Rural-Urban Penetration of Biscuits
The Penetration levels for biscuits are strong in the Urban Market, emphasizing on the
efficiency of distribution used by companies like HUL. Rural Market has a significant scope
for further exploration and sales.
Table 4: Biscuits Penetration in India
Rural Market Urban Market
50-65% 75-85%
(Source: Indian Biscuits Manufacturer Association)
Per Capita Consumption
The per capita consumption of biscuits in India is about 1.8kgs, as compared to 2.5kgs to 5.5
kgs in countries from South East Asia and Europe and 7.5kgs in the United States.
Pattern of Biscuit Consumption (On Zonal basis)
The consumption pattern is fairly similar across all regions in India, with the Eastern region
showing slightly higher consumption as compared to other regions.
Table 5: Biscuits Consumption Pattern across India
Zone % of Overall Consumption
Northern Zone 25%
Western Zone 23%
Southern Zone 24%
East & North Eastern Zone 28%
(Source: Indian Biscuits Manufacturer Association)
Market Shares & Trend
1. Overall Biscuits Market
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Parle has the market leadership position with a market share of 40%. Britannia has a
market share of 25% followed by ITC with 8%. Oreo has thus far only been able to
This bus will travel to 9 cities – New Delhi, Mumbai, Bangalore, Ahmedabad, Pune, Lucknow,
Hyderabad, Kolkata and Mysore. It will provide a platform for parents to bond and
interact with their family.
Consumer Behaviour and Some Concepts (Shikha Mittal)
1) Perception of Colour: Blue colour signifies ‘Security’, ‘Dignity’ and ‘Respect’. Oreo’s
positioning around family and togetherness can be linked to this.
2) Figure And Ground : As seen the advertisements are centered around two themes
(Figures)
a. Twist, lick and Dunk Ritual
b. Togetherness (Father Son / Father Daughter Relation)
These are clearly separated from Ground (the cute graphics of kids and their innocence
being used). Hence the brand has successfully been able to put across its brand name and
proposition consistently through various media.
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Special interactive activities around ‘Twist Lick and Dunk ritual’ were planned to be held in the bus. Parents were encouraged to Take ‘Oreo Pledge’, to spend more time with their kids.