Chocolates and Confectionary segment Chocolates and Confectionary account for 21% of Nestle Indias sales as of Year 2010.

The size of the market for chocolates in India was estimated at 30,000 tones in 2008. Bars of moulded chocolates (like dairy milk, truffle, amul, milk chocolate, nestle premium, and nestle milky bar(comprise the largest segment, accounting for 37% of the total market in terms of volume. The count segment (which as brands such as 5 star, perk, kitkat and picnic) is the next biggest segment, accounting for 30% of the total chocolate market. The count segment has been growing at a faster pace during the last three years driven by growth in perk and kitkat volumes. Wafer chocolates such as kit kat and perk also belong to this segment. Panned chocolates accounts for 10% of the total market. Why does a person buy a chocolate? A person can buy a chocolate for the sake of passing time or while in a journey. This need arises only when she starts getting bored with the initial set of affairs. But then, the role that the chocolate plays at that time, of a companion, is always inherently desired by the person. This observation again corroborates the finding of the need scale rating which states that friends, time pass and Feel good factor are the primary propellers towards the chocolate buying process. The chocolate market is primarily dominated by Cadbury and Nestle, together accounting for 90% of the market. As previously mentioned, perk is the brand that is most substituted for Kit Kat and vice versa. Therefore, brand relevance and a feeling that it cannot be substituted should be grown in the consumer. 90% of the respondents feel Perk to be an ideal substitute for kit Kat; here gain wafer v/s chocolate category comes into play. The CDM is the most preferred, with KitKat sharing second place with Perk and Five Star. (The figures are modal values rather than mean values so that the most preferred brand is chosen) Though KitKat is perceived to be better than Perk but it lags behind the Cadbury Dairy milk which is perceived to be better than Kit Kat in various attributes. There is a 46% level of loyalty associated with KitKat and reiterates the fact that even in an impulse category, such as chocolates, it is easier and cheaper to retain a consumer than to acquire one. This is attributed to the fact that chocolates are standardized products with wide availability. Thus the factor named hunger tries to capture all such need states and motivators. Energy on the other hand signifies the consumers belief that chocolate can be a source of nutrition and help in refreshing herself physically. On probing it was revealed that the variable termed as After School signifies the fact that chocolate can be a source of instant energy after a

hard day of physical exertion in the schools and colleges, which can lift the spirit of the consumer. PRODUCTS: Nestle Kit Kat is crisp wafer fingers covered with chocolayer. Nestl kitkat has a unique finger format with a breaking' ritual attached to it. Nestl kitkat is one of the most successful brands in the world and every year over 12 billion Nestl kitkat fingers are consumed around the globe. Nestle milk chocolate is a milk chocolate with a delicious taste for you to savour. Nestle Milkybar nestl offers a bouquet of three exciting clair variants: nestl eclairs are rich milky caramel eclairs with a soft center. Nestl chocolate eclairs are a delicious delight with luscious creamy chocolate inside. Nestl milkybar eclairs are delightful eclairs with a creamy milky chocolate center. Nestle Munch is extremely popular in India, nestl munch is wafer layer covered with delicious chocolayer. A crispy light irresistible snack! NESTL Eclairs with an irresistible outer layer of caramel and a yummy milky filling, you will not find a better temptation. NESTL Chocolate Eclairs made up of Delicious caramel on the outside with a Chocolate filling in the inside. A favorite amongst all, it has the entire nation rolling, chewing and phisloing over it. What is Branding? Branding is the collection of attributes that the consumer has come to expect from a product, which will strongly influence their buying patterns. Branding can be achieved using a company name - it can be applied generically or, as in the case of Kit Kat, on an individual basis. The brand name promises the consumer particular benefits, such as quality and value for money, with these expectations being built up over many years. A brand name is often considered by a company to be its most important intangible asset. In a market where repeat purchases are the key to profitability, a brand name becomes paramount to a product's success. A catchy name and distinctive packaging are vital ingredients in any brand image, but the true essence of a brand identity lies in the consumer's mind i.e. the perceptions of the product. A company must be constantly aware of these perceptions and try to preserve and build on them through advertising and other promotions. Branding enables marketers to build extra value into products and to differentiate them from their competitors. The history of Kit Kat emphasises the importance of successfully managed brand names to the company that owns them. Nestl was prepared to pay a record price to acquire Rowntree in 1988

because of the prestigious brands in Rowntree's product portfolio. Kit Kat was an important part of the portfolio. This acquisition prompted the City to look into the possibilities of including a financial valuation of a brand as an asset on a company's balance sheet.

Business theory suggests that products follow a life cycle, going through phases of development as follows:
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the conception of an idea/product research and development introduction to the market.

A period of growth then follows as consumers become increasingly aware of the product and, if successful, it becomes profitable. Eventually, the growth of sales will level off - this is the mature phase and is usually the result of increased competition. The theory predicts that sales will gradually decline as the market becomes saturated and consumer tastes change. However, it would be wrong to assume that after the uphill struggles of the development and growth phases, life becomes easier on the level. It is a considerable challenge to the marketers to prolong the profitable mature phase for as long as possible, using a range of extension strategies. A major drawback with the product life cycle theory is that it cannot be used as a predictor. Firms may be able to identify some of the stages of development from historical sales data, but they cannot know their exact position on the cycle, nor in which direction they might be heading. In addition, some products seem to enjoy very long maturity, if not immortality, with no signs of decline. Extending the product life span is the goal of many firms, but achieving this requires careful co-ordination of corporate and marketing objectives and strategies. It is vital to any firm that its marketing objectives are compatible with the overall corporate objectives. In selecting corporate objectives and strategy, a firm might wish to refer to the Boston Matrix, Ansoff's Matrix or use a simple SWOT analysis to establish where the company is and in which direction it wishes to head. For example, a company planning to consolidate its position within a national market might set very different objectives for the marketing of its products to a company wishing to expand into international markets. This in turn would affect the marketing tactics each company might employ. Confusion can often arise when attempting to reconcile marketing and corporate objectives. It could be argued that the success of any firm depends on its ability to satisfy a consumer need at a profit. This is, itself, the essence of marketing - so it could also be said that marketing and corporate objectives are the same thing. However, this would imply that marketing is more important than the other functional areas, when clearly they are all inter-dependent. Ultimately, any corporate strategy must both reflect and dictate to each of the different functional areas of the firm. Nevertheless, the information provided by the marketing department will be central to any corporate strategy formulation. This will include sales and market share, analysis of the competition, sales and profit forecasts for the future and analysis of changing consumer attitudes.

Nestl's corporate objective is to be the world's largest and best branded food manufacturer, whilst ensuring that the Nestl name is synonymous with products of the highest quality. In recent years, the company has pursued a policy of expansion and diversification through acquisition and divestment to achieve a more balanced structure to the business. Global brand names can achieve substantial production and purchasing economies of scale and, as world travel increases, so does the importance of instantly recognisable products. With a product portfolio which includes eight of the thirty top selling confectionery brands, such as Quality Street, Aero, Smarties, Polo and Rowntree's Fruit Pastilles, Milky Bar and After Eight, it is extremely important that the marketing objectives for each product line are fully compatible with the overall objectives of the company as a whole. Like any group of individuals, each product has its own character, strengths and weaknesses and consequently, the marketing objectives of each product need to be specifically tailored. In order to achieve this, Nestl has to develop a marketing strategy that will take into account all the elements of the marketing mix. This will involve individual strategies for pricing, product development, promotion and distribution. For an established brand name, these strategies must be flexible and relevant to each new generation of consumers, but at the same time, great care must be taken not to damage the perceptions of the product built up over decades of marketing. Kit Kat has a particularly broad consumer profile and is popular with all age groups. The Kit Kat marketing strategy can be summarised by the line 'Broad in appeal, young in feel and big in stature.' Product strategy No matter how effective the promotion and packaging, a firm will find it very difficult to market a product which fails to satisfy a consumer need. Kit Kat owes much of its success to a unique dual appeal - as a four-finger chocolate bar, (known in the confectionery trade as a countline), sold at corner shops and newsagents, but also as a two-finger biscuit sold in supermarkets. It is a product that has endured because of its wide appeal across the age ranges and to both sexes. Altering the actual product is potentially a very hazardous act for an established brand name as it risks altering the consumer perceptions of quality built up over decades. Tampering with the recognised core qualities could well damage the integrity of the brand. For Kit Kat, these intrinsic elements of the brand, or unique selling points include the:
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chocolate fingers foil and band wrapping, unique in the countlines market and seen as an important feature which encourages involvement and sharing by consumers well-known strapline - Have a Break, Have a Kit Kat.

In spite of the risks of altering the product, the two finger bar and multipacks were introduced in the 1960s to meet the increased needs of supermarket shopping and more recently, Orange, Mint

and Dark Chocolate Kit Kats have been available for limited periods. In the third week that Kit Kat Mint was available, it more than doubled total Kit Kat Sales. The Orange Kit Kat proved particularly popular with sales of 38 million bars in just three weeks. It provided very positive market research results. While they are seen as novelties, they can also be used to provide reassurance and reinforcement of the core attributes of the original established brand name. Special editions are used primarily as promotional tools. Market research has shown that consumers prefer special editions to be available for limited periods only and that consumers are likely to purchase the original Kit Kat at the same time or shortly after. (They are, therefore, a good way of injecting new life into the Kit Kat product life cycle). Depending on their popularity, some special editions are introduced more than once. The Orange Kit Kat has proved so popular that the two-finger multipacks are now permanently available. Apart from these variants, the intrinsic characteristics of the Kit Kat product and packaging have changed very little during the last sixty years. Although some minor, subtle changes have been made in packaging, merchandising and sales promotions, a Kit Kat from the 1930s would be instantly recognisable to modern consumers today. Pricing strategy A key advantage of maintaining a strong brand image in a competitive market is a degree of flexibility in the pricing strategy. It is a common characteristic of imperfectly competitive markets for producers to concentrate on non-price competition. When looking at the pricing strategy for Kit Kat, it can be seen from the figures that the real price has remained remarkably stable over the last sixty years. Promotional strategy Nestl has used a wide range of promotional tactics with Kit Kat. Promotion offers have included free bars in the multi-bar family packs and an instant win deal with Burger King in 1996. This promotion, where over 75 million free burgers were on offer, increased sales of Kit Kat by an estimated 30 In 1998, an on-pack promotion featuring 'The Simpsons,' with the chance to win 20,000 cash and hundreds of other prizes, increased sales of Kit Kat by a staggering 41 Advertising plays an extremely important part in the confectionery industry, with spend approaching 114 million in 1996. The Have a Break, Have a Kit Kat theme appeared briefly in 1939, but has been the on-going Kit Kat slogan, or strapline, since the mid 1950s. Kit Kat's advertising is concentrated in two media:
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television commercials - which follow the well-known Have a Break tradition posters - where the powerful colours of the pack and product are used to dramatise the message.

A particular challenge for the advertisers is to appeal to both the consumers and the purchasers. Women account for two thirds of all confectionery sales, but a large proportion of these

purchases are subsequently consumed by children. Men eat as much as they purchase suggesting they are less generous! Distribution strategy Nestl has developed distribution channels which ensure the availability of Kit Kat to buy wherever and whenever the consumer wishes to purchase it. Sales of confectionery depend heavily on its availability, with market research showing that well over 60 percent of all purchases are made on impulse. Consequently, Nestl tries to supply as many outlets as possible - both wholesaler and retailer channels. Point of sale merchandising is also important when consumers are making instant, snap decisions from a wide range of products on view. Instantly recognisable packaging also helps to tempt customers. Shoe shops, for example, have recently been identified as having potential for confectionery sales owing to the large number of families that visit them. It is also predicted that confectionery, along with all foodstuffs, will become available through cable and interactive television, videophones and the Internet. Internationally, Kit Kat is now also manufactured in Canada, Germany, India, Malaysia, China, Japan, Australia, South Africa and the United States. It is available in more than 100 countries throughout the World. An important ingredient in the pursuit of any objective is control. It would be irresponsible of a firm to commit to objectives and strategies without also setting in place the means to monitor and evaluate its success. In the short run, Kit Kat's sales figures are a key indicator of success, enabling Nestl to assess growth and market share performance and compare its progress with that of its competitors. However, in the longer term, it is also necessary to gain market research information on consumer perceptions. Consumer attitudes constantly change over time. If Kit Kat is going to maintain its brand leadership, it must be aware of and adapt to these changes. The market never forgives complacency. Kit Kat's success can be attributed to consistency in its marketing, whilst allowing for minor changes to maintain a modern image. Above all, the brand has enjoyed continuous backing with investment in marketing to both the trade and consumer sectors, enabling it to compete successfully with both established and new products. Continuous reinforcement of the brand message through advertising and promotions has enabled Kit Kat to sustain its popularity over a long period of time in the face of rapidly changing consumer attitudes and tastes and consumption patterns.