Product portfolio

We decided to begin entrance to Russian market only with classical flavor: chocolate biscuits with milk filling. There are several arguments for that. 

• First of all, we consider launching of the classsical flavor as a pilot project that will show tha general taste preferences of Russian customers. 
• Second, we consider it rather dangerous to start launch with the broad product range.

What we are also thinking of - special agreements with such chains as McDonalds and introduction of Oreo-shakes as an option drink in Happy Meal (Burger King as an option). With this product we may increase brand awareness and market penetration:

• Our target audience is "concentrated" in McDonalds and cases of consumption and getting acquainted with the brand perfectly fit our strategy
• Oreo-shakes are already introduced in some chains in Russia (Coffee Shop and T.G.I. Friday's), but their price is not appropriate for positioning for children. We are thinking of making prices for Oreo-shakes more democratic so that more people could get acquainted with the brand

Example of Oreo shake in other markets

Brand strategy

According to all mentioned above (market and competitive analysis), we are ready to introduce our recommendations for Oreo in Russian market. We will begin with the general brand strategy.

Brand strategy

• Oreo in Russian market should be positioned as a premium product, with price not much higher than other competitors (approximately 10-15 % higher than the prices for chocolate coated biscuits of Russian producers)
• Oreo should be positioned as a product for children and their parents mostly and as a product for young people too (teenagers, schools children). Mainly we shall target 30-45 y.o. middle-class individuals having one or more children and the children in particular. School children and students maybe considered as a supplementary group of consumers.

This concept was already used in other markets and we may borrow it with some little adaptatition in advertising (e.g. slavic appearance family)

• As competition is very high and low-price products can easily substitute Oreo, we should introduce more than a product, but an “unique culture of consumption” (as in video where children eating cookies with their parents: divide the cookie, put it in the milk etc.)

• Oreo is ahead of the curve in the practice of ‘agile marketing’: to duplicate this strategy in Russian market. With this strategy we may catch up the premiumisation trend and trend for constant innovations. Oreo is very surprising brand, which offers new receipts each time – it is perfect for Russian market.

Mondelez introduced branded shelves for their products

That's what we recently found in one of the supermarkets in Moscow! Mondelez introduced new branded shelves in colors of Mondelez (but did not use the btand of the company itself). In English we can translate it as "Tasty shop" - everything ready for the picnic. Chocolate, coffee and cookies - all brands are produced by Mondelez in Russia.

Market Analysis, Competition and Target Customers Analysis

As the macro- and meso-level analyses have shown (see our posts from 4/22/2014), there are a number of favourable factors for launching such a premium chocolate-coated biscuit in Russia, as Oreo. Let us remind you that due to the growth in population’s disposable income, premiumisation has become the strongest trend affecting the biscuits market: chocolate coated biscuits category is set to demonstrate the highest retail value growth in 2013 at 14% as it is perceived as the premium product (Passport GMID, 2014). Moreover, Russian consumers demonstrate little brand loyalty and find themselves in constant search of novelties – the trend that we will capture by introducing the new and bright brand of Oreo. 

However, Oreo will have to survive in a fierce fight with competitors, as the internal rivalry has been established to be severe (see our posts from 4/22/2014). First of all, let us consider competitors of potential Oreo producer in Russia - Mondelez Rus OOO. In the following, you can see the bar chart of biscuits market concentration in Russia.

Source: Passport GMID, 2014

As we can see, market concentration is very low and competitors are struggling with each other for market share. What is optimistic for Oreo launch based on these data is that its potential producer, Mondelez Rus OOO, is the market leader and consequently will have much power, resources, established distribution channels, connections, etc for introducing the new brand into its Russian portfolio.

However, we should not disregard the risk that Oreo might cannibalize other brands in Mondelez Rus OOO’s portfolio. Being one of the top brands for Mondelez Rus OOO, Yubileinoye is also the second-leading brand (4.1% value brand share in 2013 (Passport GMID, 2014)) of the whole Russian market for biscuits, running closely after the brand Lyubyatovo by United Bakers OOO (4.9% value brand share in 2013 (Passport GMID, 2014)). As Yubileinoye is known to have chocolate-coated biscuits line and any chocolate-coated biscuit is perceived by customers as premium (Passport GMID, 2014), it might become a competitor with Oreo and cannibalization might take place. This is certainly the situation we need to avoid. 

So, in order to prove Yubileinoye and other Mondelez Rus OOO brands’ potential for cannibalization by Oreo, we included a question on what biscuits brands consumers most frequently buy in our survey (https://docs.google.com/a/student.spbu.ru/forms/d/1qVlk4o8zFpI07V8lq31kztt-05A0s2ccVYR-VYK6fGI/viewform). Judging by the answers to this question, we shall identify potential Oreo’s targets for cannibalization, study their positioning and, when working out a strategy for Oreo, we shall take it into account and position Oreo in a different way to avoid cannibalization (more information on this topic will be posted in our Brand Strategy post). 

The survey

Recently we made a survey in Russian so that our potential customers could give us more insights about how we should launch our product in Russia! You are welcome to answer our short questionnaire:

CLICK HERE

More than just cookies

Look how food innovators reinvent Oreo and make new snacks from simple cookies. This video shows that Oreo brand is very "agile" and every time prepares some surprise, something completely new, still preserbong it's unique taste.

Oreo is more than just cookies - it is a unique culture of consumption, which may be introduced to Russian market too.

Other products with Oreo

It is possible to introduce not only Oreo, but other products using Oreo brand image. It is also possible to introduce this products to the Russian market.

Oreo Milka

Oreo-shake

Oreo Cake

Oreo ice-cream

Oreo in different countries

USA

Market of sandwich biscuits in USA is growing (CAGR 17%) and it reached almost $ 2.5 bln in 2013. Oreo brand holds the second position with 9% market share.

Oreo represents cookies for “kids and adults who want to have fun”, aiming at children and youth who are quality conscious – so Oreo is definitely a premium brand. It positions itself as the “best selling cookie in the United States” and with its strong record of innovation and clever advertising Oreo won the preferences of a great audience. 

Oreo is distributed through retailers and supermarkets, also having partnership agreements with such companies as McDonald’s and Baskin Robins. This ideally represents the way to reach their target audience.

Oreo has very strong marketing campaigns, basing them on the innovation, creativity, responsiveness and adaptation. Oreo uses a lot main social networks (Facebook, Instagram, twitter) to entertain their potential customers and make them believe that “To every person that feels happy, enjoys life and wants to have or share a unique taste, Oreo is the answer and your experience enhancer”. Oreo answers the trends instantly and always is eager to create new innovative ads to capture customers’ minds – it helps to keep pace with the youth and to remain one of the most creative brands.

China

Kraft Foods entered Chinese market with its bestseller Oreo in 1996, but for 9 years it couldn’t do anything to build the business, by 2005 Oreo holed only 3% of Chinese cookie market.

The whole Chinese biscuit market can be divided on seven categories. All of them together have a value of more than one billion – dollar: sandwich biscuits, plain sweet biscuits, wafers, plain savory, cookies, soda crackers and egg-roll biscuits. By 2005 Oreo was competing only in sandwich biscuit category. Kraft Foods recognized that without a significant strategic reorganization the whole market would be lost to competitors.

At first, the management team needed to understand why the existing strategy did not work. Oreo used the same strategy as company was using in U.S. Oreo had the same products and marketing strategy. This strategy did not work because different culture and different tastes.

The Oreo China team designed the following strategy to win Chinese market: 

1. It introduced a less sweet version called LightSweet Oreo.

2. Also for the first time in company history Oreo changed the formula of original Oreo to make it better for the local tastes.

3. The size of the packet was reduced to give new costumers change to try new product for lower prize. 4. The team also worked on distribution. Some very brave ideas were introduced for example in Shanghai one supermarket offered to sell Oreos by weight, which gave customers more control over how much to buy. 

5. After recognizing the popularity of wafers segment in China, the team introduced chocolate-covered wafer sticks. Convincing senior management to introduce a new product was not easy, but Oreo sticks were a big hit and soon gained 30 per cent of wafer sales overall. Wafer sticks later were launched in some other overseas markets.

India

AC Nielsen study, the company said the Indian biscuit market grew at 17% in 2010, with creams and biscuits leading overall growth, realized that trend, Kraft had decided to introduce Oreo to India market.

In 2011 Kraft Foods announced its entry into the India biscuits market.

1. To enter the new market Kraft decided to change a strategy and launched Oreo under the Cadbury brand name.

According the Kraft Food “launch Oreo under the Cadbury brand in India was made locally because the Cadbury brand has stronger brand equity in the region that the Kraft brand, which is not so well known”

Kraft also says the Cadbury brand will never be applied to Oreo in the UK or regions where the Kraft brand is “just as strong as Cadbury”.

2. Kraft used Cadbury distribution channels, it allowed the company to save a lot of money and time.

3. Kraft could reach correlation between Codbury chocolate and Oreo.   

4. Oreo also changed its price strategy to fit India market

At start prices were set lower than its core competitor Britannia's Jim-Jam Treat.

5. Oreo introduced a lot of different types of packages (3, 7 and 14 biscuits in package), in order to create a big price differentiation, because Oreo wanted to cover all India market segments. 

Why OREO? Why Russian market?

OREO is said to be the world's favorite cookies. In March 2012 the brand celebrated the 100th anniversary, which is a great sign of brand sustainability and rich brand heritage.

Why would we like to introduce OREO to Russian market?

Oreo is a world-known sandwich cookie formed from two appetizing chocolate disks with a sweet cream filling in between. Since its introduction in 1912 Oreo has become the best selling cookie in the United States. Today it is more than just an American brand. Oreo is present in more than 100 countries, gloried as the world's favorite cookie and the best-selling cookie brand of the 21st century, with $1.5 billion in global annual revenues. Kraft Foods is the proud custodian of Oreo, and Oreo is one of the company‟s 12 “billion-dollar” brands. Due to its already implemented internationalization, Oreo’s largest markets comprise not only the US, but also China, Venezuela, Canada, etc. Thanks to nearly sky-high opportunities, offered today by emerging markets, Oreo is booming in Chile, China, Indonesia and many other developing economies.

However, Oreo is still not present in the huge emerging market of Russia. Recent researches indicate, that due to rising incomes, increasing pace of life and evolving interest towards branded products, Russian market for biscuits and its chocolate coated segment (that is perceived as premium) in particular will post fastest retail value growth in 2013 of 14%. 

So the internationalization of Oreo, this powerfully branded premium cookie, into the Russian market seems very tempting to us. In our project we are going to analyze the Russian market for biscuits in greater detail and based on this knowledge (in case we conclude that conditions for the entry are favourable indeed) elaborate implications for finally bringing this beloved mouth-watering cookie to Russian consumers.