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.

Aims and Objectives in the Market

Here we shall divide aims and objectives for Oreo in Russia into short-term (1 year after product launch) and long-term (5 years after product launch) indicators we aim to achieve. The following table specifies the goals, their values and sources for benchmarking the latter.

Table 1. Aims and Objectives for Oreo in Russian Market

Aimed Indicator	Short-Term Targeted Value (1 y.)	Long-Term Targeted Value (5 y.)
Brand Share	1.6%*	3.4%*
Presence in Distribution Channels of Mondelez Rus OOO	90%	99,9%
Product Portfolio Presence	1 or 2 products of the whole portfolio***	99% products of the whole portfolio****

*Benchmarked against Alpen Gold Biscuits brand share in Russia in 2013 (Passport GMID, 2014). Alpen Gold Biscuits was chosen for benchmarking, as it possess a smaller market share than the most successful Mondelez Rus OOO brand Yubileinoye and in one year Oreo should achieve the results of medium brands at least (again not by fighting the market share from Alpen Gold Biscuits or other Modelez Rus OOO brands)

**Benchmarked against Oreo’s Brand Share globally in 2013 (Passport GMID, 2014, http://www.portal.euromonitor.com.ezproxy.gsom.spbu.ru:2048/Portal/Pages/Search/SearchResultsList.aspx)

*** It will be rather easy for Mondelez Rus OOO to launch a new product, as the company already has established infrastructure, distribution channels, etc, and launching 1 or 2 products from Oreo’s portfolio will be a “pilot” one and give the company knowledge on how to further promote to customers and end-consumers 

**** Portfolio enhancement is crucial for Russian market, as there is a growing demand for innovativeness and lack of brand loyalty. Introduction of newer and newer Oreo variations will help to keep consumers attention and demand.

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.