How Craft Changed Oreo Marketing Strategy in China
How Kraft Changed the Oreo and Its Global Marketing Strategy for Success in China
Gale Business Insights: Global Case Study Collection
Learning Objectives
After analyzing this case study, students should be able to do the following:
Explain at least three benefits of market research in product development for international and emerging markets
Identify traditional and nontraditional strategies for increasing revenue through entering new global markets
Appreciate the effect of cultural norms and tastes for firms expanding to new markets
Discuss how firms can focus products to local tastes while increasing brand value globally
Introduction
One of the more popular strategies for firms to increase profits in the 21st century has been to expand to new, growing markets. China, India, and other Asian and Pacific countries have received a great deal of attention by North American and European firms attempting to tap growing levels of expendable income from the emerging middle classes in these countries.
The strategy seems sound, but its execution is critical to its success or failure. Many examples exist of companies in the 1990s and the first decade of the 2000s failing to gain traction in these new markets. Firms often try to attract new customers by offering essentially the same products that have worked in other markets. They support this strategy by adding sales and marketing staff and other resources to convince potential buyers in the new market of the value of their products. Offering a standard product across markets can minimize costs and increase profit margins. However, cultural norms, tastes, and preferences vary greatly between a firm’s home market and the new market it may be attempting to enter. It is often difficult for firms to gauge the right mix of standardization and localization while still making growth profitable rather than being a drag on profits.
For example, Campbell Soup Co. saw an opportunity to make big profits in
Gale Business Insights: Global Case Study Collection
Learning Objectives
After analyzing this case study, students should be able to do the following:
Explain at least three benefits of market research in product development for international and emerging markets
Identify traditional and nontraditional strategies for increasing revenue through entering new global markets
Appreciate the effect of cultural norms and tastes for firms expanding to new markets
Discuss how firms can focus products to local tastes while increasing brand value globally
Introduction
One of the more popular strategies for firms to increase profits in the 21st century has been to expand to new, growing markets. China, India, and other Asian and Pacific countries have received a great deal of attention by North American and European firms attempting to tap growing levels of expendable income from the emerging middle classes in these countries.
The strategy seems sound, but its execution is critical to its success or failure. Many examples exist of companies in the 1990s and the first decade of the 2000s failing to gain traction in these new markets. Firms often try to attract new customers by offering essentially the same products that have worked in other markets. They support this strategy by adding sales and marketing staff and other resources to convince potential buyers in the new market of the value of their products. Offering a standard product across markets can minimize costs and increase profit margins. However, cultural norms, tastes, and preferences vary greatly between a firm’s home market and the new market it may be attempting to enter. It is often difficult for firms to gauge the right mix of standardization and localization while still making growth profitable rather than being a drag on profits.
For example, Campbell Soup Co. saw an opportunity to make big profits in
References: "Finding the Right Blend Is Crucial: Kraft CEO Irene Rosenfeld." The Economic Times, November 23, 2011. Accessed March 7, 2012. http://articles.economictimes.indiatimes.com/2011-11-23/news/30433514_1_kraft-ceo-irene-rosenfeld-oreo-kraft-executives. Jacobson, Robert R., and David E. Salamie. "Kraft Foods Inc." International Directory of Company Histories. Ed. Jay P. Pederson. Vol. 91. Detroit: St. James Press, 2008. 291-306. Jargon, Julie. "Campbell Soup To Exit Russia" Wall Street Journal (Eastern Edition), June 19, 2001: B9. ———. "Kraft Reformulates Oreo, Scores in China." Wall Street Journal, May 1, 2008: B1. Khosla, Sanjay, and Mohanbir Sawhney. "Growth through Focus: A Blueprint for Driving Profitable Expansion." Strategy+Business 60. August 24, 2010. Accessed March 7, 2012. http://www.strategy-business.com/article/00034?gko=63292. Lautman, Victoria. "Kraft Foods’s Brand New World." Chicagomag.com, June 2011. Accessed March 7, 2012. http://www.chicagomag.com/Chicago-Magazine/June-2011/Kraft-Foodss-Brand-New-World. Ng, Erica. "Profile: Shawn Warren, VP Marketing Kraft APAC." Marketing-interactive.com, October 27, 2010. Accessed March 7, 2012. http://www.marketing-interactive.com/news/22808.