The Situation Analysis Group 1 Juliana Gaviria Bonilla David Santiago GarcĂa Juan Carlos Villalobos Maria Camila Rodriguez
Fundamentals of Marketing Universidad de los Andes INSTRUCTOR: Dr. Bradley Wilson 2017-I
INDEX
1. Introduction 8 2. Brand overview 10 a. Nacional de chocolates 11 b. Nutresa group 12 c. Jet, brand and product 14 d. Smart objectives 17 e. Current strategy 18 f. Consumption trends 19 3. Market analysis 22 a. Overview and size 23 b. Structure 24 c. Market share 25 d. Consumption per capita 26 e. Segmentation and target 27 f. Competitors 29 4. Conclusion 32 a. Marketing problem 33 b. S.W.O.T. 34 5. Bibliography 36
Introduction
Jet Chocolate Bar, one of the most iconic products in Colombian history since its creation in 1962 up until today, is no doubt among the most successful of its kind in the national market, if not the most successful one. Having said this, every success has a broad background that explains the strengths and also reveals its flaws.
The following is the situational analysis for Jet Chocolate Bar. Jet has been characterized for innovation and consistency throughout its years of operation. In order to understand the product’s situation, the following factors will be reviewed and analyzed: Overall overview, external analysis and internal analysis. After taking into account all of the mentioned factors, a marketing problem will be identified.
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Brand overview
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Nacional de chocolates Compañía Nacional de Chocolates was founded in 1920 In Medellin, Colombia. It was the first big factory of its kind in the country, dedicated to producing cocoa based goods. Due to this innovation factor, the company was able to establish itself as the leading chocolate company in Colombia, with a steady and consistent growth throughout the years. Their web page, the company’s mission is to “bring life quality to consumers by exceeding expectations with known brands. Innovation, superior customer service and excellent distribution network nationally and internationally”. The company has a very customer orientated vision and claims to be committed to sustainable production. By 1962 the most recognized brand of the company was born: Jet Chocolates. Once again, it was the first brand of its kind in Colombia. This shows that innovation has been an important factor in the development of the company.
Nowadays, Nacional de Chocolates is one of the biggest companies in Colombia and certainly one of the leaders in the market. By 2014, the company generated more than 2,200 new jobs and sales were around $1.07 billion COP. In 2009, Nacional de Chocolates bought Nutresa S.A to broaden operations and expand to new countries. Thus, the company now operates in Mexico, Costa Rica, Peru, and Colombia. It also distributes to Ecuador, Venezuela, Puerto Rica and United States.
Wikipedia (s.f.) Logo de la Compañía Nacional de Chocolates [Illustration]
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Nutressa group Grupo Nutresa S. A. is the leader in processed foods in Colombia and one of the most relevant players in the sector in Latin America. Founded in 1920, it currently has about 37,000 employees (colaborators). Through eight business units (cold meats, biscuits, chocolates, coffee, Tresmontes Lucchetti -TMLUC-, ice cream, pasta and consumer food), it is currently the fourth largest food company in Latin America in terms of market capitalization.
The Nutresa group is a diversified company in terms of geography, products and supply, and has a direct presence in 15 countries and sales in 72 countries. It has leading brands, recognized and loved, that are part of the day to day of consumers, supported in nutritious and reliable products.
Human Rights Policy:
“As part of its human rights and diversity and inclusion policy, Grupo Nutresa recognizes the importance of respecting and promoting inclusion and diversity, as well as eradicating all forms of discrimination based on gender, race, sexual orientation, physical condition, belief Religious, political inclination, nationality, economic position, among others. Grupo Nutresa has a Human Rights policy and a management system that allows the identification of risks in the violation. In this way, the Group has tools that allow it to verify its progress in the matter and encourage the development of practices that lead to fulfill
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the commitments acquired in the Global Compact.” Mission of the company: • The mission of our company is the increasing creation of value achieving a remarkable return on investment, higher than the cost of capital employed.
• In our food businesses we always seek to improve the quality of life of the consumer and the progress of our people. • We are looking for profitable growth with leading brands, superior service and excellent national and international distribution. • We manage our activities committed to sustainable development; With the best human talent; Outstanding innovation, and exemplary corporate behavior.
Company Objectives:
Our centenary strategy is aimed at doubling to the year 2020, the sales of the year 2013, with a sustained profitability between 12 and 14% of EBITDA margin. To achieve this we offer to our consumer foods and brand experiences known and loved; Which nourish, generate well-being and pleasure, distinguished by the best price / value ratio; Widely available in our strategic region; Managed by talented, innovative, committed and responsible people, which contributes to sustainable development.
Caracol radio (s.f.) Logo del grupo nutresa [Illustration]
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Jet, brand and products Born in 1962, Jet was introduced to the Colombian chocolate market with a considerable advantage to its favor: It was the first brand to start producing cacao products locally; a clear “First-mover advantage� that has maintained its effect until today. From its foundation the brand has come a long way, introducing new and innovative products to the market and having an extensive distribution network throughout national territory.
Jet has a vast portfolio of products, including Jet Cremosita, Jet Wafer, Jet Cookies and Cream, nutella-like spreadable cream, icecream, and most importantly, the classic Jet Chocolate Bar.
Not only has the brand achieved a major distribution market reach in Colombia, but it has also extended to different countries, including the United States, Ecuador, Venezuela and Panama. Combined sales of the brand surpass the 100,000 million pesos annually, which equals to around 35 million USD.
Chocolatina Jet, the focus product
The classic Jet Chocolate bar was the first product introduced by the brand. It consists of a small 12 gram milk-chocolate bar with a characteristic flavor that has contributed to its identity. As for the presentation, little has changed from its first style. It comes in an easy-to-peel aluminum wrapping that exposes the name and image of the brand perfectly. In the inside, the chocolate comes along with a sticker that makes part of the iconic Jet album, a very effective strategy that the company implemented since the beginning and has become a tradition in many Colombian homes.
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As mentioned before, Jet started its business with a first-mo-
ver advantage in the market. In fact, such advantage and development of brand relationship and identity has taken the product to the top-of-mind position among Colombian youth (target market). This product alone represents around 45% of the overall brand income (Portafolio).
According to a study conducted by Dinero magazine in 2016, among children aged from 8 to 10, Jet is the most remembered chocolate brand by far, with approximately 80% remembrance rate.
Dinero magazine (2016) Top of Mind: las marcas mรกs recordadas por los colombianos [Graphic]
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Sales and placement
Jet has its own distribution company, its name is Cordialsa this Company is responsable for taking Jet to each client. Most of the sales of Jet are made in small supermarkets and neighborhood markets because one tradition of Colombian people is to buy groceries in small quantities so they buy more frequently during the week. Finally Jet has presence in 73 countries all around the world.
Mr brands (s.f.) Cordialsa colombia logo [Illustration]
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Smart objectives The following objectives correspond to goals for the Jet chocolate bar, set to be achieved by the end of the year 2016. All of them are built by the parameters of being specific, measurable, achievable and relevant to the products growth.
Corporate objectives
• To Increase sales for JET Chocolate in Colombia from $70000 to $75000 million pesos [DB1] by 31st Dec/2016. • To Increase the market share for JET chocolate in Colombia From 22.5% to 24% by 31st Dec/2016[DB2] .
• To increase net profit for JET Chocolate in Colombia by 5% by reducing distribution intermediaries in a 20%, by 31st December 2016[DB3] .
4 p’s objectives
• To Increase social media coverage for JET Chocolate in Colombia in Facebook by 50% by 31st Dec/2016[DB1] . • To maintain competitive pricing of $350/per unit for JET chocolate in Colombia despite new tax burdens, by 31st Dec/2016.
• To increase market reach for JET Chocolate in Colombia by 5% by introducing the product to emerging, low cost, super markets like D1, by 31st December 2016[DB2].
• To increase the top of mind awareness for JET Chocolate in Colombia from 75% to 80%, in kids aged 8-10, by 31st December 2016.
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Current strategy
Juanchosim86 (2010) Foro album chocolatina Jet [Photography ]
Jet album
Since the product first came out, in 1962 it has been accompanied by collectable stickers which are meant to be put in an album. These albums are renewed yearly since and have the current world record for oldest collectible album in the market. In their pages, you can find a collection of natural phenomena, flora, fauna, all of them related to the colombian ecosystems.
Social networks and website
For the online word, Jet has a bet on targeting children with compelling activities like games, and an online community where you can find some of the information the album has. It also shows a gallery of album collectors and their history of learning through the collection of the stickers and their information. Chocolates Jet (2016) Facebook page [Photography ]
Following the target of attracting children into the brand, Jet has created and “adventure camp� where the kids are invited to get involve with nature with the purpose of acquiring a first hand knowledge about the colombian ecosystems accompanied with extreme sports.
Chocolates Jet (2016) Facebook page [Photography ]
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Jet camp
Strategic association
To advertise the flavour for other targets (not children) Jet has made associations with McDonald’s for sponsoring a Jet chocolate McFlurry. In addition to this, another branch of associations is with main characters from animated films, with the purpose of becoming even more appealing for the kids of younger ages.
Consumption trends The following trends in its various categories are all important for the understanding and the marketing strategy development for Jet chocolate bar Technological
• Social media presence: Nowadays social media is a influence really strong in people because this social media provide information and opinions from other people about a product. Since 2013 Jet has an Instagram account. • Integrated production lines: The integrated production lines help to the efficiency of the production of Jet.
• Biodegradable materials: The discovery of this materials is important for Jet to improve the package of the chocolate. Psychological • Consumers in training: The parents started to let their kids to take decisions, so they let that their kids choose what food they want to eat considering what is better for them. In this trend the social media and the information Canals are very important because they are an influential factor for the kids. • Consumer want to think that they are part of the brand: This is important for the creation of the marketing strategy of every brand because consumers want to feel important for the brand. • Smaller households The average number of children per mother has dropped down from 2.5 kids to 1.8 by the ends of 2015
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Legal • Hungry for information: People want to know what they are eating, the nutritional information. They want to know where the cacao came from and what certifications Jet has. This affects Jet because they have to inform the consumer about that, so they have had to reveal all this information in their web page and their social networks • Comparisons:People want to access to price information of the product by their mobile devices to compare products so this information has to be able online.
• Green companies: People want to be sure that the company has good environmental practices. Cultural • Bubble life: This trend describes the new tendency that people don’t want to move a lot to obtain what they want, so that’s why Jet wants to be in the majority of supermarkets, mini-markets and in the informal commerce to satisfy the consumer and the buyer. • Access to reliable information: It is really important for the people to know what other people think about a product.
• Fit trends:People want to consume better ingredients, with the purpose of losing weight, and staying in shape.
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Demographic • Young population´s growth: from 2012 and 2013 the Young population increase in one million so jet started to introduce in the social networks.
• Population with Diabetes:More than one million of Colombian people has Diabetes with affects Jet because if more people suffer of this disease the sales will be less because they and their families won’t buy the product. Economic • Unemployment growth: the unemployment in Colombia growth in 0.3% from 2015 to 2016, and if the unemployment growth people don’t consume things like snacks.
• Shortage of resources: Currently, the high production demand of chocolate products and the slow rate at which the plants can be cultivated and regenerate the fruit, there is a world shortage of it. This condition determines a biting of the prices over the existing offer of the product, creating an increasing of the costs of production.
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Market analysis
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Overview and size
Gaviria, J. García, D. S. Villalobos, J. C. Rodriguez, M. C. (2017) Market overview [Chart]
Looking at the broad picture, Jet chocolate bar competes in the confectionary market in Colombia. Naturally, it is a very big market with around $1.07 billion pesos in sales annually and it is expected that the growth for this sector will be of around 16% by 2019.
In terms of volume, it is estimated that the trades of sweets, candy and chocolates reach 39,200 tons in Colombia, an exorbitant figure that is expected to increase to 42,800 tons by 2019.This certainly shows that the confectionary market in Colombia is huge and it is nowhere near to stopping, despite healthy trends that have emerged in consumers recently. Speaking more specifically, the market for Jet bars is chocolate bars. Estimated sales for this market oscillate around $505,800 million COP annually, with an expected growth of 24% by 2019.
As for the Jet’s producer, Nacional de Chocolates, its products take up to 62.7% of the market share, leaving competition far behind in this aspect, as Colombina (most direct competitor and closest in share) has approximately just 8.8 percent of the share. Out of the company’s percentage, the brand’s classic bar represents up to 45% of Jet sales, making it clear that it is a leading product in the market. (Portafolio). 23
Structure
Negotiation power from the buyer
It is really low because the product is cheap and the idea of Jet is that the majority of people can access to the product, so buyers cannot make negotiations if they buy high quantities.
Negotiation power from the supplier
It is really high because Jet depends of the cacao and if the sellers don’t want to sell for any reason it will affect the production. The same happens with the sugar. Suppliers can make some negotiations of conditions with Jet.
New competitor’s threats
It is really low because even thought our product is not really difficult to produce Jet has the advantage of the tradition. The chocolate market in Colombia have been growing so there are not a lot of entrance barriers that’s why a lot of international chocolate companies entered in the Colombian market.
Substitute products threats It is really high because in the Colombian market there are a lot of different candies that are of tradition like Bom Bom Bun and Frunas and the consumer and buyers can buy some of these products instead of Jet.
Competitors rivaly
It is really high because foreign companies are interest in the colombian market, but it doesnt affect us a lot because our tradition. The Price of chocolatina Jet haven’t changed a lot through the years. 24
Market share
Gaviria, J. GarcĂa, D. S. Villalobos, J. C. Rodriguez, M. C. (2017) Market share [Chart]
Nacional de chocolates has the majority of the market with 16 chocolate products, the next one is Colombina with 6 products, then Ferrero Rocher with 7.2% of the market and at the end is Mars with 5 products.
The conclusion is that Jet has a really good position in the market and that Colombian people prefer Nacional de chocolates’ products over other brands. 25
Consumption per capita
Gaviria, J. GarcĂa, D. S. Villalobos, J. C. Rodriguez, M. C. (2017) Consumption per capita [Chart]
In the consumption per capita Colombia has one of the lowest consumption of chocolate, that’s why Jet started to make exportations to other countries like Switzerland and EEUU. This is an evidence of the potential of the market outside Colombia that can be explored by Nutresa group, which is already found in a lot of latin american countries.
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Segmentation and target For this part, we established chocolate lovers, guilty snackers, occasional snackers and fitness watchers as our main customer segments within the marketplace. As a result, we obtained a better understanding of necessities, motivations and pleasures in common that exist across the chocolate market. The next table shows that division and classification:
Gaviria, J. GarcĂa, D. S. Villalobos, J. C. Rodriguez, M. C. (2017) Market segmentation [Chart]
However, the target is just focus on chocolate lovers and occasional snackers, since the others have some failures that make them less likely to be chosen. For instance, fitness watchers’ category has problems such as a high cost of entry and a light consumption, and guilty snackers do not represent a market with a high potential of growth and has a lack of participation in the current chocolate market, since its behaviour towards the product is not well defined. In contrast, chocolate lovers and occasional snackers have sales and benefits available, potential to grow and low entering costs that make them suitable for the targeting.
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Gaviria, J. GarcĂa, D. S. Villalobos, J. C. Rodriguez, M. C. (2017) Target [Chart]
Therefore, as it was said previously, the target marketing is conformed by people that identify itself as chocolate lovers. This type of customer is looking for a good tasting product that can provide a high level of pleasure. Hence, this segment has a heavy level of consumption guided by hedonistic actions. Furthermore, this kind of customers are seen in all the population and they can purchase the product from supermarkets and small or informal retailers. On the other hand, despite occasional snackers have a self-controlled consumption, they are looking with the chocolate the chance to satisfy their spontaneous craving. Additionally, the product is mainly obtained from informal sellers.
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Competitors As mentioned before, Jet chocolate bar competes broadly in the confectionery and specifically in the chocolate bar market. For this section, the two most relevant competitors are: Muu chocolate bar (direct) and Bon Bon Bum lollipop (indirect).
Direct Competitor: Muu
When it comes to competitors, the most direct one in terms of product and market share is Colombina’s Muu chocolate bar.
Colombina as a company was created in 1927, seven years after Nacional de Chocolates started operating, and has experienced consistent growth since. As for corporate culture, Colombina claims to be committed with sustainable growth as well as being customer orientated. Internationally, Colombina has significantly more presence than Nacional de Chocolates with operations in more than 45 countries around the globe. Despite that difference, the market share for chocolates is significantly lower for Colombina, with just around 8.8% of market participation.
Colombina (s.f.) Muu products portfolio [Photographies]
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Colombina (s.f.) Colombina logo [Illustration]
The product, Muu chocolate bar, is similar to Jet’s in size and simplicity. It is a milk chocolate bar that is commonly sold in a 12 gram size presentation, just as Jet’s. Distribution networks are also similar, as both products are intended to be affordable by most of the population given the income and are distributed through most of the national territory.
Marketing-wise, Muu’s strategies are not as strong as Jet’s. There are alliances with schools and some TV programs to distribute and promote the product among children, but not nearly as extensive as Jet’s marketing strategies.
Muu’s promotion strategies include:
• Promotion: Small advertising in magazines and TV ads.
• Product: 12 Gram milk chocolate bar. Non-premium product.
• Place: Most supermarkets, local stores, schools through alliances and other small retailers.
• Price: Very affordable to most of the population, non-premium pricing.
Indirect Competitor: Bom bon bum
When we talk about an indirect competitor within the candy market, Colombina’s lollipop product “Bon Bon Bun” appears as one of the most listened and referenced by consumers.
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This product has been established as one of most iconic
brands within Colombina, due to its great representation of the candy market and a close relation with its customers. Additionally it reflects the com company’s values such as teamwork and commitment by developing an inclusive work with its environment and employees. The great importance of this brand in the Colombian market has led it to obtain strategies with large international companies. One of these was with Unicef, which both companies developed a program to improve the situation of child poverty in the country.
In addition to the numerous advertising campaigns on the internet and television, Bon Bon Bun has managed to be a sponsor in major world-class events, such as the contract it had with one of Nascar’s cars. Hence, all this leads us to deduce that the marketing strategies of this product has been more extensive than those implemented by Jet, being an influential indirect competitor within national and abroad markets.
Colombina (s.f.) Bom bon bum logo [Illustration]
Bon Bon Bum’s promotion strategies include:
• Promotion: Sports events, TV ads, and small advertising in magazines. • Product: Average size lollipop with a huge variety of flavours.
• Place: Most supermarkets, local stores, schools through alliances and other small retailers.
• Price: Very affordable to most of the population, non-premium pricing.
Colombina (s.f.) Bom bon bum [Photography]
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Conclusion
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Marketing problem
Incoherence Although Jet has an updated strategy when it comes to managing social media, and a new style of images that are more according to the current trends for young kids, it has left aside the actualization of the main and traditional strategy: the album. When looking at the collectible stickers, the images and topics that are contained there are old fashion and are not congruent with the style managed in the web site and the social pages. Even further, despite the use of strategic alliances for different purposes, those alliances are not translated into the album, which could be a great advantage for alluring children into collecting the album again, since (as shown in the website) most of the active collectors are adults.
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S.W.O.T Analysis As a conclusion for all the information analysed and presented in the previous report, the following points expose the summary of the main insights found in the investigation of the product Jet chocolate bar, all of them divided by 4 categories: Strengths
Name positioning in Colombia, tradition, 2nd best company to work in, excellent distribution network, market share Weaknesses
Advertising, low album commercialization, quality conservation problems Opportunities Expansion, packaging, strategic alliances Threats
International competitors strength, consumption seasons (diet after vacation)
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Bibliography
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