Kit Kat was launched in 1937. Since then, it has consistently been one of the best selling chocolate bars on the market and has acquired an instantly recognisable brand name and identity. In 1997, British sales of Kit Kat amounted to some £227 million, which made it easily the most popular confectionery product on the market. Forty four Kit Kats are consumed every second in the UK! The UK confectionery market is worth over £5 billion per annum and is highly competitive. It continues to be dominated by large, wellestablished names - highlighting the importance to firms of creating brand identities for their products. Once created, however, a brand name needs constant maintenance. Kit Kat’s ability to remain a brand leader over sixty years is no accident. The long term maintenance of a brand name requires continuous monitoring and investment. Brand image must be seen as a dynamic, not a static factor; the same consumer perceptions that create brand loyalty can also turn against a product that fails to adjust and adapt to changing attitudes. This case study focuses on Nestlé’s Kit Kat and the long term brand name maintenance strategies which have sustained Kit Kat’s position as a market leader for over sixty years.
What is a brand name?
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. Nestlé 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.
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. Objectives What is the company trying to achieve? In which direction are we headed? Strategy Tactics How can we get there? What specific actions need to be taken, by whom and when? How can we judge whether we are being successful in achieving our objectives? How do we measure our success or failure?