Kraft Foods Presentation

Topics: Kraft Foods, Marketing, Maxwell House Pages: 5 (1483 words) Published: March 29, 2010
The product manager for coffee development at Kraft Canada must decide whether to introduce the company's new line of single-serve coffee pods or await results from the United States. Key strategic decisions include which target market to focus on and what value proposition to signal. Important questions are also raised as to how the new product should be branded, which flavors to offer, whether Kraft should use traditional distribution channels or direct-to-store delivery, and what forms of advertising and promotion to use. The case provides a basis for discussing consumer decision making, and stresses the importance of providing a clear incremental benefit when introducing a new product in an established category.

Decision Statement: Should Kraft have waited to launch the coffee pod in Canada until the company received results from the U.S.? Since they did a simultaneous launch, how can Kraft foods alter their marketing strategy to increase sales of the coffee pod?

Kraft Foods:
- Kraft Foods was originally began as a cheese manufacturer in 1903 & has since evolved into North America’s largest food and beverage company - Had previously been a division of Phillip Morris Companies but became a public company in June 2001 - Operations consist of Kraft Foods North America and Kraft Foods international - Business is divided into five product categories: beverages, convenience meals, cheese, grocery, and snacks. - One of the strongest brand portfolios of global consumer packaged goods players {text:list-item} {text:list-item}

- Strong distribution network and a well-earned reputation for developing innovative new products and food applications Mission: to achieve leadership in the markets it served, which it pursued by fostering innovation, achieving high product quality, and keeping a close eye on profit margins. - World leader in coffee sales with 15% of the global market; In Canada, Kraft’s Maxwell House and Nabob brands account for 32% market share.

The Launch of the Coffee Pod
In July of 2004, Geoff Herzog (product manager for coffee development at Kraft Foods Canada) found out that Kraft Foods North America was preparing an aggressive launch of coffee pods in the US. Herzog had less than a month to decide whether Kraft should proceed with a simultaneous launch in Canada, or await the U.S. results Herzog decided to go ahead with the launch  This is where we believe the problem arose Created the Tassimo

In order to Launch in Canada, Herzog had several decisions to make: Kraft owned two major brands in Canada, Maxwell House and Nabob, so the company would have to create a suitable branding strategy. Setting wholesale and retail prices for coffee pod

Choose which flavors to offer
Decide whether to use traditional distribution channels or direct-to-store delivery Develop an effective advertising and promotional strategy on a relatively limited budget Herzog would also need to present a convincing case that his plan and recommendations would in fact help Kraft expand its share of the Canadian coffee market, while also generating a satisfactory return on the company’s marketing investment. Marketing Strategy

With an annual budget of only $1 million for the launch, Herzog faced tight constraints on his ability to introduce Kraft coffee pods in Canada. He would need to identify a cost-effective way to convince consumers that Kraft pods delivered better value the competitors’ pods Goal: 80% of SSP machine owners to try the product; and 60% of those individuals to repeat purchase Herzog was expected to at least break even by the end of 2006 Target Market:

Individuals between 25-54, tended to be well educated and had a household income of $ 91,000 (Canadian household income...
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