market analysis for Nestle Crunch Ice Cream Bars operating in the frozen industry

market analysis for Nestle Crunch Ice Cream Bars operating in the frozen industry

Description:

I have completed a target market analysis for Nestle Crunch Ice Cream Bars operating in the frozen industry. The analysis compares the consumption rate among male and female in different age groups and ethnic groups. This analysis indicates that females are a more consumers of these frozen products in the American population.

In the 2rd part the work has mainly focused on positioning strategies that Nestle Crunch Ice Cream Bars is likely to apply. Considering that there are other competitors operating in the market it is necessary to develop strategies on how to dominate the market for long.

In the third part a representation of the brand analysis is done which involves the evaluation of the marketing strategy of the brand. This helps us to note that the company adopts a penetration pricing strategy and employs brokers and distributors for its distribution. At the same time the company ensures that promotion is done through the use of advertisements in the social and mass media.

The fourth part presents a number of recommendations for the improvement of the brand’s competitive position. The recommendations are essential in ensuring that once adopted the company can be able to achieve improved success in its sales as well as remain competitive in the market.

Executive Summary

This paper is an analysis of the Nestle Crunch Ice Cream Bars Target Market. The paper is divided into sections which facilitate the analysis of the market in a broader perspective. In part 1 the market analysis of the Frozen Treat Industry is done in order to provide a perspective of the market in which Nestle operates in. there are various factors that influence this industry ranging from social forces, economic factors, technological factors, and competitive forces. This need to be efficiently managed in order to ensure success of the overall industry. Further the second part evaluates the target market for the industry where it is evident that Nestle enjoys a wide market from the youth and young people. The next two sections involve the analysis of the brand as well as the recommendations for future improvement of the brand. These recommendations include creation of quality management platforms, setting clear priorities and resources as well as creation of healthier new products. With such strategies the company will not only increase their customer base but also increase their competitive advantage and boost their brand image. Therefore this study provides a significant basis for the improvement of the company at large.

Part1: Market Analysis of Frozen Treat Industry Category

Overview

In 2018, the market size of frozen dessert had a value of $93.7 billion globally and was projected to grow at 5.5% CAGR in the period forecasted. A primary reason for the market growth is the change in tastes of consumers’ taste and health consciousness, which led to increased demand for frozen dessert projects globally. The market is also driven by the introduction of multiple products that helps in meeting the needs of various groups of consumers and also increases disposable income. Sen et al (2019), says that frozen novelties and ice cream category have been tremendously growing and made 13.7 billion dollars last year. However, the category is expected to stagnate towards 2024. Dry fruits, a mixture of flavors, vegetable fats, and milk compounds are the components that make up frozen desserts.

The growth of the dessert market is fostered by an increasing trend where the product is considered an effective digestive ingredient. The rising demand of frozen desserts such as frozen yogurt and ice cream is also facilitated by climate change since customers believe that consuming these products helps in cooling their body temperatures in the hot climate (Sen et al., 2019). Frozen desserts sector in the US features numerous participants that have been able to extend the shelf life of different frozen desserts using latest technological advancements in plastic packaging, another factor that has contributed to the growth of the industry. However, the growth of the market is hampered by increasing health concerns, with many consumers preferring healthier options.

It is clear that the industry might stagnate in the near future despite its broad global market size after analyzing the Frozen Industry macro environment market. This is because the industry is on its maturity level. The industry operates in close competition with its competitors as there are no certain oligopolistic features and individual brands are also not that different (Ristoff, 2020). The fact that the company is enjoying economies of scales and is relatively mature, advancing from other factors is limited as are already exhausted. However, coming up with new products can be utilized as an entry strategy to frozen desserts industry. This will give new consumers’ experience and in the process get them to eat more frozen dessert foods. The below macro market environmental scan will depict the social forces, economic factors, technological factors, and competitive forces of the entire Frozen dessert industry in the US.

Environmental scans in the frozen industry

Social forces

Over the past few years, American citizens have become more concerned with eating healthy foods which has posed a major challenge to the Frozen industry. One reason that has sustained and seen the growth of the frozen industry is because of food taste, conveniences in the purchase, and preparation procedures (Sen, 2019). In general, some of the forces that have influenced the inclination of people to consumer frozen foods are sex, ethnicity, age, as well as income and educational levels. On the other hand, personal factors such as characters, outlooks, beliefs, and principles are also forces that influence an individual’s consumption habits. Families with young children are the biggest consumers of this type of food and they are the biggest client base. In this same regard, over 80% of consumers have recorded that eating healthy is simply not about balance but about avowing certain foods which means that they do not necessarily require frozen commodities like ice-creams to be hale and hearty diets (Kamp, 2020).

However, research has recorded a constant decline in their fertility rates which means that over the next few years, the number of children being born in the country will be on the decrease. This means that there will be fewer people consuming foods in the frozen industry and, thus it must reconsider measures to ensure that it stays in the market (Kamp, 2020). To achieve this, the industry must change the product packing styles, improve already existing products and think of new products that can serve the same purpose and the needs of the consumers.

Economic factors

According to Ristoff’s article, the disposable income of American citizens has caused a considerable shift in their consumption behavior (Ristoff, 2020). When the disposable income of citizens increases, the consumption shifts to healthier fresh products because they can afford them. On the other hand, Ristoff notes that since this trend is expected to continue growing, People will be more prone to go out to dinners because it will become affordable (Ristoff, 2020). Although higher-income has minimum impact on the demand for food, as the majority will prefer more convenient and high-quality foods (Sen et al., 2019). As a result, the Frozen industry needs to modify their products to create healthier foods in the frozen industry that will help capture the population and prevent the projected stagnation.

Technological factors

When thinking about technological factors in the frozen industry, the most significant components involve packaging and freezing. Some freezing techniques used to ensure that food in the frozen industry last longer without going bad include; Air blast, belt tunnel, and contact freezers. Then again, vital packaging techniques include antimicrobials, oxygen foragers, time heat indicators, eatable layers, and dampness control equipment (Sen et al., 2019). Commonly known, the quality of freezing and packaging technology goes a long way to ensuring that foods stay fresh for longer periods and is an essential factor that most consumers consider before making any purchases (Alexandre, 2013). As a result, more companies in the frozen industry are intensively investing in new freezing technologies, as well as more advanced processing technologies that will maintain and distinguish competitive products from each other.

To ensure that companies remain in business, innovations that involve using protein in frozen dessert courses are being created. Passport notes how “Since 2016, when Halo Top’s protein-packed low sugar ice cream first took the industry by storm, its dizzying growth has mesmerized observers” (Country Report, 2019). This is substantial proof that technology can and has been used to reduce the unhealthy impacts of freezing desserts. To ensure that the projection that the Frozen industry might stagnate in 2024, manufacturers are striving day and night to ensure that there is a variation of products with texture and taste to suit the diverse consumers’ needs. Although some scientists and doctors claim that freezing unavoidably affects the quality of the food products, dependent on the composition, physical properties, and shape of the commodity, manufactures can achieve effective freezing (Alexandre, 2013).

Competitive Forces

Depending on the market structure of a given country, key players in the business industry must make a key decision based on the prevailing market situation. Concerning the frozen industry, the market demand, size, predictions, and trends are some of the major aspects that affect the levels of competition and ultimately, how differentiated the products will be. Some of the areas that are alarming include; entrance into the industry as well as exit where competition is very stiff to both small and medium-sized companies. Since companies in this industry produce a variety of commodities to ensure that they remain in operation, no single entity can claim any significant market share which means that firms keep up with emerging trends and preferences. As a result, frozen food companies have been forced to invest more in branding and promotion to ensure that their clients only remain loyal to them and this has made entry into the industry a nightmare for most investors.

Figure 1: Market Attractiveness

From the figure shown above, it is clear that frozen ready meals have the biggest market attractiveness and growth when it comes to the frozen industry (National Research Council, 2015). Additionally, it is expected that frozen meat will have the second biggest market share in the United States and it will probably have the biggest growth rate over the next few years. This also implies that the industry is likely to see a rise in new entrants in the market. There also exists stiff competition between frozen seafood and frozen meat in the industry especially because they tend to act like substitutes for each other.

Although this industry has great and untapped potential, the market is expected to grow with a small margin of 2.9 billion annual growth rate (2%) because of the Corona Virus impact (Kamp, 2020). However, after the pandemic, over 35 billion dollars will be up for grabs ranging from 2021 to 2023 which means that we are likely to see a considerable increase in competition in the industry (National Research Council, 2015).

Part 2: Analysis of Nestle Crunch Ice Cream Bars Target Market

(Nestle Crunch Ice Cream Bars)

Segment and Targeting

1. Gender segmentation:

((MRI SIMMIONS database, 2017)

From the given data nestle crunch ice cream women responded more than men and their consumption of nestle crunch ice cream is higher than expected while that of men is low. Men seemed to not know even the brands of ice creams and thus they cannot tell which is best and which one they have consumed.

2. Age segmentation

(MRI SIMMIONS database, 2017)

Youths prefer consuming nestle crunch ice cream more than people over 35 years. Youths were 38% more likely to prefer nestle crunch ice cream while old people above 65 years were 50% less likely to prefer nestle crunch ice cream maybe form diseases associated with old age they have medical recommendations on using ice creams.

3. Race segmentation:

(MRI SIMMIONS database, 2017)

Based on race blacks or African Americans have a very high preference of nestle crunch ice cream they prefer this brand with 152% preference. Asians are the less race who are likely to prefer this brand of ice cream. Whites are also less likely to prefer this brand but not with a big percentage considering the big sample which responded.

4. Income segmentation:

(MRI SIMMIONS database, 2017)

The more the income the less the likeliness of nestle crunch ice cream consumption. Those who earn less are the more likely to prefer nestle crunch ice cream brand with more than 100% preference.

5. Regions segmentation:

(MRI SIMMIONS database, 2017)

From the census data people from the west are more likely to prefer nestle crunch ice cream with 30%. While people from Northeast region are the do not prefer this brand their preference of nestle crunch ice cream is less with 51%.

Nestle crunch ice cream Positioning:

Nestle’s ice cream shop busines attracts young people aged 18-34. Nestle crunch ice cream bar, as a brand that will operate in the fierce competition market, will take pricing as a positioning strategy. The brand will sell high quality products at standard prices so that customers can afford it. This strategy may attract more customers who pay more attention to product quality. Quality and pricing are a key component that distinguishes brands from other distributors operating in the same market (Madigan, 2020). This approach is likely to give Nestle crunch ice cream shop a competitive advantage over other similar enterprises. Pricing will be seen as the customer has analyzed the revenue level of many potential customers. For all young and old people who like ice cream products and want to quench their thirst every day, Nestle crush ice cream bar is the most suitable place to go. The brand will offer the best products on their menu. The brand aims to ensure that all customers can enjoy and enjoy the ice cream at a reasonable price.

Part 3: Brand Analysis for Nestle Crunch Ice Cream Bars

As noted the Nestle Crunch Ice Cream Bars main aim is based on selling products that are of high quality. This is in consideration of various factors that are evident in the market considering the issue of health and consumer behavior. For instance consumers recently have been looking for healthier foods which has significantly affected the sales of frozen food industry. Customers are filled with the thought that frozen food are of low quality and unhealthy. With such challenge the Nestle Crunch Ice Cream Bars business is faced with a significant challenge of getting more customers. On the other hand there issues to do with diet friendly products which are significantly affecting the business. At the same time there are various anti-sugar movement championed by major organizations such as WHO and FDA on low sugar intake and reduced calorie intake, consumers have been turning away from the frozen food products. (Throsby,2018)

For the Nestle Crunch Ice Cream Bars pricing is an important factor in ensuring that there is success of the overall business and product. Considering the fact that the brand is aiming at selling high quality products then creating the most appropriate price for the products is paramount. In the pricing process the company managers considers a number of factors in order to ensure that they arrive at the most appropriate price for the products. For instance the type of target customers as well as their level of earning is of great consideration. Considering the fact that the business faces considerable level of competition from other providers then the company assumed penetration pricing strategy. In this case the prices are set lower than the normal selling prices in an effort of attracting more customers and infiltrating the market. With such a strategy, broader audience will be appealed by the products and the market share of the company will be increased. At the same time the company aims at introducing new menu items and products into the market, this will therefore serve as an important strategy for the company to ensure that the customers are comfortable with the new product and that they can purchase them at ease without much draining of their pockets. Customers therefore directly relate with their price to quality and the fact that their products are ego intensive and technology based. (Winrow,2010) Being a company that emphasizes on the quality of products the company sells its products in prices that are affordable to all.

One of the important consideration of the company is the fact that the company aims at creating products that respond to customer needs and expectations. From the creation of high quality products to the employment of significant pricing strategies the company will ensure that the customers have a prestigious product that they can purchase. However one of the significant issues that arises after the production is the issue of distribution. In this case Nestle Ice cream Bars is faced with the need of delegating its responsibilities to third parties so as to ensure that the product reaches the market. There are various strategies that the company adopts in the process of ensuring successful sales of the product. One way will be through direct sales, which involves directly communicating with customers. With this strategy the manufacturer are able to know the customer preferences Further the company also employs the role of brokers and distributors. The main brokers and demands and therefore improve the product in consideration of these issues. distributers are mainly small vendors and supermarkets.

For the Nestle Crunch Ice Cream Bars both point of sale merchandising and promotions through advertisements are effective strategies of ensuring that the products are effectively marketed. The point of sale merchandising is effective strategy in the case where the products are in the supermarkets and for the small vendors. Customers will be able to see the product and purchase them. However promotion is the most appropriate strategy in this case. This is because, Nestle Crunch Ice Cream Bars operates in the food industry and customers are mainly attracted to food via their tasted. Since customers will not be able to determine the value of the product until they taste them then, promotion acts as the most effective strategy of ensuring that the customers have knowledge of the products they want to buy. Also it will be aimed at making sure that customers can choose to buy the products once they hear or see them being promoted. (Išoraitė,2016)

For the Nestle Crunch Ice Cream Bars the most effective promotion strategy that the company used is through the use of advertisements mainly in the internet and mass media. However there are other strategies such as magazines and push notifications. The company main customers are the youth and young adults. Considering the fact that most of the young people are interested in the use of the internet and social media as well as watching movies and televisions programs, these two promotion strategies deem to be the most efficient for the business. With such methods the company will be able to reach a wide range of customers with the promotions and thus increasing their sales. Via the social media the company employs the use of popup adverts and YouTube videos as well as email messages. On the other hand for the case of mass media the company will partner with television companies to include their adverts. Though these strategies are always very costly they deem to be the most significant in this case considering the target customer and the market available for Nestle Crunch Ice Cream Bars. It is important to note that the company focuses on both push and pull strategies of promotion. In this case the push strategies maximizes the use of all available channels of distribution to push in the market place. On the other hand the pull strategy involves the use of direct interfaces with consumers and therefore thus focusing on advertising that the available methods of distribution.

SWOT

Part 4: Brand Recommendation for Nestle Crunch Ice Cream Bars to improve its competitive position.

There are a number of ways that the company can adopt in making sure it improves its brand image and remain competitive in the market as well as increase the number of customers. One of the ways is considering the fact that customers are aimed at consuming more healthy foods the company should ensure that it produces high quality products by employing the most efficient, clean and healthy strategies of production, packaging and storage. (Throsby,2018) At the same time considering the fact that the customers need to consume diet friendly products, the company has a responsibility of creating products that will deem sufficiently healthy and diet appropriate for their customers. Therefore the company will ensure that their products are of low sugar content and thus help in luring customers. At the same time the manufacturer needs to create products that are in line with the WHO guidelines on healthy foods in order to make sure that they earn the trust of customers and thus maintain their competitive position in the market.

In ensuring that the company achieve successful competitive advantage in the market there are a number of factors that are of consideration in this case. For instance the company needs to have a quality management platform that will solve their global needs of guaranteeing food quality, safety and compliance with the quality standards as well as creating value to all the consumers. At the same time these quality management standards should be verified and certified in an effort of ensuring that they adhere to the conformity standards internationally. (Madden,2012) With such a strategy in place, it is important to note that Nestle Company will continue to create confidence with its customers and therefore they will be able to purchase more products from them. Similarly ensuring conformity with the international standards enables the company to avoid various forms of lawsuits due to quality issues. However there are some limitations associated with such a strategy such as the issues to do with the costs of certification as well as the establishment of the platform. At the same time coming up with such a platform is a tedious process which might take time to establish. However despite these limitations the overall advantage of the strategy cannot be foregone and therefore the company ought to invest in adopting it.

To increase growth, Nestle is faced with a significant responsibility of ensuring that they set clear priorities and allocating resources to activities that are of the most value through the use of efficiencies and growth. For instance the company needs to invest in high growth categories and geographies. There are various areas in the market that indicate significant chance for growth. These areas include nutrition, water and coffee. Study indicates that there are high chances of growth in market on these areas and that investing in such areas will serve as a significant opportunity for the promotion of brand and increasing the competitive advantage. At the same time considering the areas with the most number of customers is very important. These areas not only help in improving the revenue of the company but also provide a wide range of opportunities for advancing the business. With increased emerging market the company will be able to improve sales and thus increase its revenue. Similarly investing in areas such as e-business through digital marketing and ecommerce is an efficient strategy of ensuring that sales will grow significantly. Further increased direct consumer interaction is important in making sure that the company understands the needs and requirements of the customers and thus come up with products that are in accordance with what is required in market. From the available strategy though this proves to be one of the ways of ensuring increased success of the business it is doomed to be affected by a number of issues such as wide range of needs which are hard to cater for as well as increased costs of improving these areas.

From the prior evaluation it is evident that there are various health related issues in regard to the quality of food products. People are being encouraged on avoiding consumption of too much calories and sticking on to the consumption of healthier and natural foods. This as noted earlier is a big blow to the frozen food industry whose main products are sweet and sugary foods. However in order to ensure that they adhere to these recommendations and attract more customers through the provision of the what they require, there are a number of strategies that Nestle needs to employ in this case. For instance, needs to produce more products that are not only suitable for the youth but also for all people especially the elderly. (Throsby,2018) These include foods rich in vitamin, and proteins. Such products include milk and cereals which can be used by the people as daily food products. At the same time they should come up with new products that are organic in nature which the health conscious people can consume and therefore tapping all round customers. At the same time with the increased cases of obesity in the society it is important to produce chocolate bars which have reduced sugar content thus facilitating reduced cases of obesity. Further new healthier products such as energy drinks are needed which can be consumed by a wide range of customers such as students and people that engage in active physical activities of the daily basis. However this strategy is limited in the sense that the processes involved in the creation and introduction of new products in the market are very complex. At the same time customers might take some time before accepting new products and this might affect the sales as well as the revenue of the company before the product is fully accepted. It is also important to consider the costs of the processes during the introduction of the new products in the market.

References

Alexandre, E. M., Brandão, T. R., & Silva, C. L. (2013). Frozen food and technology. Advances in Food Science and Technology, 123, 123. IBISWorld industry report C10.850

Country Report (2019, September). Ice Cream and Frozen Desserts in the US. IBISWorld industry report 31152

MRI SIMMIONS database. (2017). 2017 annual report. Retrieved from     https://simmonsinsights-com.proxyau.wrlc.org/essentials/crosstab

National Research Council. (2015). A framework for assessing effects of the food system. National Academies Press.

Ristoff, J. (2020, May). Frozen Food Production in the US. IBISWorld industry report 31141

Sen, S., Antara, N., & Sen, S. (2019). Factors influencing consumers to Take Ready-made Frozen Food. Current Psychology, 1-10. Retrieved from Mintel Oxygen Academic database.

Kamp, K. (2020, April). Ice Cream and Frozen Novelties: Incl Impact of COVID-19 – US – April 2020. Retrieved from Mintel Oxygen Academic database.

Part 3 4 5 references

Išoraitė, M. (2016). Marketing mix theoretical aspects. International journal of research granthaalayah, 4(6), 25-37.

Madden, T. J., Roth, M. S., & Dillon, W. R. (2012). Global product quality and corporate social responsibility perceptions: A cross-national study of halo effects. Journal of International Marketing, 20(1), 42-57.

Throsby, K. (2018). Giving up sugar and the inequalities of abstinence. Sociology of Health & Illness, 40(6), 954-968.

Winrow, B. P., & Johnson, K. (2010). Minimum Price Maintenance Agreements and the Premium Pricing Strategy. Journal of Legal, Ethical and Regulatory Issues, 13(1), 75.