Introduction
Arnott’s Biscuits Limited is one of the largest producers of biscuits and snack foods in Australia. The company was founded in 1965 as a single bakery and has since grown to be a multinational giant, with over 4,300 employees in Australia alone (“About Arnott’s,” n.d.). Arnott’s Biscuits owns several beneficiary companies across the world and provides more than 50 major products to Australian and foreign markets. The company’s yearly revenues are estimated at approximately 1 billion Australian dollars (“About Arnott’s,” n.d.). The purpose of this paper is to conduct a fact-gathering exercise and become familiar with the brand management strategies that take place at the supermarket interface.
The Company’s Mission/Vision Statement and its Application
Arnott’s Biscuits Limited does not have an explicit vision statement found on their site or in the media. Given its strong position and focus on the Australian market, however, it could be assumed that the implicit vision statement involves becoming the primary producer of food and snacks in the country. The company’s mission statement is as follows: “Creating moments of real connection for Australian families when they need it most” (“Mission statement,” n.d.). This mission statement is very old, existing since Arnott’s became an Australia-wide brand in the 1960s. It demonstrates two primary purposes of the company and its products – to create moments of real connection, with a specific focus on Australian customers (“Mission statement,” n.d.). This was accomplished in a variety of ways, most of which were associated with direct involvement with local communities.
The primary means of creating connection was through the provision of excellent biscuits and snacks, which could be used during breakfast and teatime with the family. Arnott’s Biscuits succeeded in that endeavour, as for many Australians, the taste of their cookies is associated with pleasant memories and experiences of childhood. The other way of creating experiences and being there for people when they need it the most is through hiring and supply chain practices. The company has made it a policy to purchase foods and materials from Australian producers while employing Australian workers (“Mission statement,” n.d.). In so doing, Arnott’s Biscuits supports local communities by creating jobs and keeping money inside the country, while establishing itself as a popular national brand.
The company positions itself as a major employer, getting brand exposure from its own workers as well as from businesses associated with its supply chain. Lastly, Arnott’s Biscuits indulges in corporate social responsibility practices with the help of Arnott’s Foundation. The charitable branch of the company engages in numerous activities throughout Australia, ranging from supporting children with cancer to endorsing education, reviving injured drivers and sponsoring the construction of beautiful gardens (“Corporate social responsibility,” n.d.).
Nevertheless, the principles announced in the company’s mission statement are not entirely applicable to the way the company positions its brand. Arnott’s Biscuits is a global company right now, supplying its goods to Asia, Europe and the US (“About Arnott’s,” n.d.). While the majority of the organisation’s income comes from domestic markets, the company has a long-term goal of reaching to other places around the world, in order to expand its market share. Such a goal requires a change in a paradigm from a nation-specific mission towards an all-inclusive statement that everyone could support (Hitt, Ireland, & Hoskisson, 2016). A Chinese, British or American customer would have very little interest in a product catering to Australia alone, which somehow found its way to the shelf of a foreign supermarket.
Therefore, while the principles of the brand’s vision and mission have been used to position Arnott’s Biscuits in the Australian market, they are directly affecting the company’s efforts abroad. In some ways, this influence is detrimental, resulting in a very small market share outside of Australia. For example, despite supplying distant markets of Europe and the US, Arnott’s Biscuits refused to establish local branches of the company in order to directly supply the demand in these regions. Instead, it relies on producing most goods domestically and ships them by air or sea.
As a consequence, the prices for Arnott’s goods grow considerably, making them less competitive when compared to Mondelez, which is one of the major opponents of Arnott’s both domestically and abroad (“About us,” n.d.). It is a company that is well-integrated into the global community and positions itself as such. While retaining a national and domestic flare in the US, which is Mondelez International’s largest market, it caters to large and small markets across over 190 countries, where it owns properties that satisfy the demand (“About us,” n.d.). Thus, Mondelez International’s brand positioning strategy has been, overall, more successful than Arnott’s.
To conclude, although Arnott’s Biscuits applied the principles of its brand mission statement perfectly, it requires updating to account for the company’s current goals. With expansion plans being underway and considerable efforts to make the brand name known outside of Australia, the company can no longer afford to cater to the domestic market alone. It needs a better, stronger and more inclusive mission statement. It can be speculated that the current conundrum is a direct result of a lack of a long-term company vision, as Arnott’s is making an effort to go global, while the company’s basic premise of a national-specific food and snack enterprise seems to contradict that purpose.
Customer Relationship Management Strategy
Arnott’s Biscuits follows a traditional customer relationship management (CRM) strategy, which involves cultivating a positive image through corporate social responsibility actions (Riley, Singh, & Blankson, 2016). The company makes heavy use of focus groups in order to determine their directions and gauge the possible reactions to their products. Arnott’s has a presence on the Internet in the form of a personal site as well as accounts in all major types of social media, including Facebook, Twitter, Instagram and others. These platforms are typically used to achieve brand exposure and advertise products as well as do various contests and giveaways. According to Arnott’s representatives, the company’s use of social media had been shrinking due to a lack of time and resources to encourage to the effort (Wallbank, 2017).
This tendency constitutes the outdated view of customer relations management that Arnott’s and many other Australian companies adopt. This results in spectacular failures of products as well as a deteriorating relationship with the younger audience, who have already replaced the older generations as number one spenders around the world. One of the examples of customer relations failures for Arnott’s Biscuits happened in 2016, with Arnott’s pizza shapes fiasco that led to the temporary removal of traditional flavours in favour of new ones (Hickey, 2017). After sales plummeted drastically, the old flavour was restored based on popular demand and demonstrated the weakness of the company’s current focus groups approach.
Before presenting pizza shapes, Arnott conducted a focused study in order to determine how well the market would react to the introduction of the new product. The study was conducted for a year and involved over 11,000 participants from all walks of life and indicated that the new flavour would be popular with the customers (Hickey, 2017). However, the scope of the study was wrong, as the company managed to gauge only the interest in the new taste and not the overall popular demand when compared to other products in their line-up. The public outcry against the removal of the old classic tastes and shapes reached the company too late and only after the revenues for the first quartile of the year confirmed the damage.
This incident represents the weakness of Arnott’s CRM strategy in relation to its target customer groups and social media. One of the primary benefits of social media is the ability to gather voluntary and detailed feedback about the company in real time. The focus groups method significantly lags behind, especially with the size of focus groups exceeding 11,000 people (Hickey, 2017). The information provided to Arnott’s was not only inaccurate because of the poor research question but also because the information was one year old by the time the surveys were done.
Brand Architecture of Arnott’s Biscuits
Arnott’s Biscuits follows a traditional “branded house” architecture, which is often implemented by companies that do not have a large number of extensions inside and outside of the domestic market (Riley et al., 2016). The branded house architecture involves the provision of a series of distinct products under the same brand name while sharing the overarching theme of the company. Since Arnott’s Biscuits specialise primarily in the production of biscuits and snacks, they differentiate the goods based on their names, while selling all of them under the same brand of Arnott’s. Some of the products sold in the company’s branded house include the following (“About Arnott’s,” n.d.):
- Arno shortbread;
- Chocolate dessert;
- Coconut rings;
- Iced animals;
- Milk coffee;
- Teddy Bear biscuits;
- Tim Tams;
- Water crackers;
- Yo-Yo.
As it is possible to see, despite offering a different palette of shapes, forms and tastes, all of these products can be classified as biscuits or snacks. Another reason why Arnott’s retains its existing brand structure is because the company itself makes a part of a larger house of brands, such as the Campbell Soup Company, which not only owns Arnott’s but also provides soups, sauces, beverages and broths (“About Arnott’s,” n.d.). Therefore, the choice of the company to focus on its own range of products directly associated with the brand name is prudent, as it prevents the dilution of the brand between Campbell, Arnott’s and any other subsidiary the company could have purchased in order to diversify its brand portfolio.
Mondelez International, which is a large multinational confectionary corporation, has a different type of architecture. Like Campbell, it is a house of brands, containing a multitude of separate sub-brands, all united under Mondelez’s patronage. These brands include Jacobs, Maxwell House, Milka, Nabisco, Oreo, Tang, Mayer, LU, Cadbury and many others (“About us,” n.d.). Therefore, the actual competition Arnott’s faces in the domestic market comes not from one, but from a myriad of Mondelez-associated products, such as Milka and Oreo. Together, these brands have the potential to form a much larger number of products to offer to the customer.
At the same time, Mondelez suffers from brand dilution in Australia due to having to differentiate between products of their brands. As a result, Arnott’s receives full exposure, whereas Mondelez’s individual sub-divisions cannot achieve the same. Lastly, Mondelez’s house of brands type of architecture creates a competition between brands, resulting in some of the products being slowly cannibalised by similar offerings provided by other branches of the same holding (“About us,” n.d.). While Mondelez is having difficulty competing in the Australian market, it has total superiority over Arnott’s outside of it, due to possessing a much larger brand exposure and market share. Therefore, while Mondelez cannot push Arnott’s from its home turf, it can effectively landlock the company at its present state.
Supermarket Visit Competitive Analysis
For this task, I visited 3 shops located in New Zealand, which included popular chain stores, such as Countdown, Pak’ n’ Save and New World. The observations for each individual store were the following:
- Countdown. The store has three shelves dedicated to cookies, out of which Arnott’s biscuits occupied approximately 1/3 of the entire available merchandise. The provided goods offer at least 7 different flavours in 35 packages. The average price for a box of 350 grams is 4 NZ dollars, placing it in the middle of its competitors with regard to the price range. The cheapest available product includes Countdown’s own bakery brand, offering a box of 350 grams for 2 NZ dollars. The closest Mondelez competitor brand, such as Griffin’s Cookie Bear owned by Cadbury (a sub-brand of Mondelez), is sold at 4 NZ dollars for a 320-gram box. There are no promotions for Arnott’s, but there are some for smaller local brands.
- Pak’ n’ Save. This shop has a smaller number of cookie shelves when compared to Countdown (two shelves instead of three). The section for Arnott’s cookies is larger in percentage comparison, but smaller in the actual representation of the product (4 flavours and 30 packages versus 7 flavours and 35 packages). Arnott’s merchandise occupies almost an entire shelf, with the rest of the space taken by various competitors. The average price for the company’s products is 3.28 NZ dollars per a 350-gram bag, which compares favourably against Mondelez’s Griffin’s Cookie Bears, which is sold at 4.29 NZD for a 320-gram bag. In this shop, the cookie section has no promotions either.
- New World. This shop has the largest cookie section available, with 4 shelves dedicated to cookies alone. At the same time, Arnott’s merchandise occupies the least space (only half of a shelf when compared to other two shops), with the number of cookies being roughly equal to Pak’ n’ Save, with 4 flavours and 30 boxes available to the customer. Other products included Pam’s Finest cookies, Ernest Adam’s Cookies, Cookie Time, Griffin’s Cookie Bear, I Love Baking and Naturally Good cookies, with the price range between 3.19 and 7.79 NZD. The price of Arnott’s and Griffin’s Cookie Bear (the main competitor) was equal, at 3.99 NZD for a box, with Arnott retaining a slight advantage in terms of value per dollar (350 grams vs. 320 grams). The company’s products have no promotions, but there is a sale for Ernest Adam’s cookies and Pam’s Finest cookies.
As it is possible to see, Arnott’s Biscuits is very popular in New Zealand, which forms the influence sphere of the Australian greater regional market. In all three cases, there is sufficient representation of the majority of Arnott’s main products in different flavours. The price is sufficiently competitive, providing a middle-of-the-line product both in terms of price and customer value. In most cases, the company is able to outperform Mondelez’s products both in terms of pricing and exposure. Although there is sufficient competition from Australia’s and New Zealand’s own local brands, these products are catered to a different price range, between 5 to 7 NZD, whereas Arnott’s cookies remain steadily between 4 and 4.20 NZD. The volume of available products indicates that the brand is well-known to the general population.
In all three stores, there is no promotion for Arnott’s products. Usually, promotional activities are initiated by the producer, which offers the retailer a batch of products at a discount on the condition of having a sale with prices reduced. This type of advertising tends to increase sales by a large margin. The fact that the company’s products do not have any promotions in all three stores could indicate that Arnott’s is neglecting its strategy to keep the brand popular, meaning that its competitors have a chance to claim additional market share and exposure as a result of such negligence.
Conclusions
Arnott’s Biscuits enjoys a relatively stable position as the leader of the Australian and New Zealand market, as evidenced by the press and the survey of the local supermarkets. They maintain a reasonably diverse offering of products and are popular with customers. However, the company follows an outdated customer relations management model and has issues with brand exposure and positioning outside of the country. The major competitor, Mondelez, is unlikely to move Arnott’s Biscuits from its dominant position in the Australian market but maintains a strong competitive edge in the surrounding regions. In order to be able to expand abroad, Arnott’s Biscuits would need to reprofile the company to fit an international agenda.
References
About Arnott’s. (n.d.). Web.
About us. (n.d.). Web.
Corporate social responsibility. (n.d.). Web.
Hickey, D. (2017). Focus groups are dead, thanks to social media.Mumbrella. Web.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts and cases: Competitiveness and globalization (12th ed.). Boston, MA: Cengage Learning.
Mission statement. (n.d.). Web.
Riley, F. D. O., Singh, J., & Blankson, C. (Eds.). (2016). The Routledge companion to contemporary brand management. New York, NY: Routledge.
Wallbank, P. (2017). Australian social media users go mobile and shun their dinner companions, Sensis finds.Mumbrella. Web.