Market overview
Packaged cookie market in the US is in two categories: cracker and cookie manufacturing. This market was estimated at $3.3 billion in 2008 by AIB International.
Most sales are made through:
- Grocery stores
- Convenience stores
- Drug stores
- Mass merchandisers
This presentation will cover the following areas:
- Major firms in the market
- Their positioning within the market overall segmentation
- Strategies for used in the marketing
Firms in the market
- There are 56 manufacturers of chocolate chip cookies at the national and regional level
- Market is fairly saturated and therefore prospect for new firms entering the market low
- The market leader is Nabisco with its Chips Ahoy brand and sales of approximately $1,309,852 in US and Unit sale of 441,833,000.
- Nabisco is followed by Kebbler with Chip’s Deluxe brand cookies and sales of $392,136,100 and unit sales of 139,049,100 in 2008.
- The third largest cookie maker is Pepperidge Farm with the soft baked brand cookies and sales of $233,647,500 and unit sales 72,670,210.
Segmentation of the market
- This industry is driven by impulse purchasing of consumers and therefore, marketing strategy that is appealing very is important.
- Also 80% of purchases of cookie are made by women but children are the end consumers who have a strong influence on the brand to be bought.
Target consumer
- These are children of 12 years and below from families with different demographic, personality and value beliefs.
- This provides a broad segment.
12 years and under segment
- They buy through their parents and their wants are a sweet and tasty cookie while the parents wants portability and satisfaction of their children’s wants.
12-24 years segment
- They tend to be loyal to products consumed as children
- They are also sensitive to price.
25-55 year segment
- Have wants of quality taste and nutrition value of the cookie products.
- They may be buying for themselves and children therefore buy multiple products.
55 years and over segment
- Have wants of quality taste. They use the product as desserts or as an accompaniment for coffee. They tend to consume cookies in social setting where they are shared.
Market positioning of the firms
Nabisco
- It positions itself as a leader in sales and market share for packaged cookies.
- It uses price segmentation measure with the middle income families where it positions itself as moderately priced with a moderate above moderate taste.
Keebler
- Also positions itself as a leader in sales and market share for packaged cookies using price segmentation measure as with Nabisco.
- Also positioning as premium taste moderately priced option.
- Their prices are lower than Nabisco which creates a perception that it is less desirable than its competitor.
Pepperidge Farm
- It Positions itself as a premium alternative to its two competitors above.
- Products are at a higher price with a perceived quality addition to the product.
Marketing mix
Place
- All three companies have similar products and packaged the same way.
- They also have same distribution channels: grocery stores, convenience stores, drug stores and mass merchandisers.
- All the products are put in shelves at the same place in these stores and in the check out counter in small packages.
Price
- It is different for the three companies, which influences demand.
- Nabisco tries to maintain the prices above those of generic products while remaining competitive with the moderately priced brands.
- Keebler uses the same pricing strategy with Nabisco and tries to compete with it on prices.
- Pepperidge Farm uses price differentiation as a way of competing with Keebler and Nabisco.
- It uses higher prices to detach itself from generic cookies and imply a higher quality than its two major competitors
Promotion
- Nabisco currently spends $18.8 million in advertising its Chips Ahoy brand cookies in advertising in the media while Keebler uses $3.3 million for its Chips Deluxe brand cookies.
- In relation to market share of the entire industry, Chips Ahoy has 9% and Chips Deluxe a 3.4 % share.
Market strategy
Nabisco
- It mainly targets children 12 years and under.
- They market by offering moderate prices so as to make them insignificant to parents who buy them.
- It also relies on its strong brand name for the parents; advertisements targeting children which puts emphasizes on taste; and children video games free from the Nabisco website make them more attractive to children.
- Glossy packaging meant to catch the eyes of younger consumers are also used.
- Chips Ahoy products are also available in different packaging meant to suite different needs of portability.
- Brand loyalty strategy is used on adult market segments.
Keebler
- They primarily target children of 12 years and under like Nabisco in shiny brightly colored packaging.
- Prices offered are point moderate but still higher to distinguish from generic cookies
- The also use the Keebler Elf or Elves icon in advertising portrayed as making cookies better. This is to create a special mentality on their products.
Pepperidge Farm
- Mainly targets the adult segments of 25-55 and 55 and over.
- Uses high prices to differentiate it and soft baked cookies as premium products.
- Soft backed cookies are portrayed as an indulgence product.
- Uses their web also in marketing where a quiz is provided for determining the customer taste in cookies and best drink pairings.
- This puts soft baked cookie on the high end market where consumers are quite refined.
Perceptual mapping
This helps in building a marketing and positioning strategy for a brand. This uses the price and quality dimension. Choice of cookie in US is determined by the taste preference and price of the cookie.
In our study we have considered the following cookie brands:
- Soft baked cookies from Pepperidge Farm
- Chips Ahoy from Nabisco
- Chips Deluxe from Keebler’s
- Little Debbie from Mckee Foods
- Grandma’s cookie from Frito-lay’s
- Consumers perceives Pepperidge cookies as high quality and high price than the rest of the products.
- Nabisco ranks lower position in perception of high quality and price which makes its products more desirable.
- Keebler is viewed by consumers as providing a higher quality as well as higher price.
- Mckee Fods is viewed as a high quality low price due to its association with homemade formula.
- Frito-lay is perceived in the class of Nabisco of high price and high quality.
Conclusions and recommendations
- Packaged cookie market is stable but lack in growth and therefore a new firm has low possibility of entering.
- The existing products have considerable loyalty from consumers
- There exists an untapped market of young adult between ages 16-24 consisting of high school and college youths.
- The only shortcoming with this is product short cycle as “fads” influence the target consumers a lot.
