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PESTLE Framework Factors

Produce an analysis of the macro-environment for the core brand and the new product. Do this by choosing 3 major external factors of the macro-environment from the PESTLE framework. Discuss current influences from each of these 3 factors which could help or hinder the progress of this business.

Macro Environment

In the recent past, the national government has played important role in shaping the overall social inclination toward vegan food. Government spokespersons had recently equated the adoption of vegan foods with the target of reducing Hazardous Greenhouse Gases by 78% within 2035-36 (Murphy 2021). Moreover, the government has urged restaurants to substitute a significant percentage of the traditional items with vegan offerings (Murphy 2021). 

The overall initiatives by the government can be considered among the enabling factors for Nestle and Kit Kat V, the latest offering from the group. The alignment of the nation’s sustainable goals and the overall consumption of vegan food should ideally create favorable consensus among the target group of customers. The initiative to accelerate the adoption of vegan foods among the consumers can also be considered a strategy to shape overall consumption habit. Therefore, the favorable initiatives and approach by the government should ideally provide Nestle with the scope of distributing the product among a broad demographic. 

The vegan confectionary industry is estimated to grow at a steady rate in the coming years. Relevant research suggests that the global demand for vegan confectionary would cross $ 140 billion within 2028-29 (Grand View Research 2021). The average annual growth would be CAGR 15% approximately during the period (Grand View Research 2021). The overall chocolate and confectionary market size in U.K. has been estimated to reach $ 3.7 billion during 2022-23 (Ibisworld 2021). The overall chocolate and confectionary manufacturing in U.K. is estimated to grow by 6% during 2022-23 (Ibisworld 2021). 

The overall scenario reflects certain favourable factors for Kit Kat V. The global demand for vegan chocolate would accelerate the worldwide revenues of the product. Moreover, the assessment of the national confectionary market reveals positive trend, in terms of growth, demand and production. The data indicates that Nestle would have a platform to leverage the demand and further strengthen its overall brand value and reputation. 

The purchasing habit of the consumers is shifting significantly. In U.K., the millennial particularly adopt the vegan culture as a healthier alternative to traditional confectionaries (Ettinger 2022). One of the factors behind the adoption of vegan alternatives is the rising trend of lactose intolerance among a significant percentage of the consumers. Moreover, the consumers are prepared to invest premium amount to acquire high-quality vegan confectionaries. However, a recent survey by Mintel during 2019-20 has revealed that the transition from dairy chocolates to non-dairy vegan alternatives is still at a nascent stage in U.K. (Mogelonsky 2019). Approximately 80% of the surveyed consumers have revealed that they prefer milk chocolates (Mogelonsky 2019). 

The overall social dimension indicates that the changing purchasing and consumption habit of the consumers would complement the growth of Kit Kat V. The brand could leverage the overall inclination toward healthy alternatives among the potential consumers. However, the survey reveals that the rate of conversion to vegan chocolates has scopes of improvement. The shift would gain momentum in the long run. Therefore, Nestle can concentrate on an optimal combination of the milk chocolates and the vegan offerings.

Government Initiatives

Identify one customer profile of the core brand. Use secondary research to show evidence of who the target market is for this new product. Then describe what a typical customer for the core brand looks like using behavioural, demographic, geographic and lifestyle segmentation and explain whether the target audience for this new product would be the same or different from the current customer profile, and in what aspects. 

The core brand value of Nestle has been based on high value, in terms of nutrition and affordability (Nestle 2019). Traditionally, teenagers have been among the primary target consumer segments of the brand (Nestlé 2022). Some of the fundamental dimensions of the core consumer profile can be assessed, in this context. 

Nestle has focused on affordability. The brand has traditionally targeted consumers who prefer high value-for-money (Singh et al. 2021). Therefore, the target demographics of Nestle are consumers who are value conscious and belong to the middle and upper-middle socio-economic classes. In case of teenagers, the parents are often the final decision-makers. Therefore, the products are offered to consumers who match the socio-economic dimensions. 

One of the primary behavioural characteristic of the customer profile is to consume products that are delicious (Nestlé 2022). Moreover, the customer group often has limited access to financial resources. Therefore, they tend to choose products that are affordable. Moreover, the parents, who play an important role in the purchase decision, prioritise the nutritional aspects of the food products. Nestle has managed to combine all these aspects to appeal to the customer profile. 

Nestle has traditionally targeted a broad consumer base, in terms of geographical segmentation. The core brand has consistently appealed to both urban and rural customer segments (Nestlé Professional 2022). The brand has extended the broad geographical appeal to the children as well. 

The core customer profile, in this case, is the teenagers. The emergence of pandemic has significantly impacted the lifestyles of this particular customer profile. The age group relies on the information obtained through popular social media platforms (Smart 2022). There has also been a significant increase in the amount of the spent indoors. The customer segment tends to influence their parents or avail products independently, based on the information through reliable digital channels. 

In case of Kit Kat V, the target customer profile would shift, compared to the aforementioned segment. According to a recent survey, approximately 60% of customers have shared an inclination toward vegan food products (Buxton 2022). The consumers, in this case, belonged to the Millennial and Gen Z age groups. In U.K., over 40% of the Millennial and Gen Z customers have shared an inclination toward vegan chocolates (Buxton 2022). The age group, in this case, ranges from 7-38 (DIMOCK 2019). Therefore, Kit Kat V should ideally appeal to a broad age range. The rationale and core motivational factors for this age group can be assessed in this context. The young adults have been among the most proactive groups who have shifted toward sustainable food products (Buxton 2022). 

The demographic group is health conscious and aspires to maintain a sustainable, healthy lifestyle. Moreover, the age group is generally financially independent and has clear perception about desired product attributes that match their lifestyle and values. Kit Kat V is ideally positioned to leverage the specific demand among this broad age group. The core focus group would be the financially independent young adults. The age groups can also be influenced to purchase the healthy confectionary alternatives for their family members. Therefore, the scope of frequent purchases is also high among this target group. 

Global Demand and Production

Produce two perceptual maps that show the positioning of the core brand you have chosen and at least four other competitors.  One map must have the axes ‘price’ and ‘quality’, the other needs to have different axes of your choice. You cannot do ‘price’ and ‘quality’ again. Define each of your axes and explain why you have positioned the core brand and its competitors in the way you have.

Perceptual map of price and quality

The perceptual, map, in this case, focuses on Cadbury Plant and the range of vegan chocolates by Lindt. The analysis of the pricing strategy reveals that Kit Kat V has implemented a strategy of lowering the perceived cost of the consumers.  Cadbury Plant, on the other hand, is offered at ? 2 per unit (Kaur 2021).  Product attributes and value proposition shape the quality of a brand. The overall quality offered by the three brands is comparable. Moreover, the brands offer similar value proposition. Each of the brands promises sustainable alternatives to traditional dairy-based products. Therefore, neither of the brands adds any significant aspect to enhance the perceived value propositions of the brands. Therefore, it can be inferred that the pricing strategies have been moderated to appeal to distinct consumer segments. Kit Kat V has focused on a cost-leadership strategy by minimising the prices of the product and encouraging frequent purchases (Kharub, Mor and Sharma 2018). Cadbury Plant, on the other hand, has targeted the consumer segment that associates high price with premium quality. Lindt has also targeted consumer segments that are prepared to invest premium amount for perceived high quality. The target consumer base of Kit Kat V are comparatively more value conscious. They prefer to accommodate the price of the products while assessing the net value of the offerings. Therefore, Kit Kat V is positioned as a brand that promises to combine the attributes of comparative low price and high quality. 

Perceptual map of Kit Kat V

The two competitors in this case are Galaxy and Mars. In terms of variety, Galaxy has introduced three prominent vegan flavours including Hazelnut, Sea Salt and Orange (Galaxy 2022). The brand has collaborated with prominent e-commerce brand to expand the overall distribution channels. Moreover, Galaxy has introduced the vegan flavours across Asda and Sainsbury’s (Galaxy 2022). Mars has forayed into the vegan segment through three prominent flavours including Hazelnut and Bounty (Woolfson 2021). The vegan variants are available in Morrison’s and Asda supermarkets (Woolfson 2021). Kit Kat V, on the other hand has been introduced exclusively in the Sainsbury’s chain initially.  Moreover, Kit Kat V has focused on one particular variant to enter in to the vegan segment. In this context, the positioning of the three brands can be assessed, based on availability and product variants. Galaxy has the highest penetration in terms of distribution channels. The brand is available both in the digital and brick-and-mortar channels. Mars, on the other hand, is limited to the brick-and-mortar channels in the initial phase. However, both the brands have introduced similar range of variants in the introductory phase. Kit Kat V, on the other hand has focused on a single vegan variant so far. Moreover, the availability of the brand is also limited, compared to that of the competitors. Therefore, the analysis indicates that consumers would perceive the competitors as more accessible. Moreover, the consumers of Galaxy and Mars would have more flexibility in terms of alternatives or product variants, compared to Kit Kat V.   

Changing Consumer Habits

Use Ansoff to show how the new product line fits within one of the growth strategies for the core brand. Explain, why is this growth strategy the right action for the brand to take.  Briefly explain the marketing mix (4Ps) for this growth strategy and how it will help to achieve growth.

Nestle has adopted product development strategy, in case of Kit Kat V. According to Ansoff’s matrix, product development strategy entails introduction of new product to one of the existing customer segments (Kalogiannidis and Mavratzas 2020).  Nestle would potentially target the millennial and the Gen Z customer segments through the new product offerings. Both of these customer segments have been part of the customer portfolio of Nestle, over the years (Nestle 2019). Research reveals that vegan chocolates are among the emerging trends among the target age groups (Buxton 2022). This context indicates that the strategy of offering the new product has been ideal. The emerging trend would ensure sustainable revenues and demand for the products. 

The theoretical framework recommended by Ansoff posits that product development is generally associated with low to moderate degrees of risk (Kalogiannidis and Mavratzas 2020).  The strategy implemented by Nestle can be assessed in this context. Millennial have traditionally been among the core consumer segments of the brand. Therefore, the brand management infrastructure of Nestle is already equipped to understand the core values of the customer group. Promotional and distribution strategies should ideally be aligned with the preferred touch points and motivational sources of the target customers (Hanaysha 2018).  The prior knowledge regarding the shared values of the millennial and Gen Z would serve as a source of competitive advantage for Nestle while designing the promotional mix for Kit Kat V. Therefore, the risk is minimised as Nestle would primarily cater to a familiar consumer segment. Overall analysis reveals that the product development strategy has been ideal. 

Product

Kit Kat V is a vegan product sourced from completely sustainable cocoa (Nestlé Global 2021). The milk has been substituted by a non-dairy ingredient. The product has retained the original taste and texture. The added value, in this case, is the sustainability factor and the usage of healthier ingredients. One of the key attributes is that Kit Kat V would suit the preferences of consumers who are lactose intolerant or avoid dairy-based products. 

Price

Kit Kat V has been competitively priced. The competitive pricing, in this context, has been an extension of ensuring high value-for-money and affordability, which are the core brand attributes of Nestle (Nestlé Global 2021). The pricing strategy has been designed to complement high volume and frequent purchases among broad consumer demographics. 

Promotion

Nestle has adopted a multichannel promotional strategy to launch Kit Kat V. The product has been promoted through the official website of Nestle (Nestlé Global 2021). Moreover, the popular global audio-visual media has been used to promote the product. The overall strategy is aligned with the objective of high visibility and brand awareness. 

Placement

Nestle has adopted a selective distribution strategy for Kit Kat V. In the initial phase, the brand has been launched exclusively in Sainsbury’s brick-and-mortar and digital stores (Nestlé 2022). The expansive presence and availability of Sainsbury’s would complement the strategy of high visibility of the product among target consumers. However, the strategy has certain scopes of improvement. Nestle can expand the distribution through other established superstores and e-commerce chains to enhance availability. 

: Buyer Behaviour

Using the new product, you have chosen, describe each stage of the buying process and how consumers might interact with the core brand. Include relevant sources to support your analysis of the customer journey. 

Brand perception and product attributes shape the awareness stage of the consumers’ journey (Klein et al. 2020). From the perspective of Kit Kat V, the brand reputation of Nestle would be one of the motivating factors. Moreover, the product assures sustainable alternative to traditional chocolates (Nestlé Global 2021). The awareness, in this context, depends on the efficacy of the promotional activities. The new product launch has been significantly highlighted across prominent promotional media (Kaur 2021).Moreover, the multichannel promotion by Nestle has been designed to draw attention of the target consumers. Therefore, Kit Kat V would rely on the promotional vehicles of the brand and word-of-mouth publicity of the new product launch to develop concrete awareness. The brand touch points, including digital and traditional media, would inform the distribution channels, product attributes, price, among other aspects. 

During the consideration phase, a typical customer would compare the product attributes with that of the significant competitors. The range of parameters includes product attributes, price, and availability, among others. From the perspective of Kit Kat V, Cadbury Plant is among the most established competitors. Both the products offer similar attributes and contain comparable ingredients (Kaur 2021). Moreover, both the brands have followed similar distribution channels by primarily focusing on Sainsbury’s (Kaur 2021). However, the offering by Cadbury is comparatively higher priced. Therefore, the consideration and eventual preferences of the customer would depend on the behavioural attributes. The customers would obtain feedback through the digital brand touch points, secondary information sources. Moreover, the customer can also compare the products by visiting the brick-and-mortar stores. A customer who prioritises value-for-money would prefer Kit Kat V, due to the lower prices. Moreover, customer can display affective commitment toward the brand due to loyalty based on positive experience (glesias, Markovic and Rialp 2019). 

The final purchase decision of the customer is often shaped by the specific needs that are fulfilled by a product or service. A potential customer of Kit Kat V would assess the relevant needs that can be aligned with the consumption of the product. The product has been designed and promoted to fulfill one of the social needs of the target customers. Social needs create an impulse to avail products or services that are being preferred by others who share similar demographic background (Hollebeek et al. 2020). In this case, Kit Kat V would primarily fulfill the shared social need to avail a sustainable and healthier alternative to traditional chocolates. This perceived need would be the final motivational source to acquire the product. 

Loyalty significantly relies on the alignment of desired and actual experiences after availing a product or service (Minta 2018).From this perspective, the overall loyalty toward Kit Kat V would be based on the validation of the taste, texture and flavour. Ideally, a customer would expect that the new product variety would sustain the authentic experience. Moreover, the ease of access would also shape the eventual repeat purchase and loyalty. Positive experience after consumption and the overall convenience of availing the product would shape the overall loyalty of the customers in the long run.  

Reference List

Use this section to report the references that you used for your research and understanding of the assignment. This needs to be in full Harvard referencing style. A good rule of thumb is to have at least 3-4 references per question. The more the better. You can find help with this on the CASE website here. 

Buxton, A., 2022. 60% Of Millenials and Gen-Z Expect Plant-Based Chocolate Options From All Brands, Study Finds. [online] Green Queen. Available at: <https://www.greenqueen.com.hk/plant-based-chocolate-in-demand/> [Accessed 26 April 2022].

DIMOCK, M., 2019. Defining generations: Where Millennials end and Generation Z begins. [online] Pew Research Center. Available at: <https://www.pewresearch.org/fact-tank/2019/01/17/where-millennials-end-and-generation-z-begins/> [Accessed 26 April 2022].

Ettinger, J., 2022. Vegan Chocolate Market to Reach $1 Billion By 2027. [online] Green Queen. Available at: <https://www.greenqueen.com.hk/vegan-chocolate-market-1-billion-by-2027/> [Accessed 26 April 2022].

Galaxy, 2022. Galaxy® Vegan. [online] Galaxy. Available at: <https://www.galaxychocolate.co.uk/our-chocolate/vegan> [Accessed 26 April 2022].

Grand View Research, 2021. Vegan Chocolate Confectionery Market Size Worth $1.41 Billion By 2028: Grand View Research, Inc.. [online] Prnewswire.co.uk. Available at: <https://www.prnewswire.co.uk/news-releases/vegan-chocolate-confectionery-market-size-worth-1-41-billion-by-2028-grand-view-research-inc--895727140.html> [Accessed 26 April 2022].

Hanaysha, J.R., 2018. Customer retention and the mediating role of perceived value in retail industry. World Journal of Entrepreneurship, Management and Sustainable Development.

Hollebeek, L.D., Smith, D.L., Kasabov, E., Hammedi, W., Warlow, A. and Clark, M.K., 2020. Customer brand engagement during service lockdown. Journal of Services Marketing.

Ibisworld, 2021. IBISWorld - Industry Market Research, Reports, and Statistics. [online] Ibisworld.com. Available at: <https://www.ibisworld.com/united-kingdom/market-size/chocolate-confectionery-production/> [Accessed 26 April 2022].

Iglesias, O., Markovic, S. and Rialp, J., 2019. How does sensory brand experience influence brand equity? Considering the roles of customer satisfaction, customer affective commitment, and employee empathy. Journal of Business Research, 96, pp.343-354.

Kalogiannidis, S. and Mavratzas, S., 2020. Impact of marketing mix strategies effective product development issues in MNCs/Retail. International Journal of Business Marketing and Management (IJBMM), 5(12), pp.118-125.

Kaur, M., 2021. Cadbury’s first plant-based chocolate bar for vegans goes on sale next month. [online] mirror. Available at: <https://www.mirror.co.uk/money/shopping-deals/cadburys-first-plant-based-chocolate-25159502> [Accessed 26 April 2022].

Kaur, M., 2022. New vegan KitKat is available in UK stores from today. [online] mirror. Available at: <https://www.mirror.co.uk/money/shopping-deals/new-vegan-kitkat-available-uk-24312935> [Accessed 26 April 2022].

Kharub, M., Mor, R.S. and Sharma, R., 2018. The Minta, Y., 2018relationship between cost leadership competitive strategy and firm performance: A mediating role of quality management. Journal of Manufacturing Technology Management.

Kitkat, 2022. KitKat Vegan - Our First Plant Based Break | Kitkat UK. [online] Kitkat.co.uk. Available at: <https://www.kitkat.co.uk/kitkat-vegan> [Accessed 26 April 2022].

Klein, J.F., Zhang, Y., Falk, T., Aspara, J. and Luo, X., 2020. Customer journey analyses in digital media: exploring the impact of cross-media exposure on customers' purchase decisions. Journal of Service Management.

Magazine, Y., 2020. Lindt's vegan chocolate range is now available to shop in the UK. [online] YOU Magazine. Available at: <https://www.you.co.uk/lindt-vegan-chocolate/#:~:text=Vegan%20sweet%20brand%20The%20Conscious,reasonable%20%C2%A33.99%20per%20bar.> [Accessed 26 April 2022].

Minta, Y., 2018. Link between satisfaction and customer loyalty in the insurance industry: Moderating effect of trust and commitment. Journal of Marketing Management, 6(2), pp.25-33..

Mogelonsky, M., 2019. Vegan chocolate moves from margins to mainstream. [online] Mintel. Available at: <https://www.mintel.com/blog/food-market-news/vegan-chocolate-moves-from-margins-to-mainstreamhttps://www.mintel.com/blog/food-market-news/vegan-chocolate-moves-from-margins-to-mainstream> [Accessed 26 April 2022].

Murphy, J., 2021. Go vegan to help UK hit greenhouse gas targets, says Cabinet minister. [online] Evening Standard. Available at: <https://www.standard.co.uk/news/politics/vegan-help-uk-hit-greenhouse-gas-targets-cabinet-minister-kwasi-kwarteng-b931123.html> [Accessed 26 April 2022].

Nestlé Global, 2021. Take a plant-based break – vegan KitKat is here!. [online] Nestlé Global. Available at: <https://www.nestle.com/media/news/vegan-kitkat-launch> [Accessed 26 April 2022].

Nestlé Professional, 2022. Creating the Cup of Coffee That's Right Up Their Street - Nestlé Professional. [online] Nestlé Professional. Available at: <https://www.nestleprofessional.co.uk/news/insights/understanding-your-coffee-customers> [Accessed 26 April 2022].

Nestle, 2019. Annual Review 2018. [online] Nestle.com. Available at: <https://www.nestle.com/sites/default/files/asset-library/documents/library/documents/annual_reports/2018-annual-review-en.pdf> [Accessed 26 April 2022].

Nestlé, 2022. Teens, These Are What You Need. [online] Nestlé. Available at: <https://www.nestle.com.sg/nutrition_health_wellness/nutrition_for_family/teens_these_are_what_you_need> [Accessed 26 April 2022].

Nestlé, 2022. Vegan KitKats are in stores now!. [online] Nestlé. Available at: <https://www.nestle.co.uk/en-gb/media/news/vegan-kitkats-are-stores-now> [Accessed 26 April 2022].

Singh, P., Sin, L.G., Kama’Aziri, N.S.B., Jian, O.Z., Azlan, N.A.S.B.M., Ibrahim, P.N.I.B.B., Sheng, D.H., Kee, D.M.H., Heng, J.T.S., Wee, L.S. and Ying, L.Y., 2021. A Study on Nestle Promotion Strategy. International Journal of Accounting & Finance in Asia Pasific (IJAFAP), 4(1), pp.60-70.

Smart, Y., 2022. How can brands successfully reach teen consumers?. [online] Drum. Available at: <https://www.thedrum.com/profile/the-insights-family/news/how-can-brands-successfully-reach-teen-consumershttps://www.thedrum.com/profile/the-insights-family/news/how-can-brands-successfully-reach-teen-consumers> [Accessed 26 April 2022].

Woolfson, D., 2021. Mars launches vegan versions of Bounty and Topic chocolate bars. [online] The Grocer. Available at: <https://www.thegrocer.co.uk/new-product-development/mars-launches-vegan-versions-of-bounty-and-topic-chocolate-bars/651715.article> [Accessed 26 April 2022].

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