456 PART 3 | Designing a Customer Value–Driven Strategy and Mix

14-12 How can Google communicate that it is creating a more Real Tone through photography focused on skin. This
equitable marketplace? What communication channels content, widely shared across the promotional mix,
should it use? (AACSB: Ethical Understanding and sparked curiosity and generated a flood of positive public
Reasoning; Reflective Thinking) relations. Simultaneously, it confused others, addressing
problems they did not have or could not relate to. How
14-13 Google worked closely with professional photographers,
should Google address this problem? (AACSB: Ethical
directors, and influencers to demonstrate the efficacy of
Understanding and Reasoning; Reflective Thinking)

Marketing by the Numbers Never-Ending Cola War

Coca-Cola’s market share increased from 17.3 percent to 17.8 percent during the past decade. That might not seem like much, but
one share point equals 1 percent of market sales, so half a share point represents $405 million. Pepsi’s market share decreased from
10.3 percent to 8.4 percent during the same period, a loss of 1.9 share points or $1.5 billion. Many marketers budget an upcoming
year’s advertising expenditures using a percentage of sales method based on past or projected sales. The industry average advertising
expenditure-to-sales ratio for beverages is 4.1 percent of sales. Here are the worldwide advertising expenditures and sales revenues for
the two competitors. All numbers are in billions of dollars.

Coca-Cola PepsiCo 14-14 Calculate both companies’ advertising-to-sales ratios

for the years. What is each company’s average ratio
Year Advertising Sales Advertising Sales over the five-year period? Refer to the percentage-of-
2017 $2.40 $63.53 $3.96 $35.41 sales method in the chapter to learn about this method.
2018 $2.90 $64.66 $4.00 $31.86 (AACSB: Analytical Thinking)
2019 $3.00 $67.16 $4.25 $37.26 14-15 If PepsiCo had decided to base its 2020 advertising budget
on the industry average advertising-to-sales ratio for bev-
2020 $3.00 $70.37 $2.78 $33.01
erages, which is 4.1 percent, how much would PepsiCo
2021 $3.50 $79.47 $4.10 $38.66 have budgeted for advertising in 2020? Was Pepsi’s action
effective? (AACSB: Analytical Thinking; Reflective Thinking)

Company Case Nestlé: Integrating Marketing Communication into Daily Operations

With more than 2,000 brands, from global icons to local favor- on-pack promotion where customers who found a golden ticket
ites, and present in 190 countries, Nestlé is one of the world’s in their KitKat won a “holiday break” to one of ten sunny exotic
largest food-and-beverage companies. It operates in four differ- locations. Besides the ten holidays, the company offered other
ent strategic business units: beverages, milk and milk products, prizes to be won every day, like beach towels, luggage tags, sun
prepared dishes and cooking aides, and chocolates. To design a visors, and KitKat-branded passport covers.
proper marketing mix for all four product groups, Nestlé employs Besides advertising, Nestlé has used a wide range of IMC
country- and market-specific marketing teams to design an IMC tools for KitKat, including sales promotion activities. Personal
strategy, regardless of the product group. selling is costly, but large companies like Nestlé can afford it.
One of its classic campaigns was a direct vendor selling activ-
Have a Break from TV. Have a KitKat. ity in the summer months of June, July, and August in Lahore,
KitKat’s “take a break” message enjoys high-level recognition in Pakistan, during which a team of vendors clad in branded
more than 80 countries. The official website follows that philoso- t-shirts, caps, and jackets, sold chilled 0.5-liter bottles to com-
phy faithfully: it literally just asks the visitor to take a break and muters on all major intersections. The brand got great mileage
have a KitKat. The brand’s promotion is concentrated mainly in out of this campaign in terms of brand awareness, paid trial,
TV commercials and posters, where the powerful colors of the image, as well as real sales.
pack and the product reinforce the marketing message. KitKat has become a particular obsession in Japan. The in-
The brand has a history of very successful campaigns, like troduction of KitKat Green Tea (Uji Matcha) in 2004 not only ex-
one in 2012, in which customers who discovered one of the six panded the over 350 KitKat varieties available in Japan over the
GPS-enabled chocolate bars were delivered a prize of £10,000 years but also drew more attention to the brand and increased
by helicopter. The campaign drew a huge number of visitors to sales volume. After its massive success in Japan, in February
its website and Facebook and Twitter pages, all eager to see 2019, the KitKat Matcha was introduced in Europe.
how many bars were yet to be found. Building on its success, In direct marketing, Nestlé has even used physical mail cre-
an additional contest was organized to win £2,012, the year in atively. For instance, it sent out a mailer made to look like the
which the campaign was launched, by entering the code on the card left by postal workers when they are unable to deliver a
inside of their KitKat wrapper into a custom-made Facebook ap- parcel, saying that the package, the KitKat chunky, was “too
plication. Customers were only allowed to enter after they had chunky for your letterbox.” The recipients could exchange their
liked the KitKat page. card at their local news agency for a free KitKat Chunky.
Another creative ad was the KitKat’s 2015 Christmas com-
mercial, which showed a blank screen for 30 seconds—a break Direct and Digital Marketing
from the holiday noise of the season. More conventionally, for Nestlé is active in social media marketing and connects and inter-
the 2019 winter season in the UK and Ireland, KitKat launched acts with more than 11 million Facebook fans, 250,000 followers
 CHAPTER 14 | Engaging Consumers and Communicating Customer Value 457
on Twitter, and more than 180,000 followers on Instagram. Budget-Setting
The company makes sure that its products are positioned for Nestlé sets its promotion budget based on what it wants to
the wider but also the most appropriate audience using brilliant accomplish, defining specific promotion objectives, determining
ideas for creative advertising. A campaign launched in India in the tasks needed to achieve them, and estimating the costs of
2015 provided a fresh take on its signature tag line. This cam- performing these tasks. The sum of these costs is the proposed
paign was about “celebrating the breakers,” and recognized that promotion budget, which is then divided among various IMC
people take many different types of breaks. Animated videos and tools. For example, KitKat announced that it would double its
ad photos of people snoozing at their desk, listening to music, media spend in 2015 with the launch of a £10 million multime-
and partying all night were posted with the hashtag #mybreak dia campaign after losing sales in the sweet biscuits category
on Instagram. The campaign was a success, with a 42-point lift the year before. Seeking to reclaim the 11 percent of sales lost,
in ad recall and 6-point lift in message association. the campaign involved heavy promotion in-store as well as on
Nestlé constantly responds to rapid technological changes social media. Budget-setting is also in line with pricing policy:
in the marketing environment. In 2011, the company launched the price is dependent on the market of each individual prod-
the Digital Acceleration Team (DAT) to design a better mix of uct, so market leaders Nescafé and Maggi are priced with higher
traditional and digital IMC tools and enhance its product mar- margins for the company as compared to the competition. To
keting and e-commerce. Inspired by hackathon culture, this in- deliver a clear, consistent, and compelling message about the
volves an intensive and highly entrepreneurial eight-month train- products, Nestlé ensures close cooperation with market- and
ing program where diverse high-potential leaders from across marketing-specific local-country teams to consider culture and
the globe gather at Nestlé’s HQ in Switzerland to exchange market differences.
marketing experiences. The DAT works on specific digital mar- Nestlé has worked hard to make sure that its traditional mar-
keting topics, and the team returns with the expertise needed keting approaches blend well with newer, tech-savvy ones, like
to lead the digital transformation in their home units. Beyond printing of QR codes on candy bars and boosting social media
DAT, Nestlé has also endeavored to become more digitally con- engagement. Sales promotion is also done through interactive
nected by having an internal social network where more than and responsive websites. For example, in the UK, the company
200 employees can engage with one another, and by enabling printed individual codes on KitKat packaging that could either
employees to blog and inspire or influence customers as a daily be entered on a dynamic website or texted on a mobile phone
practice. to win a prize—proof that traditional promotion can co-exist with
digital tools. The particular blend of channels—of traditional and
Developing Effective Communications digital media—is based on observation of customer behavior.
At Nestlé, the process of developing an effective IMC strategy For instance, when marketing analytics indicate that a product
for promotions begins with identifying the target audience. For appeals to a younger generation, digital is clearly the way for the
KitKat the target audience is everyone—the mass consumer company to go. However, this doesn’t mean that Nestlé should
market. Next, the communication objectives, such as building abandon more traditional approaches; it continues to find ways
awareness and knowledge, and providing information value to use traditional marketing to raise brand awareness with cre-
for the customers, are determined. As KitKat is already a well- ative ideas that reinforce the marketing message.
known product globally, the company advertises not so much To continue building attractive and rewarding brand experi-
to boost sales as to remind the customers about their favorite ences for customers, Nestlé designs its IMC strategy collabora-
chocolate bar. It then decides on the suitable media, including tively with other groups, such as sales and e-business, R&D,
personal and non-personal channels, for the marketing mes- technical applications, and agency partners. Through these well-
sage. Nestlé uses all possible channels, including print media for defined steps in IMC and budget-setting, Nestlé has executed
its cost effectiveness and non-intrusiveness, which is a struggle multiple campaigns with great success and is all set to continue
in the digital era. that trend in the future.22
KitKat uses broadcast (radio, television) and display (bill-
boards, signs, posters) media to reach a broader target audi-
ence. It uses print media mostly in the form of posters that cel- Questions for Discussion
ebrate an event in a funny way, focusing on the “Take a Break” 14-16 What steps did Nestlé undertake to design KitKat’s
slogan. In one example, when a “no Wi-Fi zone” was introduced IMC and promotion program?
in downtown Amsterdam in 2013, a street sign was installed
with the “Take a Break” slogan. Nestlé also uses events: in 2013, 14-17 Should all companies have a digital acceleration team?
Android launched its new operating system using the KitKat What benefits did Nestlé get from having one?
name. 14-18 How is the budget for IMC set at Nestlé? What factors
Feedback is vital for measuring the effectiveness of commu- might possibly influence it?
nication tools, so Nestlé analyzes big data from retailers and in-
ternal processes such as how many people bought a product, 14-19 What IMC tool has Nestlé mainly used to promote
talked to others about it, or visited a store. Insights from these KitKat and increase sales?
analyses are then used by Nestlé for suggesting changes in the 14-20 Explain the benefits of IMC efforts based on examples
IMC strategy or in the product offer itself. given in this case.