Marketing Strategy Report: Ferrero in the UK Confectionery Market

This report provides a comprehensive analysis of Ferrero's marketing strategy, focusing on its operations within the UK confectionery market. It begins with an executive summary and introduction, outlining the company's position and competitive landscape. The report then delves into environmental analysis, including PESTLE factors, and evaluates Ferrero's current marketing strategy, particularly its marketing mix (product, price, place, promotion). It assesses the company's competitive advantages, such as product differentiation and unique selling propositions like high-quality hazelnut chocolate. The report also touches upon product rationale, segmentation, targeting, and positioning, along with recommendations and marketing objectives. Overall, the report highlights Ferrero's strategies for customer loyalty, market growth, and adaptation to the UK market's dynamics, emphasizing its strengths and areas for improvement within the competitive confectionery industry.

MARKETING STRATE

Table of Contents
PART 1............................................................................................................................................3
MARKETING STRATEGY............................................................................................................3
Executive summary..........................................................................................................................3
Introduction......................................................................................................................................1
Environmental Analysis.........................................................................................................1
Evaluation of Current marketing strategy..............................................................................4
Analysis of the organizations competitive advantage............................................................5
PART 2............................................................................................................................................7
Product rationale and specification........................................................................................7
Segmentation, Targeting and Positioning...............................................................................8
Recommendations marketing objectives and goals..............................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

PART 1
MARKETING STRATEGY
Executive summary
The report based on the marketing strategy of Ferrero a confectionery industry based In
Italy has been facing a tough competition from various other confectionery company such as
Cadbury, Morocco. The company focuses on loyalty towards customers and building their trust
by providing quality chocolates products so as to maintain long lasting relationship with them.
The marketing strategy of Ferrero has focused on enhancing customer satisfaction thereby
raising its scale of operations. The unique selling proposition of Ferrero is its high quality of
hazelnut milk chocolate which is secretly manufactured by the family owned business enterprise.
The micro environment of Ferrero comprises company's internal structure and its strengths and
weaknesses which impact its operations in UK market. Analysing the environment, external and
internal elements provides an overview about the firm’s strengths and weaknesses and its
operational performance. The marketing strategy should be used in such a way so as to enhance
its production in those countries which has more chances of growth for the confectionery
industry.

Table of Contents
PART 1............................................................................................................................................2
Executive summary..........................................................................................................................3
Introduction......................................................................................................................................1
Environmental Analysis.........................................................................................................1
Evaluation of Current marketing strategy..............................................................................4
Analysis of the organizations competitive advantage............................................................5

Introduction
The report incorporates the marketing strategy of a confectionery organisation. It implies
combining of all marketing goals into one strategic plan. Marketing strategy should incorporate a
critical research of market and appropriate decision making so as to achieve objectives.
Ferrero, an Italian brand producing chocolate and confectionery products is amongst the
three largest confectionery industries. The company was founded by Pietro Ferrero in 1946
having its headquarters in Alba, Italy. This company employs around 21000 workers with
approximately 18 factories worldwide.
Ferrero is based in Greenford UK since 1966 and is a subsidiary of Ferrero international.
The company has seen a fast growth in UK based Ferrero organisation with approx. 24% of
market share producing Nutella, Ferrero chocolates as well as Kinder varieties and Tic Tac. The
UK based Ferrero operates in a 3 hectares green landscape which provides the right environment
for the company and its employees to perform operations. Ferrero has a 94 % growth rate in the
UK based confectionery market.
Environmental Analysis.
Analysing the environment, external and internal elements provides an overview about
the firm’s strengths and weaknesses and its operational performance. Ferrero operates in United
Kingdom based environment and is affected and influenced by the changes in UK and its
economy (Schmidt, Spann and Zeithammer, 2014). The two types of environment faced by
Ferrero are macro and micro external environment that influences the confectionery industry
decision making and marketing strategy plans which is beyond the control by its management
team.
Macro Environment
The macro environment analysis of Ferrero in the United Kingdom incorporates the
PESTLE analysis of the company. Ferrero amongst the biggest confectionery industry engaged
in production, distribution and selling of chocolates and other products is impacted by various
external environment factors which are beyond the control (Hacker, Gambone and Hobel, 2015).
The major macro factors which affect Ferrero in United Kingdom market are:
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(Source: The Impact Of Micro and Macro Environment Factors on Marketing, 2014)
Political - The political environment of UK affects Ferrero in both positive and negative
ways influencing its strategic marketing tactics. If the taxes increase, it will impact the sales and
consumption of confectionery products as they are not necessary goods and could be switched
easily with necessity products. The international market laws and regulations also impact its
operations in the UK market thereby exposing the company with rivalry attacks.
Economical - Various strategies developed by the company which offer seasonal and
festival packages is impacted by the economical changes in the UK economy. Inflation plays a
major role in disturbing the marketing strategy of Ferrero as prices of chocolates and similar
products rises thereby increasing the cost of production (Baker, 2014).
Social - Various social changes in the UK impacts the confectionery industry thereby
affecting its sales and revenue generation. The UK government is concerned about the harmful
effects of confectionery products and the increasing rate of obesity which has imposed
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Illustration 1: External Environment of Ferrero UK

restrictions on such companies thereby reducing their total production capacity and affecting its
marketing strategy (Hauser and Shugan, 2008).
Technological - This is an important factor which has been adopted by Ferrero at its UK
situated company so as to produce high quality and efficient products quickly based on the tastes
and preferences of the people such as tic tac. The impact of internet and faster communication
techniques has simplified production process and enhanced quality of products thereby providing
company to develop stringent marketing strategies. Moreover, the company facing stiff
competition is now using stringent promotional techniques such as print media and television so
as to reach mass population as one of its marketing technique (Hedin, Hirvensalo and Vaarnas,
2014).
Micro Environment
The micro environment of Ferrero comprises company's internal structure and its
strengths and weaknesses which impact its operations in UK market. UK being the largest
economy of the world has the ability to make a company grow tremendously by providing
various opportunities. It consists of suppliers, competitors, customers etc. Ferrero possesses the
foremost strength in terms of its high quality of confectionery products in a variety of ranges
(Ivy, 2008). The company procures a distinct quality of raw material from a wide variety of
suppliers thereby maintaining long term and strong relationship.
Ferrero in UK market has set a quality management system which ensures right products
with high quality which satisfies tastes of customers thereby enhancing their experience. The
company practices high standard of hygiene as its products are concerned with food related items
and hence health and safety of people is its prime responsibility. Innovation is a key factor for
the success of the brand globally and thus company is engaged in producing competitive
products thereby giving a tough competition to Nestle, Cadbury and others. The company is
engrossed in varied types of research and development of its confectionery items thereby using
Soremartec technology (Hacker, Gambone and Hobel, 2015). The company has wide range of
products to offer all the public irrespective of their wealth status with varied prices and tastes.
Ferrero's UK market
The international market of Ferrero distributed geographically in the UK market has
increased its total market share by 34% in the last five years. It has an ambitious plan of growth
in the UK for next coming five years. As being on the seventh position the company has devised
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a strategy to double its share in the UK competing with Mars, Nestle, Mondalez, Lindt,
Thorntons and Haribo (DeTienne, 2010). The company has a sales figures of $ 304 million in
2012 thereby an increase from the previous year. The UK based Ferrero has seen a total gross
profit of 35% in the year 2012.
Evaluation of Current marketing strategy
The confectionery industry engaged in production of chocolate and other products based
in Italy has a major competitive advantage over its tastes, varieties and qualities which enhances
customer satisfaction. In addition, the company has a current marketing strategy of selling its
products to all segments of society globally focussing on environmental and socio-economic
categories (Shepherd and Haynie, 2009). Ferrero UK has a specific marketing strategy for
Christmas and other festivals and brings in new packages with varied chocolates or specific
design for gifting and greeting purposes during festivals. Such a strategy of Ferrero has gained it
competitive advantage over others.
Marketing Mix strategy
The marketing mix refers to a combination of different elements combined together in
order to achieve competitive advantage buy the firm (Rosenbusch, Brinckmann and Bausch,
2011). It has four main elements which every organization undertakes in order to influence
customer to buy products and services.
Product - Ferrero has few specific variety of chocolates and confectionery products
which focuses on niche markets to grab the most so as to enhance sales. The company has wide
range of products which includes Kinder - Bueno, Chocolate, Maxi, Country, Pingui, Choco fresh, Maxi king, Playful
kinder Eggs includes Surprise, Schoko-Bons . Ferrero products includes Nutella, Duplo, Ferrero Rocks, Raffaello and Mon cheri
 Tic Tac the sugar confectionery category has Tic Tac, Tic Tac Silvers and Tic Tac king
size (Alshamaila, Papagiannidis and Li, 2013).
Price - Ferrero has a superior price enhancing advantage because of their quality and
quick availability. Thus, the team at Ferrero has a competitive advantage of keeping the prices
high. Such a quality is achieved through procurement of best raw materials from a varied
countries and suppliers which provides Ferrero a distinct benefit over others. The company has
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extensively engaged in R&D about their products and feedback from customers to evolve a
better chocolate and confectionery item.
Place - Ferrero is a family owned business evolved in Italy and has 18 factories providing
confectionery products globally to around hundred countries. It follows a normal distribution
channel and few intermediaries between manufacturer and end consumer (Shepherd and Haynie,
2009). Though Ferrero products are available easily to all places either hypermarkets,
supermarkets, convenience stores etc.
Promotion - This marketing strategy of Ferrero is extensively important as it creates an
image in the minds of consumers thereby adding value to the brand. It has spend 11 million
pounds in advertising for its UK based market which has enhanced its sale sand profit for that
year. The company incorporates television, print media, newspapers and magazines for
promoting brand and products. The company uses different advertises for special occasions and
festivals such as Christmas.
Analysis of the organizations competitive advantage
As Ferrero is amongst the top confectionery industries it needs to plan strategies in order
to remain competitive in the UK market. The company focuses on product differentiation in
order to achieve sustainable competitive advantage. Ferrero's product differentiation is close to
magnificent which incorporates wide variety of products such as Nutella, Kinder, Tic-Tac etc.
The company integrates in a secretive manner of production which has provided it with agonistic
advantage with employing creative workers dedicated towards accomplishing tasks.
The company has the USP of using hazelnut in milk chocolates which gives a great taste
and high quality of product. Another unique proposition which the company holds is attractive
packaging and easy availability to all places such as hypermarkets, supermarkets, convenience
stores etc. Changing lifestyle of consumers, increase in migration, stable economy, easy
availability through e-commerce delivery channels and cosmopolitan culture are some of the
factors which are proving as a catalyst for the growth of the Ferrero UK market (Hedin,
Hirvensalo and Vaarnas, 2014).
The company has another USP in form of different sizes and best quality due to best raw
materials. The company is now focusing on development of brand through incorporating
innovation and technology which will help in building a strong brand globally. The company has
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brought in brand extension to the Ferrero Rocher that is Rondnoir and Rafaello and has a
beautiful packaging and labelling as well as attractive designing.
The various competitors of Ferrero are Mars, Nestle, Mondalez, Lindt, Thorntons and
Haribo who gives a stiff competition to the company by coming up with various hazelnut filled
chocolates providing customers an advantage to switch from the brand. The UK based Ferrero
has been in a competitive advantage due to its unique selling proposition of quality and distinct
tastes which has grabbed loyal customers (Hauser and Shugan, 2008)
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PART 2
Product rationale and specification
The Boston growth share matrix is a tool for analysing marketing strategy in order to
achieve sustainable competitive advantage. It assess a product or business in two categories
mainly the relative market share which the new product or business firm will have in compliance
with others and market growth potential that they would grab with time.
(Source: The Impact Of Micro and Macro Environment Factors on Marketing, 2014)
The above diagram incorporates he various products of Ferrero and their segment in comparison
to other (Ivy, 2008). The kinder products of Ferrero are stars, The question mark are its
innovative candy while the dogs are Mon cheri and cash cows hold Tic Tac produces by Ferrero.
Question mark - It implies what will the new product do when launched in the market. It
is also known as problem child with high growth and low market share as it is newly produced
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Illustration 2: BCG Matrix

and less known. Any product of business unit at this step is uncertain as it will become the star or
go in the cash cow category. Thus the company should formulate strategies to make its product
achieve market share as well as relative market growth thereby attaining the star position when it
is in Question mark stage (Jain and Haley, 2009).
Stars - This step reflects the Kinder products such as Bueno, Chocolate, Maxi, Country,
Pingui, Choco fresh, Maxi king, Playful kinder Eggs includes Surprise, Schoko-Bons . All these
products have a high market share as well as growth rate as it is demanded by children, adults
and families because of their nutritious value. The company has such strategic marketing plans
which has given these products a competitive advantage over others. The use of innovation and
extensive R&D program has provided lead to this segment of Ferrero (Hacker, Gambone and
Hobel, 2015). Thus. The company needs to hold its products at this stage through continuous
innovation and promotion techniques.
Cash cows - The cash cows reflects those segment of the company which is able to
generate ample amount of cash though having a low growth rate in the UK market. The Tic Tac
by Ferrero is generating maximum revenue for the company as it is having a high market share.
The cash cows usually intake low investment on the product thereby generating huge revenue for
the company is another marketing strategy used by Ferrero to retain customers. This acts as a
USP for Ferrero thereby enhancing its overall profitability because the excess profit earned could
be used in other segments.
Dogs - This usually reflects those products who are in downturn position. The dog has
low market share and growth rate for a product of Ferrero Mon cheri which is almost gone from
the market of UK. Thus the company needs plan strategies to disinvest such a product as it is
adding to the total cost of operations of Ferrero (Jain and Haley, 2009). The dog category
generally produces no revenue and intake no investment. However, they are considered as
negative profitability products mainly because the money already invested in the product can be
used somewhere else.
Thus, Ferrero needs to indulge in development of those products which fall in the category of
Question mark, Stars and Cash Cow. The path towards dog section needs to be disinvest for as
long as possible (Hacker, Gambone and Hobel, 2015).
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