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Lecture 5

ADM3326 Lecture 5: twix.pdf

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University of Ottawa
Raluca Balan

TWIX In early 2004, Canadian marketing executives for Twix faced the challenge of building their th brand despite no Canadian advertising in 25 years. Sitting in 15 place in terms of market share, Twix received a corporate directive from Mars Canada Inc. to move it into the top 10 by 2007. BACKGROUND Company Mars Canada Inc. is a division of the US global company known as Mars Incorporated. The parent company’s expansion reaches to virtually every European nation, many Pacific Rim countries, Latin America, Africa, and the Middle East. Canadian branch operations began in the 1940’s with head office establishment in the 1960’s. For about 30 years, the company featured the name Effem Foods or Effem Inc. Mars Canada marketed other chocolate bars like Mars, Snickers, Bounty, 3 Musketeers, and Dove, confectionary products such as Maltesers, Skittles, and Starburst, along with three brands of pet food, and Uncle Ben’s rice products. Brand Twix featured a biscuit and caramel covered in milk chocolate with two to a pack. It originated from the UK division in 1967 and reached North America in 1979. A peanut butter version emerged in 1983 while an alternative with dark chocolate covering became available in 2005. Mars sold other product variations in other parts of the world. Although marketed in other countries under a different brand name, the Twix name existed globally since 1991. Advertising and promotion occurred in the US with some amount of Canadian spillover. Some recent slogans included, “Twix it up”, and “Chew it over with Twix”. Ads with the latter slogan had a lead in asking or suggesting “when you need a moment”. For example, some ads showed situations where a young man needed time to think before he replied to the question or remark from another person such as his boss or a young woman. Eating the second Twix bar provided a convenient delay to produce the most appropriate response or a garbled response as he chewed that was interpreted as being positive. Competitive Activity The Canadian chocolate bar market experienced extensive competitive activity over the past ten years. Many brands developed line extensions with different versions in terms of ingredients or types of chocolate. Brands often engaged in promotional activity with price reductions or discounts for volume purchases, and periodically used contests or similar brand-enhancing promotional activity. For example, sometimes a chocolate bar came free with a meal at a fast- food restaurant. Popular brands offered multiple packages and sizes, especially in warehouse type stores like Costco. Extensions into other product categories occurred as well as since consumers could order chocolate bar bits on ice cream in some shops. Beyond these activities, most major brands still advertised their main chocolate bar fairly extensively. TWIX IN CANADA Twix appeared to be a viable candidate to move up in market share rankings (Exhibit 1) for a number of reasons. Recent survey research indicated extremely low brand awareness of 2% among those aged 12-24. However, 9% of these people had purchased Twix in the past seven days, a level equivalent to Oh Henry, and 3% purchased the brand most often. Secondly, while Mars and Snickers attracted younger teen-age males, Twix seemed poised to reach the upper end of females aged 12-24 since it had greater usage with this demographic. Finally, Twix’s ingredients and the two bar format appeared suitable to compete with other ‘break” bars like Kit Kat and Coffee Crisp. Focus group research highlighted the importance of taking a break. Young adults caught between their teenage years and young adulthood felt somewhat overwhelmed with responsibility and desired to enjoy and extend their breaks as long as possible. Questions regarding the consumption of Twix revealed consumers enjoyed the biscuit, caramel, and chocolate in many playful ways while eating. The two bars allowed a longer break and extended their enjoyment much like a Kit Kat or Coffee Crisp chocolate bar. Recently, two Nestlé brands, Kit Kat and Aero, moved from the middle of the pack to the top. Their strategy and results provided food for thought. KIT KAT STRATEGY After three years of no advertising, Kit Kat’s market share rank dropped to eighth place in 1999. Kit Kat looked to bring it back to first where it had been in varying times during its fifty-plus years in Canada. Kit Kat’s historical advertising message of “taking a break” still showed in recent research but appeared vulnerable. For example, 70% of consumers agreed that “Kit Kat is perfect when you want a break” dropped to 53%. With Oh Henry, Reese’s, Caramilk, and Coffee Crisp in its sights, Kit Kat’s strategy covered three phases. In 2000 and 2001, Kit Kat ran 37 outdoor ads and 27 magazines ads to give the “taking a break” idea a younger and more contemporary feel (Exhibit 2). In addition, Kit Kat Chunky emerged in stores without any advertising support. Over the course of two years, Kit Kat spent $3.4 million, about equal to the expenditures of Reese’s and slightly behind Oh Henry. Kit Kat vaulted to third place, partly due to Chunky sales since it represented 20% of total sales, and partly due to the reinforced advertising message. In 2002, Kit Kat dedicated its entire $1.6 million budget to Chunky. A humourous TV ad showed a “scientist” demonstrating how a large aquarium containing piranhas were full after eating food and a Chunky chocolate bar. Out of home ads featured catchy lines directed to teens such as “Choc-o-lot”, “Kit Kong”, “Beat Hunger with a big stick”, and “Katlossal”. The tag-line for the campaign featured the line “Have a bigger break”. Kit Kat reached second place by the end of 2002 with Chunky accounting for a q
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