MPK732 MARKETING MANAGEMENT

Trimester 1, 2014
Unit Chair: Nichola Robertson




CASE STUDY ANALYSIS
FOR
iSNACK 2.0: The New Vegemite
(OPTION A)




Group 79:

Chetan Bansal ID: 213401845
Shamila Zyhana Zarook ID: 213322313
Midhun Ittoop ID: 213574606
Swathi Priya Paranthaman ID: 212019766






EXECUTIVE SUMMARY
Kraft foods iconic brand Vegemite which is a proud Australian symbol, which Australians
dont travel without when visiting abroad. But this 90 year old brand has lost much ground in
sales and it used to have 80% household penetration which reduced to 72% at the end of 2007.
All this prompted the company to start a marketing analysis and campaign (How Do You Like
Your Vegemite), which proved to be the most successful campaign. After this campaign, the
company decided to launch a cheesy variant of vegemite as many of the consumers in the
campaign mentioned that they liked it with Philadelphia cheese. After this the name me
campaign was used to name the new product saw active participation of many of the people.
Kraft foods named the new product as iSnack2.0 which resulted in a huge backlash from the
public sphere. This has prompted the management to rethink their decision while the problem
here is that the name used here does not seems likely to be a name of food product and there
is a strong disagreement in public as they have actively participated in the campaign to name it,
and now they feel betrayed.
So the solution that they can go with is either change the name of the product again using
public opinion or they can choose this name only and try to explain with advertisements and
complaint redresses the depth of the new product and the associated name.















TABLE OF CONTENTS

1. Introduction
2. Marketing Problem _____
3. Marketing Research
4. Consumer Behaviour
5. Branding___________________________________________
6. Conclusion/Recommendations__________________________
7. References














1. INTRODUCTION
This case study is based on a new product launch by Kraft foods, related to its iconic vegemite.
When it comes to Vegemite, it is breakfast spread and it is an essential Australian product. In this
case it efforts went through Kraft's decision to revitalize brand performance over the overview of
a brand extension. Representation on extensive social media analysis of brand appearance, the
brand team led by Simon Talbot identified a gap in the market for a line extension containing a
blend of Vegemite and Kraft's other brand, Philadelphia Cream Cheese.
From a great profile campaign containing a competition to name the new extension Talbot's team
has chosen the name iSnack 2.0 for their new product. After two days the public unveiling of this
name, there was a nationwide backlash against it, and even on the day of announcement of the
name during Australian football league grand final at the MCG there was a stunned silence
(Keinan, farrelly, Beverland 2012).
And after this it became evident that what was to follow, and the backlash was consistent and
enormous.In that case, Talbot needs to consider whether theyre going to continue with this
brand name or needs to change it in light of the public outcry.
It might be questioned as to why a new product variant of vegemite was required. Some of the
key motives for the new vegemite were, there was a lack of connection with the customers and
customer tendencies, and in addition there were a constricted target market which only consisted
of kids.



2. MARKETING PROBLEM
Malhotra (2007, p.7-9) describes Problem Definition is the systematic collection and analysis of
information which helps in improving the quality of planning and decision making.
While Kraft used a crowdsourcing approach in 2009 to launch a new product related to vegemite,
owing to its reduced household penetration to just 72%. This marketing campaign was highly
successful in reaching the public, and it also help in growth of the sales of vegemite. A Name
me campaign was started after this, similar to one that was done when vegemite was named.
(Keinan, farrelly, Beverland 2012)
The name iSNACK 2.0 was chosen by replacing the word spread from ispread which was
chosen by the public. This decision of Kraft became the source of a lot of criticism and public
backlash. It resulted in a angst among the public which they were displaying online and via
phone calls and mails.
Although amidst of this backlash, the sales of the new vegemite has grown, and there was a 12%
penetration of households. Besides that, Kraft has also sold 2million jars of this new vegemite.
But contrary to this, there is a problem with this trend as
i. Brand image was getting tarnished because of this debacle.
ii. It did not sound like food but, likely to be a gadget
iii. It may also effect the sales of the original brand
Well it may be argued by many of the critics that this debacle was a public relations stunt just to
garner free publicity for the fading vegemite, but as pointed out by Sheldon Nesdale of
marketingmag.com.au, it was a genuine mistake. As mentioned by Simon Talbot, head of
corporate affairs at Kraft:
"With such a well-loved, iconic brand we wouldn't create something using the Vegemite name
unless we were absolutely sure Australians would love it."

No doubt that Vegemite was getting all the publicity, but it was predominantly negative publicity
and there was a danger of the original brand image that has been maintained for so long years
and has resulted in a traditional reference in relation to Australia. So, Talbot has also got some
moral and ethical issues related to this debacle.
The name iSNACK 2.0 was a great failure as the public was not able to relate with the name at
all and were dissatisfied with the company for that matter.
This situation would not have been seen if the company could have tested the name with a
sample group first.
There is a probability of a further decrease in sales as a result of the public backlash, so actions
have to be taken wisely.











3. MARKETING RESEARCH:
The set of processes or process linking the consumers, identification of information
can be defined as marketing research. Marketing research helps in defining the
opportunities of marketing and problem, the performance of marketing is
monitored by process of evaluation, generation and refining.
The specification of the information required to address the issues and collecting
information by designing the methods which helps in the implementation of data,
collection process, result analysis and their implications. It is also known as
systematic gathering of quantitative and qualitative analysis and recording of data
relating the issues in marketing products and services.

VEGEMITES MARKETING RESEARCH:
In vegemites marketing research, the main reason behind the How do you like
your vegemite (HDYLYV) campaign was that, it would allow people to think and
have a conversation about their consumption in the present and past, which will
lead to connection with the other consumers. So the largest integrated HDYLYV
campaign took place. The main goal of the marketing research in this campaign
was to assess and identify how changing elements in marketing impacts the
behavior of the customer. So the company did extensive public relations campaign,
advertising outdoor in trams, buses and trains across Australia.
The company found a great success and very good positive feedback in the
campaign which was performed by methodological approach in marketing research
known as Qualitative marketing research and quantitative marketing research. This
lead to the systematic and objective identification of marketing research in the
HDYLYV campaign. Philip Kotler defines Relationship of the marketing is
practiced by building satisfying relations long-term with key partiescustomers,
suppliers and distributorsin order to retain their long-term preference and
business (Kotler, n.d).

INTRODUCTION OF iSNACK 2.0:
As per the marketing research methodology the company for the further
growth in their product, launched the new product which lead to the purpose of
assisting management in decision making. Initially Kraft decided to launch the
new product without naming and wanted to create a competition based
campaign called as Name Me Campaign so the people could suggest the
name. This launch was received well by the media and it took 6 weeks for this
poll to get completed and all kinds of communication media were used like
SMS, mail, internet for the voting purpose. The marketing team was looking
for a clever and different name, which was identified, and solution was given
to the problems which in turn created opportunities in marketing the product as
iSpread2.0



Later this iSpread2.0 was modified as iSnack 2.0 by Kraft and this new name
change of the vegemite in the company was carried out by collection, analysis,
and dissemination of information which gave way to the best outcome of the
campaign. The detailed plan was developed to implement the iSnack2.0
campaign and this development effect lead to the best outcome of the decision
taken by the company which reached the consumers in large scale. (Howard R.
Moskowitz, Jacqueline H. Beckley, Anna V. A. Resurreccion, 2012.)



In this modern world Internet lead to the development of websites which is more
interactive, and is become a common place for the companys and the consumers
to have a presence in web with the wide range of data collection and analysis. The
growth of online market is a global force and is the new competition for companies
now.
So the iSnack 2.0 campaign carried out its marketing in the internet and made a
bold move by advertising in Australian Football League Grand Final 2009 and new
vegemite was in the centre stage of millions of viewers as it was launched during a
game of Australias most beloved sport (Football) at the sport stadium- The
Melbourne Cricket Ground. This made iSNACK2.0 face an immediate backlash
from the consumers both online and offline. (By Julian Lee., Age, The
(Melbourne). 10/02/2009.) This was due to the lack in Marketing Research that
was adapted and the company failed to correspond ease with the available
information. (ABC Premium News. 10/07/2009.) The company should have
worked hard to stay competitive and marketing research could have been carried
out effectively by both quantitative (What) and qualitative (Why?) ways in
order for the better understanding of the target audience and the motivations
behind behaviour of customers.


With so many of the drawbacks in the Marketing research by the company gave
way to the backlash of iSnack 2.0 from consumers to make purchases, Hence the
company needs to grab the average consumers attention by researching on more
new compelling methods with messages combination that will more effectively
resonate. ("We have been overwhelmed by the passion for Vegemite and the new
product. The new name has simply not resonated with Australians.)
(Kraft spokesman Simon Talbot, quoted on BBC News, 2009 )




4. CONSUMER BEHAVIOUR
Vegemite was a rage among Australians who had it almost daily, mainly as bread spread. To
understand the consumer's perceptions of the brand, Kraft conducted an online research analysis
with the help of social media. To analyse people's opinion, Vegemite opened a website called
www.howdoyoulikeyourvegemite.com.au in 2008. Based on their preference, online users could
vote for the best way of having Vegemite by clicking any one of the twelve options given on the
website.
As a marketing strategy, Kraft decided to launch the product without a name. After announcing
the product's release, they held a competition that ran for two months urging Australians and
New Zealanders to suggest a name for the new Vegemite version. Just after the launch of the
iSnack2.0 on September 26, 2009, Kraft was hit by a wave of criticism against the new brand
name. Industry observers opined that customers had rejected the name outright as was evident
from the negative comments that poured in on Twitter and other social networking sites as well
as blogs overnight. Faced with public wrath, Kraft's board members decided at an emergency
meeting called on September 28, 2009, that the name 'iSnack2.0' should be immediately dropped.
Within four days of the launch of the new name, Kraft announced that it would give iSnack 2.0 a
new name.
Many advertising experts applauded Kraft's strategy of crowd sourcing the name to create
awareness about the new product. According to them, the success of the branding exercise was
evident in the instant buzz it created about the product, in both offline and online media. Industry
experts and critics remained divided in their opinion on the success of the branding exercise.
While some suggested that it was a poor marketing decision that caused considerable brand
damage, others believed in the conspiracy theory - that it was a cleverly planned publicity
gimmick which generated unprecedented brand awareness for a new product.
But after the mid-2000s, Australia witnessed a gradual change in its demographic composition.
The number of immigrants increased considerably in comparison to people born and brought up
in Australia. Foreign born people, who had not been exposed to Australian traditions and tastes
did not like the strong taste of Vegemite, preferring butter or cream cheese instead. Thus, Kraft
witnessed a falling demand for the product in Australia. The company conducted online research
and formulated a new recipe for Vegemite based on consumer insights. It introduced a new
spreadable version of the original Vegemite in July 2009 and, as part of the product promotion,
started a naming contest 'Name me'. From among the 48,000 suggestions received, Kraft's
marketing team picked out the name 'iSnack 2.0' for the product, hoping that the trendy name
would appeal to the target segment - Generation Y consumers.

5. BRANDING
Nowadays everything comes under a brand nothing comes unbranded in the
market. Branding plays a vital role for a new product that is introduced in the
market. The three common strategies followed by companies for naming their new
products are sub brand name, company brand name or corporate umbrella,
individual or separate family names. A brand is normally conceptualized as being a
category within memory having links associated with qualities, company picture,
in addition to overall thought patterns. The naming framework used for an
extended brand might result in the dilution of the parent brand. If an extended
brand didnt receive good response in the market then it would leave a negative
impact on the parent brand, the consumers are less likely to buy any family
products that had a failure product in the market (Sood, Keller & Lane, 2012,
p.374, 376)
Vegemite which has been introduced in the Australian market for over 70 years has
become an inevitable part in Australians breakfast. It has been considered as an
iconic product of Australia and the people do enjoyed having vegemite in their
own way.
About company:
Vegemite is the popular product of Krafts company that produces both food and
beverages in about 10 countries .Worldwide Krafts market and manufacture
packaged foods and beverages. It has got about 50 brands and the revenue of the
company is more than 100 million and vegemite is one of their key products
(Marketwatch, 2009, p.94).
Even though the company had a rich history, by 2007 the company was losing
ground. The profit of the company fall sharply, the base cost shot up, and there was
decline in revenues. Moreover, the company found it very extremely difficult to
survive the situation (Keinan, Ferrely, Beverland, 2012).
The company not only had a decline in revenue but also I had a decrease in its
volume during 2007.The company was striving hard to recruit youthful aussies to
consume their thick brownish salty spread that their parents adored usually (Wall
street journal 2012). So Talbot and his marketing team at Krafts conducted a
How do you like your vegemite campaign in order to know the insights of the
people. The results showed a new trend of mixing vegemite with Philadelphia
cream cheese, which is a product of Krafts. So the company decided to mix its
two products and make a brand extension to the vegemite that would indeed
revitalise the current market of vegemite (Keinan,Ferrely, Beverland,2012).. The
new product was named as the isnack 2.0 after the name me campaign .The
consumers expressed their aggression both online and offline when the new name
for the new vegemite was announced. Nevertheless the less pungent, less salty
mild sweeter variation in the first was rapidly yanked by retail store shelves
(Vieira, Gustavo, 2012). Simon Talbot, head of corporate affairs at Kraft said that:
"With such a well-loved, iconic brand we wouldn't create something using the
Vegemite name unless we were absolutely sure Australians would love it."(
Marketwatch, 2009).
The way Talbot chose to revitalise and extend the brand of the traditional vegemite
was not appreciable moreover the name isnack 2.0 also made confusion and upset
to its users. The Krafts new vegemite name saga has done tremendous damage to
its brand(ABC Premium News, 2009).As outlined by Krafts, the new vegemite
had only a sales of about 350000 jars throughout the first year ,whereas the older
version had 22 million(Pannett, Rachel, 2012). "The new name has simply not
resonated with consumers, particularly the modern technical aspects associated
with It." said Simon Talbot (New Zealand Herald, 2009). In an online voting on
nzherald.co.nz about 94 per cent voted dislike to the new product name. Some of
the news headlines after the product announcement were ISuck 2.0: Unhappy
little Vegemites" and "People iHate Vegemite iSnack"(New Zealand Herald,
2009).So it is evident from the consumers response that the brand extension
especially the name ISNACK2.0 is not welcomed by the people.

6. CONCLUSION AND RECOMMENDATION
Even though vegemite is the traditional product of Australia the company couldnt
take over the younger generation with their product. Their product was mainly
consumed by the older generation. New generation were susceptible to new
products that are available in the market that gave a new taste and experience.
However the company introduced a new product in the market named Isnack 2.0
which is a blend of vegemite and Philadelphia cream cheese which was initially
welcomed by the consumers due to its new taste but soon it was losing ground due
to its odd name. Even though the name isnack 2.0 was named after an online
campaign unfortunately it doesnt receive any good response in the market in
addition, even the traditional customers regret to rely on the product due to the new
name. The main problem faced by Krafts was that, the company tried to focus
mainly on younger generation and they gave less focus on the old ones. But the
fact was that most of the companys consumers were traditional user so the new
taste and the new name were not a good match for them in addition the new aussy
children seems to rely on other brands rather than the new vegemite. So the
company had to face huge decline in its sales. The company would not only focus
on a particular age group but it should target on wide range of customers of
different age group. And while choosing a name to the product it should match
with the current trends in the market, names do have impact on the consumption of
the product, and Kraft failed to have a good name for its new vegemite.
It is recommended that they should either go for changing the name or make the
public understand the depth of the product.

REFERENCES

'Company Spotlight: Kraft Foods' 2009, Marketwatch: Global Round-Up, 8, 11, pp. 93-102, Business
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iSnack-Controversy-Case%20Study.htm
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