Vegemite Swot Analysis

iSnack 2.0

Case Assignment #1

MBAS 831 – Marketing Fundamentals

Monday May 11, 2015

Team Phoenix (344)

Margaret Hong (Lead)

Qusai Al-Saif (Second)

Vipin Pal (Second)

Albert Oppenheimer

Hamilton Petropoulos

Raghuveer Krishnan

Table of Contents

THE MEANING BEHIND VEGEMITE 3

TIME FOR A CHANGE 3

“HDYLYV” VS “NAME ME” CAMPAIGN 4

“HDYLYV” CAMPAIGN 4

“NAME ME” CAMPAIGN 5

WHAT NOW? 5

APPENDIX 7

EXHIBIT 1: SWOT ANALYSIS 7

EXHIBIT 2: FORCE FIELD ANALYSIS 7

EXHIBIT 3: HOW DO YOU LIKE YOUR VEGEMITE IMPLEMENTATION SCHEDULE 8

The Meaning Behind Vegemite

Vegemite has been an Australian icon, an icon that has represented the ‘Australian identity’ as effectively as a kangaroo. Vegemite has been a part of Australian heritage for more

than 70 years and is identified as an ‘Australian’ product, not a product of Kraft. This is evident in Vegemite’s role in Australia’s unofficial national anthem “Down Under”. Over 22 million jars have been sold per year, with cumulative sales of 1 billion jars to date.

Vegemite represented not only the national identity of Australia, but also an individual’s personality, depending on how a person consumed it.

Supermodel Miranda Kerr enjoyed eating Vegemite with avocado, representing her healthy lifestyle. Danni Minogue enjoyed eating Vegemite as a hangover cure, indicating her active social lifestyle. The celebrities played a strong role in promoting the how “Do You Love Your Vegemite” campaign by providing free advertising when they stated how they enjoyed their

Vegemite.

Time for a Change

After over 70 years of success in the market and a key driver brand in Kraft Food Australia’s repertoire, it was time for a Vegemite image overhaul to change its aging brand image. Vegemite was experiencing declining sales, household penetration dropped by 8%, and increased costs as a result of excess capacity at its manufacturing facilities. The company lost 10% market share over the last five years as a result of these factors. Internal reasons for the declining performance of the product were due to Vegemite’s limited use, bitter taste and low usage options, and its high capacity and long storage time causing a low repurchase rate.

External reasons for Vegemite’s subpar performance were due several factors. First, Vegemite was traditionally marketed as a breakfast option for families with children. Then, there were more breakfast options, the number of Australian households having children was decreasing, and the Australian lifestyle was changing; Australians did not have time to eat breakfast. Secondly, Kraft ignored important customer segments and overlooked global consumption. 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.

To undergo a brand image overhaul, Talbot and his team conducted social media research and found that Vegemite had a positive brand affinity, and in fact, was ranked as a number one brand across the globe. Vegemite was also iconic and novel, and had an extremely active presence on social media. Having a strong positive brand affinity meant that any advertising campaign would result in quick word of mouth, strong attachment to the brand, and significant effect on brand image. Australians were so patriotic towards Vegemite that they got defensive if the Vegemite brand was insulted. The product itself also created a nostalgic feel, due to its association with families and children. However, the product could be improved in several ways. First, its black colour, unusual taste, and its ingredients discourage non-Australians from trying the product. If the product ingredient mix was changed, non-Australians could adopt the product. Secondly, its narrow brand association and lack of product diversification makes the product weak. Brand association was limited to family with kids. Exhibit 1 provides an overview of the Vegemite SWOT analysis.

“HDYLYV” vs “Name Me” Campaign

“HDYLYV” Campaign
To analyze people's opinion, Vegemite opened a website called “How Do You Like Your Vegemite” 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. The campaign was successful for several reasons. First, Kraft identified the target consumers, which included all Australians, but in particular focused on lapsed or non-users of Vegemite and new Australians. The cultural fabric of Australia had changed, with 23% of the population consisting of migrants; Kraft therefore needed to engage with new Australians to introduce the product. The company also needed to re-engage with Australians who had grown up on the spread but had lapsed in usage due to a changing lifestyle or the brand simply no longer being top of

mind.

Second, there was a communication strategy. The strategy was to use IBM research, that showed that Vegemite was the most beloved brand on the internet, to leverage the new “How Do You Like Your Vegemite” campaign and drive people to the website. The data derived from the HDYLV website were then used to conduct a media relations campaign leveraging the splits about how different people most enjoyed their Vegemite. With landmark sales as significant as one billion jars of Vegemite, it was decided that this landmark should be celebrated with the nation.

Lastly, the team had an implementation timeline (Exhibit 3). Planning started in early March 2008 in preparation for an October 2008 launch for the One-Billionth jar.

As a result of these three factors, the campaign was executed successfully. The campaign had not only surpassed all sales and media goals, but broke all existing records for the brand. Media outlets picked up the HDYLYV across the globe. Vegemite broke all records, shipping the largest amount of Vegemite ever at 1000 tons per month. The campaign also saw an increase in sales of 5% over the previous best year in the history of the brand. Consumption growth year-on-year saw a 6% increase, and household penetration grew by 2%.

“Name Me” Campaign
Following the success of the HDYLYV, Vegemite launched an Australia-wide contest in 2009, putting the product on grocery shelves with special “Name Me” packaging. Over 48,000 entries came in during the contest, resulting in the name ‘iSnack 2.0.’ Perhaps the only thing that went well was the fact that the Vegemite team identified the goals of the campaign, which were to come up with a new name for new product, to introduce the new product, to engage customers in with the new product, and to promote the new product. However, Talbot and his team failed to have a communication strategy, which was one of the success factors evident in the HDYLYV campaign. Simply put, the name didn’t engage the customer. Initial engagement occurred via Kraft’s naming competition, but the final selection was made without reference to the majority of their customers. Feedback showed the name held little meaning and was irrelevant to the product. Customers also felt that it was a joke and insult to their beloved brand. Many associated the “i” with an apple product. When Kraft decided to use a symbol that had American influence, it understandably made many Australians unhappy.

The “Name Me” campaign also lacked an implementation timeline. The team pushed for an aggressive 10-month campaign without any actual milestones. There was little pre-launch consumer consultation or consumer testing. With a lack of research supporting the decision, their choice to time the release during Australia’s most iconic sports stadium was catastrophic. As mentioned earlier, any advertising related to Vegemite would have quick word of mouth and have significant effect on brand image. By tying the release to a national event, the company successfully reached millions of viewers instantly but with unintended negative results. This stumble enhanced the negative media coverage because of the strength of the brand affinity.

What Now?

The goal of Vegemite’s brand extension was to introduce a new Vegemite, a new product used lift Vegemite to its former glory, and a new product that was made for non-traditional users. The concept of brand extension, if executed correctly, is to bring a product to market with fewer investment costs, to leverage existing relationships, and to require less investment for consumer awareness (Halo Effect). Kraft owned both the Philadelphia Cream Cheese brand and the Vegemite brand. The new product simply required finding the right mix between the two products; no further R&D costs were required. Furthermore, a brand extension allows for a reduction in consumer perceived risk and an increase in market share. It also addresses consumer preference changes to keep up with the changing times. Customers will also be more loyal to the parent brand. However, if executed poorly, there is the risk of damaging the parent brand and losing loyal customers. In essence, brand extension needs to fit consumer preferences.

Talbot and his team have two options: to keep the name or change the name. Taking into account the Force Field Analysis in Exhibit 2, if they keep the name, the advantage is to leverage the 50 million impressions made within the first 72 hours caused by the brand awareness nationally and internationally. Furthermore, the market showed no sign of dropping the product and, in fact, sales of iSnack had risen 47% and the original Vegemite sales grew at a rate of 6%. However, the downside to keeping the name is that consumers felt no connection to the new name as no reasoning was communicated to them. Loyal customers were unhappy and major international newspapers ran full-page stories ridiculing the naming decision.

If the team was to change the name, it could lead to potential increase in sales. The iSnack 2.0 name was not the consumers’ first choice. By changing it, it would make consumers feel as if their opinions were valued. Also, another naming campaign could generate more consumer involvement. The downside, however, is that changing the name would make consumers feel more powerful. There might also be consumers who liked and accepted the new name. Lastly, additional costs would be incurred as a result of changing the new name.

It is recommended that Talbot and his team not ignore the backlash. Using the Service Recovery paradox, the team can turn its dissatisfied customers to achieve higher customer satisfaction. A good recovery can turn angry, frustrated customers into loyal ones. In fact, it can create more goodwill than if things had gone smoothly in the first place. By changing the name, it will show consumers that they listened and cared for their feedback. Summarized below the timeline in which Talbot and his team should take to address the media backlash:

Week 1 Week 2-3 Week 4
• Press release apologizing for the incident
• Directly address complaints that Vegemite is classic and not to be associated with modern fads
• Evidence of listening to customer feelings
• Keep “hype” alive, renew customer hope and excitement • Launch a new naming competition that requires a public vote system
• Link through social media as direct response to complaints
• Limit the options to 6 possible choices for votes each devised by marketing team to manage social media
• Choices generated with customer complaints and brand associations in mind • Announcement of name via press release and social media
• Communicate “you asked, we listened”
• All this will positively affect relationship marketing of brand by achieving a mutual exchange and fulfillment of promises.

Appendix

Exhibit 1: SWOT Analysis

Strengths Weaknesses
• Recognizable brand
• Recent increase in sales
• Iconic status in Australia
• Firm customer base of both local and international consumers (expats)
• Consumers are loyal and highly vocal on social media
• Vegemite has a long shelf life and therefore, low repurchase rate
• Fan base doesn’t extend beyond established consumers; not branching into new demographics
• 75% of Vegemite use is on toast and for breakfast; limited uses
Opportunities Threats
• New consumer groups emerging, such as 23% migrant population
• Trend of combining Vegemite with other products means opening for diversified Vegemite products • General decline in the breakfast foods industry
• Lack of diversity and adaptation makes product “dated” and irrelevant
• Could become “niche” product amongst small target public

Exhibit 2: Force Field Analysis

Worst Case Drivers Current Situation Barriers Best Case Scenario
• Loss in recently won sales
• Poor public reaction
• Dislike of either/both taste and strategy
• Loss money from failed investment • Previously successful/effective market research
• Well-positioned financially to reinvest in new campaign
• “In touch” with consumers • Shipping over 1000 tons per month
• Sales up 5% from previous record
• Solid consumer engagement • Not enough attention to research
• Lack of product testing
• Rushed work (10 months turnaround)
• Picky and highly variable customer base (is “some evidence” of a particular trend enough to warrant a new product?) • Well received product with enthusiastic response to competition
• High sales on both new and old product
• Another Australian icon created
Exhibit 3: How Do You Like Your Vegemite Implementation Schedule

How Do You Like Your Vegemite One Billionth Jar
• Create word-of-mouth and buzz amongst the key Vegemite fan base by giving a preview of the How Do You Like Your Vegemite campaign to the Vegemite Fan Club on Facebook
• Launch the National Vegemite Census using the IBM research, driving people to the website to register their favourite ways of eating Vegemite
• Use statistics from Census to produce localized and national press materials about the findings of the Census • Establishing the One Billionth landmark through research
• A student competition to design the special edition One Billionth Jar
• Launch at Kraft's Port Melbourne manufacturing facility
• Nationwide roadshow with the special edition jar
• Additional media push to encourage further engagement in the promotion
• Announcement of the winner