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Ferrero Rocher

1. Introduction
1.1 Chocolate market

Premium chocolate is a fast growing and vibrant market in many parts of the parts of the world.
In 2007 the global market for chocolate was estimated at US$6.95 billion. Its global sales had
risen by 18% within the last year as a result of sale and consumer awareness. The reasons behind
the growth of sales and consumer awareness are:

Wider availability of premium chocolate at the retail level.


High levels of new product activity.
Consumers becoming attracted to dark chocolate on account of its health benefit.
Ethical concerns have increased demand for organic and Fair-trade chocolate.
According to the February 1, market research study on “chocolate market”, the chocolate market
enjoyed a total growth rate of 19.1% with retail sales in 2000 producing a $13.7 billion.
(MarketResearch. (2001, February 1). The Chocolate Market. Retrieved March 16, 2009 from
http://www.marketresearch.com/product/display.asp?productid=186930&g=1)

Since 2002 upto 1500 products have been launched. Global premium chocolate market is
forecasted to reach a value of US$ 12.9 billion by 2011. This represents an increase of more than
85% in value terms compared with present levels, and provides an indication that the market in
many parts of the world has only just started to develop towards its potential. This forecast is
supported by the opinions of Nestlé, which claims the global market for premium and luxury
chocolate may reach even higher at US$14bn within the next decade. (Researchandmarket. (2008, November).
Global Market Review of Premium Chocolate Forecasts to 2011. Retrieved March 15, 2009 from
http://www.researchandmarkets.com/reportinfo.asp?report_id=661952&t=e&cat_id=)

1.2 Competitors

The major competitors of the chocolate market are, Nestle, Cadbury and Hershey.

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The second one Nestle, was built as a result of Henri Nestle developing the first milk food for infants in
1867, which in turn helped save the life of a neighbor’s child. The main aim of the business is to build it
as the world's leading nutrition, health and wellness company based on human values and principles.
Nestlé's business objective is to manufacture and market the company's products in such a way
as to create value that can be sustained over the long term for shareholders, employees,
consumers, and business partners. (Nestle. All about Nestle. Retrieved March 19, 2009 from
http://www.nestle.com/AllAbout/AllAboutNestle.htm)

Third one, Cadbury is a leading global confectionery company with an outstanding selection of
chocolate, gum and candy brands. They have created popular brands like Cadbury, Trident and
Halls. The company produces altogether three kinds of confectionery, which is chocolate, gum
and candy. Cadbury operates in over 60 countries, works with around 35000 direct and indirect
suppliers and employs around 50000 people. (Cadbury. Company Overview. Retrieved March 11, 2009 from
http://www.cadbury.com/ourcompany/ouroverview/Pages/ourcompany.aspx)

The Hershey Company is the largest North American manufacturer of quality chocolate and
sugar confectionery products. The Hershey Company earns revenue of nearly $5 billion and has
almost 13,000 employees worldwide. The Hershey Company markets iconic brands such as
Hershey's, Reese's, Hershey's Kisses, Kit Kat, Twizzlers, and Ice Breakers. Hershey is the leader
in the fast-growing dark and premium chocolate segment, with such brands as Hershey's Bliss,
Hershey’s Special Dark, Hershey’s Extra Dark and Cacao Reserve by Hershey’s. (Heryshey’s (2008,
June 11). Newsroom. Retrieved March 13, 2009 from http://www.thehersheycompany.com/about/)

Last but not the least is our company FerreroSpa is an Italian manufacturer of chocolate and
other confectionery products. It was founded by confectioner Pietro Ferrero in 1946 and based is
in Pino Torinese, Italy. The company is still owned by the Ferrero Family. The group headed by
the chief executive officers, Pietro and Giovanno Ferrero has 36 operating companies, 15
factories and about 19600 employed worldwide.

Ferrero group also cares deeply about social issues, the environment, food safety, the local
communities where it operates, and its own human resources. Today many Ferrero products are
global products, sold all over the world, and Ferrero has become the fourth largest confectionary
group in the world.

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But its particular characteristic, as they call it is being “glocal”: “a company that is at the same
time global and local, attentive to international development, but also to its relationship with
individual localities”. The company’s core commitment has always been to the consumer. A
relationship of trust based on knowledge, experience, sensitivity and intuition, a mutual and
enduring loyalty, tied Ferrero to its consumer and is a measure of its attention to their needs, a
key element in the company’s success. (Ferrero. Business. Retrieved March 1, 2009 from

http://www.ferrero.com/eng/index.html). The offer we have selected for our target segment is Ferrero Rocher.

The offer we have chosen to review the appropriateness is Ferrero Rocher.

2. Ferrero Rocher
Ferrero Rocher is a success worldwide. Approximately 3.6 billion Ferrero Rocher chocolates are
sold each year in over 40 countries. The success of Ferrero Rocher lies in its unique packaging
and labeling, it’s one of a kind recipe and the fine details which goes for its production and
packaging. (Ferrero. Business. Retrieved April 24, 2009 from http://www.ferrerrorocher.cam )

2.1 Levels of a product

According to Philip Kotler there are three Levels of a product, which are the core, the actual
product and the augmented product.

The first level is the core product, deals with the underlying benefits and features of the product.
Ferrero Rocher basically is a chocolate therefore its key benefit is sweet and tasty confectionery.

The second level, the actual product is also sometimes referred to as the tangible product, and
deals with issues such as physical attributes, brand name, quality, and packaging. The brand
Ferrero is a very powerful brand as the Ferraro Spa Company has existed since 1946. The
product’s success lies in its unique recipe and in its one of a kind shape. At the center of each
Ferrero Rocher is a perfectly roasted hazelnut, surrounded by a luscious, smooth filling and a
delicate crisp wafer, all enveloped in creamy milk chocolate and finely chopped hazelnuts.

(Ferrero. Retrieved April 20, 2009 from http://ferrerochocolatesusa.com/)

The last and final level is the augmented product. It deals with things that enhance the complete product
package. In the case of our product it’s varieties, gift packs, special process and being one of a kind.
Ferrero Rocher offers two different varieties: Rodnoir and Rafaello. Rafaello has an almond center and

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shredded with coconut and is in a silver wrapper whereas Rondnoir is in a brown wrapper and its
Ferrero's dark chocolate. Ferrero Rocher is a popular gift during the holidays. For instance the Chinese
culture associates the gold of the packaging with good fortune and wealth. Rocher chocolates are a great
gift for all your everyday occasions: Thanksgiving, Birthdays, Mothers Day, Anniversary Gift, Thank you
Gifts. (Ferrero. Retrieved April 20, 2009 from http://ferrerochocolatesusa.com/)

Last but the not the least is its quality of being one of a kind. When you experience Ferrero
Rocher, you experience a creamy, crunchy, multi– layer, multi sensory chocolate and hazelnut
delight. Eating Ferrero Rocher is a one of kind experience.

2.2 Branding, Packaging and Labelling


Ferrero has brought in Brand Extensions to the Rocher, namely Rondnoir and the Rafaello. In
this way they have been able to use the mentality of the buyer when seeing the Ferrero logo and
hiking the interest in Rocher lovers. Their products are hence packaged in a very beautiful
manner as discussed in the actual level of the product. They are first wrapped in a golden foil of
a matte texture. They are then branded by sticking the Ferrero logo on them and then placed on
paper such as cupcake paper. Ulker has introduced the Ulker Palino, a brand that completely
imitates the Branding, Packaging and Labelling of the Ferrero Rocher, except for the fact that
once you put it in your mouth, it is no match to the chocolate made by Ferrero.

2.3 Market Segmentation , Targeting and Positioning


Our product could be segemented geographically, demographically, behaviorally and
psychographically.
Geographic : Our product is mainly found in developed and developing countries in which we
find it in cities and towns mainly. You may find it in Supermarkets and Department Stores but
not in convenient stores and normal shops. This brings us to the conclusion that it is segmented
at developed neighborhoods.
Demographic: Our product can mainly be segmented on the basis of demographics. Starting with
age, we decided that the age range of people it is aimed at is from the ages 12 to 40. We decided
so as from the ages 12 onwards kids start experimenting with different brands and then generally
get hooked on to Ferrero Rocher. They relish and enjoy these chocolates past their twenties,

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thirties and generally slow down in their forties due to other complications. Gender is not an
issue. It is generally aimed at middle and upper level income groups.
Psychographic: People who believe that Ferrero Rocher is in tune with their personalities and at
the same time people who have a strong preference to certain socioeconomic status in life and
their lifestyle tend to turn to Ferrero Rocher as an outlet to their psychological needs and wants,
especially when backed by buying power.
Behavioural: Consumers prefer Ferrero Rocher compared to other packs of chocolates as it
delivers a strong brand and hence use it for special occasions., Loyalty to this strong brand keeps
consumers in close proximity to a Ferrero Rocher at all times. Finally comes the attitude, the
actual feelings that one has with regards to a product. And thanks to the sweet milky loveliness
of Ferrero Rocher, attitude segmentation never fails.

Moving on to Targeting, We believe that The Ferrero company has only entered segments where
it can offer superior value and gain advantages over competitors. It has evaluated its marketing
organization objectives and resources carefully. It has a suitable size growth and looks good
when seen from a long-run perspective.
The Ferrero Company has a little bit of differentiated marketing wherein the other types of
chocolates come into the picture, but when considering Ferrero Rocher only it follows niche
marketing wherein it goes after a large share of one of a few sub-markets of the confectionary
industry.

If the Ferrero Rocher had to be postioned we believe that with regards to its superior quality,
medium – upper income class appeal and great wrapping it would more into the range of high
perceived quality and status and extensive personalized service.

Findings

Following are the findings of our report:

Anywhere in the world, regardless of the production plant which it is made, a Ferrero Rocher
tastes the same. Taste is of a pure and unique quality. Quality of a Ferrero Rocher is at its best
with best quality ingredients and high quality standards.

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Ferrero has a competitive advantage because of having a wide range of sizes.

Availability – Ferrero is available at any supermarket and department store in the markets
(countries) which they operate.

The product range directly linked to Ferrero (Rocher, Rodnoir, Raffaelo) is at the optimum level.
3 sub brands catering 3 main markets and to their prestige segments of Dark Chocolate, Nut and
Milk Chocolate, Coconut chocolates.

Distribution network seems to be very good because no matter how much the demand increases
Ferrero never runs out of stock and Ferrero is always positioned on Middle 1st shelf above eye
level in any super market.

Promotion in certain countries is not enough. Ferrero is not promoting their products through TV
and printed media adverts and special promotions. As an example: most of the Sri Lankans don’t
know the taste or the brand name or the reputation of the Ferrero rocher.

Current Pricing Strategy of Ferrero is reaching nowhere. It is neither high priced for the prestige
segment nor low priced for the mass market. It’s stuck in the middle.

Recommendations

Asia has the worlds booming economies while Europe and America is in a recession. Ferrero
should promote their products more in the Asian markets especially in China and India which
has an emerging upper middle class which will amount to half of the world’s population.

Localize the advertisements and promotions. Ferrero should look in to the culture, values, norms
and trends of the markets which they cater and then design the adverts and promotions.

The market which Ferrero caters is relatively inelastic to the price. They should try to increase
the prices and improve the profits.

Ferrero can use price differentiation in the markets by increasing prices in the markets which has
high purchasing power.

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Ferrero can improve their brand image and sales in the local markets by sponsoring local events.
Get some customer feedback and carry out market researches frequently.

More response to the festive seasons in the Asian market. Example; Indian new year, Chinese
new year, Deepavali, Ramazan.)

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