Kinder 12/1/08 Surprise Eggs
There are some customers in the United States who go to the supermarket every
Christmas or Easter, maybe even on Halloween, and no longer see a favorite chocolate of theirs. This chocolate is the Kinder Surprise Egg. This chocolate egg has achieved iconic status in some important markets in Europe. Unfortunately, a looming government threat hangs over the product in the United States, and recently in its most popular country Germany. Suddenly the toys popularity seems threatened by external variables it may not be able to control. The Italian company Ferrero SPA, launched the brand in 1972. The product itself is a hollow milk chocolate in the size of a hens egg. What distinguishes this product from other chocolate eggs is the surprise toy inside. This toy typically requires fixing of smaller parts, immediately engaging the customer. The name Kinder Surprise came from a combination of two words. Kinder in German means children, and surprise came from the toy inside. Kinder Surprise is in the confectionary industry, specifically manufacturing, distributing and selling. Ferrero manufactures the chocolate eggs, while MPG now manufacturers the toys inside them. Originally, Kinder Surprise eggs were targeted at children. The little surprise toys were intended to capture the imaginations of small children, while delivering them sweets. The way this toy was going to separate itself was not with the chocolate, but with the toy itself. The surprise that would come out of the chocolate was the selling point of the product. While the chocolate itself is considered mediocre by Kinder Surprise aficionados, and there are serious Kinder Surprise aficionados, they take solace in its mediocrity. The strategy behind the product has always been the diversification of its toys, and the unpredictability and quality of them.
Its primary customers, though, have become quite different than Ferrero originally intended. While the toy was originally intended for Children, an adult cult phenomenon has come out of collecting kinder toys. In fact, there is a serious collectors market that pushes the success of this product. These collectors call themselves completists as they attempt to have every form of the Kinder toy product ever made. In total, there have been thousands of various toys that have come from these Kinder surprises, and actually obtaining all of them is very difficult. This difficulty in collecting the toys from Kinder Surprise eggs comes through some of the segmentation approaches the company takes geographically. The company originally made three different lines of products, one line for Germany, one line for Western Europe, and another for South America. For the completists to be successful, they have to obtain the items from all three of these lines. While the three lines have merged into two lines, now recovering those toys that were made originally becomes more difficult. By segmenting geographically, Ferrero can appeal to the populations of that region by giving them a sense of history and a feeling of ownership with the Kinder Egg toys. In theory, it creates a brand identity if Brazils toys look different than those of Germany. The customer feels he is being catered to. While the product segments geographically, it also segments demographically. By producing toys ranging from Cinderella to a Sports car, Kinder Surprise is segmenting by gender, which appeals to the child. Segmenting by gender is also inoffensive to its adult customers, who are simply interested in completing their collections, and understand the history and tradition of the product.
The strategy of the firm with this product is to create a relationship with its clientele more so than other chocolate confectioners. The relationship they want to build is a trusting one with parents and children alike. The way Kinder accomplishes this strategy is twofold. First, the product, especially Kinder Surprise, appeals to the child, in that the chocolate pleases them, and the toy is fun to play with. The toy distracts the child from asking for more chocolate. Through this distraction, the parent is pleased in that their child is not immediately begging for another chocolate. The grief from the mother or father not wanting to give too much chocolate to the child is saved. What this relationship leads to is what they consider a Kinder World. Because Kinder has been around for 36 years, the company knows there are multiple generations who are a part of Kinder history. Thus when marketing their product, Ferrero wants to relate to everyone who has ever been a part of the history and tradition. This idea, hopefully, will result in brand loyalty. Kinder Surprises website (http://www.kindersurprise.com/pages/toys.html) is a testament to the marketing idea behind Kinder world. On the official Canadian site, you are a part of the Canadian community, giving the impression Kinder understands your culture. The five main options and links are Home, Our Toys, Our Products, Parents, and Contact Us. Immediately, the Our Toys link should jump out at the kids, the Our Products link to researching completists, and to worried parents the Parents link gives the information they need about the relationship between their children and the Kinder product. So just on the Canadian site, a Canadian community is built. In fact, there is a toy collection sheet for kids. Immediately, Kinder is trying to draw kids into the belief
that they should be collecting the toys that they receive. This immediately builds brand loyalty within the curious child; something the parent may not be able to control. But the parent, rather than feeling as an outcast, feels included. The headline reads, We have designed our site so that it is a fun, informative and a safe environment for kids. Then the Parents section explains to the parents that the site includes games, music, and downloads, seemingly innocuous things for children. What the parents may not notice, though, is the beginning of the child being drawn into imaginary Kinder World. In fact, at the top right of the screen, there is a link to the global site. This link is the bridge from Canada to the rest of the Kinder World. Much like a geographic map, the other countries seem far but tangible. This marketing idea makes the childs imagination grow faster as they consider what other countrys toys look like, and lets them know children worldwide are involved with Kinder. While the Kinder global site is in a language other than English, the most important aspect is the part that reads Magic Kinder World and TV in English. Immediately, a childs eyes are drawn to these words. Thus the global site emphasizes two important themes, and the consumers come to believe that these are universal characteristics of a Kinder Surprise fan. The Magic Kinder World is not yet running, but the TV section has multiple videos about Kinder Surprise. Then the part that says Magic Kinder Cup, while in another language, is an internet game, making the Kinder collector a competitor in the community, making them part of this intense completist culture. Kinder history, in terms of strategy and production, can be broken down into two distinct periods. Before 2004, Ferrero was responsible for making both the toys and the
chocolate. But in 2004, a company based out of Luxembourg, Magic Production Group (MPG, took over toy production while Ferrero remained responsible for making the chocolate part of the product. In order to understand what has happened with the products strategy since 2004, it is important to understand its history before 2004. After 1991, Ferrero had three distinct production lines. The German line is considered to be of the highest quality to Kinder aficionados. Before 1997, these products were only sold in Germany, but after 1997 were sold both in Germany and Austria. What separated these Kinder surprises were their instruction papers, which were quite large and had a unique numbering system. Interestingly, there was no rhyme or reason to the numbering system; rather each one just began with a 6 or 7. The papers had the name of the series on one side, and the name of the toy on the other along with the assembly instructions. The Western European line, which meant all countries where Kinder Surprise were available and not banned, excluding Austria and Germany, but including those countries outside Europe where they were sold, included a different number system that involved the use of the letter K. These toys were considered less sophisticated than the German ones, including instruction manuals that were more basic. These toys were numbered according to the year they were made, but unlike the German toys did not have names included on the instruction papers. In recent years, there have been reproductions of K toys, but they are called recasts because they are reproductions and unoriginal. The Argentine/Brazilian line is virtually the same as the Western European line, while there are some subtle differences in the product. The European line toys have eyes painted on the characters, but the Argentine line of toys has stickers for eyes. There are
also a couple of toys exclusive to the Argentine line, including two specific jigsaw puzzle toys. Lastly, the papers in the toys were slightly different too. The papers in the Argentine line were of poor quality and tore easily, while they showed the toy series and assembly number on one side, with a multi-lingual safety warning printed on the other. After 2004, when MPG took control of the manufacturing of Kinder Surprise toys, they merged the German and Western European lines so that the same toys were now distributed in all European countries. The numbering system was changed so that in the first year it was a c-series, the second year an s-series, and as of 2007 a 2-s series. Also, the toys and papers were changed too. The toys now had an MPG mark rather than a Ferrero one, and the papers were made larger. While the toy lines merged, some regional characteristics of the papers stayed true. German toys tend to still have the series and toy name in German. Western European papers have no writing, but do contain the Magicode logo. Interestingly, there continues to be a separate Brazilian/Argentine line, which has distinct stickers and papers. For the Argentine line, the papers are bigger, showing the toy in series, the assembly instructions and a multi-lingual safety warning. For the Brazilian line, the papers have remained the same size with the warning section in yellow. Also, two curious things have transpired with the Argentine/Brazilian line. Some K series toys have appeared, also some recasts of the older German toys have appeared, including the German six-digit number. It is also worth noting that Kinder surprise has a few limited edition toy series. First, they have hand painted figurines. These toys can either have animal or cartooncharacter themes, but always have the appropriate style of its country. Kinder surprise
also releases a line called Steckfiguren which roughly translates to snap-together figurines. These are also typically cartoon-character based, and were originally only released in Germany. Lastly, the Kinder toys puts out Metal figurines. These toys, though, have been discontinued since MPG took over. The magicode logo is an important new strategy to promote kinder eggs by MPG. As is typical of many dynamic companies, they are using the Internet to draw in customers. In each toy a paper strip with a magicode appears, which MPG refers to as Internet surprises. Each magic code can be typed into the Magic Kinder website, and the code allows the customer to play Magic Kinder games. Some of these games need to be downloaded, while others can be played directly on the site. This strategy adds a new dimension to the product. Now not only is the product a collectible to adults, but before children can begin to relate to the product on that sentimental level, they can do so immediately by being specially catered to by these games. Finally, Ferrero brings out 20 new sets of figures every year for the eggs, as well as 150 new kits for toys that have to be put together with the help of a tiny instructions sheet. In general, though, Kinder Surprise has not changed the product itself. Its ultimate popularity in Europe has generally continued. Understanding the different toy lines is important, also, in understanding the international focus of Kinder Surprise. Because Kinder Surprise is marketed across multiple continents, the product needs to be as diversified as its customer base. The diversity surrounding the product has led to diversity within the product so as to appeal to
its audience. Ferrero has made Kinder websites for many countries in various languages, emphasizing its global focus. The product is specialized, and typically customers familiar with the product seek it out or have heard of it from friends. It is not a mass purchased product to the extent that Nestle fifty-ounce Easter egg bags are, so it must be marketed on an international scale. Kinder Surprise is as much a collectors item as much as a chocolate or a toy, and it the companys mission to reach all its collectors worldwide. Not only must they keep up distribution, but once again their multilingual websites help keep the international tone.
A testament to their international focus is the various blogs about the product, particularly the emphasis on the interest of current news about Kinder Surprise eggs. One anonymous blogger in wrote, particular I will definitely miss these when I move back to the States from Germany. First off, I personally love the chocolate. Its like the Kinder Bueno...in egg form. For Easter I dropped 5 on one of the gigantic ones and got a Pirate Snail that slides down a slide into a little a bucket of water. A Pirate SNAIL! This blogger brings up a couple points Kinder Surprise has achieved through its marketing efforts. First is that the customer will not label the product as only significant in Germany, as he mentions that he will think of the chocolate elsewhere. He then mentions how he would pay for more significant types of Kinder Surprise eggs. This loyalty and curiosity for more interesting Kinder surprise eggs is a testament to how the product is less about the chocolate, and more about collecting the toys. Another blogger wrote, I love, love, love Kinder Eggs, but for the toys and not the chocolate. I had a hard time finding them in Chicago (my one source dried up) so my husband bought me a case of them from Canada. Oh, what a happy day that was. Clearly the ban in the United States is resisted by the ability of the product to transcend geographical marketing limits. The major external factor that affects the firm and its strategy is one of the reasons for its current ban in the US, as well as another growing concern worldwide. In the US, Kinder Eggs were banned for two reasons. The main, overarching reason is the 1938 Food, Drug and Cosmetic Act. This Act prohibits the embedding of non-food items
completely enclosed inside food items, unless the non-edible part has a functioning value. For example a lollipop or Popsicle stick is not edible but is a useful handle.1 Unfortunately for Kinder Surprise, the non-edible part does not have any function in aiding the chocolate. This act was originally implemented to prevent non-food items to affect the food, which in Kinder surprises case, it does not. The more frustrating reason for its ban in the US for Kinder Surprise is that in April, 1996, the Consumer Product Safety Commission (CPSC) claimed the toys were potentially choking hazards for children under three years old. The idea behind the banning is that the child will not be able to differentiate between the chocolate and the toy. This argument seems strange, though, for a couple of reasons. First of all, the toy comes with a warning that the product should not be given or be around a young child. Second, the little pieces are incased in a plastic tube that is difficult and takes strength to open, more so than the strength of a small child. These two reasons were enough to frustrate Ferrero. Unfortunately for Ferroro, this second reasoning for the ban may not only continue to exist in the US, but rather in its most popular country. The Childrens committee of the German Parliament, which is actually made up of adults (I was confused at first as well), fears children might mistake the toys in the eggs for food and swallow them.2 The committee is responsible for introducing legislation on behalf of children. Tragically, these sweets are most popular in Germany. Ferrero angrily replied to this announcement. The company cited the numerous safety tests it had gone through since coming on to the German market in 1974 by saying, There is absolutely no evidence that the Kinder Surprise eggs as a combination of toy
and foodstuff are dangerous, said Elise Glaab, the companys spokeswoman. The Kinder Surprise toy is separated from the chocolate by a plastic capsule. Another external dimension undisclosed but present that is affecting the Kinder Surprise product is the emergence on the stress for nutrition. While Germany may cloak its ban with the reasoning the US gave, it seems suspicious that after all this time they would ban Germanys favorite candy just for that.
This nutrition worry may be an ulterior motive for the Commission to ban the Kinder Surprise, or maybe induce Ferrero to change the chocolate. Children cant differentiate between toys and nutritional items. It is a sad fact, but that means that Kinder Surprise eggs have to go, said Miriam Gruss, a member of the committee.3 The Kinder Surprise egg actually contains 15 grams of fat, and 9 grams of saturated fat, while having a meager 4 grams of protein. Based on a 2,000-calorie diet, that constitutes 23% of ones daily value of fat, and 45% of ones daily value of saturated fat. Meanwhile, those 4 grams of protein account for 8% of ones daily value. So while Ferrero may think it is dealing with an issue of having to change its toy, maybe it really might have to change the nutritional facts of its product to remain a player in the German market. In an article in Money Marketing, An account manager at Direct Life & Pensions voices his concerns for the potential ban in Europe. He first disagrees that the product is banned because it is hazardous more so than it is unhealthy. Then the manager goes on to say, The fact that there have been no reported incidents of German children mistaking these toys for nutritional items and the fact that, no child could, without help, open the plastic capsule which conceals the toy does not appear to have any bearing on the decision.4 He then explains that in the business of protecting customers, no matter how much documentation is done, there is no real way to guarantee protection. He believes this ban is gratuitous. He then jokes that the only way to protect a customer is not to sell anything at all. Lastly, the article explains that a committee in Germany to decide these bans is a bad idea. He believes that putting warning labels on packaging should be good enough.
Kinder Surprises firm, as aforementioned, is Ferrero International S.A. Its in the financial business, specifically it is a holding company with interests in the manufacture of confectionary, including chocolate. Under the NCAIS code 311320 of chocolate and confectionary manufacturing from Cacao beans, Ferrero involves itself in a giant industry. In 2006, it was reported by Dun & Bradstreet that the industry had 631 companies and posted annual sales of nearly $7.1 billion with about 17,179 employees. In the 1990s, more producers became health conscious consumers, and thus the industry had to adjust to making its product seem either healthier or a treat someone could have because their product was distinct. Fortunately, though, in 2000, the health benefits of high-end dark chocolates and cocoa were released. It was shown that cocoa plant extracts have been proven to reduce cholesterol and contain high amounts of natural antioxidants, which fight disease-causing free radicals. Also, chocolate tends to be a seasonal product, receiving fluctuated demand based on the four seasons. The third and fourth quarters typically reflect the highest sales. Interestingly, sales of premium-priced chocolates such as Kinder Surprise have been increasing, possibly because of the interest in medical research news concerning the health risks associated with high fat milk chocolates. Currently Ferreros biggest competitors worldwide for its chocolate production involve Jutrzenka SA, Tinna Oils & Chemicals Ltd, and Merto Trading. These companies have a broader scope than Ferrero, and thus do more business. In terms of selling Easter Eggs, Ferrero mostly competes with the American companies Hersheys and Nestle, although less so since its ban in the 1990s.
In terms of its strengths, weaknesses, opportunities, and threats, Kinder Surprise is a dynamic product for Ferrero. Its strengths involve the fact that it avoids the seasonal demand issue by coming out with new product lines year-round. During Valentines Day, for instance, Kinder sometimes makes a special line of products. Second, Kinder is a premium-chocolate typically not eaten in large quantities, thus it avoids the stigma of the health issues of chocolates. Kinder Surprises biggest weakness is that it cannot completely avoid the seasonal demand of chocolate. The product is unfortunately in higher demand during chocolate eating seasons. So even though the product differentiates itself in that it markets year round, customers typically shop for chocolate during Halloween and Christmas, both of which are in the last two quarters of the sales year. The biggest opportunity for Kinder is its completist culture. This culture can be used in marketing to attract adults as well as children to purchase the product. Unfortunately, the major threat of the product being banned in Germany, and in potentially more locations, still looms. While Ferrero could try to expand the product geographically, its extreme popularity in Europe could dwindle if the product is banned in Europe. The Kinder Egg pricing strategy is one that evokes the belief that the product is special and unique. The chocolate eggs made by Kinder are ones they consider to be a unique aspect of the European marketing mix. The toy is significant in its popularity, and thus the company capitalizes by having a more expensive product. Kinder surprise eggs come in bags of 12. Because Kinder surprise eggs cannot be legally sold in the US, one must have them shipped in order to receive them. Yes, this act
would technically be illegal. But to get a feel for their prices, one can look at the prices in other markets geographically. In Europe, the price of 12 Kinder eggs is 10.90 euros. This comes out to be about $13 US. Nestle, a world famous chocolate manufacturer, makes a fifty-ounce bag of Nestle Chocolate Easter Eggs. This bag contains many more, smaller chocolates, and is priced at $19.50. It is hard to compare Kinder eggs to other chocolate Easter eggs because it is a bigger egg, and is not sold by weight of the bag but by quantities of the egg. The average price of $1 per egg, though, is certainly higher than in Nestles 50-ounce bag. Thus Kinder Surprise is stating that each individual egg is special, and that these are carefully crafted eggs, not ones of mass production. The pricing strategy also builds on Kinders vision that each egg has its own significance. Similarly, in a line to be produced in India, Kinder was going to price the egg at 25 Indian rupees, which equals about .50$. According to Marketing Practice: The Worlds largest Online Resource on Indian Brands, Kinder Surprise is priced at around Rs 25, which I consider too premium for a chocolate brand. The writer goes on to say, I feel that the brand has got its initial pricing wrong. Indians are too choosy to spend Rs 30 on a chocolate as small as an egg. 5 First of all, it should be noted that the prices in India are different than the prices in Europe. Thus Kinder Surprise is segmenting its prices geographically. The price for an egg in India is lower than that of one in Europe. The company may have lowered their prices in India because the economic market there is not as strong. In terms of price sensitivity, the product is very popular in Europe, and it seems
that as long as the egg does not become absurdly priced it will be sold well. It is a more expensive Easter egg, but one that comes with exclusive benefits. Obviously, according to the statement made about the Indian market, its popularity is not the same worldwide. As the article goes on to say, Although the brand has established its position in global market, it is in for a certain surprise in the Indian market.With this high price and little surprise will Kinder Surprise can make it big in Indian market will be an exciting story to watch. 5 But its price strategy between Europe and India, based on that quote, has stayed the same. Kinder understands that its a specialized, premium chocolate. The customers are not paying for mass production, but specialization within each egg. The customer is paying for the chocolate, the instructions, the toy, and hopefully for Kinder the culture. At this point, Kinder Surprise eggs are not in imminent danger, although they may want to consider a couple of strategic marketing moves. First, they must address their potential ban in Germany. Marketing a new chocolate that is healthier may be worth the risk of losing popularity if it means the egg remains on the market. A healthier product should hardly bother the completists who are more concerned about the toy than the flavor of the chocolate. Also, parents who are unfamiliar with the product will be happy to give their children healthier sweets. Second, Ferrero should consider starting lines in new locations such as India as was aforementioned. The products popularity in Europe has spread into other continents, and if the product does get banned in Germany it should have new markets contributing to its revenue. Lastly, Kinder Surprise should continue to build its popularity on the Internet. If the
Internet games can attract the childrens attention, they will become customers year round rather than just seasonally. Also, if each new country marketed has its own Kinder website, they may be able to keep the product from going stale.
1. 1. http://www.associatedcontent.com/article/378773/why_kinder_eggs_are_banned_in_the_us.html?cat=22
2. 3.
http://www.buzzle.com/articles/214443.html
http://www.guardian.co.uk/world/2008/aug/08/germany.foodanddrink
4. PROTECTION: Surprise element. (2008, August). Money Marketing, 24. Retrieved November
29, 2008, from ABI/INFORM Trade & Industry database. (Document ID: 1537551411
5. Marketing Practice: Worlds Largest Online Resource on Indian Brands. 20 Aug. 2007. Marketing
Practice. 27, November, 2008. http://owl.english.purdue.edu/owl/resource/557/09/