Nestle KitKat belong to the maturity stage, which is recognized and accepted byconsumers in the market. Advertising and sales promotions have to be done in orderto entice consumers into purchasing the product. Cross branding campaigns withglobally recognized organizations like Android or YouTube is the way forward forKitKat to effectively capture the attention of consumers.34
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MKTG 1199 – Marketing Principles (LF02, Group 2)6.2 Price. Pricing strategy crucial in determining the profitability of a business. Compared to itscompetitor in the market, KitKat confectionary are priced quite low for its value,which goes to shows a high demand for KitKat, capable of producing large volumereducing cost.Price Ceiling vs Price FloorKitKat sets its price for confectionaries above the production cost so as to avoid anylosses that will incur from the sale of each confectionery, also pricing it at a value thatdoes not exceed consumer’s perceived value of the product. Overall pricing approach –Good Value PricingKitKat focuses on producing superior quality chocolate that is of superior qualitywhich allows consumers to savour the taste. In terms of branding, KitKat is known tobe one of the global leader in confectionery market. Hence, KitKat adopts valued-based pricing on the chocolate as consumers has grown loyal towards KitKat brand,superior quality & nutritious. KitKat will take up value-added pricing strategy, itbeing relatively low price, create value for money providing superior quality ofchocolate at a low price.Type of market - Monopolistic Competition, Relatively ElasticKitKat trademark crunchy wafer chocolate helps differentiate KitKat from its widerange of competitors. KitKat has always being associated with “taking a break” whichdelivers it as a break time snack experience. KitKat therefore belongs to themonopolistic competition as KitKat is able to be differentiated by buyers. Consumercommonly purchase its standard two bar KitKat over its 4 bar KitKat for its similarquality taste of milk chocolate with crunchy wafer but lesser quantity. Known to be achildhood snack delivering the nostalgia experience consuming it. Thus is consideredto be relatively elastic in demand. Which defines, consumers being sensitive onpricing but willing to pay if there’s promotion KitKat products. 35
MKTG 1199 – Marketing Principles (LF02, Group 2)New product pricing strategy – Market Penetration PricingKitKat practices market penetration pricing which sets a low initial price to penetratethe market- attracts large pool of buyers quickly and win a large market share, thehigh sales volume result in falling costs, which will allow KitKat to cut on its priceeven further. This low price will keep out its competitor as buyers will be choosingKitKat new product instead, allowing further penetration. Furthermore KitKat isrecognized in Singapore confectionary market and is highly sought out by consumers.
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