Oreo Cookies had a fascinating dilemma to explore in 1996 when they struggled how to implement the strategy of bringing their market to China and India, (Koellmann, 2013). Kraft Foods had to strategize how to make their one-hundred-year old brand of the Oreo appealing to a new audience that did not necessarily know the value of purchasing an Oreo over competitive local cookies, (Koellmann, 2013). Where Oreo had their largest challenge was appealing to the Chinese market, thus, in 2005, Kraft decided to study the Chinese market in a better effort to understand their prospective consumer, (Koellmann, 2013). One of the ways that Kraft considered analyzing the Chinese market was by conducting a SWOT Analysis.
In conducting a SWOT Analysis, the company has to debate the Strengths, Weaknesses, Opportunities, and Threats within the prospective market of entry, (SWOT Analysis: Discover New Opportunities, Manage, and Eliminate Threats, 2016). When trying to ascertain what the issues were with Oreo’s prior entry into the Chinese market, Kraft had some major issues to debate. Starting with the Strengths, Oreo was a world renown brand; however, it was not a world renown brand in China due to how China had been historically closed off for so many years to a great deal of the Western world, (Koellmann, 2013). Thus, this was a strength but was a double edged sword in the Chinese market that Kraft did not previously anticipate because they were under the false assumption that Oreo was more well known and interesting to the Chinese public overall, (Koellmann, 2013). Where Kraft made a pivotal error with their prior market entry strategy to China was that they were unable to calculate who exactly their Chinese consumer was and as a result, they essentially mistook what they thought to be a Strength that was actually a potential weakness, (Koellmann, 2013). Kraft had many weaknesses when entering China and a great deal of them stemmed from American ignorance and arrogance when entering foreign markets. The reason I argue this is that Kraft had to do a better job of their market analysis in order to market their Oreo cookie to consumers, (Koellmann, 2013). Regardless of how well the Oreo cookie is known all over the world, there may be parts of the world, such as in rural Chinese villages, that do not know what Oreos are, (Koellmann, 2013). This is Kraft’s job to anticipate this and to implement it into their business development strategy in China, (Koellmann, 2013). In looking at Kraft’s opportunities in China, it is evident that there are a plethora of opportunities due to the massive size of China’s population, (Koellmann, 2013). Where Kraft has to be careful is to follow the regulations of the Chinese government adequately in order to not run into problems with angering their respective markets, (Koellmann, 2013). That being said, China offers a plethora of opportunities to Kraft should they get to know their consumers and know how to differentiate the Oreo cookie from the other cookies on the Chinese market, (Koellmann, 2013). Pertaining to Threats, Kraft had an enormous amount of Threats when entering the Chinese market that did come true in many respects. Given that China has been isolated for so many years from the West, of course they have their own cookies and of course, their consumers are accustomed to them, (Koellmann, 2013). Kraft essentially had the challenge of showing the Chinese consumer why their American cookie was better to invest in than the Chinese competition, which is surely no easy feat, (Koellmann, 2013). The Chinese culture is quite traditionalist and this was a major issue that Kraft did not anticipate because they did not know their Chinese consumer that they were supposedly targeting in the beginning of their operation to bring the Oreo cookie to China, (Koellmann, 2013).
Based on Kraft’s experience in China, I would propose the following strategy for the Oreo entering into let’s say “Country X.” Country X has never seen the Oreo and has a great deal of native tribes that have no television and no knowledge of American culture. This sort of market is Oreo’s ultimate challenge because it does not have its established one-hundred-year brand to fall back on in marketing it to a new country. First, in order to bring the Oreo to Country X, I would propose a slow start strategy that tests this potential market before investing a great deal of capital. This is crucial in order for Kraft to ascertain whether this market is a viable option. At first, I would propose importing the various boxes of Oreo products to introduce at the local mom and pop stores that exist in Country X in order to reach and educate the locals about the products that do not have access to traditional marketing methods. I would advise Kraft to invest in a traditional Billboard campaign that is visible at the major local produce markets that the customers visit to conduct their daily trade. Additionally, I would recommend a radio campaign and a traditional start up where the marketing team would distribute the products complimentary at first to generate interest. In order to introduce the product sustainably, I would also propose to allow the locals to get jobs to sell the cookies in order to grant jobs and create positive public relations while promoting the product on the ground. This strategy would be crucial in communities in rural parts of Country X that merely do not have access to modern marketing techniques. In Country X people primarily have radios, and thus, are very cut off from the rest of the world. This would allow Oreo to gain exposure and market share.
One of the principal aspects of this strategy in Country X would be that it would allow Kraft to test Oreo’s potential of success without a great deal of capital investment. What makes this strategy so great is that it eliminates Kraft’s financial liability if Oreo is a flop or it allows them to plan Oreo’s strategy again if necessary. Many companies do not do this and build a plant prematurely for production, for example. This is one of the largest errors that a prospective company can make in a foreign market because there is always a ratio of not being predictable that is a risk in the business world. What makes companies lose sight of this is that they assume that their brand will be an instant success or is sufficiently well known in the world of commerce. This is a trap that Oreo fell into when they entered China, which is precisely why Oreo cannot rely on their well established brand in the first world in order to bolster their success in Country X. Oreo would be best advised to test Oreo’s potential in Country X, because perhaps people will not like the outside of the Oreo, for example. From personal experience, I can say that the interior is better and I always throw out the crusts. If the population in Country X also did not like the exterior due to the flavor being too foreign compared to their domestic cookies, then Oreo needs to regroup and ascertain another angle to play.
Oreo also needs to complete a competitive analysis of what the competition is in Country X that they are currently dealing with. If there are too many similar products, Oreo has the challenge of showing Country X what makes Oreo so special and this reputation is not achieved overnight. Part of the science of marketing is showing a consumer why one needs the product in contrast to merely wanting the product. Coca Cola is a prime example of genius marketing to the third world because people who barely make $1 per day still want a Coca Cola and they surely do not need it to survive. Oreo has this challenge of meeting this standard in Country X where there is little development and resources for consumers to buy extras. If they are looking for a cookie for a birthday or special occasions, why should they choose Oreo when they could have something made domestically that is made cheaper? This is a crucial point that makes marketing so fascinating because the company is truly tasked with the objective of understanding that consumer that may not have resources in the case of Country X and finding a viable way to appeal to them. This surely does not happen overnight and is something that is crucial to make a product marketable overseas. Many companies lose sight of the importance of making the Oreo be a stable to society in Country X. If a company focuses on this aspect, they will be able to build their brand and image from the ground up and ultimately, appeal to their consumer. What is crucial about this process is taking the time to know and study their consumer. Rather than spending a great deal of capital on some over priced marketing campaign, marketing departments need to use those resources to invest in understanding the consumer first before jumping in head first to a foreign market. If they invest in this study of the consumer, in the long run their investment will provide a profit for the company.
Oreo learned this lesson the hard way with their first attempt at penetrating the Chinese market. Even though China is different than Country X, it is similar in the respect of being closed off from the West. What Oreo did not anticipate was the lack of knowledge that the Chinese had about Western culture and Western products. When they revised their strategy and then started to study their prospective Chinese consumer, they found a way to save their business in a major way and that is why we still see the Oreo alive and well in the Chinese market today. Had Oreo conducted their initial due diligence prior to entering the Chinese market, they likely would have saved a great deal of money. Thus, this is a lesson to any American company trying to penetrate a foreign market, do not rely on being American and successful, you still have to win over your foreign consumer who many know absolutely nothing about your product and the brand you are trying to promote regardless of the brand’s history and prestige within the United States and other parts of the world.
References
Koellmann, B. (2013). Smart Cookie. Business Insider. Retrieved from: http://www.businesstoday.in/magazine/lbs-case-study/how-kraft-foods-won-over-customers-in-china-and-india/story/193162.html/.
SWOT Analysis: Discover New Opportunities, Manage, and Eliminate Threats. (2016). Mindtools. Retrieved from: https://www.mindtools.com/pages/article/newTMC_05.htm/.
