What you don’t know about your brand will hurt you, as Kraft demonstrated when its Milka brand lost 15% of its sales volume in Germany between 2010 and 2011.
Kraft European analytics manager Matt Stockbridge told Marketing Week Live that media spend had increased substantially during the year, yet Milka had drastically underperformed compared with its competitors. Overall, German chocolate sales volumes fell by 4%, but Milka had done almost four times worse. “The reason the market declined by 4% was us. We screwed the market,” says Stockbridge.
The knee-jerk reaction was to blame a badly executed advertising campaign, but an analytical assessment of Milka’s sales data across the year and throughout Germany revealed findings that directly contradicted the initial hunch of an advertising failure.
Media spend, new product developments and sales promotions all had positive impacts on sales over 2011, driving increased purchases by volume compared with the previous year. In fact, advertising had the biggest positive impact on sales and without it, Stockbridge says, “we would have declined by 20%”. Where Milka had fallen down was on distribution, competition and price, all of which deterred consumers from buying its chocolate bars.
Each of these elements behind the decline could be blamed almost entirely on two price promotions that Milka had run in the previous year, but chosen not to repeat. They had been ditched because of the speed with which consumers had relieved retailers of their Milka stocks, destroying any profit margin for the manufacturer.
But in removing the promotions, Milka lost volume sales because the price did not seem as attractive to consumers, while negative sales impacts from distribution and competition arose because retailers gave the same promotional slots to other manufacturers, meaning those brands took market share from Milka.
Stockbridge says that Kraft learned important lessons about German consumers, who are the most price-sensitive in Europe. “If you run a promotion in the UK, you’ll usually attract the lighter users who will buy a single bar and won’t come back. If consumers in Germany see lower prices, they’ll buy 15 bars,” he says.
By investigating shopping habits rather than relying on just the top-line sales figures to tell the whole story, Kraft is now able to look at how to solve the very sticky issue of falling chocolate sales.
Pat Rigney Managing Director Fastnet Brands
My full time passion is my full time business which is building, creating, refreshing and reinventing brands at Fastnet.
We aim to excite consumers, engage the trade and add value to your business.
We bring our International experience and network to bear on supporting your business grow. We strive to improve and deliver exponential shareholder value.
Patrick Rigney Managing Director Fastnet Brands