Hydrox: One Smart Cookie Marketing Plan Madeline Milano 828 Cookie Drive (687) 555-8888 [email protected] www.hydroxrulesoreodrools.com ©2021 Pedago, LLC. All rights reserved. Table of Contents _____________________________________________________________ Executive Summary 3 Situational Analysis 4 Industry Background & Growth 4 Competition 5 SWOT Analysis 7 Strengths 7 Weaknesses 7 Opportunities 7 Threats 8 Marketing Objectives 9 Target Customers 10 Children aged 5-12 10 Demographics 10 Buying habits 10 Psychographics 10 Media habits 11 Parents of children aged 5-12 11 ​ Demographics and Psychographics 11 ​ Buying habits 12 Media habits 12 ​ Product Description & Unique Selling Proposition 13 ​ Distribution Plan 15 ​ Phase 1: School fundraisers 15 ​ Phase 2: General availability 15 ​ Phase 3: Online retailers and grocery delivery services 15 ​ Pricing & Positioning Strategy 17 ​ Positioning Statement 17 ​ Pricing Strategy 17 ​ Offers 17 ​ ©2020 Pedago, LLC. All rights reserved. 1 Strategy for Increasing Transaction Prices 18 Promotions Strategy 19 Phase 1: Personal selling, word of mouth, and social media 19 Phrase 2: Television, paid social media, and national sweepstakes 19 Television 19 Social Media 19 Sweepstake Competitions 20 ​ ​ Customer Retention 20 ​ Joint Ventures & Partnerships 21 ​ Fundraising.com 21 ​ Netflix and The Magic School Bus Rides Again 21 ​ Camp Kennedy Space Center 21 ​ References 22 ​ Appendix A: Marketing Materials 26 ​ ©2020 Pedago, LLC. All rights reserved. 2 Executive Summary _____________________________________________________________________ Launched in 1908, Hydrox cookies are the original chocolate sandwich cookie. When Oreo launched their cookie in 1912, however, Hydrox lost market share and gained a reputation as “the knockoff Oreo”—this despite having a richer, more chocolatey taste, a crispier cookie, and more wholesome ingredients than Oreos. The comparison to Oreos, along with the clinical-sounding Hydrox name, has held the brand back. To escape the “knockoff” reputation, Hydrox must rebrand as a cookie that is completely ​ distinct from Oreos. It must also create a context for the unusual Hydrox name, so that it ​ seems pure and intelligent, rather than chemical and unappetizing. Hydrox can accomplish both of these goals by rebranding as “the smart cookie”: a wholesome and educational cookie that will entertain kids and please parents. Today, Hydrox cookies are not only kosher, but also GMO free, artificial color free and made with real sugar. To improve consumer’s perceptions, the brand positioning must stress on the fact that it is a healthy choice. Also, new Hydrox cookies will come packaged with cookie-based science experiments, and each cookie will have a fun science fact printed on the cream inside. Children will want the cookies not just for the taste, but for the experience. Parents will want to buy them not just as a treat, but as a teaching tool. Hydrox will re-enter the market through school-based fundraisers. After gaining brand awareness, the product will become available in major grocery stores. This expansion will be supported by a television ad campaign, social media, and national sweepstakes. Within 5 years, we plan to increase the Hydrox market share to 10% of sandwich cookies. ©2020 Pedago, LLC. All rights reserved. 3 Situational Analysis _____________________________________________________________ Industry Background & Growth Studies in the cookie industry show that cookie sales in the US total nearly $8 billion annually, and grew at slightly less than 1% in 2017 (Schroeder 2017). The growth of major brand cookies slowed or, in some cases, declined, but private labels (e.g., store brands) grew 5.6%. This downward trend among dominant cookie brands is due primarily to demand shifts. First, the stigma around “generic” private label brands has lifted, increasing the market share of these lower-priced products (Green 2017). 85% of consumers trust private label brands and 53% shop at a store just for its private brand (Shoup 2019). Second, preferences are shifting towards indulgence foods that are perceived as more wholesome, nutrient-rich, and natural. Importantly, this does not mean that consumers are buying fewer indulgences like cookies and candy—in fact, sales in this category continue to grow globally—but it does mean that the preferred products in the category are shifting. This can be seen in the success of healthier cookies such as Pepperidge Farms’s low-calorie Thin & Crispy cookies, which drove the company’s 3.9% increase in sales, and Mondelez’s belVita cookies, which saw a robust 19% revenue growth this year (Schroeder 2017). Finally, due to the increased availability of products made by smaller, specialized companies—mainly through online ordering—some consumers are shifting away from larger brands towards organic, local, or niche brands (Terlep and Gasparro 2017). ©2020 Pedago, LLC. All rights reserved. 4 Competition In the sandwich cookie market, Oreo is obviously Hydrox’s number one competitor. According to IRI multi-outlet data, Hydrox posted $492k in annual sales in early 2017, significantly less than Oreo’s sales. Despite a sales decline from the previous year, Oreo remained the top player in the industry (Yu 2018). Oreo’s parent brand Nabisco currently dominates the market, with its Oreo brand earning $710 million in sales in 2017. Table 1 shows sales of the US’s top cookie brands in 2017. However, the Oreo brand saw a 7.6% decline in sales during 2017, while Oreo Double Stuf sales fell 6.7% (Conway 2019). The CEO of Mondelez, which owns Nabisco, attributed the decrease in profits from major cookie brands to price deflation, erosion in promotion effectiveness, and a shift toward health and well-being products. ©2020 Pedago, LLC. All rights reserved. 5 Table 1. Dollar sales of the leading cookie brands of the United States in 2017 Table 2. Hydrox vs. Oreo Product Comparison Hydrox Oreo Ingredients real sugar, non-GMO, kosher corn syrup Flavor stronger chocolate scent and lighter chocolate flavor and cocoa taste sweeter Dunk test remain crisp after dunk in milk ready to fall apart in milk Brand awareness few people know the brand, global awareness especially younger generations Marketing budget low high Package similar to Oreo famous blue package History first sold in 1908, known as the first sold in 1912, copycat of Hydrox original chocolate sandwich cookie. ©2020 Pedago, LLC. All rights reserved. 6 Despite a similar look between their cookies, Hydrox and Oreo have some major differences. Table 2 above shows the product and brand differences between them (Fahey 2017). SWOT Analysis Strengths Hydrox does not include high-fructose corn syrup or any GMO ingredients, both of which are becoming increasingly unpopular with American parents. In 2017, the company removed artificial flavors and colors from the new recipe, and got non-GMO certification (Kassoff 2017). The cookie is also vegan and kosher. On its outside packaging and in marketing communications, Hydrox will convey this information to consumers. Weaknesses The Hydrox name has a chemical connotation that invokes cleaning products rather than cookies. It also has a brand reputation as the “knockoff Oreo,” which has contributed to ​ ​ declining sales. Hydrox cookies still contain non-organic, processed ingredients, and are a high-calorie and high-fat food. While they may appear healthier than Oreo cookies, they will not appear healthier than organic, non-processed snacks. Opportunities As customers’ tastes move away from foods with high fructose corn syrup and GMO ingredients (like Oreo), Hydrox is presented with an opportunity to capture market share in this healthier market. This is particularly true since Hydrox is, and will appear, more wholesome and educational than Oreo. In 2018, Hydrox accused Oreo of deliberately making its cookies difficult to find on store shelves. Hydrox argued that Oreo did so for years by letting its own employees stock the shelves rather than grocery store workers. If Hydrox wins this case, it could change the way big brands play the game in the market, and dramatically improve consumer access to Hydrox products (Gelski 2018). ©2020 Pedago, LLC. All rights reserved. 7 Threats The growing popularity of private label cookies impacts all brands, including Hydrox. The threat of imitation of Hydrox rebranding, if successful, will be moderate to high. A comparable recipe could be developed, and other brands could use similar science facts. ©2020 Pedago, LLC. All rights reserved. 8 Marketing Objectives _____________________________________________________________________ The marketing campaign has three main goals: 1. Increase brand awareness among parents of American children aged 5-12 from 12% to 50% within five years. 2. Increase brand awareness among American children aged 5-12 from 3% to 50% within five years. 3. Increase the Hydrox market share to 10% of sandwich cookies within five years. ©2020 Pedago, LLC. All rights reserved. 9 Target Customers _____________________________________________________________________ Our marketing will be focused on two distinct groups: school-aged children and their parents. Children aged 5-12 Demographics Children in the U.S. have strong purchase power. According to Forbes, by 2020, they will be the largest generation of consumers by 2020, with a purchase power of $143 billion in direct spending (FONA International 2019). Buying habits Our target market is suburban American school-aged children, aged 5-12. This market’s habits