Why Oreo Cookies by Mondelez Is so Popular

Introduction

Mondelez International, Inc is a multinational confectionery, food and beverage company which mainly focuses on snacks production based in America (Reuters, 2019). Having net revenues of $25.9 billion and net earnings of $3.4 billion during the year of 2018, Mondelez is one of the snacking companies in the world. Mondelez was initial from Kraft, but due to the business expansion, Kraft was then split into Kraft and Mondelez. According to Marketing Week (2018), “Fast, Focused and Fearless” are the 3 qualities which Mondelez International are holding on to sustain in the market. Brand family such as belVita, Cadbury, Halls, Tiger as well as Oreo are part of Mondelez’s portfolio (New York Times, 2012). “Snacking made right” is the slogan of Mondelez to empower people to snack right. It is their responsibilities to be the future leader of snacks by producing the right snack at the right moment with the right way (Mondelez International, 2019). As Oreo cookies is one of the products from Mondelez, it will be the product which will be analyzed in this report.

Three Levels of Product

Three levels of product consist of the core product, augmented product and actual product. Core product is the benefits brought by the product to consumers. As mentioned by Mondelez International (2019), the core product of Oreo cookies is to satisfy our needs for hunger. Oreo cookies could act as snacks in between of meals when the consumers are hungry. Next, actual product is the tangible and physical product purchased. Mondelez has successfully established its brand name for Oreo which the name “Oreo” results the consumers to imagine the cookies as sandwiched biscuits with icing cream. Additionally, even though with the packaging of Oreo may be varied according to the flavors, the packaging of Oreo are still consistently be designed to be in blue. This is to allow customers to be able to recognize the product easily. As Mondelez has built up its reputation in the snacking industry, it has also provided the quality assurance to consumers. Lastly, augmented product added value to the products. Just as for Oreo, Mondelez provides free shipping to customers who purchase Oreo in bulks for retailers or wholesalers.

The Product Classifications

As Oreo is a food product which could be categorized as snacks, it falls under the classification of convenience products. Convenience products are usually bought frequently by the customers without having much comparison and putting effort to search for the product when purchasing. Therefore, it is important for Oreo to be in lower-priced compared to other food products. According to the Annual Report of Mondelez (2018), Oreo cookies are placed in various settings such as in supermarkets, petrol stations, vending machines, convenience stores and retail food outlets. They are made easily obtainable for the consumers to purchase whenever desired to.

The Pricing Strategies

For Oreo cookies, Mondelez has used two types of pricing strategies, which are segmented pricing and promotional pricing. Firstly, segmented pricing is done depending on the customers, products and locations. These affected the prices of products and change over time. Oreo which are being sold in a supermarket may have a different pricing compared to the Oreo being sold in the airport. For instance, the selling price for a packet of Oreo of 137 grams in local supermarket could be RM3.67, but in airport, the same packaging of Oreo may be sold at RM5.50 (Milks Favourite Cookie, 2014). The difference of RM1.83 showed the segmented pricing based on their locations. Besides, Mondelez has also used promotional pricing to increase their sales in a short run. This happens by temporarily reducing the prices of products to promote buying excitement from the customers for a period of time. However, it is also important to know the adverse effect if this strategy is used too frequently, which may create danger of affecting the company’s brand value.

The Distribution Strategies

Mondelez optioned to make their snack products to be readily available in every market. Oreo could be easily found anywhere in most of the markets. This strategy is known as intensive distribution. As we can observe from the market, Oreo is widely available in convenience stores, vending machines and supermarkets (Annual Report of Mondelez, 2018). Companies which sell basic necessity products such as breads, beverages and snacks usually target their distribution strategies as intensive distribution and Oreo can be classified as one of the examples too. Most companies believe the more visible the product is, there will be a higher ability to create product awareness. This leads to customers to build trust on the brand and be more likely to purchase the product which Mondelez is also acting with this strategy too.

The Promotional Tools

Mondelez has done a good job in promoting the company and their products. The promotional tools could be identified as advertising and sales promotion. As for advertising, it is common for Mondelez for using paid non-personal presentation on their products. For example, Oreo booths or stalls are set up in local supermarkets like Tesco or Aeon from time to time. The objective of this advertising strategy is to stand out from the other similar products and attract customer’s attention. Next, Mondelez also applies sales promotion as their promotional strategy. Sales promotion is a great tool to increase short term sales and create customer’s incentive to purchase. Offering incentives such as rebate, coupon or free gift is helpful in attracting new customer and encouraging existing customer to support the products which may also increase Oreo’s sale in a long run. For instance, Oreo has a practice of launching mystery flavor for yearly guess. Furthermore, Oreo would also give cash rewards of $50,000 to a lucky customer who made the right guess (Oreo, 2019).

Conclusion

In conclusion, Mondelez is a well-established company which has been doing a great job in promoting their products ever since Kraft. This has resulted a great brand awareness in their customers and built the trust for the brand. However, as a recommendation, Mondelez may consider setting up a pop-up store for Oreo specialization. This is said so because for the past recent years, Oreo has been producing exclusive flavors for Oreo and attracted new customers to try out. Therefore, it may be another marketing strategy to increase company’s sales by developing new business.