Oreos in China (Example of Product Adaptation Strategy in Global Marketing)

Summary

The video discusses how Kraft reinvented the classic Oreo cookie to succeed in the Chinese market. After sales declined, Kraft conducted research and developed less sweet versions and innovative products like the Oreo wafer stick. This adaptation doubled sales and made Oreo the top-selling biscuit in China. The success stemmed from understanding local tastes and offering affordable packaging. Promotional efforts, such as in-store samples and commercials, also played a crucial role. The story highlights the importance of adapting products to local markets to drive growth.

Takeaways

• 🍪 Oreo was adapted for the Chinese market after initial sales started to decline.
• 🔍 Extensive research and numerous prototypes were developed to find the right balance for the Chinese palate.
• 📈 The remake of Oreo led to a doubling of sales in China within two years, making it the top-selling biscuit there.
• 🍫 The introduction of the Oreo wafer stick capitalized on the popularity of wafers in China, combining it with the beloved Oreo flavor.
• 🏆 The Oreo wafer stick became Kraft's biggest single SKU in China and was later sold in Canada, Korea, and Australia.
• 🌟 The entrepreneurial spirit in local markets is encouraged to create the next big sellers for Kraft.
• 🤔 The success of the Oreo wafer stick is attributed to its unique taste that still resembles an Oreo despite its different form.
• 📦 Kraft introduced a smaller and more affordable pack of Oreos to cater to consumers with less disposable income.
• 📈 Pricing strategy played a significant role in increasing sales, with a 35 US cents pack doing well in second and third-tier cities.
• 🎉 Kraft utilized promotional strategies such as in-store samples and commercials to introduce the traditional American way of eating Oreos to Chinese consumers.
• 🌐 The script also hints at a broader context of international business competition, mentioning Google's struggle to lead in the Chinese market despite deep pockets and experience.

Q & A

Why did Kraft decide to change the classic American Oreo cookie for the Chinese market?

Kraft decided to change the Oreo cookie for the Chinese market after noticing a decline in sales since its introduction in 1996. They found that the American version was too sweet for Chinese tastes and started testing alternatives to find the right balance.

Who is Lorna Davis and what role did she play in the Oreo's success in China?

Lorna Davis heads Kraft China. She was instrumental in the decision to remake the Oreo for the Chinese market, which helped double sales in two years and made Oreo the number one selling biscuit in China.

What was the first variation of the Oreo that Kraft introduced in China?

The first variation introduced in China was a less sweet version of the original Oreo. It looked the same but had a different taste profile to cater to local preferences.

What is the Oreo wafer stick and why was it launched?

The Oreo wafer stick is a product that Kraft discovered had a significant market in China. Since Kraft did not have an offer in the wafer category and consumers liked both Oreo and wafers, they launched a chocolate-coated wafer product that still tasted like an Oreo.

How did the Oreo wafer stick perform in the Chinese market?

The Oreo wafer stick became the biggest single SKU or item in China in 2006, making history for Kraft as it was the first product developed in the China market and later sold in Canada, Korea, and Australia.

What other variations of the Oreo did Kraft introduce in China?

Besides the less sweet Oreo and the wafer stick, Kraft introduced white chocolate covered wafer sticks, a cookie line with cream that can be used as a straw, a super long wafer cookie, and the wafer sandwich which behaves exactly the same as an Oreo but needs to be taken apart.

Why did Kraft introduce a smaller and more affordable pack of Oreos in China?

Kraft found that many people in China liked Oreos but did not have enough available money to purchase a full pack, which was priced at about 70 US cents. To address this, they introduced a smaller pack priced at 35 US cents, which did particularly well in second and third-tier cities.

What promotional strategies did Kraft use to boost Oreo sales in China?

Kraft used a promotional blitz that included in-store samples which often resulted in immediate sales, and commercials that showed the traditional American way of eating Oreos, such as twisting apart and licking the cream or dunking in milk, to introduce these foreign concepts to Chinese consumers.

How did the Oreo's marketing in China differ from traditional American marketing?

The marketing in China focused on introducing and educating consumers about the traditional American way of eating Oreos, which was foreign to Chinese consumers. This included rituals like twisting the Oreo apart and licking the cream or dunking it in milk.

What was the significance of the Oreo's success in China for Kraft's global strategy?

The success of the Oreo in China was significant because it demonstrated the importance of localizing products for different markets. It also showed that products developed in local markets, like the Oreo wafer stick, could become successful globally, as it was later sold in Canada, Korea, and Australia.

What is the broader implication of Kraft's strategy with Oreo in China for other American brands?

The broader implication is that even well-established American brands need to adapt their products to local tastes and preferences to succeed in international markets. It also highlights the potential for local market innovations to have global impact.