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Skittles Marketing Plan Essay

Skittles is a well-known, long-standing brand that has pleased consumers for generations. However, it is our contention that the name’s growth is stagnating, and needs to be revitalized based upon a core marketing goal: bring Skittles from simply a candy – something one consumes on a whim and forgets about – to a brand that engenders both value and feeling for consumers. With such a focus, the objective is to influence the seemingly minor consumer choice between confections in vending machines and on store shelves by linking a positive and pleasing emotion to the image of the brand. The intention is to achieve realistic, long-term financial goals, which will be controlled through measuring actual results against initial projections. The overall target for the marketing return on investment (ROI) is a minimum of 1.2% within two years. Furthermore, plans to expand the Skittles product line through seasonality and a joint venture with Absolut Vodka will pull in a wider variety of our target market. This addition will attract various ages and personalities from the target segment to the Skittles brand, and will ultimately grow the distribution and sales of Skittles.

Product:

The marketing plan will affect the entire marketing mix, beginning with product. For consumers, the core value of Skittles is in its physical characteristics; they are colourful, relatively cheap, assist in improving focus, and help to control cravings for higher caloric options, like chocolate cake. Skittles is a non-chocolate confectionary usually sold to retailers in large boxes already containing individually-wrapped packages of Skittles weighing 55g, averaging 42 in every package. In 1979, the first Skittles were created in Britain; in 1982, the product was being manufactured in America. Seven years later, Tropical and Wild Berry Skittles were introduced with banana, kiwi and mango, as well as raspberry, wild cherry, and strawberry, respectively. The millennium brought the dawn of sour Skittles, and 2004 ushered in Skittles bubble gum. A smoothie mix – incorporating two flavours in one candy – was released in 2005, and 2006 saw the first limited edition product: X-treme Fruit Skittles.

1 Going forward, the basic template for the product and branding – the candies themselves, lettering, and basic packaging of the product – will adhere to and be customized for further products. The proposed brand extensions, aiming to increase the target market of “Snackers” through exposure and familiarity, consist of seasonal Skittles promotional products; Christmas would see red and green Skittles sold in specific packaging, St. Valentine’s Day would see bags of red candies, and so on. This trend can be extrapolated to take advantage of other external consumer interests; for example, a Skittles product that is composed completely of green candies, with a portion of the proceeds supporting a “green” effort. Since product and the majority of printing requirements are already available, the costs to produce these additions are negligible. This expansion adds exclusivity to these specific incarnations, taking advantage of seasonal novelty to boost sales. Furthermore, the opportunity to capitalize on an already-established trend that influences the targeted segment manifests itself in the form of a joint product venture with Absolut Vodka. Skittles vodka will appeal through its novelty and sweet taste, the former towards both genders, while the latter mostly to women. The planned name, pending partner approval, is “Absolut Rainbow”. Since university students and young professionals make up a large percentage of alcohol consumers, as well as much of our chosen “Snacker” segment, this product release will increase exposure and link Skittles with memories of cheerful, fun-filled times.

Price:

The pricing strategy for Skittles, given the elastic nature of the candy industry, will always be constrained by competitors and retail decisions. Being priced competitively, the researched average price floor per bag of Skittles sits at roughly $0.60, based off of research from three different wholesalers who sell directly to consumers.

2 This price is then marked up based on the decision of retailers regarding their specific regions. Further research on candy sales has yielded an adjusted 50-70% industry average range for retail profit margins, suggesting a manufacturer-to-distributor price of $0.18 to $0.30 per bag.3 The secret to profit is to make use of an intensive distribution, wherein Skittles are available in every store and vending machine possible. Since this is already the case, the only new distribution concerns that enter the marketing plan consist of seasonal products and Skittles vodka. Seasonal Skittles will be circulated through stores, as interchanging products in vending machines is significantly more difficult. However, “Absolut Rainbow” will rely on Absolut Vodka’s
distribution network after product development.

Distribution

Distribution for the brand is already exceptional; it is rare to see a vending machine or candy display without at least one variety of Skittles. The current method of distributing the product is a mixture of pull and push strategies. Retailers of candy demand Skittles because they know that consumers will purchase them often enough to move product and produce profit, while Wrigley actively offers the product to said retailers, using their already-present pull force to facilitate even wider distribution. The above analysis leads to the belief that changing the basic distribution strategy is unwise, yet in-store and on-site presentation will be improved. Covering vending machines with the Skittles brand, as well as erecting specialized stands in stores, similar to other eye-catching displays, will influence impulse purchases. Stands of such nature are low-cost when made of corrugated board, and the strength of the Skittles brand could be used to encourage this increase in retail space. Seasonal products are best suited for such pageantry, as the promotions are temporary, instilling a special feeling to the items.

On the other hand, Skittles vodka would be available for purchase wherever the original vodka is sold. The partner company, being more knowledgeable and capable in regards to the distribution of alcohol, would be consulted and would bear the responsibility, though not financially. Both Absolut and Skittles would gain value from this partnership due to an increase in sales from the short-term buzz and the long-term increase in market size. As for the brand’s international presence, implementing an entirely new marketing campaign focusing on youth and nostalgia while also expanding into new regions is unwise, as the campaign may conflict with local culture and would be an extra drain on finances.

Promotion

Promotion is an area where the Skittles brand has had the majority of its problems, and therefore possesses the greatest number of opportunities for improvement. The status quo for Skittles advertisements has been, for the mid to recent past, focused on reminding the consumer that the brand exists. Aiming to influence impulse buys simply by recognition and familiarity, Skittles has created eye-catching, odd, and sometimes plain shocking ads for television and print. However, they have yet to go beyond this mission of recognition and expand into the realm of consumer emotion, feeling, and values. The marketing proposition for promotion revolves around creating a joint image of nostalgia and youth; one that will give psychological energy to the tired worker, memories of the “good old days” for the aged consumer, and a feeling of being part of a young and vibrant world for those just starting their lives outside the nest (Exhibit 1). An accompanying slogan change, associated with the unchanged visual packaging, will best associate this new emotional value with Skittles in consumer’s minds. The most promising example of a new slogan is “Have you had your Skittles moment today?” focusing on accompanying television ads depicting an individual eating a Skittle and recalling a youthful or light-hearted and fun moment in their past (Exhibit 2). The addition of nostalgia to the younger image will give a greater complexity to consumer’s emotions towards the brand, thus creating a stronger pull towards Skittles in – according to Wrigley’s 2007 Annual Report – the sixteen seconds it takes for someone to browse for candy.

4 Such visual ads will appear on YTV, CTV, Global, and ABC. The television ad will feature various activities performed by younger children and adults such as playing hopscotch, marbles, or poker, featuring Skittles as the focal object. In addition, the new joint vodka product can be incorporated into the youthful image quite easily, as the intended regular consumer includes those of a legal younger age. The aim of the ad is to connect Skittles with consumer’s positive experiences, tying the brand to the “good old days” (Exhibit 3). An example of a televised ad is as follows: As Jim sits at his desk, staring at his computer screen in his claustrophobic cubicle, he decides to take a walk to the vending machine. Out of all the options, he chooses Skittles- they taste delicious, they’re colourful, and most of all, they bring him back to the good old days. Jim progresses with his work, but after he tastes the fruity deliciousness of a red Skittle, he thinks back to the moments when his daily activities didn’t revolve around TPS reports, but revolved around swimming through colourful ball pits at jungle gyms. As Jim chews on his red Skittle, he feels nostalgic and delighted that he experienced his Skittles moment of the day. A second advertisement is as follows:

While John is sitting and relaxing on his couch, snacking on a bag of Skittles, he looks over to the wall where he admires the recently hung picture of him and his wife, Jane. He chooses a green Skittle next, and as he experiences the sweet and tasty flavour, he thinks back to that one night in high school; the night he first laid eyes on Jane. John remembers the butterflies in his stomach, but specifically remembers feeling a jolt of confidence when he thought offering Jane a Skittle would be the way to win her over. Luckily, Jane accepted, and picked a red Skittle – a sure sign of love. After that night, John has never doubted the power of the rainbow, and continues to choose Skittles as his favourite snack. Advertising this product via product placement in “The Office”, “How I Met Your Mother”, and “Grey’s Anatomy” exposes a wide audience to the brand for a reasonable cost. As well, the product will be associated with media that this particular age group of “Snackers” already feels that they own. As another technique to gain customer awareness and to create hype around the Skittles brand, a campaign will be created which invites consumers to share their “Skittles Moments”.

Consumers will be prompted to send in, through email or on-site, their favourite and most memorable “Skittles Moments” that made them reminisce their childhood. The top three “Skittles Moments” from Canada and the United States will win an all-expenses-paid trip to the Disneyland Resort in Anaheim, California. The trip will be a seven-night stay for four people with park hopper passes for the full six days. The intent is that the winners feel like they are young again and to promote new magical memories that they can attach to Skittles. Their “Skittles Moment” will also be transformed into a national televised commercial within the next year. This will entice our consumers to get involved with the brand and to think about it on a more consistent basis. If this campaign is successful, it will broaden other countries’ eligibility to submit on an international basis to send in their “Skittles Moments” (Europe, Asia, etc.). In the end, it is believed that this campaign will boost the sales of Skittles and will create a positive emotion with the Skittles brand.

Financial Analysis

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Financial estimation puts the budget at $12.5 million, 10% of Wrigley’s annual sales distributed to their 43 brands ($539 million/4), and the costs at $7,676,033.5 Firstly, to support both seasonal and current products, in-store displays costing $780 in physical and $675,000 in logistics will be purchased and shipped.

6 Furthermore, television advertisements on YTV, CTV, Global, and ABC, are estimated at $350,000 after production per channel per month, for a total of $1,400,000.

7 The Disneyland contest trips will cost $3,048 per trip, which makes a total of $18,288 for six trips.

8 The televised commercial of the collective “Skittles Moments” will be broadcasted on all previously mentioned channels, costing another $1,400,000. Product placement is broken down into “The Office” at $213,163; “How I Met Your Mother” at $142,117; and “Grey’s Anatomy” at $326,685, totalling $681,965.

9 The estimates show the lowest price charged for a single bag of Skittles being $0.60, with distributors paying $0.18-$0.30 per bag, usually in bulk.

10 Costs for Skittles vodka would be split between Absolut and Wrigley; the former would handle distribution, while Wrigley would bear a large portion of advertising costs. The advertising would focus on the above product placement, and both firms would share production costs, estimated at $20/bottle.

11 At the conservative estimate of 250,000 litres of production, this would cost Wrigley $2,500,000 when costs are split evenly. The budget will also include $1,000,000 for unforeseen costs arising from delays, impromptu substitutions (ie: one show for another), maintenance for the websites, communications, and technology, etc. Implementation

The actual implementation of the proposed marketing plan will consist of three separate sections: an emotion-centric advertising campaign, the creation of seasonal products, and the vodka partnership. Beginning in May, Skittles will implement the nostalgic and youthful campaign in order to coincide with the beginning of summer activities that best match the visuals, by replacing the current ads with the new initiative as described above. In addition, starting in July children and young adults no longer attend school, thus giving them more potential opportunity to watch television.

The product placement ads, starting as new television seasons debut, in “The Office”, “How I Met Your Mother”, and “Grey’s Anatomy” would focus primarily on Skittles Vodka. Cardboard displays will be implemented in May as well, taking advantage of the above marketing initiatives and increased traffic from summer weather. Overall, the goal of Skittles’ new marketing campaign is to promote Skittles to the wide “Snacker” segment as a candy that generates “Skittles Moments”. These positive memories and associations will take consumers to a place where they feel a deep emotion in response to the brand. The underlying objective is to persuade consumers to purchase Skittles more often, ultimately boosting sales. In the end, this marketing initiative will increase Skittles’ awareness, build demand, and foster a lasting emotional connection.

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