Blog Post 4: Business Model Analysis Report, Mondelēz International

I have always been interested in the consumer packaged goods (CPG) industry. A consumer packaged good is one that is “consumed every day by the average consumer…that needs to be replaced frequently” (Investopedia).  Part of my interest stems from the fascinating concept that consumers must make purchase decisions for things like food, beverages, clothing, and household products frequently, and there are very low switching costs for these types of products, yet companies still manage to capture brand loyalty and lead consumers to repeatedly buy their products despite thousands of offerings. CPG companies, therefore, are highly competitive and have to constantly be innovative in their business models and groundbreaking in their marketing endeavors if they want to stay on top.

In addition, CPG is an intriguing industry because these products directly impact people’s lives in a meaningful way. Whether it’s the fruit snacks and juice boxes that the team mom gives her five-year-old son and his friends after they’ve just won their first soccer game or the disposable air freshener that makes grandma’s house smell so distinct, these offerings aren’t just products; they’re memories that form an intricate lifestyle. I love learning about how companies can hear stories like these directly from their sources, get to know their consumers better through this communication, and use this knowledge to help them form a loyal bond with a seemingly ordinary product.  

My interest in this industry is part of the reason why I have accepted a full time offer at PepsiCo-Frito Lay for after graduation. I was a Marketing Analyst Intern at Frito Lay for summer 2013, and I am really looking forward to going back, so I thought about doing our business model analysis report on Frito Lay or PepsiCo. However, I had the chance to learn a lot about Frito Lay last summer and will have the opportunity to learn even more next year, so I started thinking of companies to research that would be more of a challenge and help me to grow in my knowledge of CPG.

For my business model analysis report, therefore, I’d like to research Mondelēz International. I came to this decision after thinking about Frito Lay’s major competitors and remembering how during my summer there, shareholder Nelson Peltz advocated that PepsiCo purchase Mondelēz and spin off its beverage business and focus on snacks. By researching this company, I would get to learn more about one of Frito Lay’s major competitors and its brands, which could be helpful for my career in the future.

Mondelēz International is one of the world’s largest snack companies. In October 2012, Kraft Foods Inc. spun off its grocery business, Kraft Foods Group Inc., and became Mondelēz. One of its company goals is to create “delicious moments of joy in everything [they] do,” which is consistent with my earlier discussion of creating memories for consumers. It is a global company with nine billion-dollar brands: Cadbury, Cadbury Dairy Milk and Milka Chocolate, Jacob’s Coffee, LU, Nabisco, Oreo, Tang, and Trident Gum. Its full list of brands is pictured below (Mondelez International Fact Sheet):

Mondelēz is a global company, but the geographic area providing the largest percentage of its sales is Europe (39%--see below). It competes in the beverage, cheese and grocery, biscuits, chocolate, and gum and candy categories, although the largest percent of sales is captured by its biscuits category (Mondelēz International Fact Sheet). This, in itself, is an incredible feat because to compete in multiple categories requires significant knowledge of several markets, reaching out to many different consumer segments, and detailed strategies for how marketing and innovation efforts for each of these brands will come together and benefit the company as a whole. Major competitors in snacking include other global CPG food companies like Nestle, Frito-Lay, and Unilever. As I stated before, competition in the snacks business is very touch because consumers have very low switching costs and sometimes like to try new things.

Because of this, Mondelēz has to be very energetic in fighting to capture loyalty and drive growth. Its business cycle (pictured below) begins with focusing on building its power brands—these are the brands that consumers already love. From there, its goals are to expand gross margins, leverage overheads, and reinvest in growth (Mondelēz International Fact Sheet). Although it sounds like finance, marketing plays a huge role in this cycle because the growth that is being driven is the result of creating and growing more brands by driving loyalty that doesn’t cannibalize Mondelēz’ other product sales.

Mondelēz is an interesting company because it has so many different types of brands. From Ritz to Philadelphia to Stride, this company has tasty products across the food and beverage spectrum, and because its brands vary so much, so do its targeted consumer segments.

The first customer segment I’d like to focus on for this report is one that I can identify with: college students. Mondelēz has brands like Oreo and Chips Ahoy! that are potentially valued dorm room snacks for when people are hanging out with their friends or studying in their room. In addition, Oreo has a strong social media presence (it gained a lot of publicity last year with its super bowl tweet (Watercutter)). Its social media seems to be catered towards young people, and it would be interesting to explore the connection between Mondelēz’ brands and college students across the country.

The next customer segment I’d like to analyze for my report is mothers of young children. Mondelēz makes many products like Cheese Nips and Sour Patch that kids love to eat. From my experience, mothers are usually the purchasers of items like these and also the gatekeeper between the child and the snack. I’d be interested to see mothers’ thoughts about the products and to learn more about their opinions on the snacks they are feeding their kids, as well as if Mondelēz is creating value for mothers by creating snacks (some healthy, some not) that their kids enjoy.

The third customer segment I’d like to learn about for my report is the kids themselves. Mondelēz provides tasty snacks that kids can connect with and enjoy. For example, Mondelēz ran a “Sour, Sweet, Gone” television ad campaign that gave their Sour Patch Kids brand a youthful and fun personality. Kids can identify with the brand message even if they don’t realize it and give value in a snack that kids enjoy.

Finally, I’d like to analyze a different type of consumer; baby boomers. Mondelēz has brands like Triscuit and Wheat Thins that create value for these people by providing healthy yet tasty alternatives to other snacks. These crackers can keep baby boomers going throughout their days.

However, these are not the only consumer segments that Mondelēz provides value to. Its dozens of brands are all unique and serve different purposes, and it would be interesting to explore this further. I am looking forward to performing more of this research and gaining a greater knowledge of Mondelēz and CPG as a whole.

Works Cited

"Fact Sheet." Mondelez International Company Website. Mondelez International, n.d. Web. 8 Oct 2013.

Investopedia. "Definition of Consumer-Packaged Goods." Consumer Packaged Goods. 2013.

Watercutter, Angela. "How Oreo Won the Super Bowl with a Timely Blackout Ad on Twitter." Underwire. (2013): n. page. Print.