Kinder surprise distribution and marketing channels

Today Ferrero is one of the largest confectionary companies in the world. Ferrero has product sales all over the world. Kinder Surprise is one of the best-sellers of the company and is at the heart of Ferrero’s success. Kinder Surprise is sold around the world and has a great market power.

Why  distribute?

When a commodity is produced and packed, the next procedure is to distribute it to customers rapidly and widely. The most important decision to be taken is which distribution channels should company use to sell its products.

How distribute?

In fast moving consumer goods (FMCG) market, most company choose channel C to sell their products. Channel C is a long-standing channel, especially for consumer products, it takes goods from a producer to a wholesaler, then to a retailer, and finally to consumers. This is called marketing intermediary, when there is a middleman, who links producers to other middlemen or to those who ultimately use the products (Dibb, Simkin, Pride, & Ferrell, 2012, p. 415). There are two types of middlemen: functional and merchants. In this case functional middlemen resell products of Ferrero as they do not take title to the products.

Looking at the channels of distribution, the one that is used is an indirect one, which implies the fact that the product is being distributed to the consumer through intermediaries (agents/wholesalers/retailers). The direct one does not take place since a teenager cannot purchase a Kinder Surprise himself from the company, and cannot order it from their webpage either, since Ferrero sells only to other businesses. In its turn, indirect channel length can be long and short. Long indirect channel is applied to Kinder Surprise.

Global distribution makes Kinder Surprise spread in every corner of the world. Products flow from manufacturers to retailers freely and fast accelerating the speed of final transaction. Except that, internet has a powerful distributor too. Shopping online becomes a fashion trend. Professional websites such as Ebay, amazon provide formal platforms to sell goods. One example of the online retailer I found is Brand Distribution – the source of best FMCG brands and services (B2B brand distribution, 2016), where other businesses such as supermarkets can purchase Kinder products in large quantities.

Which type of marketing does this category fall to?

The type of marketing that is used selling Kinder Surprise or other Ferrero products is retail marketing. In retail marketing it is the retailer who promotes awareness and sales of the company’s product. Supermarkets, hypermarkets, small shops use in-store promotion, various stands, in order to show Kinder Surprise products and make them attractive to the customer. The promotion expands to use of billboards, TV advertising and magazine/newspaper advertising by the supermarkets.  

How do retailers influence consumers’ decisions?

As it was mentioned above, Kinder Surprise sales, when in the supermarket, directly depend on a retail store, its promotions and influence this brings to a consumer. People are less likely to buy a product if the shelf is disorganised and a few items are left, for instance. The display cues and product quantity are directly controlled by the managers.

Consumers are influenced by the retail environment, whether there is another competitor’s chocolate eggs next to Kinder Surprise, or whether there is a promotion stand, whether the shelf is directly visible for a consumer or he has to look for it, whether the stand for Kinder is directly next to the cashier so the child can take it on the way out.

Successfully organised shelves and promotions gain more customers and subsequently more profit. When they sell a lot of Kinder eggs, Ferrero would prefer that retailer in particular to any other one.

The choice of a distribution strategy

There are three distribution strategies: intensive distribution, selective and exclusive. The one that is used in Kinder sales is the intensive one (Dibb, Simkin, Pride, & Ferrell, 2012, p. 427). It is used commonly to distribute low priced products or impulse purchases. Soft drinks, chocolate, snacks, bread are a few examples, which belong to this category.

Marketing channel functions

Marketing channels serve many functions. The function of creating utility is fulfilled by the retailers as they are the ones who make products available in the places where consumers would like to purchase them.

The function of facilitating exchange efficiencies is related to the intermediaries (wholesalers and retailers) because they are those who can regulate the additional price on the product (transportation costs etc.). The function of alleviating discrepancies is related to the retailers because they are the ones who provide to the consumer the necessary quantity of Kinder Surprise in one pack and the assortment in which the consumer is interested.

The function of standardizing transactions belongs to both retailers of Kinder Surprise and the manufacturer – Ferrero. This is because a retailer can change the price according to specific season: if it is Christmas, the prices will go up, for instance. The prices can also go down, when Kinder Surprise becomes not that salable, however, there should be specific price Kinder sets, which Kinder Surprise cannot go lower than, as it will be a bad image for the company. For instance, a retailer will never be allowed to sell a Kinder Surprise at a price of 30 cents.

Providing customer service function is done by the Ferrero company, however there will be rare cases when it will be done. In such cases such as choking hazard by a child or when a toy inside a chocolate egg is damaged/malfunctioning.

Secrets of merchandising

I visited almost all the supermarkets in Deventer, the Netherlands to complete my marketing assignment by comparing how my chosen product (kinder Surprise) is sold in each one of them. The stands were compared, the level of product’s position, supermarket’s decorations, staff clothing etc.

Jumbo and Albert Heijn were ones of those which had Christmas decorations all around the shop. Jumbo had even more of them, including multiple Christmas trees around the supermarket, decoration at the entrance and various Christmas tree branches on horizontal stands. The atmosphere these two shops create is also brought by Christmassy music that puts customers “in the mood”. Plus and Dirk van de Broek had more chilling music, slow and hasteless. Low-cost shops, like Aldi and Lidl, had no decorations, nor music. What attracts the eye as soon as you come to Aldi, however, are the advertisements, which are attached to the ceiling.

As for personnel’s clothing, Jumbo’s stuff wears yellow and black shirts, which are the colours of the supermarket logo, shelves and other representative parts of the outlook. On their backs, there is the name of the shop written in capital letters, which makes it visual for the customers. Same way, Albert Heijn provides their employees with blue shirts (the logo of AH is blue). The abbreviation of the name of the shop is on one of the hands in small letters.

At Plus, staff wears green shirts and is always concentrated (from my experience) in one of the sides of the shop because they are more a collectivistic society (talking and doing everything together). At Dirk, all the staff are assigned at their specific areas. They wear red clothes with “DIRK” in capitals written at the back. At Lidl they have very little staff and they wear navy blue clothes. In Aldi, the only person I saw from the staff was a cashier, which was surprising for me.

At Jumbo, Kinder Surprise was located straight in the line after the entrance in the chocolate/jelly beans department. This location was chosen along with department allocation, and is followed by cookies shelves, jams, soft drinks, so-called sweet stuff. Jumbo also has Kinder at the till, which attracts children’s attention on the way out of the supermarket. In Plus, Kinder Surprise is placed exactly at the same places as in Jumbo: in the confectionary department and at the till. Only confectionary department in Plus is located almost on the way out of the supermarket.

In Dirk Kinder is located only in the confectionary department, which is on the way out of the supermarket. There are no products at the till. In Aldi it was hard for me to find Kinder Surprise because there, everything was mixed together. Eventually, I found it at this place:

Interesting to notice how on these three pictures of different shops  Kinder Surprise is positioned. Firstly, it is always placed at the bottom, with a possible purpose of attracting young consumers due to their height. Secondly, it is always placed “on the shelves on the edge”.

Thirdly, chocolate boxes are always put together with Kinder on one vertical shelf. The most known brands are located on the level of the average consumer height, following the rule eye level is buy level (Zaretckaya, 2016),

Three following supermarkets were compared: Dirk, Jumbo and Plus. Certain value brands are offered: Twix, Mars, Snickers, Bounty, MilkyWay, Kit-Kat, Toblerone, Merci, Milka, Cote d’Or, Ferrero. From own-label offerings, there is a substitute to Kinder eggs (2^nd picture), truffles, various chocolate bars, fudge, formed chocolate.

In all the shops from the pictures Kinder Surprise was presented in a box of three eggs. At the tills of Jumbo and Plus, there were also Kinder eggs that were sold as a sole item. The number of facings of Kinder Surprise was two in Jumbo and Dirk, and only one facing in Plus. Other products of competing brands have even more facings – 3, 4 and even 8, however in some shops it is relatively the same.

In Jumbo, the share of space allocated for Kinder products is relatively big: about 2 metres, which makes Kinder win the majority of brands, except Milka, which place is 3 times as large – 6 metres long!!!! In Plus, Kinder only takes about 60 cm, losing to Milka, Cote d’Or, Tony’s, Plus brand. At Dirk Kinder as a brand has the majority of space – 1 metre. They say that facing should take at least 40 cm on a shelf, otherwise it is not effective. It also should not be too long.

At the till in Jumbo, Kinder again takes the majority of space – about 30 cm from the given 70 with 3 other brands. Three facings here this time (more), because the product is presented in a less bulky package.

Kinder is a brand-wholesaler. They have their own branch where from they sell their products to businesses such as hypermarkets, shops etc. Nevertheless, as they are a huge global company they depend on their distributors.

All those supermarkets are retailers.  A retailer is a business that purchases products for the purpose of reselling them to the ultimate consumers, the general public, often from a shop or store, but increasingly also online (Dibb, Simkin, Pride, & Ferrell, 2012). It includes all transactions in which the product is purchased with the goal to be consumed by the family/household.

Kinder Surprise can also be bought through non-store retailing (online), however then it will be ordered in larger quantities.

Transportation of the products is done by distributors and not by Kinder itself. The company is too large to handle such activities. One of the distributors of Kinder is Atlantic Grupa which distributes Ferrero products throughout Eastern Europe (Atlantic Grupa, 2016).

If anything happens to the product, Kinder is the one responsible for it. In this case Kinder takes title to the products and not a convenience store. An example of it can be a 4-year old child cutting a finger because of the toy where Ferrero becomes liable due to the imperfection of the product.