Whitepaper - the increasing importance of mobile for the confectionery industry in emerging countries

Posted by Jenni Armstrong on 26 August 2016

The final module of Squared Online sees Squares work in groups to create a whitepaper that sells their ideas on how a major digital trend will affect an industry. For our latest whitepaper showcase we're taking a look at a series of reports from students who joined us from Perfetti Van Melle, who look after brands such as Smint, Chupa Chups, Mentos and Fruit-ella.

Following the first Perfetti Van Melle whitepaper on Influencer Marketing, our next takes a look at how mobile is both the hotspot and the sweet spot for the confectionery industry.

In the recent year we have seen a dual evolution in our industry: on one side the growing consumption of entertaining and indulging products (especially appealing to young people for their ability to surprise and delight), and on the other the progressive penetration of mobile use, even more so in younger generations. Such dynamics, even if geographically spread, are particularly true in emerging countries where growing disposable income allows for more experimentation.

Even if emerging countries are relatively new to more sophisticated candies, we can observe a steady trend in innovative products which introduce new tastes (sourness for example) and new product experiences (difference texture, new type of chew), refreshing the traditional offerings more rooted in a child-driven market (salty, gourmet candy). On top of that we expect that it will become more and more essential to wow the consumer at every touch point (Mintel Confectionary report on trends 2015).

In the consumer journey it will be key to develop a communication approach that hits the right notes emotionally and functionally to drive consideration. So for example a “wow offer” or “hook point” online will help drive consumers at the point of sale to shop the product, satisfying their needs and giving excellent value for money (mono pieces and low unit price makes confectionery still very appealing even in economic tough environments – Euromonitor report “Searching for the sweet spot” – 2015). When it comes to the product itself, the challenge we face also in emerging markets is to keep the “wow effect” to make sure repeat purchases are continued.

And today, consumer engagement will happen not only during the purchase cycle but in other moments as well: with updates, comments, sharing of pictures, video with or without the product as well as insightful content linked to the brand experience. And this is where we also need to be prepared to take advantage of the most impactful digital trend we have seen in the last 10 years: the use of mobile handsets as the main tools for peer interaction, gaming and video consumption.

This trend has been particularly big in the younger population and even more so in emerging countries as a result of demographic expansion (for example Indonesia, India, Brazil, but also Nigeria - see for reference “The demographic winners and losers in emerging markets” Columbia management 2012).

Here are a few digital insights in the identified geographic areas:

Brazil

India

  •  From 200 million internet users in 2013 to over 500 million users by 2017 — including 314 million mobile internet users — the growth of mobile internet in India is on the upsurge. IAMAI and KPMG projected that India will reach 236 million mobile internet users by 2016, and 314 million by 2017
  • India has the third largest Internet user base in the world out of which more than 50 per cent are mobile-only internet users
  • Share of mobile phone users that use a smartphone in India: 29,8%; trend to grow up to 39% in 2019 (source: statista)
  • With 26% usage, social is one of the most used apps in India
  • http://yourstory.com/2015/07/mobile-internet-report-2015/

Indonesia

Nigeria

  • 60% of the population is under 25 years
  • Fastest growing country mobile market (Google Consumer Barometer)
  • Mobile broadband becoming much affordable

Recent innovation in the confectionery industry and opportunity gaps

Biggest challenges to  industry norms are coming from adjacent products that transform the indulgent experience into something richer (chocolate snacks for example) or products that are more unexpected, daring and/or push the boundaries of the traditional tastes (new textures, mixing segments – chewy lollipops – or novel combinations of ingredients – yogurt and sugar). So our first opportunity comes from a possible evolution of traditional candy formats, shapes and consumption experience out of childish remit into a more teen/adult world.

An additional opportunity lies in the use of mobile technology for the co-creation of new products and the building a multidimensional richness of consuming confectionery that would make the category relevant also to teens discovering and celebrating new attitudes and more social dimensions, typical of teens’ lives.

A possible approach for the confectionery industry: risks, challenges and benefits

Our target are young people (early teens, generation C, with focus on 11-14 yo). They are always on, their first and foremost worry is about being connected. Friendship to them is important but sometimes it can be also just virtual. They enjoy sharing content which is self-created and consume media in micro moments. They can easily be present on several screens and have a sophisticated use of more than one social platform (messaging platforms, gaming, chatting). 

In the identified geographic contexts the average income is still very low (less than 2 dollars per day - https://www.cia.gov) and therefore they cannot afford to buy dedicated apps but would interested in free apps or downloads.

They tend to be very goal-oriented - they expect to be able to get information or entertainment easily, immediately and on their own terms. Therefore our strategy will need to ensure that accessibility is paramount but without sacrificing richness of content.

Products are becoming more and more digitally rich and defined in a broader context. Today’s pathway to purchase starts long before customers set foot in store. The actual shop window is in their homes, at their office, on the bus and in the café. The interaction before product being consumed, or after being eaten, is brought to a higher level. Consumers do not hold products in their hands in a retail environment or buy them at the checkout: they relate to them in a much deeper and continuous way.

Our customers will evaluate the digital experience we give them, as that’s how they first experience our brand. So the perception of our products is driven by the behavior and expression of the product before and beyond the item itself: the digital “presence” is almost as important as the packaging and delivery method used to get it to customers. A large percentage of our customers are online looking for valud and entertainment: they are looking for added value in brands that can deliver more of their needs, more of the things that they want in a product or service, than they’re already getting. And for teens the only value is not always in terms of being cheaper than your competitor.

The progressive sophistication of teens’ focused industries (in particular snacks, soft drinks, sport apparel) is merging product use and consumers’ lives: consumers are used to interacting with brands on a daily basis, to being entertained, to share content that the brand makes available. Meaningful Brands® research by Havas shows us that there is a huge disconnect between people and brand. Most people would not care if 74% of all brands disappeared for good. Being a trusted brand has not stemmed the disconnect. The biggest life threatening risk for a brand is now being disconnected from its own consumers. So what is the challenge for candy and lollipops?

In addition to a potential disconnect on/off relationship, we should also consider the lack of multidimensional fun (ie. beyond physical consumption) in the total product experience. Eating a candy is a time limited experience, between 1-8 minutes: once it is finished there is no other reminder of the experience. We must make the product experience last longer, to extend the fun: in other words to add more value to teens’ lives, where the real currency it to be visible and share fun content. We need to stay relevant in a consistent way with the category truth, which is fun and enjoyment.

And digital messaging, gaming and mobile content offers exactly the opportunity to do that:

  • Interactive product experiences that are richer and more persuasive than simply holding the product
  • Full understanding of the product turns browsers into buyers, giving them the confidence to purchase
  • “Cool” immersive content fuels engagement and brand preference — not simply sales

What are the benefits of these trends applied to our industry?

First of all relevancy, defined as reasons to stay continuously connected with our products, waiting for the fun stemming from the product, but also from the gaming and entertainment possibilities linked to our brands.

Which leads to the second benefit: the opportunity for the brands in the confectionery industry that can intercept the need for surprising and novel interactions both with the product itself and its brand life attitudes. In addition to that we can also foresee that mobile platform can keep confectionery:

  1. Always very close to teens (93% of Generation C sleeps with their mobile near the bed)
  2. Top of mind even beyond the impulse moment at the store (particularly true for our category)
  3. Open to new product ideas and suggestion for product evolution and design by consumers themselves
  4. Entertaining with content which is consumer created for the brands
  5. Open to deeper understanding linked to consumer data (from occasions & sharing habits to social sentiments): gaining insights into consumer behavior by tracking and analyzing their digital interaction.

Regulatory implications

Clearly this increased focus on teens and younger people will need to have some kind of self-regulatory approach to avoid the risk of being perceived as promoting unhealthy eating habits (see for ref. https://www.ftc.gov and http://ec.europa.eu/consumers/consumer_rights/unfair-trade/false-advertising/index_en.htm).

We would suggest having a strong position about sugar and energy requirement in teens’ lives linked to healthy lifestyles and sport activities, whilst educating consumers about the risk of overconsumption by introducing clear portion size policies for the whole industry and transparent labeling.

A strong case for more critical consumers and pressure groups could be stated by explaining that sugar is a natural ingredient - so as an industry we could explore the possibility for a fair trade agreement for more volume to be shifted towards sustainable plantations and support to local farming.

A second area that will require particular attention is that related to privacy of minors. On this account we will need to strive for full transparency and 100% protection policies, always allowing parents or authorities to have full access to the branded generated content and or activities that promote our products. In such direction we would sustain policy for the whole industry for teens to have full control over advertising or other type of content when using online services with clearly accessible “opt out”options (see also academic articles like http://www.bileta.ac.uk/content/files/conference%20papers/2007/Privacy%20issues%20in%20Mobile%20Advertising.pdf).

We believe that an informed, transparent relationship and clear rules will generate not only consumer trust but also worry-free enjoyment of the sweets candies we've loved ourselves since we were kids.

You can read more student whitepapers here

Find out more about Squared Online: you can give us a ring on +44 (0) 20 7173 5938, or download the brochure to read about the course and the Squared experience.

Topics: Digital trends, Digital marketing, Whitepaper, Business-sponsored students, Business case studies, Squared Network