Kraft Foods competitive strategy through cost leadership and distribution optimization

Strategic Choices

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Low cost

Differentiation

Preemptive

Strengths: Outbound logistics

The company should improve their distribution method to make it more cost effective thus allowing them to cut distribution costs and these savings can be passed on to the consumers. As posited by Alagse (2012)

, the best strategy for Kraft foods would be to become the lowest cost supplier of their products rather than the lowest cost producer. This would enable the company to translate their cost advantage into price advantage for their consumers enabling them to improve their market share.

The company should ensure availability of their products in order to enjoy prolonged sustainability as a result of ease of access of their innovative products to the consumers thus increasing brand loyalty. The company will also be able to create unique value for their products as a result of their ready availability in the market thus increasing the appeal of the product greatly Jemmeson, 1997()

The company should improve their outbound logistics in order to attempt to tap into market segments which have not been targeted by competitors thus allowing the company to focus on a specific market niche. This will enable the company to increase their consumer base through offering preferential access to their products to these new market segments.

Kraft foods should position their products uniquely by improving their distribution channels to ensure they reach as many consumers as possible in order to establish a dominant position in the market. This strategy will help Kraft foods to establish a large customer base enabling them to be able to respond better to the competitive wars in the industry by the company being seen as the premier destination for food products Passemard & Kleiner, 2000()

Weaknesses: Difficulty in marketing & sales of new brands

The company should position new brands as low price brands in the market in order to become the cost leader for these new brands Ma, 2002()

The company should ensure the new brands are as innovative as possible through improved quality, packaging, and design and that they are constantly improved in order to keep them a step ahead of competitor's products.

The company should ensure new brands are targeted for specific market segments in order to focus on these specific market niches.

The company should ensure they have the necessary technical skills and corner raw materials to be able to produce the new products in a unique manner that the competitors cannot copy Ma, 1999()

Threats: Strong competitive rivalry

The company should strive for the product positioning that promotes the visibility of their products as low cost products and does not harm the profit margin of the company. Kraft foods should thus strive to ensure their consumers

The company should improve their product differentiation through improved quality, design and packaging of the products in a way that creates the perception that there is no substitute that is available for the consumers as a result of the differences in quality and design of the product Dennis, Nunamaker, & Paranka, 1991()

The company should seek new market segments where competitors have not reached in order to target and market their products. In these new market segments, the company's emphasis should be on consumer satisfaction thus the company should provide the best products in order to gain market share early and increase their brand loyalty that even after competitors set in, it will be difficult for consumers to switch to the new products Oliver, 1997()

The company should strive to create strategic alliances through horizontal and vertical integration in order to raise their playing level in order to enhance the ability of Kraft foods to create value for its consumers as compared to its competitors. This will also enable Kraft foods to acquire and accumulate valuable assets and resources which enable the company to gain and sustain their competitive advantage Powell, 1992()