#124 Oreos in China
Yes, granted, this is not the freshest and a lot may have happened since, but as I am constantly on the lookout for content that fits my interests, here it is: a segment on “Oreos in China” from CNBC’s “Made in China: The People’s Republic of Profit,” a one-hour original special reported by CNBC’s Melissa Lee (aired Wednesday, July 30th 2008). One has to hand it to the owner of the brand, Mondelez, that they did quite well on the adaptation to Chinese consumers’ tastes. Born in 1912 in New York, Oreos are still the world’s bestselling cookie with annual revenues of approximately USD 1.5 billion. In China, their success is due to being smart about local responsiveness – from working around pricing limitations to catering to different tastes. Today, they have moved even beyond the products that are featured in the video as one can see from visiting their Chinese website – from Mini Oreos with strawberry flavor to the Oreo birthday cake. Oreo is a good example for how companies can capture the middle ground between standardization and adaptation – adapt in some of the aspects of the marketing mix where it’s absolutely necessary or advantageous, but standardize as much as local conditions allow you to so that the integrity of the brand is not in jeopardy. Well done!
PS: NPR ran a similar feature in its Planet Money series, titled “Rethinking the Oreo for Chinese Consumers“. Definitely worth listening to as well.
June 29, 2017 @ 3:29 pm
The local responsiveness of Oreo not only manifests in introducing new products, which mixtures and prices are adapted to the Chinese market, but also in different branding strategies in distinctive markets. In China, Oreo cookies are sold with a Chinese brand name to improve understandability. Due to the large market in China and the distribution of the wavers to Canada and Australia, production capacities can be totally exploited and a balance between standardization and adaption is possible. What I consider as critical, is the lactose intolerance of most Asians, which could have posed a threat to the product positioning. In my opinion, advertising with the typical American way of eating Oreos could have had consequences in the willingness to buy of Chinese consumers. Many Chinese people do not drink milk and moreover, the product was totally unusual at the beginning. With new product introductions and different pricing strategies, Mondelez could very well balance out the uncertainty of the Chinese. From my point of view, Mondelez did very well in this case.
July 4, 2017 @ 4:20 pm
According to the video about the case of Oreo I think after all they really did an excellent job regarding the Chinese market. This example truly shows the importance of market research when introducing a product to a new market. Especially within the food industry it is crucial to know about your target customer’s taste. In my opinion the Chinese website represents an excellent example for successful product adaptation as it remarkably combines the original brand image with Chinese culture and taste. It’s also great to see that a product developed within the Chinese market was even sold in Canada afterwards!
July 6, 2017 @ 11:46 am
Especially in the food and beverage industry it is crucial to adapt products to the local market. In this case Mondelez did a really good job. They adapted the original American Oreos to the Chinese taste and developed Oreos which are less sweet and sold them in smaller packages. In addition, they also developed a new product in China which was so successful that it is now sold also in Canada, Korea and Australia. Without these adaptations in taste with different flavors, price, packaging and the development of different wafer variations, they would not be that successful in China. Well done!
July 7, 2017 @ 4:37 am
I think Oreo’s success in China is inseparable from its serious market research. Oreo produces Oreo cookies that match Chinese consumers’ tastes. Oreo’s product type is also constantly innovative, to meet the different consumer spending habits. It’s advertising is also very alive, mostly with family and friendship as the theme. In line with China’s traditional culture. This kind of advertisement can resonate with the consumer in order to attract customers to buy the product. In the supermarket products are also very scientific, Oreo is always placed in the customer most likely to see the place. Such a marketing strategy makes Oreo in the Chinese biscuits market has maintained a leading position.
July 7, 2017 @ 4:13 pm
One would think that a cookie consisting of two chocolate wafers wrapped around a sweet vanilla crème is something people of all ages and ethnicities would enjoy. Well, in the case of Oreo however, it is a different story. Despite being extremely popular in the American and European market the small round chocolate biscuit was not nearly as popular in China. The video above showcases how a company sometimes might need to adapt its product when facing intercultural differences; here a good market research is key. In the case of China this meant total reconsideration as Chinese customers did not like the sweetness of the cookie. Personally, I thought that changing the recipe was an extremely bold move – considering the product’s success is mainly due to its taste – but in the end, it certainly was worth the risk. Oreo carefully considered how to combine the original brand image with the Chinese culture and managed to come up with the perfect combination of standardization and adaption in terms of the marketing mix. Well done!
July 8, 2017 @ 10:13 am
Thank you for showing us this excellent example of how to use local responsiveness as a major success factor. This example of Oreo underlines how important it is to not just enter a new market with an existing product by leaving it as standardized as possible, but to really go deep into market research, reacting on different market aspects and adapting the product as much as necessary while keeping an eye on maintaining the corporate design and recognition value of the product. Some companies may have ended their adaptation when changing the taste of their cookies, but Oreo went one step further, by taking into consideration the customers general preferences concerning sweets (bars instead of cookies) and their income (making the packages smaller and therefore affordable). Furthermore, the new, adapted products are now offered in other countries as well, which is another benefit for Oreo.
July 13, 2017 @ 4:04 am
It is a great honor to read your article.
As a Chinese, I have to say that Oreo is very successful in China. When I first came to the United States, I found that there is a big difference between the US Oreo and Chinese Oreo. Actually, I prefer the Chinese Oreo products. As an international business student, I think Oreo’s success can be divided into the following factors.
Product
As mentioned in the video, earlier, Oreos is American version which is quite sweet. After they entered China, Oreos started to do the R&D and test alternatives. In this process, they took a long time and a lot of prototypes. However, this process is necessary and Oreos got the right balance finally. According to the CAN (2013) report, nearly 80 percent of five-year-old children suffer from tooth decay in Taiwan, which is higher than the 50 percent goal set by the World Health Organization. Also, according to the Shanghai Daily (2008), about 91.4 percent of local adults between 35 and 44 years of age suffer from tooth decay. Sugar has a high impact on tooth decay; therefore, the requirement of food sweetness is harsh in China. Moreover, in the Chinese people’s eating habits, they do not like high-sweet food. Oreo is more adaptive for the tastes of Chinese by changing the sweetness.
In addition, Oreo specifically studied new products for China such as wafer stick. At first, Chinese market of wafer stick was monopolized by Nestlé and Nestlé had hug sales on its wafer stick products. Oliver found this business opportunity. They started to produce and sell the Oreo wafer stick. Because many Chinese people like the taste of Oreo, Oreo soon entered the wafer market. In addition, in recent years, Oreo launched the ultra-thin biscuits and wafer sandwich. And also Oreo has developed a lot of flavors such as strawberry and blueberry. All of these products are more adaptive for Chinese people. Oreo based on the different market to do the different innovation, which makes them successful in China. Moreover, some of these product developed in China has sold to some other foreign countries. Kraft called this process “reverse innovation” (Waldmeir, 2012).
Price
Kraft launched a smaller and more affordable pack of cookies. They found there were many people on China who really like Oreo, but their absolute available money at any time was not enough for a full pack of Oreos. The Gross Domestic Product of China is well now, but according to Trading Economics (2017), the Gross Domestic Product per capita in China was recorded at only 6894.50 US dollars in 2016. Especially, in some second and third tier cities, people do not have absolute available money to pay for a full pack. Therefore, a smaller pack of cookies help Oreos entered the second and third tier cities market.
Promotion
In China, Oreo not only did a promotional blitz from in store samples but also did advertising in TV. In detail, the in store samples often results in immediate sales and the advertising showed consumers the traditional American way of eating Oreos. Oreo’s advertising is very novel for the Chinese people. The marketers of Oreo know many people even Americans do not duck Oreos into mill, but it is a moment of fun between parents and children. About Oreo’s advertising, I have to say they choose TV as a medium is very successful. According to Richet-cooper (2011), TV audiences are very broad in China. There are 1.2 billion people or 95.6% of China’s total population. Moreover, Chinese people much respect star effect. Oreo has chosen NBA star Yao Ming as the new Oreo star because of his iconic presence in China (Campaign, 2010). All of these actions help Oreo to raise brand awareness and also help them successful in China.
Place
Oreo began selling its products in China’s supermarkets. The product is not only placed in the counter, but also placed in a very prominent promotional area. As a Chinese, when I entered supermarket, I will be attracted by Oreos. In recent years, with the development of China’s electricity business, Oreo also began selling their products online. Oreo can seize every opportunity in developing process, which helps Oreo get a long-term succeed.
However, in my opinion, Oreo still have room to improve such as packaging style. Oreo’s main target consumers are children, so if Oreo can add some cartoon designs on the basis of the original design, it will be more popular with children.
Reference
Campaign. 2010. Oreo, Yao Ming campaign, greater China. Campaign Asia. Retrieved from http://www.campaignasia.com/video/oreo-yao-ming-campaign-greater-china/216674
CNA. (2013). 80 percent of 5-year-olds suffer from tooth decay. The China Post. Retrieved from http://www.chinapost.com.tw/health/childrens-health/2013/12/11/395711/80-percent.htm
Richet-Cooper, D. (2011). CCTV, 1.2 billion viewers strong. Ina Global. Retrieved from http://www.inaglobal.fr/en/television/article/cctv-12-billion-viewers-strong
Shanghai Daily. (2008). Shanghai locals suffer increasing rate of tooth decay. Shanghai Daily. Retrieved from http://www.china.org.cn/environment/health_green_living/2008-09/17/content_16487904.htm
Waldmeir, P. (2012). Chinese characteristics of Oreo. Financial Times. Retrieved from http://www.ftchinese.com/story/001043533
July 18, 2017 @ 5:46 am
Even though there are one and a half billion populations in China, it is not easy for foreign businesses to be successful in this market if they do not understand the Chinese consumer behavior and cultural environment. Based on the information given in the blog, Oreo is very successful in doing business in China since they adapted its products to fit with the consumers’ needs. When they firstly tapped into China, they were not that successful in introducing Oreo products and almost pull out of China since they got only less respond from consumers. Fortunately, they decided to do the market research by asking consumers with simple question like what is wrong with the Oreo product and they realized why. Oreo took that opportunity to adapt their products from sandwich cookie to the wafer which the taste of Oreo can fulfill the need of consumers. Moreover, currently, Oreo launched many new products which have different flavors like strawberry, mango, etc. as well as Oreo birthday cakes. From the analysis, Oreo has a good strategy on standardization and adaptation of marketing mix like products. They adapted products to be wafer so that the taste can fit with the consumers’ preferences but also still keeps the symbol of Oreo by making Oreo products able to dunk in milk, even though the shape is not round. Consequently, Oreo made an outstanding move in China market and become very successful in adapting products to meet with Chinese preferences.
September 16, 2017 @ 5:29 am
I recently saw a presentation about a candy product in India and they had very similar issues that Oreo had in China. The taste, price point and packaging had a considerable negative impact on the overall sales of the candy product. But, just like Oreo the company changed their packaging, price line and flavor to align better with the Indian market and almost immediately the company saw a significant positive impact on the sales of their product.
When companies enter new markets, they need to have “crosscultural awareness” (” trends: different countries, different customs – trends in packaging (When in Rome, do as the Romans do)”, 2015). What works in the US or Europe can be a total failure in other international markets, just because your product has been successful in one market doesn’t mean it will be successful in another. When entering a new market, it is important to have thorough understanding of the different values, norms, palettes, and expectations. Food tastes and preferences vary greatly from country to country, so it is in the best interest of any company who is trying to enter a new country (market) to do their research and make sure your product fits within that countries culture, norms and values.
Avoiding Cross-Cultural Faux Pas: Food: Making the Best Impression. (n.d.). https://www.mindtools.com/pages/article/cross-cultural-faux-pas-food.htm
different countries, different customs – trends in packaging (When in Rome, do as the Romans do). (2015, September 23). http://www.kakoii.com/different-countries-different-customs-international-packaging-trends-when-in-rome-do-as-the-romans-do/
September 17, 2017 @ 4:43 am
The first Oreo debuted in 1912 the company Nabisco (Kraft) initially was created to be a local company based out of New Jersey. (History Of Oreo 2017) Nabisco (Kraft) had a history of adaptation in the market. In 1975 Nabisco (Kraft) introduced a double stuffed Oreo and more new products to the market over time. (History Of Oreo 2017) Fudge Covered, Halloween and Christmas inspired Oreos were the next in line and the product evolved. Nabisco (Kraft) had a long history in America where it was the number one cookie, the product needed to stay relevant. Nabisco (Kraft) needed to extend the brands life cycle and what better way to re-invent yourself by going global. Nabisco branched into other markets starting in 1920. (Mondelez 2017) “In order to adapt, a company must have its antennae tuned to signals of change from the external environment, decode them, and quickly act to refine or reinvent its business model and even reshape the information landscape of its industry.” (Deimler, M.R. 2016) Nabisco’s (Kraft) business motto in the China market was completely different with respect to the product. Their strategy orientation went from Pre-International in the beginning to Global. This change didn’t happen overnight it took almost a decade for Nabisco (Kraft) to research the culture and truly understand how the market could exist in China.
History of Oreos. (n.d.). Retrieved September 16, 2017, from http://oreofunandfacts.weebly.com/history-of-oreos.html
Mondelēz International, Inc. – Home. (n.d.). Retrieved September 16, 2017, from http://www.mondelezinternational.com/
Deimler, M. R. (2016, May 27). Adaptability: The New Competitive Advantage. Retrieved September 16, 2017, from https://hbr.org/2011/07/adaptability-the-new-competitive-advantage
September 20, 2017 @ 4:14 am
The thing that strikes me most about this story is how Nabisco was able to pivot from one strategy to the next. They successfully entered the Chinese market using a standardization model. By bringing the classic Oreo cookie into the market they could take advantage of all those years of experience with that popular product, including all the cost savings and efficiencies of not having to start over or alter the product.
Once they established themselves and had a stable footing, they did a little more homework and found that a slight alteration of the product would cater much more to the local customers taste palate and would make the product that much more successful. This localization strategy could have been executed from the beginning but one could argue that the learning the company did from not localizing meant they could localize much more quickly and successfully with all they had learned.
My favorite part of the story, however, is when they took it all the way to innovating and creating products from scratch that were specifically for the Chinese market. Not only was this product successful in China but, not unlike other products in other industries, Nabisco was able to take this wafer cookie product back into other well established markets, coming full circle.
July 13, 2018 @ 2:38 am
It is interesting how Kraft first entered the Chinese market with their standard Oreo product, but failed because Oreo cookies were not appealing to the Chinese consumers. So, by investing some time in consumer research they were able to learn that consumers were not attracted to Oreos because they were too sweet. Hence, the Chinese Kraft team developed a new Oreo cookie product that looks the same, but it is less sweet. They also created new products such as the wafer sticks, straw shaped wafers, and etc. that still had its unique Oreo taste. They had to provide smaller and more affordable packs of Oreo cookies because the Chinese consumers could not afford the full pack of Oreos. In order to get Chinese consumers to try the new Oreos, they offer samples in stores. For their T.V. ads they used the same traditional ads as in the U.S. in order to keep the emotional appeal. After years of entering the Chinese market, Kraft was able to acquire success because they were able to adapt their Oreo product without diluting the brand. They also change their pricing strategy without negatively affecting profit in order to gain more consumers. Yet, as stated at first they were struggling because they failed to conduct thoroughly market research of China in where they could have better understand the Chinese consumer’s preferences. If Kraft had done their market research before entering China, they could have saved a lot of money and time. As many U.S. brands that expand internationally they believe that because they are a U.S. brand they are going to succeed overseas. However, this is not the case, a brand needs to understand consumer preferences, culture, laws, regulations, competition, and etc. Overall, Kraft was able to standardize and adapt its marketing mix for Oreo cookies.
July 14, 2018 @ 7:58 am
Each country has its own values, norms and habits, which depend heavily on geographical location. When going international it is always important doing local adaptions otherwise the product is not successful in this country. Oreo did market research and came to the result that Chinese people prefer a better balance between the sweet cream and the bitter cookie. This requires a good knowledge of the market and an analysis of customer expectations. Companies should built country-specific characteristics for example in terms of eating behavior. Oreo did it right by changing the ingredients, the logo and inventing new types of the original product. For Oreo as a brand, it is necessary that the taste is almost the same, so people who visit China will recognize the brand and will buy the product also in the foreign country. The company created loyal customers with emotional advertising by showing them how to eat an Oreo cookie in the American style. Other companies could learn a lot from the brand Oreo because they did it perfectly right.
July 15, 2018 @ 2:13 am
I think Oreo is a good example. As an international brand, they have done a lot of research and product changes when they enter different markets. From the beginning of the success of entering the Chinese market to the change of consumer preferences, Oreo constantly changes its strategy. In the analysis of Product Readiness, Oreo changed in this part of the product according to the taste of the consumer, reducing the sweetness. The appearance of Oreo has also changed, from a wafer stick to sandwich biscuit. In the price adjustment according to the size of the city to make changes, in some second and third-tier cities, they lower the price to attract consumers. In the place part, they are sold in major stores, it can be easily purchased. In the promotion section, Oreo’s traditional American advertising has changed to the Chinese version, and to convey that this product can bring the family closer. I am also a favorite of Oreo. In the market of Taiwan, Oreo is constantly changing the type of products. I especially like the mini version. This version of Oreo is a traditional Oreo volume. It’s half smaller and you can eat it in a bite. Its packaging is also zippered. When you eat a few pieces, you can quickly seal it. Traditional Oreos usually have to be eaten directly after unpacking. This kind of packaging is a big change. Consumers who taste but don’t want to eat a lot of Oreo at a time, especially in Asia, most people have this habit. As an international business, From part of market, culture, consumer preferences, Oreo did in-depth investigation and planning. It’s a great company for international business.
July 15, 2018 @ 9:24 pm
In my view of point, Oreo can be a best practise example how to think global but act local. A crucial success factor is the market research. Even it was a long and hard way to do it, it’s the basic module for a successful business. Expecially in the food and beverage industry it’s necessary to do market research. Considering the marketing mix, they didn’t just adapt the product. Oreo changed the package size and therefore also the price. Moreover, the way how to communicate with their target customers is different. In some shops are sales people available, which get in contact with the customers.
April 26, 2019 @ 5:42 am
In my opinion, as the author stated in the article Oreo is a good example for those can capture the middle ground between standardization and adaptation. Oreo entered the Chinese market in 1996. In China, it has developed into the most influential and successful biscuit leading brand. But when it first entered China, Oreo wasn’t popular at all. This has caused Oreo to almost withdraw from China. Then Oreo’s ex-parent company Kraft, conducted a survey of Chinese consumers, and the conclusions made them somewhat surprised, for the Chinese who do not like dessert, Oreo is too sweet. The Chinese market with nearly 1.5 billion people is the market Oreo want to fight for. Oreo began to try to localize the taste of the biscuits, while the team was looking for ways to let the Chinese accept Oreo. Now Oreo has launched a moon cake series in the Chinese market for the upcoming Mid-Autumn Festival. It has been put on the shelves of Tmall supermarkets. It has four flavors, including mellow chocolate flavor, cocoa milk flavor, creamy pineapple flavor and soft strawberry flavor. These are good examples of adaptation.
April 23, 2020 @ 12:33 am
This article and the video present good points on how a successful company can have issues entering a new market. With the success Oreo had in the Us and even in the neighboring countries, one would think that they would have success without having to adjust or as the bog says, “adapt” and “standardize”. I ran into this video a while back when attempting to locate a company who failed with a market entry but found that Oreo did not fail, they just did not have the initial success they were expecting. Another company who had a similar situation was Kit Kat when entering Japan. Just how Oreo introduced new products or variances of the product that enabled their success. At times it is offering similar products at a lower cost or reconfiguring the product itself that makes it desirable for the consumers but still holds true to the brand.
March 18, 2022 @ 10:22 pm
The video presented in this blog is a great example of how a company has successfully globalized their products in other countries. This classic American cookie has become a worldwide favorite due to its ability to adapt to foreign markets and giving customers what they want. The example in the video of how Mondelez created a “lightly sweet” cookie to cater to the consumer base in China shows how innovative the company is and their willingness to adapt to the markets they want to internationalize too. The idea of local responsiveness is something that Mondelez has been successful in and this is also appealing to customers. The video also talks about how the cookies are inexpensive regardless of the country they operate in, which is something that other company’s might struggle with due to compensating their internationalization expenses with higher product costs. Many companies have struggled with going global for a variety of reasons, and Oreo has managed to create a good image for their brand worldwide and continues to expand their product line today. Although this is blog is not necessarily a business failure, it shows how companies can easily fail when trying to globalize if they do not cater to the demographic in the desired country.