Introducing iSnack 2.0 The New Vegemite Case Solution

1. Why did Vegemite fail?

Vegemite is an iconic Australian brand; Australians are extremely involved and protective towards it. Vegemite is a very strong brand which is exceptionally high on its brand affinity. Australians associate the feelings of patriotism, safety, and happiness with Vegemite. 

With the New Vegemite's launch, the company was successful to sell 2 million jars of the New Vegemite with approximately household penetration as high as 12% in just two months. The results were incredible, which showed that people liked the new Vegemite Combination despite of the fact that it was released without a name initially and the new product had shorter shelf life and required refrigeration. After two months from the launch, Kraft Foods held a "Name Me Campaign” and invited suggestions for the new brand’s name from the Australians. The ‘Name Me' was also very successful as Kraft’s previous social media campaigns. People were highly involved and appreciated it. But when the name "iSnack 2.0” was launched, Kraft Foods got huge negative response and bashing on the internet. The new name for the brand was not accepted by the audience.

The Australians gave an immediate negative response to the name. The consumers were infuriated and showed their grievances and dislike through social media posts, so much so that the person who gave the name suggestion made to the list of 50 most hated people in Australia. This was primarily because Australian could not resonate with the name “iSnack 2.0”, it sounded more like technology then food. Another reason could be because the prefix “i” belonged to an American technology company “Apple” which hurt the Australian feelings of patriotism. It did not seem to be Australian anymore and they Australians did not feel the same connection with the new product that they felt with Vegemite.

2. Why did Talbot have to revitalize the brand?

Vegemite had been one of Kraft’s iconic products and a part of Australians’ life for more than 70 years. Australians loved Vegemite. Over the year Vegemite had managed to be a part of Australian households as a staple. It had an exceptionally good brand penetration (Approx. 80%) in the ANZ market. The sales for Kraft's products, especially Vegemite were increasing till the late 90's, and they reached an all-time-high in 2002. But after 2002, the sales were instable and volatile and showed a decreasing trend. 

By 2007, Kraft’s overall business position in Australia and New Zealand region was suffering. Kraft’s products were very popular among its consumers, but it was facing internal management issues. Also, Kraft Foods’ recent decision to build factories in Indonesia, Middle East and other regions where the exports’ demand was high resulted in a blow to Kraft’s ANZ business. The exports to these countries were primarily supplied form the AZN region; and the construction of factories in these regions resulted in overcapacity in the Australian factories, thus increasing the prices of per unit production.

Plus, a decline was also observed in the market share of many of Kraft’s products; Vegemite’s market share decreased by 8%. Seeing the overall situation, the newly appointment Kraft’s management decided to revitalize all its brands with special focus to Vegemite.

3. Kraft's decision to revitalize brand performance through the introduction of a brand extension. 

To revitalize the sales and decreasing brand performance, Kraft ANZ decided to get consumer insights by engaging in market research. For this research, Kraft’s management hired IBM’s services in 2008. The Key research objectives were;

• To identify various trends and patterns Insights for the development of product extensions.

• Find unique trends existing in the market.