The estimated market value for chewing gum in 2001 was £266 million. Of this £227 million was sugar-free chewing gum. This is an increase of 11.8% on 1999 sales. The market for chewing gum and bubble gum has been growing over the last 10 years (See Fig. 1). In fact the market has grown by 42% between 1996 and 2001. However the growth rate of 10% between 1996 and 1997 has halved to 5% between 2000 and 2001.
Between 1999 and 2001 the sales of sugar-free chewing gum increased where as the sales of all other types of chewing gum and bubble gum decreased (See Fig. 2).
It terms of volume the market has also grown as shown below in Fig.3
This is a positive sign for the launch of my new product as if I do launch it I will be launching it into an already growing market. However, this exceptional growth in the sugar-free chewing gum market may attract other firms to the market which may introduce more competition.
Competition
It is important to look at different competition in order to determine the market leaders and to find out how difficult it would be to break into the particular market. It is also useful to know how many competitors there are in the market as if it is a crowded market place then it might be harder to gain a large market share whereas if there are just a few competitors in the market it may be easier for a big corporation like Nike to break into it.
The gum market is dominated by just one manufacturer, Wrigley, and its various brands (Source: Euromaster report). The Wrigley Company Ltd (Wm Wrigley Jr Co) different brands include: -
- Airwaves
- Extra
- Freedent
- Hubba Bubba
- Ice White
- Juicy Fruit
- Orbit
- PK
Source: Trade Press
There are only two other main competitors in this market; Leaf and Adam’s Confectionary. However their market share is tiny compared to Wrigley’s (See Fig.4).
Although there are only three main competitors each of the three companies have several different brands of products. This can be shown in Fig.5.
This shows that Wrigley owns 9 out of the 10 leading chewing gum brands. This just emphasises there dominance of the chewing gum market.
Due to the massive domination of the market by Wrigley’s it may be hard to gain status, however Nike will only have one main rival therefore it may be able to concentrate its efforts. By using the financial wealth of the Nike corporation it could use UK-wide advertising through different medias such as television, radio and newspapers/magazines. This is the main difference between Wrigley’s and its competitors; Wrigley’s spent around £17.5 million on advertising in the year 2000 (Source: Mintel) where as its competitors spent very little. The reason Wrigley’s dominates this market is due to its brand and brand loyalty, if Nike could transfer their ‘cool’ brand image to its range of chewing gum then I think that it could be a success.
New Competitors
Information on new competitors is useful as it can show if Nike will have to compete with a lot of new competitors if it launches a new product. It can also show how companies that have launched new products have done. For example if a new competitor joined the market and gained a significant market share then it would show Nike that it is possible to break into the market.
No substantial companies have entered the chewing gum market for years. I think this is because companies are scared off by the immense presence of Wrigley’s as the market leaders.
However in 2001 Colgate launched a chewing gum called ‘Colgate Dental Gum’, it has aimed to get a 7% market share in its first year. This is an interesting move by a dental care company and may signal the start of several dental care companies launching a range of chewing gum. Also in 1999 Wrigley’s did launch a new chewing gum called ‘Ice White’ which is a sugar-free stick gum which helps to whiten teeth. This chewing gum has risen quickly in popularity and had a 3.3% market share in 1999, just one year after entering the market.
If Colgate Dental Gum does well then other companies may join the market, if this did happen it would make it harder for Nike to gain a market share as there would be many new competitors.
Target Market
Trying to establish which types of consumers are going to buy the product is very important as it makes market research easier and saves money and time as the marketing mix can be directed at the people who are going to buy the product.
Everybody chews gum therefore most chewing gum is aimed at everyone. However, some chewing gum is aimed at smaller market segments such as children or smokers. The brands of chewing gum with the largest market share are the products aimed at the majority of the market. If Nike does launch a chewing gum it must decide whether it wants to aim for the whole mainstream market or a smaller more specific segment. If they aimed their product at all consumers then there would be the possibility of higher sales. However if they aimed their product at a smaller segment, teenagers, for example they could use their ‘cool’ brand image to make the product appeal to teenagers.
The market for sugar-free chewing gum has risen quickly in the last 10 years due to the rise in popularity of healthy eating; Nike could exploit this by giving their product a unique selling point (USP) and could make the chewing gum good for your health and so appeal to most consumers. This would also link in with their athletic, sporty image.
Market Issues
It is important to look at market issues to find out any reasons why a market may rise or decline in size in the future. Knowing about any market issues can help to make sure that a product is marketed properly. For example if a market for watches is advancing in technology very quickly then a new company entering the market must be prepared to spend a lot of money on research and development.
In the market for chewing gum at present there are two main issues that companies are using to give their products unique selling points (USP’s). These are: -
- Chewing gum helps to stop smoking
- Chewing gum is good for you
Chewing gum helps to stop smoking – An article on the BBC website called ‘Rise in numbers quitting smoking’ says that sales of products that help you to quit smoking are around £94.7 million. The sales of £94.7 million are predicted to increase to £125 million by 2006. Of these products Nicotine patches and chewing gum account for 85% of sales. If Nike were to launch a chewing gum which helped to stop smoking then it would only appeal to smokers which is around a third of the population (Source: Mintel). It would also not really fit in with the healthy, sporty image of Nike.
Chewing gum is good for you – Another article on the BBC website called ‘Chew gum ’to beat tooth decay’’ says that child tooth decay could be significantly reduced if schoolchildren were encouraged to chew sugar-free gum. Chewing gum can contain several things that can be good for you. These include: -
- Decongestants
-
Xylitol - a sweetener made from the bark of the silver birch which helps to lower the chance of tooth decay
- Sodium bicarbonate - helps to whiten teeth
Sugar-free chewing gum is also now approved by many dental authorities, including the British Dental Association (Source: Mintel). If Nike were to launch a chewing gum which included the ingredients listed above then it would both appeal to the growing consumer trend for healthy alternatives and would fit in with the company’s healthy, sporty and athletic image.
Distribution
It is important to gather information about the different distribution channels for existing chewing gum manufacturers because it will show which are the most successful places to sell and promote the new Nike chewing gum.
The main channels of distribution of confectionary can be shown in Fig.6 over the last five years.
The graph below (Fig.7) shows the channels of distribution of confectionary on average over the last five years.
Overall the best place to sell the new product would be in multiple grocers, confectionary specialists and independent food stores which accounts for on average over 75% of sales between them.
However this data is only specific to confectionary products and chewing gum is only around 14% of that market (Source: Mintel) therefore this data can not be taken to be totally accurate as it only gives a basic idea of the distribution of chewing gum.
Limitations
There are obviously going to be limitations when collecting secondary data and all these limitations must be taken into account before deciding upon a conclusion as to whether Nike should launch a new product.
There are several reasons as to why the data may not be totally reliable. The data may be out-dated and therefore not totally reliable. The data collected may also not be totally relevant. For example the chewing gum market is only one segment of the confectionary market. This is shown with the data in the ‘Distribution’ section. Equally data may only be relevant to the UK whereas the product might be launched worldwide.
Conclusion
From carrying out secondary research into the market for chewing gum I have found that the positive conclusions are: -
- Nike is a huge company with the finance behind it so that it could easily launch a new chewing gum profit without having to struggle for the capital.
- The brand image of Nike could help to sell the new product along with the many famous sportspeople who endorse Nike’s products.
- The sugar-free chewing gum market is the largest out of all the chewing gum and mints markets and easily big enough to incorporate another large firm
- The sugar-free chewing gum market is also growing rapidly and therefore Nike could profit greatly from the market.
- No other sports manufacturers produce a range of chewing gum. In fact no other sports manufacturers produce any type of food product. Therefore Nike would be unique and reduce its competition from its main rivals of Adidas and Reebok.
- There is only three main competitors and therefore it could be quite easy for Nike to break into the market with sufficient Advertising and promotion.
- Nike’s healthy sporty image could be easily transferred to a chewing gum with the increasingly important issues of chewing gum being good for your health.
And the negative conclusions to be: -
- With Wrigley’s having such a big market share (87.9%) it will be hard to establish the new product as to get any market share our product must reduce the market share of Wrigley’s which has been the market leader for years.
- Although Nike has diversified into other areas such as golf it has always stayed close to its roots as a sports manufacturer. By creating a new chewing gum product it would be entering unknown territory and a lot of money would have to be spent on research as well as designing the new product and manufacturing it.
Overall Conclusion
Although to look at it would seem that the positive reasons for launching a new chewing gum product easily outweigh the negative you must take into account that the fact that Nike has never sold a food product. This is a very big factor and creates a huge risk.
However, I think that due to the fact that Nike is such a big company and due to its brand image I do think that it would be feasible for Nike to launch a chewing gum. I think that it would probably be wise for Nike to carry out extensive market research and R&D before launching a product. I also think that it would be wise for Nike to create a range of sugar-free chewing gums as it is shown that although Wrigley’s do have a large market share, their market share is built up by many different brands of chewing gum.
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