Wrigley’s Innovation in China’s Confectionary Market

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The Role of Product Innovation for Wrigley’s in the Asian Market

Wrigley is operating in a highly competitive market. Although it stands out as the most innovative firm and the market leader in this industry, other players are posing real threat to its progress in this market. For this reason therefore, product innovation is the only way through which this firm can manage the competition. Product innovation plays a very important role to Wrigley in the Asian markets.

When Wrigley ventured into the Chinese market, it realized that even though there was a market gap that it could easily fit in, especially given the large population in this country, there were other local firms that had mastered the art of trade in this industry and carefully guarded their market share.

There was only one way of managing market competition and standing out as the firm to beat in this market. Given the attractive population of this region, this firm realized that it had to be one of the leading firms in order to reap maximally in this market.

Product innovation therefore had a pivotal role in the strategy of this firm to capture new markets. The Asian market is very huge. China alone is home to about 1.3 billion people, which is five times that of the United States. However, not everyone appreciates the confectionaries that are manufactured by Wrigley’s.

For instance, chocolate had not been popular among the Chinese and countries in this region as it is in America and parts of Europe. For this reason therefore, the firm had the responsibility to make this product attractive. Product innovation has therefore been so important in creating market where it never existed before. This innovation is also important in ensuring that Wrigley’s remain ahead of other competitors.

Analysis of Wrigley’s Products and Innovations on the Basis of their Newness to the Company and the Market

Wrigley’s innovativeness can be traced back to its inception in the late 1890s. The founder of this company, William Wrigley Jr. was a very innovative man. At an age of 29, he started a business of selling soaps. With the need to ensure that the sales of his soaps grow, it introduced an incentive of backing powder to its attractive customers.

He had to look for a different incentive and decided on chewing gum as the incentive. He was keen to realize that chewing gum had even greater potential and soon switched to manufacturing of chewing gum. Through innovation, the soap seller soon transformed to be a chewing gum manufacturer. This has been the trend of this firm.

Types of New Products

Since those early years of its inception, Wrigley maintained innovation by producing new products quite often. Initially, it was selling soaps. Its first new product was baking powder. This new product was not new to the market. There were many other business units actively selling this product in the market.

However, this product was completely new to the firm. When the firm started selling chewing gum, the product was new to the firm, but not to the market because there were other firms producing the same. However, when the firm selected this industry as its preferred line of business, it started producing new brands of the chewing gum like Lotta, Vassar, and Spearmint. These products were new, both to the firm and to the market.

The firm has continued to introduce more brands new to the firm and to business. Such products as Juicy Fruit Gum, Freedent and Big Red were a big success in the market because they were new to the market, just as they were to the firm. Winterfresh, Airwave Honey, Lemon, and Juicy Fruits were similarly new products that were very successful. These products were new to the firm and to the market.

Implications of Repositioning from Existing Markets to New Markets

Product repositioning can be as successful as it can be dangerous. Repositioning a product in the market may be very important, especially when the current image is not very attractive. Wrigley’s has moved from the American market to the Chinese market. These two markets are completely different. The socio-cultural factors that influence buying behavior of the Chinese markets are very different from that in the United States. Product positioning of this firm in China should be made different from the way it is done in the United States.

This is exactly what this firm has done, especially in the markets in China, Taiwan and other countries in this region. While the American markets were receptive to the chocolate, the Chinese markets were more receptive to the sugar products. This firm therefore realized that it had to reposition its products to reflect the local requirements in China.

The implication of this move was a huge sale in the Chinese markets. The products gained acceptance in the local market as the products meet their requirement of the locals. It was viewed as a local product with the potential to meet local needs. However, upon a careful review of the market, this firm realized that the Chinese market was changing its opinion on chocolates.

It therefore changed the strategy. It developed a new line of products that were sensitive to the changing market needs and repositioned them to reflect this change. As a result, Wrigley’s has managed to remain the dominant firm in this market.

Implications of Developing and Launching Incremental Innovations

The firm has come to realize that the market is very competitive and as stated above, has embraced innovation and creativity. The implication of this is evidenced in both the US markets and the market in China. By developing and launching incremental innovation, this firm has been in a position to keep its market lead.

It has managed to stay ahead of competition. It has continued to offer the market new products that satisfy their needs in a better way. For this reason, it has retained a pool of loyal customers, making them blind to the products of the competitors. Incremental innovation to their existing products has turned some of the customers into evangelists, making this firm even stronger in the Chinese market. This strategy has also enabled the existing products have a longer life cycle in the market, making them more profitable to the firm.

Implications of Developing and Launching ‘really new’ innovations

Developing and launching of ‘really innovations has also had a positive implication to Wrigley’s in this new market. When this firm started to develop the chewing gums, it was a completely new market.

Although it was new to the firm and the prospects of success was based on chance, the firm managed to penetrate the market with this new products and this has landed it its current position as the leading manufacturer of the confectionaries in the world. The new products created new markets that have remained very loyal to the firm hence its main strength.

The Extent to Which Wrigley’s Innovation Strategy Has Been a Success in China

Wrigley’s in China is a success story given the growth in the market share. Wrigley considered the Chinese market as the most attractive after the US market. Given the fact that the market was still growing, Wrigley considered it even more attractive. However, it had to maintain its innovative strategy in order to be a success in this market.

Because of the innovative strategy of this firm, the market share of this firm has grown from about 46 percent in 2001, to over 80 percent in 2005. This growth is estimated to increase within the coming years due to the innovation strategy of this firm within this market.

Currently, Wrigley’s is considered as the leader in retail penetration in this industry and in consumer goods in general in China. The firm has managed to reach a 2.2 million distribution points within the country. The distribution of Wrigley was estimated to cover over 300 cities in China alone. This is estimated to be about 90 percent retail penetration. Wrigley’s continuous innovation has made the firm sustain strong consumer preference.

Opportunities and Challenges Faced by Wrigley

The path taken by Wrigley’s has been marred by opportunities and threats in equal measure. The firm’s strengths and weaknesses have played off to make the firm reach its current market position. To analyze carefully the opportunities and threats of this firm, a SWOT analysis would be used to examine the internal and external environments of this firm.

External Environment

Within the external environment, the firm has met a number of opportunities that has made it reach its current glorious position. The first opportunity that availed itself to this firm was the apparent gap that existed in China in the Confectionary market. The firm made good use of this opportunity and has firmly established itself in this market.

Another very strong opportunity that availed itself to this firm was the size of the market in China. The market was five times larger than the US market. This implied that it had a larger potential for this firm. The emerging markets and submarkets in this region were also making the region potential as a market of this firm. The firm was quick to meet the unmet needs of this market at good time, hence its success.

However, the firm also faced some potential challenges that hampered its growth within the Chinese market. There is a considerably competition in this market. There are firms producing products that are close substitutes of the products of Wrigley’s. They pose potential threat in the market for this market. There is no barrier to market entry, making this market open to competitors. This therefore means that there is a possibility of new entrants into this market that can pose further threat to this firm.

Internal Environment

The main strength of this firm is its innovativeness. This has enabled it protect its market share in this region. The firm has developed a very strong brand name in the market that has increased its profitability. However, some weaknesses of this firm have made it lose a portion of its market share. Failure of some of its products has caused the firm both financially and in relation to time.

Innovation Strategy for the Next 5-10 Years

To be in a position to manage market competition for the next five to ten years, the firm must retain its innovativeness within this industry. It must be in a position to maintain the satisfaction of the customers in the market through development of new products in the market. The existing products should also be developed to extend their life cycle in the market. Above all, the firm should always be sensitive to the needs of the market and respond to the changes in tastes and preferences of customers.

New Product Development to Capture a Segment of the Market

The market is getting increasingly fierce. More players are coming in with new strategies in the market and Wrigley’s must develop a strategy that would enable sustain itself within this market. Based on opportunities and threats in this industry within China, this firm must consider diversifying its products to go beyond the gum products.

The chewing gums are very profitable and they have defined the firm’s position in the market. However, many firms are coming up with similar products, making it very difficult for the firm to maintain one line of production. The Chinese are getting increasingly conscious about their health. They currently prefer products that have been approved as health sensitive. The firm must therefore consider producing products that are sugar free as many health experts have argued that sugary products are not good to health.

The firm should develop sugar free gum and target the middle class market within this country. This market segment is very sensitive on issues pertaining to their health. Although they value the chewing gums, they put more emphasis on their health other than on the product.

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