Our Oreo SWOT analysis sheds a light on the Strengths, Weaknesses, Opportunities, and Threats of the most famous cookie company.
It is a fact universally acknowledged that everyone must try an Oreo biscuit at least once in their life. For most people, it’s not just a biscuit, it's their childhood in a packet of their favorite late-night snack. For those of you who have never heard of or tried an oreo, here’s your chance. Get to know the company a little more in this Oreo SWOT analysis and then you can go out and try some for yourself!
For those of you who are aware of Oreo, you must have heard about the “twist or dunk” debate. Which would you choose? Dunking the entire cookie in a glass of milk or separating it in two halves and eating them? While you ponder over this, let’s take a look at Oreo’s history.
Created by Nabisco in 1912, more than a hundred years ago, Oreo was NOT the first of its kind. Yes, you read it right, there was in fact a similar cookie created by another company four years prior to the creation of Oreo. However, Nabisco made sure to outshine its competitor, and now Oreo has become a household name.
The origin of Oreo’s name is a mystery in itself. While some attribute it to the French word for gold, others believe it is the Greek word for “mountain” attributed to the cookie’s initial shape that never made it to the market.
While the classic Oreo is universally recognized, there are a number of flavors and variations that have been introduced over the years. Fudge-covered Oreos, Halloween Oreos, the Christmas Oreos, Gluten-free Oreos, and Oreo Thins are a few examples.
Oreos have also become a popular ingredient for desserts, with new recipes making their way to the internet with every passing day, some of which you can even find on their official website!
Oreo has also introduced OREOiD which allows people to not only customize their cookies but also customize oreo themed gifts such as shirts, earmuffs, bags, insulated travel mugs, candles etc.!
With its creative marketing campaigns and even a place in New York named after it (Oreo Way), Oreo is perhaps one of the most famous cookies around the world.
However, to get a better idea of how the company is actually performing you might need to use a SWOT analysis to take a closer look. This analysis makes use of four major components (strengths, weaknesses, opportunities and threats) to analyze a company's performance.
Strengths and weaknesses are called internal factors because they are directly associated with the organization and controlled by it. On the other hand, the external factors (opportunities and threats), are what affect the company.
For instance, Oreo’s strong brand equity can be considered as its strength (internal factor) but the change in consumers' preferences can be considered a threat (external factor).
Now let’s proceed to take a look at Oreo SWOT analysis.
What are Oreo’s biggest strengths?
Every company must constantly make efforts to improve themselves and build up their strengths which serve as their competitive advantage. Oreo also has to rely on its strengths in order to compete better and some of them are as follows.
Brand Equity
Oreo’s association with Cadbury, a well-known brand in itself, often leading it to be called Cadbury’s Oreo, results in higher brand recognition. This also results in Oreo having higher brand equity which is the value of a product or brand in the mind of consumers in comparison to a generic product.
Furthermore, this association results in higher brand recall which means that a greater number of people are able to remember it easily, leading to Oreo outperforming its competitors.
Vast Distribution Network
Another major strength for Oreo is its extensive distribution network. When it comes to its availability, the brand ensures that its products are available even in the less developed areas of their chosen markets.
Global Market
With approximately 2100 distributors and 450,000 retailers around the world, Cadbury’s Oreo has a global presence. The brand is a permanent fixture in the global marketplace, with its presence in more than 95 countries.
This allows Oreo to reach a significantly larger number of customers than a national or international presence would allow.
Strong Communication
The brand makes the best possible use of advertisement and marketing communication to present family and relationships in its advertisements. It also uses slice-of-life ads to depict both the taste and emotion associated with its biscuits.
Brand Trust
Due to its good quality, lower price Oreo has garnered a substantial amount of trust from loyal consumers. The brand has existed for more than a hundred years around the world and more than a decade in certain individual markets which increases consumer trust in the brand.
Superior Quality Packaging
Oreo’s superior marketing efforts are not just limited to its advertisements but also extend to the product's packaging. The brand ensures to tailor its packaging according to the tastes and perceptions of the market where the products are being sold.
Good quality packaging plays a pivotal role in how consumers perceive the quality of the product which is why Oreo’s efforts in this regard resulted in its packaging becoming a strength.
Social Media Presence
As the world opts for digital marketing and online advertisements, Oreo has made sure not to be left behind. With up to 38 million followers on Facebook, Oreo has a strong social media presence.
This allows the brand to gain more traction with youngsters, who avidly use social media, and are Oreo’s major target market.
What are some of the biggest weaknesses of Oreo?
If we are being honest, life isn’t always sunshine and rainbows, there are rough patches too. While companies can boast about a number of strengths, they cannot completely ignore their weaknesses. Listed here are some of Oreo’s weaknesses that need to be considered.
High cost of ingredients
The main ingredient for Oreo biscuits is chocolate, and Cadbury only uses the best quality cocoa which is rather costly.
While the cost of the ingredients is going up, the brand is unable to increase its prices at the same level which results in an overall decrease in profitability.
Internal Competition
While external competition is always a given, Cadbury’s Oreo also has to face competition from Cadbury’s other products such as Bournvita biscuits.
These competing products take up some of Oreo’s market share resulting in fewer sales volume and lower profitability.
Criticism
There have been issues regarding the use of chemicals in Oreo biscuits and the case of salmonella poisoning in the US resulting in the recall of certain products.
High Advertising Costs
While Oreo’s advertising efforts are certainly worthy of praise, they are also very costly. This advertising cost cannot be compromised because the brand relied on the impulse buying that occurs due to exposure to its advertisements.
Due to the nature of its products and its overall positioning, the price for the products cannot be increased to factor in or offset the cost of advertising those products.
Differentiation Issues
At any given time, a vast number of biscuits are available in any market in many forms, which results in differentiation issues. Brands can find it difficult to set themselves apart from their competitors.
What are the opportunities for Oreo?
If companies only looked at their strengths and weaknesses, they would not be able to improve beyond a certain point. However, there are always opportunities that can be availed to improve the organizations' performance and outperform its competitors.
Listed here are some of the opportunities that Oreo can avail to improve itself.
Growth Potential in Emerging Economies
Another potential market for Oreo is emerging economies like China and India. These economies are quick to adopt certain western trends such as the use of biscuits as a daily snack.
Oreo’s presence in such economies will allow it access to a greater number of customers which will increase its sales volume and hence increase its profitability.
Increase in Demand
The market demand for biscuits is on the rise and so is the demand for chocolate. Both of these trends are in Oreo’s favor which fits into both categories.
This increase in demand may result in an increase in the sales of Oreo biscuits which will, in turn, increase its profitability.
Attracting Children
A consumer segment that is sometimes overlooked, but has great potential, is children. If you have kids in your home, you know how convincing they can be if they want something. No one can convince a parent like a child determined to get what they want.
A cleverly constructed advertisement that appeals to children can definitely increase the inflow of cash for the company. Oreo may well benefit from opting for this strategy.
What are the threats for Oreo?
While it is always nice to ponder over the potential opportunities that a company can avail, it is also important not to ignore the threats posed by forces outside the company. Some of the threats that Oreo may have to take into account are as follows.
Competition
While the increase in demand for biscuits is a great opportunity for Oreo, it also results in strong competitors such as Mars, Hershey’s, Parle, Britannia, etc. This strong competition may make it even more difficult to compete effectively.
Unhealthy Ingredients
Oreo biscuits are, primarily, a snack. This is why they are not really focused on incorporating healthy ingredients in their product. In fact, it contains some unhealthy components such as fats, sugar, etc.
The current trend in consumers' food preferences is shifting towards healthier products which may lead to a decrease in the demand for Oreo.
Lack of Recognition in Remote Areas
Another factor is that Oreo is not recognized in some of the remote areas which affects its profitability.
Oreo SWOT Analysis: Conclusion
Oreo is, without a doubt, one of the most popular brands of cookies throughout the world. With a global presence, vast distribution network, and strong brand equity, it is doing quite well in its respective market.
However, Oreo needs to overcome certain weaknesses such as differentiation issues, in order to further improve its performance. It can also avail new opportunities such as marketing to children, in order to compete more effectively and increase its market share.
Oreo can also gain from anticipating and effectively responding to threats from outside forces such as the shift in consumer preferences towards healthier food options or lack of recognition for its products in rural/remote areas.
Maintaining its strengths and working on its weaknesses, availing new opportunities, and responding to threats before it's too late may help Oreo to further improve as a brand.
While the brand is already doing quite well, it doesn't hurt to do even better!
There are a number of tools that can be utilized to assess how a company is performing and a SWOT analysis is one such tool. It is particularly used by companies as part of their strategic planning process.
If you want to take a look at how a company is performing, a SWOT analysis may be one of the most suitable options. Not only is it easy to understand and use, but it can also be utilized to understand different industries as a whole or study a particular industry in depth.
A SWOT analysis takes into account the company's strengths and weaknesses which are considered as internal factors and the threats and opportunities for the organization (external factors).
An understanding of these four factors can result in improved performance of the company. It is a very important skill for management students or professionals to know how to carry out SWOT analysis.
For those of you who want to carry out a SWOT analysis on your own, a good template is always the best option. You can also take a look at some examples to better understand the process and the application of this strategic planning tool. Since visuals facilitate a better understanding, you can also make use of a tabular form.
