In the United States, Tang has been around for half a century, and the powdered, tangerine-flavored drink was the chosen beverage for some of the early NASA space flights. For example, in 1962 astronaut John Glenn drank Tang on board the space shuttle. ‘Tang makes water more exciting.’ Now the Chinese are drinking it up – literally.

Kraft Foods saw sales of Tang in developing markets soar 30% in recent years, to more than $950 million, powered by Asia, Latin America, and Eastern Europe.

The resurgence of Tang is one payoff from Kraft’s strategy of boosting overseas sales by targeting 10 so-called power brands – products the company identified in 2008 as being under-marketed and having the highest potential profit margins.

Also on the list are household names like Oreo cookies and Philadelphia cream cheese. ‘These 10 get a disproportionate amount of talent, R&D resource, as well as advertising and promotion,’ says Sanjay Khosla, who oversees Kraft’s developing markets.

The two-year-old strategy is credited with raising revenues from developing markets to 21% of Kraft’s $42.2 billion total in 2009, excluding currency fluctuation, divestitures, and acquisitions..............

Questions

1. Evaluate Kraft’s strategy of targeting so-called ‘power brands’ for overseas markets. Is this something that is unique to Kraft’s situation or can other consumer goods companies be as successful? Discuss.
2. Is the success of following a strategy of targeting brands limited to developing countries in Asia-
Pacific and Latin America, or can it be applied with success in other areas such as Western Europe? Discuss.
3. Is it desirable to devote a disproportionate amount of talent, R&D resources, and advertising and promotion to a small number of brands in a company’s product line? What about the other products (brands)? Wouldn’t sales of these necessarily be less than what they might be with proper support? Explain.