Hydrox: One Smart Cookie

Marketing Plan

Madeline Milano
828 Cookie Drive
(687) 555-8888
[email protected]
www.hydroxrulesoreodrools.com

©2023 Quantic Holdings, Inc. All rights reserved.

Table of Contents
_____________________________________________________________

Executive Summary 3

Situational Analysis 4
Industry Background & Growth 4
Competition 5
SWOT Analysis 7
Strengths 7
Weaknesses 7
Opportunities 7
Threats 8

Marketing Objectives 9

Target Customers 10
Children aged 5-12 10
Demographics 10
Buying habits 10
Psychographics 10
Media habits 11
Parents of children aged 5-12 11
Demographics and Psychographics 11
Buying habits 12
Media habits 12

Product Description & Unique Selling Proposition 13

Distribution Plan 15
Phase 1: School fundraisers 15
Phase 2: General availability 15
Phase 3: Online retailers and grocery delivery services 15

Pricing & Positioning Strategy 17

Positioning Statement 17
Pricing Strategy 17
Offers 17

©2023 Quantic Holdings, Inc. All rights reserved.

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 Strategy for Increasing Transaction Prices 18

Promotions Strategy 19
Phase 1: Personal selling, word of mouth, and social media 19
Phrase 2: Television, paid social media, and national sweepstakes 19
Television 19
Social Media 19
Sweepstake Competitions 20
Customer Retention 20

Joint Ventures & Partnerships 21

Fundraising.com 21
Netflix and The Magic School Bus Rides Again 21
Camp Kennedy Space Center 21

References 22

Appendix A: Marketing Materials 26

©2023 Quantic Holdings, Inc. All rights reserved.

2
Executive Summary
_____________________________________________________________________

Launched in 1908, Hydrox cookies are the

original chocolate sandwich cookie. When Oreo
launched their cookie in 1912, however, Hydrox
lost market share and gained a reputation as “the
knockoff Oreo”—this despite having a richer,
more chocolatey taste, a crispier cookie, and
more wholesome ingredients than Oreos. The
comparison to Oreos, along with the
clinical-sounding Hydrox name, has held the
brand back.

To escape the “knockoff” reputation, Hydrox must rebrand as a cookie that is completely
distinct from Oreos. It must also create a context for the unusual Hydrox name, so that it
seems pure and intelligent, rather than chemical and unappetizing.

Hydrox can accomplish both of these goals by rebranding as “the smart cookie”: a
wholesome and educational cookie that will entertain kids and please parents.

Today, Hydrox cookies are not only kosher, but also GMO free, artificial color free and
made with real sugar. To improve consumer’s perceptions, the brand positioning must
stress on the fact that it is a healthy choice. Also, new Hydrox cookies will come
packaged with cookie-based science experiments, and each cookie will have a fun
science fact printed on the cream inside. Children will want the cookies not just for the
taste, but for the experience. Parents will want to buy them not just as a treat, but as a
teaching tool.

Hydrox will re-enter the market through school-based fundraisers. After gaining brand
awareness, the product will become available in major grocery stores. This expansion will
be supported by a television ad campaign, social media, and national sweepstakes.

Within 5 years, we plan to increase the Hydrox market share to 10% of sandwich cookies.

©2020 Pedago, LLC. All rights reserved.

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Situational Analysis
_____________________________________________________________

Industry Background & Growth

Studies in the cookie industry show that cookie sales in the US total nearly $8 billion
annually, and grew at slightly less than 1% in 2017 (Schroeder 2017). The growth of major
brand cookies slowed or, in some cases, declined, but private labels (e.g., store brands)
grew 5.6%.

This downward trend among dominant cookie brands is due primarily to demand shifts.

First, the stigma around “generic” private label brands has lifted, increasing the market
share of these lower-priced products (Green 2017). 85% of consumers trust private label
brands and 53% shop at a store just for its private brand (Shoup 2019).

Second, preferences are shifting towards indulgence foods that are perceived as more
wholesome, nutrient-rich, and natural. Importantly, this does not mean that consumers
are buying fewer indulgences like cookies and candy—in fact, sales in this category
continue to grow globally—but it does mean that the preferred products in the category
are shifting. This can be seen in the success of healthier cookies such as Pepperidge
Farms’s low-calorie Thin & Crispy cookies, which drove the company’s 3.9% increase in
sales, and Mondelez’s belVita cookies, which saw a robust 19% revenue growth this year
(Schroeder 2017).

Finally, due to the increased availability of products made by smaller, specialized

companies—mainly through online ordering—some consumers are shifting away from
larger brands towards organic, local, or niche brands (Terlep and Gasparro 2017).

©2020 Pedago, LLC. All rights reserved.

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Competition

In the sandwich cookie market, Oreo is obviously Hydrox’s number one competitor.
According to IRI multi-outlet data, Hydrox posted $492k in annual sales in early 2017,
significantly less than Oreo’s sales. Despite a sales decline from the previous year, Oreo
remained the top player in the industry (Yu 2018).

Oreo’s parent brand Nabisco currently dominates the market, with its Oreo brand earning
$710 million in sales in 2017. Table 1 shows sales of the US’s top cookie brands in 2017.
However, the Oreo brand saw a 7.6% decline in sales during 2017, while Oreo Double Stuf
sales fell 6.7% (Conway 2019). The CEO of Mondelez, which owns Nabisco, attributed the
decrease in profits from major cookie brands to price deflation, erosion in promotion
effectiveness, and a shift toward health and well-being products.

©2020 Pedago, LLC. All rights reserved.

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 Table 1. Dollar sales of the leading cookie brands of the United States in 2017

Table 2. Hydrox vs. Oreo Product Comparison

Hydrox Oreo

Ingredients real sugar, non-GMO, kosher corn syrup

Flavor stronger chocolate scent and lighter chocolate flavor and

cocoa taste sweeter

Dunk test remain crisp after dunk in milk ready to fall apart in milk

Brand awareness few people know the brand, global awareness

especially younger generations

Marketing budget low high

Package similar to Oreo famous blue package

History first sold in 1908, known as the first sold in 1912, copycat of Hydrox
original chocolate sandwich
cookie.

©2020 Pedago, LLC. All rights reserved.

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Despite a similar look between their cookies, Hydrox and Oreo have some major
differences. Table 2 above shows the product and brand differences between them
(Fahey 2017).

SWOT Analysis

Strengths
Hydrox does not include high-fructose corn syrup or any GMO ingredients, both of which
are becoming increasingly unpopular with American parents. In 2017, the company
removed artificial flavors and colors from the new recipe, and got non-GMO certification
(Kassoff 2017). The cookie is also vegan and kosher. On its outside packaging and in
marketing communications, Hydrox will convey this information to consumers.

Weaknesses
The Hydrox name has a chemical connotation that invokes cleaning products rather than
cookies. It also has a brand reputation as the “knockoff Oreo,” which has contributed to
declining sales.

Hydrox cookies still contain non-organic, processed ingredients, and are a high-calorie
and high-fat food. While they may appear healthier than Oreo cookies, they will not
appear healthier than organic, non-processed snacks.

Opportunities
As customers’ tastes move away from foods with high fructose corn syrup and GMO
ingredients (like Oreo), Hydrox is presented with an opportunity to capture market share
in this healthier market. This is particularly true since Hydrox is, and will appear, more
wholesome and educational than Oreo.

In 2018, Hydrox accused Oreo of deliberately making its cookies difficult to find on store
shelves. Hydrox argued that Oreo did so for years by letting its own employees stock the
shelves rather than grocery store workers. If Hydrox wins this case, it could change the
way big brands play the game in the market, and dramatically improve consumer access
to Hydrox products (Gelski 2018).

©2020 Pedago, LLC. All rights reserved.

7
Threats
The growing popularity of private label cookies impacts all brands, including Hydrox. The
threat of imitation of Hydrox rebranding, if successful, will be moderate to high. A
comparable recipe could be developed, and other brands could use similar science facts.

©2020 Pedago, LLC. All rights reserved.

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Marketing Objectives
_____________________________________________________________________

The marketing campaign has three main goals:

1. Increase brand awareness among parents of American children aged 5-12 from
12% to 50% within five years.
2. Increase brand awareness among American children aged 5-12 from 3% to 50%
within five years.
3. Increase the Hydrox market share to 10% of sandwich cookies within five years.

©2020 Pedago, LLC. All rights reserved.

9
Target Customers
_____________________________________________________________________

Our marketing will be focused on two distinct groups: school-aged children and their
parents.

Children aged 5-12

Demographics
Children in the U.S. have strong purchase power. According to Forbes, by 2020, they will
be the largest generation of consumers by 2020, with a purchase power of $143 billion in
direct spending (FONA International 2019).

Buying habits
Our target market is suburban American school-aged children, aged 5-12. This market’s
habits include making impulse purchases, and motivating their parents to purchase items
through frequent repeated requests (aka, “pester power” or the “nag factor”) (Johns
Hopkins University Bloomberg School of Public Health 2011). Children aged 12 years and
under have the power to influence $500 billion in purchases annually (Greninger 2017).

Psychographics
Research indicates that there are several stages of effective marketing towards
school-aged children (SickKids 2020). Children in general love entertainment and
novelty. Marketing messages for children up to age 6 aim to associate brands with
feelings of fun and happiness, rather than describing actual product facts. The wisdom of
this marketing tactic has been proven by the success of children’s “ket” candies such as
Pop Rocks (Hudak 2007). This strategy dovetails well with the “fun” nature of Hydrox’s
games and fun facts.

Children aged 8-12 respond best to “aspirational” marketing, which aims to make
children feel grown-up, cool, or more intelligent. This fits in well with Hydrox’s new
branding as the “smart cookie.”

©2020 Pedago, LLC. All rights reserved.

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Subtle or complex tastes are lost on this target market (Kentish 2015); they are more
motivated to purchase through games, prizes, quizzes, contests, and sweepstakes than
through distinctive flavors.

Media habits
At this stage, kids are mostly motivated by TV commercials, online ads, and even
magazines. 65% of brand requests by kids are inspired by a commercial. 50% are from
online ads, and 46% are from magazine ads. Today’s kids also have more access to
technologies. They are tech-savvy and rely on smart devices and social media. Kids
between 10 to 13 years old either own a smartphone or know when they would get one
(Zahra Media Group 2017).

Kids’ content viewing choices are focused on streaming services. 50% of 5-15 years now
watch services like Netflix and Amazon Prime. Social media like YouTube also became a
popular choice (Gilchrist and Polizzi 2019). The graph below shows that kids from 8 to 15
years old prefer YouTube over TV, and this trend is growing.

Parents of children aged 5-12

Demographics and Psychographics

Our second target market is suburban American parents of school-aged children. These
parents are aged 30-45, although their income level varies, all are primarily motivated by
their children’s wants and interests. Two studies, one by Viacom (Consoli 2012) and
another by the survey site YouGov (Harmeling and Gammon 2015), show that 95% of
American parents seek their children’s input when purchasing items for them.

©2020 Pedago, LLC. All rights reserved.

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Buying habits
These parents are also increasingly focused on offering their children healthier food.
Nielsen research suggests that 52% of Americans avoid food that has artificial
sweeteners, which Hydrox does not include (though Oreos do). This is even more
pronounced in parents (Nielsen 2017). According to a 2014 BabyCenter/IAB study, 63% of
new North American parents change their purchasing criteria when they have children,
with 45% of new moms saying that natural and wholesome ingredients are an important
criteria when making food decisions. While only 12% of mothers reported buying organic
products for their children in 2006, that number had tripled to 36% by 2014, and will likely
continue to rise (BabyCenter 2015).

Media habits
These parents belong to an age group that is active on social media such as YouTube,
Facebook, Instagram, Pinterest, and LinkedIn (Perrin and Anderson 2019). Table 3 below
shows comparison of media habits across different demographic groups in the US.

Table 3

They are also major subscribers of video streaming services and mobile videos (Westcott
et al. 2018).

©2020 Pedago, LLC. All rights reserved.

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Product Description & Unique Selling Proposition
_____________________________________________________________________

Hydrox: the smart cookie.

Hydrox cookies are a sweet teaching treat!

Not only are they the smarter choice for parents—no high fructose corn syrup and lots of
educational value—but they also come packed with entertainment kids love: fun facts,
puzzles, contests, and experiments.

Hydrox cookies differ from Oreos: they are a chocolate sandwich cookie with cream
filling, but they are crunchier, slightly less sweet, have a richer chocolate taste, and are
made from simpler ingredients—namely, with no formulated high fructose corn syrup
(FDA 2019). In March 2017, Hydrox became the first national sandwich cookie brand with
non-GMO certification (Kassoff 2017). See the graph below.

©2020 Pedago, LLC. All rights reserved.

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The new, rebranded Hydrox cookies will come with a fun science fact printed on the
cream of every cookie, similar to the successful Snapple tactic of including a “Real Fact”
on the lid of every bottle (Marketing Sherpa 2004). Our patent-pending process allows
machines to use quick-dry chocolate deco pens to write facts on a premium, tasteless,
organic wafer sheet. The wafer will be bonded to the cream, making each cookie a
twist-off, science surprise!

©2020 Pedago, LLC. All rights reserved.

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Distribution Plan
_____________________________________________________________________

Phase 1: School fundraisers

In Year 1, Hydrox cookies will be reintroduced to the public through a school fundraiser
program, in partnership with Fundraising.com. Students will sell school-branded boxes of
Hydrox cookies for $5 per box (25.5 oz), competing to earn prizes and rewards for
selling. Hydrox will donate $1.50 to the school for every box sold. Appendix A shows
some sample marketing materials for the program.

The main goal of this initial fundraising strategy is to increase awareness of Hydrox
cookies, build brand loyalty, and generate demand for the product.

Phase 2: General availability

In Year 2, after increasing brand awareness and market share through the school
fundraiser program, Hydrox cookies will become available in the cookie aisle of all major
grocery stores (including big box stores like Wal-Mart and Target). Eventually, we will offer
Hydrox cookies in gas stations and convenience stores. Hydrox will also negotiate with
these grocery stores to gain more visible shelf placement.

This distribution strategy, similar to that of Oreo cookies, will effectively reach our target
customers.

Phase 3: Online retailers and grocery delivery services

Retail industry is shifting from offline to online and mobile retailing. Given the busy
schedules of today’s parents, online grocery shopping and grocery delivery apps can
ease their daily stress dramatically. In Year 3, Hydrox will be sold on major online retail
platforms such as Amazon, eBay, and Walmart. These stores have broad access to
consumers all over the world, and are essential for Hydrox to improve its market share.

For metropolitan and suburban areas where income levels are relatively high, Hydrox will
partner with third party grocery delivery services such as Instacart, DoorDash, Deliv, or

©2020 Pedago, LLC. All rights reserved.

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Shipt to reach consumers. With several simple clicks on their smartphones, kids and
parents can get same day home delivery.

©2020 Pedago, LLC. All rights reserved.

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Pricing & Positioning Strategy
_____________________________________________________________________

Positioning Statement
For parents who are sick of unhealthy, artificial snacks, Hydrox cookies offer a healthier
treat that children are still excited to eat—and they’re educational! Unlike Oreo cookies,
Hydrox cookies have no high fructose corn syrup, artificial flavorings, or GMO
ingredients. Plus, each cookie comes printed with a fun science fact.

Pricing Strategy
Our prices are in line with Oreo cookies at $2.99 for a standard 39-cookie package.

While parents are increasingly interested in natural and wholesome ingredients, only 21%
of American adults are willing to pay extra to avoid unwanted ingredients like high
fructose corn syrup. Because of this, a premium-price strategy is unlikely to succeed,
though Hydrox may be able to entice Oreos customers away from that brand if the price
is similar, and Hydrox cookies add value through their lack of high fructose corn syrup.

A low-priced penetration strategy would also be counterproductive, as Hydrox is

attempting to shed its reputation as the Oreo “knockoff”—a status that would be
reinforced by lower pricing, and which might make the product less appealing to children
aged 10-12, who are preoccupied with social status and resistant to cheap or “off-brand”
items (Barasch 2016).

Offers
After the initial wave of distribution through school fundraisers, 20% off coupons will be
offered at grocery store locations during the initial grocery store rollout. Coupons will
also be available through partnering grocery stores’ weekly ads.

For mobile grocery delivery apps, a 10% off coupon will be offered for people who
“subscribe” to Hydrox cookies for regular automatic deliveries.

©2020 Pedago, LLC. All rights reserved.

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Strategy for Increasing Transaction Prices
Hydrox will offer a “family size” package of 60 cookies for $3.99 and a “snack pack”
package of 8 individually packaged servings for $4.99. These prices are also in line with
Oreo’s pricing, for reasons stated in the Pricing Strategy.

©2020 Pedago, LLC. All rights reserved.

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Promotions Strategy
____________________________________________________________________

Phase 1: Personal selling, word of mouth, and social media

We will reintroduce Hydrox through personal selling (in-school fundraising campaigns). In
partnership with Fundraising.com, students will sell Hydrox cookies to friends, families,
and neighbors to raise money for their school's science program. The money raised may
be used for supplies, after-school science clubs, and more.

These fundraising campaigns will be complemented by web-based science education

resources for teachers and schools. All schools will receive access to free, cookie-related
science experiments, web resources, and a library of Hydrox-sponsored science videos
for kids.

Phrase 2: Television, paid social media, and national sweepstakes

Television
After establishing a foothold in the market through school fundraising campaigns, Hydrox
will expand to grocery stores. This expansion will be supported by a national television
ad campaign, focused on advertising to children aged 5-12 through popular children’s TV
shows. This ad campaign will focus on the slogan “One smart cookie”.

Commercials will show cool, “slacker” style kids sneaking a peek inside a Hydrox cookie
and using the fact inside to surprise and impress others (then happily eating the cookie
to hide the evidence).

Social Media
Our campaign will continue to focus on earning social media attention through sharing
helpful science materials for teachers and parents, as well as fun, cookie-related science
games for kids. Additionally, the company will experiment with sponsored posts and
tweets directed at parents looking for healthier alternatives for their children. The
targeted social media platforms include Facebook, YouTube, Instagram, Twitter, and
Pinterest.

©2020 Pedago, LLC. All rights reserved.

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Sweepstake Competitions
Hydrox will sponsor seasonal sweepstake competitions to keep kids excited about
purchasing cookies. Our flagship sweepstake will be an annual contest to win a free,
week-long trip to the Camp Kennedy Space Center for a youth “astronaut training” camp.

Customer Retention
To retain our customers, we will keep the cookie exciting and fresh by frequently
changing the science facts, experiments, and contests available. We encourage kids and
their parents to interact with our product design and invent new ways to eat Hydrox
cookies. Consumers are encouraged to post innovative pictures about our cookies, and
will be rewarded if their pictures are adopted as official Hydrox marketing material.
Repeated purchasers/subscribers of our products will get generous discounts.

©2020 Pedago, LLC. All rights reserved.

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Joint Ventures & Partnerships
_____________________________________________________________________

Fundraising.com
Fundraising.com has a well-established infrastructure for helping schools run successful
fundraisers. It currently provides a variety of fundraising options and products to address
different schools’ needs; Hydrox cookies will be added to this list, and Fundraising.com
will specifically promote the product for science-related fundraisers.

Netflix and The Magic School Bus Rides Again

Netflix is currently rebooting the popular Magic School Bus series, and Hydrox will be a
partner. Hydrox will print special edition packaging with a main character (Miss Frizzle) on
the front. Hydrox will also include a promo code inside the package for a free month of
Netflix.

Netflix will include Hydrox cookie product placement in three episodes of the second
season of The Magic School Bus Rides Again.

Camp Kennedy Space Center

Each year, Hydrox will run a spring sweepstake offering ten all-expenses-paid trips to a
week-long astronaut camp at the Camp Kennedy Space Center. Camp Kennedy will
promote this sweepstakes competition on their website and social media accounts. They
will also coordinate a Hydrox-sponsored live webcast with astronauts aboard the
International Space Station, where students can submit questions to be answered via the
Hydrox Twitter feed.

©2020 Pedago, LLC. All rights reserved.

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References
_____________________________________________________________________

BabyCenter. 2015. “2015 State of Modern Motherhood: Mobile and Media in the Lives of
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Gelski, Jeff. 2018. “Hydrox Maker Seeks $800 Million from Oreo Maker.” Food Business
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Kassoff, Ellia. 2017. “Leaf® Brands Continues to Improve Hydrox® with Non-GMO Status!:
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0m-from-Mondelez-for-hurting-its-cookie-sales.

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Appendix A: Marketing Materials
_____________________________________________________________________

Facebook ad for teachers:

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Facebook ad for parents:

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