Marketing Strategy Of Cadbury 1i2x6f

Victoria University of Bangladesh Assignment on Marketing Strategy of Cadbury

Prepared by Md. Rabiul Islam ID: 110917321 Batch: 17th

Prepared for Panuel Rozario Prince Course instructor Strategic marketing

Date of Submission 23 May, 2012

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Contents EXECUTIVE SUMMARY ........................................................................................................................ 3 Overview of the Company .......................................................................................................................... 4 1.1 Market Segmentation ........................................................................................................................... 5 I.

Moulded Chocolate Segment ............................................................................................................. 5

II.

Countline Bars Segment .................................................................................................................... 6

IV. Choco Panned Segments ..................................................................................................................... 6 V. Sugar Panned Segment ........................................................................................................................ 7 1.2 BRAND POSITIONING ...................................................................................................................... 7 1.3 COMPETITIVE ANALYSIS: ............................................................................................................. 9 1.4 Customer Analysis .............................................................................................................................. 10 1.5 What is Blue Ocean Strategy (BOS)? ................................................................................................ 11 2.1 PRODUCT STRATEGY .................................................................................................................... 12 2.2 PRICING STRATEGY ...................................................................................................................... 13 2.3 PLACING STRATEGY ..................................................................................................................... 13 2.4 PROMOTION STRATEGY .............................................................................................................. 14 3.1 FINDINGS ........................................................................................................................................... 15 3.2 RECOMMENDATIONS .................................................................................................................... 16 3.3 CONCLUSION ................................................................................................................................... 16 BIBLIOGRAPHY ..................................................................................................................................... 17

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EXECUTIVE SUMMARY Chocolates had its beginnings in the times of the Mayas and the Aztecs when they beat cocoa into a pulp and made a bitter frothy chocolate out of them. They first became popular in Europe in a highly unrefined form. Then the Hershey Food Company was the first to bring out chocolates in the currently popular solid form. The main ingredient of chocolates is cocoa, grown mainly on the equatorial zones of South America. The other ingredients that go into the making of chocolates are: sugar, milk solids, and permitted emulsifiers. Cocoa constitutes nearly 40% of the total raw material cost. The following report attempts to make a study on the chocolate industry and the position of the chocolate brand, Cadbury. The brand name chosen is the umbrella brand as we feel that the corporate name is recognized as a brand, not so much its individual products. The study will focus on the marketing and advertising strategy employed by Cadbury in the context of the Indian macro environment and industry structure. The advertising strategy will be studied with respect to Cadbury's business and marketing objectives. The strategies adopted will be analyzed for each product offering. The same is followed to a minimal extent for its major competitor, Nestle, to get an understanding of where Cadbury stands. The report initially focuses on an examination of the industry environment and the product class. The report then goes on to analyze the corporate, marketing and advertising strategies adopted by the selected company and its main competitor. It concludes by looking at the challenges and recommendations for the industry and the company.

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Overview of the Company Cadbury is a food product company with interests in Chocolate Confectionery, Milk Food Drinks, Snacks, and Candy. Cadbury is the market leader in Chocolate Confectionery business with a market share of over 70%. Some of the key brands of Cadbury are Cadbury Dairy Milk, 5 Star, Perk, Eclairs, Celebrations, Temptations, and Gems. In Milk Food drinks segment, Cadbury's main product - Bournvita is the leading Malted Food Drink. Its heritage can be traced back in 1824 when John Cadbury opened a shop in Birmingham selling cocoa and chocolate. Since then we have expanded our business throughout the world by a program me of organic and acquisition led growth. On 7 May 2008, the separation of our confectionery and Americas Beverages businesses was completed creating Cadbury plc with a vision to be the world's BIGGEST and BEST confectionery company. 

Cadbury makes and sells three kinds of confectionery: chocolate, gum and candy

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They operate in over 60 countries

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John Cadbury opened for business in 1824 - making us nearly 200 years young

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They work with around 35,000 direct and indirect suppliers

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They employ around 45,000 people around the world

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Every day millions of people around the world enjoy the brand

Cadbury is the world's largest confectionery company and its origins can be traced back to 1783 when Jacob Schweppe perfected his process for manufacturing carbonated mineral water in Geneva, Switzerland. In 1824, John Cadbury opened in Birmingham selling cocoa and chocolate. Cadbury and Schweppe merged in 1969 to form Cadbury Schweppes plc. Milk chocolate for eating was first made by Cadbury in 1897 by adding milk powder paste to the dark chocolate recipe of cocoa mass, cocoa butter and sugar. In 1905, Cadbury's top selling brand, Cadbury Dairy Milk, was launched. By 1913 Dairy Milk had become Cadbury's best selling line and in the mid twenties Cadbury's Dairy Milk gained its status as the brand leader.

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1.1 Market Segmentation This can be done in two ways: product forms and customer based. With respect to product forms there are five major segments,

I.

Moulded Chocolate Segment

This segment constitutes 50% of the total market. Cadbury‟s Dairy Milk (CDM) – Cadbury‟s flagship brand – has 50% of this segment market. To position CDM in this segment Cadbury used the traditional demographic variables of age, socio-economic groups and usage intensity. CDM was positioned as a product that elders (parents) bought for children. Cadbury has actually associated itself to enduring and emotional values of love, sharing, parental affection, and reward. Considering that CDM practically acts as a trend setter for all the brands in this segment, this limited the positioning of the entire category towards children only. The Cadbury brands in this segment are CDM, Fruit & Nut, Crackle, Bournville. CDM is basically the leading brand here, and the others act as an endorser basket for the company. Nestle forms 25% of this segment and the company‟s major brands are Nestle Classic, Nestle Milk Chocolate and Nestle Crunch. From around 1993, this segment began showing signs of maturity. This was hurting CDM. This led to Cadbury attempting to rejuvenate the segment. They changed their core customer from children to that of the universe: both children and adults. This attempt at redefining the market to enticing all age groups helped bring about changes in the segment. Today, the notion associated with the consumption of chocolates is that of casualness instead of just product consumption. Today, this segment grows at 40% per annum, and is likely to remain an important segment for further growth.

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II.

Countline Bars Segment

This segment forms 33% of the chocolates market. This segment is mostly targeted at teenagers. Major Cadbury brands are 5-Star, Break, Real, Krisp, and Double Decker. 5-Star is doing well here (about 50% of the segment) while the rest of the brands act as endorser brands. Nestle has a minor presence in this category with its product Bar-One.

III.

Growth of a Sub Segment: Chocolate Wafers

Chocolate wafers are the new products being offered by chocolate companies today in order to expand the market. In 1995, Cadbury and Nestle launched Perk and KitKat respectively. These were wafer–enrobed chocolates in a new context and a different benefit offering. Internationally, confectionery products like wafer chocolates have a very high tonnage and have a much bigger future than plain chocolates. Market research and success of these two brands suggest that consumers are ready for accepting the wafer chocolate proposition. The conviction of both Cadbury and Nestle towards this segment can be gauged from the fact that both brands are seeing unprecedented allocation of funds, to the tune of 60% to 70% of the total ment budget of both companies on chocolates.

IV.

Choco Panned Segments

This segment forms 4% of the total market and Cadbury has 100% of the market in this segment. The major brands are Nutties, Caramels, Butterscotch and Tiffins. All of these brands have been used by Cadbury to drive variety, induce gifting practices and serve to some specific taste preferences. Cadbury does not these brands. They have been used as flanker products. The opportunity for growth in this segment is high what with the imminent entry of multinationals like Mars and Hershey‟s. This is also likely to pose a threat to Cadbury, what with its complacency.

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V.

Sugar Panned Segment

This segment form 15% of the total market and Cadbury has about 98% of this segment, its major brands being Gems and Éclairs. Éclairs has been used strategically to foster chocolate consumption among children as well as adults by offering a tiny „guilt free, eat no more than a biteful‟ at a convenient price point. Gems is still Cadbury‟s primary tool to protect its franchise in the child segment. It was previously associated in its commercials with the international spy character, James Bond. Around 1995, Gems was repositioned to broad base its appeal from 3-6 years old to teenagers as well. However this failed due to the product form which has become deeply rooted with kids and hence the company has reverted back to the target segment of kids with a new offering of 'Chocogems'.

1.2 BRAND POSITIONING Cadbury is the perfect expression of spontaneous, happy, joyous feelings. Eating Cadbury provides the „Real Taste of Life‟ experience.

For whom: Why?

Kids, teens, mums, adults, mature adults. (FOR EVERYBODY)

Offers rich taste

Cadbury

When: All purpose consumable. Gifts, Light snack

Against whom: Competitors like, Nestle, Amul Substitutes like, Chips, Biscuits.

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Positioning is the space occupied by Cadbury in the minds of the consumer. For the chocolate market, Cadbury is pitted against competitors like Nestle, Amul and substitutes like, chips, biscuits and other light snacks. Idea of positioning Cadbury is to occupy a distinct space, which is differentiable, yet powerful. Cadbury is the perfect expression of spontaneous, happy, joyous feelings. Eating CDM provides the „Real Taste of Life‟ experience 1.2.1 Basis of positioning Cadbury believes in the following when it comes to positioning: 

Product based positioning

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Strong corporate brand.

1.2.2 Product based positioning

Quality/Value



The

quality

Associations with Use Occasion

aspect

is



hugely

Cadbury can be consumed anytime

emphasized in Cadbury. Even the

as has been expressed in its

physique,

ment continuously.

particularly

the

visuals(glass and a half symbol)

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1.3 COMPETITIVE ANALYSIS:

Porter's 5 Forces Model Substitutes Substitutes like IceCreams, potato chips, biscuits, soft drinks, chewing gum, are a source of

Suppliers

threat as well as opportunity

Major raw material

for market expansion.

Suppliers are cocoa producers in Latin American countries. Due to negligible Domestic production in India, suppliers enjoy high bargaining power.

Buyers

Competitors

Since chocolates do not satisfy any

Duopoly Both the major players have Financial muscle to sustain their

immediate needs, it is not a necessary item. Consumer power is very high and

Brands All players following a pull

consumers need to be persuaded through various positioning planks

strategy.

Milk supply also

New Entrants

fluctuates, therefore, in

Imminent entry of global majors like

summer months, milk

Hershey's, Mars etc. is bound to change

suppliers gain sufficient

the power equation in the Indian chocolate

bargaining power.

market.

to consume chocolates.

As markets become more receptive to globalization there are chances of more and more MNCs entering the market? Cadbury needs to maintain its brand equity through regular innovative ments and promotions.

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There is a growing threat from local substitutes. The Sweet shops are reinventing themselves and coming up with their own versions of chocolates. These find favor with the local tastes and are available in many varieties.

Both MNC and Local Bakery brands are expanding their operations. Theses bakeries are manufacturing various verities of chocolates locally with local blends. They do not have to invest in extensive distribution and have as good quality as Cadbury. Their USP is providing fresh chocolates. Cadbury has to reinvent its strategies to face such future challenges.

1.4 Customer Analysis Not all the people are able to enjoy the sweet taste of chocolate equally. There is a profound dichotomy between groups of people. The main customer in this country is the children. Children consume most portions of chocolates in Bangladesh. While the adult consumption proportion is lower than that of children. In here we know children who are 1 to 12 years old. On the contrary, chocolate consumption in Europe is ri. Worlds 60% of chocolates are consumed in European countries. So the customers in Europe are easy to reach and easy to sell by the companies. European buyers have more bargaining power than countries in Asia do, so the sales rate goes even higher. Chocolate is a kind of product that is not harmful or even close to that. Neither banned by any religion, so that makes the market even bigger. In Bangladesh there are 160 millions of people. And only children and adult eat chocolates. Because we think chocolate is a symbol of childishness and luxury. We don‟t eat chocolates often. Unlike India, we don‟t eat chocolates on occasions. In India, chocolates are bought in several occasions, like diwali, and other religious festivity. So in India the chocolates consuming customers are more diverse than in Bangladesh.

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1.5 What is Blue Ocean Strategy (BOS)? Blue Ocean Marketing understands the importance of strategy to bring a business to the next level. Just as you have invested and are committed to your business, when we work with a client, we are strategic and tactical about achieving your goals. Blue Ocean Marketing is ionate about helping our clients to be a success. A sound strategy is the foundation of successful marketing. It is crucial to understand the goals of your business and your industry and markets. “Blue Ocean Marketing” helps you to bring the key components all together and to develop a well thought out and coordinated marketing strategy and plan. The marketing plan is your roap for setting the course and direction to your marketing goals. Without a sound and effective marketing plan, your company runs the risk of wasting time, energy, and money on actions that produce less than satisfactory results. It will develop marketing plan and create a clear vision. In laying the groundwork for your marketing plan, we put our experience and ion to work for. Blue Ocean Marketing offers a range of marketing management services, suitable for any sized business and most budgets.

1.5.1 Fitting with Blue Ocean strategy: Cadbury is not a partner with BOS, so they are not following every aspect that this strategy states. 

BOS is the simultaneous pursuit of differentiation and low cost => Cadbury is trying to be different than its competitor at low production cost.

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The aim of BOS is not to out-perform the competition in the existing industry, but to create new market space or a blue ocean, thereby making the competition irrelevant. => Cadbury is currently competing with Nestle and Mars.

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BOS frameworks and tools include: strategy canvas, value curve, four actions framework, six paths, buyer experience cycle, buyer utility map, and blue ocean idea index=> Cadbury is not following these tools.

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BOS covers both strategy formulation and strategy execution=> Cadbury formulates and executes strategy proactively.

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The three key conceptual building blocks of BOS are: value innovation, tipping point leadership, and fair process=> Cadbury knows about innovation of value and its importance to the customers, so they are trying to add more and more value to its products.

Chapter Two

2.1 PRODUCT STRATEGY

Satisfaction suffices. But delight dazzles the average company will compete for customer by conforming to her expectation consistently. But the winner will sur them by constantly exceeding her expectation, delivering to her door step additional benefits which she would never have imagined possible. Cadbury‟s offer such product. The wide variety products offered by the company include: I.

Chocolate & Confectionary

1) Dairy Milk 2) Fruit & Nut 3) 5 Star 4) Break 5) Perk 6) Gems 7) Eclairs 8) Nutties 9) Temptation 10) Milk Treat

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II. Beverages III.

Food Drinks

1) Bournvita 2) Drinking chocolate 3) Cocoa

2.2 PRICING STRATEGY

Make no mistake. Second P of marketing is not another name for blindly lowering prices and relying on this strategy alone to increase sales dramatically. The strategy used by Cadbury‟s is for matching the value that customer pays to buy the product with the expectation they have about what the production is worth to them. Cadbury‟s has launched various products which cater to all customer segments. So every customer segment has different price expectation from the product. Therefore maximizing the returns involves identifying right price level for each segment, and then progressively moving through them. Dairy Milk Perk 5 Star Friut and Nut Gems Break NuttiesBournvita (500 gm) Drinking chocolate

2.3 PLACING STRATEGY

It takes much more time and effort to build, but once built, distribution equity is much together to erode. Own distribution network consist of clearing and forwarding (C&F) agents & distribution stockiest. This network of distribution can either wholesalers and which in turn retailers or the distributors can to the retailers directly. Once the stock product reaches retailers, the prospective customers can have access to the product. Cadbury‟s distributes the product in the manner stated above. Cadbury‟s distribution network has expanded from 1990 distributors last year to 2100 distributors and 4,50,000 retailers. Beside use of TI tom improves logistics, Cadbury is also attempting to improve the distribution quality. To address the issue of product stability, it has

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installed visi colors at several outlets. This helps in maintaining consumption in summer when sales usually drops due to the fact that the heal effects product quality and thereby off takes. Cadbury now is available into small confectionary shops to large supermarkets.

2.4 PROMOTION STRATEGY

If an ment is to communicate effectively, the receiver must at least half want it to, and be prepared to take step toward the sender. Effective advertising is rarely hectoring or loudly explicit.... It often both attracts and generates arm feelings. More often than not, a successful campaign has a stronger element of the unexpected a quality that good advertising shares with much worthwhile literature. To penetrate into the inner recesses of her memory, communication must first ensure exposure, grab her attention evoke her comprehension, grab her acceptance and then extract retention competing with thousands of other units of communication trying to do the same. Finding showed that the adults felt too conscious to be seen consuming a product actually meant for children. The strategic response addresses the emotional appeal of the band to the child within the adult. Naturally, that produced just the value vacuum that Cadbury was looking to fill. Thereafter it was the job of the advertising to communicate customer the wonderful feeling that he could experience by re- discoursing the careful, unself conscious, pleasure – seeking child within himself – a graft these feeling onto the Ads. While with the new launched temptations with the slogan “Too to Share” the communication resolves around the reluctance of a person who‟s got their hand on a bar of temptation to let anyone else to have a bite. As well as outdoor and radio ads, Ad agency contract has created communication for cinemas and even ATM machines for the brand. Something familiar is planned for phone-book as well. In cinemas, Cadbury has a message onscreen just before the lights are dimmed to give them a chance to get their temptations. There will also be after dinner sampling in restaurants – to begin with, 30 catteries in Mumbai have been selected. The next round of activity will include the wafer-chocolate Perk and the Picnic bar, which has faced problems with its taste, because of the peanut it contains. Milk treat has also been launched in a module bar form, just in time of Diwali gifting market. Éclairs has got potential for much wide distribution, in a small sweets that airlines, hostels, and up market retail outlet offer to guest

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and customers. Ad spend in 2000 was about 14% of sales and the management said that plans to maintain as spend at this level in the current year also. Ad since any discussion today would be incomplete without mention „e‟ word, the management plans to tap this new channel of marketing. Beside three company website (i.e. www.cadburyindia .com, wwww.bourvita.com, www.cadburygift.com) that the company has launched, it had also entered into various marketing relationship with other portals, specially targeted during festivals and events such as Valentine‟s Day, etc.... It‟s a combination of sniff up its key brand, researching and improving the newer products that haven‟t taken off, ed with high ad – spends that Cadbury hopes will see it emerges stronger after the current slowdown, as well as expand the market.

Chapter Three 3.1 FINDINGS

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CONSUMER RESEARCH

Consumer research deals with consumer and their problems and solution to the problems. In this I came to know about the consumers need and expectation levels regarding products and ascertainable levels of consumer satisfaction. 

PRODUCT RESEARCH:

Under product research I came to know about the modification which consumers wants as to the quality, packing, shape, color, and quantity etc of their favorite chocolate. 

PRICING RESEARCH:

This includes ability to consume, to pay for the product, how much a person can spend on his/her favorite chocolate. In this I have tried to find out consumer‟s price expectations and reactions.

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ADVERTISING RESEARCH

Under this I have concluded that whether the ment appeals the consumers or not. This also includes evaluating and selecting the proper media-mix and measuring advertising effectiveness.

3.2 RECOMMENDATIONS

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Cadbury‟s major problems are linked to the need for very responsive distribution network due to the perishable nature of its products. Costs go up and problems like the recent worm episode arise. What we suggest is a revamping of its distribution network to make it more responsive.

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Indian consumers mainly consume sweets during some festivals. It must come up with innovative offerings for its chocolates to suit the need during such occasions. e.g.: Come up with shapes similar to Indian Sweets and package it innovatively reflecting the festival colors.

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Start exploring newer distribution channels like E-tailing where Hi-value chocolates are sold in specialized packs.

3.3 CONCLUSION

In today‟s competitive business environment brands have assumed a role of growing importance. They can differentiate a company‟s products and customer loyalty, helping to sustain profitability in the long term. The Cadbury Dairy Milk brand has evolved into a Megabrand incorporating a range of products each with their own identity, but now under the Dairy Milk brand. This initiative is intended to leverage the strength of the Cadbury Dairy Milk brand to the full. The strategy involved a packaging and range refreshment strategy which has resulted in a unified innovative Dairy Milk brand. Having exceeded initial sales tar gets by a considerable margin, the strategy can be considered a success!

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BIBLIOGRAPHY

Kapferer, Jean-Noel. "Strategic Brand Management". The Free Press. A division of Macmillan, Inc. 1992 Edition Kotler, Philip. "Marketing Management" Analysis, Planning, Implementation, and Control Prentice-Hall, Inc. Eighth Edition Aaker, David, et al, "Advertising Management" Internet Sources:  www.cadbury.co.uk  www.india-today.com/btoday  www.cadburyindia.com  www.wikipedia.org/wiki/cadbury

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