Cadbury Essay Example

Cadbury Essay Cadbury Dairy Milk  encapsulates an enormous breath of emotions, from shared values such as family togetherness, to the personal values of individual enjoyment. It stands for goodness. A moment of pure magic! Cadbury Dairy Milk  (CDM) entered the Indian market in 1948, and since then for consumers across India, the word Cadbury has become synonymous with chocolate. CDM  remains at the top of the Indian chocolate market not only because of its most delicious, best tasting chocolate but also because of its memorable communication. Cadbury India 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, Cadburys main product Bournvita is the leading Malted Food Drink in the country. * Sell thr ee kinds of confectionery: chocolate, gum and candy * Operates in over 60 countries. * 35,000 direct and indirect suppliers. * 187 years old. * 45,000 people are employed CURRENT MARKET SITUATION The chocolate market in precedent years has been witnessing tremendous growth in terms of value as well as volume. The governance of the market is maintained by large international giants through franchisee and expansion into new markets which is leading to the growth of the chocolates market in India. The Indian chocolate industry has registered a growth of 15% per annum from 2008 to 2012 and is projected to grow at an even higher rate in the future. The industry has a positive outlook due to rising per capita income and the gifting culture in the country. According to this report, the er capita consumption of chocolates is increasing in the country which will continue to increase market revenues. It is expected that Indias chocolate industry will be growing at a CAGR of 23% by volume between the years 2013-2018 and reach at 341609 Tons. Dark chocolates are expected to account for the larger market share when compared to milk and white chocolates in the comi ng years. The introduction of medicinal and organic ingredients in the manufacturing of chocolates has led to a new trend and development in the country, which will be adapted by major manufacturers to remain active in the market. We will write a custom essay sample on Cadbury specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Cadbury specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Cadbury specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The Indian chocolate market is getting bigger and better. While on one hand, the premium segment (composing imported varieties) is opening up on the other, companies like Cadbury India are launching indigenous product made to international standards. Of the 20,000 tons chocolate market worth about   Rs. 400 crore, Cadbury account for about 70% followed by Nestle, with a share of around 20%. Amul has about 5% of the market, with minor player taking the rest. The battle, though, is between Cadbury and Nestle. Though with a much smaller portfolio, Nestle is putting up a tough fight. From a treat for kids, chocolate are now being positioned near meal substitutes, thanks to the initiative taken by the Cadbury India during early nineties. The market itself has become broader based, in the sense adults are an important target segment now. The reposting of Cadbury’s Dairy Milk in 1994 as the ‘real taste of life (through the Slice of Life and Cricket commercial by Ogilvy and Mather) grew the entire milk chocolate by 20%, and gave the Cadbury’s range – 5 Star, Gems, Eclairs, Fruit amp; Nut, Crackle, Nutties, Butterscotch amp; Tiffns – a new lease of life. In other words, it facilitated the repositioning of Cadbury’s sub brands in the basket. Some of the strategic clicked, while other did not quite take off. The company is pushing the gifting segment, through occasion linked gifts. Chocolates contribute to 64% of Cadbury’s turnover. Confectionary sales accounting for 12% of turnover is contributed largely by Eclairs. The company attempted expanding its confectionary product portfolio, with launch of sugar based confectionary goodly and fruits, without much success. Cadbury also has a strong brand bornvita in the malted health drink category which account for 24% of turnover. There exists an even larger unorganized market in the confectionary segment. Cadbury has 4% of the market share in this segment. Leading national players are nutrine, Parry’s Ravalgoan, Candico, Parle, Joyoco India and Perfetti, the MNCs such as Joyco and Perfetti have aggressively expanded their presence in the country in the last few years. Malted food drinks category consists of white drink and brown drink. White drinks accounts for almost two third market of the 82,000 for market south and east are large market for drinks, accounting for largest proportion of all India’s sale. Cadbury’s Bourn Vita is leader in the brown drink coca based segment in the white drink segment Smith Kline’s Horlicks in the Nestle Milo , GCMMF nitramul and other Smith Kline brand Boost, Maltova and Viva Cadbury bold 14% market share in food drinks segment. Despite tough market condition and increased competition Cadbury managed to record a double digit (11%) top line growth in 2000. The company achieved a volume growth of 5. 2%. This was achieved through innovative marketing strategies and focused advertising campaign flagship brand Dairy Milk. Net profit rose sharply by 41. 8% to Rs. 520 million. Reduced material and energy cost and tighter control over working capital over working capital and capital expenditure enabled the company to improve the profitability. Company added 8 million new consumers and saw its outlets grow to 4. 5 lakhs and consumer to 60 million. In the food segment, Britannia is the leader brand with 21% among those who expressed an opinion saying that they like advertising for the brand Cadbury was clearly No. 2 with 18% to which CDM throw in its weight with 13% and perk with 4%. For the Chocolate Company, Khane Walo Lo Ko Khane Ka Bhanna and the Karwa Cauth, Sports are clear winners. Tied for the brand place are Amul, Parle and south based Arun Le Gram with 5% each. Disappointment among bid brands Kissan and Maggi and Kwality Walls (1%) each. MARKET DESCRIPTION * The chocolate market in precedent years has been witnessing tremendous growth in terms of value as well as volume. The governance of market is maintained by large international giants through franchisee and expansion into new markets which is leading to the growth of the chocolates market in India. Indian chocolate industry has registered a growth of 15% per annum from 2008 to 2012 and is projected to grow even at a higher rate in future. The industry has a positive outlook due to phenomenal growth in the confectionery industry, rising per capita income and gifting culture in the country. * According to  Ã¢â‚¬Å"India Chocolate Market Forecast amp; Opportunities, 2018†,  the  per capita consumption of chocolates is increasing in the country which will continue to flourish the market revenues. It is expected that India chocolate industry will be growing at the CAGR 23% by volume between the years 2013-2018 and reach at 3,41,609 Tons. The dark chocolates are expected to account for the larger market share when compared to milk and white chocolates in the coming years. The introduction of medicinal and organic ingredients in the manufacturing of chocolates had led to a new trend and development in the country, which will be adapted by major manufacturers to remain active in the market. * Sweet-toothed Indians have increasingly moved towards premium chocolates due to growing preference for better quality chocolates. Consumption of premium chocolates by rural consumers also witnessed a sharp rise in 2012. Interestingly, small pack sizes experienced a rapid increase in sales across rural areas and tier III cities owing to the affordability attached to it. In line with the preference for small pack sizes, volume sales of mini chocolates launched by Mars also started to emerge in 2012. * India has always had a sweet tooth, and chocolate is fast becoming its favorite treat, ahead of sugar candy, with an annual market growth rate of 15%. Cadbury’s now owns 70% of the market, introducing innovative products that can survive in the extreme heat. Global market share by region, 2011:| Western Europe 32%| North America 20%| Asia 17%| Latin America 13%| Eastern Europe 12%| Middle East and Africa 4%| Australasia 2%| PRODUCT REVIEW Cadbury India Ltd. is a part of Mondelez International. Cadbury India operates in five categories – Chocolate confectionery, Beverages, Biscuits, Gum and Candy. In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the years. Some of the key brands are  Cadbury Dairy Milk, Bournvita, 5 Star, Perk, Bourneville, Celebrations, Gems, Halls, Eclairs, Bubbaloo, Tang  and  Oreo. Our core purpose make today delicious captures the spirit of what we are trying to achieve as a business. In India, Cadbury began its operations in 1948 by importing chocolates. After over 60 years of existence, it today has six company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) Hyderabad and 4 sales offices (New Delhi, Mumbai, Kolkata and Chennai). The corporate office is in Mumbai. Cadbury India enjoys a value market share of over 70 percent  in the chocolate category and our brand  Cadbury Dairy Milk (CDM)  is considered the gold standard for chocolates in India. The pure taste of  CDM  defines the chocolate taste for the Indian consumer. In the Milk Food drinks segment our main product is  Bournvita   the leading Malted Food Drink (MFD) in the country. Similarly in the medicated candy category Halls is the undisputed leader. We recently entered the biscuits category with the launch of the Worlds No 1 biscuit brand  Oreo. Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over two decades, we have worked with the Kerala Agricultural University to undertake cocoa research and released clones, hybrids that improve the cocoa yield. Our Cocoa team visits farmers and advises them on the cultivation aspects from planting to harvesting. We also conduct farmer meetings amp; seminars to educate them on Cocoa cultivation aspects. Our efforts have increased cocoa productivity and touched the lives of thousands of farmers. Hardly surprising then that the Cocoa tree is called the Cadbury tree! CONSUMER TRENDS 1. Mithai- the traditional Indian sweats is getting substituted by chocolates among upwardly mobile Indians. Instead of buying sweats on Raksha Bandhan, sisters prefer offering chocolates to their brothers. This is the reason for sudden spurt in advertisement between July amp; Sep by  most of the companies. . The range and variety of chocolates available in malls seems to be growing day by day, which leads to lot of impulse sales for chocolate companies. 3. Chocolates which use to be unaffordable, is now considered mid-priced. Convenience over Mithai in terms of packaging and shelf life in making both middle class and rich Indians opt for chocolates. 4. Designer chocolates have become status symbols. They are linke d to one’s aspiration and lifestyle and malls are perfect points of sale as people usually are happy and gay at these destinations. 5. Cadbury initial communication for Celebrations was concentrated on occasions like Diwali and Rakshabandhan. Over the last seven to eight years, the brand emerged as a good gift proposition for occasions and enabled people to come closer. Research done by Cadbury suggested that they should extend the plank of occasion-based gifting to social gifting i. e. all-year-round gifting options. 6. Consumers can choose from wide range of chocolates, which initially was limited to Milk chocolates like Dairy Milk and Milky Bar. In past few years we have seen so many SKUs with almonds, raisins and all sort of nuts. And how can we forget latest 5 star crunchy and Ulta Perk, which has opened new windows for consumers. 7. In past, consumers had negligible inclination for dark chocolates. But now we have seen a change in the Indian palate, which is increasing the base of this sub-segment. COMPETITIVE REVIEW * Cadbury India continued to enjoy dominance in chocolate confectionery and is set to hold a value share of 56%, followed by Nestle at 22% in 2012. The two leading companies have enjoyed established presence in chocolate confectionery for years. However, the two companies lost shares to Mars and Ferrero India, which are gradually gaining ground in chocolate confectionery. * Chocolate and confectionery makers say adult consumption of chocolates and candies is growing at the fastest pace in India, and companies like  Mondelez, Mars, Nestle,  Perfetti Van Melle,  Parle  and  ITC  are launching new products and brands that target the grown-up. * These days there are over 50 good chocolate brands available in India and all of them are doing good business. Some of them are: Amul, Nestle, Ferrero Rocher, Mars, SK Industries, Campco, Hershey Company. Market Analysis We have already completed the first level of analysis in identifying the driving forces that lead to changes in our industry. The next step is to analyze individual consumers (individuals, and organizations) and to set out our primary and secondary segments or target markets. Customer Need Analysis Key Customer Groups Customer Needs 1. Children 1. Desire for Chocolate 2. Youth2. Gift 3. B2B 3. Revenue generation (Distributer, Wholesaler, Retailer and All type of channel members) 4. Parents 4. Care of own children 5. Old age 5. After having lunch or . Dinner as sweet Product Review I. Chocolate amp; Confectionary 1) Dairy Milk 2) Fruit amp; Nut 3) 5 Star 4) Break 5) Perk 6) Gems 7) Eclairs 8) Nutties 9) Temptation 10) Milk Treat II. Beverages III. Food Drinks 1) Bourn vita 2) Drinking chocolate 3) Cocoa CHANNELS OF DISTRIBUTION * Cadbury dairy milk  are sold directly to wholesaler and  retailers. * Cadburys distribution network encompasses  2100  distributors  and 50,000 retailers. * Consumer base of over 65 million. * Cadbury reaches 0. 6 million retail outlets. SWOT ANALYSIS Strength 1. Very strong brand equity in India. 2. Due to its 54 years presence in India – has deep penetration – 2100 distributors; 450,000 retailers, 60 mid urban (22%) customers. 3. Three sectors; Chocs (70% share), Confec (4%), food drinks (14% leader in brown segment). 4. Low cost of production due to economic of scale. That means higher profits. Better market penetration . 5. Second best manufacturing location throughout Cadbury Schweppes. Weakness 1. Poor technology in India compared to current international technologies (Godiva, Mozart, Fazer, Dint, Naushans, etc ) 2. Ltd. Key products, only one central brand (CDM). Pralines range totally wising in India. 3. â€Å"Make in India† tag once the economy opens up wore and imports rush in. Opportunities 1. Tremendous scope for per capita consumption (160 gms of 8 – 10 kg) 2. Increasing per capita national income resulting in higher disposable income. 3. Growing middle class and growing urban population. 4. Increasing gifts cultures. 5. Substitute to â€Å"Mithais† with higher calories/cholesterol. 6. Increasing departmental stores concept – impulse @ at cash counters. 7. Globalization: optimal use of global Cadbury Schweppes. Threats a) Major:- Due to low cost and highest brand equity, it is success in India. b) Minor:- Globalization will bring in better brands for upper end of the market (Lint, Hershey’s, Monarch, Godiva, etc†¦) 5 P’s Of Marketing 1 PRODUCT I. Chocolate amp; Confectionary 1) Dairy Milk 2) Fruit amp; Nut 3) 5 Star 4) Break 5) Perk 6) Gems 7) Eclairs 8) Nutties 9) Temptation 10) Milk Treat II. Beverages III. Food Drinks 1) Bourn vita 2) Drinking chocolate 3) Cocoa 2 – Pricing 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 Rs. 15 Perk Rs. 10 Star Rs. 10 Fruit and Nut Rs. 22 Gems Rs. 10 Nutties Rs. 30 Bournvita (500 gm) Rs. 104 Drinking chocolate Rs. 65 3 Physical Distribution – â€Å"Place† Distribution Equity: It takes much more time and effort to build, but once built, distribution equity is hard to erode. The fundamental axiom of Indian consumer market is this: You can set up a state-of –the-art manufacturing facility, hire the hottest strategies on the block, swamp prime television with best Ads, but the end of it all, you should know how to sell your products. The cardinal task before the Indian market in managing is to shoe-horn its product on retail shelves. Buyers are paying for distribution equity not brand equity and market shares. Why does the company need distribution equity more in India? With technology and competitive pressure slash in it is becoming increasing difficult for marketers to retain a unique product differentiation for long period. In a product and price parity situation, the brand that sells more is the one that reaches the highest number of customers. India – 1 billion people, 155 million household has over 4 million retail outlets in 5351 urban markets and 552725 villages, spread cross 3. 28 million sq. km. elevision has already primed and population for consumption, and the marketer who can get to the to the consumer ahead of competition will give a hard – to – overtake lead. But getting their means managing wildly different terrains-climate, language, value system, life style, transport and communication network. And your brand equity isn’t going to help when it comes to tackling these issues. Own distribution network consist of clearing and forwarding (Camp;F) agents amp; distribution stockiest. This network of distribution can either contact wholesalers and which in turn retailers or the distributors can contact 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 to improve logistics, Cadbury is also attempting to improve the distribution quality. To address the issue of product stability, it has installed visi colors at several outlets. This helps in maintaining consumption in summer when sales usually drops due to the fact that the heat affects product quality and thereby off takes. Looking at the low penetration of the chocolate, a distribution expansion would itself being incremental volume. The other reason is arch rival Nestle reaches more than a million retailers. This increase in distribution is going to be accompanied by reduction in channel costs. Cadbury’s marketing costs, at 18% of total costs, is much higher than Nestle’s 12% or even pure sugar confectionery major Parry’s 11%. The company is looking to reduce this parity level. At Cadbury, they believe that selling confectionery is it like selling soft drinks. 4 Promotion 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 customer memory, communication must first ensure exposure, grab his attention evoke his comprehension, grab his 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, unselfish conscious, pleasure – seeking child within him – and graft these feeling onto the Ad campaign like â€Å"Khane Walon Ko Khane Ka Bahana Chahiye† for CMD and â€Å"Thodi Si Pet Pooja – Kabhi Bhi Kahin Bhi† for Perk have been sure shot winner with the audience. Whirl with the new launched temptations with the slogan â€Å"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. All ICICI’s ATM a message flashes on the screen as soon as customer inserts his ATM card. It tells the customer that this would be good time to get out of his temptation since he/she is bound to be alone. Something familiar is planned for phone-book as well. In cinemas, Cadbury as a message on-screen 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. Eclairs has got potential for much wide distribution, in a small sweets that airlines, hostels, and up market retail outlet offer to guest 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 spiffing up its key brand, researching and improving the newer products that haven’t taken off, supported with high ad – spends that Cadbury hopes will see it emerges stronger after the current slowdown, as well as expand the market. 5 Positioning In the 1970s consumers were ready to pay â€Å"more for more†, and luxury goods flourished. In the 1980s, consumers began to demand â€Å"more for same†, and the discounting era grew strong. Today’s consumer demanding â€Å"more for less†, and the winner will be that super value marketers†¦. Some of today’s most successful companies recognize those customers are more educated and able to recognize true customer value†¦ Positioning is simply concentrating on an idea – or – even a word defines that company in the mind of the consumer. It is more efficient to market one successful concept to one large group of people than 50 product or service ideas to 50 separate group†¦ repositioning is a must when customer attitude have changed and product have strayed away from the consumer’s long standing perception of them†¦ Cadbury’s is an anchor in sea of confectionary products. As a variety of competitive claims assails her senses, today customer uses complicated decision making process to assess the alternative before making a purchase. Since Cadbury’s is more clearly associated with a particular set of attributes in terms of benefits and prices, the quicker becomes her search process. Positioning of individual product: 1) CMD: is and always remain flagship brand. The punch by the company for advertising this product life. ‘Real taste of Life’, itself defines the positioning of the product. The chocolate is meant for all age groups. It symbolizes fun, enjoyment, good items. It has goodness of milk, taste and appetite appeal. 2) 5 star: although positioned internationally as an energy bar, 5 star was positioned on an emotional platform in India during the late 1980s. Symbolizing togetherness, 5 star was originally targeted at teenagers. In June 1994, the company reworked the strategy for 5 star to make it a source of energy. In fact, before the launch of Perk, 5 star’s energy bar positioning made it a snacking chocolate. 3) Eclairs: competing in the chewable toffees segment. Eclairs was re-launched during the mid-nineties with a new name, Dairy Milk Eclairs. 4) Gems: broadcasting Gems, though, didn’t prove to be feasible proposition for Cadbury. Targeted at children under 12 years with ‘Gems Bond’ advertising. Cadbury decided to sell it to teenagers with the ‘Smart Very Smart’ campaign. But now, the company is retargeting children with its animated commercial. â€Å"Gems are the best brand to speak to children. Colorful chocolate buttons appeal most to children and that is why Cadbury is re-targeting children. † ) Crackle: it was the first Cadbury’s chocolate to have crunch in it. It was targeted as a funky chocolate to add spark to life. 6) Perk: in September, 1995, Cadbury preempted the launch of Nestle’s Kit-Kat by rushing a new brand, Perk into the market. Positioned much further on the functional scale of 5 star, Perk was meant to be light snack-product for subduing the first pangs of hunger. 7) Bournvita: positioned as tasty health drink. While its competitors concentrated only on health aspect, Bournvita combined the nutritious value   with taste. PREPARED BY: Kunal malik