NIPS COLLEGE OF IT AND MANAGEMENT

ALLAHABAD

A MARKETING PROJECT REPORT ON

NESTLE VS CADBURY

Submitted to Submitted by

Mr. JITENDRA KESWANI ANIL MOHIT

BBA 6TH Sem

Roll No.9206490005

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DECLARATION

I ANIL MOHIT a student of NIPS COLLEGE OF IT & MANAGEMENT ALLAHABAD BBA-6THsemester, hereby declares that the final year research report entitled “A MARKETING PROJECT REPORT ON NESTLE VS CADBURY” is my original work and the same has not been submitted for the award of any other diploma or degree.

(ANIL MOHIT)

BBA 6TH SEMESTER

Roll No 9206490005

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ACKNOWLEDGEMENT

I take this opportunity project to place on record my grateful thanks and sincere gratitude to all those who gave valuable advice and inputs for my study. My study could not have been completed if I had not been able to get the reference materials from the company.

I am immensely grateful to my esteemed guide Mr. JITENDRA KESWANI whose continued and invaluable guidance can never be forgotten by me but without whom this study could not have got present shape.

The success of this report is because of the cooperation of all. I take no credit for this achievement but take responsibility for any mistakes and inaccuracies & finally as well I want thanks to GOD, for being so kind to me and blessing me with you all.

(ANIL MOHIT)

BBA 6TH SEMESTER

Roll No 9206490005

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TABLES OF CONTENT

THE INDUSTRY SCENARIO-----------------------------------------------------------------------------------------7-8

RESEARCH METHODOLOGY-------------------------------------------------------------------9-11

OBJECTIVES OF THE STUDY----------------------------------------------------------------------12

CADBURY DAIRY MILK------------------------------------------------------------------------13-20

A. HISTORICAL HIGHLIGHTSB. PRODUCTIONC. V I S I O ND. ADVERTISING & SALES PROMOTIONE. DISTRIBUTION SYSTEM ADOPTED BY CADBURY

NESTLE INDIA LIMITED-----------------------------------------------------------------------21-24

A. HISTORICAL HIGHLIGHTSB. MORE THAN A MOUTHFUL - CHOCOLATE INDUSTRY

GROWING MARKETS ............FALLING MARGINS--------------------------------------24-28

A. Direct CompetitionB. INDIRECT COMPETITIONC. MARKET RESEARCH

OBSERVATION & FINDING-------------------------------------------------------------------------------------------------------------------29-30

Data analysis & Interpretation-------------------------------------------------------------31-43

Strategies of the Dominant Brands---------------------------------------------------44-51

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A. Personality TraitsB. Impulsive Buying Behavior and PricingC. RECOMMENDED MARKETING STRATEGY DESIGND. Market Segmentation and Target Market SelectionE. TARGET AUDIENCE

SUGGESTIVE MARKETING MIX FOR INTRODUCING A NEW PRODUCT-----------51-64

A. ProductB. PricingC. PromotionD. PositioningE. Advertisement PlanF. Advertisement ObjectivesG. Sales promotion ActivitiesH. Market Testing Plan

IMPLEMENTATION-----------------------------------------------------------------------------------------------------65

CONCLUSION----------------------------------------------------------------------------------------66

ANNEXURE --------------------------------------------------------------------------------------67-74  BIBLIOGRAPHY--------------------------------------------------------------------------------------75

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A MARKETING PROJECT REPORT ON

NESTLE VS CADBURY

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THE INDUSTRY SCENARIO

With the entry of multinationals and home companies sprucing up their act, the confect ionery market i s booming. McKinsey & Co. has est imated the confectionery industry to touch a whopping Rs. 6500 crore by the year 2008.

Till the eighties, the chocolate market was small and the product category i t se l f was fuzzy . In the e ight ies , Cadbury ’s - the v i r tua l monopol i s t - had decided to focus its efforts on making chocolates a distinct category with an ident i ty of i t s own. And the marketer had sharp ly pos i t ioned i t s product at children to do that. Hence, chocolates bore an “Only for kids” tag, and kept adults at bay.

By the end of the eighties, Cadbury’s still ruled the roost with over 80 percent market share. And though several brands - like Amul and Camp co - tried to break into the market, none of them had succeeded in shaking the leader’s grip. In fact, Cadbury’s had become a brand virtually generic to chocolates. Then chocolates were used to reward and reinforce positive behavior and hence were categorized as a luxury reserved for special occasions. This was, a stark contrast to the west where chocolates were snacked on, eaten as mini meals or just to suppress pangs of hunger.

But constant working by players like Cadbury’s (re-launch of Cadbury’s Dairy Mi lk target ing adul ts and as a casua l any-t ime buy) and Nest le towards exploding the myth that chocolates are meant for children only, has resulted inthe segment booming.

Trends in the Industry

• With soc io-economic changes rap id ly tak ing p lace , the young and not so young population will lead a new life style and chocolate eating is definitely going to be widespread and acceptable.

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• In the industry, both population and family incomes as well as urbanization are on the increase.

• There has been a s ign i f i cant growth in the middle c lass , wi th 5 .8 mi l l ion people having upgraded to the quoted middle class.

• There is quantified data on FMCG usage having increased (NRS-VI & IRS’98figures)

Thanks to the above reasons the growth in the chocolate market is estimated to be at 22% in 2001. But marketers in the industry are looking forward to a much higher growth rate, as India’s per capita consumption of chocolates is only 15 Gms. Versus 6 Kg in the west

The Indian Chocolate market can be sliced into four parts.

1. Moulded Chocolate Segment -Comprising slab chocolates like Dairy milk chocolates, etc. These are made by pouring the ingredients into moulds.

2. Countline Segment -Comprising bars like 5 star, Bar One, Perk, Kit Kat, etc. These have ingredients other then chocolate and are usually Bar shaped, making for chunky bites.

3. C h o c o - P a n n e d S e g m e n t -C o m p r i s i n g c h o c o l a t e f o r m s l i k e B u t t e r s c o t c h , N u t t i e s , T i f f i n ’ s , e t c . P a n n e d v a r i e t y h a s d i f f e r e n t cores/centers which are covered with a layer of chocolate.

4. Sugar-Panned Segment -Comprising chocolate forms such as Gems, Chocolate éclairs, etc. These generally have a sugar coating on the outside.

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RESEARCH

METHODOLOGY

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RESEARCH METHODOLOGY

As mentioned earlier, the objective of the study is to formulate a Marketing S t r a t e g y f o r a n y n e w e n t r a n t i n t h e I n d i a n C h o c o l a t e I n d u s t r y . W h i l e recommending the said strategy detailed information from both primary and secondary sources was collected and analyzed. This included:

Primary Sources Four level primary information collections were undertaken.1. To ana lyze buy ing behav ior and in order to ga in an ins ight into the buyer need-sat i s fact ion leve l , a quest ionnai re was formulated and administered among 80 people. The profile of the respondents was as follows:

1. Consumers of chocolates – 12 years + in LUDHIANA. This was since; chocolate consumption was witnessed amongst all age groups.

2. A d is t r ibutor was a l so interv iewed so as to get pert inent in format ion regarding the most important ‘P’ of FMCG marketing – Place.

3. Extensive interviews were conducted with retailers in the LUDHIANA a r e a . T h e s e i n c l u d e d p a n s h o p s , g r o c e r y s h o p s , b a k e r i e s , departmental stores, etc. They provided information on various facts of chocolate distribution such as Point-of –purchase material (dispensers etc . ) , in f rastructure problems, c r i t i ca l in format ional regard ing the policies of the present players in the market, etc.

Secondary Sources A number of secondary sources of information were used. These were:

•Information: Industry statistics, problems facing the industry, future outlook, etc. Also measures being adopted for cocoa production development.

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•Internet websites Of Cadbury’s, Nestle and indiainfoline.com, askjeeves.com

•Extensive use of secondary information in the form of magazines/journals/newspapers clippings, such as Business World, Business Today, Business India, A&M, Brand Equity, Economic Times, etc.

The methodology adopted was as follows:

Industry Scenario Sketch (utilizing secondary information)

Extensive Interviews held with Primary/Secondary Sources (Companies/Chocolate manufacturers Association).

Extensive retailer interviews in LUDHIANA Area

Formulation and administration of a questionnaire

Formulation of the Recommended Strategy on the basis of the abovementioned Primary and Secondary Information

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OBJECTIVES OF THE STUDY

1. To get familiar with their marketing strategies separately.2. To view the segments being targeted by these brands in the market.3. Up to what extent do the public respond to their products?4. To prepare a marketing plan for any brand that is planning to enter the

India chocolate market.5. To be a relevant guide for any brand launch in India.

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COMPANY PROFILE

History

•Started business in 1948 in India. The company was incorporated as Cadbury-Fry (India) Pvt. Ltd.

•Founder: John Cadbury in Birmingham, UK in 1824

•Current MD: Mr. Rajiv Bakshi

•Turnover: 450 Cr.

•No. of offices: 4 Staff Strength – 2000 approx.

1. Branch Manager is responsible for the entire Branch Function

2 . P r o m o t i o n a l M a t e r i a l s – N e t w o r k a d , M e d i a , P O S M a t e r i a l s l i k e posters, danglers, dispensers etc.

3. Target – A l l age groups

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4. Distribution: Through C&F Agents → Re-distributors → Retailers →consumers Godown: 1 in Delhi Office: 1 in DelhiAvg. No. of calls per day by S.O.: 35Sales Reporting – weekly basis

5. Sales Kit: Daily call report, product folder, price list, calculator, etc.

6. Organisat iona l S t ructure:

7. Key products: Cadbury’s Dairy Milk, 5 Star, Fruit & Nut, Bourn vita, Perk etc.

COMPANY BACKGROUND

In 1930 R Hudson and Company finally joined with Cadbury. This gave the f lour i sh ing loca l f i rm a d i rect l ink wi th one of the greatest in internat iona l chocolate manufacturing and marketing. Over the years the company has been involved with many other long standing brands and entrepreneurs –names such as Fry – a chocolate brand dating back to 1756, and of course Schweppes which is still part of the Cadbury group internationally although no tin New Zealand.

In 1969 Cadbury Fry and Schweppes merged internationally with the New Zealand Company becoming known as Cadbury Schweppes Hudson Limited in 1973.

In 1986 Cadbury Schweppes Hudson merged with Cadbury Schweppes Australia. The result was a truly international operation with both the New Zealand and Australian companies supplying each other. Cadbury Schweppes

Australia is a fully owned subsidiary of Cadbury Schweppes plc, the United Kingdom based parent company.Most recently, in 1990 Cadbury required the Griffins confectionery business, and sold the Hudson biscuit operation in a reciprocal agreement. The Griffins b u s i n e s s d a t e s b a c k t o b e f o r e t h e t u r n o f t h e c e n t u r y .

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G e o r g e G r i f f i n established the company when he opened a small confectionery business at Nelson.

Finally, in 1991 we became known as Cadbury Confectionery Ltd, and can now boast dominance in New Zealand’s chocolate and sugar confectionery markets. With manufacturing bases in both Dunedin and Auckland, as well as sales offices in Wellington and Christchurch, the Company employs nearly1,000 in total.

The Cadbury group has also flourished internationally. Cadbury Schweppes – the parent company – has manufacturing facilities in 20 countries and its famous brands are bought and enjoyed in more than 110 countries around the world. Cadbury is one of the world’s leading chocolate makers and is number one in England and Australia as well as in New Zealand.

PRODUCTION Cadbury India’s first manufacturing facility was set up at Thane (Mumbai) in1966. Today, the factory has grown manifold and manufactures a range of p r o d u c t s t h a t i n c l u d e C a d b u r y D a i r y M i l k , 5 S t a r , N u t t i e s , G e m s a n d Bourn vita. The factory employs about 750 people and houses the R&D and engineering development facilities of the company.

In a move towards backward integration, Cadbury bought Induri Diary farm in P u n e i n 1 9 6 4 . R e c e n t l y , a m a j o r i n v e s t m e n t p r o g r a m r e s u l t e d i n t h e installation of modern molding, crumb and chocolate making facilities. Today, the Induri Factory manufactures intermediate products like milk crumb and arrange finished chocolates.

In 1989, the company began operations in their newest and most modern plant at malanpur. Equipped with state-of-the-art technology and backed by constant investment, this unit manufactures Éclairs, Gems, Perk and Picnic.

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V I S I O N The governing objective for Cadbury India is to deliver:

•Superior Shareholder Value

•Cadbury in every pocket

ADVERTISING & SALES PROMOTION As we have discussed the importance of Advertising and Sales promotion in introduct ion, so we know how much advert i s ing a im sa les promot ion are important.

The slogans of advertising are the tools of sales promotion are so important which couples the customer to purchase the product. Now we are going to discuss all these things one by one about Cadbury.

Following are a few advertising slogans used by Cadbury for introducing the product to the customers:-

•THE REAL TASTE OF LIFE (DAIRY MILK)

•THODI SI PET POOJA KABHI BHI KAHI BHI (PERK)

•WHEN EVER ON HUNGER STRIKE (PERK) •TAN KI SHAKTI, MAN KI SHAKTI (BOURNVITA)

•KUCH ZADA HI SOLID (PICNIC)

•YEH CHOCOLATE KHAE AAP INHE KHAE (ECLAIRS)

All these slogans used by Cadbury are beautifully prepared because they can compel the consumer to buy the product to some extent.

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Now we wi l l d i scuss them in deta i l s wi th the he lp of which we can eas i ly understand how these slogans can leave these impression on the customer.

•The Real Taste of Life

This slogan was prepared for the first chocolate introduce by the Cadbury first time in India. The chocolate was ‘Dairy Milk’. This slogan says that there are many types of products present in the market, they have different taste but Dairy Milk is the best and the true taste of the life. This slogan also stands for the victory. On electronic media, the advertisement shows that a cricketer wins the match and after that he and his girl friend eats this product. Therefore, this stands for victory of any body eats this product will definitely win in his life.

•Thodi Si Pet Pooja Kabhi Bhi Kahi Bhi When Cadbury introduced its next chocolate named ‘Perk’ this slogan were used. This explains that if anybody is hungry and he do not have any thing to eat accept this Perk then he can have this. This shows that Perk is so good chocolate which can be used as a substitute of food and is a complete food.

•Whenever on Hunger Strike

Later on Cadbury came out with new slogan on television; the advertisement shows that few students are on hunger strike. But they had the chocolate. This shows that nobody can control himself/herself if this product of Cadbury is lying in front of that person. This means that Cadbury product is so good that nobody can leave it.

•Tan Ki Shakti, Man Ki Shakti This slogan was used for ‘Bourn vita’. Bourn vita is full of proteins, vitamins, minerals and all those necessary things which are useful for our body and mind. Therefore, this slogan stood best for Bourn vita. TAN KI

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SHAKTI, means the energy to the body. If anybody here this product, he /she will remain active for whole day. That person will look healthy, active and will look smart.

•YEH CHOCOLATE KHAIN, AAP INHE KHAIN When Éclairs toffee came in the market, this slogan was used. Éclairs is a toffee filled with chocolate. It means that instead of having chocolate you can h a v e é c l a i r s t o f f e e t o o . I t a p e r s o n d o e s n o t w a n t t o h a v e 1 2 p i e c e s o f chocolate, can have one or two éclairs toffee.

•KUCH ZADA HI SOLID Nowadays new chocolate has been introduced by the Cadbury and th is slogans going on creating demand for this new product. In this ad we can see that one chocolate falls on a car and damages the car. This chocolate is sostrong due to lots of nuts, caramel etc. etc. present in this chocolate. This also shows that this is for adventurous people who love thrills, adventure etc.

DISTRIBUTION SYSTEM ADOPTED BY CADBURY Cadbury Schweppes pick the world number 3 soda market has egged to sell most of its soft drinks business outside the US to Coca Co. for $ 1.85 billions to finance a head on battle with Coke in the No. 1 soda makers home market. The agreements included the Showers’ Dr. Pepper chanda dry and crush brands and exude South Africa and France the pact which was dependent on regulatory approval was likely to be concealed in mid 1999 Cadbury said. The more will allow Cadbury to expand it Dr. Peeper business in US where it derives two-thirds of its soft drinks sales and was a 15 per cent market share at the same time it get Cadbury out of markets where it is growing at a slower pace. The shares rose as much as 70.5 per cent or 7.5 per cent or 7.5 per cent 1002.“This sort out the places where Cadbury’s systems weren’t strong enough to c o m p e t e w i t h C o c a - C o l a , ” s a i d M r . D a v i d l o n g a n a n a l y s t a H e n d e r s o n Crosthwaite, “they were fighting with proper for this.

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P a t t e r n s o f d i s t r i b u t i o n c h a n n e l s a n d t y p e s o f d i s t r i b u t i o n intermediaries

Manufacture↓Stockiest/Distributor ↓Semi-wholesaler ↓ Retailer ↓User

FACTORS INFLUENCING PRICING OF CADBURY

Internal Factors

•Corporate and marketing objectives of the firm.•The image sought by the firm through pricing.•The characteristics of the product.•Price elasticity of demand of the product.•The stage of the product on the product life cycle.•Use pattern and turn around rate of the product.•Cost of manufacturing and marketing.•Extent of distinctiveness of the product and extent of production differentiation practiced by the firm.•Other e lements of the market ing mix of the f i rm and the i r interact ion with pricing.•Composition of the product line of the firm.

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External Factors

•Market characteristics.•Buyer’s behavior in respect of the given product.•Bargaining power of major customers.•Competitors pricing policy.•Government controls regulations on pricing.•Other relevant legal aspects.•Societal (or social) considerations.•Understanding, if any reached with price cartels.

Cadbury objective of pricing

•Profit maximization in the short-term.•Profit optimization in the long-term.•A minimum return (or target return) on investment.•A minimum return on sales turnover.•Targets sales volume.•Target market share.•Deeper penetration of the market.•Entering new markets.•Target profit on the entire product line irrespective of profit level in individualproducts.•Keeping competition out, or keeping it under check.•Fast turn around and early cash recovery.•Stabilizing prices and margins in the market.

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NESTLE INDIA LIMITED

HISTORICAL HIGHLIGHTS Incorporated in 1959 as Food specialties, Nest India (NIL) was promoted by Nestle Alimantana, Switzerland, which presently holds 51% equity stake in the company. Manufacturing in India began with the start up of the Moga Factory in 1962. Nestlé’s first unit at Moga, Punjab is manufacturing:

•Milk products•Infant milk formulae•Weaning cereals•Culinary products•Beverages

It is the main manufacturing unit of Nestle India Limited. The second factory at Choladi, Tamil Nadu to produce beverages i.e. 100% EOU for instant tea wasset up in 1967.

The third plant in Nanjangud, Karnataka was set up in 1989 to produce

•Instant Coffee•Health Beverages

The fourth plant at Samalkha, Haryana, was set u in 1993, to produce

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•Weaning cereals•Culinary products•Health beverages•Milk products

The fifth plant at Ponda, Goa was set up in 1994 to produce:

•Wafers•Waffles

The sixth plant at Bicholine, Goa commenced construction for manufacture of a range of culinary products and this was expected to be commissioned in the latter part of 1996.

Nestle India, the largest food company in the country is continuously looking at new niches in the market place for its various products.

In mi lk products Nest le has made a cons iderab le mark . For instance, the c o m p a n y w a s t h e f i r s t t o i n t r o d u c e a D a i r y W h i t e n e r w i t h i t s p r o d u c t ’ Everyday'. And till today that product is a brand leader despite the presence of a host of other brands in the field. IN the case of Milkmaid condensed milk, Nestle relaunched the product as desert maker and has seen the sales graph climbing since.

In baby foods, Nestle has made its strong hold with Lactogen and Cerelac. Nest le i s a l so popular in pure ghee segment . I t s Everyday pure ghee has gained a quite satisfactory market share, Nestle has also entered into fitness f o o d p r o d u c t s . N e s t l e t o d a y i s a h o u s e h o l d n a m e . N e s t l e e x t e n d e d t h e product line in coffee by bringing in Dolco, and then Sunrise.

In 1990, NIL entered the chocolate bus iness introduc ing Nest le Premium chocolate. Nestlé’s products are sold under brand names such as a Milkmaid, Everyday, Cerelac, Nescafe, Maggi, Lactogen, Éclairs etc. It launched the world famous Kitkat chocolates in 1995. During the year 1996 Milo the world’s largest selling chocolate energy food drink was launched.

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MORE THAN A MOUTHFUL - CHOCOLATE INDUSTRY

The Indian chocolate market is getting bigger and better. While on one hand, the premium segment (comprising imported varieties) is opening up, on the other, companies like Cadbury India are launching indigenous products made to international standards. Of the 20,000-tonne chocolates market worth about Rs. 400 crores, Cadbury accounts for about 70 percent, followed by Nestle, with a share of around 20 percent. Amul has five per cent of the market, with minor players taking the rest. The battle, though, is between Cadbury and Nestle. Though much smaller portfolios, Nestle is putting up a touch fight. 5 Star

Although positioned internationally as energy bar, 5 Star was positioned on an emotional platform in India during the late 1980s. Symbolizing togetherness, 5S t a r w a s o r i g i n a l l y t a r g e t e d a t t e e n a g e r s . I n J u n e 1 9 9 4 , t h e c o m p a n y reworked the strategy for 5 Star to make it a source of energy. In fact, before t h e l a u n c h o f P e r k , 5 S t a r ' s e n e r g y b a r p o s i t i o n i n g m a d e i t a s n a c k i n g chocolate, with Nestle pitching Bar One (launched in 1993) against it with the punch l ine ' for those in between t imes ' . Cadbury wi l l be launching a new campaign for 5 Star shortly. They would like to further 5 Star's equity in the functional or snacking direction. It is very nebulous one though.

Eclairs

Competing in the chewable toffees segment, Eclairs was relaunched during the mid-n inet ies wi th a new name, Da i ry Mi lk Ec la i rs . Accord ing to Ra j iv Baksh i , Managing D i rector (des ignate) , Cadbury Ind ia L td , growth in th is s e g m e n t i s v e r y h i g h . I t i s w o r t h o v e r 4 0 0 0 t o n e s n o w . N e s t l e a l s o a presence here with Nestle's Eclairs.

Gems

Broadcasting Gems, though, did not prove to be a feasible proposition for C a d b u r y . T a r g e t e d a t c h i l d r e n u n d e r 1 2 y e a r s w i t h

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t h e ' G e m s B o n d ‘advertising, Cadbury decided to woo teenagers with the 'Smart'. Very smart campaign. But now, the company is re-targeting children with its animated commercial. Gems is the best brand to speak to children. Colorful chocolate buttons appeal most to children and that is why we are re-targeting children. While Cadbury has successfully relaunched a host of its sub-brand, it has not been able to pay attention to brands like Mr. Pops lillipop. As you grow and add more brands, the ability to spend on brands becomes lower. Therefore we have selected a few critical brands to do a paper job.

POLO

POLO is one of Nestle's key strategic confectionery brands worldwide, and represents Nest le ' s f i r s t entry into the large 50,000 tonne p .a . (organized sector) Indian Sugar confectionery market

GROWING MARKETS ............FALLING MARGINS

Incorporated in 1959 as Food Spec ia l t ies L td . , Nest le Ind ia L td . (NIL ) i s promoted by Nest le A l imentana-Switzer land, which present ly owns 51% equi ty s take in i t . N i l i s one of the top p layers in the processed food and beverages industry and the largest producer of instant cof fee wi th a 49% market share. Its market dominance apart from instant coffee is spread over processed milk products (condensed milk, milk powders and dessert mix), infant foods and processed and culinary products (instant noodles, sauces, soups etc.).

Established in 1860, its Swiss parent Nestle, S.A. with ownership and a clutch of top selling global brands (Kit-Kat, Polo, Nescafe, Nido, Maggi, Perrier etc.) is one of the largest and most prof i tab le p layers in the processed food and beverage industry. with sales at US$ 47.7 billion, it ranks 39 th in the Fortune5 0 0 l i s t t o w e r i n g o v e r i t s c o m p e t i t o r s l i k e , K e l l o g g ’ s , C o n a g r a , G r o u p e - Danone, Kraft-General Foods and others.

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Increasing market dominance: NIL's portfolio comprising over 65 products, marketed through a representative-network in 3000 towns and 570000 outlets, is manufactured at five state-of-the-art manufacturing plants in India.While its Moga unit produces milk products, infant milk food, weaning cereals, culinary products and beverages, the Choladi unit was set up to produce tea in 1967. The th i rd p lant at nanjangud was set up in 1989 to manufacture instant cof fee and hea l th beverages . I t s other two p lants are located at Samalkha in Haryana and Ponda in Goa. It is currently setting up another p l a n t a t B i c h o l i m , G o a t o m a n u f a c t u r e c u l i n a r y p r o d u c t s . T h e g a m u t o f operations of NIL could be broadly classified into four categories.

Direct Competition

At present there are three major players Nestle, Cadbury’s and Amul in the Indian Chocolate market. Campco initially tried to break into market but failed. Brief profile of the same has been entailed below: Cadbury’s India Ltd. Cadbury’s India Ltd, has been in India since 1948. Its brands: Dairy Milk, 5Star, Gems and Chocolate Eclairs are the households names in India today. In a l l the segments i .e . molded chocolates , count chocolates and panned chocolates, it is undoubtedly the market leader.

Cadbury’s has its manufacturing units at Thane (Mumbai), Malanpur, Indori(near Pune), Mithuri and Kolapur. It has a strong distribution network with about 500 distributors in North India and more than 3 lac retail outlets beingserviced all over India.

In 1997, Cadbury planned to pump in Rs.80-crore to up production capacity at a couple of Cadbury’s factories. This cash is exactly double of what’s been invested in 1996.

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The Company launched Perk, a wafer enrobed chocolate in 1995. This was reactionary to the launch of Kit Kat and has been able to counter competition.

Cadbury’s Dairy Milk (CDM) - The Flagship brand

CDM, the oldest of Cadbury’s brands was launched in 1956. In the early 90s,a r i se in the pr ices of cocoa, increase in the exc ise duty and a fa l l in the demand inspired the idea of repositioning. Two years in the process a f ter relaunch Cadbury’s Dairy Milk’s market share stood at 25 percent with sales rising by an average 40 percent per annum.

B e s i d e s C D M C a d b u r y ’ s h a s a n u m b e r o f e n d o r s e r b r a n d s s u c h a s Fru i t ’n ’Nut , Nut Mi lk etc . Even though contr ibut ion of these brands to the company’s bottom- l ine i s very smal l , they are requi red in order to make a complete portfolio of offering.T h e C o m p a n y d e v e l o p e d a c o n c e n t r a t i o n s t r a t e g y o n C D M , F i v e S t a r , Cadbury’ Gems, Cadbury’s Eclairs, Perk and the latest of its offering Picnic(which has drawn a good response in the market).

The Company has also identified sugar confectionery, as a growth sector. Itsfirst offeringGoogly. Nestle India Ltd. Nestle India Ltd. has been in India for more than 35 years now. The world’s largest marketer of chocolates (became world number one when it acquired R o w n t r e e M a c i n t o s h o f t h e U K ) - N e s t l e , m a d e i t s f o r a y i n t h e I n d i a n chocolate Industry in November 1990. It launched three products - the milk chocolate , the b i t ter chocolate and Crack le (a crunchy chocolate) - in the slabs category and Bar One in count lines.

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Cadbury ’s was qu ick to react , and launched a whole host of products in succession: All Silk milk chocolate, Creamy Bar, and a new version of 5 Star.

Nestle, in the beginning did not have its own manufacturing facility. It had an alliance with Camp co to manufacture chocolates. Later, in 1995 a state-of-art manufacturing plant was set up at Ponda, Goa at a cost of Rs. 50 crores. This unit took care of the entire Kit Kat production. However, the production tie-up with Camp co still continued.

Launch of Kit Kat Kit Kat, one of world’s most popular chocolate, was launched in India in 1995.Within months of its launch, it fulfilled every target Nestle had set. Its launch was accompanied by the launch of Cadbury’s Perk in order to counter Kit Kat and safeguard the flagship brand – CDM. Kit Kat has been able to define anew segment in the industry in the form of the wafer enrobed any time snack.

Kit Kat outsells Perk in the outlets where both are available. In the crucial markets of Bombay and Delhi both are running neck-and-neck. It has even said to have threatened the mother brand, Cadbury Dairy Milk.

NESTLE’s New Launches Brand Launch Allen Splash Selected Cities(Sugar Candies) After Eight Mints Delhi & Mumbai

Lion Wafer Bars Delhi & Mumbai

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INDIRECT COMPETITION

Since the target audience includes, consumers of not only chocolates but also of biscuits and confectionery, it faces indirect competition from these product categories. Also, other confectionery products like toffees, candies etc have proved to be ind i rect compet i t ion (however would be l imi ted s ince we are targeting small kids segment).

MARKET RESEARCH

In order to recommend and execute an ef fect ive s t rategy for market ing of goods and services, a systematic market research needs to be undertaken. The buyer preference research would play a vital role in the assessment of c o n s u m e r s t a s t e / p u r c h a s e h a b i t s a n d a b e t t e r u n d e r s t a n d i n g o f t h e consumers mind. In fact the strategy formulation/recommendations in this report of the marketing mix relies heavily on these research findings.

A q u e s t i o n n a i r e w a s a d m i n i s t e r e d ( a s m e n t i o n e d i n t h e M e t h o d o l o g y ) amongst people of different age groups and professions. Results from this research provided interesting cues, which were extremely beneficial in the formulation of the recommended marketing mix.

The main object of this research/questionnaire was as follows:

•To find out the current the current taste/chocolate eating habits.•To find out the extent of brand loyalty.•To get feed back of consumers perception about flavors and conventional outlets.•To find out extent of price sensitivity•Retail outlet preference.•Brand preference etc.

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OBSERVATIONS & FINDING

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OBSERVATIONS

Based on the basis of the questionnaire research, some of the facts that came to the fore have been listed below. These research findings played a key role in the development of the recommended marketing strategy.

•Kit Kat and CDM had a high unaided awareness level and also, both these brands en joyed a h igh consumer preference. Amul i s perce ived for g iv ing value for money.

•Chocolates are no more a children’s item.

•Most of people buy chocolate by impulse dec is ion. Chocolates are even considered as a good gift option.

•C o n s u m e r s p r e f e r e n c e v i s - à - v i s p l a c e o f p u r c h a s e , s i z e / f o r m / t a s t e o f chocolates, etc

•Most of the respondents had a high ad. Recall level for Cadbury’s Dairy Milk and Kit Kat.

•When it comes to gifting, usually the receivers are1. A f r iend of oppos i te sex2 . C h i l d r e n

•The idea of making chocolates available at sweet shops, gift shops, ice cream parlors, fast food joints/restaurants was asked to be rated. The concept of exclusive chocolate parlors was rated favorably (around 63%).

•The product category does not enjoy high brand loyalty levels.

•People are not price sensitive and consider the prices of chocolates available in India, “reasonably O.K.”. They are ready to pay a premium for good quality. Suitable price for a 40gm chocolate was felt to be between Rs10/- to Rs15/-.

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Data analysis

&

Interpretation

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1. Do you consume chocolate?

OPTIONS No OF RESPONDENTSYES 70NO 30

INTERPRETATION:

This chart shows that 30% of respondents does not consume chocolate

While 70% of respondents

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2. How often do you buy chocolate.

OPTIONS NO OF RESPONDENTSPer day 40Week 30Month 20No 10

INTERPRETATION:

This chart shows that 40% of respondents buy chocolate per day, 30% on

Weekly basis, 20% on monthly and 10% respondents does not buy chocolate.

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3. What brand of chocolate are you aware of?

OPTIONS NO OF RESPONDENTSCadbury 45Nestle 25Amul 20Other 10

INTERPRETATION:

This chart shows that 45% of respondents are aware of Cadbury brand,20% of

respondents are aware of amul,25% of nestle and 10% awareness of other brand.

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4. What influenced you to buy the above stated brand?

OPTIONS NO OF RESPONDENTSAdvertising 60Dealer 10Attractive packing 10Shop display 20

INTERPRETATION:

This chart shows that 60% of respondents are influenced by advertising, 10% by

dealer, 10% by attractive packing, and the rest 20% by shop display.

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5. If a particular brand is not available with retailer. You will?

OPTIONS NO OF RESPONDENTSDrop the idea 30Buy another brand 70

INTERPRETATION:

This chart shows that 30% of respondents drop the idea if the particular brand

Is not available with retailer, and the rest 70% go with the another brand.

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6. You purchase of chocolate?

OPTIONS NO OF RESPONDENTSOccasion led (birthday etc.) 30As a gift 30Casual purchase 20Any other 20

INTERPRETATION:

This chart shows that 30% respondents purchase chocolate on occasion

Led, 30% as a gift ,20% on casual purchase, and 20% on any other occasion.

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7. If you buy chocolate?

OPTIONS NO OF RESPONDENTSA gift 20Spouse 10Children 30Friends 40

INTERPRETATION:

This chart shows that 20% respondent buy chocolate for a gift purpose,

10% for their spouse, 30% respondents buy chocolate for children, and 40% for

their friends.

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8. What according to you is the suitable price for 40 gm chocolate?

OPTIONS NO OF RESPONDENTS<10 1510 to 14 2514 to 20 40>20 20

INTERPRETATION:

This chart shows that 15% respondents prefer less than 10rs for 40 gm

Chocolate, 25% respondent prefers 10 to 14rs, 40% prefer 14 to 20rs, 20 % prefer

More than 20rs.

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9. Ideal chocolate would taste as follow?

OPTIONS NO OF RESPONDENTSBitter 30Wafer enrobed 40Caramels nuts inside 20Any other 10

INTERPRETATION:

This chart shows that 30% respondents prefer bitter taste, 40% prefer wafer

Enrobed, 20% prefer caramels nuts inside, 10% prefer any taste chocolates.

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10. One an occasion I would like to a gift a chocolate to loved one?

OPTIONS NO OF RESPONDENTSYes 70No 30

INTERPRETATION:

This chart shows that 70% respondents say yes that they would like to gift a

Chocolate to a loved one, and30% say no.

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11. Are you happy with the kind of chocolate brands available in India

Today?

OPTIONS NO OF RESPONDENTSYes 76No 24

INTERPRETATION:

This chart shows that 76% respondents say yes that they happy with the

Chocolate brands in India, and 24% respondents are not happy.

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12. If you want to buy a wafer chocolate, say KitKat and if it is not available,

you would settle for a Bar/Moulded chocolate say 5 star or CDM.

OPTIONS NO OF RESPONDENTSYes 67No 33

INTERPRETATION:

This chart shows that 67% respondents say yes, and 33% respondents are says no.

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Strategies of the Dominant Brands

It is important to understand the strategies of dominant brands in the market before we go on to analyze the brand communication. Cadbury is the biggest player followed by Nestle, and they cover amongst themselves over 95% of the market share1. The perception map in Exhibit 1 shows the positioning of popular brands graphically.

Exhi bit 1 Positioning of Dominant Chocolate brands in the Indian Market

Cadbury

Cadbury is the market leader with around 60% of the value sales. It boasts of several strong brands in the category covering almost the entire spectrum of consumer needs.

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Dairy Milk

Dairy milk is the megabrand of the Cadbury Family focusing on consumers of all ages. The core proposition is 'something to celebrate all the good occasions in life with'. The communication proposes that no matter what the occasion of your happiness, Dairy Milk is the perfect way to celebrate.

Silk

Silk is a premium variant of dairy milk and aims to give an up market stretch to the core brand. The positioning of Silk is 'Smoother, Creamier and Chunkier'. The communication focuses on the experience of eating chocolate with childlike innocence and unabashed joy. The tagline 'Have you felt Silk lately?' tries to give a refreshing feel to the entire experience of chocolate eating.

Perk

Perk’s target market segment in India is the causal snack space that has primarily been dominated by chips and wafers. The target consumers are teenagers and the advertising just highlights its role as a mini snack. 'Thodi-Si-Pet-Pooja' campaign, featuring mischievous teenagers, defined its brand personality.

Celebrations

Celebrations’ target market was to replace the traditional gift options like traditional sweets and dry-fruits during festivals. The communication focused on the emotions related to gifting.

5 Star

The target segment for this brand has been the youth and children. The brand has continuously focused on variants to add an element of surprise in the chocolate-eating experience.

Nestle

Nestle ranks second with 31% of the value sales. A large product portfolio and a strong distribution network have helped the company in maintaining its leadership along with Cadbury.

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Kit Kat

The brand's commercial focuses on 'Have a break, have a Kitkat'. Nestle Kit Kat was well received by consumers in early years owing to both the novel 'finger format' of the chocolate as well as the way its advertising celebrated the 'consumption ritual'.

Munch

Munch is the largest distributed brand in its category. It is a wafer chocolate. The campaigns of Munch focus on its crunchy taste. Priced at Rs. 5 it targets the middle class in metros and smaller towns.

Personality Traits

Consider how you would describe the personality of a close friend. Chances are that you would list a number of traits, such as outgoing, kind or even-tempered. A trait is a relatively stable characteristic that causes individuals to behave in certain ways. The Trait theory suggests that individual personalities are composed of broad dispositions called traits. Cattle came up with 16 key personality traits that he uses to describe most aspects of human personality4.

We tried to map the personality traits targeted or represented through various commercials. Simultaneously, we tried to match the overall personality of a brand as reflected by overall marketing communication and consumer perception on these personality traits.

An interesting finding was the difference in traits observed for Nestle Munch’s recent commercial featuring the boxer Vijendra Singh from their overall brand image. For traits like 'openness to change' and 'privateness', not only was the ad in-consistent but also conveyed a brand personality significantly different from the overall brand personality built over the years.

Munch’s projected brand personality has shifted in six of seven relevant traits from the last ad campaign to the current one. These inconsistent brand personality projections may lead to confusion in the minds of consumers who will rather shift to another related brand with a more consistent personality. Exhibit 2 shows the differences in positioning of Nestle Munch from old to new ads with two of these traits as dimensions.

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Exhibit 2 Differences in Nestle Munch's newly communicated and existing personality traits

Impulsive Buying Behavior and Pricing

Impulsive behavior occurs when the consumer is looking for immediate hedonic benefits. It is commonly associated with urges to smoke, drink, overspend or overeat. 'Impulsive behavior' is defined by 'Consumers experiencing an irresistible urge to consume', which they might even regret later.

Whether an individual focuses on cost or the benefit of impulsiveness depends on the chronic values of the consumer, which forms the core of its personality. Hedonic personalities will focus selectively on the benefits than the cost of impulsiveness and are considerable uninfluenced by the costs. Hence, such individuals become insensitive to price aspect when their hedonic urge is driving the purchase decision.

Let us explain the growth of the market at the higher end of the spectrum in recent years in chocolate category with this argument. The product offerings on the higher end are of rich chocolate (e.g. silk) based products (associated with taste and pleasure) instead of wafer-based offerings (which serve as a snack). This shows that brands command a better premium when an impulsive urge rather than functional benefits are the prime motivators for purchase.

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Even though chocolate buying behavior is impulsive, research suggests that the relative accessibility of inputs such as costs versus the benefits of impulsiveness influences impulsive behaviour5. Impulsiveness is unaffected by cost highlighting arguments which explains the ineffectiveness of advertisements discouraging cigarettes, alcohol, etc.

When the benefit of impulsiveness was the pleasure of yielding to temptation, the advertisements, that 'triggered the desire' or 'highlighted the benefits of giving in to the temptation' appealed most to the hedonic individuals. However, the prudent personalities give more value to the cost than the benefits. Thus, the benefits are relatively non-influential in judgment. Thus, advertisements that justify the cost of impulsiveness can help provoke impulsiveness in such consumers.

RECOMMENDED MARKETING STRATEGY DESIGN

The market s t rategy of the f i rm i s a complete and unbeatable p lan or an i n s t r u m e n t d e s i g n e d s p e c i a l l y f o r a t t a i n i n g t h e m a r k e t i n g o b j e c t i v e o f company. The formulation of the marketing strategy consists of two steps:-

1 . Segmentat ion & target market se lect ion.2 . Assembl ing the market ing mix .

Market Segmentation and Target Market Selection M a r k e t s e g m e n t a t i o n a n d t a r g e t m a r k e t s e l e c t i o n h a v e a n i n t i m a t e relationship with market strategy formulation.

T h e c o m p a n y m a y f o c u s o n t h e f o l l o w i n g f a c t o r s w h i l e l a y i n g d o w n t h e target market.

1. Geographic Segmentation Geographica l ly the country can be broadly d iv ided into 3 sub segments -Rural, Suburban and Urban.

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In the first phase (after the test launch), Urban parts of the country should be targeted. The chosen segment is targeted because –

•Lack of infrastructure, like refrigeration-not to venture rural markets.•The consumpt ion pattern & behav ior in Rura l Ind ia does not f i t wi th the product attributes and perceived benefits.•The limitation of disposable income is another factor that hampers entry in rural areas.•S e m i - U r b a n m a y b e c o n s i d e r e d i n t h e s e c o n d p h a s e . A n y e a r a f t e r t h e launch.

Within Urban India, the cities with 1 million + population i.e. top 23 metros will be targeted. A soft launch of the brand should be undertaken before taking the brand to these areas. This (test launch) will be undertaken in Bombay, since it(Bombay) is a high consumption city for chocolates. (Source: Nestle (I) Ltd –infect Nestlé’s sales peaked out in Bombay, during its initial launch).

2. Demographic Segmentation The demographic variables have been separately addressed to arrive at the target audience.

•Age:12 years + segment of the population is recommended to be targeted. Smal l k ids may not be targeted, because of the nature of the perce ived product benefit by consumers in that age group, who are inclined towards sweeter and creamier snacks. Further, it may not be easy to get youngsters of f the i r tuck money. A lso , ch i ldren today a l ready have an array of cheap domest ic and internat iona l confect ionery ( in the form of chewing-gums, lollipops, rolls, lozenges and toffees).

•Family Life Cycle: In terms of family life cycle it is addressed at all of the following:1. Young/Single or Married (with/without Kids)2 . Matr icu lates and Col lege goers3 . Marr ied wi th no ch i ldren under 18 .4 . Marr ied o ld couple/o ld s ing le .

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5 . E m p t y n e s t c o u p l e s .

The brand may positioned such that it fits all stages of family life cycle.

•Income: The income segmentation may be all households with an annual income exceeding Rs. one lakh. Targeted audience may be all households that can afford a television or have access to satellite television.

3. Psychographic Segmentation

Social Class: In terms of psychograph the soc ia l c lass targeted i s the educated upwardly mobile urban middle and upper class.Personality Traits:Th is segment essent ia l ly cons is ts of emulators i .e . , upwardly mobile, pioneers, freaky, fun loving type of people. These are the people who like to enjoy life and believe in traveling and adventure.

Life Style: In terms of lifestyle, it may be aimed at those who favor buying convenience products . They are a l so wi l l ing to exper iment wi th a l ternate products in place of conventional food items, as the universe of chocolate consumption is changing from occasion led to more casual consumption.

4. Behavioural Segmentation

The moulded segment of the market is perceived to be the growth engine of the market. Hence, this segment is quite lucrative for a new brand launch. Also, chocolate purchases have moved from being occasion-led to a casual snack. Hence, anytime anyplace snack aspect needs to be established. This segment comprises of people who like to have chances and want to try new things.

5. Learning-Involvement The purchase of a chocolate i s o f a low- invo lvement category . I t i s an impulse purchase and decision to buy is not pre-planned.

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6. Usage Rate T h e m a r k e t m a y b e f u r t h e r s e g m e n t e d o n u s a g e r a t h e r t h a n a t t i t u d e - Anytime Anyplace Snack. This is a group of consumers that find traditional snacks too heavy. Even though a range of chocolates may be offered, a core brand (concentrated strategy mentioned later) may be launched in the count l ine segment . S ince th is segment i s t ipped to be the growth eng ine of the industry (according to industry sources – Mr. Sanjay Verkey, Cadbury’s India and Mr. Bohidar ) and th is segment has a substant ia l share of the market (33%).

TARGET AUDIENCE Following from the above, it is recommended to target consumers who found traditional snacks too heavy. Usage rather attitude is being used to segment. This is the segment that tended to pick up biscuits instead-something they could munch while continuing with their schedule.

There are 181 million urban individuals in India Our target segment is people living in the top 23 metros (1 million +population), which implies 63 million people. Further, SEC A-B in these 23 metros with Cable & Satellite at home are targeted (94.4 % of SEC A-B have a cab le & sate l l i te connect ion) .

SUGGESTIVE MARKETING MIX FOR INTRODUCING A NEW PRODUCT:

The objective of the marketing mix developed is:

“To develop a product that is available, affordable, based on local raw m a t e r i a l , a n d a d a p t e d t o t h e t a s t e a n d t h e n u t r i t i o n a l h a b i t s o f t h e population”.

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The e lements of the mix - Product , Pr ice , P lace & Promot ion have been entailed below:

Product

As ment ioned ear l ier , the two most important segments of the market are Moulded and Count line segment (segments have a high share of the market).Also, it can be seen in the findings, the Indian consumer does not recognize the d i f ference between Moulded and Count l ine segment . Further , a key decision that needs to be taken is to decide whether to have a core brand focus or have a plethora of brands. Here, it would be advisable to launch a complete basket of products covering both the count line and the Moulded chocolate segment (at least i f not Panned) . A range of brands can he lp cushion out risks over the entire offering. Also, it has been that to sustain in the long term, a complete portfolio of chocolates for every taste is essential. However, a concentration strategy may be adopted in the first phase, focusing on one core flagship brand.

The various product attributes have been mentioned below:

•Stipulations regarding the use of Hydrogenated Vegetable Oil-HVO (since it contains nickel) may be adhered to. Nickel in chocolates can cause cancer. However, research is still on to prove this. Product formulation should keep this aspect in mind.

•Packaging:The packages or the cover packs, of the brands can be in Blue, Green and Red color which represents a fun element. The packaging should keep the product crisp, fresh and protected from the harsh climatic conditions in the country, and hence provide a longer shelf life.

•Sizes:A s c a n b e s e e n i n t h e f i n d i n g s t h e m o s t p o p u l a r s i z e i s 4 0 g m s . However, in order to provide a good assortment of offering, the following sizes may be introduced:

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⇒15 gm ⇒35/40 gm ⇒80 gm.

⇒Super Saver (105 gms.)

⇒200 gms ⇒Gift packages: since, chocolates is a very popular gifting option, attractive gift packs may be introduced. The offering is also planned to be distributed through gift shops, hence, attractive packs on the “Swiss Coats” (small local player) concept be developed.

•Any foreign brand formulation needs to be “tropicalised” and hence, adapted to the Indian conditions. Dropping of the “international” formula (Nestle had faced problems because of this as product could not take the Indian heat)may be considered.

•Taste:Since, Indians have a preference for soft chocolates with caramels, wafers etc inside (see findings), and the product should appeal to the Indian pa late by incorporat ing these in the of fer ing . In th is segment there wi l l be d i rect compet i t ion on ly f rom Truf f le . A panel of target consumers may be called in to sample any fresh batch of chocolates, so as to ensure that the product developed appeals to the Indian palate.

The milk and creams in India are different, and workers no way as well trained as abroad. Hence, the product development must keep this fact in mind.

•The product should also have a high shelf life with a good shelf appeal as well. This so since, chocolates is an impulse buy and a good distinct product look can attract a customer.

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Product Differentiation

Since, there exists strong competition from heavy weights such as Nestle and Cadbury’s; the product offering should be well differentiated. Nestle, when it launched i t s chocolate brands in Ind ia , ensured that each brand was wel l differentiated - White chocolate(not conventional brown) with a sugary taste that appealed to k ids , Mi lky bar marb les d i f ferent iated as they had white chocolate centre instead of the brown chocolate core in Gems.

Pricing

Factors like competition, internal costs, and the positioning and corporate objective of the company need to be taken into consideration by a company before pricing a product.

Premium pricing (relative to the competing brands – not designer chocolates), wi th spec ia l emphas is on taste and qual i ty (most important at t r ibutes-see findings) is recommended. The premium pricing does not suggest that the of fer ing i s made unaf fordable to the target consumer . A h igh pr ice would accompany a promise for a better taste and quality. Therefore, the brand(s)’ taste & quality needs to justify the high price.

Further, the product category is relatively inelastic i.e. consumers would not stop buying their favorite brands if the price is increased by a few rupees(see findings). Consumers feel that even if the price of their favorite brand is reduced, they might not buy more of it. Also, there is a general perception of chocolates being “Reasonably O.K.”(See findings).

According to Sarura Business, the high priced (relative to other brands in the market) imported foreign brands have been able to draw a decent response. Primarily, because of their high foreign brand equity.

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As can be seen in the table (on brand comparison –on price, given on the next page), Nestle and Cadbury’s are pitted against each other and Amul is the cheapest brand in the market.

Considering the above, a premium pricing strategy, with the assurance of good quality and better taste, in a market that is not high on price sensitivity may prove to be a success.

It may be noted that the price should be only Rs2/- or Rs 3/- expensive than Cadbury’s or Nestle’s offering. For instance

CDM is priced at Rs 15/- for 40 gms

Nestle’s Milk Chocolate at Rs 13/- for 40 gms

Amul is priced at Rs 10/- for 40 gms

The offering in this segment may, therefore, be around Rs 16/-

While pricing the product, the following duty structure may be considered:

•18 percent excise•Other state levied duties (after excise) such as Sales tax, etc. (which vary from state to state)-within 10 to 20 percent.

Placement: T h e s u c c e s s o f a n y F M C G p r o d u c t t h r i v e s o n d i s t r i b u t i o n . F a c t o r s l i k e f inanc ia l cost e f fect iveness) per i sh ab i l i ty of the product ; repeat orders ; m a n a g e r i a l c a p a c i t y a n d u n i t v a l u e o f t h e p r o d u c t n e e d t o b e c a r e f u l l y analyzed while setting up the distribution framework of the company. The p r o d u c t c a t e g o r y i s e s s e n t i a l l y a “ p u l l ” m a r k e t . H o w e v e r , t h e c h a n n e l members provide greater visibility to the product. This is extremely important s i n c e c h o c o l a t e s i s a l o w i n v o l v e m e n t i m p u l s e p u r c h a s e p r o d u c t . T h e recommended distribution framework has been entailed below:

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Recommended Distribution Logistics

The first task in hand should be, to effectively map the territory into smaller more accessible and controllable units. An effective territory mapping needs tobe done not only to provide an efficient coverage of the market but also to provide growth opportunities to the constituents (stockiest), as the company grows. The recommended distribution chain would be as follows:

The Company

Carrying & Forwarding Agents

Stockiest/ Distributors

Whole sellers

Retailers

Carrying & Forwarding Agents:

These may be appointed at two or more State(s) of operation of the company. Carrying & Forwarding agents work on a c o m m i s s i o n b a s i s – 3 % ( i n d u s t r y n o r m s ) o f t h e g o o d s h a n d l e d . I t i s recommended that the country keeps about 4 to 6 weeks of inventory at the C&F level and a commission structure which is in keeping with the industry n o r m . T h e r e f o r e a 3 p e r c e n t c o m m i s s i o n o n t h e i n v o i c e v a l u e m a y b e provided to the agents.

Stockiest:

A s t o c k i e s t p r o v i d e s a l o c a l d e l i v e r y p o i n t f o r t h e manufacturer/marketer. They store the products, break bulk, and distribute to the retailers. With greater no. of retailers now seeking credit from the retailer, efficient management of collection has become a vital part of the stockiest’ job.

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The main problems that new product faces is that of getting experienced and effective channel members. As existing marketing marketer/manufacturer can p iggy back on the ex is t ing channel s t ructure . A new company wi l l have to provide greater incentives convince channel members to stock the product o f f e r i n g . H e n c e , a n i n n o v a t i v e m e a n s o f c h a n n e l h a n d l i n g n e e d s t o b e adopted:

•C o m p e t i t i v e c o m m i s s i o n t o t h e s t o c k i e s t - a r o u n d 5 . 6 6 % o n t h e i n v o i c e (industry standards 5.66%)

•The efforts of the sale representatives employed by the stockiest to get orders may be supplemented by the manufacturer’s sales force.•Retail outlets to be serviced at least four times in a month (at least once a week)•Distributors (stockiest) to maintain stock of not more than 15 to 20 days•Since, distributors are to maintain air-conditioned go downs, in summers the A/C expenses may be borne by the Co.

•The Merchandiser concept: Merchandisers may be appointed by the company(salary to be borne by the Co.) in order to keep a constant touch, and to “feel t h e p u l s e ” o f t h e m a r k e t . T h e s e m e r c h a n d i s e r s w o u l d a l s o f a c i l i t a t e implementation of various schemes of the co. Regular job would include:

⇒ To check if products have reached expiry,⇒ Proper setting of shelf space

⇒ POP material displays, etc.

⇒More transparent and clearer claims handling policy

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Wholesaler:

Whole seller’s prime concern is buy in bulk and sell at the fastest rate. The aim of any distribution chain of mass-market product category like chocolates would be to expand i t s reach i .e . the no. of out lets s tor ing i t s products . Th is may not be poss ib le even with a wel l estab l i shed stock iest network. Hence, wholesaler’s play a significant role in supplementing the stockiest’ effort send in providing a better reach to the product.

Retail Outlets:

It is extremely important for any chocolate brand to have a wel l entrenched reta i l presence. Reach I the key . Cons ider , Genera l DeConfetaria (marketer of Boomer Bubble gum) having its products available in400000 outlets around the country, and Perfetti with 250,000 outlets. The aim would be to expand the retail network as wide and deep as possible.

A “blitz force” tactic for retail chain enhancement may be followed. A blitz force is a “commando” unit hired to target specific work. About 5 to 10 salesmen, recruited from the same locality will be roped in to penetrate a specific area. Being far more familiar with the area, they are expected to create about 10 to12 new out lets da i ly . Th is task on a later s tage may be entrusted to the distributor’s salesman.

The biggest problem in distributing a product category like chocolates is lack of infrastructure. The product needs to be kept in refrigeration (more so, in summers)-limiting the points at which it is available (ideal temperature needed for chocolates is 18 to 25 degrees). Hence, summer see sales suffer. Demand falls by almost two-thirds in the summer months. To counter this, the Co. can –

•Cool/chilled vans may be operated in summers (for C&F to Stockiest transit of goods). Because of only a seasonal requirement, these may be out sourced.•Insulated boxes, Ice/chilled pads and packs, Ice surrounded Sintex tanks, towels etc may be used to ensure that the product reaches the reta i lers without losing its form.

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•Considering the importance of refrigeration (specifically in summers), Vizzy coolers may be installed. These coolers not only provide refrigeration but also a good POP value. Further, while distributing chocolates, it must be ensured that the brand has a deep retail coverage not a selective presence. Finally, while deciding onto the selling outlets, certain unconventional outlets may be considered. These include –

a. Sweet Shops:The product may be kept at traditional Sweet Shops. More so, during festival times. b. Gift Shops:As the idea of gifting chocolate is becoming more popular among the targeted segment , i t would be prof i tab le to ensure the availability of chocolate chocolates at various gift shops.

c. Stationary/Book Shops:Teenagers, is a lucrative segment with a high consumpt ion rate . They f requent book shops and magaz ine s tores quite often. Hence, making chocolate available at these outlets may be considered.

d. Ice Cream Parlors :In India, ice cream is treated as a fun product and a sweet dish or a desert after meals. Both these attributes match with chocolate consumption habits. Hence, ice cream parlors may prove to be benef ic ia l in prov id ing greater reach to the product . Here aga in , cha ins l i ke Dol lops , etc . may be used in order to fac i l i tate greater reach. A strategic distribution tie-up may be reached with ice cream companies such as Kwal i ty Wal l s , Vadi la l ’ s etc for d i s t r ibut ion of c h o c o l a t e s a l o n g w i t h t h e d i s t r i b u t i o n o f i c e c r e a m s t h r o u g h t h e Vending Trolleys.

e. Fast-food Joints/Restaurants:A s a d i s c u s s e d a b o v e t h a t o n o u r country the chocolates can be served as a sweet after meals, hence separate counters may be installed at various fast food joints such as Mac Donald ’s , N i ru la ’s etc . Th is would prov ide the brand, not just greater visibility but

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also valuable sales. Also, these outlets possessadequate infrastructure to store chocolates.

f. Jewellery Shops:The leading jewellery shops in the city entertain their customers with cold drinks and or tea. These are not suited to all. The complimentary chocolate treat at the particular shop would only status of treating his clients differently and the children folk would also enjoy t h i s s p e c i a l t r e a t m e n t a n d l e a v e f i d d l i n g w i t h t h e p r e c i o u s g o l d garments.

g. Exclusive Chocolate Parlors :As can be seen in the findings, there has been an overwhelming response to the idea of buying chocolates f rom exc lus ive chocolate out lets . Hence, deve lopment of exc lus ive chocolate parlors may be considered.

Promotion:

This involves communicating persuasively to the consumers, in o r d e r t o a r o u s e t h e i r i n t e r e s t i n t h e p r o d u c t . A d e t a i l e d p r o m o t i o n p l a n involving advertisement, sales promotion and public relations is proposed. Positioning:

The pos i t ion ing of the var ious brands in the market has been listed below:

Cadbury’s Brands Positioning Nestle’s brand Positioning

Cadbury’sDairy milk

“The Real Taste of Life”

Classic Milk chocolate

Positioned as an affordable, enriched milk chocolate

Fruit n Nut Positioned atCreamy Bar Adults as anRoast Almond Impulse anytime

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Nut Milk purchaseCrackle Self expressionBoonville Values attached

5 Star / Perk Perk-Positionesed as a snacking consumption.

Kit Kat Positiond as a snacking consumption

Break/Crisp/Double Decker

“Thodi Si Pet Pooja”5Star-Energy Bar

“Have a Break, Have a Kit Kat”

Reach for the Stars Bar One Positioned as a trendy,cool anytime snack

Gems/Eclairs

Positioned asButterscotch Variety, giftingCaramels/Overtures and taste

preferenceNutties/All SilkTiffinsRelish

The flagship brand may be positioned as a premium (see pricing) anyplace, anyt ime snack . S ince , snack ing propos i t ion i s the growth eng ine for the industry , pos i t ion ing should hence, be focused on that . The two dr ivers - impulse purchase and need to snack .

Advertisement Plan The Advertisement plan could be as under:

Corporate objective: The corporate image should be built over a period of time, so as to reinforce consumer confidence in the brands of the company. Th is i s a l so essent ia l to counter compet i t ion, s ince over

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a per iod of t ime, names such as Cadbury’s, Nestle have attained high levels of recognition and assurance.

Advertisement Objectives

•To position the product as a “high quality brand, with a wide range of offering, providing, fun anytime, anyplace products”.•To create awareness about new flavors.•Induce consumer trials.•Build corporate image•To undertake competitive advertisement.

The Budget:

Considering the fact that the market is dominated by big-wigs such as Cadbury’s and Nestle, aggressive competitive advertising needs to be undertaken.

Since both Kit Kat and Perk are allocating 60 to 70 percent of their total ad budget on chocolates, an allocation of about 20 to 25 percent of the projected turnover may be sufficient in the first year. After which about 10 to 12 percent may be used to sustain the brands.

Message: The message design will be consist of following;

•Appeal: Chocolate is basically a fun product and exchange chocolate as gifts i s gett ing popular these days . An EMOTIONAL appeal of “Love” can be designed. Apart from it chocolate can be highlighted by fun elements in life can be positioned as MOOD ELEVATORS. An ASPIRATION appeal would also be helpful.•Presentation: The design of advertisement will be the setup of fun scene like picnic, college, campus, sports. Ground, partly time can be suitable so that people can “Associate” the chocolate with fun.•Message Source: For print media the message source will be the copy part and creative advertisement design. For electronic media, the source will be whole family unit, younger enjoying exchanging and eating chocolate.

Media:

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Print Media: Will be the major magazines read by the target segment i.e.., India today, society, famine, stardust etc.•P.O.P.Material induce impulse purchase.

Electronic Media: Since the whole of target segment watch Satellite TV during pr ime t ime and advert i sement wi l l be featur ing share for 3 or more t ime to leave an impact . Apart f rom i t company wi l l be sponsor ing the fun re lated programmes on DD and Satellite TV.

Public Relations:

I . T h e c o m p a n y w i l l h o l d a p r e s s c o n f e r e n c e a n n o u n c i n g i t s a r r i v a l i n India and will highlight its global achievements.I I . C o m p a n y h a s p l a n t o s p o n s o r e v e n t s l i k e 2 v i z . , s k i i n g r i v e r r a f t i n g , yachting etc.I I I . C o m p a n y w i l l a l s o s p o n s o r f u n b a s e d T V p r o g r a m s .

Sales promotion Activities: To induce consumers to try the new chocolate and to get the product pushed in the market the sales promotion plan should include the following:

Trade promotion:The Company will have to offer lucrative trade promotion schemes, in order to push primary sale. These include incentives to stockiest for push ing the sa le of chocolates . At the reta i l leve l , the fo l lowing t rade promotion measures may be adopted:

•Schemes such as, a certain percent off on the purchase of Rs 5000 or Rs10,000 worth of chocolates.•A box of chocolates free with every dozen purchased.•Shop Displays/Vizzy Coolers –linking them to sales

Apart from these, Window Shelf space may be purchased outright.Consumer Promotion:

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Some of the consumer offers that could be introduced are:1. Free gifts like pen, comics etc., on return chocolate wrapper.2 . M o n e y S a v e r s3. Chocolates in a toy t ruck etc .4 . T h e C o m p a n y c a n a n n o u n c e c o n s u m e r “ c o n t e s t s ” ( w i t h p r o o f o f purchase) with attractive prizes, supplemented by an advertisement campaign.

Point Of Purchase Material: POP is of extreme importance, to a product category like this. This is so, since sales are impulse /casual driven. Hence, heavy point of purchase advertising in the form of danglers, chocolate dispensers, etc. may be used.

Market Testing Plan

The company should test the product before it goes national (23 metros withmillion + population). This is so because:1.It would reduce the risk of failure in the market where it goes national,by validating the marketing mix.2.Fac i l i tate va l idat ion of pos i t ion ing .3.Allow corrective action through incorporation of consumer feedback.

For test marketing the chocolates, the plan may be as follows:

1.Test Objectives: To validate the brand names, new outlets, etc and tomeasure the sales volume, pricing and promotion policy. Competitor reaction can also be analysed.2.The product may be launched in Bombay ( as a soft(test) launch). Thisselection was based on :

•Bombay is uniformally represented by the target segment

•Competitor activity is high. Also, Nestle was able to wrest a significant marketshare from Cadbury’s when it was launched.•Bombay is representative of the target segment.

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IMPLEMENTATION

A w e l l d e s i g n e d m a r k e t i n g p l a n c o u n t s f o r n o t h i n g , i f n o t i m p l e m e n t e d proper ly . Success in the market p lace depends upon the way the p lan i s i m p l e m e n t e d . T h e l a u n c h i s r e c o m m e n d e d t o b e b e f o r e w i n t e r s - s a y September or October, since –

•That period would facilitate high Diwali sales, and

•D u r i n g w i n t e r s t h e r e w o u l d n o t b e m u c h n e e d f o r r e f r i g e r a t i o n . H e n c e company would get valuable time its infra in place.

The success of the brand would largely depend on the following:

•Sales Distribution Network

•Quality standards

•Research and Development-continuous innovative products

•Technology support

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CONCLUSION

The growth and expans ion of the Ind ian chocolate market in the past has -been hampered, due to stiff excise duties on chocolates (at 18 percent – while other agro based products are being charged as low as 8% and a few, even0% excise) and non-availability of quality cocoa in the country.

Also, import of chocolates has been put in the OGL category, with duties being reduced (in a phased manner). The industry has made recommendations to the Indian government to go back to the Special item list category, in order to safeguard the domestic industry.

However , cont inuous market ing focus by the p layers in the market has resulted in the industry looking up like never before. These companies/brands have become much more market savvy . The Ind ian chocolate market i s transforming and new players (Sara Lee is planning to set up base in India)are entering the market. Hence, considering the low per capita consumption of chocolates, the future of the industry seems to upbeat.

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ANNEXURE  

 

 

 

1. Please rank the following attributes in a chocolate on a scale of 1-7

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According to their importance to you? (1-most important, 7-least

Important)

a. Taste

b. Quality

c. Packaging

d. Price

e. Flavour

f. Add-ons (wafer, nuts, etc)

g. Brand image

2. If particular brand is not available with the retailer, you wil-

a. Drop the idea of buying a chocolate

b. Go to another retail outlet

c. Try another (competitor’s) brand

3. You purchase (of a chocolate) is

a. Occasion-led (say on a birthday, etc.)

b. As a gift

c. Casual purchase

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4. If you favourite brand is a few Rs expensive than it is, you would still

Go for it.

a. Yes

b. No

5. A sale promotion scheme like Rs 2/ off, 10gms extra, a candy free, etc.

Would affect your purchase decision.

a. Yes

b. No

6. An ideal chocolate would taste as follows-

a. Bitter

c. Wafer enrobed

d. Caramels, nuts inside

e. High on sweet

f. Any other (please specify)

7. Most of my chocolate purchases are pre-planned.

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a. Yes

b. No

8. What size of a chocolate do you normally buy?

a. 15gms

b. 25gms/30gms

c. 80gms

d. Super saver packs(105gms)

e. 200gms

9. The price of your favourite brand or preferred brand of chocolate is

a. High & expensive 77

b. Reasonably ok

c. cheep

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10. Are you happy with the kind of chocolate brands in India, today?

a. Yes

b. No

11. If the price of your favourite brand is reduced, you will buy more of it?

a. Yes

b. No

12. If you want to buy a wafer chocolate, say kitkat and if it is not available

you would settle for Bar/Moulded chocolate, say 5star or Cadbury’s dairy

milk.

a. Yes

b. No

13. On an occasion I would like to gift a chocolate to a loved one.

a. Yes

b. No

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14. What according to you is the suitable price for a 40 gm. Chocolate which is

Of good quality and flavor(which will be available for the first time).

a. Below Rs.10/-

b. Between Rs.10/-to14/

c. Rs. 14/-toRs20/-

d. More than Rs.20/-

15. Do you consume chocolate

a. Yes

b. No

16. How often do you buy chocolate

a. Per day

b. Week

c. Month

d. No

17. What brand of chocolate are u aware of

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a. Cadbury

b. Amul

c. Nestle

d. Other

18. What influenced you to buy the above stated brands?

a. Advertising

b. Dealer

c. Attracting packing

d. Shop display

19. If a particular brand is not available with retailer. You will?

a. Drop the idea

b. Buy another brand

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20. Ideal chocolate would taste as follow

a. Bitter

b. Wafer enrobed

c. Caramels nuts inside

d. Any other

21. If you buy chocolate?

a. A gift

b. Spouse

c. Children

d. Friends

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BIBLIOGRAPHY

Kotler Phillip, Marketing Management, Millennium edition. (Prentice hall of India).

Business today

Business World,

Business India,

Economic Times

CMIE reports indiainfoline.com

Internet sources

www.indiainfoline.com

www.domain_b.com

www.agencyfaqs.com

www.nil.comwww.cadburys.com

www.web-enable.com/industry/enabling-scm.asp

www.cadbury.co.in

www.financialexpress.com

www.business-shandard.com

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