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Victoria University of Bangladesh

Assignment on

Marketing Strategy of Cadbury

Prepared by

Md. Rabiul Islam

ID: 110917321

Batch: 17th

Prepared for

Panuel Rozario Prince

Course instructor

Strategic marketing

Date of Submission

23 May, 2012

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ContentsEXECUTIVE SUMMARY.........................................................................................................................2

Overview of the Company...........................................................................................................................3

1.1 Market Segmentation............................................................................................................................4

I. Moulded Chocolate Segment..............................................................................................................4

II. Countline Bars Segment.....................................................................................................................5

IV. Choco Panned Segments......................................................................................................................5

V. Sugar Panned Segment.........................................................................................................................6

1.2 BRAND POSITIONING.......................................................................................................................6

1.3 COMPETITIVE ANALYSIS:..............................................................................................................8

1.4 Customer Analysis.................................................................................................................................9

1.5 What is Blue Ocean Strategy (BOS)?.................................................................................................10

2.1 PRODUCT STRATEGY.....................................................................................................................11

2.2 PRICING STRATEGY.......................................................................................................................12

2.3 PLACING STRATEGY......................................................................................................................12

2.4 PROMOTION STRATEGY...............................................................................................................13

3.1 FINDINGS............................................................................................................................................14

3.2 RECOMMENDATIONS.....................................................................................................................15

3.3 CONCLUSION....................................................................................................................................15

BIBLIOGRAPHY......................................................................................................................................16

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EXECUTIVE SUMMARY

Chocolates had its beginnings in the times of the Mayas and the Aztecs when they beat cocoa

into a pulp and made a bitter frothy chocolate out of them. They first became popular in Europe

in a highly unrefined form. Then the Hershey Food Company was the first to bring out

chocolates in the currently popular solid form.

The main ingredient of chocolates is cocoa, grown mainly on the equatorial zones of South

America. The other ingredients that go into the making of chocolates are: sugar, milk solids, and

permitted emulsifiers. Cocoa constitutes nearly 40% of the total raw material cost.

The following report attempts to make a study on the chocolate industry and the position of the

chocolate brand, Cadbury. The brand name chosen is the umbrella brand as we feel that the

corporate name is recognized as a brand, not so much its individual products. The study will

focus on the marketing and advertising strategy employed by Cadbury in the context of the

Indian macro environment and industry structure. The advertising strategy will be studied with

respect to Cadbury's business and marketing objectives. The strategies adopted will be analyzed

for each product offering. The same is followed to a minimal extent for its major competitor,

Nestle, to get an understanding of where Cadbury stands.

The report initially focuses on an examination of the industry environment and the product class.

The report then goes on to analyze the corporate, marketing and advertising strategies adopted by

the selected company and its main competitor. It concludes by looking at the challenges and

recommendations for the industry and the company.

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Overview of the Company

Cadbury is a food product company with interests in Chocolate Confectionery, Milk Food

Drinks, Snacks, and Candy. Cadbury is the market leader in Chocolate Confectionery business

with a market share of over 70%. Some of the key brands of Cadbury are Cadbury Dairy Milk, 5

Star, Perk, Eclairs, Celebrations, Temptations, and Gems. In Milk Food drinks segment,

Cadbury's main product - Bournvita is the leading Malted Food Drink.

Its heritage can be traced back in 1824 when John Cadbury opened a shop in Birmingham selling

cocoa and chocolate. Since then we have expanded our business throughout the world by a

program me of organic and acquisition led growth. On 7 May 2008, the separation of our

confectionery and Americas Beverages businesses was completed creating Cadbury plc with a

vision to be the world's BIGGEST and BEST confectionery company.

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

They operate in over 60 countries

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

They work with around 35,000 direct and indirect suppliers

They employ around 45,000 people around the world

Every day millions of people around the world enjoy the brand

Cadbury is the world's largest confectionery company and its origins can be traced back to 1783

when Jacob Schweppe perfected his process for manufacturing carbonated mineral water in

Geneva, Switzerland. In 1824, John Cadbury opened in Birmingham selling cocoa and chocolate.

Cadbury and Schweppe merged in 1969 to form Cadbury Schweppes plc. Milk chocolate for

eating was first made by Cadbury in 1897 by adding milk powder paste to the dark chocolate

recipe of cocoa mass, cocoa butter and sugar. In 1905, Cadbury's top selling brand, Cadbury

Dairy Milk, was launched. By 1913 Dairy Milk had become Cadbury's best selling line and in

the mid twenties Cadbury's Dairy Milk gained its status as the brand leader.

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1.1 Market SegmentationThis can be done in two ways: product forms and customer based.

With respect to product forms there are five major segments,

I. Moulded Chocolate Segment

This segment constitutes 50% of the total market. Cadbury’s Dairy Milk (CDM) – Cadbury’s

flagship brand – has 50% of this segment market. To position CDM in this segment Cadbury

used the traditional demographic variables of age, socio-economic groups and usage intensity.

CDM was positioned as a product that elders (parents) bought for children. Cadbury has actually

associated itself to enduring and emotional values of love, sharing, parental affection, and

reward. Considering that CDM practically acts as a trend setter for all the brands in this segment,

this limited the positioning of the entire category towards children only.

The Cadbury brands in this segment are CDM, Fruit & Nut, Crackle, Bournville. CDM is

basically the leading brand here, and the others act as an endorser basket for the company.

Nestle forms 25% of this segment and the company’s major brands are Nestle Classic, Nestle

Milk Chocolate and Nestle Crunch.

From around 1993, this segment began showing signs of maturity. This was hurting CDM. This

led to Cadbury attempting to rejuvenate the segment. They changed their core customer from

children to that of the universe: both children and adults. This attempt at redefining the market to

enticing all age groups helped bring about changes in the segment. Today, the notion associated

with the consumption of chocolates is that of casualness instead of just product consumption.

Today, this segment grows at 40% per annum, and is likely to remain an important segment for

further growth.

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II. Countline Bars Segment

This segment forms 33% of the chocolates market. This segment is mostly targeted at teenagers.

Major Cadbury brands are 5-Star, Break, Real, Krisp, and Double Decker. 5-Star is doing well

here (about 50% of the segment) while the rest of the brands act as endorser brands.

Nestle has a minor presence in this category with its product Bar-One.

III. Growth of a Sub Segment: Chocolate Wafers

Chocolate wafers are the new products being offered by chocolate companies today in order to

expand the market. In 1995, Cadbury and Nestle launched Perk and KitKat respectively. These

were wafer–enrobed chocolates in a new context and a different benefit offering.

Internationally, confectionery products like wafer chocolates have a very high tonnage and have

a much bigger future than plain chocolates. Market research and success of these two brands

suggest that consumers are ready for accepting the wafer chocolate proposition. The conviction

of both Cadbury and Nestle towards this segment can be gauged from the fact that both brands

are seeing unprecedented allocation of funds, to the tune of 60% to 70% of the total

advertisement budget of both companies on chocolates.

IV. Choco Panned Segments

This segment forms 4% of the total market and Cadbury has 100% of the market in this segment.

The major brands are Nutties, Caramels, Butterscotch and Tiffins.

All of these brands have been used by Cadbury to drive variety, induce gifting practices and

serve to some specific taste preferences. Cadbury does not advertise these brands. They have

been used as flanker products.

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The opportunity for growth in this segment is high what with the imminent entry of

multinationals like Mars and Hershey’s. This is also likely to pose a threat to Cadbury, what with

its complacency.

V. Sugar Panned Segment

This segment form 15% of the total market and Cadbury has about 98% of this segment, its

major brands being Gems and Éclairs. Éclairs has been used strategically to foster chocolate

consumption among children as well as adults by offering a tiny ‘guilt free, eat no more than a

biteful’ at a convenient price point. Gems is still Cadbury’s primary tool to protect its franchise

in the child segment. It was previously associated in its commercials with the international spy

character, James Bond. Around 1995, Gems was repositioned to broad base its appeal from 3-6

years old to teenagers as well. However this failed due to the product form which has become

deeply rooted with kids and hence the company has reverted back to the target segment of kids

with a new offering of 'Chocogems'.

1.2 BRAND POSITIONING

Cadbury is the perfect expression of spontaneous, happy, joyous feelings. Eating Cadbury

provides the   ‘Real Taste of Life’ experience.

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Positioning is the space occupied by Cadbury in the minds of the consumer. For the chocolate

market, Cadbury is pitted against competitors like Nestle, Amul and substitutes like, chips,

biscuits and other light snacks. Idea of positioning Cadbury is to occupy a distinct space, which

is differentiable, yet powerful.

Cadbury is the perfect expression of spontaneous, happy, joyous feelings.

Eating CDM provides the ‘Real Taste of Life’ experience

1.2.1 Basis of positioning

Cadbury believes in the following when it comes to positioning:

Product based positioning

Strong corporate brand.

1.2.2 Product based positioning

Why?Offers ri ch taste

For whom:Kids, teens, mums, adults, mature adults. (FOR EVERYBODY)

When:All purpose consumable. Gifts , Light snack

Against whom: Competitors like, Nest le, AmulSubstitutes like, Chips, Biscuits .

Cadbury

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Quality/Value Associations with Use Occasion

The quality aspect is hugely

emphasized in Cadbury. Even the

physique, particularly the

visuals(glass and a half symbol)

Cadbury can be consumed anytime

as has been expressed in its

advertisement continuously.

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SubstitutesSubstitutes like IceCreams,potato chips, biscuits, soft drinks,chewing gum, are a source of threat as well as opportunityfor market expansion.

SuppliersMajor raw materialSuppliers are cocoaproducers in LatinAmerican countries.Due to negligibleDomestic production inIndia, suppliers enjoyhigh bargaining power.Milk supply alsofluctuates, therefore, insummer months, milksuppliers gain sufficient bargaining power.

CompetitorsDuopolyBoth the major players haveFinancial muscle to sustain theirBrandsAll players following a pullstrategy.

BuyersSince chocolates do not satisfy anyimmediate needs, it is not anecessary item.Consumer power is very high andconsumers need to be persuadedthrough various positioning planksto consume chocolates.

New EntrantsImminent entry of global majors likeHershey's, Mars etc. is bound to changethe power equation in the Indian chocolatemarket.

Porter's 5 Forces Model

1.3 COMPETITIVE ANALYSIS:

As markets become more receptive to globalization there are chances of more and more MNCs

entering the market? Cadbury needs to maintain its brand equity through regular innovative

advertisements and promotions.

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There is a growing threat from local substitutes. The Sweet shops are reinventing themselves and

coming up with their own versions of chocolates. These find favor with the local tastes and are

available in many varieties.

Both MNC and Local Bakery brands are expanding their operations. Theses bakeries are

manufacturing various verities of chocolates locally with local blends. They do not have to invest

in extensive distribution and have as good quality as Cadbury. Their USP is providing fresh

chocolates. Cadbury has to reinvent its strategies to face such future challenges.

1.4 Customer Analysis

Not all the people are able to enjoy the sweet taste of chocolate equally. There is a profound

dichotomy between groups of people. The main customer in this country is the children. Children

consume most portions of chocolates in Bangladesh. While the adult consumption proportion is

lower than that of children. In here we know children who are 1 to 12 years old.

On the contrary, chocolate consumption in Europe is rising up. Worlds 60% of chocolates are

consumed in European countries. So the customers in Europe are easy to reach and easy to sell

by the companies. European buyers have more bargaining power than countries in Asia do, so

the sales rate goes even higher. Chocolate is a kind of product that is not harmful or even close

to that. Neither banned by any religion, so that makes the market even bigger.

In Bangladesh there are 160 millions of people. And only children and adult eat chocolates.

Because we think chocolate is a symbol of childishness and luxury. We don’t eat chocolates

often. Unlike India, we don’t eat chocolates on occasions. In India, chocolates are bought in

several occasions, like diwali, and other religious festivity. So in India the chocolates consuming

customers are more diverse than in Bangladesh.

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1.5 What is Blue Ocean Strategy (BOS)?Blue Ocean Marketing understands the importance of strategy to bring a business to the next

level. Just as you have invested and are committed to your business, when we work with a client,

we are strategic and tactical about achieving your goals. Blue Ocean Marketing is passionate

about helping our clients to be a success.

A sound strategy is the foundation of successful marketing. It is crucial to understand the goals

of your business and your industry and markets.  “Blue Ocean Marketing” helps you to bring the

key components all together and to develop a well thought out and coordinated marketing

strategy and plan.  The marketing plan is your roadmap for setting the course and direction to

your marketing goals. Without a sound and effective marketing plan, your company runs the risk

of wasting time, energy, and money on actions that produce less than satisfactory results.   It will

develop marketing plan and create a clear vision. In laying the groundwork for your marketing

plan, we put our experience and passion to work for.  Blue Ocean Marketing offers a range of

marketing management services, suitable for any sized business and most budgets.

1.5.1 Fitting with Blue Ocean strategy: Cadbury is not a partner with BOS, so they are not

following every aspect that this strategy states.

BOS is the simultaneous pursuit of differentiation and low cost => Cadbury is trying to

be different than its competitor at low production cost.

The aim of BOS is not to out-perform the competition in the existing industry, but to

create new market space or a blue ocean, thereby making the competition irrelevant. =>

Cadbury is currently competing with Nestle and Mars.

BOS frameworks and tools include: strategy canvas, value curve, four actions

framework, six paths, buyer experience cycle, buyer utility map, and blue ocean idea

index=> Cadbury is not following these tools.

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BOS covers both strategy formulation and strategy execution=> Cadbury formulates and

executes strategy proactively.

The three key conceptual building blocks of BOS are: value innovation, tipping point

leadership, and fair process=> Cadbury knows about innovation of value and its

importance to the customers, so they are trying to add more and more value to its

products.

Chapter Two

2.1 PRODUCT STRATEGY

Satisfaction suffices. But delight dazzles the average company will compete for customer by

conforming to her expectation consistently. But the winner will surpass them by constantly

exceeding her expectation, delivering to her door step additional benefits which she would never

have imagined possible. Cadbury’s offer such product. The wide variety products offered by the

company include:

I. Chocolate & Confectionary

1) Dairy Milk

2) Fruit & Nut

3) 5 Star

4) Break 5) Perk

6) Gems 7) Eclairs

8) Nutties 9) Temptation

10) Milk Treat

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II. Beverages III. Food Drinks

1) Bournvita

2) Drinking chocolate

3) Cocoa

2.2 PRICING STRATEGY

Make no mistake. Second P of marketing is not another name for blindly lowering prices and

relying on this strategy alone to increase sales dramatically. The strategy used by Cadbury’s is

for matching the value that customer pays to buy the product with the expectation they have

about what the production is worth to them.

Cadbury’s has launched various products which cater to all customer segments. So every

customer segment has different price expectation from the product. Therefore maximizing the

returns involves identifying right price level for each segment, and then progressively moving

through them.

Dairy Milk Perk 5 Star Friut and Nut Gems

Break NuttiesBournvita (500 gm) Drinking chocolate

2.3 PLACING STRATEGY

It takes much more time and effort to build, but once built, distribution equity is much together

to erode.

Own distribution network consist of clearing and forwarding (C&F) agents & distribution

stockiest. This network of distribution can either 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 tom improves logistics, Cadbury is also

attempting to improve the distribution quality. To address the issue of product stability, it has

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installed visi colors at several outlets. This helps in maintaining consumption in summer when

sales usually drops due to the fact that the heal effects product quality and thereby off takes.

Cadbury now is available into small confectionary shops to large supermarkets.

2.4 PROMOTION STRATEGY

If an advertisement is to communicate effectively, the receiver must at least half want it to, and

be prepared to take step toward the sender. Effective advertising is rarely hectoring or loudly

explicit.... It often both attracts and generates arm feelings. More often than not, a successful

campaign has a stronger element of the unexpected a quality that good advertising shares with

much worthwhile literature.

To penetrate into the inner recesses of her memory, communication must first ensure exposure,

grab her attention evoke her comprehension, grab her acceptance and then extract retention

competing with thousands of other units of communication trying to do the same.

Finding showed that the adults felt too conscious to be seen consuming a product actually meant

for children. The strategic response addresses the emotional appeal of the band to the child

within the adult. Naturally, that produced just the value vacuum that Cadbury was looking to fill.

Thereafter it was the job of the advertising to communicate customer the wonderful feeling that

he could experience by re- discoursing the careful, unself conscious, pleasure – seeking child

within himself – a graft these feeling onto the Ads.

While with the new launched temptations with the slogan “Too to Share” the communication

resolves around the reluctance of a person who’s got their hand on a bar of temptation to let

anyone else to have a bite. As well as outdoor and radio ads, Ad agency contract has created

communication for cinemas and even ATM machines for the brand.

Something familiar is planned for phone-book as well. In cinemas, Cadbury has a message 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. Éclairs has got potential for much

wide distribution, in a small sweets that airlines, hostels, and up market retail outlet offer to guest

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and customers.

Ad spend in 2000 was about 14% of sales and the management said that plans to maintain as

spend at this level in the current year also.

Ad since any discussion today would be incomplete without mention ‘e’ word, the management

plans to tap this new channel of marketing. Beside three company website (i.e.

www.cadburyindia .com, wwww.bourvita.com, www.cadburygift.com) that the company has

launched, it had also entered into various marketing relationship with other portals, specially

targeted during festivals and events such as Valentine’s Day, etc....

It’s a combination of sniff up its key brand, researching and improving the newer products that

haven’t taken off, supported with high ad – spends that Cadbury hopes will see it emerges

stronger after the current slowdown, as well as expand the market.

Chapter Three

3.1 FINDINGS

CONSUMER RESEARCH

Consumer research deals with consumer and their problems and solution to the problems. In

this I came to know about the consumers need and expectation levels regarding products and

ascertainable levels of consumer satisfaction.

PRODUCT RESEARCH:

Under product research I came to know about the modification which consumers wants as to

the quality, packing, shape, color, and quantity etc of their favorite chocolate.

PRICING RESEARCH:

This includes ability to consume, to pay for the product, how much a person can spend on

his/her favorite chocolate. In this I have tried to find out consumer’s price expectations and

reactions.

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ADVERTISING RESEARCH

Under this I have concluded that whether the advertisement appeals the consumers or not.

This also includes evaluating and selecting the proper media-mix and measuring

advertising effectiveness.

3.2 RECOMMENDATIONS

Cadbury’s major problems are linked to the need for very responsive distribution network

due to the perishable nature of its products. Costs go up and problems like the recent

worm episode arise. What we suggest is a revamping of its distribution network to make

it more responsive.

Indian consumers mainly consume sweets during some festivals. It must come up with

innovative offerings for its chocolates to suit the need during such occasions. e.g.: Come

up with shapes similar to Indian Sweets and package it innovatively reflecting the festival

colors.

Start exploring newer distribution channels like E-tailing where Hi-value chocolates are

sold in specialized packs.

3.3 CONCLUSION

In today’s competitive business environment brands have assumed a role of growing importance.

They can differentiate a company’s products and customer loyalty, helping to sustain profitability

in the long term. The Cadbury Dairy Milk brand has evolved into a Megabrand incorporating a

range of products each with their own identity, but now under the Dairy Milk brand. This

initiative is intended to leverage the strength of the Cadbury Dairy Milk brand to the full. The

strategy involved a packaging and range refreshment strategy which has resulted in a unified

innovative Dairy Milk brand. Having exceeded initial sales tar gets by a considerable margin, the

strategy can be considered a success!

BIBLIOGRAPHY

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Kapferer, Jean-Noel. "Strategic Brand Management". The Free Press. A division of Macmillan,

Inc. 1992 Edition

Kotler, Philip. "Marketing Management" Analysis, Planning, Implementation, and Control

Prentice-Hall, Inc. Eighth Edition

Aaker, David, et al, "Advertising Management"

Internet Sources:

www.cadbury.co.uk

www.india-today.com/btoday

www.cadburyindia.com

www.wikipedia.org/wiki/cadbury

Family brand names:The parent brand is also known as an

opportunities forbrand stretchingandbrand extensions. A br and extensionopportunities forbrand stretchingandbrand extensions. A br and extensionopportunities forbrand stretchingandbrand extensions. A br and extension

A brand pyramid can help manager s plan and analyse a brand’s identity. The top tier of the

pyramid consists of the br and core.

Brand core

Closely related to these values is thebrand proposition: the promiseClosely related to these values is thebrand proposition: the promiseClosely related to these values is thebrand proposition: the promiseClosely related to these values is thebrand proposition: the promise