Description
my project on an analytical study on choclate industry cadburys
ACKNOWLEDGEMENT
“The most awaited moment of a successful completion of an endeavor is always a result of the effort of the people involved explicitly or implicitly in it and it is impossible with the help and guidance” I take this opportunity to express my sincere gratitude to each and every person who gave the help and guidance for preparing this project. I am grateful to Prof. for giving me this
opportunity to do this project and his guidance for such an informative project on “An Analytical Study of Chocolate Industry in India with Special Reference to Cadbury's India.” “Great discoveries and Achievement invariably involve the cooperation of many minds” with the deep sincere gratitude I owe my regards to Cadbury India Limited for giving me valuable time in guiding me not only in carrying out my project work but also in preparing this project work, I would like to thank of Cadbury India Limited for providing me the essential inputs for my project. Last but not the least my heartful gratitude to all those person who knowingly or unknowingly, directly or indirectly supported me or boosted my morale for this project a reality, my strength and inspiration are the blessing of my parents and friends, I owe my success and achievement to them.
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Reeba Mathew (T.Y.B.M.S.)
EXECUTIVE SUMMARY
"An Analytical Study of Chocolate Industry in India with Special Reference to Cadbury's India" is a sweet CHOCOLATE story of chocolates in the hot and humid plains of INDIA, which enlightens us about the size & status of chocolate industry in India. 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 chocolate industry in India has a size of 20000 tonnes and is worth about Rs. 400 crores. The chocolate market has been growing by nearly 35%; however there has been some slowdown in the last two years. The chocolate market is predominantly urban with coverage of 95%. The sales volume have decreased by 5% in the last year and the chocolate market had declined with the average consumption coming down by 25% from 16000 tonnes to the current level of 12000
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in the first quarter of 1997, largely due to the steep hike in excise duties. However, this trend has seen a kind of a reversal in the latter half of 1997.
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 India Limited, to get an understanding of where Cadbury stands.
Cadbury India limited was set up as a wholly owned subsidiary of the UK-based Cadbury Schweppes Overseas Limited. The parent company is the fourth largest in the world chocolate market, after Mars, Nestle, and Philip Morris. They set up operations here as far back as 1948, and will thus be completing 50 years of its existence here. Cadbury’s milk chocolate was first introduced in the Indian market in 1956. It made an immediate impact, quickly becoming the market leader – a success story, even to this day. Cadbury India can be termed as one of the best performing FMCG companies today. Unlike its peer group, which is more of complete food companies, Cadbury is a very niche player with a dominant position in Indian Chocolate
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Confectionery market. This makes it different & more successful in comparison with the peer companies. Now is the period of slowdown in the economy, where FMCG companies are the first ones to be hit upon. Reduction in the real income of the consumer has made its direct impact on the top –line growth of the company. Still Cadbury has been able to drive its bottom- line growth. The reason for the success is the Corporate Governance practiced in the organization. We update its growth, progress and current valuation in this report.
INDEX
SR.NO.
1. 2. 3. 4.
TOPICS
Overview of chocolate industry in India Market size (by value & volume) Major players CADBURY’S INDIA LIMITED
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PAGE NO.
Objectives, Values & Vision Business Market Segmentation Product Positioning Product Life Cycle Product Innovation Pricing
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Promotion Product Category Corporate Strategy Current Scenario CADBURY AND THE WORM CONTROVERSY CADBURY’S FIGHT BACK Success factors of Cadbury’s India Limited SWOT Analysis CASE STUDY
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5. 6. 7. 8. 9. 10. 11. 12.
Marketing Business – Promotion of Chocolate in India Problems and Challenges in Indian Chocolate Industry External Factors affecting Growth of Chocolate Industry in India Growth Opportunities in Indian Chocolate Industry Strategies for Growth and Success of Chocolate Industries in India Conclusion Bibliography
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AN OVERVIEW OF CHOCOLATE INDUSTRY IN INDIA
The chocolate industry in India as it stands today is dominated by two companies, both multinationals. The market leader is Cadbury with a lion's share of 70 percent. The company's brands (Five Star, Gems, Éclairs, Perk, Dairy Milk) are leaders their segments. Till the early 90s, Cadbury had a market share of over 80 percent, but its party was spoiled when Nestle appeared on the scene. The latter has introduced its international brands in the country (Kit Kat, Lions), and now commands approximately 15 percent market share. The Gujarat Co-operative Milk Marketing Federation (GCMMF) and Central Areca nut and Cocoa Manufactures and Processors Co-operative (CAMPCO) are the other companies operating in this segment. Competition in the segment will get keener as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the Indian chocolate pie.
The chocolate industry in India has a size of 20000 tonnes and is worth about Rs. 400 crores. The chocolate market has been growing by nearly 35%; however there has been some slowdown in the last two years. The chocolate market is predominantly urban with coverage of 95%.
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The sales volume have decreased by 5% in the last year and the chocolate market had declined with the average consumption coming down by 25% from 16000 tonnes to the current level of 12000 in the first quarter of 1997, largely due to the steep hike in excise duties. However, this trend has seen a kind of a reversal in the latter half of 1997.
Cadbury India limited was set up as a wholly owned subsidiary of the UK-based Cadbury Schweppes Overseas Limited. The parent company is the fourth largest in the world chocolate market, after Mars, Nestle, and Philip Morris. They set up operations here as far back as 1948, and will thus be completing 50 years of its existence here. Cadbury’s milk chocolate was first introduced in the Indian market in 1956. It made an immediate impact, quickly becoming the market leader – a success story, even to this day.
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PER CAPITA CHOCOLATE CONSUMPTION (in lb) OF FIRST 15 COUNTRIES OF THE WORLD
RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
COUNTRIES PER CAPITA CONSUMPTION SWITZERLAND AUSTRIA IRELAND GERMANY NORWAY DENMARK UNITED KINGDOM BELGIUM AUSTRALIA SWEDEN UNITED STATES FRANCE NETHERLANDS FINLANDS ITALY
(in lb) 22.36 20.13 19.47 18.04 17.93 17.66 17.49 13.16 12.99 12.90 11.64 11.38 10.56 10.45 6.13
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INDIA, stands nowhere even near to these countries when compared in terms of Per Capita Chocolate Consumption. The Indian chocolate industry is extremely fragmented with a range of products catering to a variety of consumers. We have the bars/slabs, jellies, lollipops, toffees and sugar candies. Given India's mammoth population, it comes as a surprise that per capita chocolate consumption in the country is dismally low - a mere 20 gms per Indian. Compare this to over 7 kgs in most developed nations. However, Indians swallowed 22,000 tonnes of chocolate last year and consumption is growing at 10-12 percent annually. The market size of chocolates was estimated to be around 16,000 tonnes, valued around Rs.16 billion in 1998. Volume growth for which was over 20% pa in the 3 years preceding 1998, slowed down thereafter. Both chocolate and sugar confectioneries have abysmally low penetration levels, in fact, even lower than biscuits, which reach 56 per cent of the households. Market growth in the chocolate segment has hovered between 10 to 20%. In the last five years, the category has grown by 14-15% on an average and will expect it to continue growing at a similar rate in the next five years. The market presently has close to 60mn consumers and they are mainly located in the urban areas. Growth will mainly come through an increase in penetration as income levels improve. However, almost all of this consumption is in the cities, and rural India is nearly 'chocolate-free'. But the fact is that three quarters of Indians live in Rural Areas. "Average summertime temperatures reach 43 degrees
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Celsius in India. Chocolate melts at body temperature of 36 degrees." Per capita consumption of chocolates in India is minuscule at 20gms in India as compared to around 5-8 kgs and 8-10 kgs respectively in most European countries. Awareness about chocolates is very high in urban areas at over 95%. Growth of other lifestyle foods such as malted beverages and milk food have actually declined by 3.7 per cent and11.7 per cent, however the CHOCOLATES continue to grow at the rate of 12.6%.
Low priced unit packs, increased distribution reach and new product launches can be said to have fuelled this growth. The launch of lower-priced, smaller bars of chocolate in the last two years and positioning of chocolate as a substitute to traditional sweets during festivals, have boosted consumption. This is also because chocolate, which was considered to be an elitist food, has caught the fancy of buyers looking for a lifestyle item at affordable cost. Till recently, chocolate consumption had been restricted by low purchasing power in the market. Chocolates and other cocoa-based snack foods were looked upon as food suitable only for the well-off. After economic liberalization in 1991, major changes have occurred in food habits, partly on account of rise in gross domestic product (GDP) growth and higher purchasing power in the hands of the middle-class representing a third of the total population. Availability of chocolate products has also exploded. A study had projected that sales of the Indian chocolate industry would rise from $125/$130 million in 1998 to $175/$180 million by the year 2000 and to $450 million by the year 2005 which ACTUALLY happened irrespective of various negative factors. Per capita chocolate consumption continues to be low at about 200g per person, being mainly consumed in urban areas. In the middle and higher
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income groups, 70 per cent of children, 43 per cent of young adults and 16 per cent of adults consume chocolate.
CHILDREN ADULTS YOUNG ADULTS
55% 12% 33%
CHOCOLATE CONSUMPTION STRUCTURE OF INDIA – 2004
CHOCHOLATE & CONFECTIONERY MARKET OF INDIA 2004
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TYPES OF CHOCOLATES
Depending on what is added to (or removed from) the chocolate liquor, different flavors and varieties of chocolate are produced. Each has a different chemical make-up, the differences are not solely in the taste. 1. Unsweetened or Baking chocolate is simply cooled, hardened chocolate liquor. It is used primarily as an ingredient in recipes, or as a garnish. 2. Semi-sweet chocolate is also used primarily in recipes. It has extra cocoa butter and sugar added. Sweet cooking chocolate is basically the same, with more sugar for taste. 3. Milk chocolate is chocolate liquor with extra cocoa butter, sugar, milk and vanilla added. This is the most popular form for chocolate. It is primarily an eating chocolate
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4. Cocoa is chocolate liquor with much of the cocoa butter removed, creating a fine powder. It can pick up moisture and odors from other products, so you should keep cocoa in a cool, dry place, tightly covered.
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THERE ARE SEVERAL KINDS OF COCOA • Low-fat cocoa has the most fat removed. It typically has less than ten percent cocoa butter remaining. • Medium-fat cocoa has anywhere from ten to twenty-two percent cocoa butter in it. • Drinking or Breakfast cocoa has over twenty-two percent left in it. This is the cocoa used in chocolate milk powders like Nestle's Quik.
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Dutch process cocoa is cocoa which has been specially processed to neutralize the natural acids in the chocolate. It is slightly darker and has a much different taste than regular cocoa.
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Decorator's chocolate or confectioner's chocolate isn't really chocolate at all, but a sort of chocolate flavored candy used for things such as covering strawberries. It was created to melt easily and harden quickly, but it isn't chocolate.
? CATEGORIES OF CHOCOLATES Commercial Chocolates are available in the following forms: • • • • • Bars or Moulded Chocolates Counts Panned Chocolates (Gems) Eclairs Assorted Chocolates
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Bars or moulded chocolates (like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premium, and Nestle Milky Bar) comprise the largest segment, accounting for 37% of the total chocolate market in volume terms. Wafer chocolates such as Kit-Kat and Perk also belong to this segment. Panned chocolates accounts for 10% of the total chocolate market. Wafer chocolates such as Kit-Kat and Perk also belong to this segment.
? FORMS OF CONSUMPTION Pure Chocolates • • • • Toffees Cakes & Pastries Malted Beverages Wafer Biscuits & Baked Biscuits
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Chocolate Desserts
MARKET SIZE (BY VALUE & BY VOLUME)
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The Indian chocolate market is valued at Rs.650 crores (i.e. Rs.6.50 billion) a year. The Indian chocolate bazaar is estimated to be in the region of 22,000-24,000 tonnes per annum, and is valued in excess of US$ 80 million.
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Chocolate penetration in the country is a little over 4 percent, with India's metros proving to be the big draw clocking penetration in excess of 15 percent. Next, comes the relatively smaller cities/towns where consumption lags at about 8 percent. Chocolates are a luxury in the rural segment, which explains the mere 2 percent penetration in villages.
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The market presently has close to 60mn consumers and they are mainly located in the urban areas.
MAJOR PLAYERS
? The major players in the Indian Chocolate Industry are:
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• • • •
CADBURY’S INDIA LIMITED NESTLE INDIA THE GUJRAT CO-OPERATIVE MILK MARKETING FEDERATION (CAMPCO) (GCMMF) - AMUL COCOA MANUFACTURES AND PROCESSORS CO-OPERATIVE
Two giants - Cadbury and Nestle, dominate the combined chocolate and éclair market. Together they have a 90% share of the entire market. Amul holds a 5% share, and is present only in the moulded chocolate segment of the market.
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CADBURY’S INDIA LIMITED
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CADBURY’S INDIA LIMITED
Cadbury is a very old trusted name. It all started in Birmingham in England when John Cadbury started his family grocery shop with side business of cocoa and chocolate products in around 1824. His two sons, Richard and George, expanded their family business of cocoa and chocolate. Bournville, a town near Birmingham, was build by them as a part of expansion of their business. Cadbury family is also known for their contribution in social reforms and considered as liberals. This family was in the forefront of adult education movement in England. Cadbury was originally incorporated as a wholly owned subsidiary of Cadbury Schweppes Overseas Ltd (CSOL) in 1948. The company's original name was Cadbury Fry (India) Ltd. In 1978, CSOL diluted its equity stake to 40% to comply with FERA guidelines. In 1982, the name was changed to Hindustan Cocoa Products. CSOL's shareholding was increased to 51% in Jan '83 through a preferential rights issue of Rs700mm. The current name was restored in Dec '89. In 2001, Cadbury Schweppes made an open offer to acquire the 49% public holding in the company. The parent holds over 90% of the equity capital after the first open offer. A second open offer has been made to buyback the balance shareholding, after which the company would operate as a 100% subsidiary of Cadbury Schweppes Plc
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Ever since the Cadbury is in India in 1947, Cadbury chocolates have ruled the hearts of Indians with their fabulous taste. The company today employs nearly 2000 people across India. Its one of the oldest and strongest players in the Indian confectionary industry with an estimated 68 per cent value share and 62 per cent volume share of the total chocolate market. It has exhibited continuously strong revenue growth of 34 per cent and net profit growth of 24 per cent throughout the 1990's. Cadbury is known for its exceptional capabilities in product innovation, distribution and marketing. With brands like Dairy Milk, Gems, 5 Star, Bournvita, Perk, Celebrations, Bytes, Chocki, Delite and Temptations, there is a Cadbury offering to suit all occasions and moods. Today, the company reaches millions of loyal customers through a distribution network of 5.5 lakhs outlets across the country and this number is increasing everyday. Cadbury India limited was set up as a wholly owned subsidiary of the UK-based Cadbury Schweppes Overseas Limited in July 1948. They started off by setting up production facilities at Thane to manufacture chocolates, malted foods, cocoa powder and drinking chocolate using the technical know how of the parent company.
The company, which has experienced a 13% rise in turnover (1996-97) to Rs.354 crores, has ambitious plans to double its sales within three years time. The company has manufacturing facilities at Malanpur and Induri. During 1997, the
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company invested Rs.80 crores in the two factories. At Malanpur, the capacity of Eclairs (one of the Cadbury range of products) production was increased, a new wafer line was installed, and the chocolate making capacity was increased. This increase is from 7000 to 17000 tonnes. At Indri, a new molded line was installed to manufacture center filled molded in orange and coffee Truffle.
Cadbury is the market leader in the Indian chocolate market with a share of 70% and sales of around 12000 tons. It has successfully differentiated its product over the years by strategic brand building. The company had realized that chocolates by itself do not satisfy any immediate needs (soft drinks would satisfy thirst, ice cream would provide relief from heat), so they would have to be associated with human feelings of romance, magic, love and affection. So it had at one point of time employed emotional attachment as basis of differentiation. This has lately been modified to including the rational perspective so as to catalyze increased consumption of chocolates within the family. The key business objective of the company today is to 'continuously provide products that are value for money'.
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? On analyzing the market, the phenomenal success of the
company can be attributed to:
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The pioneer advantage - The company was the first to enter the
Indian market, as early as 1956. For a long time, it was practically the only dominant player in the market. It, therefore, enjoyed a large share of both customer’s heart and mind. So much so that for an entire generation, chocolate was synonymous with Cadbury. It is only recently that the company has started facing some threat from Nestle.
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A strong endorser brand - Cadbury realized early that volumes
would not be enough to support all its brands with heavy advertisements. Hence what they were to take CDM as the flagship brand and advertised it heavily to popularize the brand name to help the flanker brands around CDM. But in the last two years the company has spent extensively on the chocolate wafer segment (without treating it as a flanker brand of CDM), seeing as how the segment has been growing phenomenally.
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Right product formulation - the climatic conditions and the Indian
taste are very different from the western markets where the company first started its operations. Cadbury was able to successfully reformulate its product as per the Indian conditions, while entrants like Nestle could not do so.
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Presence in all segments – Cadbury has a presence in the entire
range, starting from low priced hard boiled sweets and sugar confectionery to the premium range of chocolates. The company also claims success in all these segments it has been entering recently.
The following is the list of the major brands of the company:
Cadbury’s Dairy Milk Cadbury’s Gems Cadbury’s Nutties Cadbury’s Crackle Cadbury’s 5 Star Cadbury’s Relish Cadbury’s Mr. Pops Cadbury’s Eclairs Cadbury's Picnic Cadbury's Truffle Cadbury's Gold Cadbury's Bournville
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Cadbury's Tiffins Cadbury's Butterscotch Googly Mocka
The Chocolate Chronology
The following is the analysis of how the chocolate industry evolved in India. • • • • • • • 1956 - Cadbury's milk chocolate launched 1957 - Cadbury's 5-Star launched 1970 - Cadbury's Eclairs launched. 1974 - Amul chocolate launched 1986 - Cadbury's Milk Chocolate relaunched as Cadbury's Dairy Milk (CDM). 1990 - Cadbury launches premium chocolate brand Overtures 1991 - Nestle chocolates launched. Cadbury counters Nestle's entry with All Silk, and unfurls huge consumer promotion campaign. CDM revamped. Nestle launches Milkybar; Cadbury counters Creamy Bar.
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1994 - Cadbury's 'Real Taste of Life' and 5-Star's 'Reach for the Stars' campaign launched. Eclairs revamped and renamed Dairy Milk Eclairs.
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1995 - Cadbury launches Perk, preempting Nestle's KitKat. Overtures are withdrawn.
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1997 – Cadbury launches Truffle 1998 – Cadbury launches Gold, Picnic. (All these launches actually took place in the month of December, i.e. Dec’96 and Dec’97 to be more precise, in keeping with the company policy of launching the new brands at the New Year eve. However they hit the market in the month of January only)
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OBJECTIVES AND VALUES OF CADBURY’S INDIA
? OBJECTIVES • • • Grow shareholder value over the long term. Cadbury in every pocket. Our marketing strategy is aimed at achieving this vision by growing the market, by appropriate pricing strategy that will create a mass market and to have offerings in every category to widen the market.
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VALUES • • • • • Setting stretched financial objectives. Adopting Value Based Management for major strategic and operational decisions and business systems. Creating an outstanding leadership capability within our management. Sharpening our company culture to reflect accountability, aggressiveness and adaptability. Aligning our management rewards structure with the interests of our shareowners.
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VISION • • • • • • • • • Life Full Of Cadbury Cadbury is an organization which impacts and interacts with the consumers. Cadbury is present in most happy occasions in the life of our consumer. Our brands excite our consumer. Cadbury is an expression of a consumer's life. Cadbury Full Of Life Cadbury as a company is vibrant. Cadbury is a fun and energizing workplace. Cadbury is robust and alive.
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BUSINESS
Cadbury dominates the Indian chocolate market with above 65 - 70 % market share. Besides, it has a4% market share in the organized sugar confectionery market and a 15% market share in milk/ malted foods segment.
CONTRIBUTION TO TURNOVER
CHOCOLATE SUGAR CONFECTIONERY FOOD DRINKS
1994
59% 9% 32%
2001
65% 10% 24%
Cadbury's Indian operations are not just the largest in Asia but also the cheapest. In India, Cadbury has the largest market share anywhere in the world and has been the fastest growing FMCG Company in the last three years with a compound annual growth rate of 12.5 per cent.
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MARKET SEGMENTATION
? This can be done in two ways: • • product forms customer based.
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With Respect To Product Forms
There are four major segments in the Indian Chocolate Industry:
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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. Amul attempted to expand the category by bringing in teenagers, but it was not successful. 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. Today, this segment grows at 40% per annum, and is likely to remain an important segment for further growth.
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•
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.
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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. Both chocolates had a snack positioning. Perk offered the anytime anywhere snack proposition – ‘Thodi si Pet Puja’, whereas KitKat tried to promote snacking through ‘Have a break, Have a KitKat. The growth rate of this segment is 15-20% annually, and is estimated to be worth over Rs.100 crores, making it a very lucrative segment. 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 Indian 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.
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A new entrant in this category is Cadbury's Picnic – it is a three layered chocolate coated wafer bar with dry fruit, caramel, and crispies, priced at Rs. 14 for a 40 gm. Bar. Picnic will be used no only to expand the functional segment of the market, but also to counter KitKat and other imported bars (Snickers, Mars, and Lion). As against Perk, which is positioned as a light snack, Picnic is positioned as a heavy near meal substitute. In keeping with the company's new strategy of expanding the market, this product has been launched to develop the snacking area in the chocolate market. Cadbury is hoping to grab a 10% market share with Picnic.
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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. The opportunity for growth in this segment is high what with the imminent entry of multinationals like Mars and Hersheys. This is also likely to pose a threat to Cadbury, what with its complacency.
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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 Eclairs. Eclairs have 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. (65% of Eclairs eaters are from the households earning less than Rs.4000/- per month.) 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 olds 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'.
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? With Respect To The Consumer Buying Power
These are: 1. High income customers (price greater than Rs.25 for 40 gm.) who will go in for premium chocolate brands. 2. Middle income customers (price between Rs.10 – 25) who are price sensitive. 3. Children, who are mostly price driven and will consume more of toffees in the price range of Rs.0.50 – 1.
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? Psychographics And Demographics
This is attempted in terms of the consumers. 1. High income customers – it is estimated the age group buying the chocolates will be 22 onwards. The income level is estimated to be Rs.8000 per month. The customers are mostly urban, and are mostly professionals (engineers, doctors, executives, etc.) The psychographic profile: They can either be individuals indulging themselves, or they could be indulging their children. They are inner directed people who form their own values and norms and believe in not adhering blindly to social norms. They are somewhat occasion driven in their buying behavior. 2. Middle income customers – it is estimated that the age group in this segment will be 15 plus. The income level is estimated to be around Rs.5000 per month. The consumers can be urban, semi urban, and is currently spreading to rural areas. The psychographic profile: they are likely to be variety seeking in their behavior. They are self expressing by nature and inner directed to an extent. They like to indulge themselves. 3. Children – the upper age limit is estimated to be 12 years. They mostly purchase their chocolates with their pocket money. The consumers can be urban, semi urban, and rural, though their is a somewhat greater emphasis on urban. The psychographic profile: they are novelty seeking in behavior. They are also fun loving.
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PRODUCT POSITIONING
The differentiation planks used in the Indian chocolate market are:
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Product quality (levels of fat/cocoa): e.g., KitKat though priced higher, sells more than Perk, presumably due to quality.
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Chocolates with additives like fruits and nuts. Packaging: this being predominantly an impulse driven purchase category, packaging is an important mode of attracting attention at the display counter.
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International heritage of the product: e.g., KitKat is selling somewhat due to its international fame.
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As a gift item. As a snack (Note: The importance of positioning chocolates as a gift item has been receding in recent times. Now, a greater emphasis is placed on positioning chocolates as a snacking item or as a near meal substitute)
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Size (e.g., small sizes to increase trial rate): this is gaining tremendous importance today since the companies, in a bid to offer chocolates at affordable prices, are reducing their pack sizes.
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Shape (e.g., chocolates in shape of toys targeted at children). e.g., chocolates for Christmas season, by Cadbury's, which were shaped as Mickey Mouse; this was successful for the season. Also the shape has to be such that the product is sharable. This has been attributed as a major reason for success of third relaunch of KitKat.
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• Cadbury's Dairy Milk (CDM):
Cadbury's Dairy Milk is the flagship brand of Cadbury's not only in India but world wide. CDM is the single largest selling unit in India. It has annual sales to the tune of Rs.200 crore. CDM not only accounts for 30 per cent of the total chocolate market in value, but commands nearly 26 per cent in volume terms and close to 30 per cent of Cadbury's annual turnover. Moving from a predominantly adult positioning in the days of the legendary dancing girl ad, to the teens and the tweens, when the Cyrus Broacha ads hit the airwaves, CDM has made a long sweet journey. In spite of the new categories being explored by Cadbury, its star brand remains Cadbury Dairy Milk (CDM) which continues to corner almost 30 per cent of the chocolate market.
• Cadbury's Temptation:
Cadbury's Temptation is premium chocolate brand aimed for high value consumption. Various variants available are Almond, Rum, Cashew and Orange. Cadbury's temptation is priced at Rs.40
• Cadbury's Celebration
Cadbury India launched its premium Celebrations range, which contains traditional Indian dry fruits wrapped in Dairy Milk chocolate. This gifting option combines the pleasure of giving away dry fruits - which Indians traditionally consider a premium, healthy gift - with chocolate. Cadbury now has 90 per cent market share in this profitable segment
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PRODUCT LIFE CYCLE
In 1993-94, it looked that chocolates had completed the mature of PLC and was passing through its decline stage. In 1992-93, volumes had fallen by 15.6% and in 1993-94 volumes fell by 17%. As a result, in the period the total tonnage decreased from 12,000 tones to 8,000 tones. Everybody was sure that this industry was on the way to demise, but industry leader Cadbury (with around 70% --market share) bounced back in 1994 when cocoa prices again fell to their normal level. The company also changed its positioning which had been safely nurtured over many years that lead to a dramatic growth in tonnage from 10,000 tones to 16,000 tones in period 1994-96. However, there was another increase in the prices of cocoa, which led to the decline in the sales till early mid 1997. Since then the cocoa prices had stabilized leading to a reversal in the declining trend. Thus, PLC for the category can be described as scalloped PLC as industry moved back from mature stage to growth stage. The PLC graph as revealed by the industry is shown in the figure.
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PRODUCT INNOVATIONS
• 5 STAR: Consumer feedback suggested that the old 5 Star was too chewy, and people complained of it sticking to their teeth. It was made softer and melted easily in the mouth & introduced as 5 Star Crunchy
• PERK: Perk was made much lighter and the size of the bar increased to match Nestlé’s Munch. Perk had been under fire from Nestlé’s deadly duo of KitKat and Munch, but after the relaunch, its market share is two per cent more than KitKat's. And, the five-year-old brand is now almost as big as the decades-old 5 Star in size, both in the region of Rs.50-55 crore
• HEROES: Packaging innovation has played a vital role in revamping of various Cadbury's brands. Heroes brand is simply a multi-pack with miniatures of all its most popular brands in a single outer case.
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PRICING
After the roaring success of Nestlé’s Munch and Chocostick, Cadbury's empire struck back hard. The Rs.5 price point accounts for more than half of all chocolate sales. Nestle had seized the initiative at this price point, with its launch of Munch, now a roaring success (and the largest selling product at that price point). Today, Cadbury has four products at this price point: CDM, Perk, 5 star and Gems- and the five-rupee CDM bar is its single largestselling. "This is a potent price point in India, because the average purchasing power is abysmally low," is what industry analyst has to say. Nestle kicked off one of the biggest success - the liquid chocolate category with its brand Choc stick priced at Rs.2 - three months ahead of competition. Cadbury did react with Chock, priced at Rs.2, expanding the concept of sachetisation to new frontiers. Chocki has been the single biggest growth driver for Cadbury as well as the entire chocolate category. The novelty of the format endeared itself to the existing customer. In less than one year, it constituted nearly 10 per cent of the total chocolate market, split equally between Cadbury and Nestle. Volume led growth strategy Cadbury has followed a well-planned strategy of fuelling volume growth by introducing smaller unit packs at lower price points. Simultaneously, the company seems to have astutely juggled with the larger pack sizes and raised prices to a degree higher than what appears at face. The strategy has driven volumes in the last two years and we expect the volume growth to continue in the next two years. Chock, selling at a potent price point of Rs.2 was ideal for smaller towns, especially since it did not need refrigeration. But Chock started to cannibalize other higher-priced chocolates in larger markets. The students of Bombay Scottish (an up market school in Mumbai) are not supposed to eat Chocki, they should not have even heard of the product.
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•
Distribution: Chocolate needs to be distributed directly, unlike other FMCG products like soaps
and detergents, which can be sold through a wholesale network. 90% of chocolate products are sold directly to retailers. Distribution, in the case of chocolates, is a major deterrent to new entrants as the product has to be kept cool in summer and also has to be adapted to suit local tropical conditions. Cadbury's distribution network used to encompasses 2100 distributors and 450,000 retailers. The company has a total consumer base of over 65 million. Besides use of IT to improve distribution logistics, Cadbury is also attempting to improve distribution quality. To address the issues of product stability, it has installed VISI coolers at several outlets. This helps in maintaining consumption in summer, when sales usually dip due to the fact that the heat affects product quality and thereby off take. To avoid cannibalization of its higher priced products from lower priced ones, Cadbury is setting up two separate distribution channels - one for CORE business & other for MASS markets, with different stockists, wholesalers and retailers. One set will be dedicated to Cadbury's high-end products and traditional chocolates. The other will cater to the mass market brands namely Chock, Halls, Eclairs, and etc al - all products priced below Rs.3. But today, Cadbury's distribution network reaches out to six lakh outlets each for its chocolate & confectionery brands (i.e. total reaching12 lakh outlets).
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At the outset, the chocolate market appears to be price-sensitive. This is starkly brought out in the following cases: 1) When the excise-duty on chocolates was raised from 16.5% to 27.5% and cocoa prices rose by 25%in 1992-93, the retail prices went up by 30%. As a result, the sales and consumption fell by more than 30% in the next two years. 2) The major players have successfully launched small-size packs of chocolates. Keeping in mind the price sensitive nature of the market, the companies are reducing the pack sizes to be able to offer chocolates at affordable prices, and fit them to a Rs.6-8 bracket. Due to the broadbasing of the chocolate market there is a drive towards smaller, convenient packs for a larger audience and it also increases trial. However, the upper segments of the consumer base are not price-sensitive. For example, a chocolate like Kit-Kat, which is, priced 30% above its rival Perk, has a similar market share of 8%.
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PROMOTION
Typically it is said that chocolates are being eaten when everyone is happy. And this is something advertising has always portrayed. But it is found chocolates are eaten under diverse conditions and moods - when people are anxious, when they are sad, when happy - a whole range of emotions. Condensing these views & thoughts, it can be said chocolate is a true soul mate. Someone who is with you through the ups and downs of life, helping you bounce back. And that's what Cadbury's Dairy Milk (CDM) positioned itself as - a special friend. Cadbury had embarked on a strategy which involves increased consumption of its products through enhanced reach, affordability and visibility, which it feels, can be attained by creating new markets, widening the depth of its distribution network and working towards a comprehensive portfolio with brands across all price segments. On the distribution front, the company increased the number of its distribution outlets from the present 4 lakhs to 5 lakh by the year 2000. To attain the objectives of affordability, over the past two years, Cadbury has been changing its product portfolio from pure chocolate items to confectionery, which includes caramel, nuts, raisins and wafers. The aim is to bring down the price line and enter other markets than the purely urban ones. In line with this, it launched Googly in early 1997, and followed it up with products like Mocka and English Toffee. The strategy of the company has been to launch one major product and follow it up with smaller products, for instance, the launch of Picnic was followed by Cadbury Gold and a couple of sugar confectionery launches.
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Intense competition from Nestle is one of the reasons Cadbury has re-worked its product range and made efforts to enter the mass product segment. In 1998, the company moved into smaller sized versions of Diary Milk and Perk and found to its delight that the introduction of economy priced models led to more people eating chocolate. In the same year, small packs increased chocolate volumes of Cadbury by 19 per cent and market. Nestle, with a 20 per cent share in the chocolates market responded with Munch, a chocolate brand came to counter Picnic. Cadbury Dairy Milk chocolate was first introduced in the early 1900s; it made an immediate impact quickly becoming the market leader. The success story has continued. It is still the top selling chocolate brand in the country and the Cadbury Mega Brand's broad family of products today has an international retail value approaching US$ 1 billion. As an international brand, Cadbury Dairy Milk carries the same distinctive image all over the world. Wherever you buy a bar of Cadbury Dairy Milk, the pack design will be exactly the same, only the language will be different.
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THE PRODUCT CATEGORY
? Needs satisfied by product category In its present form chocolate fulfills many needs by satisfying a state of felt deprivation of some basic satisfactions. They satisfy basic physiological needs like need for food and also some socio-psychological needs like belonging, affection, social and inspirational needs. However, not all the chocolate variants may satisfy all the needs and there may be certain variants taking care of some specific needs.
• Food ? ? ? Hunger Sweet tooth gratification Taste Chocolates may be used to satisfy the basic need of hunger. In India they are neither typically seen as having wholesome and nutritional food value nor are they perceived as stomach filling. Some of them were positioned as an instant energy provider but they also were given some emotional overtones along with the rational appeal of food. The snacking concept has just caught up in India with the introduction of wafer chocolates and there also they are used to satisfy only small pangs of hunger and are used as a between meal snacks. This concept has gained more importance and with the launch of Picnic in the last year, chocolates are now intended to be used as near meal substitute. It is also used by many users as dessert; however it has still not substituted the traditional dessert of sweets. Nestle, to counter this has brought out 'Mithai Magic'. Also, Nestle has already come up with its chocolate 'After Eight', positioned as a desserts, and we foresee that with the changing taste if the consumers, this might be a lucrative market in the future.
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• Belonging: The consumption of chocolates in India is now days seen as contemporary and trendy. The chocolate consumption is identified with the feeling of self-expression and spontaneity. Many young people nowadays therefore eat chocolates to have a feeling of belonging to a group which is trendier, free from inhibitions imposed by society. Not only are the younger people, in the current scenario, chocolates also targeted at the child ego state of the adults.
•
Affection: Human being by nature wants to get affection and return it. In India many parents
have traditionally purchased chocolates for their children to show their love and affection. There was a time when the chocolate industry was primarily thriving on the satisfaction of this emotional need. This emotional platform is now being modified to incorporate the rational platform.
• Social: There were many people who want to become a part of the strata of society which is westernized and upwardly mobile, exchange chocolates as gifts (on festivals). For example, Cadbury was a pioneer in starting the concept of 'Chocolate Days' and 'Eclair Days' in colleges and schools, which led to substantial increase in the sales, which enabled the company to give discounts upto 20%.
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• Aspiration: A segment of consumers who cannot afford chocolates and generally consume sugar confectionery, sometimes eat chocolate eclairs (a product which gives taste of chocolate at far less price) as they aspire to eat better things in life like chocolates. This satisfies his aspirational needs.
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? Consumer Buying Behavior In Product Category
The product category comes under Fast Moving Consumer Foods (FMCG) and the product is generally purchased as a convenience good. The general characteristics of this product are: It is a low involvement product, but there are significant differences in various brands in market. The following matrix may help in studying the behavior of consumer for this particular product category.
High Involvement Significant differences Between brands Complex buying behavior
Low involvement Variety seeking behavior * chocolates
Few differences Between brands
Dissonance reducing buying behavior
Habitual buying behavior
In this category, consumers are often found to do a lot of brand switching. Although the consumer expects some benefits from chocolates, but he chooses a brand without much evaluation, and evaluate it during consumption only. But next time, quite often he may reach for another brand out of boredom or a wish for a different taste. Brand switching occurs for the sake of variety rather than dissatisfaction.
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Since Cadbury has 70 % of market share, this variety-seeking behavior had not affected its sales negatively. This had been possible due to various factors like lack of strong competition. However, with the new entrants in the market, there has been stiff competition. There are few segments like wafer chocolates segment where company faces strong competition from Nestle, the second major player in the market. In these segments company should try to increase brand loyalty for its brands. This increased consumer loyalty will also act as deterrent towards development of strong competitors in other segments. Further to increase the overall size of market, company should try to increase consumers involvement with chocolates. (Company can use consumer involvement achieved by soft drink marketers in USA as a benchmark. In USA, consumer involvement in soft drinks is much higher than other beverages like coffee).
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? How To Build Consumer Interest In The Product Category?
Following are the possible strategies for increasing consumer interest in the product category. • • Frequent reminder advertising and maintain a top of mind awareness for the product. Emphasize functional benefits like nutritious value of chocolates. In India chocolate is considered as a junk food. Creating consumer awareness about functional benefits can help in weakening this negative image. Here, the industry can follow the example of Max ice creams, wherein they are using the nutritional/health (more milk protein) plank to sell the ice creams to the buying unit – mothers – who can feel less guilty of buying 'junk food'. • Company can try to satisfy higher level needs of consumers like social needs, belongingness, and inspirational needs.
Our Recommendations: Out of these possible strategies, we recommend that company should try to focus on building high top-of-mind awareness, increasing reminder advertisements and educate consumers about functional benefits of product. Educating consumers about nutritious, calorific value of chocolates may be significant as per capita expenditure on food in India is significantly high and chocolates get very little of it. Also there is a need to educate the customer’s of the various need satisfactions that can be fulfilled by the use of chocolates apart from treating it like a light snack, in between kind of food item. Company has already taken a positive step in this direction with the launch of its Picnic ads wherein it has educated the customers about the heavy snacking aspect of chocolates.
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? How To Increase Brand Loyalty For Cadbury's Brands?
• Build strong relationship for different Cadbury's brands with consumers in various segments. • • By dominating the shelf space and avoid getting out of the shelf space. The company can also maintain the consumer loyalty by offering a variety brands from its own stable so that even if the consumer looks for variety, he goes in for some of that company's own stable. • By increasing the range of its products so as to increase the evoked set in the minds if the consumers.
Our Recommendations: Company already has a very strong relationship with consumers in traditional segments like moulded chocolates. Parents were using Cadbury to express their love towards their children. In fact various market researches carried out revealed that consumers see Cadbury as a synonym for chocolates. This relationship building strategy should be extended to emerging high growth segments like wafer chocolates. Apart from advertising, company can form kids clubs and sponsor various competitions like quizzes, games and music events to build a continuous relationship with target segment. Food MNC Nestle successfully utilized this strategy by forming children clubs for its noodles brand Maggi.
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Company's flagship brand CDM is already available in many variants and thus consumer opting for competitor's brands in moulded chocolate segment is very less. In other segments like wafer chocolates, company should offer more variety to retain customers. The company is already working on this strategy and has decided to launch around three to four new brands every year to offer customer’s more variety and at the same time displace the strong competitor brands from the shelf and increase its own shelf space. Company already has highest shelf space among chocolate companies and its distribution is strong enough to keep continuous availability. So there is not much scope of strengthening this network without going for increasing geographical coverage. Keeping this in mind the company has increased its retailer network by over 60% and is targeting the semiurban areas. Chocolates are a perishable item, which means that the shelf life of the product is not very long and it is important that the product moves fast. Also, it is an impulse purchase item. Most of the time the consumer decides to consumes the product at the spur of the moment. The companies can actually use this as an advantage and increase their sales since it does not involve any rational evaluation and then reaching a decision to consume.
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? How to Exploit Impulse Purchase Behavior?
?
By improving the point of purchase promotion and providing the cues to instigate the customers to consume the product.
?
Improving the visibility of the product so as to enhance the consumption Installing an extensive distribution system and ensuring that the product is available at all possible places most of the times.
?
?
Extend the gift proposition so as to position it as a gift not only for the festivals but also as a casual gift that can be given to anyone anytime.
Our Recommendations:
?
Cadbury's is already using the above mentioned tactics to exploit impulse behavior and increase the product consumption. However there is further scope to increase coverage and visibility. For this reason we recommend that the company not only focuses on the urban and semi-urban areas but also expand its coverage to the rural areas.
?
There are some elements of seasonality present in the consumption of chocolates. The sales in summer drop almost to 2/3rd of the normal sales. This is largely due to the fact that chocolates melt when kept in open during summers and hence there is a need to store them in the refrigerators, which in turn restricts the number of outlets where the product can be sold. This factor also affects the visibility of the product which is a very important criteria being an impulse purchase item.
?
Company has succeeded in positioning chocolates as an all time product (the 'Slice of Life' campaigns) that can be consumed anytime and anywhere, to treat others and also one. It is the spirit of enjoying life at every step of the way and with this theme they have succeeded in overcoming the barrier of using chocolates as a gift only for the festival season.
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? How to overcome this seasonality factor?
The seasonality factor in the sales can be eliminated by improving logistics and packaging in order to make the product more durable and long lasting in intense heat too. Therefore we feel that the company should pay immediate attention towards increasing logistics. It can perhaps, incorporate some strategies or experience of the ice-cream players in the market. These companies have extensively used cold chains and tie up with regional players to overcome problems created by the high temperatures in the summers. In fact, KitKat had succeeded in countering the temperature problem with its packaging. Cadbury’s had also to some extent managed to counter this problem with its packaging for Perk, however it has to innovate and improve significantly to counter this heat problem and be able to use this as a differentiating factor while selling its chocolates.
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CORPORATE STRATEGY
? CADBURY'S BUSINESS STRATEGY Cadbury realizes that being market leader in the chocolate market it will have to bear the onus of expanding the size of the market; there was not much scope of increasing the market share at the expense of existing players. Thus resulting business strategy consists of having a presence in all the segments with a clear differentiation among offerings in different segment and a different proposition for each of them. Further, the company follows a multi branding strategy i.e. having more than one brand cater to a particular segment that may even lead to the cannibalization of sales of one brand. The game plan for the company is to increase the consumption of chocolate and confectionery among adults by offering products in convenient packs at affordable price. To achieve this it has chosen the local manufacturing route. This also makes business sense it sources almost every raw material locally (except cocoa, one third of which is imported from south east Asia and Africa since the domestic production is falling short).
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? Short Term Objective And Future Plans
The short-term objective of the company is to develop brands with mass franchise and widen out its distribution network further into the rural sector. This is in keeping with the awareness that new product development provides the key to growth in this market.
The company plans to launch one new product every year and extend its sugar confectionery range. The overall strategy is to launch three or four products every year, but only one of the brands will be a big launch, the rest being soft launches. This year the company chose Picnic as its big launch.
The company is also focusing on exports. The current exports constitute 2.5% of the total turnover of Rs.354.14 cores. The company has clear intentions of improving margins which will be achieved by controlling indirect costs, reduced wastage, freeze manpower, and cut non profit expenditure. The company expects healthy cash flows in the future due to decline in the capital expenditure depreciation, which will further bring down the interest costs. The future strategy of the company is to maintain is dominance.
The company has started to associate the umbrella name of Cadbury's with events like the Film fare awards, and Zee Cine Awards, and movie screenings like Air Force One to promote the brand name further and also to simulate recall.
The company is aiming at overall growth rate of 18%. In keeping with this objective the company has increased its advertising spending and marketplace investments by 40% over the year 1997. The Cadbury account in India which is handled by O&M is worth Rs.29.62 cores.
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? Currently if we see, the company has its products focused around three basic propositions. • Drives attitudes and behavior: This is led by the company's flagship brand Cadbury Dairy Milk (CDM). CDM is currently positioned on the emotional plank of spontaneity and selfexpression and is targeted mainly on the adult consumer.]
•
Drives Snacking Consumption: It has three main brands in this category - 5 Star, Perk and Picnic. However the three brands are positioned in a slightly different manner. Perk is positioned as an any time snack anywhere, whereas 5 star is positioned as an Energy Bar. Picnic is positioned as a heavy snack bar which can be had as a near meal substitute
•
Drives variety, gifting and taste preference: The two brands in this category are Gems and Eclairs. However, there is a lot of difference between these two brands. While Gems is targeted primarily at children, Eclairs is a chocolate simulator, which simulated the taste and the feel of the chocolate but has to popped in the mouth like a toffee.
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Drives attitude Drives snacking and behaviour consumption 5-Star Endorsers Dairy Milk Perk Picnic Bournville Crackle Flankers Nut Milk Fruit & Nut Creamy Bar Roast Almond Break
and Drives variety, gifting and taste preference Gems Dairy Milk Eclairs Butterscotch Caramels Nutties Tiffins Relish Truffle Mocka Overtures withdrawn) All Silk (now
Prodigals
Besides these endorsing brands, Cadbury traditionally has maintained a whole battery of flank and satellites in its brand portfolio. It has always focused on preempting any moves by a competitor by launching a brand of its own. The threat of Nestle's entry led to the launch of tactical brands like All Silk, Crackle and Break. Therefore, in the Cadbury's brand system, the flanker brands are used for the tactical purpose of plugging a gap in the segment where the threat of entry by a rival brand was imminent. Cadbury has also entered the sugar confectionery range of Googly and Mocka with the intention of expanding its range further. However, Nestle's successful entry through KitKat in the wafer segment proved that unless you support your flank brands actively, they are not going to be of any use in blocking competition. And hence Cadbury is showing some active interest in the area.
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? The Essential Advertising Strategy It has been noticed that the basic advertising strategy of Cadbury India Limited regarding its chocolate and confectionery products is that of main media vehicle being television, and to a lesser extent, outdoor advertising. There is not that extreme emphasis on print media advertising. There is also some amount of radio advertising but only on the FM stations in the metro towns
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? Marketing Strategy
The company's marketing strategy was mainly based on remarketing the product category. lts objective was to revitalize the faltering demand and to search for new marketing propositions to start a new life cycle for the declining product. The onus of this marketing task was more on Cadbury than on any other player in the market. Being a market leader, it was the both the responsibility and necessity for the company to revive and increase the market. This was very true in the context of the theory that the market leaders stand to gain the maximum with an increase in the market size. With the entry of Perk and KitKat in 1995, CDM's performance was affected because consumers attention was diverted by the variety and excitement now available in the market place. In addition to this, primarily in metros the CDM consumers were graduating to functional offerings like KitKat or Picnic. So in the future, CDM's primary focus would be to widen franchise in smaller tows where penetration is currently low, and also to stress on the platform of mood upliftment rather than hunger satisfaction.
? Possible Marketing Strategies For Achieving Above-Mentioned Objectives There were three basic strategies Cadbury could have taken to capture the downfall in its sales, in 1994. 1. Market Modification • To look for new markets and market segments and thus find new buyers for the product. • • To stimulate the increased usage of the product among present customers. To repositioning the brand to achieve larger brand sales.
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2. Product Modification
•
To bring about improvement in the product and increase in the functional values and thus generating new users.
•
To come out with the new variants of the product, with clear differentiation from the existing product and try to tap a different set of users for the product.
3. Marketing Mix Modification • • • To cut prices to draw new segments To push the product through trade promotions. To search for a new and brilliant advertising appeal that wins the customers attention and favour.
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? Possible Strategies That Cadbury should adopt:
The increasing competition in the chocolate market would have prompted companies not only to go for line extensions of the existing products but to also diversify into other related areas. Some of the possibilities that existed at that point of time for market leader, Cadbury are briefly stated below• Expand into sugar confectionery market. (the volume of chocolates is around 16000 tons whereas sugar confectionery is approximately 2 lakh tons). • • Set-up a manufacturing base in India for Exports. Cultivate cocoa beans, (which accounts for 50% of the total raw material costs) domestically which is 50% cheaper than imported ones. • Expansion in the rural/semi-urban markets, class IV and V towns (here Nestle have an upper hand compared to Cadbury's at present). • Position the products for corporate gifts, although this market exists the potential is still unknown and none of the players have seriously eyed this market. • Convert light users to heavy users, by introducing new large packages at lower prices compared to the existing prices. • Introduce small packs (1 piece of chocolate per pack), to induce trial rate, this is more important in light of the decision taken by the companies to enter the rural market.
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? New Product Forms
Other recommendations are to launch new products linked to their core offerings. The company should seriously look for taking chocolates in other product forms: • Chocolate sauces, particularly used as toppings for ice creams are getting popular in India. No organised sector market exist for this product category. Cadbury can continue its pioneering tradition by entering this sector. Considering that ice cream market is a high growth category ,this may turn in to significant volumes for Cadbury. • • Chocolate cakes. Like CDM-cake/Nestle Milk Cake in line with Britannia's Merricake. Liquid chocolate, different variants can be launched. Liquid chocolate such that it can be used with Cold Water (like Rooh Afza), • Chocolate biscuits by CDM and Nestle with their different brands, e.g. with white/brown chocolate. • The company can also consider rejuvenating its dormant chocolate drink by marketing it as a cold, ready to drink milk and using dispensers to distribute it. • Further, if the company has ambitions to tap the huge market for snacks in India, it should consider launching variants of chocolates which can directly compete with traditional Indian snack in terms of tastes as well as price. Nestle tried to do so in the area of sweets, by launching MithaiMagic, although it bombed at the marketplace at the initial launch. • Position the brand as an alternative to other meals during breakfast, and thus can be taken with hot/cold milk in breakfast. This alternative will have an implication on package sizes, the company will have will have to introduce large family packs say 400/500/1000 grams. • Chocolates from vending machines at places like Railway stations/offices/schools, and make it as an attractive new concept.
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THE CURRENT SCENARIO
Chocolates are an impulse category which makes relying on the same advertising stimulus for too long a time infeasible. The key to success is to keep inventing the same spark of spontaneity. Cadbury tried to achieve this, however, O&M's creative team found it difficult to recreate the same magic in its advertising as that created by the Slice of Life and the Cricket Ad. It was a classic problem of being unable to extend a big idea. They launched a new test ad referred to as 'the bird ad' which was run in Calcutta. But it was withdrawn as it did not gel with the brand personality. In 1996, the company released 'the bicycle commercial'. But the post launch research showed that the ad was perceived as contrived because people could not relate to the bucolic surroundings that seemed more like an English countryside than an Indian setting. However, since the brand's identity needed to stay contemporary and fresh, the ad was aired for some time. By the end of 1996, fatigue seemed to have set in and there was a hint of a slowdown in volumes. Through the year 1997, no major initiative on CDM was made except for the Independence campaign which was largely a tactical response. This year, the company continued with the 'slice of life' mode of advertising through its elevator series of ads.
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CADBURY AND THE WORM CONTROVERSY
The discovery of worms in some samples of Cadbury's Chocolate in early October 2003 created one of the biggest controversies in India against a Multi National reputed for being a benchmark of QUALITY. The controversy created an deep adverse impact on the company with their sales not only drastically dipping down, but at the same time allowing the competitors to establish their foothold and taking maximum advantage of Cadbury's misfortune. The controversy, and the adverse publicity received in several countries, set back its plan of outsourcing model which would have resulted in significant revenue generation, several months back. The "worms' controversy" came at the worst time? The next few months were the peak season of Diwali, Eid & Christmas. Cadbury sells almost 1,000 tonnes of chocolates during Diwali. In that year, the sales during festival season dropped by 30 per cent. The company saw its value share melt from 73 per cent in October 2003 to 69.4 per cent in January 2004. In May, however, it inched up to 71 per cent. CDM sales volumes declined from 68 per cent in October'03 to 64 per cent in January 2004. Clearly, the worm controversy took a toll on Cadbury's bottom-line. For the year ended December 2003, its net profit fell 37 per cent to Rs 45.6 crore (Rs 456 million) as compared with a 21 per cent increase in the previous year. However, Cadbury's reiterated that
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all through the 55 years of leadership in India, that it has remained synonymous with chocolates and have remained committed to high quality and consumer satisfaction.
CABDBURY'S FIGHT-BACK ? 'Project Vishwas'
"Steps to ensure quality & regain the confidence" Following the controversy over infestation in its chocolates, Cadbury India Ltd unveiled ‘Project Vishwas', a plan involving distribution and retail channels to ensure the quality of its products. The company's team of quality control managers, along with around 300 sales staff, checked over 50,000 retail outlets in Maharashtra and replaced all questionable stocks with immediate effect. The Vishwas programme was intended to build awareness among retailers on storage requirements for chocolates, provide assistance in improving storage conditions and strengthen packaging of the company's range of products. Cadbury reduced the number of chocolates in its bulk packets to 22 bars from the present 60 bars. These helped stockists display and sell the products "safely and hygienically" 190,000 retailers in key states were covered under this awareness programme.
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? The Big 'B' FACTOR The big factor that has pushed up CDM sales is the Amitabh Bachchan campaign. It helped restore consumers' faith in the quality of the product. In early January, Cadbury appointed Amitabh Bachchan as its brand ambassador for a period of two years. The company believed that the reputation he has built up over the last three decades complements their own, which was built over a period of 50 years. Yet the entire credit of recovery could not be attributed to the brand mascot.
• Incisive action taken by the company also helped. Some of which were:
1. Responded to consumers concern over the issue rapidly. Also, the communication campaign worked effectively in giving out the central message. 2. The packaging was changed to include a sealed plastic wrapper inside the outside foil. Cadbury's launched a new 'purity-sealed' packaging for its flagship product, Cadbury Dairy Milk. The packaging is in response to foreign bodies, notably worms, being found in its products. Over the next few weeks Cadbury will work towards introducing either a heat sealed or a flow-pack packaging that offers a high level of resistance to infestation from improper storage. 3. New advertising & promotion campaigns were in place which accounted for an Ad spend of nearly Rs 40 crore (Rs 400 million) Cadbury invested nearly Rs 25 crore (Rs 250 million) this year on new machinery for the improved packaging.
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? CADBURY'S SINGING SWEETLY AGAIN
All is well that ends well. And for Cadbury's India, nothing can be sweeter than Regaining Back the Consumer Confidence. Thanks to quick action taken to recover the damage done by the worm controversy like Operation Vishwas, adopting new packaging & massive advertising with Mr. Amitabh Bachchan as their brand ambassador, Cadbury's regained its market share. The survey conducted by the company says that consumers have long forgotten the controversy and are back to their merry chocolate-chomping ways. Sales were back to the precontroversy levels. Consumer confidence in the product was back and there was a steady progression in sales .The company posted a high double digit sales growth in that year end. The recovery began in May 2004 when Cadbury's value share went up to 71 per cent. Hires AT Kearney to curb costs Cadbury India appointed management consultancy firm AT Kearney to draw up a strategy to control costs in several areas, including sourcing of raw materials and packaging. This was partly an outcome of the worms' controversy more than a year ago. Among other things, it changed the wrappers for its Cadbury Dairy Milk brand and introduced better coolers. The consultancy firm will also look at the sourcing of direct and indirect materials like renegotiating with suppliers for longer term contracts and vendor management. Other costs (indirect expenses) like travel costs and hotels were also being studied.
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In other words, Cadbury is trying to reduce the cost per stock keeping unit (SKUs, or packs). The aim is to improve efficiencies.
? Earnings sensitivity factors; • Cocoa bean prices: Domestic as well as international prices of key raw material cocoa have significant impact on margins. • Excise duties: Changes in excise levied on malt and chocolate influences end product prices and thereby volume growth as well as margins. Changes in custom duties and foreign exchange fluctuation: As 20% of raw material is imported, changes in custom duties & foreign exchange fluctuations have significant impact on the final cost of the product. Competition from MNCs like Nestle as well as imported brands. Increasing competition puts pressure on advertisement budget and margins. However on the positive side, it helps in expanding the market.
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SUCCESS FACTORS OF CADBURY’S INDIA LIMITED
1. Global management processes: India occupies a high profile position in the global organization, with advocates in regional and global headquarters. Global management has allowed the local operation a high degree of flexibility in growing the business, understanding that asset utilization may be lower and returns slower to arrive, but expecting volume share to compensate for lower margins in the long run. 2. Local management processes: The Cadbury India team is all-Indian and has a deep understanding of local market dynamics. The business is set in a way that highlights localization across all facets - driving the belief that the only way to succeed in India is by developing localized business models. For example, the company tailored the chocolate formula in India to prevent melting in the country's open-air high frequency store environment. 3. Customized business models: Local management has set up systems to test and develop products from the ground up with specialized interlinked cells that execute innovation and market testing hand-in-hand. Cadbury India is known as a key product innovator. Besides Dairy Milk, the entire Cadbury product portfolio in India has been developed locally to suit Indian consumer tastes. Packaging, marketing and distribution have all been tailored to local market conditions.
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4. Royalty Structure: Royalty to Cadbury Schweppes Plc., is around 1 per cent of the turnover. But with that, the company gets unlimited access to latest technology, new products and so on. They can also introduce new products from the parent, if it is suitable for Indian market. 5. Subtle reengineering of raw material mix led to cost savings: Cadbury has reduced its dependence on cocoa, thus lowering its exposure to volatile raw material prices as well as cutting costs. It appears that they have subtly altered its recipe by using less of costlier cocoa and more of milk and sugar. Cadbury's launch of Perk has also contributed significantly in reducing the proportion of cocoa in the overall raw material mix. Consequently, Cadbury saved about Rs.94mn (1.8 percent of net sales) in FY1999.
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SWOT ANALYSIS
As you know SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in any other situation requiring a decision. Strengths and weaknesses are internal factors and opportunities and threats are external factors.
? As per as the Cadbury India is concern the SWOT analysis is as follow: STRENGHT:
• Cadbury Schweppes plc is a very profitable organization, generated revenue of more than
£6,508 billion (2005).
• It is a global chocolate brand built upon a reputation for fine products and services. • Cadbury Schweppes plc was one of the Fortune Top 100 Companies to Work For in
2005. The company is a respected employer that values its workforce.
• The organization has strong ethical values and an ethical mission statement
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• •
The third largest beverage company in the world. The fourth largest confectionary companies in the world
• •
Products are sold over 200 countries. Profits are increasing year by year.
WEAKNESS:
• Cadbury has a reputation for new product development and creativity. However, they
remain vulnerable to the possibility that their innovation may falter over time.
• The organization has a strong presence in the United States of America, UK and India. It
is often argued that they need to look for a portfolio of countries, in order to spread business risk.
• Cadbury's recall over 1 million chocolate bars over salmonella fears. • The organization is dependant on a main competitive advantage, the retail of coffee. This
could make them slow to diversify into other sectors should the need arise.
• The company has no apprehensions of cannibalization of its chocolate brands. Small
range of products.
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OPPORTUNITIES:
• Cadbury company is very good at taking advantage of opportunities. • The company has the opportunity to expand its global operations. New markets with new
products which are limited in particular region.
• Cadbury has decided to focus on a few of its key brands such as Cadbury Dairy Milk,
Bournvita, Eclairs and Halls to drive growth for the company.
• Co-branding with other manufacturers of food and drink, and brand franchising to
manufacturers of other goods and services both have potential.
• Cadbury India is attempting to increase the declining market for chocolate with innovation,
one of which is its sweet snack, Bytes.
• Brand ambassador Amitabh Bachchan for advertising there new products.
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THREATS:
• Who knows if the market for Cadbury will grow and stay in favour with customers, or
whether another type of beverage or leisure activity will replace coffee in the future?
• Health organization have so many barriers for new development. • Cadbury’s are exposed to rises in the cost of chocolate and dairy products. • Entry into salted snacks was ruled out so it is important to do new innovation and
marketing research.
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CASESTUDY ? Cadbury Bytes
?
Market Background:
Cadbury is the market leader in chocolates but was a new entrant in the packaged snacking category. The company had a loyal child following but snacking was driven by teens and adults. The Indian palette also showed a distinct preference for salty snacks. Overall brand Cadbury strengths in the confectionery market were weaknesses in the packaged snacking market. Snacks were also largely driven by shared consumption vis s avis confectionery which is largely an impulse individual consumption
? Competition:
Well entrenched competitors and local unorganized players which are synonymous with snacking and dominated the market.
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? The Brand:
Cadbury Bytes was a one of a kind snack, in that it was sweet and not salty and had the irresistible taste of Cadbury chocolate in it. To be positioned effectively as a snack it had to offer the irresistible taste of Cadbury chocolate in the context of shared snacking.
? The Brand Objective
Position Cadbury Bytes as the "people magnet" of snacking which led to being creatively expressed as "Bytes Jahaan Public Wahaan!"
? The Results Cadbury Bytes expands the chocolate category.
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? Cadbury 5 Star Crunchy
? Market Background:
Cadbury is the market leader in the chocolates category, with Cadbury 5 Star being its second largest brand. Cadbury 5 Star which is unique bar of nougat and caramel enrobed in Cadbury Dairy Milk Chocolate provides one of the most distinctive and involving chocolate eat experiences. However in recent years the Cadbury 5 Star franchise was in decline.
? Competition The brand was under threat from other more offerings in the market.
? The Brand
Cadbury 5 Star needed to introduce an element of surprise in its eat experience to
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gain share among lapsed consumers. To do this the variant Cadbury 5 Star Crunchy was launched- which still had the richness of caramel, chewiness of nougat but also contained rice crispies.
? The Strategy The campaign was built around the proposition of an " unexpected surprise" which had a surprise in every bit. This was creatively expressed as " Naya Five Star Crunchy.. Ab har bite main Arrey!" The campaign targeted at youth was executed in a lighthearted vein built around a boy-girl relationship. In order to engage youth the campaign was executed across TV, radio, internet, outdoor and print media.
? The Results The brand registered double digit growth post the launch.
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MARKETING – PROMOTION OF CHOCOLATES IN INDIA
Traditionally, chocolates were always targeted at children. But stagnancy in growth rates made the companies re-think their strategies. Cadbury was the first chocolate company that took the market by storm by repositioning brands at adults, as opposed to children.
? BUYING BEHAVIOUR Chocolates are consumed as indulgence and not as snack food, as prevalent in western countries. Almost 75% chocolates are impulse purchases. Chocolates are bought predominantly by adults and gifted to children. On an average the wholesalers sells Rs50000/month of Chocolates (all brands included). Also the wholesaler usually deals in all kinds of FMCG goods, Foodstuff in addition to the chocolates. The items like chocolates are placed near the counter. Chocolates are kept in cardboard boxes and are also delivered in the same. In a few of the cases the chocolates were kept separately (as per equipment provided by the manufacturer - e.g. VISI Coolers), In addition to marketing promotions companies have been focusing extensively on the promotions by the sales staff. Also the companies can devise there marketing strategies that are catering to specific segments and are thus more effective.
? NATURE OF RETAIL OUTLET
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Chocolates are primarily sold through Kirana Stores, Gift stores, Medical Stores, canteens, Pan-Bidi stores, Bakeries, Sweet Shops etc. This is true for chocolates also. The space allocated for the chocolates was less when compared to the total area of the shop. Of the space allocated for chocolates, Cadbury brands occupied more than Nestle brands. The chocolates category thrives on excitement. It's all about giving the consumer a choice and taste which they enjoy.
? STOCKING OF THE PRODUCTS. In most of the cases, various brands of chocolates are kept together. In some of the cases the chocolates are stocked depending on the manufacturer's provision. The chocolates are kept in Glass Jars and boxes - These are provided by the respective companies along with the product. The chocolates are kept there. But in most of the cases chocolates are stocked near the counter. Ideally the shopkeeper tries to keep chocolates within the reachable (sitting on the counter) distance. Chocolates are kept at or below the eye level. This is to facilitate visibility of the chocolates for the customer who is visiting the store. Medium size retailers sell chocolates of about Rs. 400 - Rs. 800 per week while big retailers sell chocolate worth Rs1000 or more per week.
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PROBLEMS AND CHALLENGES IN INDIAN CHOCOLATE INDUSTRY
1. TEMPERATURE: A peculiar problem that hinders the distribution to far-off places is the tendency of chocolates to melt under even moderate heat. The temperatures can reach as high as 48 degrees in summers, whereas chocolate starts melting at body temperature (about 37-38 degrees). Manufacturers have to take precautionary measures to ensure the preservation of chocolates especially in summer.
2. UNAVAILABILITY OF CONTROLLED REFRIGERATION: India does not have controlled refrigerated distribution. Air-condition supermarkets are rare. Cadbury loses 1.5 percent of annual sales of Rs. 6.8 billion to heat damage. Companies revise ingredients to make chocolate withstand heat, and so Indian chocolates are more resilient to heat than Eurupean chocolates by a factor of 2 degrees. Ironically, the chocolate market has grown recently because smaller retailers have stuffed fridges and coolers supplied by the cola companies Coke and Pepsi with chocolates. Nestle and Cadbury have tried to provide loans for retailers to buy fridges, but to hold down power costs the shopkeepers switch off the fridges at night. As a result the cocoa fat
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melts and migrates to the main body of the chocolate bar. When the cooling is switched on in the morning, the cocoa fat solidifies and turns white, presenting a bizarre, un-sellable white on black form. Nestle tried to provide fridges with see-through doors, but was appalled to see its chocolates sandwiched between dead chicken, butter and vegetables.
Small coolers were provided to retailers to keep the chocolate from melting, but that didn't quite do the trick. Electricity costs money and is not provided in a uniform way, so on and off the electricity goes and the product may suffer sometimes.
3. RAW MATERIALS: Cocoa is the key raw material and accounts for around 35% of the total material cost(including packaging) of chocolates. The price of cocoa has been hitting a new high of late. Cocoa prices are at a near 20-year high at $2358 per ton, up from $900 a year back. India does not produce cocoa to any noteworthy extent but is a large consumer of chocolates. Consumption of chocolates and other cocoa-based products, especially among the middle class, has been growing.
4. TRANSPORTATION: Chocolate needs to be distributed directly, unlike other FMCG products. 90% of our products are sold directly to retailers. Building such a direct network in rural areas is a daunting task since the infrastructure is poor in India in rural areas.
5. THREAT FROM IMPORTED BRANDS: Free availability of imported brands bought through illegal routes pose a threat to the domestic chocolate industry. Usually, these imported chocolates taste better than domestic
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chocolate due to recipe difference. Hence consumers who are willing to spend a little more, prefer these imported chocolates.
However, the premium brands, which come through official channels, do not pose a threat to the market, as these cater to a small niche market. However there is a lot of dumping from neighboring countries like Dubai, Nepal, etc of inferior brand of imported chocolates. These are not only of low quality, but are brought very near to their expiry dates. Most of the cheap chocolate brands that are available do not meet Indian Food Regulations.
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EXTERNAL FACTORS AFFECTING GROWTH OF CHOCOLATE INDUSTRY IN INDIA
? Good monsoon ensures adequate availability of raw materials, which are mainly agricultural in nature. Raw material prices have significant influence on margins. ? Government policies in terms of licensing, duties, movement of agricultural commodities etc, also affect the introduction of products, time lag for a product launches, taxes, excise, etc all influence the business.
? Market growth driven by overall economic growth and urbanization also contributes. An overall booming economy will consume tonnes of chocolates because consumer spending increases. Also, the absolute number of consumers in middle class & upper middle class increases. ? Rupee depreciation improves export realizations, however it also makes import of raw material(esp. cocoa) expensive.
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GROWTH OPPORTUNITIES IN INDIAN CHOCOLATE INDUSTRY
? Untapped Market & Limited Consumption:
?
The fact that chocolate is not a traditional food, high prices and domestic
production problems will provide the main problems to market growth. As these markets develop, prices will fall making these products more accessible to the wider population. However the Indian market is still untapped and provides immense scope for growth, both geographically as well as product basket wise. Chocolates right now reaches about 70mn to 75mn consumers. It is estimated
?
that chocolates have a potential market of about 116mn consumers. Chocolate consumption in India is extremely low. Per capita consumption is
?
around 160gms in the urban areas, compared to 8-10kg in the developed countries. The per capita chocolate consumption in India is still much below the East Asian standards. Hence per capita consumption has a immense scope for improvement. In rural areas, it is even lower. Chocolates in India are consumed as indulgence
?
and not as a snack food. A strong volume growth was witnessed in the early 90's when Cadbury repositioned chocolates from children to adult consumption. The biggest opportunity is likely to stem from increasing the consumer base.
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?
Leading players like Cadbury and Nestle have been attempting to do this by value for money offerings, which are affordable to the masses. We also believe that the near term opportunity lies in increasing penetration rather than increasing the intensity of consumption. In the past five years, the chocolate business grown by 14-15% on an average and is expected to grow further for at least next five years.
?
?
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?
CHANGING ATTITUDES & CONSUMPTION PATTERN
In the past, chocolate consumption had been restricted by low purchasing power in the market. Chocolates and other cocoa-based snack foods were looked upon as food suitable only for elitist consumption till recently. But with the launch of lower-priced, smaller bars of chocolate in the last two years and positioning of chocolate as a substitute to traditional sweets during festivals, have boosted consumption. Chocolates which were considered to be an elitist food hit the fancy of masses looking for a change in life style at affordable cost.
?
?
?
?
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? RURAL EXPANSION
Rural market and small town markets are seen as the key to spurring double-digit growth. Products such as liquid chocolate packs from the existing portfolio are expected to enable rapid acceptance.
?
?
?
LEVERAGE INDIA FOR OFFSHORING
?
India is being leveraged for export of finished goods, as a superior
destination for manufacturing best practices, and for BPO opportunities. All the above points bring us to a conclusion that there's an immense scope for growth of chocolate industry in India not only in its offering pattern but also for increment in its total Consumption value and size.
?
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STRATEGIES FOR GROWTH AND SUCCESS OF CHOCOLATE INDUSTRIES IN INDIA
? Revamp the product to keep the excitement alive. ? Companies should look at new avenues, while expanding the reach of its products. Distribution will hold the key. Companies need to reach out to smaller towns, where three-fourths of the population does not even know the product. ? Merger & Acquisitions: Mergers & Acquisitions with companies that match the product portfolio & overall growth strategy should be considered which will not only strengthen the company to establish a stronger hold in the country but also ward off possible competition in the select category. Such collaborations will also facilitate companies to use each other's distribution networks.
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CONCLUSION
? The Indian Chocolate Industry is a unique mix with extreme consumption patterns, attitudes, beliefs, income level and spending. At one hand, we have designer chocolates that are consumed when priced at even Rs.2500/kg while there are places in India where people have never even tasted chocolates once. ? Understanding the consumer demands and maintaining the quality will be essential. Companies will have to keep themselves abreast with the developments in other parts of the world. ? PRICING is the key for companies to make their product reach consumers' pockets. Right pricing will make or break the product SUCCESS. ? Economical distribution of the products will also be equally important.
? The companies' strategies should focus on driving sales through a right product mix, efficient materials procurement, reduced wastages, increased factory efficiencies and improved supply chain management.
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? There's an immense scope for growth of chocolate industry in India - geographically as well as in the product offering. ? The Indian Chocolate Industry is destined to grow and will do so in the future.
BIBLIOGRAPHY
Kapferer, Jean-Noel. "Strategic Brand Management". The Free Press. A division of Macmillan, Inc. 1992 Edition Kotler, Philip. "Marketing Management" Analysis, Planning, Implementation, and Control Prentice-Hall, Inc. Eighth Edition Aaker, David, et al, "Advertising Management" Prentice-Hall, Inc. Fourth Edition Business Line 'Catalyst' – Thu. Feb 19,1998. Financial express 'Brand Wagon' – Fri, Oct. 27, 1995
Internet Sources: • • • • • •
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www.business-standard.com www.financialexpress.com www.economictimes.com www.indiaserver.com www.expressindia.com www.indiainformer.com
• •
www.cadbury.co.uk www.india-today.com/btoday
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doc_496738849.doc
my project on an analytical study on choclate industry cadburys
ACKNOWLEDGEMENT
“The most awaited moment of a successful completion of an endeavor is always a result of the effort of the people involved explicitly or implicitly in it and it is impossible with the help and guidance” I take this opportunity to express my sincere gratitude to each and every person who gave the help and guidance for preparing this project. I am grateful to Prof. for giving me this
opportunity to do this project and his guidance for such an informative project on “An Analytical Study of Chocolate Industry in India with Special Reference to Cadbury's India.” “Great discoveries and Achievement invariably involve the cooperation of many minds” with the deep sincere gratitude I owe my regards to Cadbury India Limited for giving me valuable time in guiding me not only in carrying out my project work but also in preparing this project work, I would like to thank of Cadbury India Limited for providing me the essential inputs for my project. Last but not the least my heartful gratitude to all those person who knowingly or unknowingly, directly or indirectly supported me or boosted my morale for this project a reality, my strength and inspiration are the blessing of my parents and friends, I owe my success and achievement to them.
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Reeba Mathew (T.Y.B.M.S.)
EXECUTIVE SUMMARY
"An Analytical Study of Chocolate Industry in India with Special Reference to Cadbury's India" is a sweet CHOCOLATE story of chocolates in the hot and humid plains of INDIA, which enlightens us about the size & status of chocolate industry in India. 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 chocolate industry in India has a size of 20000 tonnes and is worth about Rs. 400 crores. The chocolate market has been growing by nearly 35%; however there has been some slowdown in the last two years. The chocolate market is predominantly urban with coverage of 95%. The sales volume have decreased by 5% in the last year and the chocolate market had declined with the average consumption coming down by 25% from 16000 tonnes to the current level of 12000
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in the first quarter of 1997, largely due to the steep hike in excise duties. However, this trend has seen a kind of a reversal in the latter half of 1997.
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 India Limited, to get an understanding of where Cadbury stands.
Cadbury India limited was set up as a wholly owned subsidiary of the UK-based Cadbury Schweppes Overseas Limited. The parent company is the fourth largest in the world chocolate market, after Mars, Nestle, and Philip Morris. They set up operations here as far back as 1948, and will thus be completing 50 years of its existence here. Cadbury’s milk chocolate was first introduced in the Indian market in 1956. It made an immediate impact, quickly becoming the market leader – a success story, even to this day. Cadbury India can be termed as one of the best performing FMCG companies today. Unlike its peer group, which is more of complete food companies, Cadbury is a very niche player with a dominant position in Indian Chocolate
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Confectionery market. This makes it different & more successful in comparison with the peer companies. Now is the period of slowdown in the economy, where FMCG companies are the first ones to be hit upon. Reduction in the real income of the consumer has made its direct impact on the top –line growth of the company. Still Cadbury has been able to drive its bottom- line growth. The reason for the success is the Corporate Governance practiced in the organization. We update its growth, progress and current valuation in this report.
INDEX
SR.NO.
1. 2. 3. 4.
TOPICS
Overview of chocolate industry in India Market size (by value & volume) Major players CADBURY’S INDIA LIMITED
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PAGE NO.
Objectives, Values & Vision Business Market Segmentation Product Positioning Product Life Cycle Product Innovation Pricing
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Promotion Product Category Corporate Strategy Current Scenario CADBURY AND THE WORM CONTROVERSY CADBURY’S FIGHT BACK Success factors of Cadbury’s India Limited SWOT Analysis CASE STUDY
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5. 6. 7. 8. 9. 10. 11. 12.
Marketing Business – Promotion of Chocolate in India Problems and Challenges in Indian Chocolate Industry External Factors affecting Growth of Chocolate Industry in India Growth Opportunities in Indian Chocolate Industry Strategies for Growth and Success of Chocolate Industries in India Conclusion Bibliography
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AN OVERVIEW OF CHOCOLATE INDUSTRY IN INDIA
The chocolate industry in India as it stands today is dominated by two companies, both multinationals. The market leader is Cadbury with a lion's share of 70 percent. The company's brands (Five Star, Gems, Éclairs, Perk, Dairy Milk) are leaders their segments. Till the early 90s, Cadbury had a market share of over 80 percent, but its party was spoiled when Nestle appeared on the scene. The latter has introduced its international brands in the country (Kit Kat, Lions), and now commands approximately 15 percent market share. The Gujarat Co-operative Milk Marketing Federation (GCMMF) and Central Areca nut and Cocoa Manufactures and Processors Co-operative (CAMPCO) are the other companies operating in this segment. Competition in the segment will get keener as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the Indian chocolate pie.
The chocolate industry in India has a size of 20000 tonnes and is worth about Rs. 400 crores. The chocolate market has been growing by nearly 35%; however there has been some slowdown in the last two years. The chocolate market is predominantly urban with coverage of 95%.
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The sales volume have decreased by 5% in the last year and the chocolate market had declined with the average consumption coming down by 25% from 16000 tonnes to the current level of 12000 in the first quarter of 1997, largely due to the steep hike in excise duties. However, this trend has seen a kind of a reversal in the latter half of 1997.
Cadbury India limited was set up as a wholly owned subsidiary of the UK-based Cadbury Schweppes Overseas Limited. The parent company is the fourth largest in the world chocolate market, after Mars, Nestle, and Philip Morris. They set up operations here as far back as 1948, and will thus be completing 50 years of its existence here. Cadbury’s milk chocolate was first introduced in the Indian market in 1956. It made an immediate impact, quickly becoming the market leader – a success story, even to this day.
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PER CAPITA CHOCOLATE CONSUMPTION (in lb) OF FIRST 15 COUNTRIES OF THE WORLD
RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
COUNTRIES PER CAPITA CONSUMPTION SWITZERLAND AUSTRIA IRELAND GERMANY NORWAY DENMARK UNITED KINGDOM BELGIUM AUSTRALIA SWEDEN UNITED STATES FRANCE NETHERLANDS FINLANDS ITALY
(in lb) 22.36 20.13 19.47 18.04 17.93 17.66 17.49 13.16 12.99 12.90 11.64 11.38 10.56 10.45 6.13
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INDIA, stands nowhere even near to these countries when compared in terms of Per Capita Chocolate Consumption. The Indian chocolate industry is extremely fragmented with a range of products catering to a variety of consumers. We have the bars/slabs, jellies, lollipops, toffees and sugar candies. Given India's mammoth population, it comes as a surprise that per capita chocolate consumption in the country is dismally low - a mere 20 gms per Indian. Compare this to over 7 kgs in most developed nations. However, Indians swallowed 22,000 tonnes of chocolate last year and consumption is growing at 10-12 percent annually. The market size of chocolates was estimated to be around 16,000 tonnes, valued around Rs.16 billion in 1998. Volume growth for which was over 20% pa in the 3 years preceding 1998, slowed down thereafter. Both chocolate and sugar confectioneries have abysmally low penetration levels, in fact, even lower than biscuits, which reach 56 per cent of the households. Market growth in the chocolate segment has hovered between 10 to 20%. In the last five years, the category has grown by 14-15% on an average and will expect it to continue growing at a similar rate in the next five years. The market presently has close to 60mn consumers and they are mainly located in the urban areas. Growth will mainly come through an increase in penetration as income levels improve. However, almost all of this consumption is in the cities, and rural India is nearly 'chocolate-free'. But the fact is that three quarters of Indians live in Rural Areas. "Average summertime temperatures reach 43 degrees
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Celsius in India. Chocolate melts at body temperature of 36 degrees." Per capita consumption of chocolates in India is minuscule at 20gms in India as compared to around 5-8 kgs and 8-10 kgs respectively in most European countries. Awareness about chocolates is very high in urban areas at over 95%. Growth of other lifestyle foods such as malted beverages and milk food have actually declined by 3.7 per cent and11.7 per cent, however the CHOCOLATES continue to grow at the rate of 12.6%.
Low priced unit packs, increased distribution reach and new product launches can be said to have fuelled this growth. The launch of lower-priced, smaller bars of chocolate in the last two years and positioning of chocolate as a substitute to traditional sweets during festivals, have boosted consumption. This is also because chocolate, which was considered to be an elitist food, has caught the fancy of buyers looking for a lifestyle item at affordable cost. Till recently, chocolate consumption had been restricted by low purchasing power in the market. Chocolates and other cocoa-based snack foods were looked upon as food suitable only for the well-off. After economic liberalization in 1991, major changes have occurred in food habits, partly on account of rise in gross domestic product (GDP) growth and higher purchasing power in the hands of the middle-class representing a third of the total population. Availability of chocolate products has also exploded. A study had projected that sales of the Indian chocolate industry would rise from $125/$130 million in 1998 to $175/$180 million by the year 2000 and to $450 million by the year 2005 which ACTUALLY happened irrespective of various negative factors. Per capita chocolate consumption continues to be low at about 200g per person, being mainly consumed in urban areas. In the middle and higher
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income groups, 70 per cent of children, 43 per cent of young adults and 16 per cent of adults consume chocolate.
CHILDREN ADULTS YOUNG ADULTS
55% 12% 33%
CHOCOLATE CONSUMPTION STRUCTURE OF INDIA – 2004
CHOCHOLATE & CONFECTIONERY MARKET OF INDIA 2004
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TYPES OF CHOCOLATES
Depending on what is added to (or removed from) the chocolate liquor, different flavors and varieties of chocolate are produced. Each has a different chemical make-up, the differences are not solely in the taste. 1. Unsweetened or Baking chocolate is simply cooled, hardened chocolate liquor. It is used primarily as an ingredient in recipes, or as a garnish. 2. Semi-sweet chocolate is also used primarily in recipes. It has extra cocoa butter and sugar added. Sweet cooking chocolate is basically the same, with more sugar for taste. 3. Milk chocolate is chocolate liquor with extra cocoa butter, sugar, milk and vanilla added. This is the most popular form for chocolate. It is primarily an eating chocolate
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4. Cocoa is chocolate liquor with much of the cocoa butter removed, creating a fine powder. It can pick up moisture and odors from other products, so you should keep cocoa in a cool, dry place, tightly covered.
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THERE ARE SEVERAL KINDS OF COCOA • Low-fat cocoa has the most fat removed. It typically has less than ten percent cocoa butter remaining. • Medium-fat cocoa has anywhere from ten to twenty-two percent cocoa butter in it. • Drinking or Breakfast cocoa has over twenty-two percent left in it. This is the cocoa used in chocolate milk powders like Nestle's Quik.
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•
Dutch process cocoa is cocoa which has been specially processed to neutralize the natural acids in the chocolate. It is slightly darker and has a much different taste than regular cocoa.
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Decorator's chocolate or confectioner's chocolate isn't really chocolate at all, but a sort of chocolate flavored candy used for things such as covering strawberries. It was created to melt easily and harden quickly, but it isn't chocolate.
? CATEGORIES OF CHOCOLATES Commercial Chocolates are available in the following forms: • • • • • Bars or Moulded Chocolates Counts Panned Chocolates (Gems) Eclairs Assorted Chocolates
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Bars or moulded chocolates (like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premium, and Nestle Milky Bar) comprise the largest segment, accounting for 37% of the total chocolate market in volume terms. Wafer chocolates such as Kit-Kat and Perk also belong to this segment. Panned chocolates accounts for 10% of the total chocolate market. Wafer chocolates such as Kit-Kat and Perk also belong to this segment.
? FORMS OF CONSUMPTION Pure Chocolates • • • • Toffees Cakes & Pastries Malted Beverages Wafer Biscuits & Baked Biscuits
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•
Chocolate Desserts
MARKET SIZE (BY VALUE & BY VOLUME)
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The Indian chocolate market is valued at Rs.650 crores (i.e. Rs.6.50 billion) a year. The Indian chocolate bazaar is estimated to be in the region of 22,000-24,000 tonnes per annum, and is valued in excess of US$ 80 million.
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•
Chocolate penetration in the country is a little over 4 percent, with India's metros proving to be the big draw clocking penetration in excess of 15 percent. Next, comes the relatively smaller cities/towns where consumption lags at about 8 percent. Chocolates are a luxury in the rural segment, which explains the mere 2 percent penetration in villages.
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The market presently has close to 60mn consumers and they are mainly located in the urban areas.
MAJOR PLAYERS
? The major players in the Indian Chocolate Industry are:
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• • • •
CADBURY’S INDIA LIMITED NESTLE INDIA THE GUJRAT CO-OPERATIVE MILK MARKETING FEDERATION (CAMPCO) (GCMMF) - AMUL COCOA MANUFACTURES AND PROCESSORS CO-OPERATIVE
Two giants - Cadbury and Nestle, dominate the combined chocolate and éclair market. Together they have a 90% share of the entire market. Amul holds a 5% share, and is present only in the moulded chocolate segment of the market.
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CADBURY’S INDIA LIMITED
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CADBURY’S INDIA LIMITED
Cadbury is a very old trusted name. It all started in Birmingham in England when John Cadbury started his family grocery shop with side business of cocoa and chocolate products in around 1824. His two sons, Richard and George, expanded their family business of cocoa and chocolate. Bournville, a town near Birmingham, was build by them as a part of expansion of their business. Cadbury family is also known for their contribution in social reforms and considered as liberals. This family was in the forefront of adult education movement in England. Cadbury was originally incorporated as a wholly owned subsidiary of Cadbury Schweppes Overseas Ltd (CSOL) in 1948. The company's original name was Cadbury Fry (India) Ltd. In 1978, CSOL diluted its equity stake to 40% to comply with FERA guidelines. In 1982, the name was changed to Hindustan Cocoa Products. CSOL's shareholding was increased to 51% in Jan '83 through a preferential rights issue of Rs700mm. The current name was restored in Dec '89. In 2001, Cadbury Schweppes made an open offer to acquire the 49% public holding in the company. The parent holds over 90% of the equity capital after the first open offer. A second open offer has been made to buyback the balance shareholding, after which the company would operate as a 100% subsidiary of Cadbury Schweppes Plc
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Ever since the Cadbury is in India in 1947, Cadbury chocolates have ruled the hearts of Indians with their fabulous taste. The company today employs nearly 2000 people across India. Its one of the oldest and strongest players in the Indian confectionary industry with an estimated 68 per cent value share and 62 per cent volume share of the total chocolate market. It has exhibited continuously strong revenue growth of 34 per cent and net profit growth of 24 per cent throughout the 1990's. Cadbury is known for its exceptional capabilities in product innovation, distribution and marketing. With brands like Dairy Milk, Gems, 5 Star, Bournvita, Perk, Celebrations, Bytes, Chocki, Delite and Temptations, there is a Cadbury offering to suit all occasions and moods. Today, the company reaches millions of loyal customers through a distribution network of 5.5 lakhs outlets across the country and this number is increasing everyday. Cadbury India limited was set up as a wholly owned subsidiary of the UK-based Cadbury Schweppes Overseas Limited in July 1948. They started off by setting up production facilities at Thane to manufacture chocolates, malted foods, cocoa powder and drinking chocolate using the technical know how of the parent company.
The company, which has experienced a 13% rise in turnover (1996-97) to Rs.354 crores, has ambitious plans to double its sales within three years time. The company has manufacturing facilities at Malanpur and Induri. During 1997, the
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company invested Rs.80 crores in the two factories. At Malanpur, the capacity of Eclairs (one of the Cadbury range of products) production was increased, a new wafer line was installed, and the chocolate making capacity was increased. This increase is from 7000 to 17000 tonnes. At Indri, a new molded line was installed to manufacture center filled molded in orange and coffee Truffle.
Cadbury is the market leader in the Indian chocolate market with a share of 70% and sales of around 12000 tons. It has successfully differentiated its product over the years by strategic brand building. The company had realized that chocolates by itself do not satisfy any immediate needs (soft drinks would satisfy thirst, ice cream would provide relief from heat), so they would have to be associated with human feelings of romance, magic, love and affection. So it had at one point of time employed emotional attachment as basis of differentiation. This has lately been modified to including the rational perspective so as to catalyze increased consumption of chocolates within the family. The key business objective of the company today is to 'continuously provide products that are value for money'.
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? On analyzing the market, the phenomenal success of the
company can be attributed to:
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The pioneer advantage - The company was the first to enter the
Indian market, as early as 1956. For a long time, it was practically the only dominant player in the market. It, therefore, enjoyed a large share of both customer’s heart and mind. So much so that for an entire generation, chocolate was synonymous with Cadbury. It is only recently that the company has started facing some threat from Nestle.
•
A strong endorser brand - Cadbury realized early that volumes
would not be enough to support all its brands with heavy advertisements. Hence what they were to take CDM as the flagship brand and advertised it heavily to popularize the brand name to help the flanker brands around CDM. But in the last two years the company has spent extensively on the chocolate wafer segment (without treating it as a flanker brand of CDM), seeing as how the segment has been growing phenomenally.
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•
Right product formulation - the climatic conditions and the Indian
taste are very different from the western markets where the company first started its operations. Cadbury was able to successfully reformulate its product as per the Indian conditions, while entrants like Nestle could not do so.
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Presence in all segments – Cadbury has a presence in the entire
range, starting from low priced hard boiled sweets and sugar confectionery to the premium range of chocolates. The company also claims success in all these segments it has been entering recently.
The following is the list of the major brands of the company:
Cadbury’s Dairy Milk Cadbury’s Gems Cadbury’s Nutties Cadbury’s Crackle Cadbury’s 5 Star Cadbury’s Relish Cadbury’s Mr. Pops Cadbury’s Eclairs Cadbury's Picnic Cadbury's Truffle Cadbury's Gold Cadbury's Bournville
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Cadbury's Tiffins Cadbury's Butterscotch Googly Mocka
The Chocolate Chronology
The following is the analysis of how the chocolate industry evolved in India. • • • • • • • 1956 - Cadbury's milk chocolate launched 1957 - Cadbury's 5-Star launched 1970 - Cadbury's Eclairs launched. 1974 - Amul chocolate launched 1986 - Cadbury's Milk Chocolate relaunched as Cadbury's Dairy Milk (CDM). 1990 - Cadbury launches premium chocolate brand Overtures 1991 - Nestle chocolates launched. Cadbury counters Nestle's entry with All Silk, and unfurls huge consumer promotion campaign. CDM revamped. Nestle launches Milkybar; Cadbury counters Creamy Bar.
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•
1994 - Cadbury's 'Real Taste of Life' and 5-Star's 'Reach for the Stars' campaign launched. Eclairs revamped and renamed Dairy Milk Eclairs.
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1995 - Cadbury launches Perk, preempting Nestle's KitKat. Overtures are withdrawn.
•
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1997 – Cadbury launches Truffle 1998 – Cadbury launches Gold, Picnic. (All these launches actually took place in the month of December, i.e. Dec’96 and Dec’97 to be more precise, in keeping with the company policy of launching the new brands at the New Year eve. However they hit the market in the month of January only)
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OBJECTIVES AND VALUES OF CADBURY’S INDIA
? OBJECTIVES • • • Grow shareholder value over the long term. Cadbury in every pocket. Our marketing strategy is aimed at achieving this vision by growing the market, by appropriate pricing strategy that will create a mass market and to have offerings in every category to widen the market.
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VALUES • • • • • Setting stretched financial objectives. Adopting Value Based Management for major strategic and operational decisions and business systems. Creating an outstanding leadership capability within our management. Sharpening our company culture to reflect accountability, aggressiveness and adaptability. Aligning our management rewards structure with the interests of our shareowners.
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?
VISION • • • • • • • • • Life Full Of Cadbury Cadbury is an organization which impacts and interacts with the consumers. Cadbury is present in most happy occasions in the life of our consumer. Our brands excite our consumer. Cadbury is an expression of a consumer's life. Cadbury Full Of Life Cadbury as a company is vibrant. Cadbury is a fun and energizing workplace. Cadbury is robust and alive.
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BUSINESS
Cadbury dominates the Indian chocolate market with above 65 - 70 % market share. Besides, it has a4% market share in the organized sugar confectionery market and a 15% market share in milk/ malted foods segment.
CONTRIBUTION TO TURNOVER
CHOCOLATE SUGAR CONFECTIONERY FOOD DRINKS
1994
59% 9% 32%
2001
65% 10% 24%
Cadbury's Indian operations are not just the largest in Asia but also the cheapest. In India, Cadbury has the largest market share anywhere in the world and has been the fastest growing FMCG Company in the last three years with a compound annual growth rate of 12.5 per cent.
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MARKET SEGMENTATION
? This can be done in two ways: • • product forms customer based.
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With Respect To Product Forms
There are four major segments in the Indian Chocolate Industry:
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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. Amul attempted to expand the category by bringing in teenagers, but it was not successful. 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. Today, this segment grows at 40% per annum, and is likely to remain an important segment for further growth.
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•
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.
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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. Both chocolates had a snack positioning. Perk offered the anytime anywhere snack proposition – ‘Thodi si Pet Puja’, whereas KitKat tried to promote snacking through ‘Have a break, Have a KitKat. The growth rate of this segment is 15-20% annually, and is estimated to be worth over Rs.100 crores, making it a very lucrative segment. 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 Indian 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.
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A new entrant in this category is Cadbury's Picnic – it is a three layered chocolate coated wafer bar with dry fruit, caramel, and crispies, priced at Rs. 14 for a 40 gm. Bar. Picnic will be used no only to expand the functional segment of the market, but also to counter KitKat and other imported bars (Snickers, Mars, and Lion). As against Perk, which is positioned as a light snack, Picnic is positioned as a heavy near meal substitute. In keeping with the company's new strategy of expanding the market, this product has been launched to develop the snacking area in the chocolate market. Cadbury is hoping to grab a 10% market share with Picnic.
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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. The opportunity for growth in this segment is high what with the imminent entry of multinationals like Mars and Hersheys. This is also likely to pose a threat to Cadbury, what with its complacency.
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•
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 Eclairs. Eclairs have 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. (65% of Eclairs eaters are from the households earning less than Rs.4000/- per month.) 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 olds 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'.
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? With Respect To The Consumer Buying Power
These are: 1. High income customers (price greater than Rs.25 for 40 gm.) who will go in for premium chocolate brands. 2. Middle income customers (price between Rs.10 – 25) who are price sensitive. 3. Children, who are mostly price driven and will consume more of toffees in the price range of Rs.0.50 – 1.
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? Psychographics And Demographics
This is attempted in terms of the consumers. 1. High income customers – it is estimated the age group buying the chocolates will be 22 onwards. The income level is estimated to be Rs.8000 per month. The customers are mostly urban, and are mostly professionals (engineers, doctors, executives, etc.) The psychographic profile: They can either be individuals indulging themselves, or they could be indulging their children. They are inner directed people who form their own values and norms and believe in not adhering blindly to social norms. They are somewhat occasion driven in their buying behavior. 2. Middle income customers – it is estimated that the age group in this segment will be 15 plus. The income level is estimated to be around Rs.5000 per month. The consumers can be urban, semi urban, and is currently spreading to rural areas. The psychographic profile: they are likely to be variety seeking in their behavior. They are self expressing by nature and inner directed to an extent. They like to indulge themselves. 3. Children – the upper age limit is estimated to be 12 years. They mostly purchase their chocolates with their pocket money. The consumers can be urban, semi urban, and rural, though their is a somewhat greater emphasis on urban. The psychographic profile: they are novelty seeking in behavior. They are also fun loving.
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PRODUCT POSITIONING
The differentiation planks used in the Indian chocolate market are:
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Product quality (levels of fat/cocoa): e.g., KitKat though priced higher, sells more than Perk, presumably due to quality.
• •
Chocolates with additives like fruits and nuts. Packaging: this being predominantly an impulse driven purchase category, packaging is an important mode of attracting attention at the display counter.
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International heritage of the product: e.g., KitKat is selling somewhat due to its international fame.
• •
As a gift item. As a snack (Note: The importance of positioning chocolates as a gift item has been receding in recent times. Now, a greater emphasis is placed on positioning chocolates as a snacking item or as a near meal substitute)
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Size (e.g., small sizes to increase trial rate): this is gaining tremendous importance today since the companies, in a bid to offer chocolates at affordable prices, are reducing their pack sizes.
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Shape (e.g., chocolates in shape of toys targeted at children). e.g., chocolates for Christmas season, by Cadbury's, which were shaped as Mickey Mouse; this was successful for the season. Also the shape has to be such that the product is sharable. This has been attributed as a major reason for success of third relaunch of KitKat.
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• Cadbury's Dairy Milk (CDM):
Cadbury's Dairy Milk is the flagship brand of Cadbury's not only in India but world wide. CDM is the single largest selling unit in India. It has annual sales to the tune of Rs.200 crore. CDM not only accounts for 30 per cent of the total chocolate market in value, but commands nearly 26 per cent in volume terms and close to 30 per cent of Cadbury's annual turnover. Moving from a predominantly adult positioning in the days of the legendary dancing girl ad, to the teens and the tweens, when the Cyrus Broacha ads hit the airwaves, CDM has made a long sweet journey. In spite of the new categories being explored by Cadbury, its star brand remains Cadbury Dairy Milk (CDM) which continues to corner almost 30 per cent of the chocolate market.
• Cadbury's Temptation:
Cadbury's Temptation is premium chocolate brand aimed for high value consumption. Various variants available are Almond, Rum, Cashew and Orange. Cadbury's temptation is priced at Rs.40
• Cadbury's Celebration
Cadbury India launched its premium Celebrations range, which contains traditional Indian dry fruits wrapped in Dairy Milk chocolate. This gifting option combines the pleasure of giving away dry fruits - which Indians traditionally consider a premium, healthy gift - with chocolate. Cadbury now has 90 per cent market share in this profitable segment
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PRODUCT LIFE CYCLE
In 1993-94, it looked that chocolates had completed the mature of PLC and was passing through its decline stage. In 1992-93, volumes had fallen by 15.6% and in 1993-94 volumes fell by 17%. As a result, in the period the total tonnage decreased from 12,000 tones to 8,000 tones. Everybody was sure that this industry was on the way to demise, but industry leader Cadbury (with around 70% --market share) bounced back in 1994 when cocoa prices again fell to their normal level. The company also changed its positioning which had been safely nurtured over many years that lead to a dramatic growth in tonnage from 10,000 tones to 16,000 tones in period 1994-96. However, there was another increase in the prices of cocoa, which led to the decline in the sales till early mid 1997. Since then the cocoa prices had stabilized leading to a reversal in the declining trend. Thus, PLC for the category can be described as scalloped PLC as industry moved back from mature stage to growth stage. The PLC graph as revealed by the industry is shown in the figure.
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PRODUCT INNOVATIONS
• 5 STAR: Consumer feedback suggested that the old 5 Star was too chewy, and people complained of it sticking to their teeth. It was made softer and melted easily in the mouth & introduced as 5 Star Crunchy
• PERK: Perk was made much lighter and the size of the bar increased to match Nestlé’s Munch. Perk had been under fire from Nestlé’s deadly duo of KitKat and Munch, but after the relaunch, its market share is two per cent more than KitKat's. And, the five-year-old brand is now almost as big as the decades-old 5 Star in size, both in the region of Rs.50-55 crore
• HEROES: Packaging innovation has played a vital role in revamping of various Cadbury's brands. Heroes brand is simply a multi-pack with miniatures of all its most popular brands in a single outer case.
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PRICING
After the roaring success of Nestlé’s Munch and Chocostick, Cadbury's empire struck back hard. The Rs.5 price point accounts for more than half of all chocolate sales. Nestle had seized the initiative at this price point, with its launch of Munch, now a roaring success (and the largest selling product at that price point). Today, Cadbury has four products at this price point: CDM, Perk, 5 star and Gems- and the five-rupee CDM bar is its single largestselling. "This is a potent price point in India, because the average purchasing power is abysmally low," is what industry analyst has to say. Nestle kicked off one of the biggest success - the liquid chocolate category with its brand Choc stick priced at Rs.2 - three months ahead of competition. Cadbury did react with Chock, priced at Rs.2, expanding the concept of sachetisation to new frontiers. Chocki has been the single biggest growth driver for Cadbury as well as the entire chocolate category. The novelty of the format endeared itself to the existing customer. In less than one year, it constituted nearly 10 per cent of the total chocolate market, split equally between Cadbury and Nestle. Volume led growth strategy Cadbury has followed a well-planned strategy of fuelling volume growth by introducing smaller unit packs at lower price points. Simultaneously, the company seems to have astutely juggled with the larger pack sizes and raised prices to a degree higher than what appears at face. The strategy has driven volumes in the last two years and we expect the volume growth to continue in the next two years. Chock, selling at a potent price point of Rs.2 was ideal for smaller towns, especially since it did not need refrigeration. But Chock started to cannibalize other higher-priced chocolates in larger markets. The students of Bombay Scottish (an up market school in Mumbai) are not supposed to eat Chocki, they should not have even heard of the product.
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•
Distribution: Chocolate needs to be distributed directly, unlike other FMCG products like soaps
and detergents, which can be sold through a wholesale network. 90% of chocolate products are sold directly to retailers. Distribution, in the case of chocolates, is a major deterrent to new entrants as the product has to be kept cool in summer and also has to be adapted to suit local tropical conditions. Cadbury's distribution network used to encompasses 2100 distributors and 450,000 retailers. The company has a total consumer base of over 65 million. Besides use of IT to improve distribution logistics, Cadbury is also attempting to improve distribution quality. To address the issues of product stability, it has installed VISI coolers at several outlets. This helps in maintaining consumption in summer, when sales usually dip due to the fact that the heat affects product quality and thereby off take. To avoid cannibalization of its higher priced products from lower priced ones, Cadbury is setting up two separate distribution channels - one for CORE business & other for MASS markets, with different stockists, wholesalers and retailers. One set will be dedicated to Cadbury's high-end products and traditional chocolates. The other will cater to the mass market brands namely Chock, Halls, Eclairs, and etc al - all products priced below Rs.3. But today, Cadbury's distribution network reaches out to six lakh outlets each for its chocolate & confectionery brands (i.e. total reaching12 lakh outlets).
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At the outset, the chocolate market appears to be price-sensitive. This is starkly brought out in the following cases: 1) When the excise-duty on chocolates was raised from 16.5% to 27.5% and cocoa prices rose by 25%in 1992-93, the retail prices went up by 30%. As a result, the sales and consumption fell by more than 30% in the next two years. 2) The major players have successfully launched small-size packs of chocolates. Keeping in mind the price sensitive nature of the market, the companies are reducing the pack sizes to be able to offer chocolates at affordable prices, and fit them to a Rs.6-8 bracket. Due to the broadbasing of the chocolate market there is a drive towards smaller, convenient packs for a larger audience and it also increases trial. However, the upper segments of the consumer base are not price-sensitive. For example, a chocolate like Kit-Kat, which is, priced 30% above its rival Perk, has a similar market share of 8%.
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PROMOTION
Typically it is said that chocolates are being eaten when everyone is happy. And this is something advertising has always portrayed. But it is found chocolates are eaten under diverse conditions and moods - when people are anxious, when they are sad, when happy - a whole range of emotions. Condensing these views & thoughts, it can be said chocolate is a true soul mate. Someone who is with you through the ups and downs of life, helping you bounce back. And that's what Cadbury's Dairy Milk (CDM) positioned itself as - a special friend. Cadbury had embarked on a strategy which involves increased consumption of its products through enhanced reach, affordability and visibility, which it feels, can be attained by creating new markets, widening the depth of its distribution network and working towards a comprehensive portfolio with brands across all price segments. On the distribution front, the company increased the number of its distribution outlets from the present 4 lakhs to 5 lakh by the year 2000. To attain the objectives of affordability, over the past two years, Cadbury has been changing its product portfolio from pure chocolate items to confectionery, which includes caramel, nuts, raisins and wafers. The aim is to bring down the price line and enter other markets than the purely urban ones. In line with this, it launched Googly in early 1997, and followed it up with products like Mocka and English Toffee. The strategy of the company has been to launch one major product and follow it up with smaller products, for instance, the launch of Picnic was followed by Cadbury Gold and a couple of sugar confectionery launches.
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Intense competition from Nestle is one of the reasons Cadbury has re-worked its product range and made efforts to enter the mass product segment. In 1998, the company moved into smaller sized versions of Diary Milk and Perk and found to its delight that the introduction of economy priced models led to more people eating chocolate. In the same year, small packs increased chocolate volumes of Cadbury by 19 per cent and market. Nestle, with a 20 per cent share in the chocolates market responded with Munch, a chocolate brand came to counter Picnic. Cadbury Dairy Milk chocolate was first introduced in the early 1900s; it made an immediate impact quickly becoming the market leader. The success story has continued. It is still the top selling chocolate brand in the country and the Cadbury Mega Brand's broad family of products today has an international retail value approaching US$ 1 billion. As an international brand, Cadbury Dairy Milk carries the same distinctive image all over the world. Wherever you buy a bar of Cadbury Dairy Milk, the pack design will be exactly the same, only the language will be different.
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THE PRODUCT CATEGORY
? Needs satisfied by product category In its present form chocolate fulfills many needs by satisfying a state of felt deprivation of some basic satisfactions. They satisfy basic physiological needs like need for food and also some socio-psychological needs like belonging, affection, social and inspirational needs. However, not all the chocolate variants may satisfy all the needs and there may be certain variants taking care of some specific needs.
• Food ? ? ? Hunger Sweet tooth gratification Taste Chocolates may be used to satisfy the basic need of hunger. In India they are neither typically seen as having wholesome and nutritional food value nor are they perceived as stomach filling. Some of them were positioned as an instant energy provider but they also were given some emotional overtones along with the rational appeal of food. The snacking concept has just caught up in India with the introduction of wafer chocolates and there also they are used to satisfy only small pangs of hunger and are used as a between meal snacks. This concept has gained more importance and with the launch of Picnic in the last year, chocolates are now intended to be used as near meal substitute. It is also used by many users as dessert; however it has still not substituted the traditional dessert of sweets. Nestle, to counter this has brought out 'Mithai Magic'. Also, Nestle has already come up with its chocolate 'After Eight', positioned as a desserts, and we foresee that with the changing taste if the consumers, this might be a lucrative market in the future.
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• Belonging: The consumption of chocolates in India is now days seen as contemporary and trendy. The chocolate consumption is identified with the feeling of self-expression and spontaneity. Many young people nowadays therefore eat chocolates to have a feeling of belonging to a group which is trendier, free from inhibitions imposed by society. Not only are the younger people, in the current scenario, chocolates also targeted at the child ego state of the adults.
•
Affection: Human being by nature wants to get affection and return it. In India many parents
have traditionally purchased chocolates for their children to show their love and affection. There was a time when the chocolate industry was primarily thriving on the satisfaction of this emotional need. This emotional platform is now being modified to incorporate the rational platform.
• Social: There were many people who want to become a part of the strata of society which is westernized and upwardly mobile, exchange chocolates as gifts (on festivals). For example, Cadbury was a pioneer in starting the concept of 'Chocolate Days' and 'Eclair Days' in colleges and schools, which led to substantial increase in the sales, which enabled the company to give discounts upto 20%.
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• Aspiration: A segment of consumers who cannot afford chocolates and generally consume sugar confectionery, sometimes eat chocolate eclairs (a product which gives taste of chocolate at far less price) as they aspire to eat better things in life like chocolates. This satisfies his aspirational needs.
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? Consumer Buying Behavior In Product Category
The product category comes under Fast Moving Consumer Foods (FMCG) and the product is generally purchased as a convenience good. The general characteristics of this product are: It is a low involvement product, but there are significant differences in various brands in market. The following matrix may help in studying the behavior of consumer for this particular product category.
High Involvement Significant differences Between brands Complex buying behavior
Low involvement Variety seeking behavior * chocolates
Few differences Between brands
Dissonance reducing buying behavior
Habitual buying behavior
In this category, consumers are often found to do a lot of brand switching. Although the consumer expects some benefits from chocolates, but he chooses a brand without much evaluation, and evaluate it during consumption only. But next time, quite often he may reach for another brand out of boredom or a wish for a different taste. Brand switching occurs for the sake of variety rather than dissatisfaction.
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Since Cadbury has 70 % of market share, this variety-seeking behavior had not affected its sales negatively. This had been possible due to various factors like lack of strong competition. However, with the new entrants in the market, there has been stiff competition. There are few segments like wafer chocolates segment where company faces strong competition from Nestle, the second major player in the market. In these segments company should try to increase brand loyalty for its brands. This increased consumer loyalty will also act as deterrent towards development of strong competitors in other segments. Further to increase the overall size of market, company should try to increase consumers involvement with chocolates. (Company can use consumer involvement achieved by soft drink marketers in USA as a benchmark. In USA, consumer involvement in soft drinks is much higher than other beverages like coffee).
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? How To Build Consumer Interest In The Product Category?
Following are the possible strategies for increasing consumer interest in the product category. • • Frequent reminder advertising and maintain a top of mind awareness for the product. Emphasize functional benefits like nutritious value of chocolates. In India chocolate is considered as a junk food. Creating consumer awareness about functional benefits can help in weakening this negative image. Here, the industry can follow the example of Max ice creams, wherein they are using the nutritional/health (more milk protein) plank to sell the ice creams to the buying unit – mothers – who can feel less guilty of buying 'junk food'. • Company can try to satisfy higher level needs of consumers like social needs, belongingness, and inspirational needs.
Our Recommendations: Out of these possible strategies, we recommend that company should try to focus on building high top-of-mind awareness, increasing reminder advertisements and educate consumers about functional benefits of product. Educating consumers about nutritious, calorific value of chocolates may be significant as per capita expenditure on food in India is significantly high and chocolates get very little of it. Also there is a need to educate the customer’s of the various need satisfactions that can be fulfilled by the use of chocolates apart from treating it like a light snack, in between kind of food item. Company has already taken a positive step in this direction with the launch of its Picnic ads wherein it has educated the customers about the heavy snacking aspect of chocolates.
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? How To Increase Brand Loyalty For Cadbury's Brands?
• Build strong relationship for different Cadbury's brands with consumers in various segments. • • By dominating the shelf space and avoid getting out of the shelf space. The company can also maintain the consumer loyalty by offering a variety brands from its own stable so that even if the consumer looks for variety, he goes in for some of that company's own stable. • By increasing the range of its products so as to increase the evoked set in the minds if the consumers.
Our Recommendations: Company already has a very strong relationship with consumers in traditional segments like moulded chocolates. Parents were using Cadbury to express their love towards their children. In fact various market researches carried out revealed that consumers see Cadbury as a synonym for chocolates. This relationship building strategy should be extended to emerging high growth segments like wafer chocolates. Apart from advertising, company can form kids clubs and sponsor various competitions like quizzes, games and music events to build a continuous relationship with target segment. Food MNC Nestle successfully utilized this strategy by forming children clubs for its noodles brand Maggi.
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Company's flagship brand CDM is already available in many variants and thus consumer opting for competitor's brands in moulded chocolate segment is very less. In other segments like wafer chocolates, company should offer more variety to retain customers. The company is already working on this strategy and has decided to launch around three to four new brands every year to offer customer’s more variety and at the same time displace the strong competitor brands from the shelf and increase its own shelf space. Company already has highest shelf space among chocolate companies and its distribution is strong enough to keep continuous availability. So there is not much scope of strengthening this network without going for increasing geographical coverage. Keeping this in mind the company has increased its retailer network by over 60% and is targeting the semiurban areas. Chocolates are a perishable item, which means that the shelf life of the product is not very long and it is important that the product moves fast. Also, it is an impulse purchase item. Most of the time the consumer decides to consumes the product at the spur of the moment. The companies can actually use this as an advantage and increase their sales since it does not involve any rational evaluation and then reaching a decision to consume.
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? How to Exploit Impulse Purchase Behavior?
?
By improving the point of purchase promotion and providing the cues to instigate the customers to consume the product.
?
Improving the visibility of the product so as to enhance the consumption Installing an extensive distribution system and ensuring that the product is available at all possible places most of the times.
?
?
Extend the gift proposition so as to position it as a gift not only for the festivals but also as a casual gift that can be given to anyone anytime.
Our Recommendations:
?
Cadbury's is already using the above mentioned tactics to exploit impulse behavior and increase the product consumption. However there is further scope to increase coverage and visibility. For this reason we recommend that the company not only focuses on the urban and semi-urban areas but also expand its coverage to the rural areas.
?
There are some elements of seasonality present in the consumption of chocolates. The sales in summer drop almost to 2/3rd of the normal sales. This is largely due to the fact that chocolates melt when kept in open during summers and hence there is a need to store them in the refrigerators, which in turn restricts the number of outlets where the product can be sold. This factor also affects the visibility of the product which is a very important criteria being an impulse purchase item.
?
Company has succeeded in positioning chocolates as an all time product (the 'Slice of Life' campaigns) that can be consumed anytime and anywhere, to treat others and also one. It is the spirit of enjoying life at every step of the way and with this theme they have succeeded in overcoming the barrier of using chocolates as a gift only for the festival season.
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? How to overcome this seasonality factor?
The seasonality factor in the sales can be eliminated by improving logistics and packaging in order to make the product more durable and long lasting in intense heat too. Therefore we feel that the company should pay immediate attention towards increasing logistics. It can perhaps, incorporate some strategies or experience of the ice-cream players in the market. These companies have extensively used cold chains and tie up with regional players to overcome problems created by the high temperatures in the summers. In fact, KitKat had succeeded in countering the temperature problem with its packaging. Cadbury’s had also to some extent managed to counter this problem with its packaging for Perk, however it has to innovate and improve significantly to counter this heat problem and be able to use this as a differentiating factor while selling its chocolates.
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CORPORATE STRATEGY
? CADBURY'S BUSINESS STRATEGY Cadbury realizes that being market leader in the chocolate market it will have to bear the onus of expanding the size of the market; there was not much scope of increasing the market share at the expense of existing players. Thus resulting business strategy consists of having a presence in all the segments with a clear differentiation among offerings in different segment and a different proposition for each of them. Further, the company follows a multi branding strategy i.e. having more than one brand cater to a particular segment that may even lead to the cannibalization of sales of one brand. The game plan for the company is to increase the consumption of chocolate and confectionery among adults by offering products in convenient packs at affordable price. To achieve this it has chosen the local manufacturing route. This also makes business sense it sources almost every raw material locally (except cocoa, one third of which is imported from south east Asia and Africa since the domestic production is falling short).
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? Short Term Objective And Future Plans
The short-term objective of the company is to develop brands with mass franchise and widen out its distribution network further into the rural sector. This is in keeping with the awareness that new product development provides the key to growth in this market.
The company plans to launch one new product every year and extend its sugar confectionery range. The overall strategy is to launch three or four products every year, but only one of the brands will be a big launch, the rest being soft launches. This year the company chose Picnic as its big launch.
The company is also focusing on exports. The current exports constitute 2.5% of the total turnover of Rs.354.14 cores. The company has clear intentions of improving margins which will be achieved by controlling indirect costs, reduced wastage, freeze manpower, and cut non profit expenditure. The company expects healthy cash flows in the future due to decline in the capital expenditure depreciation, which will further bring down the interest costs. The future strategy of the company is to maintain is dominance.
The company has started to associate the umbrella name of Cadbury's with events like the Film fare awards, and Zee Cine Awards, and movie screenings like Air Force One to promote the brand name further and also to simulate recall.
The company is aiming at overall growth rate of 18%. In keeping with this objective the company has increased its advertising spending and marketplace investments by 40% over the year 1997. The Cadbury account in India which is handled by O&M is worth Rs.29.62 cores.
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? Currently if we see, the company has its products focused around three basic propositions. • Drives attitudes and behavior: This is led by the company's flagship brand Cadbury Dairy Milk (CDM). CDM is currently positioned on the emotional plank of spontaneity and selfexpression and is targeted mainly on the adult consumer.]
•
Drives Snacking Consumption: It has three main brands in this category - 5 Star, Perk and Picnic. However the three brands are positioned in a slightly different manner. Perk is positioned as an any time snack anywhere, whereas 5 star is positioned as an Energy Bar. Picnic is positioned as a heavy snack bar which can be had as a near meal substitute
•
Drives variety, gifting and taste preference: The two brands in this category are Gems and Eclairs. However, there is a lot of difference between these two brands. While Gems is targeted primarily at children, Eclairs is a chocolate simulator, which simulated the taste and the feel of the chocolate but has to popped in the mouth like a toffee.
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Drives attitude Drives snacking and behaviour consumption 5-Star Endorsers Dairy Milk Perk Picnic Bournville Crackle Flankers Nut Milk Fruit & Nut Creamy Bar Roast Almond Break
and Drives variety, gifting and taste preference Gems Dairy Milk Eclairs Butterscotch Caramels Nutties Tiffins Relish Truffle Mocka Overtures withdrawn) All Silk (now
Prodigals
Besides these endorsing brands, Cadbury traditionally has maintained a whole battery of flank and satellites in its brand portfolio. It has always focused on preempting any moves by a competitor by launching a brand of its own. The threat of Nestle's entry led to the launch of tactical brands like All Silk, Crackle and Break. Therefore, in the Cadbury's brand system, the flanker brands are used for the tactical purpose of plugging a gap in the segment where the threat of entry by a rival brand was imminent. Cadbury has also entered the sugar confectionery range of Googly and Mocka with the intention of expanding its range further. However, Nestle's successful entry through KitKat in the wafer segment proved that unless you support your flank brands actively, they are not going to be of any use in blocking competition. And hence Cadbury is showing some active interest in the area.
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? The Essential Advertising Strategy It has been noticed that the basic advertising strategy of Cadbury India Limited regarding its chocolate and confectionery products is that of main media vehicle being television, and to a lesser extent, outdoor advertising. There is not that extreme emphasis on print media advertising. There is also some amount of radio advertising but only on the FM stations in the metro towns
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? Marketing Strategy
The company's marketing strategy was mainly based on remarketing the product category. lts objective was to revitalize the faltering demand and to search for new marketing propositions to start a new life cycle for the declining product. The onus of this marketing task was more on Cadbury than on any other player in the market. Being a market leader, it was the both the responsibility and necessity for the company to revive and increase the market. This was very true in the context of the theory that the market leaders stand to gain the maximum with an increase in the market size. With the entry of Perk and KitKat in 1995, CDM's performance was affected because consumers attention was diverted by the variety and excitement now available in the market place. In addition to this, primarily in metros the CDM consumers were graduating to functional offerings like KitKat or Picnic. So in the future, CDM's primary focus would be to widen franchise in smaller tows where penetration is currently low, and also to stress on the platform of mood upliftment rather than hunger satisfaction.
? Possible Marketing Strategies For Achieving Above-Mentioned Objectives There were three basic strategies Cadbury could have taken to capture the downfall in its sales, in 1994. 1. Market Modification • To look for new markets and market segments and thus find new buyers for the product. • • To stimulate the increased usage of the product among present customers. To repositioning the brand to achieve larger brand sales.
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2. Product Modification
•
To bring about improvement in the product and increase in the functional values and thus generating new users.
•
To come out with the new variants of the product, with clear differentiation from the existing product and try to tap a different set of users for the product.
3. Marketing Mix Modification • • • To cut prices to draw new segments To push the product through trade promotions. To search for a new and brilliant advertising appeal that wins the customers attention and favour.
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? Possible Strategies That Cadbury should adopt:
The increasing competition in the chocolate market would have prompted companies not only to go for line extensions of the existing products but to also diversify into other related areas. Some of the possibilities that existed at that point of time for market leader, Cadbury are briefly stated below• Expand into sugar confectionery market. (the volume of chocolates is around 16000 tons whereas sugar confectionery is approximately 2 lakh tons). • • Set-up a manufacturing base in India for Exports. Cultivate cocoa beans, (which accounts for 50% of the total raw material costs) domestically which is 50% cheaper than imported ones. • Expansion in the rural/semi-urban markets, class IV and V towns (here Nestle have an upper hand compared to Cadbury's at present). • Position the products for corporate gifts, although this market exists the potential is still unknown and none of the players have seriously eyed this market. • Convert light users to heavy users, by introducing new large packages at lower prices compared to the existing prices. • Introduce small packs (1 piece of chocolate per pack), to induce trial rate, this is more important in light of the decision taken by the companies to enter the rural market.
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? New Product Forms
Other recommendations are to launch new products linked to their core offerings. The company should seriously look for taking chocolates in other product forms: • Chocolate sauces, particularly used as toppings for ice creams are getting popular in India. No organised sector market exist for this product category. Cadbury can continue its pioneering tradition by entering this sector. Considering that ice cream market is a high growth category ,this may turn in to significant volumes for Cadbury. • • Chocolate cakes. Like CDM-cake/Nestle Milk Cake in line with Britannia's Merricake. Liquid chocolate, different variants can be launched. Liquid chocolate such that it can be used with Cold Water (like Rooh Afza), • Chocolate biscuits by CDM and Nestle with their different brands, e.g. with white/brown chocolate. • The company can also consider rejuvenating its dormant chocolate drink by marketing it as a cold, ready to drink milk and using dispensers to distribute it. • Further, if the company has ambitions to tap the huge market for snacks in India, it should consider launching variants of chocolates which can directly compete with traditional Indian snack in terms of tastes as well as price. Nestle tried to do so in the area of sweets, by launching MithaiMagic, although it bombed at the marketplace at the initial launch. • Position the brand as an alternative to other meals during breakfast, and thus can be taken with hot/cold milk in breakfast. This alternative will have an implication on package sizes, the company will have will have to introduce large family packs say 400/500/1000 grams. • Chocolates from vending machines at places like Railway stations/offices/schools, and make it as an attractive new concept.
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THE CURRENT SCENARIO
Chocolates are an impulse category which makes relying on the same advertising stimulus for too long a time infeasible. The key to success is to keep inventing the same spark of spontaneity. Cadbury tried to achieve this, however, O&M's creative team found it difficult to recreate the same magic in its advertising as that created by the Slice of Life and the Cricket Ad. It was a classic problem of being unable to extend a big idea. They launched a new test ad referred to as 'the bird ad' which was run in Calcutta. But it was withdrawn as it did not gel with the brand personality. In 1996, the company released 'the bicycle commercial'. But the post launch research showed that the ad was perceived as contrived because people could not relate to the bucolic surroundings that seemed more like an English countryside than an Indian setting. However, since the brand's identity needed to stay contemporary and fresh, the ad was aired for some time. By the end of 1996, fatigue seemed to have set in and there was a hint of a slowdown in volumes. Through the year 1997, no major initiative on CDM was made except for the Independence campaign which was largely a tactical response. This year, the company continued with the 'slice of life' mode of advertising through its elevator series of ads.
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CADBURY AND THE WORM CONTROVERSY
The discovery of worms in some samples of Cadbury's Chocolate in early October 2003 created one of the biggest controversies in India against a Multi National reputed for being a benchmark of QUALITY. The controversy created an deep adverse impact on the company with their sales not only drastically dipping down, but at the same time allowing the competitors to establish their foothold and taking maximum advantage of Cadbury's misfortune. The controversy, and the adverse publicity received in several countries, set back its plan of outsourcing model which would have resulted in significant revenue generation, several months back. The "worms' controversy" came at the worst time? The next few months were the peak season of Diwali, Eid & Christmas. Cadbury sells almost 1,000 tonnes of chocolates during Diwali. In that year, the sales during festival season dropped by 30 per cent. The company saw its value share melt from 73 per cent in October 2003 to 69.4 per cent in January 2004. In May, however, it inched up to 71 per cent. CDM sales volumes declined from 68 per cent in October'03 to 64 per cent in January 2004. Clearly, the worm controversy took a toll on Cadbury's bottom-line. For the year ended December 2003, its net profit fell 37 per cent to Rs 45.6 crore (Rs 456 million) as compared with a 21 per cent increase in the previous year. However, Cadbury's reiterated that
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all through the 55 years of leadership in India, that it has remained synonymous with chocolates and have remained committed to high quality and consumer satisfaction.
CABDBURY'S FIGHT-BACK ? 'Project Vishwas'
"Steps to ensure quality & regain the confidence" Following the controversy over infestation in its chocolates, Cadbury India Ltd unveiled ‘Project Vishwas', a plan involving distribution and retail channels to ensure the quality of its products. The company's team of quality control managers, along with around 300 sales staff, checked over 50,000 retail outlets in Maharashtra and replaced all questionable stocks with immediate effect. The Vishwas programme was intended to build awareness among retailers on storage requirements for chocolates, provide assistance in improving storage conditions and strengthen packaging of the company's range of products. Cadbury reduced the number of chocolates in its bulk packets to 22 bars from the present 60 bars. These helped stockists display and sell the products "safely and hygienically" 190,000 retailers in key states were covered under this awareness programme.
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? The Big 'B' FACTOR The big factor that has pushed up CDM sales is the Amitabh Bachchan campaign. It helped restore consumers' faith in the quality of the product. In early January, Cadbury appointed Amitabh Bachchan as its brand ambassador for a period of two years. The company believed that the reputation he has built up over the last three decades complements their own, which was built over a period of 50 years. Yet the entire credit of recovery could not be attributed to the brand mascot.
• Incisive action taken by the company also helped. Some of which were:
1. Responded to consumers concern over the issue rapidly. Also, the communication campaign worked effectively in giving out the central message. 2. The packaging was changed to include a sealed plastic wrapper inside the outside foil. Cadbury's launched a new 'purity-sealed' packaging for its flagship product, Cadbury Dairy Milk. The packaging is in response to foreign bodies, notably worms, being found in its products. Over the next few weeks Cadbury will work towards introducing either a heat sealed or a flow-pack packaging that offers a high level of resistance to infestation from improper storage. 3. New advertising & promotion campaigns were in place which accounted for an Ad spend of nearly Rs 40 crore (Rs 400 million) Cadbury invested nearly Rs 25 crore (Rs 250 million) this year on new machinery for the improved packaging.
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? CADBURY'S SINGING SWEETLY AGAIN
All is well that ends well. And for Cadbury's India, nothing can be sweeter than Regaining Back the Consumer Confidence. Thanks to quick action taken to recover the damage done by the worm controversy like Operation Vishwas, adopting new packaging & massive advertising with Mr. Amitabh Bachchan as their brand ambassador, Cadbury's regained its market share. The survey conducted by the company says that consumers have long forgotten the controversy and are back to their merry chocolate-chomping ways. Sales were back to the precontroversy levels. Consumer confidence in the product was back and there was a steady progression in sales .The company posted a high double digit sales growth in that year end. The recovery began in May 2004 when Cadbury's value share went up to 71 per cent. Hires AT Kearney to curb costs Cadbury India appointed management consultancy firm AT Kearney to draw up a strategy to control costs in several areas, including sourcing of raw materials and packaging. This was partly an outcome of the worms' controversy more than a year ago. Among other things, it changed the wrappers for its Cadbury Dairy Milk brand and introduced better coolers. The consultancy firm will also look at the sourcing of direct and indirect materials like renegotiating with suppliers for longer term contracts and vendor management. Other costs (indirect expenses) like travel costs and hotels were also being studied.
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In other words, Cadbury is trying to reduce the cost per stock keeping unit (SKUs, or packs). The aim is to improve efficiencies.
? Earnings sensitivity factors; • Cocoa bean prices: Domestic as well as international prices of key raw material cocoa have significant impact on margins. • Excise duties: Changes in excise levied on malt and chocolate influences end product prices and thereby volume growth as well as margins. Changes in custom duties and foreign exchange fluctuation: As 20% of raw material is imported, changes in custom duties & foreign exchange fluctuations have significant impact on the final cost of the product. Competition from MNCs like Nestle as well as imported brands. Increasing competition puts pressure on advertisement budget and margins. However on the positive side, it helps in expanding the market.
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SUCCESS FACTORS OF CADBURY’S INDIA LIMITED
1. Global management processes: India occupies a high profile position in the global organization, with advocates in regional and global headquarters. Global management has allowed the local operation a high degree of flexibility in growing the business, understanding that asset utilization may be lower and returns slower to arrive, but expecting volume share to compensate for lower margins in the long run. 2. Local management processes: The Cadbury India team is all-Indian and has a deep understanding of local market dynamics. The business is set in a way that highlights localization across all facets - driving the belief that the only way to succeed in India is by developing localized business models. For example, the company tailored the chocolate formula in India to prevent melting in the country's open-air high frequency store environment. 3. Customized business models: Local management has set up systems to test and develop products from the ground up with specialized interlinked cells that execute innovation and market testing hand-in-hand. Cadbury India is known as a key product innovator. Besides Dairy Milk, the entire Cadbury product portfolio in India has been developed locally to suit Indian consumer tastes. Packaging, marketing and distribution have all been tailored to local market conditions.
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4. Royalty Structure: Royalty to Cadbury Schweppes Plc., is around 1 per cent of the turnover. But with that, the company gets unlimited access to latest technology, new products and so on. They can also introduce new products from the parent, if it is suitable for Indian market. 5. Subtle reengineering of raw material mix led to cost savings: Cadbury has reduced its dependence on cocoa, thus lowering its exposure to volatile raw material prices as well as cutting costs. It appears that they have subtly altered its recipe by using less of costlier cocoa and more of milk and sugar. Cadbury's launch of Perk has also contributed significantly in reducing the proportion of cocoa in the overall raw material mix. Consequently, Cadbury saved about Rs.94mn (1.8 percent of net sales) in FY1999.
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SWOT ANALYSIS
As you know SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in any other situation requiring a decision. Strengths and weaknesses are internal factors and opportunities and threats are external factors.
? As per as the Cadbury India is concern the SWOT analysis is as follow: STRENGHT:
• Cadbury Schweppes plc is a very profitable organization, generated revenue of more than
£6,508 billion (2005).
• It is a global chocolate brand built upon a reputation for fine products and services. • Cadbury Schweppes plc was one of the Fortune Top 100 Companies to Work For in
2005. The company is a respected employer that values its workforce.
• The organization has strong ethical values and an ethical mission statement
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• •
The third largest beverage company in the world. The fourth largest confectionary companies in the world
• •
Products are sold over 200 countries. Profits are increasing year by year.
WEAKNESS:
• Cadbury has a reputation for new product development and creativity. However, they
remain vulnerable to the possibility that their innovation may falter over time.
• The organization has a strong presence in the United States of America, UK and India. It
is often argued that they need to look for a portfolio of countries, in order to spread business risk.
• Cadbury's recall over 1 million chocolate bars over salmonella fears. • The organization is dependant on a main competitive advantage, the retail of coffee. This
could make them slow to diversify into other sectors should the need arise.
• The company has no apprehensions of cannibalization of its chocolate brands. Small
range of products.
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OPPORTUNITIES:
• Cadbury company is very good at taking advantage of opportunities. • The company has the opportunity to expand its global operations. New markets with new
products which are limited in particular region.
• Cadbury has decided to focus on a few of its key brands such as Cadbury Dairy Milk,
Bournvita, Eclairs and Halls to drive growth for the company.
• Co-branding with other manufacturers of food and drink, and brand franchising to
manufacturers of other goods and services both have potential.
• Cadbury India is attempting to increase the declining market for chocolate with innovation,
one of which is its sweet snack, Bytes.
• Brand ambassador Amitabh Bachchan for advertising there new products.
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THREATS:
• Who knows if the market for Cadbury will grow and stay in favour with customers, or
whether another type of beverage or leisure activity will replace coffee in the future?
• Health organization have so many barriers for new development. • Cadbury’s are exposed to rises in the cost of chocolate and dairy products. • Entry into salted snacks was ruled out so it is important to do new innovation and
marketing research.
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CASESTUDY ? Cadbury Bytes
?
Market Background:
Cadbury is the market leader in chocolates but was a new entrant in the packaged snacking category. The company had a loyal child following but snacking was driven by teens and adults. The Indian palette also showed a distinct preference for salty snacks. Overall brand Cadbury strengths in the confectionery market were weaknesses in the packaged snacking market. Snacks were also largely driven by shared consumption vis s avis confectionery which is largely an impulse individual consumption
? Competition:
Well entrenched competitors and local unorganized players which are synonymous with snacking and dominated the market.
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? The Brand:
Cadbury Bytes was a one of a kind snack, in that it was sweet and not salty and had the irresistible taste of Cadbury chocolate in it. To be positioned effectively as a snack it had to offer the irresistible taste of Cadbury chocolate in the context of shared snacking.
? The Brand Objective
Position Cadbury Bytes as the "people magnet" of snacking which led to being creatively expressed as "Bytes Jahaan Public Wahaan!"
? The Results Cadbury Bytes expands the chocolate category.
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? Cadbury 5 Star Crunchy
? Market Background:
Cadbury is the market leader in the chocolates category, with Cadbury 5 Star being its second largest brand. Cadbury 5 Star which is unique bar of nougat and caramel enrobed in Cadbury Dairy Milk Chocolate provides one of the most distinctive and involving chocolate eat experiences. However in recent years the Cadbury 5 Star franchise was in decline.
? Competition The brand was under threat from other more offerings in the market.
? The Brand
Cadbury 5 Star needed to introduce an element of surprise in its eat experience to
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gain share among lapsed consumers. To do this the variant Cadbury 5 Star Crunchy was launched- which still had the richness of caramel, chewiness of nougat but also contained rice crispies.
? The Strategy The campaign was built around the proposition of an " unexpected surprise" which had a surprise in every bit. This was creatively expressed as " Naya Five Star Crunchy.. Ab har bite main Arrey!" The campaign targeted at youth was executed in a lighthearted vein built around a boy-girl relationship. In order to engage youth the campaign was executed across TV, radio, internet, outdoor and print media.
? The Results The brand registered double digit growth post the launch.
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MARKETING – PROMOTION OF CHOCOLATES IN INDIA
Traditionally, chocolates were always targeted at children. But stagnancy in growth rates made the companies re-think their strategies. Cadbury was the first chocolate company that took the market by storm by repositioning brands at adults, as opposed to children.
? BUYING BEHAVIOUR Chocolates are consumed as indulgence and not as snack food, as prevalent in western countries. Almost 75% chocolates are impulse purchases. Chocolates are bought predominantly by adults and gifted to children. On an average the wholesalers sells Rs50000/month of Chocolates (all brands included). Also the wholesaler usually deals in all kinds of FMCG goods, Foodstuff in addition to the chocolates. The items like chocolates are placed near the counter. Chocolates are kept in cardboard boxes and are also delivered in the same. In a few of the cases the chocolates were kept separately (as per equipment provided by the manufacturer - e.g. VISI Coolers), In addition to marketing promotions companies have been focusing extensively on the promotions by the sales staff. Also the companies can devise there marketing strategies that are catering to specific segments and are thus more effective.
? NATURE OF RETAIL OUTLET
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Chocolates are primarily sold through Kirana Stores, Gift stores, Medical Stores, canteens, Pan-Bidi stores, Bakeries, Sweet Shops etc. This is true for chocolates also. The space allocated for the chocolates was less when compared to the total area of the shop. Of the space allocated for chocolates, Cadbury brands occupied more than Nestle brands. The chocolates category thrives on excitement. It's all about giving the consumer a choice and taste which they enjoy.
? STOCKING OF THE PRODUCTS. In most of the cases, various brands of chocolates are kept together. In some of the cases the chocolates are stocked depending on the manufacturer's provision. The chocolates are kept in Glass Jars and boxes - These are provided by the respective companies along with the product. The chocolates are kept there. But in most of the cases chocolates are stocked near the counter. Ideally the shopkeeper tries to keep chocolates within the reachable (sitting on the counter) distance. Chocolates are kept at or below the eye level. This is to facilitate visibility of the chocolates for the customer who is visiting the store. Medium size retailers sell chocolates of about Rs. 400 - Rs. 800 per week while big retailers sell chocolate worth Rs1000 or more per week.
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PROBLEMS AND CHALLENGES IN INDIAN CHOCOLATE INDUSTRY
1. TEMPERATURE: A peculiar problem that hinders the distribution to far-off places is the tendency of chocolates to melt under even moderate heat. The temperatures can reach as high as 48 degrees in summers, whereas chocolate starts melting at body temperature (about 37-38 degrees). Manufacturers have to take precautionary measures to ensure the preservation of chocolates especially in summer.
2. UNAVAILABILITY OF CONTROLLED REFRIGERATION: India does not have controlled refrigerated distribution. Air-condition supermarkets are rare. Cadbury loses 1.5 percent of annual sales of Rs. 6.8 billion to heat damage. Companies revise ingredients to make chocolate withstand heat, and so Indian chocolates are more resilient to heat than Eurupean chocolates by a factor of 2 degrees. Ironically, the chocolate market has grown recently because smaller retailers have stuffed fridges and coolers supplied by the cola companies Coke and Pepsi with chocolates. Nestle and Cadbury have tried to provide loans for retailers to buy fridges, but to hold down power costs the shopkeepers switch off the fridges at night. As a result the cocoa fat
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melts and migrates to the main body of the chocolate bar. When the cooling is switched on in the morning, the cocoa fat solidifies and turns white, presenting a bizarre, un-sellable white on black form. Nestle tried to provide fridges with see-through doors, but was appalled to see its chocolates sandwiched between dead chicken, butter and vegetables.
Small coolers were provided to retailers to keep the chocolate from melting, but that didn't quite do the trick. Electricity costs money and is not provided in a uniform way, so on and off the electricity goes and the product may suffer sometimes.
3. RAW MATERIALS: Cocoa is the key raw material and accounts for around 35% of the total material cost(including packaging) of chocolates. The price of cocoa has been hitting a new high of late. Cocoa prices are at a near 20-year high at $2358 per ton, up from $900 a year back. India does not produce cocoa to any noteworthy extent but is a large consumer of chocolates. Consumption of chocolates and other cocoa-based products, especially among the middle class, has been growing.
4. TRANSPORTATION: Chocolate needs to be distributed directly, unlike other FMCG products. 90% of our products are sold directly to retailers. Building such a direct network in rural areas is a daunting task since the infrastructure is poor in India in rural areas.
5. THREAT FROM IMPORTED BRANDS: Free availability of imported brands bought through illegal routes pose a threat to the domestic chocolate industry. Usually, these imported chocolates taste better than domestic
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chocolate due to recipe difference. Hence consumers who are willing to spend a little more, prefer these imported chocolates.
However, the premium brands, which come through official channels, do not pose a threat to the market, as these cater to a small niche market. However there is a lot of dumping from neighboring countries like Dubai, Nepal, etc of inferior brand of imported chocolates. These are not only of low quality, but are brought very near to their expiry dates. Most of the cheap chocolate brands that are available do not meet Indian Food Regulations.
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EXTERNAL FACTORS AFFECTING GROWTH OF CHOCOLATE INDUSTRY IN INDIA
? Good monsoon ensures adequate availability of raw materials, which are mainly agricultural in nature. Raw material prices have significant influence on margins. ? Government policies in terms of licensing, duties, movement of agricultural commodities etc, also affect the introduction of products, time lag for a product launches, taxes, excise, etc all influence the business.
? Market growth driven by overall economic growth and urbanization also contributes. An overall booming economy will consume tonnes of chocolates because consumer spending increases. Also, the absolute number of consumers in middle class & upper middle class increases. ? Rupee depreciation improves export realizations, however it also makes import of raw material(esp. cocoa) expensive.
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GROWTH OPPORTUNITIES IN INDIAN CHOCOLATE INDUSTRY
? Untapped Market & Limited Consumption:
?
The fact that chocolate is not a traditional food, high prices and domestic
production problems will provide the main problems to market growth. As these markets develop, prices will fall making these products more accessible to the wider population. However the Indian market is still untapped and provides immense scope for growth, both geographically as well as product basket wise. Chocolates right now reaches about 70mn to 75mn consumers. It is estimated
?
that chocolates have a potential market of about 116mn consumers. Chocolate consumption in India is extremely low. Per capita consumption is
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around 160gms in the urban areas, compared to 8-10kg in the developed countries. The per capita chocolate consumption in India is still much below the East Asian standards. Hence per capita consumption has a immense scope for improvement. In rural areas, it is even lower. Chocolates in India are consumed as indulgence
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and not as a snack food. A strong volume growth was witnessed in the early 90's when Cadbury repositioned chocolates from children to adult consumption. The biggest opportunity is likely to stem from increasing the consumer base.
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Leading players like Cadbury and Nestle have been attempting to do this by value for money offerings, which are affordable to the masses. We also believe that the near term opportunity lies in increasing penetration rather than increasing the intensity of consumption. In the past five years, the chocolate business grown by 14-15% on an average and is expected to grow further for at least next five years.
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CHANGING ATTITUDES & CONSUMPTION PATTERN
In the past, chocolate consumption had been restricted by low purchasing power in the market. Chocolates and other cocoa-based snack foods were looked upon as food suitable only for elitist consumption till recently. But with the launch of lower-priced, smaller bars of chocolate in the last two years and positioning of chocolate as a substitute to traditional sweets during festivals, have boosted consumption. Chocolates which were considered to be an elitist food hit the fancy of masses looking for a change in life style at affordable cost.
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? RURAL EXPANSION
Rural market and small town markets are seen as the key to spurring double-digit growth. Products such as liquid chocolate packs from the existing portfolio are expected to enable rapid acceptance.
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LEVERAGE INDIA FOR OFFSHORING
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India is being leveraged for export of finished goods, as a superior
destination for manufacturing best practices, and for BPO opportunities. All the above points bring us to a conclusion that there's an immense scope for growth of chocolate industry in India not only in its offering pattern but also for increment in its total Consumption value and size.
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STRATEGIES FOR GROWTH AND SUCCESS OF CHOCOLATE INDUSTRIES IN INDIA
? Revamp the product to keep the excitement alive. ? Companies should look at new avenues, while expanding the reach of its products. Distribution will hold the key. Companies need to reach out to smaller towns, where three-fourths of the population does not even know the product. ? Merger & Acquisitions: Mergers & Acquisitions with companies that match the product portfolio & overall growth strategy should be considered which will not only strengthen the company to establish a stronger hold in the country but also ward off possible competition in the select category. Such collaborations will also facilitate companies to use each other's distribution networks.
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CONCLUSION
? The Indian Chocolate Industry is a unique mix with extreme consumption patterns, attitudes, beliefs, income level and spending. At one hand, we have designer chocolates that are consumed when priced at even Rs.2500/kg while there are places in India where people have never even tasted chocolates once. ? Understanding the consumer demands and maintaining the quality will be essential. Companies will have to keep themselves abreast with the developments in other parts of the world. ? PRICING is the key for companies to make their product reach consumers' pockets. Right pricing will make or break the product SUCCESS. ? Economical distribution of the products will also be equally important.
? The companies' strategies should focus on driving sales through a right product mix, efficient materials procurement, reduced wastages, increased factory efficiencies and improved supply chain management.
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? There's an immense scope for growth of chocolate industry in India - geographically as well as in the product offering. ? The Indian Chocolate Industry is destined to grow and will do so in the future.
BIBLIOGRAPHY
Kapferer, Jean-Noel. "Strategic Brand Management". The Free Press. A division of Macmillan, Inc. 1992 Edition Kotler, Philip. "Marketing Management" Analysis, Planning, Implementation, and Control Prentice-Hall, Inc. Eighth Edition Aaker, David, et al, "Advertising Management" Prentice-Hall, Inc. Fourth Edition Business Line 'Catalyst' – Thu. Feb 19,1998. Financial express 'Brand Wagon' – Fri, Oct. 27, 1995
Internet Sources: • • • • • •
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www.business-standard.com www.financialexpress.com www.economictimes.com www.indiaserver.com www.expressindia.com www.indiainformer.com
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www.cadbury.co.uk www.india-today.com/btoday
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