CHOCOLATE INDUSTRY

Management Research Project-1

Submitted
In the partial fulfilment of the Degree of
Master of Business Administration
Semester-1
By
Name: Mauli Y. Parekh Roll No.25
Name: Vandana Bhagchandani Roll No.2
Under the Guidance of:
Prof. Rachita Jayswal
Submitted To:
A.M.P.I.C.S Institute of Management.
Ganpat University,
Kherva.
November, 2010.

1
 Contents

SR Particular
NO.
Executive Summary
Objective and Scope
Objective
Scope
Research Methodology
Identification of Topic
Research type
Research Design
Data collection
Sample Size
Selection of Brands
Research Instruments
History of chocolate
Chocolate industry- An Overview
National brands
Cadbury
Parle
Amul
Nestle India
Local brands
Michi’s
Baba kent
Linkage
Secondary objective
Market strategy
Target audience
Packaging & labelling
Questionnaire
Analysis
National brands analysis
Local brands analysis
Overall view
Kids survey
Finding & recommendation
Bibliography

2
 PREFACE

As a part of MBA curriculum and in order to gain practical knowledge in field

Of management, we are required to make a report on any Business related topic.

The basic objective behind this project is to gain the knowledge about the Consumer Behaviour and to
interpret its various implications. We have selected the topic, Consumer Behaviour Regarding
Chocolate Industry.

The chocolate industry is an ever-growing industry and is expected to face a boom in the coming years
too .A large numbers of Chocolate industries have been established in Gujarat. Also a majority of the
Industrial Units are established at Naroda, Narol and Kubernagar in Ahemdabad.

The preparation of this project is mainly based on the facts and findings noted through the primary
data collected by us from the visits to the companies and from various written and published
documents.

The objectives of the report are to understand the factors influencing the purchase decision of the
brands of chocolate industry in ahemdabad and to find out the marketing strategies and problems of
chocolates industry.

The scope of our project is limited to the chocolates industry and is confined to the industrial units
located in ahemdabad.

Inspite of our best efforts, there may be errors of omission and commissions in the project for which
we as a group take full responsibility.

3
 ACKNOWLEDGEMENT

Though this acknowledement, we express our sincere gratitude towards all those people who have
helped us in the preparation of this project, which has been learing exprience.

We appreciate the co-operation extended by the marketing heads of all the companies in giving us all
imformation that made it possible for us to make this project.

We would like to thank the director, Prof.(Mrs.)H.D.Trivedi, the faculty, the computer lab operator,
the librarian and the administative staff of B.K majumdar institute of business administration-
H.L.B.B.A for their support.

Finally, we express our sincere thanks to Prof. Arun Prasad who guided us throughout the project and
gave us valuable suggestions and encouragement.

4
 EXECUTIVE SUMMARY OF
CHOCOLATE INDUSTRY

BACKGROUND:

The origins of chocolate can be traced back to the ancient Maya and Aztec civilizations in Central
America, who first enjoyed 'chocolate'; a much-prized spicy drink made from roasted cocoa beans.
Chocolates bars are first manufactured at a confectionery level in the year 1765. Chocolate was first
manufactured at Milan. The chocolate industry has undergone a sea of changes in past years. Advent
of industrialization opened new avenues for chocolate industry. There are many famous brands are
available in chocolate industry. Some imminent brands in chocolate are Nestle, Cadbury, Amul, Gand
many more. The process of chocolate making is quite interesting. The therapeutic uses of chocolates
are established scientifically. Many international brands of chocolates are available worldwide.
Depending upon what goes into it there are many types of chocolates available now. These types of
chocolate include cocoa powder, dark chocolates, bittersweet chocolate, semi sweet chocolate, sweet
dark chocolate, milk chocolate. The chocolate industry has grown to a worldwide industry topping $50
Billion in retail sales worldwide and continues to show healthy growth. Recently, there has been an
increasing trend towards high quality chocolates such as chocolates with high cocoa content and or
chocolates flavored with natural flavors and rich spices.

OBJECTIVE:

The primary objective of our project is to study the factors influencing the purchase decision of rural
and urban consumers consuming different types of national and local chocolates.

The secondary objective of our project is to find out different types of marketing strategies used by
retailers and wholesalers.

5
SCOPE:

The scope of our research is confined to the chocolate industry only. We will be limiting our findings
to only retail consumption. The scope of our survey will be limiting to Ahmedabad city only. For the
purpose of our study we will choose four representatives of this industry viz.

NATIONAL BRANDS: LOCAL BRANDS:

1.) Cadbury 1.) Kent

2.) Nestle India 2.) Michi

3.) Amul 3.) Pelican

4.) Parle 4.) Ayush

RESEARCH METHODOLOGY:

RESEARCH TYPE:

We will follow the descriptive type of research.

RESEARCH DESIGN:

We will adopt the survey method and observation method. A survey research will help us in studying
the extent to which the factors influence the purchase decisions.

6
DATA SOURCES:

PRIMARY SOURCES:

We will collect a survey amongst consumers of different types of chocolates. We will also collect
information from various company offices.

SECONDARY SOURCES:

We will referring to various websites, journals, books, magazines etc.

RESEARCH INSTRUMENT:

The research instrument will be questionnaire

CONCLUSION:

From this project we will expect to find out the factors affecting the extent to which they affect the
purchase decisions.

7
 Content
Preface........................................... 1
Acknowledgement....................... 2
Executive summary..................... 3

Particular
Executive Summary
Objective and Scope
Objective
Scope
Research Methodology
Identification of Topic
Research type
Research Design
Data collection
Sample Size
Selection of Brands
Research Instruments
History of chocolate
Chocolate industry- An Overview
National brands
Cadbury
Parle
Amul
Nestle India
Local brands
Michi’s
Baba kent
Linkage
Secondary objective
Market strategy
Target audience
Packaging & labelling
Questionnaire
Analysis
National brands analysis
Local brands analysis
Overall view
Kids survey
Finding & recommendation
Bibliography

8
 Bibliography

Books

Philip kotler and Gary Armstrong, principle of marketing,10th edition

News Papers

The economic times

The Hindu business line

Websites

www.rediff.com
www.business-standard.com
www.India-stats.com
www.Agencyfaqs.com
www.Equitymaster.com
www.myiris.com
www.thehindubusinessline.com

9
 Annexure 1
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.
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.

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.
� 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.
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:

1. Bars or Moulded Chocolates
2. Counts
3. Panned Chocolates (Gems)
4. Éclairs
5. Assorted Chocolates
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.

10
MAJOR PLAYERS

In Ahmedabad In India
1.) Ravalgaon 1.) Cadbury
2.) Palican 2.) Nestle
3.) Rommy 3.) Amul
4.) Ayush 4.) Parle
5.) Kim Kim 5.) Candyman
6.) Micky 6.) Parry

11
 Annexure 2
MARKETING STRATEGY

PRODUCTS

.Decision regarding appearance, size, shapes, weight, brand, packing etc are taken

PRICE

Decision regarding prize, policy, credit policy are taken. In Urja fabrics pvt ltd the price is
governed
.by market value based price. The customer’s queries have to be answered within 24 hours

PLACE

Decision regarding wholesale and retail merchants, channels of distribution, physical decision
.etc are taken

PROMOTION

.Decision regarding advertisement, personal selling, publicity and sales promotion are taken

COMPETITORS
When competition is healthy, it motivates and encourages the companies to bring about drastic change
in its management to stand with the competition. They are forced to improve the quality of goods and
prove them at low rates.

12
Followings are the marketing strategy adopted by different malls of Ahmedabad city:

Place No of Price Packaging Supply chain Advertisement

chocolates
Big Cadbury Rs5 Box, bottle, Head Office ___
Bazzar to 90wrapper (Mumbai)
Gallops Cadbury Rs 10Wrapper, Local suppliers ___
Nestle to Box,
300 Paper
packaging
Amul Amul Rs 5 Box, packets, Dairy T.V advertisement
(retail to wrapper
outlet) 150
Reliance Cadbury Rs 5 Box, bottle, Head ___
Fresh to wrappers Office(Mumbai)
150

Place Major Profit Occasions Selling Schemes

customers Units
Big Bazzar All 7-10% Rakhi Single __
&Diwali units
Gallops Collegians & 20% Christmas, Single __
Children Diwali, Rakhi Units

Amul(retail All (majority 20% All time hit Single __

outlet) youngsters) units
Reliance Cadbury __ Adults Single __
fresh units

Analysis:

These are the information available from different malls and retail outlets of Ahmadabad. From
the above information we can clearly says that mostly all the malls are selling chocolates
Cadbury brand only and very few are selling nestle brand. All of them are chocolates between
the ranges of Rs 5 to Rs 300. Mostly they are supplying chocolates from the head office of
Bombay only Amul supplying chocolates from dairy. The profit margin rate of all of them is
between 7 to 20%. All of them are selling chocolates in single unit only and none of them are
providing any schemes on sale of chocolate.

13
Following are the marketing strategies adopted by different types of Shops of Ahmedabad city:

Place No of Price Packaging Supply Chain

chocolates
Shrinath parlor Cadbury 5 -500 Gokul Das
Nestle 5-10 __ Veer co
Amul Rs 5 Ashok mrktng
Parle Rs 1 Precise sell
Ambika Dairy Cadbury 1 to 175 Tin, Boxes Gokul das
farm Nestle 1 to 10 Veer co
Parle 0.50 to 5 Precise sell
Krishna dairy Cadbury 1-300 Tin,boxes Gokul Das
Nestle 1-10 Veer co
Parle 0.50-5 Precise sell
R.B stores Cadbury 5-30 Gokul Das
Nestle 2-12 __ Veer co
Parle 0.50-1 Precise sell

Place Major Profit Occasion Selling Schemes

customers Units
Shrinath Kids & adults 7-8% Rakhi & Single __
parlor Diwali units
Ambika Kids 5-8% All occasions Single Discounts at
dairy farm units festivals
Krishna Kids 10-25% All occasions Single __
dairy farm units
R.B stores Kids & 7-10% Rakhi, Single __
Adults diwali.birthday units

Analysis:

These are the different type of available from the different shops of Ahmedabad city. From the
above information we can say that all the shops are selling mostly all the brands of chocolate
which are Cadbury, nestle, amul, parle.They are selling chocolates between the price range of
0.50 paisa to Rs 300.All the retailers are purchasing Cadbury chocolates from only one
distributor and that is Gokul das. Same as they are purchasing nestle chocolates from veer co,
Parle from precise sells and amul from ashok marketing. Generally all the shops earning profit
between 7-25%. And they are selling chocolates in single units.

14
Following are the marketing strategies of rural brands of chocolates adopted by different shops in
Ahmedabad city.

Place No of Price Packaging Supply Chain

chocolates
Aashapura Kent Rs. .25 to 2 Plastic Wrapper Kalupur
Lemo
Michi
Jitubhai Kent Rs. .25 to 5 Wrapper Kalupur
Pelican
Aayush
Kim Kim
Chamunda Kent Rs. 10 to 30 Tin, boxes, Naroda
stores Lemo Packets,
Michi Jar
Pelican
Aayush
Kim Kim
Aasha
Satyavijay Kent Rs. 10 to 50 Tin, boxes, Naroda
Lemo Packets,
Michi Jar
Pelican
Aayush
Kim Kim

Place Major Profit Occasion Selling Schemes

customers Units
Aashapura Kids & adults 5-7% - Single __
units
Jitubhai Kids 5-8% All occasions Single __
units
Chamunda Jashri, 8-11% All occasions Bulk __
stores Deepak except feb-
stores,Suraj, march
Naveenshah

Satyavijay Kids & 7-10% __ Bulk __

Adults

15
Analaysis:

These are the different type of rural brand chocolates available from the different shops of
Ahmedabad city. From the above information we can say that all the shops are selling mostly all
the brands of chocolate which are Kent, Lemo, Michi and Aayush. They are selling chocolates
between the price range of Rs. 10 to Rs 30. All the wholesellers are purchasing Kent chocolates
from only one distributor and that is Kent Food Product, Naroda .Same as they are purchasing
Michi chocolates from JRJ Products Ltd Madhupur etc. and they are selling these chocolates in
bulk to retailers. Generally all the shops earning profit between 5-7%. And they are selling
chocolates in single unit between the price ranges of .25 to 2.

16
 Annexure 3

OVERALL REVIEW

Talking about chocolate market in a nutshell, we came to know that now day’s chocolates of
national band are mostly popular within both local and urban people. The main reason being that
the availability of national brands of chocolates like Cadbury, Amul, Nestle and Parle are widely
available even in slums. It’s becoming popular in both rural and urban areas.

Generally observed phenomenon is that women prefer more chocolates than men do. Youngster
and children up to specific age are the target audience. They are concentrated and their needs are
taken into consideration.

For urban area precisely Dairy milk, 5 star, eclair, munch, kit Kat, celebrations, temptations are
more famous while in rural areas chocolates like kacha aam, cokanaka, aayush, roomy, pelican
and roul gun are the most consumed.

While we concuted a survey among the kids, they preferred those chocolates with attractive
wrappers. They preferred those of different shapes and sizes and with those of transparent boxes.

While we conducted a survey among the kids, they prefered with attractive wrappers. They
preferred with those of different shapes and sizes and with those of transparent boxes.

When we went for retail survey we went for retail survey we came to know what their selling
strategies were and what were their mostly demanded chocolates. We even went to Amul for
survey where we identified that consumers of Amul chocolate are in plenty.

When we surveyed about chocolate consumed in our college canteen, all of them said that
Dairymilks were in demand. So from all the above information we come to know that Cadbury is
most popular brand than other brands of chocolates.

17
 Annexure 4

FINDINGS

We have to various conclusions from this project. We have found that:

1. INCOME:

Income as a factor affects purchase decision indirectly i.e. almost all brands of chocolate are at
different prices. Hence it might not affect consumers purchase decision then. However the same
brands of chocolate are priced more at Malls. So consumers become more sensitive at such
places.

For a consumer who has an income less than Rs. 10000, he will not always be able to afford 20-
50 rupees for a chocolate. Hence he might spend 5 rupees for a chocolate.

2. BRAND PREFRENCE & BRAND LOYALTY:

A large number of consumers have a first preference of Cadbury, followed by Nestle, Amul and
parle. Yet if the preferred brand is not available then they would switch to other brands. This
shows that the level of brand loyalty among consumers is very low. Although Cadbury is one of
the most reputed brands, it does not have brand loyalty.

3. AVAILIBILITY:

Availability is not a factor that a consumer keeps in mind while purchasing any brand of
chocolate. However now a days chocolates being necessity in many occasions, a consumers will
purchase any brand available if his preferred brand is not available. This shows that availability
affects a consumer to a great extent.

Taste

Many consumers purchase a brand of chocolates on the basis of how the chocolate tastes.
consumers appeal that they find few of the chocolates bitter in taste. Hence they tend to avoid
purchasing those brands as far as possible. Yet on the other hand there are consumers who love
the bitter taste of chocolate. Hence it is a matter of consumer’s percieverence.

Size

We have seen that usually chocolates of rs 5 to rs 10 are consumed. This is followed by

chocolats of rs 20,30,50 and so on. However all brands are not available in all size.

18
Hence consumer who want to purchase chocolates of rs 5 and 10 of a particular brand and if it is
not available than they would switch to another brand in which that size is available.

Price
Price is an important factor affecting the purchase decision of consumers. However consumers
were agreed that they are ready to buy a brand even if its price increase. They were not ready to
compromise their perceived quality of the brand.

Packaging and Labeling

A large number of consumers said that packaging and labeling of a brand of chocolates does not
affect the purchase decision. While the consumer among the lower age group especially the kids
gives priority to packaging and labeling. Packaging can help brand volumes but cannot be the
driver.

Brand awareness

Consumers are well aware of the various brands in the market. One of the brands that they were
ever to recall the most was CADBURY. While surveying we found that CADBURY today has
become synonymous to chocolates.

Advertisement

Advertisement plays a small role in influencing the purchase decision of consumer.

Advertisement has managed to make consumer aware of various brands. It helps in influencing
the purchase decision only when all the brands of chocolates are available.
Brands like CADBURY, NESTLE, AMUL spend lot of money on advertisement to increase
their sales on the other hand local manufactures without advertisement manage to sell their
products in the market.

Own experience
A large no of consumers said that they would purchase a brand of chocolates based on their own
experience of taste, perceived, quality and so on.

Brand name
It can be seen that various brand have created a brand image for themselves in the minds of
consumers. When all the brands are available they purchased chocolates on the basis of brand
name.

Word of mouth
Most consumers felt that word of mouth does not affect their purchased decision.

No brand differentiation

19
There is no brand differentiation in the market i.e. even though people ask for dairy milk, they
satisfied if they walk away with 5star,kit-kat, munch, amul, or any other chocolates of any brand.

RECOMMENDATION

1. The national brands of chocolates should also be made easily available and consumable
in rural areas too.
2. The local chocolates are widely popular in specific localities. They could even be
supplied in a wider area.
3. As per public opinion the respondents even wanted to experience varities in taste in a
specific brands . The companies can look forward to that.
4. In the lower age group between 10 to 20 the teens even wanted different sizes in shapes
in chocolate. For e.g free of our respondents even desire to have chocolats of heart shapes
specially for gifting others.
5. No schemes are introduced in chocolates on regular basis. Schemes should be their for
few of the expensive brands.
6. For bringing inovvation, chocolate should even be made of different colurs. For e.g
chocolates of Black. White. Red, pink, blue and so on would be widely accepted by the children.

20
21