Professional Documents
Culture Documents
8/18/2013
Contents
Sr. No.
Index
Page No.
1.
Executive Summary
2.
3-4
3.
5-6
4.
Cadbury India
7-12
5.
Financials Analysis
13-14
6.
15-17
7.
S.W.O.T Analysis
18-19
8.
5 C Analysis
19-20
9.
20-24
10.
11.
BCG Matrix
25-26
12.
27-29
13.
29-31
14.
32-38
15.
16.
15.
24-25
39
40-41
42-43
48-50
18
19
References
16.
17
1|Page
44-47
51
52
Executive Summary
- The global chocolate market is estimated to be around $106 billion.
(Retail Market Value).
Market
Driver &
Challenges
Trends
Challenges
- Attractive pricing
- Chocolate Gifting
- Price-sensitive consumer
- Opportunity to expand
Segments
Competition
- Choco-Panned Segment
- Sugar-Panned Segment
Nestle (21%)
Amul (3%)
Others (3%)
2|Page
3|Page
Although the global market is still dominated by Western Europe and North America,
emerging markets clearly represent the future. The BRIC countries (Brazil, Russia, India
and China) accounted for 55% of global confectionery retail growth in 2011.
According to trade analyst figures, current hotspots include India (annual growth rate
15%), China (9%), Russia (6%) and Mexico (3.8%).
Men's love of chocolate is on par with women's preference for the treat: A UK study by
research group Mintel revealed 91% of all women admit to eating chocolate with the
men not far behind at more than 87%.
There are a number of trends within the chocolate industry that are driving growth; and
product innovation in 2010-11 brought a 16% increase in new product releases over 2009.
Increasing disposable incomes as well as changing public sentiments regarding health
and our global community is the driving forces behind this growth in innovation.
Annual Per Capita Chocolate Consumption 2012.
In India chocolate consumption was very low in the early 90s but as the decade advanced
the consumption drastically increased. The late 90s witnessed a good chocolate market
condition. The chocolate market in India is dominated by two multinational companies
Cadbury and Nestle. The national companies - Amul and Campco are other candidates in
this race. Cadbury holds more than 67% of the total share of the market. Nestle has
emerged by holding almost 21% of the total share. Apart from chocolate segment, there is
also a big confectionery segment which is flooded by companies like Parry's, Ravalgaon,
Candico and Nutrine. All these are leading national players. The multinational companies
like the Cadbury, Nestle and Perfetti are the new entrants in the sugar confectionery
market. (Management paradise) There are several others which have a minor share in
these two segments. According to statistics, the chocolate consumption in India is
extremely low. If per capita consumption is considered, it comes to only 160gms in the
urban areas. This amount is very low compared to the developed countries where the per
capita consumption is more than 8-10 Kg. Observing this fact it would not be appropriate
to consider the rural areas of India as it will be extremely low. This low consumption is
owing to the notion behind consuming chocolates. Indians eat chocolates as indulgence
and not as snack food. The major target population is the children. India has witnessed a
slow growth rate of about 10% pa from the 70s to the 80s. But as the century advanced
the market stagnated. This was the time when Cadbury launched its product- Dairy Milk as
an anytime product rather than an occasional luxury. All the advertisements of Dairy Milk
paid a full attention to adults and not children. And this proved to be the major
breakthrough for Cadbury as it tried to break the conventional ideas of the Indians about
chocolate. One of the oldest products of Cadbury which is still going strong is the
Cadburys Five Star which was launched in the year 1968 in India. Cadburys Five Star is
the most resistant chocolate to temperature and hence it is widely distributed all across
the country.
In early 90s, the Cocoa prices became high due to which the manufacturers were forced
to raise their product prices. But as the new variety of chocolate was launched the wafer
and the chocolate variety with the brand name Perk, the volume grew significantly. In the
late 90s new players like Nestle also introduced these wafer chocolates with the name Kit
Kat resulting into the growth of the market.
Dark Chocolate is growing at a rate of 13% globally. But India is still at nascent stage.
There is less than 25% awareness amongst the young age segment.
6|Page
Cadbury India
Cadbury India a subsidiary of Mondelez International, the $32 billion global snacking
major formed in October last year after Kraft Foods decided to split its business.
Cadbury controls over 67% share in the Rs 5,562 crore chocolates segment in India,
followed by Nestle with 21% share and Ferrero with 6% share, industry insiders said
quoting data from market research agency Nielsen. Last year, sales of Ferrero India and
Nestle's chocolate segment grew 30% and 6%, respectively. The chocolate industry in
India works at different levels that include chocolate giants like Cadbury's Dairy Milk,
Nestle etc., small chocolate manufacturers, chocolate retailers, chocolate importers and
people who make chocolates at home.
Cadbury India operates in five categories Chocolate confectionery, Beverages, Biscuits,
Gum and Candy. In the Chocolate Confectionery business, Cadbury has maintained its
undisputed leadership over the years. Some of the key brands are Cadbury Dairy Milk,
Bournvita, 5 Star, Perk, Bournville, Celebrations, Gems, Halls, Eclairs, Bubbaloo, Tang
and Oreo.
In India, Cadbury began its operations in 1948 by importing chocolates. After over 60
years of existence, it today has six company-owned manufacturing facilities at Thane,
Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh)
Hyderabad and 4 sales offices (New Delhi, Mumbai, Kolkata and Chennai). The corporate
office is in Mumbai.
Cadbury India enjoys a value market share of over 67 percent in the chocolate category
and our brand Cadbury Dairy Milk (CDM) is considered the "gold standard" for chocolates
in India. The pure taste of CDM defines the chocolate taste for the Indian consumer.
In the Milk Food drinks segment main product is Bournvita - the leading Malted Food Drink
(MFD) in the country. Similarly in the medicated candy category Halls is the undisputed
leader. Cadbury recently entered the biscuits category with the launch of the Worlds No 1
biscuit brand Oreo.
Toblerone, the legendary triangular Swiss chocolate, is over a century-old brand and
prides itself on being the only triangular chocolate. The launch of Toblerone in India is in
line with the business objective of growing and leading the premium gifting chocolate
market with Gift like no one else as the brand theme.
7|Page
9|Page
Cadburys Market Segment:Market place for any product is comprised of many different segments of consumers, each
with different needs and wants. Market segmentation can be defined in a number of ways
such as:
Demographic variables: - (e.g. Consumers age groups, gender, material states income
nb etc).Current Population of India - India, with 1,270,272,105 (1.27 billion) people is the
second most populous country in the world. With the population growth rate at 1.58%,
India is predicted to have more than 1.53 billion people by the end of 2030. More than 50%
of India's current population is below the age of 25 and over 65% below the age of 35.
Geography: - About 72.2% of the population lives in some 638,000 villages and the rest
27.8% in about 5,480 towns and urban agglomerations. So India is the biggest market for
Chocolate in terms of population.
The lifestyle of consumers (i.e. their interests and activities) the benefits which consumers
look for in a product or on the occasions when the product might be consumed.
Cadbury takes into account all these factors when producing a range of products. It
targets different segments within the market, are as follows: Break segment: Products which are normally consume as a snatched break and often
with tea and coffee, for example Cadburys Perk and Oreo Biscuits.
Impulse segment: These products are often purchase on impulse, eating these and
then. They include product such as Cadburys Dairy Milk.
Take home segment: This describes product that are normally purchased from
supermarkets, taken home consumed at a later stage.
The price of Cadbury dairy milk is reasonable and affordable. So a person does not need
to think much before purchasing it, they can easily buy it any time when they want to buy.
The income of a person does not play any important role in it.
Cadbury dairy milk will not be much affected by the generation differences. All types of
peoples like to purchase the Cadbury dairy milk when they want to buy it.
10 | P a g e
Behavioural factors: Decision: - The decision is taken by the children and youngsters. They play an important
role in taking the decision of when to buy the Cadbury dairy milk.
Occasions: - For purchasing the Cadbury dairy milk no special occasions are required.
People can easily purchase it on regular basis. Occasionally such as Diwali,
Rakshabandhan, the sales of Dairy Milk increases.
Psychographic: - The psychology of how consumers think, feel, reason, and select
between different alternatives (e.g., brands, products, and retailers). The psychology of
how the consumer is influenced by his or her environment (e.g., culture, family, signs,
media). Here Cadbury wins the race & Cadbury become a part of lifestyle as a loyal brand.
Brands in fact influence consumer behaviour in a number of ways:
Reassurance: - A brand is a stamp of authenticity. It adds value by promising
replicability and helps to establish repeat purchase patterns. In a foreign country, people
seek the reassurance of familiar brands, even though they are presumably traveling to find
new experiences! This is why tourists and travelers around the world feel comfortable on
eating at McDonalds.
Value Expression: We choose brands that reflect the individual values that we possess
as individuals. We do this to communicate the desired signals in the highly social
environment we inhabit.
11 | P a g e
Snack
Indulgence
Low Price
Figure: 4.2 Cadbury Chocolate brand Segment
Source: http://www.mondelezinternational.com/in/en/Brands/index.aspx
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Financials Analysis
Cadbury India, whose revenue growth has consistently outperformed the economy over
the past few years, experienced the first hints of a slowdown in 2012, incidentally its first
year under new parent Mondelez International.
Its revenues increased 20.8% to Rs 4,065 crore, the lowest growth rate since 2006 and a
sharp deceleration from the 34.4% growth recorded in 2011. Profit after tax increased by
2.1% to Rs 303.4 crore. This slowdown will be seen as a small setback to Mondelez
International's plans to rev up growth in emerging markets.
Figure: 5.0 Cadbury India Sales & Net Profit (Source: http://www.indiainfoline.com/)
Mondelez International came into existence in October 2012, when grocery and snacks
giant Kraft was split into two companies. Its international business, including Oreo cookies
and Cadbury, was spun off and named Mondelez while most of the US assets remained in
Kraft. Kraft had acquired Cadbury in January 2010.
Cadbury India experienced a slowdown in sales and profit in 2012, despite launching
legendary Swiss triangular chocolate brand Toblerone, as consumers cut back on
discretionary products, many even trading pricier chocolates with lower priced candies and
confectionery.
Cadbury India had launched products such as Silk and Bournville, and entered the biscuits
segment in the past two years, which drove the growth,"The availability of foreign brands
such as Ferrero Rocher and Lindt in the premium segment could be hampering growth in
that category."
13 | P a g e
3,522
35%
157
3,365
123
11
3,499
2,615
28%
112
2,503
30
83
2,617
2,045
17%
111
1,934
14
-16
1,932
1,751
21%
163
1,589
25
51
1,665
1,442
21%
148
1,293
23
17
1,333
1,576
81
272
594
1,157
44
1,248
61
239
533
924
45
904
53
167
448
698
34
617
37
134
295
543
25
522
30
120
284
462
4
395
25
112
228
378
16
3,725
451
6
445
79
366
116
-53
303
0
303
884
38
1,150
6
20
97
NA
424
3,051
448
4
444
67
376
84
-5
297
-0
297
624
37
884
6
20
95
NA
329
2,303
314
4
310
61
249
65
-25
209
-3
211
443
28
624
6
20
67
NA
236
1,651
281
3
278
44
234
38
1
7
189
-0
189
390
135
443
6
20
60
NA
171
1,421
244
5
238
37
202
35
3
-2
166
1
165
343
119
390
6
20
51
NA
144
1,154
179
2
177
34
143
18
2
6
118
-9
127
-2
244
17
343
7
20
35
NA
122
14 | P a g e
15 | P a g e
Earnings sensitivity factors:- Cocoa bean, Sugar & Solid milk (milk powder) prices: Domestic as well as international
prices of key raw material cocoa, Sugar & Milk has significant impact on margins. Good
monsoon ensures adequate availability of raw materials, which are mainly agricultural in
nature.
- Rupee depreciation improves export realizations; however it also makes import of raw
material (esp. cocoa) expensive.
- 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 fluctuations, as 20% of raw material are
imported.
- 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.
Some of the key growth drivers being:- Tradition of gifting sweets
- Shifting in consumer preference (from traditional mithai to chocolates)
- Increasing awareness - demand for sugar-free and diet chocolates among consumers.
16 | P a g e
Distributors
RET
DIS
RET
CNF
DIS
RET
CNF
CNF
DIS
Retailers
CNF
S.W.O.T Analysis
Strength
Cadbury being a reputed company has its brand name as one of its biggest strengths. It
has been present for over 65 years even before competition could peep-in. Due to its
presence for so many years people tend to associate chocolate with Cadbury. It is almost
as if Cadbury is synonymous with generic category chocolate. Cadbury is a very profitable
organization, generating revenue in billions. Cadbury India Ltd is supported by its parent
company, Mondelez International. A large range of products like - chocolates, beverages,
malted foods etc. are manufactured by Cadbury. These products are reasonably priced to
suit different economic consumer categories. Celebrity endorsements have increased
sales and also added glitter to the brand name. Cadbury India has the biggest market
share at 67 per cent while Nestle is the second largest at 21 per cent. Amul & other holds
the rest. In spite of innovation in the chocolate segment, their basic chocolate, Dairy Milk,
still seems to remain the all-time favourite of most people. Low cost of production due to
economic of scale. That means higher profits, better market penetration with the strong
distribution network.
Weaknesses
The scenario of worms being found in Cadbury chocolates lead to a temporary decline in
sales. Also Cadbury offers a limited variety of products as opposed to other leading
competitive brands, e.g. Amul and Nestle that offer an array of products like biscuits, dairy
products, etc. One of the major raw material i.e. Cocoa has to be imported leading to
bunched imports and higher inventory. Also majority of markets in India are not Air
conditioned and hence cannot store chocolates at least during hot summers, which limits
the market access. There is lack of penetration in the rural market where people tend to
dismiss it as a high end product. It is mainly found in urban and semi-urban areas. The
operating profit of the company declined, declining profitability will adversely affect the
operations of the company. Poor technology in India compared to current international
technologies.
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Opportunities
As Cadbury has established itself very well in the Indian market, it can now narrow down
to some popular products and can bring down its own individual Cadburys store. It has
capabilities to increase the range of products manufactured. The company can easily
venture into new segments individually or jointly. Another very important opportunity that
can be observed is the introduction of foreign products in India. The company can focus
on targeting urban areas and developing sectors by working on availability and
affordability. The company aims at bringing efficiency in logistics and distribution. This can
very well be achieved by using information technology. Cadbury can also focus on gaining
profits through chewing gum market in India.
Threats
As Cadbury has already faced a worm scandal, its reputation has been put at stake by the
competitors trying to exploit this situation. Cadbury faces a serious threat in the
confectionery segment from companies like Amul, Nestle, etc. As Cadbury produces
chocolates and a few related products, effective management of all the areas proves to be
difficult at times. Trends of purchase may change with the ever-changing taste preference
of consumers. Changing restrictions and rules from Government quality control boards
may result in pressure on the production of the company & cost increase. Also, Cadbury is
exposed to rise in the cost of cocoa beans, dairy products and other vital ingredients.
5C Analysis
Company: - Cadbury dairy milk is a brand of chocolate made by Cadbury Plc. unit of Kraft
Foods and sold in several countries around the world. It first went on sale in 1905 in the
United Kingdom. The current parent is Mondelez International.
Customers: - The prospective customer of dairy milk range from 5 to 60 years of age.
Since dairy milk has a range of product suited for every member of the family. The aim is
to strengthen the brand relationship in the current consumers life. The ranges of
customers vary for diary milk. Whereas some buy it as an alternative for sweet others buy
it as a gift item. The consumers mostly buy the product on impulse and are influenced by
taste/flavour and then by company/brand.
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Competitors: - The main competitors of Dairy milk in India are Nestle, Ferrero Rocher,
Amul chocolates & unbranded chocolate. The high end chocolates (Bournville and silk)
also face competition also face competition from the imported Swiss chocolates. But one
of the biggest advantages the dairy milk has over its competitors is the brand loyalty that it
has got. The excellent advertising, reach and accessibility have made it the top of mind
brand in the chocolate category.
Climate: - The climate for the chocolate industry and dairy milk in particular seems very
attractive in a country like India. With the size of the market being so big along with
encouraging category growth the prospects look very good. Since the product is not
seasonal and the margin is also good makes the climate for the industry even better. With
new innovations coming up in terms of product and packaging the market is still on a
growth curve.
Collaborators: - As already said Cadbury dairy milk manages a huge range of retailers
and whole sellers who make up the collaborators. Over the years the company has
partnered with various other companies like Adam Philippines in 2001 so that diary milk
has a much wider distribution network in the Philippines.
Impulsive Chocolate Buying Behaviour and Pricing
Impulsive behaviour occurs when the consumer is looking for immediate hedonic benefits.
It is commonly associated with urges to smoke, drink, overspend or overeat. 'Impulsive
behaviour' is defined by 'Consumers experiencing an irresistible urge to consume', which
they might even regret later.
Whether an individual focuses on cost or the benefit of impulsiveness depends on the
chronic values of the consumer, which forms the core of its personality. Hedonic
personalities will focus selectively on the benefits than the cost of impulsiveness and are
considerable uninfluenced by the costs. Hence, such individuals become insensitive to
price aspect when their hedonic urge is driving the purchase decision.
Let us explain the growth of the market at the higher end of the spectrum in recent years
in chocolate category with this argument. The product offerings on the higher end are of
rich chocolate (e.g. Dairy Milk Silk) based products (associated with taste and pleasure)
instead of wafer-based offerings (which serve as a snack). This shows that brands
20 | P a g e
command a better premium when an impulsive urge rather than functional benefits are the
prime motivators for purchase.
Even though chocolate buying behaviour is impulsive, research suggests that the relative
accessibility of inputs such as costs versus the benefits of impulsiveness influences
impulsive behaviour. Impulsiveness is unaffected by cost highlighting arguments which
explains the ineffectiveness of advertisements discouraging cigarettes, alcohol, etc.
When the benefit of impulsiveness was the pleasure of yielding to temptation, the
advertisements, that 'triggered the desire' or 'highlighted the benefits of giving in to the
temptation' appealed most to the hedonic individuals. However, the prudent personalities
give more value to the cost than the benefits. Thus, the benefits are relatively noninfluential in judgment. Thus, advertisements that justify the cost of impulsiveness can
help provoke impulsiveness in such consumers.
Consumer Trends
- Mithai- the traditional Indian sweats is getting expensive and substituted by
chocolates among upwardly mobile Indians. Instead of buying sweets on Raksha
Bandhan, Diwali, people prefer to buy chocolates.
- The range and variety of chocolates available in malls seems to be growing day by
day, which leads to lot of impulse sales for chocolate companies
- Chocolates which use to be unaffordable, is now considered mid-priced.
- Designer chocolates have become status symbols.
This clearly means that the three main factors like demand for products, conducive
regulations and customised talent are abundant 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.
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. 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 primarily sold through Kirana Stores, Gift stores,
Medical Stores, canteens, Pan-Bidi stores, Bakeries, Sweet Shops, Super market etc.
21 | P a g e
The majority of consumers are buying chocolates from Super market & discounted stores.
The details summary from where the consumers are buying is shown in the below graph.
Chocolates which were considered to be an elitist food hit the fancy of masses looking for
a change in life style at affordable cost.
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 Off-Shoring: - 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 theres 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.
Product life cycle of CDM
The product life cycle model helps marketers identify the different stages that the sales
and profits of a product go through during the course of its lifetime. There are five stages
to the product life cycle: introduction, growth, maturity, saturation and decline.
1. Introduction: Sales are slow as the product is not yet known. Costs are high due to
heavy marketing spend to create awareness. Emphasis is on advertising and
distribution. The Cadbury Dairy milk launched by Cadbury in 1905 is an example of
a brand at the introduction stage.
2. Growth: This stage shows growing market acceptance and increasing profits.
Competitors begin to enter the marketplace. The business concentrates on
optimising product availability. The Cadbury Dairy milk is the market leader in
chocolate market with 30 % market share example of brand at growth stage.
3. Maturity: The rate of sales growth slows down as the product has been widely
distributed and sold. The company now focuses on creating brand extensions and
promotion offers to boost sales. New product research is critical to ensure future
sales. The Cadbury Dairy Milk Silk chocolate range is an example of creating brand
extensions brand at the maturity stage.
4. Decline: Sales slow down dramatically and profits fall off. The product may be
dropped to make way for new products and the cycle recommences. So far CDM
has not reached at this stage because of extension in maturity stage.
24 | P a g e
& at future time. That investment is likely to be needed if the company wants to
retain its market positions, as competitors will be trying to emulate stars.
Cadbury India has two star products Cadbury Dairy Milk Chocolates with 30%
market share in chocolate market & Cadbury Bournvita 16.2 % share in malted
foods category (as per Nielsen data for the quarter ending March-13).
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The discovery of worms in some samples of Cadburys 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 Cadburys 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, Cadburys reiterated that all through the 55 years of leadership in India that it
has remained synonymous with chocolates and has remained committed to high quality
and consumer satisfaction."
Cadburys 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.
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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.
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.
Cadburys 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 heatsealed 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.
Cadbury Singing Sweetly Again:All is well that ends well. And for Cadburys India, nothing can be sweeter than Regaining
Back the Consumer Confidence.
28 | P a g e
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, Cadburys regained its market share.
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.
In other words, Cadbury is trying to reduce the cost per stock keeping unit (SKUs, or
packs).The aim was to improve efficiencies.
Success Factors of Cadbury 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 countrys 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.
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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.
4. Royalty Structure:Royalty to Cadbury Schweppes 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.
6. Brand Building:Since its inception, Cadbury in India has stayed ahead thanks to their constant marketing
initiatives, that have at all points in time understood the needs of and opportunities in a
changing nation but Nestle had stood firm in second position resulting from their
responsibilities and providing quality products. Amul an Indian company has been able to
create brand quality and thus selling their product through their name.
7. Wide variety of brands:The '60s was a decade which saw the launch of brands that are etched in the hearts of
generations of Indians - Tiffins, Nut Butterscotch, Caramels, Crackle, 5 Star and Gems. It
was a strategy that introduced consumers to a variety of tastes and product forms leading
to a rapid increase in chocolate consumption.
8. Quality products at low price:Cadbury's Eclairs was launched in 1972, at the then princely sum of 0.25p and was an
instant hit. It continues to be one of the biggest brands in the Cadbury portfolio and offers
the lowest price point at which consumers can experience the real taste of chocolate. But
as compared to other companies the price are very high because of lack of competition.
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9. Innovative & attractive packaging:In the years that followed, Cadbury invested in technology and made an impact through
innovative packaging. This decade experienced a continuous growth in volumes as
Cadbury launched a flurry of brands with different pack sizes, at various price points. The
now ubiquitous Sheet Metal Dispenser seen on cash counters of thousands of shops for
dispensing chocolates was an innovation that helped brand the colour purple in the minds
of the Indian consumer.
10. Timely expansion of market:In the 90's Cadbury realised both the scope and the need to expand the market. Hitherto
perceived only as a children's product, Cadbury 'universalized' the chocolate market. The
multi-award winning advertising campaign - 'The Real Taste of Life' - was launched,
capturing the childlike spontaneity in every adult.
Moulded chocolate and clairs also showed satisfactory growth. This has also helped in
improving the infrastructure and distribution reach of the company in chocolate and
confectionery segment.
11. Introducing new products:Cadbury 5 Star with its Energizing Bar campaign targeted the youth, offering them a
mind and body charge. While pre-empting competition, Cadbury Perk - the light chocolate
snack - pushed chocolates into the wider area of snacking by promising 'Thodi Si Pet
Pooja Kabhi Bhi Kahin Bhi' (anytime, anywhere) and has introduced new flavours like Mint
Hint, Mango Tango, Very Strawberry. It has also introduced various new chocolates like
Gollum and Fruits in recent years.
12. Constant diversification:Faced with rapidly changing markets and increased competition, Cadbury launched Truffle
to hit the high ground of great tasting chocolate. This was followed by Picnic in 1998,
which with its unique, multi-ingredient construct promises to take chocolates straight into
the realm of snacks. With the introduction of Gollum and Fruits Cadbury has taken the
market by surprise.
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13. Commitment of expansion:With the launch of Trebor Googly, the tangy, fizzy candy, Cadbury took the market by
surprise and marked the entry of Trebor into the fast growing Indian sugar confectionery
market. The extension of Googly to a Mint flavour reinforces Cadbury's commitment to
establish the Trebor name as a strong player in the value added sugar confectionery
market.
14. Repositioning:Cadburys has been repositioning its products for children to adults and for celebrative
occasions. A repositioning campaign was arranged for dairy milk that showed adults doing
unconventional things (like a lady breaking into a jig in the middle of the overflowing
Cricket (stadium) driving home the message that adults could enjoy chocolate as well.
15. Information technology:At Cadbury India they believe that effective communication n and availability of
information 'at the right time and the right place' is critical for an edge in business. In order
to achieve this they realised the importance of and have in place, an effective IT
infrastructure.
Through IT investment, they aim to
- Remain competitive in the fast changing environment.
- Incorporate best practices in the business processes.
- Arrive at uniform software and business practices globally within Cadbury Schweppes.
- Achieve flexibility of systems to keep pace with changing environments.
- Increase speed of response to business processes.
- Minimise working capital.
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Target
Promo
Mechanisms
TVC, Print,
Hoardings
Child in adult
Khanewalon ko
khane ka bahana
chahiye
Wider masses
Appeal to a wider
mass based on age,
gender, etc.
Pappu Pass Ho
Gaya
Youngsters
Miss Palampur
Rural masses
Kuch Meetha Ho
Jaaye
Conversion of
sweet consumers
to chocolate for
special occassions
This was an
TVC, Print,
innovative idea and
Hoardings,
Cadbury went ahead
Social Media
with the Celebrations
packs with these ads
Khane ke baad
Meethe mein
Kuch Meetha Ho
Jaaye
From converting
sweet consumers on
special occasions
Cadbury now tried to
sweet consumption
for dessert to
chocolate as well
TVC, Print,
Hoardings,
Social Media
Shubh Aarambh
Converting yet
another segment of
sweet consumers i.e.
before the start of any
work
TVC, Print,
Hoardings,
Social Media
TVC, Print,
Hoardings
TVC, Hoardings
TVC, Hoardings
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Figure: 14.1 Cadbury Dairy Milk- The Real Taste of Life Campaign
Source: Cadbury India Website
(http://www.mondelezinternational.com/in/en/home/index.aspx)
Communication Objective: - Through the ad, they wanted to convey the message that
there is a child in each one of us and they wanted to appeal to that child, since children
loved eating chocolates. The ad was meant to create a particular image in the eyes of the
customer and successfully communicate what the product conveyed.
It appealed to the child in every adult and Cadbury Dairy Milk became the perfect
expression of 'spontaneity' and 'shared good feelings' In every adult there is a child let that
child express itself give in to temptation and satisfy his or her desire to sink teeth into a
smooth creamy delicious chocolate This approach appears to be unique to Cadbury.
What was Communicated- The Real Taste of Life was launched in the 1990 s. It was an
attempt to capture the child-like spontaneity in every adult. From the depiction of an old
man offering his wife a Dairy Milk chocolate to the dancing girl in crowded stadium, it all
reflected the impulsiveness and the spontaneity of the child in the adult.
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Why they communicated- They wanted to re-create the image of a child in the eyes of the
adults, remind them of their childhood days and create an image that Cadbury essentially
stood for childhood and stimulate them to buy chocolate so as to make them remember
the childhood days.
What was achieved- A change in Consumer mind-set that chocolates were mostly for kids
and young people. Through the campaign, adults realized they could and should enjoy
chocolates as well.
Khanewalon ko khane ka bahana chahiye
Communication objective- Through the ad, it was aimed at widening the chocolate
consumption among the masses and making sure the product reached a wider group of
people, based on age, sex etc.
What was Communicated- The ad reflected the fact that Cadbury could be available and
eaten by all groups of people. In the ad, an elderly lady, middle-aged man, newly married
bride, young guy and a child are all seen enjoying Cadbury, which showed that all people,
irrespective of their sex and age could enjoy it.
Why they communicated- The ad was meant to stimulate purchase intentions and enable
the reach of Cadbury to a wider audience.
What was achieved- A widening of audience, which meant a wider market for the product.
Kuch Meetha Ho Jaaye
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Communication Objective- The ad was meant to portray Cadbury as something which can
be had on all celebratory occasions. It projected chocolates as a substitute to mithai
(sweets) and cheered people to have chocolate on every joyous occasion.
What was communicated- The basic depiction was that the ad showed that chocolate can
be showed as being enjoyed during Diwali and any other celebratory occasions.
Why they communicated- The idea was mainly to develop preferences among people for
chocolates to sweets and stimulate the demand for chocolates in festive and joyous
occasions.
What was achieved- Depiction of chocolate as a substitute to sweets and the fact that it
can be enjoyed in joyous occasions too.
Pappu Pass Ho Gaya
What was communicated- The ad showed the coming out of results and the passing of a
person called Pappu, who had failed repeatedly. All youngsters were seen having
chocolate to enjoy their moment of success. Thus, it predominantly targeted youngsters.
Why they communicated- The ad was meant to reach out to youngsters and encourage
them to buy chocolates.
What was achieved- Enabling Cadbury to be portrayed as a product which can be had by
youngsters to celebrate their successes.
Miss Palampur
What was achieved- Enabled Cadbury to be shown as a product which can be enjoyed in
rural areas too.
Shubh Aarambh
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Financial Objective
Cadbury India experienced a slowdown in sales and profit in 2012, despite launching
legendary Swiss triangular chocolate brand Toblerone, as consumers cut back on
discretionary products, many even trading pricier chocolates with lower priced candies and
confectionery.
Cadbury India had launched products such as Silk and Bournville, and entered the biscuits
segment in the past two years, which drove the growth, The availability of foreign brands
such as Ferrero Rocher and Lindt in the premium segment could be hampering growth in
that category."
The growth rate of sales & PAT was decreasing in the 2012-13 period. This was mainly
due to competition that it faced because of foreign brands entering into India. But in recent
past Cadbury has been successful in increasing its growth rate. This is mainly due to
increase in market size.
India chocolate industry will be growing at the CAGR 23% by volume between the years
2013-2018 and reach at 3,41,609 Tons..
We expect Cadbury India will be growing at the same rate. The Sales projections are
given in the below graphs:-
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them and saw a change in the target market for the brand. Now the target market for dairy
milk is every member of the family.
Cadburys Dairy milk always aimed for the bigger bite of the Indian market. It has been the
market leader in the chocolate category for years.
The main objective of Cadburys dairy milk is very clear, reach the audience by showing
them their reflection. Showing small happiness and cheerful moments that we see in our
day to day life is cherished by enjoying a bite of Cadburys Dairy milk and by adding an
emotional touch to it, & has won the Indian audience thoroughly.
We are Positioning Diary milk as a successful alternative to the traditional Indian sweets in
unique way in order to cash in the rich tradition of Indian people associated with desserts,
birthday gifting through Facebook, gifting in schools (15th August & 26th Jan-13) & on
birthdays, gifting in offices on birthdays & gifting with marriages invitation card & after
marriage ceremony.
Positioning: - Cadbury Dairy Milk excels at positioning. Not only can the chocolate bars
have many different positions based on which segment they are in, but also none of the
positions damper the effects of other positions! Youth see with word Cadbury as a
synonym for chocolate, others see it as synonyms for sweet and love and bliss. In India it
positioned itself as spontaneous, special, carefree, real moments (Mazza aa gaya) in the
initial stage. But later it tried to position itself as brand that is synonymous with sweet
(Kuch meetha ho jaye). The most recent campaign (Shubh Aarambh) tries to take
forward the initial positioning of dairy milk as an alternative for the traditional sweet and
positions itself as something that is as auspicious as the sweet which is generally offered
as bhog to gods.
Marketing Strategy:Cadbury India Limited is always on the lookout of attractive and growing markets. It
believes in creating high barriers for any new entrant to enter the market. The objective is
to earn attractive and resilient returns on its investment faster and create its monopoly in
the market. We will be using market penetration as the growth strategy where the business
focuses on selling existing products into existing markets. It seeks to maintain or increase
the market share of current products, secure dominance of growth markets, restructure a
mature market by driving out competitors, and, increase usage by existing customers.
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The mithai market by some estimates is almost Rs 18,000-Rs 20,000 crore in size and a
large part of this market is unorganized. We would like to target that segment.
Hospitality is another segment that is growing at a consistent rate.
Chocolates in the corporate gifting segment is the new trend, with variety of gift-packaging
and customisation in branding. Chocolates have become a premium gifting option.
We would like to gift Chocolates on the birthday gifting segment through facebook birthday
wishing option.
We would like to target all these segments using three different age group using the same
Cadbury Dairy milk in unique way.
India, with 1,270,272,105 (1.27 billion) people is the second most populous country in the
world, while China is on the top with over 1,360,044,605 (1.36 billion) people. The figures
show that India represents almost 17.31% of the world's population, which means one out
of six people on this planet live in India. Although, the crown of the world's most populous
country is on China's head for decades, India is all set to take the numero uno position by
2030. With the population growth rate at 1.58%, India is predicted to have more than 1.53
billion people by the end of 2030.
More than 50% of India's current population is below the age of 25 and over 65% below
the age of 35. About 72.2% of the population lives in some 638,000 villages and the rest
27.8% in about 5,480 towns and urban agglomerations.
Sr. No
1
2
3
4
Age Group
0-18 years
19-35 years
36-65 years
66 above
Total
Population Percentage
38%
27%
30%
5.3%
100%
Population in Billion
0.48
0.34
0.38
0.07
1.27
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Product
Pack size
Rate
Value
Dairy Milk
9.2 Gram
Rs. 5
Value
18.6 Gram
Rs. 10
Value
Dairy Milk
17 Gram
Rs. 10
Value
Dairy Milk
38 Gram
Rs. 22
Mid-Tier
42 Gram
Rs. 35
Mid-Tier
42 Gram
Rs. 35
Mid-Tier
42 Gram
Rs. 35
Premium
60 Gram
Rs. 55
Premium
60 Gram
Rs. 55
Premium
60 Gram
Rs. 55
Super Premium
145 Gram
Rs. 125
Super Premium
145 Gram
Rs. 125
Super Premium
145 Gram
Rs. 125
Place: - The company has five company owned manufacturing capacities in Thane, Induri
(Pune), Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh). The sale offices
are located in the metros and the head office is located in Mumbai. The distribution
structure is such that Cadbury dairy milk chocolates are sold directly to the retailers and
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the whole sellers. Cadburys distribution network used to encompass 2100 whole sellers
and 450,000 retailers.
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. Creation of a strong brand is very important in the confectionery
industry. Almost 80 percent of the chocolate purchases are unplanned and are on
impulse. The media mix for any campaign for diary milk comprises of TV, radio, print, OOH
and Internet. The advertisements are used to create and emotional bonding with the
consumers and hence are high on the emotional content. The print media is for making
the consumers more knowledgeable about the brand and digital media is used for more
targeted two way communication. Over the years dairy milk has concentrated heavily on
TV advertising but lately there is a shift towards digital media. The promotions have been
done keeping in mind to increase brand loyalty and to encourage repeat purchases at the
same time increasing market share. Apart from the mass media the other strategies
include making dairy milk a visible brand in the market and encouraging free samples
through competitions to gain trust and familiarity among the target audience.
Human Resource:HRs role continues to be critical in the Chocolate industry, especially in the Sales &
marketing environment where the success or lack of success is directly attributed to talent.
A career path in Sales & Marketing can offer experiences in areas sales management,
exposure to marketing plans, brand initiatives, brand analysis and new product
development.
The Cadbury Fit: Essential Requirements for Sales Force
-
MBAs from premier institutes with 2 to 10 years of Sales and Marketing experience
preferably in an FMCG
Influencing and networking skills
Strategic and breakthrough thinking
High energy and commercial orientation
Ability to effectively analyze data
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Conclusion
The Indian Chocolate Industry is a unique mix with extreme consumption patterns,
attitudes, beliefs, income level and spending. Understanding the consumer demands and
maintaining the quality will be essential. Pricing is the key for Cadburys to make their
product reach to every consumer houses. Right pricing will make or break the product
Success. Theres also an immense scope for growth of chocolate industry in India,
geographically as well as in the product offering. So we think that bringing online
sales(through facebook) & increasing the institutional sales(in unique way) would bring
prosperity and increase the sales of Cadburys as a whole again resulting in the goodwill
of the company.
Recommendations
Maintain dominance in chocolate segment.
Medias such as the internet (Facebook, Google+ etc.) and the radio enable large
amount of cheap advertisement. Internet is a good place to sell goods, even
confectionary ones. Provides a new consumer group with access to Cadbury and
allows even larger sales due to a larger overall consumer group. (Business studies)
Many new players are trying to enter Indian market so it should formulate new
strategies so as not to lose market share.
New channels such as gifting, child connectivity and value for money offering to be
the key growth drives.
Grow volume sales at least 20% p.a. over the next years.
One new major product from International portfolio should be launch in India every
year.
FDI will bring in many new products and competitors so Cadbury will have to
maintain their strong market distribution channel so as not to lose market share.
They need to maintain high standards and should be careful that there product
remains sterile. And is not effected by insects.
They should bring many more flavours of Dairy Milk.
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Bibliography
References:
www.google.com
www.wikipedia.com
www.cadburyindia.com
www.economicstimes.com
www.thehindu.com
www.youtube.com
http://www.mondelezinternational.com/in/en/home/index.aspx
Books Referred: 1. Cadburys Purple Reign-The Story Behind Chocolates Best-Loved Brand
By: John Bradley
2. Chocolate Science & Technology by: Emmanuel Afoakawa
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