Cadbury Marketing Mix(focuses On Cadbury India Ltd) 2q4h6q

MARKETING MIX CADBURY

BY RAGHAVENDRA MISHRA

INTRODUCTION • CADBURY IS A LEADING GLOBAL CONFECTIONERY COMPANY WITH AN OUTSTANDING PORTFOLIO OF CHOCOLATE, GUM AND CANDY BRANDS. IT EMPLOY AROUND 50,000 PEOPLE AND HAVE DIRECT OPERATIONS IN OVER 60 COUNTRIES, SELLING PRODUCTS IN ALMOST EVERY COUNTRY AROUND THE WORLD CADBURY.IT IS A BRITISH CONFECTIONERY AND BEVERAGE COMPANY WITH ITS HEADQUARTERS IN LONDON, UNITED KINGDOM

HISTORY • 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.

MARKETING OBJECTIVES • GROW SHAREHOLDER VALUE…OVER THE LONG TERM • CADBURY IN EVERY POCKET • 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

TARGET MARKET • 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. • 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. THE MARKET PRESENTLY HAS CLOSE TO 60MN CONSUMERS AND THEY ARE MAINLY LOCATED IN THE URBAN AREAS.

MARKET SEGMENTATION • MARKET SEGMENTATION IS THE PROCESS IN MARKETING OF GROUPING A MARKET (I.E. CUSTOMERS) INTO SMALLER SUBGROUPS. THESE MARKETS ARE OFTEN TERMED NICHE MARKETS OR SPECIALTY MARKETS • THE PURPOSE OF SEGMENTATION IS TO IDENTIFY AND TARGET PRIME CUSTOMER GROUPS (EG THE 20% THAT FOR 80% OF YOUR SALES) SO THAT YOU GET THE MAXIMUM RETURN FROM A LIMITED MARKETING BUDGET

GEOGRAPHIC SEGMENTATION • 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 CELSIUS IN INDIA. CHOCOLATE MELTS AT BODY TEMPERATURE OF 36 DEGREES.”

DEMOGRAPHIC SEGMENTATION AGE• CHILDREN - 55% • ADULTS - 12% • YOUNG ADULTS - 33% • INCOME LEVEL- IN THE MIDDLE AND HIGHER INCOME GROUPS

MARKETING MIX • THE TOOLS AVAILABLE TO A BUSINESS TO GAIN THE REACTION IT IS SEEKING FROM ITS TARGET MARKET IN RELATION TO ITS MARKETING OBJECTIVES. IT IS THE GENERALLY ACCEPTED AS THE USE AND SPECIFICATION OF THE “FOUR P’S” DESCRIBING THE STRATEGIC POSITION OF A PRODUCT IN THE MARKETPLACE. • PRODUCT • PRICE • PLACE • PROMOTION

PRODUCT • PRODUCT VARIANTS • CURRENTLY CADBURY INDIA OPERATES IN FOUR CATEGORIES VIZ. CHOCOLATE CONFECTIONERY, MILK FOOD DRINKS, CANDY AND GUM CATEGORY • CADBURY DAIRY MILK, 5 STAR, PERK, ÉCLAIRS AND CELEBRATIONS • CANDY CATEGORY HALLS • BUBBLE GUM BRAND BUBBALOO • BOURNVITA - THE LEADING MALTED FOOD DRINK (MFD)

PRODUCT INNOVATIONS •

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5 STAR:

CONSUMER 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 NESTLE’S MUNCH. PERK HAD BEEN UNDER FIRE FROM NESTLE’S DEADLY DUO OF KITKAT AND MUNCH, BUT AFTER THE RELAUNCH, ITS MARKETSHARE 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 SINGLEOUTER CASE.

PACKAGING THE PACKAGING WAS CHANGED TO INCLUDE A SEALED PLASTIC WRAPPER INSIDE THE OUTSIDE FOIL. CADBURY’S LAUNCHED A NEW 'PURITYSEALED' PACKAGING FOR ITS FLAGSHIP PRODUCT, CADBURY DAIRY MILK. 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. CADBURY INVESTED NEARLY RS 25 CRORE (RS 250 MILLION) THIS YEAR ON NEW MACHINERY FOR THE IMPROVED PACKAGING. •

PRICE • THE RS 5 PRICE POINT S FOR MORE THAN HALF OF ALL CHOCOLATE SALES • TODAY, CADBURY HAS FOUR PRODUCTS AT THIS PRICE POINT: CDM, PERK, 5 STAR AND GEMS — AND THE FIVE-RUPEE CDM BAR IS ITS SINGLE LARGEST-SELLING SKU. • “THIS IS A POTENT PRICE POINT IN INDIA, BECAUSE THE AVERAGE PURCHASING POWER IS ABYSMALLY LOW,” IS WHAT INDUSTRY ANALYST HAVE TO SAY

VOLUME LED GROWTH STRATEGY • CADBURY HAS FOLLOWED A WELLPLANNED 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.

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. • 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.

EARNINGS SENSITIVITY FACTORS •

COCOA BEAN PRICES: DOMESTIC AS WELL AS INTERNATIONAL PRICES OF KEY RAW MATERIAL - COCOA HAVE SIGNIFICANT IMPACT ON MARGINS.

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EXCISE DUTIES : CHANGES IN EXCISE LEVIED ON MALT AND CHOCOLATE INFLUENCES END PRODUCT PRICES AND THEREBY VOLUME GROWTH AS WELL AS MARGINS.

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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.

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COMPETITION FROM MNCS LIKE NESTLE AS WELL AS IMPORTED BRANDS. INCREASING COMPETITION PUTS PRESSURE ON MENT BUDGET AND MARGINS. HOWEVER ON THE POSITIVE SIDE, IT HELPS IN EXPANDING THE MARKET.

PLACE • PLANT LOCATIONS • IN INDIA, CADBURY BEGAN ITS OPERATIONS IN 1948 BY IMPORTING CHOCOLATES. AFTER 60 YEARS OF EXISTENCE, IT TODAY HAS FIVE COMPANY-OWNED MANUFACTURING FACILITIES AT THANE, INDURI (PUNE) AND MALANPUR (GWALIOR), BANGALORE AND BADDI (HIMACHAL PRADESH) AND 4 SALES OFFICES (NEW DELHI, MUMBAI, KOLKOTA AND CHENNAI). THE CORPORATE OFFICE IS IN MUMBAI.THESE FACTORIES CHURN OUT CLOSE TO 8,000 TONNES OF CHOCOLATE ANNUALLY

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. CADBURY'S DISTRIBUTION NETWORK USED TO ENCOMES 2100 DISTRIBUTORS AND 450,000 RETAILERS 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

NATURE OF RETAIL OUTLET • 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.

PROMOTION • •

MENTS THE MENT AIMED AT CONVEYING THE IDEA THAT NO SPECIFIC OCCASION IS REQUIRED FOR CONSUMING CDM

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CELEBRITIES ENDORSEMENTS

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CADBURY ROPED IN PREITY ZINTA FOR ITS PERK BRAND. PREITY ZINTA’S ANGELIC DIMPLES LAID THE FOUNDATION FOR WHAT WOULD BECOME THE INDIAN TEENAGER’S FAVORITE SNACK. AFTER THIS CAMPAIGN, PERK’S SALE SURGED

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THE BIG ‘B’ FACTOR THE BIG FACTOR THAT HAS PUSHED UP CDM SALES IS THE AMITABH BACHCHAN CAMPAIGN. CADBURY APPOINTED AMITABH BACHCHAN AS ITS BRAND AMBASSADOR

CHOCOLATE ADS SHIFT FOCUS FROM KIDS TO YOUTH • INDIAN CHOCOLATE MARKET IS ALMOST TOTALLY DEPENDED ON PURCHASES OF KIDS. • WHILE CADBURY IS TRYING TO SELL INDULGENCE TO ADULTS, KIT KAT IS SELLING 'RITUALISTIC' BREAK TO • TEENAGERS/ YOUNG ADULTS. THIS IS REFLECTED IN THE CHANGING ADVERTISING PATTERNS ACROSS DIFFERENT • CHANNELS.

CONCLUSION 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. RIGHTPRICING WILL MAKE OR BREAK THE PRODUCT SUCCESS. ECONOMICAL DISTRIBUTION OF THE PRODUCTS WILLALSO 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.THERE’S AN IMMENSE SCOPE FOR GROWTH OF CHOCOLATE INDUSTRY IN INDIA GEOGRAPHICALLY AS WELLAS IN THE PRODUCT OFFERING

BIBLIOGRAPHY • • • • • •

WWW.CADBURY.CO.UK WWW.CHOCOLATEREVIEW.CO.UK WWW . CADBURYS CHWEPPES.COM WWW.WIKIPEDIA.ORG WWW.CADBURY.COM WWW.OPPAPERS.COM

REFERENCES• PHILIP KOTLER