Cadbury Dairy Milk
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  • 1. Cadbury India Cadbury Dairy Milk Ashok Hegde, Arun Khedwal,Sanjeev Shrivastva & Rutuja Dighe 8/18/2013
  • 2. 1 | P a g e Contents Sr. No. Index Page No. 1. Executive Summary 2 2. Global Market Summary & Consumption 3-4 3. Chocolate Market in India 5-6 4. Cadbury India 7-12 5. Financials Analysis 13-14 6. About Cadbury Dairy Milk Chocolate (CDM) 15-17 7. S.W.O.T Analysis 18-19 8. 5 C Analysis 19-20 9. Impulsive Chocolate Buying Behaviour and Pricing 20-24 10. Product life cycle of CDM 24-25 11. BCG Matrix 25-26 12. Cadbury & the Worm Controversy 27-29 13. Success Factors of Cadbury India Limited 29-31 14. Review of Past Promotional Programs 32-38 15. PEST analysis of the Chocolate Segment in India 39 16. Marketing plan Dairy Milk 40-41 15. Segmentation, Targeting, Positioning of Cadbury Diary Milk 42-43 16. Marketing Strategy 44-47 17 The Marketing Mix of Cadbury Dairy Milk Chocolate (CDM) 48-50 18 Conclusion & Recommendations 51 19 References 52
  • 3. 2 | P a g e Executive Summary - The global chocolate market is estimated to be around $106 billion. (Retail Market Value). - 100 tons – of chocolate are consumed every second. - Currently, the Indian chocolate market is worth around Rs 5,562 crore. - India chocolate industry will be growing at the CAGR 23% by volume between the years 2013-2018 and reach at 3,41,609 Tons. Drivers Challenges - Increase in disposable income - Rise in Cocoa prices - Attractive pricing - Lack of government initiative - Rising income levels - High entry barriers - Chocolate Gifting - Price-sensitive consumer - Opportunity to expand - High excise & Import duty  - Experts feel that premium chocolates are replacing traditional  Indian “mithai” and thus they are no longer a category just for a category just for kids. - Moulded Chocolate Segment - Count line Segment - Choco-Panned Segment - Sugar-Panned Segment Cadbury India Ltd (67%) Ferrero Rocher (6%) Nestle (21%) Amul (3%) Others (3%) Driver & Challenges Market Trends Segments Competition
  • 4. 3 | P a g e Global Market Summary Market Growth:- • The global chocolate market is estimated to be around $106 billion. • 100 tons – of chocolate are consumed every second. Figure:2.0 Global Chocolate retail market Value (Source: Euromonitor) Figure:2.1 Global Chocolate Region wise Market (Source: Euromonitor)
  • 5. 4 | P a g e 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. Figure:2.2 Annual Per Capita Chocolate Consumption-2012 (Source: http://thecnnfreedomproject.blogs.cnn.com/2012/01/17/who-consumes-the-most- chocolate/) In Asia, chocolate hasn't traditionally been the sweet of choice, market analysis firm Euro monitor International reports. Right now, Indians eat only 165 grams (less than 6 ounces) of chocolate a year. The Chinese eat only 99 grams (3.5 ounces). The per-capita consumption in India of chocolates has increased from 40gm in 2005 to 150-165 gm now and there is a lot of scope to grow even further.
  • 6. 5 | P a g e Chocolate Market in India India is the world's fastest growing market for chocolates. Registering 15% annual growth between 2008 and 2012, the Indian chocolate industry is projected to grow at an even higher rate in the coming years Currently, the Indian chocolate market is worth around Rs 5,562 crore. The Population of India in 2013 is 1.27 billion. The chocolate consumption number comes around 2,09,550 ton. 400 Kgs of chocolate consumption in India per minutes. Low priced unit packs, increased distribution reach and new product launches can be said to have fuelled this growth. The industry has a positive outlook due to phenomenal growth in the confectionery industry, rising per capita income and gifting culture in the country. The per capita consumption of chocolates is increasing in the country which will continue to flourish the market revenues. It is expected that India chocolate industry will be growing at the CAGR 23% by volume between the years 2013-2018 and reach at 3,41,609 Tons. The dark chocolates are expected to account for the larger market share when compared to milk and white chocolates in the coming years. The introduction of medicinal and organic ingredients in the manufacturing of chocolates had lead to a new trend and development in the country, which will be adapted by major manufacturers to remain active in the market. Figure: 3.0 Indian Chocolate Market Shares 2013 (Source: Economic times News Paper)
  • 7. 6 | P a g e In India chocolate consumption was very low in the early 90’s but as the decade advanced the consumption drastically increased. The late 90’s 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 70’s to the 80’s. 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 Cadbury’s Five Star which was launched in the year 1968 in India. Cadbury’s Five Star is the most resistant chocolate to temperature and hence it is widely distributed all across the country. In early 90’s, 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 90’s 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.
  • 8. 7 | P a g e 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.
  • 9. 8 | P a g e The Cadbury Logo Brand names act as a simple perceptual cue that identifies a product as one people are familiar with or one they associate with particular attributes or features (Achenreiner and John 2003). The famous Cadbury white/purple script logo is unique and original, yet simple, familiar and somehow approachable (Figure 4.0). There is some element of a guarantee about the product created by the signature logo. In fact, in Australia, Cadbury is regularly voted as the most trusted brand in the country (Bradley, 2008). The appetising visual of two glasses pouring milk into the signature is also well known and provides a pictorial heuristic for the perceived benefit of “a glass and a half of full cream dairy milk”. Figure: 4.0 Cadbury white/purple script logo (Source: Cadbury website) Cadbury is also instantly recognisable because of its iconic purple packaging. Colour has emotional significance and can prompt swifter recognition to packaging than either written words or imagery (Tutssel, 2001). Cadbury uses colour for quick brand recognition across its many forms of marketing communications, for example, in outdoor advertising and television advertising. One recent survey has found that 88 per cent of UK respondents recognised Cadbury’s purple, making it the third most recognised brand of those tested (Fitzgerald, 2009). Cadbury’s particular shade of purple has also long had associations with royalty and luxury (Bradley, 2008). Cadbury’s signature colour is considered so valuable to the company for brand recall and brand recognition that it has spent millions of dollars in legal fees attempting to prevent other chocolate companies such as Darrel Lea from using purple in their marketing communications. The Cadbury logo, its brand name and signature colour is always clearly visible in all marketing communications providing ease of brand recognition.
  • 10. 9 | P a g e Cadbury India’s Market Share in different Segments 2012 For more than six decades now, Cadbury has enjoyed leadership position in the Indian chocolate market to the extent that 'Cadbury’ has become a generic name for chocolate products. Cadbury has leading brands in all the segments viz bars (Dairy Milk, Crackle, Temptations), count lines (5 star, Milk Treat). Figure: 4.1 Cadbury India’s Market Share in different Segments 2012 (Source: Business today: http://businesstoday.intoday.in/story/kraft-takes-over-cadbury- india-changes/1/21920.html)
  • 11. 10 | P a g e Cadbury’s 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 Cadbury’s Perk and Oreo Biscuits. Impulse segment: – These products are often purchase on impulse, eating these and then. They include product such as Cadbury’s 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.
  • 12. 11 | 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 McDonald’s. 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.
  • 13. 12 | P a g e Chocolate Brands of Cadbury India:- High Premium Snack Indulgence Low Price Figure: 4.2 Cadbury Chocolate brand Segment Source: http://www.mondelezinternational.com/in/en/Brands/index.aspx
  • 14. 13 | P a g e 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."
  • 15. 14 | P a g e Profit & Loss of last six year:- Figure: 5.1 Cadbury India P & L Source: India Infoline (www.Indiainfoline.com) Particulars Dec-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 INCOME : Sales Turnover 4,272 3,522 2,615 2,045 1,751 1,442 Sales Growth 21% 35% 28% 17% 21% 21% Excise Duty 206 157 112 111 163 148 Net Sales 4,066 3,365 2,503 1,934 1,589 1,293 Other Income 58 123 30 14 25 23 Stock Adjustments 52 11 83 -16 51 17 Total Income 4,176 3,499 2,617 1,932 1,665 1,333 EXPENDITURE : Raw Materials 1,576 1,248 904 617 522 395 Power & Fuel Cost 81 61 53 37 30 25 Employee Cost 272 239 167 134 120 112 Other Manufacturing Expenses 594 533 448 295 284 228 Selling and Administration Expenses 1,157 924 698 543 462 378 Miscellaneous Expenses 44 45 34 25 4 16 Less: Pre-operative Expenses Capitalised - - - - - - Total Expenditure 3,725 3,051 2,303 1,651 1,421 1,154 Operating Profit 451 448 314 281 244 179 Interest 6 4 4 3 5 2 Gross Profit 445 444 310 278 238 177 Depreciation 79 67 61 44 37 34 Profit Before Tax 366 376 249 234 202 143 Tax 116 84 65 38 35 18 Fringe Benefit tax - - - 1 3 2 Deferred Tax -53 -5 -25 7 -2 6 Reported Net Profit 303 297 209 189 166 118 Extraordinary Items 0 -0 -3 -0 1 -9 Adjusted Net Profit 303 297 211 189 165 127 Adjst. below Net Profit - - - - - -2 P & L Balance brought forward 884 624 443 390 343 244 Statutory Appropriations - - - - - - Appropriations 38 37 28 135 119 17 P & L Balance carried down 1,150 884 624 443 390 343 Dividend 6 6 6 6 6 7 Preference Dividend - - - - - - Equity Dividend % 20 20 20 20 20 20 Earnings Per Share-Unit Curr 97 95 67 60 51 35 Earnings Per Share(Adj)-Unit Curr NA NA NA NA NA NA Book Value-Unit Curr 424 329 236 171 144 122
  • 16. 15 | P a g e About Cadbury Dairy Milk Chocolate (CDM) Cadbury Dairy Milk encapsulates an enormous breath of emotions, from shared values such as family togetherness, to the personal values of individual enjoyment. It stands for goodness. A moment of pure magic! Cadbury Dairy Milk (CDM) entered the Indian market in 1948, and since then for consumers across India, the word Cadbury has become synonymous with chocolate. CDM remains at the top of the Indian chocolate market not only because of its most delicious, best tasting chocolate but also because of its memorable communication. Cadbury’s own milk chocolate bar, made by adding milk powder paste to the dark chocolate recipe of cocoa mass, cocoa butter and sugar, was launched in 1897. But it did not attract a lot of interest. Swiss manufacturers were leading the field in milk chocolate, with much better products than their rivals. So in 1904 George Cadbury was tasked with developing a milk chocolate bar that was to have more milk than anything else on the market. All sorts of names were suggested: Highland Milk, Jersey and Dairy Maid. But when a customer’s daughter suggested Dairy Milk, the name stuck.’ George Cadbury Dairy Milk was launched in June 1905. It was sold in unwrapped blocks that could be broken down into penny bars. Gradually it became more and more successful – Cadbury’s biggest seller by the beginning of the First World War. And by the early 1920s it had taken over the UK market. And of course, it’s still with us today. Cadbury Dairy Milk has become a megabrand, available in many different varieties and all over the world. Cadbury Chocolate constantly creates or acquires new products to add to their range of offerings. Major chocolate brands produced by Cadbury include the bars Dairy Milk, Crunchie, Caramel, Wispa, Boost, Picnic, Flake, Curly Wurly, Chomp, and Fudge; chocolate Buttons; the boxed chocolate brand Milk Tray; and the twist-wrapped chocolates Heroes.
  • 17. 16 | P a g e Figure: 6.0 Cadbury Dairy Milk Chocolate (Source: Cadbury’s Purple Reign) 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.
  • 18. 17 | P a g e - Expansion potential due to lesser penetration - Rising income levels and rapid development in rural markets. However, there is a long way to go for the Indian chocolate industry. Increasing awareness, rising disposable income, shifting in Indian consumer preference and rapid development in rural markets shows there is a huge untapped market that the chocolate manufactures can capture. Cadbury India distribution network India Cadbury’s brands are available in over a million outlets across the country. Cadbury is also focusing intensively on achieving distribution equity. Though it takes much more time and effort to build, but once built, distribution equity is hard to erode. With technology and competitive pressure slash in it is becoming increasing difficult for marketers to retain a unique product differentiation for long period. In a product and price parity situation, the brand that sells more is the one that reaches the highest number of customers. To tap this huge potential Cadbury's distribution channels include the manufacturing warehouses where the chocolate production takes place. This is followed by wholesaler & then followed by retailer. Due to 65 years of presence in India - has deep penetration- 2,500 distributors; 550,000 retailers, 60 mid urban (22%) customers. The modern trade is handled separately. A schematic representation of the entire distribution channel is given here:- CNF in each district Distributors Retailers Figure: 6.1 Cadbury India distribution network India DISDISDIS CADBURYS INDIA LIMITED CNFCNFCNFCNF RETRETRET
  • 19. 18 | P a g e 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.
  • 20. 19 | P a g e 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 Cadbury’s 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 consumer’s 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.
  • 21. 20 | P a g e 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
  • 22. 21 | 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 non- influential 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.
  • 23. 22 | 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. Figure: 9.0 from where the consumers are buying Chocolates 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 an 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
  • 24. 23 | P a g e repositioned chocolates from children to adult consumption. The biggest opportunity is likely to stem from increasing the consumer base. 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 intensity of consumption. 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. Urban consumers now buy chocolates and confectionery for everyday consumption. Earlier, they would buy them mostly during festivals. Also, more and more Indian consumers are replacing traditional sweets with chocolates. Almost 20% of chocolate sales in at the retailer come from adult chocolates. "Adult chocolate consumption is getting a fillip from modern retail. Figure: 9.1 Chocolates Consumption Pattern Indians now prefer chocolates over other Indian sweets because of health considerations. This has also helped in opening the bakery segment to the chocolate manufacturers. We have bakery chains which have launched their own brands of chocolates as an offering
  • 25. 24 | P a g e 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 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. 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.
  • 26. 25 | P a g e Figure: 10.0 Product Life Cycle of Cadbury Dairy Milk Chocolate The product life cycle is very useful for managers as it can act as a guide for changes in strategy at different stages in the product’s life. However, the concept runs the danger of becoming a self-fulfilling prophecy. In reality, not all products (or brands) follow the "S" curve of the product life cycle. Some fad products die quickly after introduction. Others manage to live indefinitely. The Cadbury brand has been in existence since 1824 and is still the number one brand in confectionery products. BCG Matrix Boston Consulting Group Matrix based on product life cycle approach to use the charts, analyst plot a scattered graph to rank the product on the basis of relative market share & growth rate. The BCG matrix is used in business to under where to invest, harvest & divest. This matrix also shows the relationship between cash-generating products & cash- caters. 1. Star: - Products in rapidly growing markets in which the company has high relative market share. Star products generates the high amount cash but are expensive to support. They are good investment as have high earning potentials both at present
  • 27. 26 | 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). Figure: 11.0 BCG Matrix Cadbury Chocolate India 2. Cash Cows: - Products in slow growth, or even static, market in which they have relatively high market share are called as Cash Cows. They require little promotion although under investment can turn them into dogs so they should not be taken for granted. The company’s objective is likely to be hold this position in order to obtain maximum return on investment (ROI). Cadbury India has two cash cow products Perk & Gums. 3. Dogs: - Dogs are in stagnant or slow-growing markets have relatively low market Share. One company’s dog can become another’s cash cow or even a star if they are operating in different markets or market segments. Cadbury India has three dogs 5 Star, GEMS & Eclairs. 4. Question mark: - Products in this quadrant are in rapid growing market but hold a relatively low market share. Cadbury India has two dogs Toblerone & Bournville.
  • 28. 27 | P a g e Cadbury & 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 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." Cadbury’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.
  • 29. 28 | P a g e 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. 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. Cadbury Singing Sweetly Again:- All is well that ends well. And for Cadbury’s India, nothing can be sweeter than Regaining Back the Consumer Confidence.
  • 30. 29 | 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, Cadbury’s 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 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.
  • 31. 30 | P a g e 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.
  • 32. 31 | P a g e 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 éclairs 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.
  • 33. 32 | P a g e 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.
  • 34. 33 | P a g e Review of Past Promotional Programs The details of all the past & present promotional programs are explained below: Campaign Target Shift over the years Promo Mechanisms Real Taste of Life Child in adult From just for kids to the kid in every adult TVC, Print, Hoardings Khanewalon ko khane ka bahana chahiye Wider masses Appeal to a wider mass based on age, gender, etc. TVC, Print, Hoardings Pappu Pass Ho Gaya Youngsters TVC, Hoardings Miss Palampur Rural masses Shift to smaller packs TVC, Hoardings Kuch Meetha Ho Jaaye Conversion of sweet consumers to chocolate for special occassions This was an innovative idea and Cadbury went ahead with the ‘Celebrations’ packs with these ads TVC, Print, Hoardings, Social Media Khane ke baad Meethe mein Kuch Meetha Ho Jaaye Targeting the habit of Indians to have desserts after meals 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 Targeting the belief of Indians that anything begun by having something sweet provides good luck Converting yet another segment of sweet consumers i.e. before the start of any work TVC, Print, Hoardings, Social Media Figure: 14.0 Review of Past Promotional Programs Source: Cadbury India Website (http://www.mondelezinternational.com/in/en/home/index.aspx)
  • 35. 34 | P a g e Analysis of Communication Process Real Taste of Life 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.
  • 36. 35 | P a g e 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” Figure: 14.2 Cadbury Dairy Milk- Kuch Meetha Ho Jaaye Campaign Source: Cadbury India Website (http://www.mondelezinternational.com/in/en/home/index.aspx)
  • 37. 36 | P a g e 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” Figure: 14.3 Cadbury Dairy Milk- Pappu Pass Ho Gaya Campaign Source: Cadbury India Website (http://www.mondelezinternational.com/in/en/home/index.aspx) Communication Objective- The ad targeted youngsters and has become part of street language. It has been adopted by consumers to express joy in a moment of achievement/success. The ad showed association with little joys of life. The campaign urged people to celebrate every little moment of happiness in their life with a chocolate.
  • 38. 37 | P a g e 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” Figure: 14.4 Cadbury Dairy Milk- Miss Palampur Campaign Source: Cadbury India Website (http://www.mondelezinternational.com/in/en/home/index.aspx) Communication Objective- The ad targeted the rural parts of India. It focused on Adults and values, like Sacred Cow campaigns aimed at rural India did fare well. Campaigns aimed at rural India did fare well. The share of Cadbury increased by more than 20% in rural India. The share of Cadbury increased by more than 20% in rural India. The brand further strengthened its positions with the core audience. The brand further strengthened its positions with the core audience. What was communicated - It shows a villager enjoying the success of his cow becoming Miss Palampur. The entire village joins in the celebration, with all having chocolates. Why they communicated- The ad was meant to increase the reach of the product to rural areas and develop preferences for chocolates in the rural areas.
  • 39. 38 | P a g e What was achieved- Enabled Cadbury to be shown as a product which can be enjoyed in rural areas too. “Shubh Aarambh” Figure: 14.5 Cadbury Dairy Milk- Shubh Aarambh Campaign Source: Cadbury India Website (http://www.mondelezinternational.com/in/en/home/index.aspx) Communication Objective- The ad was specifically aimed at indicating a shift from the notion of celebrating happy occasions with chocolate to the happy occasions with chocolate to the concept of anticipating concept of something good after consuming the chocolate, a substitute for mithai. The campaign is aimed at consumers across sectors, and is supposed to have a balanced appeal across all tiers. What was communicated- The ad depicted the starting if friendship over having Cadbury and how a bonding developed over it. Why they communicated- The ad was meant for the core group, i.e. consumers in the age group of 15-35 years. The ad was established to remind consumers about the utility of Cadbury What was achieved- Enabled Cadbury to re-establish itself in the eyes of the core target customers.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.
  • 40. 39 | P a g e PEST analysis of the Chocolate Segment in India Growth and progress of a company depends upon multifarious factors which are known to have direct and apparent effects on the overall target and functioning of that company. For a gargantuan corporation like the Cadbury’s, it is very important to keep an eye out for the butterfly effects of the political, social, economical, technological and environmental factors. Any changes in the laws or regulations, especially concerning international trade and food labeling could greatly affect the chocolate industry. Awareness of the Food Safety Act will help the chocolate industry for sustaining in the ever growing market. The chocolate manufacturers need to make sure that none of the companies are breaking laws regarding production. For example, employing children or paying under minimum wage. Otherwise, scandals and lawsuits would greatly hurt their reputation. Inspite of the economy being relatively down at the moment, it is observed that the chocolate industry has not been affected much. As a result it would support the launch of a new chocolate product or a new store. High consumer spending and low interest rates also encourage a new product. Confectionary market is growing at a very high rate and there are still many uncovered segments that require appropriate strategic approaches. Many people are trying to eat healthy and cut down on confectionary goods and soft drinks due to the current “skinny is beautiful” trend. Public opinion of chocolates is very high, so no major concerns are there to stop consumers from buying their products. Production is high due to advanced technologies and well equipped factories which enables high quality mass production. Medias such as the internet, television 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)
  • 41. 40 | P a g e Marketing plan Dairy Milk Marketing Objectives:- Over the years Cadbury dairy milk has positioned itself as an all-time favourite chocolate that is meant for all irrespective of the age, class and gender. It has been always marketed as a chocolate having the contemporary taste but which is affordable, with several variants to select from and over the time it has been trying to position itself as an alternative to the traditional Indian sweet. Whereas the corporate strategies are cantered towards ensuring profitable growth in the market and grow shareholder value over the long term the marketing strategies are more particular which can be stated a follows:- Increase sales & profit of Cadbury diary milk. Positioning diary milk as a successful alternative to the traditional Indian sweets in order to cash in the rich tradition of Indian people associated with desserts. Sustain market share over the year through product innovation in product development and packaging the variants Fruit & Nut, Crackle and Roast Almond, combine the taste of Cadbury Dairy Milk with a variety of ingredients and are very popular amongst teens & adults. Today, “Cadbury Dairy Milk alone holds 30% value share of the Indian chocolate market”. The Dairy Milk Brand is marketed using market penetration strategy. As there is huge competition in the industry therefore the brand is marketed at low profit margin in order to win market share & to maximise profit by increase the sale volume. In our view the marketing strategy use to market the product is fair enough because this attracts the right people at right time & probably at right place. This strategy takes into account all the factors that are essential in promoting the brand like this & it pays close attention to the market demand & customer expectation. The expenditure on the marketing of the brand also seems to be fair enough to by comparing it with the competitors. In our view some more efforts are required to promote the brand like some sort of unique promotion techniques to be used in order to make marketing strategy more successful. But on the whole the strategy is good & working nicely.
  • 42. 41 | P a g e 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:- Figure: 16.1 Cadbury India Sales & net profit projections
  • 43. 42 | P a g e Segmentation, Targeting, Positioning of Cadbury Diary Milk Dairy Milk chocolate bars have been in existence since 1905. Their packaging has changed, although their promotions remain somewhat constant but the positioning has evolved over the years. Their actual Diary Milk chocolate has not been altered over time except for when being sold to different regions –Indians like creamier chocolate than do those from England so Dairy Milk in India contains more of a milk content. Segmentation: - The segmentation of the market for dairy milk is based on three things. The first one being based geography. Geographically, Dairy Milk bars are segmented by consumer preferences in the area and are sold more predominantly in regions which consume more snack/junk food. The other type of segmentation is catering to the impulse purchasers. These types of consumers form a major chunk of the consumer base that the product caters to. Dairy Milks are often stocked in convenience stores and the check-out aisles of supermarkets due to impulse purchasers who are buying the chocolate for purchase and consumption now. The other segment is the gift segment. Giving away chocolates as gifts is a trend that is fast catching up in India Cadbury dairy milk wants to cash in on that. The latest segment that Cadbury dairy milk is catering to is the dessert segment. The tradition of having a dessert after meal is present in every civilization and this is a huge segment. The latest drive of dairy milk is to become the national dessert of the country. As far as segmenting the market on income there are different variants of dairy milk (Bournville and silk) targeted towards the higher class (Premium Segment) who are ready to pay the premium for extra dark chocolate. Targeting: - Starting from 1905 the purchasers of dairy milk have changed from children to all age groups. When Cadbury started its operation in India their main buyers were children and the youth who brought chocolates to celebrate special occasion. This limited the market for Cadbury dairy milk. This is a reason that Cadbury came out with the campaign of (‘kuch meetha ho jaye’) to make dairy milk synonymous with sweet so that it could target all the age groups. In India it was a mentality that chocolates are for children and the adults were more inclined towards to the conventional sweets. This campaign targeted
  • 44. 43 | P a g e 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. Cadbury’s 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 Cadbury’s 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 Cadbury’s 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 birthday’s & 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.
  • 45. 44 | P a g e 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 Age Group Population Percentage Population in Billion 1 0-18 years 38% 0.48 2 19-35 years 27% 0.34 3 36-65 years 30% 0.38 4 66 above 5.3% 0.07 Total 100% 1.27 Figure: 16.0 Age wise grouping of Indian Population Source: http://www.indiaonlinepages.com/population/india-current-population.html We will be targeting the first three groups covering 94.7 % of population. The detail marketing strategy is given in below for all the age groups.
  • 46. 45 | P a g e Marketing Plan for Age group 0 to 18 The total population in this age group is 0.483 billion & we believe that the 50% population is studying in school the numbers comes around 0.241 billion. Child connectivity & gifting segment also being attempted as a new growth segment for the company. We would like to target this age group by gifting the chocolates in schools. We have traditions of distributing sweets to all school students after Flag hosting on 15th August (Independence Day) & 26th January (Republic Day). We propose, Cadbury to tie up with bigger chain of school for distribution of Dairy Milk Chocolate (Institutional Sales) on 15th Aug & 26th Jan. Chocolates have become a premium gifting option. The chocolates have health benefits compared to Indian traditional sweets. CDM has more nutritional value for children's than any other sweet. The below graph shows the scenario if we are able to get 1 % market share in total population at the rate of Rs. 20 per unit of this age group then company can increase its sales by 48 million INR & if we consider the best case of getting 6% market share then company can increase the market share by 290 million INR. Figure 16.1 CDM Marketing plan for 0 to 18 Age group This target can be achieved by doing the tie-ups with bigger schools like DAV Schools (700 schools across India), so that market share in this segment will be captured at faster rate. In future this can be extended to gifting chocolates on Birthday’s & Children's day.
  • 47. 46 | P a g e Marketing Plan for Age group 19 to 35 The total population in this age group is 0.343 billion. This segment can be targeted in many ways. Research shows that the best way to catch this population on internet (on Facebook). India has 78 million active users who access Facebook (DNA News).Most of the people wishes birthday to their friends & family member on Facebook every day. We propose, Cadbury to tie up with Facebook & launch the online chocolate gifting programme on facebook.In the application one week before birthday Facebook will give the reminder. By using this application you can delight your dear one by choosing the perfect Chocolate & delivering it on Birthday with your birthday message for him or her. Customers can choose the best Chocolate gift they want to send it across India. Cadbury will take great care in delivering those Chocolate gifts across India (Through distribution network). Through these gifts, we deliver the emotions and heartfelt love that you send. Select the Chocolate, Gift wrapping & Birthday message for your friend & place the order online. The order will be received in district distributor system; same will be packed & dispatched by Courier at the delivery address. The below graph shows the scenario if we are able to get 1 % market share in total population at the rate of Rs. 55 per unit of this age group then company can increase its sales by 189 million INR & if we consider the best case of getting 6% market share then company can increase the market share by 1,132 million INR. Figure 16.2 CDM Marketing plan for 19 to 35 Age group In future this can be extended to gifting chocolates on Valentine's Day, International Women's Day, Mother's Day, Father's Day & Friendship Day.
  • 48. 47 | P a g e Marketing Plan for Age group 36 to 60 The total population in this age group is 0.381 billion.This is majorly working population of India. This segment can be targeted in many ways. Chocolates in the corporate gifting segment (gifting on Birthday at office) is the new trend, with variety of gift-packaging and customisation in branding. Chocolates have become a premium gifting option. Hospitality is another segment that is growing at a consistent rate. This population can be targeted on marriages (with wedding invitation card & after marriage gift), on festivals, special occasions & many more occasions. The below graph shows the scenario if we are able to get 1 % market share in total population at the rate of Rs. 100 per unit of this age group then company can increase its sales by 381 million INR & if we consider the best case of getting 6% market share then company can increase the market share by 2,286 million INR. Figure 16.3 CDM Marketing plan for 36 to 65 Age group Cadbury is focusing on new channels & institutional sale as a means to growth. The possible ways of approaching all the above strategy are new geographical markets, new product dimensions or packaging, new distribution channels, and, different pricing policies to attract different customers or create new market segments.
  • 49. 48 | P a g e The Marketing Mix of Cadbury Dairy Milk Chocolate (CDM) Product: - The product Diary Milk is a chocolate bar that is made from real dark chocolate. The design of the chocolate is nearly same throughout the world with slight changes that are made according to the different regions. The amount of milk content in dairy milk is the highest as compared to other competitors. The components that are used in making the chocolate are sugar, cocoa butter, vegetable fats, cocoa mass and emulsifiers. The various variants of dairy milk are Wowie, Crackle, Fruit and Nut, Crunchie, Temptations (roasted almond, rum raisins and raisin apricot), Bournville and Silk. Price: - Cadbury Dairy Milk has always adopted a competitive pricing strategy for the basic product whereas has gone for premium pricing on the other variants. The price list is given as follows:- Segments Product Pack size Rate Value Dairy Milk 9.2 Gram Rs. 5 Value Dairy Milk Shots 18.6 Gram Rs. 10 Value Dairy Milk 17 Gram Rs. 10 Value Dairy Milk 38 Gram Rs. 22 Mid-Tier Dairy Milk Crackle 42 Gram Rs. 35 Mid-Tier Dairy Milk Roast Almond 42 Gram Rs. 35 Mid-Tier Dairy Milk Fruit & Nut 42 Gram Rs. 35 Premium Dairy Milk Silk 60 Gram Rs. 55 Premium Dairy Milk Silk Fruit & Nut 60 Gram Rs. 55 Premium Dairy Milk Orange Peel 60 Gram Rs. 55 Super Premium Dairy Milk Silk 145 Gram Rs. 125 Super Premium Dairy Milk Silk Fruit & Nut 145 Gram Rs. 125 Super Premium Dairy Milk Orange Peel 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
  • 50. 49 | P a g e the whole sellers. Cadbury’s 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:- HR’s 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
  • 51. 50 | P a g e 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 Cadbury’s to make their product reach to every consumer houses. Right pricing will make or break the product Success. There’s 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 Cadbury’s 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.
  • 52. 51 | P a g e 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. Cadbury’s Purple Reign-The Story Behind Chocolate’s Best-Loved Brand By: John Bradley 2. Chocolate Science & Technology by: Emmanuel Afoakawa ---------------------------XXXX--------------------------