cad bury india

1 | P a g e C a d b u r y I n d i a

Cadbury India

A Marketing Project Study

Submitted by BM-B Group 3: Swapna K (B08113)

Usha Venugopal (B08115) Vaibhav Maheshwari (B08116)

Vishal Agarwal (B08121) Vivek S (B08122)


Introduction: Confectionery is a unique impulse category because it’s eaten regularly throughout the day rather than specifically at meal times. Confectionery now accounts for 24% of all food media spend, more than any other food category. According to a survey, purchase levels for confectionery are significantly higher than any other impulse category (Refer Fig1). Fig1: % Population buying each Impulse Category The four major confectionery categories are- chocolate confectionery, sugar confectionery, gum and cereal bars. The Indian confectionery market reached a value of around $500 million in 2005. India’s chocolate market is dominated by two just companies—Cadbury, which entered the country 60 years ago and has nearly 60% market share, and Nestlé, which has about 32%. The two have prospered by luring consumers with attractively packaged chocolate assortments to replace the traditional dried fruits and sugar confectioneries offered as gifts on Indian holidays, and by offering lower-priced chocolates, including bite-sized candies costing less than 3 cents. With growth just starting to kick in, Asia is going to remain a sweet spot for chocolate makers for years to come. The Indian chocolate market is estimated to be worth Rs. 3.2 billion, with an annual growth rate of 10 percent. Per Capita Consumption levels are very low in India, as compared to 8.7 kg per year in the U.K. The market therefore offers tremendous potential for growth. In our analysis we are concentrating on the chocolate industry in general and Cadbury’s in particular. Cadbury India Limited (CIL), a part of the Cadbury Schweppes Group, is India’s leading confectionary manufacturer. Cadbury’s Dairy Milk, 5 Star, Éclairs, Perk and Gems are the largest selling brands in their segments. CIL is estimated to have a 65 percent share of the Indian chocolate market. In fact the word Cadbury is a classic example of a brand coming to symbolize a product category.

Objectives:

Corporate Objectives:

� Broadening consumer appeal and extending reach to newer markets � Sustained growth of market share through aggressive product development � Striving for international quality in the products and processes � Focussing on cost competitiveness, productivity and innovative utilization of assets � Energising and developing its people

In India, Cadbury India has defined its vision as "Life full of Cadbury, Cadbury full of life". Cadbury India wants to achieve in the next four years what it has in the last 50 years.


Marketing Objectives:

� Double its turnover—which stood at Rs.1, 058 crore in 2006—by 2010. This calls for a growth rate of over 20 percent annually and will be done by setting up new capacity, and increasing volumes

� Get more people to eat more chocolate, which calls for making it more affordable and being more innovative

� Could get into new product categories like gums where the global portfolio is impressive

� Aiming for a larger footprint in the confectionery space � To be stronger in health drinks

Like most players with near-monopoly shares, Cadbury runs the risk of losing share to new players like Hershey’s, ITC (with brands like Minto and Candyman) as well as to premium imported chocolates. But that may not be much of a worry if Cadbury succeeds in growing the market. They could, for instance, hold a 50 per cent share but of a much larger pie. Advertising Objective: Leverage further the Cadbury label, which is what the company has been doing with aggressive advertising and promotions (these costs account for 12-13 per cent of sales, with 30 percent of that spend being below the line). Consumer focus: Appealing to a broader range of consumers is at the heart of the plan.

� Future activities will cover further improvisation of product & packaging to deliver superior value to the consumers

� Greater innovation in packaging & product presentation across various power brands � Product introduction to provide new texture & taste experience to consumers

Suppliers and business partners: � Continue using Ethical Sourcing Standards when working with suppliers � Continue to engage in regular dialogue with its suppliers and responds to their suggestions � Continue evaluating potential suppliers against a set of standards such as environmental

protection and ethical labour practices prior to doing business with them


Situation Analysis

The chocolates market is estimated at around 33,000 tonnes valued at approximately Rs 8.0 bn.

Cadbury is the leader in Chocolate with 70% share. It has actually become the generic name for chocolates in India.

Cadbury with its Dairy Milk, Five Star, Milk Treat, Eclairs, Golden, is ruling the roost. In chocolate-based drinks, it claims nearly 50% of the market. Cadbury India's market share in cocoa-based products is 35%, with Dairy Milk brand alone accounting for 29%. Perk and Five Star account for another 20%. Cadbury derives 76% of its revenues from chocolates and other confectionery sales.

The next closest competitor to Cadbury in this segment is Nestle 22%. Besides that large foreign brands like Hershey’s and local ones like ITC are trying to tread into Cadbury’s turf. Imported chocolates are available via modern trade in higher-end segments where Cadbury’s presence is arguably weaker.

To push sales further, chocolate majors have been targeting adult audiences. Chocolates are being presented as snack food for the new target audiences. Another strategy sought is the introduction of smaller editions.

Although the players have resorted to very aggressive promotional drives, there has been stagnation in the market from time to time perhaps, due to increase in cocoa prices.

After the worm controversy in October 2003, there was a meltdown in chocolate sales. Cadbury India appears to be on a recovery path.

Competitor Portfolio: In the domestic market, Nestle India has been deriving its revenues from five product baskets - coffee (Nescafe Select, Sunrise); milk products (Milkmaid condensed milk and ready mixes, Coffeemate coffee creamer,

Everyday dairy whitener); foods for infants (Cerelac, Nestum, Lactogen); chocolates/confectionery and malted beverages (Milo, Kitkat, Charge, Munch, Polo); and food products (Maggi noodles, soups). The recovery in exports and price increases in chocolates has helped Nestle record a healthy growth in profits (26% at Rs 2.62 bn). Nestles' chocolate portfolio of Kitkat,

Munch and Charge has slowed down significantly. The company has ventured into new areas - liquid milk, bottled water and biscuits.

Demand : Past & Future

Year MT

2004-05 35.5

2005-06 38.4

2006-07 41.3

2007-08 44.2

2008-09 47.2

2009-10 50.2

Lead Players

Company Share (%)

Cadbury's 68

Nestle 22

Amul 8

Market Growth Rates

1990-91 - 1996-97 6.9%

1996-97 - 2001-02 8.9%

2001-02 - 2006-07 11.5%

2004-05 - 2009-10 7.2%

2009-10 - 2014-15 6.0%

Market Segmentation

Segment Share (%)

2 to 8 years old 16

8 to 25 years old 53

25 to 54 years old 22

Over 55 years old 7

North 35

East 12

West 33

South 20

Product Variation

Segment Share (%)

Moulded Chocolates 50

Countline bars 33

Sugar panned 13

Choco panned 4


Micro-Environmental Analysis: (1) Market Concentration & Competition The chocolate industry is highly concentrated. Cadbury and Nestle together account for 90% of the retail sales with Cadbury being the market leader. Competition in this industry is fierce, especially between Cadbury and Nestle. Both Cadbury and Nestle have rival products in every segment (Cadbury’s DairyMilk, 5 Star, Perk vs. Nestle’s Classic, bar-one, munch, etc.) (2) Barriers To Entry The industry’s main barrier to entry is with respect to advertising. The incumbent firms have spent millions of rupees to create brand-loyalty with consumers. The cumulative effects of advertising create an absolute cost advantage for the incumbent firms, thus entrants must overcome not only current advertising efforts, but also the lingering impact of past marketing campaigns. High sunk costs also act as a barrier to entry. Sunk costs in this industry include establishing channels of distribution, advertising expenditures, and initial research and development costs. All these factors create difficult barriers to entry for a new firm entering the market and an advantage for successful first movers such as Cadbury and Nestle. But recent happenings like Ferrero planning to start production in 2009 at a new factory near Mumbai, and Hershey partnering with domestic confectioner Godrej Industries to distribute Hershey products have actually changed the equation a lot. (3) Supplier Power Industry uses a wide range of raw materials in manufacturing chocolate products, the main ones being cocoa beans, sugar and other sweeteners (including polyols and artificial sweeteners such as aspartame), dairy products (including milk), gumbase and fruit and nuts. Cadbury buys its raw materials from suppliers around the world. No single supplier accounts for more than 10% of their raw material purchases. One of the methods implemented by Cadbury to minimise the impact of price fluctuations and ensure security of supply is by entering into forward agreements and long-term contracts wherever available. Cadbury imports cocoa beans from West Africa, primarily Ghana, and the Americas. West Africa accounts for over 60% of world production. They buy cocoa beans and cocoa butter from a range of suppliers, and try to minimise the effect of cocoa price movements and secure our future requirements by entering into forward and future contracts. In order to ensure assured supply of raw material for its chocolates, Cadbury India Limited has decided to sell cocoa seedlings to coconut farmers in Tamil Nadu at Rs 4 per seedling. A MoU was signed between Cadbury India and the Tamil Nadu government to this effect. They purchase most of the sugar at prices essentially set by national government through quotas and duties. So far no difficulty has been experienced in obtaining adequate supplies of sugar for their operations, and they do not anticipate any future difficulties, given the many available sources. (4) Buyer Power End consumers have strong buyer power because of the availability of substitutes, both generic and brand names. It is easy for a consumer to purchase a nearly identical product for a lower price. This gives consumers a great deal of leverage and leads Cadbury to spend millions of rupees to create product differentiation via advertisements and new products to catch up with the evolving trends in the market. Retail stores have significant buyer power due to their ability to charge high fees for shelf space, which is important channel of distribution for Cadbury. Cadbury has worked hard to build strong relationships with these retailers to minimize this affect.


(5) Substitutes The current trends in the market suggest that traditional sweets are possible substitutes for chocolates. This is further stressed by the fact that till a few years back chocolate was not considered to be a gift item unlike sweets. However, in recent years this scenario has changed quite rigorously because of an innovative strategy taken up by Cadbury. In order to strengthen the special relationship consumers share with chocolates, Cadbury India launched its all-year-round ‘Cadbury Celebration gifting’ range with an array of newly designed Cadbury Celebration packs. The range features a selection of stylish new packs available in “Nutbutterscotch”, “Caramel”, “Almond Magic”, “Cashew Magic” & “Raisin Magic”. The range is priced between Rs 145 & Rs. 155 and is available in all premium retail outlets across major towns in India. There is also a wide selection of online vendors that offer Cadbury Celebration range for all kinds of occasions. Macro Environmental Factors (PEST Analysis): Political:

• Liberalisation measures prompted by WTO affecting sales by way of competition from imports; Direct imports from Cadbury Schweppes by dollar stores might erode market share

• Change in government policies has allowed entry of foreign players; US-based chocolate-maker Hersheys is mulling a foray into the Indian chocolate market through its joint venture with Godrej

• “Too good to share” Kashmir ad campaign for ‘Temptations’ (2002) lead to a major controversy; Political parties staged rallies outside its offices and newspaper editorials lambasted the company for its insensitivity. The Ad campaign was withdrawn and a public apology was issued

• The Food Safety and Standard Bill, 2005 with penal provisions requires a review as the same gives huge powers to the Inspecting Officers to seize food articles without authorization and may create unwanted confusion to the detriment of the company

Economic:

• The prices of cocoa and milk, the chief ingredients used in chocolates, have gone up by 50 per cent, while the price of sugar, another important raw material, has come down. The overall input costs have gone up by 20 per cent. India imports most of its cocoa requirements and the prices of cocoa have risen globally due to unavailability of cocoa. If the prices of these commodities keep increasing, Cadbury will be forced to increase the prices

• Low margins, high volumes, price sensitivity of the industry and competition from cheaper substitutes leaves little room for price manoeuvring

Social: • In October 2003, seizure of chocolates stock from Pune plant after worms were found by

customers in Dairy Milk packages; Sales dropped by 30 percent where it was expected to grow by 15 percent owing to the festive season; Advertisements went off air for a month and half; To regain the lost faith of customers, Cadbury invested in technology to the tune of Rs.15 crore, roped in Amitabh Bachchan as the brand ambassador and upped ad spends by 15 percent

• “Indianisation” of the brand to increase width of consumption by entering the Indian mind-space - Making Cadbury a part of Indian customs and traditions – positioning chocolates as a substitute to sweets


Technological: • Adoption of JDA software’s space and category management solution resulted in 93.75%

reduction in planning and processing time and increase in productivity • e-Commerce has not picked up that well - not much turnover through this route – future

growth prospects of this channel Analysis of Objectives for Cadbury and its Competitors: Objectives Cadbury India Nestle India Corporate Objectives • Broadening consumer appeal

and extending reach to newer markets

• Sustained growth of market share through aggressive product development

• Striving for international quality in the products and processes

• Focussing on cost competitiveness, productivity and innovative utilization of assets

• Energising and developing its people

• Constant focus on innovation and renovation and providing greater value to consumers

• Striving for low cost operation by pursuing and accelerating industrial restructuring and aiming for manufacturing efficiency

• Regaining an impulse distribution culture

Marketing Objectives • Setting up new capacity and increasing volumes

• Get more people to eat more chocolate, which calls for making it more affordable and being more innovative

• Could get into new product categories like gums where the global portfolio is impressive

• Aiming for a larger footprint in the confectionery space

• Distribution through innovative consumer promotions and trade offerings and supporting key price points

• Maintain the trust of customers on Nestle products that comes from a quality image that has been built up for over a century

Advertising Objectives • Leverage further the Cadbury

label, which is what the company has been doing with aggressive advertising and promotions

• To create focus on nutrition, wellness and fitness and the increasing health consciousness amongst the urban population

Cadbury’s Strategy: Cadbury India began its operations in 1948 by importing chocolates and then re-packing them before distribution in the Indian market. After 59 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, Kolkata and Chennai). The corporate office is in Mumbai.


Currently Cadbury India operates in three sectors viz. Chocolate Confectionery, Milk Food Drinks and in the Candy category. Branding Strategy: Cadbury’s strategy to attract consumers is unique in a sense. Instead of focusing on the product, it seeks to tap into emotions normally associated with chocolates. They have also adapted their strategies to the unique demands of the Indian retail sector. The strategy has clearly proved successful, as they have been able to build and maintain a leadership position in the market with many loyal customers. Marketing Strategy: In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the years. Some of the key brands are Cadbury Dairy Milk, 5 Star, Perk, Éclairs and Celebrations. Cadbury enjoys a value market share of over 70% - the highest Cadbury brand share in the world. The flagship brand Cadbury Dairy Milk is considered the "gold standard" for chocolates in India. The Cadbury India Brand Strategy has received consistent support through simple but imaginative extensions to product categories and distribution. The diversified product categories enable them to reach out to different customer segments thus broadening their reach. While the usual brands in the lite category are stocked at most of the mom and pop stores, and groceries, the premium brands are sold at premium food stores and modern trade formats to achieve ‘differential visibility. Supplier Strategy: Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over two decades, they have worked with the Kerala Agriculture University to undertake cocoa research and released clones, hybrids that improve the cocoa yield. Their Cocoa team visits farmers and advises them on the cultivation aspects from planting to harvesting. They also conduct farmers meetings & seminars to educate them on Cocoa cultivation aspects. Their efforts have increased cocoa productivity and touched the lives of thousands of farmers. Advertising Strategy: Television, the print media and posters have been the main media of communication for Cadbury’s advertisements. However, with their understanding of the peculiarities of the Indian market, Cadbury has also explored many new ways of getting their message across to the consumers. Sheet Metal Dispensers: This purple salesperson for Cadbury’s is found in almost every shop stocking their chocolates. Since it is placed on the cash counter, it’s design offers visibility, ease of vending, and protection from the elements. It is also placed in the most appropriate position to cater to the impulse buyers. This ‘first’ from Cadbury has become so popular that is now the standard design for all chocolate manufacturers. Visicoolers: Visibility for chocolates drops in the summer, as they disappear into the refrigerator. In high throughput outlets, the visicooler serves the need for cooling while still maintaining the visibility of the product. Jars: These are provided to small outlets, where they are prominently displayed. Vending machines: These high visibility machines are provided at busy locations. Presence in Amusement Parks: Cadbury’s also maintains a presence in many amusement parks across the country, strengthening the association of its chocolates with ‘fun’ occasions.


Competitor strategy - Nestle Nestlé describes itself as a food, nutrition, health, and wellness company. Recently they created Nestlé Nutrition, a global business organization designed to strengthen the focus on their core nutrition business. They believe strengthening their leadership in this market is the key element of their corporate strategy. This market is characterized as one in which the consumer’s primary motivation for a purchase is the claims made by the product based on nutritional content. Cadbury’s biggest competitor, Nestle, often stresses the energy giving aspects of chocolate (for example, in advertising for Nestle Charge), or on other attributes of the chocolate - taste in the case of Nestle Crunch, as a light snack in the case of Nestle Bar One. Nestle specifically targets children in the advertising for Milkybar, its white chocolate, again emphasizing its energy giving properties. To counter Milkybar, Cadbury has the Dairy Treat - where it targets mothers by trying to convey the message that its product is full of the goodness of milk, and so equivalent to consuming milk itself. Bar One chocolate has been re-launched in new tastes, packaging and pack sizes. And another variant of KitKat - white chocolate - has just been rolled out. Cadbury’s Perk parallel in Nestle - Munch Pop in the snacking arena has also taken well. In Nestle India per se, out of its various businesses, the revenues from chocolate segment are just 15% of its total revenues. The focus primarily has been in the growing Indian processed foods sector, though it comes second in the chocolate segment with a market share of 20%.

Marketing Mix Product Cadbury India Limited (CIL) confectionary products include Dairy Milk, 5 Star, Eclairs, Perk, Halls, Bytes and Gems which are the largest selling brands in their segments. Cadbury’s Dairy Milk (CDM) is its flagship brand, having a market share of 30% and average daily sales of 1 million bars. It also introduced ‘Cadbury Celebrations’ range with an array of newly designed Cadbury Celebration packs for various festivals. Its closest competitor Nestle, comes second with a market share of 22% and comparatively less diversified products in chocolates. Its products are Kit-Kat, Munch, Milky-bar, Charge, Classic, Polo. Kit-Kat is their premium brand in chocolates. In Nestle, the diversification and revenues across other segment like snacks, coffee, milk products, infant food, beverages is higher. While Cadbury gets 76% of its revenues from Chocolates and Nestle a much lower proportion we observe that Cadbury’s primary focus is in the Chocolate segment. It no doubt has an edge in the premium chocolate segment. Cadbury is considering diversifying into other segments too. Pricing The price charged for a chocolate bar can determine whether a consumer will buy it and the level of sales achieved can determine whether or not Cadbury will make a profit. Price is also affected by factors such as the state of the economy, what competitors are charging, the stage reached in the products life cycle and above all what price the Indian market will bear. Cadbury products are in the range of Rs10 to Rs 20 and has also introduced the ‘Cadbury Celebration gifting’ ranges available in “Nutbutterscotch”, “Caramel”, “Almond Magic”, “Cashew Magic” & “Raisin Magic”. The range is priced between Rs 145 & Rs. 155. The entire Cadbury Celebrations line notched a 25% growth in sales for the fiscal year ending March 2007. It has many variations: The basic range is priced between Rs 60 and Rs 100. The panned/gift range is Rs 145-155. Cadbury’s Heroes is Rs 50-Rs 100. The Rich Dry Fruit collection will be in the region of Rs 200-500. The entire line is distributed nationwide at

10 | P a g e C a d b u r y

I n d i a

175,000 outlets and the panned or gift line is sold at 100,000 outlets across one-million-plus population towns and cities. Cadbury Nestle 5 star Rs 5 – 10 BarOne Rs 5 – 10 Perk Rs 5 – 10 Munch Rs 5 – 10 Celebrations Rs 60 - 155 - - Kitkat Rs 6 – 24 Temptations Rs: 30 - 60 - Gems Rs 10 - Figure 1: Prices of Cadbury products and it’s Nestle equivalent Promotion The basic purpose of promotion and advertising by Cadbury is to make Cadbury synonymous with chocolate and -

• Educate the market

• Build brand awareness

• Increase consumption

• Encourage seasonal purchases

Promotion Strategies:

• Use of emotional appeals in advertising

• Customer surveys as a means to align the advertisements with evolving sets of customers.

• Packaging as a tool to communicate quality

Till the mid-nineties, Cadbury’s marketing communication campaigns for CDM were targeted at kids. The advertisements focused on the relationship between the parents and their children, where parents expressed their love by gifting the child a Dairy Milk. However, Cadbury changed its tack and the communication campaigns were targeted at adults, to expand the chocolate market and increase sales. Place Cadbury India has manufacturing locations at Thane, Pune, Himachal Pradesh, Gwalior and Bangalore and has Cocoa operations at Cochin. Cadbury's distribution network reaches out to six lakh outlets each for its confectionery and chocolate brands. Chocolates need to get retailed at larger and better outlets while all the products below Rs 3 need a different distribution network. Chocolate needs to be distributed directly, unlike other FMCG products like soaps and detergents, which can be sold through a wholesale network. 90% of chocolate products are sold directly to retailers. Distribution, in the case of chocolates, is a major deterrent to new entrants as the product has to be kept cool in summer and also has to be adapted to suit local tropical conditions. Cadbury's distribution network used to encompasses 2100 distributors and 450,000 retailers. The company has a total consumer base of over 65 million. Besides use of IT to improve distribution logistics, Cadbury is also attempting to improve distribution quality. To address the issues of product stability, it has installed VISI coolers at several outlets. This helps in maintaining consumption in summer, when sales usually dip due to the fact that the heat affects product quality and thereby off take. To avoid cannibalization of its higher priced products from lower priced ones, Cadbury is setting up two separate distribution channels – one for Core business & other for Mass markets, with different stockists, wholesalers and retailers. One set will be dedicated to Cadbury’s high-end products and traditional chocolates. The other will cater to the mass market brands namely Chocki, Halls, Eclairs et al — all products priced below Rs 3.


I n d i a

But today, Cadbury's distribution network reaches out to six lakh outlets each for its chocolate & confectionery brands (i.e. total reaching12 lakh outlets). Analysis of Value chain The last few years have seen the company invest heavily in the entire value chain to successfully combat competition and continually move the market to the next stage of evolution.

o At Cadbury India they believe that effective communication 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 realized the importance of and have in place, an effective IT infrastructure. Through IT investment, they aim to o Remain competitive in the fast changing environment. o Incorporate best practices in the business processes. o Arrive at uniform software and business practices globally within Cadbury Schweppes. o Achieve flexibility of systems to keep pace with changing environments. o Increase speed of response to business processes. o Minimise working capital.

o Cadbury continued to make significant investments in the information Services/ Technology area to cope with the growing needs necessary to manage operations more effectively in complex supply chain management. Technical expertise in various forms of information technology enabled the business of company to grow and sustain.

• New Technology: o A Wide Area Network comprising of 31 VSATs across the country connect the branch

offices, factories, depots and the corporate office. This is used for e-mail and accessing SAP/R3, which is the application package, used across the Cadbury Group. The implementation of SAP gives them up-to-date information in terms of stocks at factories and depots, sales across the country, and the financial impact of all the above transactions at any given moment of time.

o The company being a part of the Cadbury group benefits from its access to proprietary technology, technical expertise and the fruits of the extensive centralized Research and development. The diversified knowledge and expertise have contributed significantly to the operations of the company over the years. Some of the key areas, which have benefited are: o Benchmarking of products against competition to achieve an advantage in product

quality, for increasing competitiveness. o Access to latest technological developments, such as Spear-point technology for cocoa

based products implementing during 2000, which would improve quality and competitiveness.

o Enhancement of skill and competence of company personnel due to training received. o Implementation of environmentally sound business.

• Trade Marketing: Chocolate and Confectionery purchase being impulse led, demands eye catching, on-the-cash-counter visibility in as many of these outlets as possible. In order to best meet their dealer's display and vending needs, they have invested in an array of inputs to the trade.

• The Sheet Metal Dispenser: This ubiquitous, purple salesperson for Cadbury is found in almost any shop stocking their chocolates. While being on the cash counter, its unique design offers visibility, ease of vending and protection from the elements. Available in various sizes, it can meet the needs of any outlet. This 'first' from Cadbury, has become so popular, today it is the standard dispenser design for all chocolate manufacturers.


I n d i a

• Visicoolers & Refrigerators: Come summer, visibility for chocolates drop as they disappear into the refrigerator. In high throughput outlets, the visicooler with a glass front not only maintains eye contact with the consumer, but offers perfect chocolates throughout summer as well.

• Vending machines: First introduced in the country by Cadbury, these impressive coin operated

machines can be seen dispensing chocolates in high traffic areas from the World Trade Centre at Mumbai to New Delhi railway station. Nowadays vending machines of Amul and Nestle can also been seen everywhere in the market. Vending machines have formed a part of selling products saving on sales person and opening shops.

• Chocolates are primarily sold through Kirana Stores, Gift stores, Medical Stores, canteens, Pan-Bidi stores, Bakeries, Sweet Shops etc. This is true for Cadbury 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.

Profits (In Rs Crore)

Company\Year 2003 2004 2005 2006 2007

Cadbury India 45.65 41.29 45.95 68.81 117.65

Nestle India 263.08 251.92 309.57 315.10 413.81

Figure 2 : Profit figures for Nestle and Cadbury India division over the years Note: Profits are of complete group and not restricted to chocolate segment only. Product Innovation and Revamping Cadbury At Cadbury, careful screening of the ideas is carried out to see whether they are economically and technically viable and whether consumers would be interested in such new concepts. Ideas must be relevant. Business analysis involves financial, technical and sales forecasting to estimate the potential for the ideas. ‘Market needs’ must match the technological possibilities or the new product could end up being far too expensive to produce. Actual product development follows if these two hurdles are passed. Ideas are translated into real products which can be packaged, promoted and launched. Questions that arise include – recipe – are the ingredients economically readily available; process – does machinery exist that is able to meet the needs previously identified such as shape, size and form; packaging - is it suitable to withstand being transported from A to B?. New product performance must be consistent before the project moves on. Production run after production run is carried out on a pilot scale during development to get it right.

Marketing development plans are drawn up at the same time. A suitable name must be chosen and registered; it must be unique to the product and in today’s business arena, it should be capable of international use. Careful checks must be made to ensure that the selected name does not mean something different in other languages. Pack design must be finalised making sure that it is in line with product targeting in the market place. Certain styles appeal to different age groups and use of cartoon characters for children’s products can be hazardous as tastes and fashions change rapidly! While deciding final price, Cadbury has to be sure that a top-quality product can be produced and distributed, with margins for the company, wholesalers and retailers, within the price that the consumer will be willing to pay. Recent Product Launch: Cadbury Lite (Feb 2008) is the first ‘No added sugar’ product in the Cadbury India portfolio and will mark the company’s foray in catering to specific dietary needs of consumers. Cadbury Lite is currently being launched in Tamil Nadu and Andhra Pradesh markets and will roll out


I n d i a

to the other states in a phased manner. The 40g bar is priced at Rs. 28. An integrated marketing campaign will be launched in the second week of March to create awareness around the product. The 360-degree marketing communication will encompass TV, Print, Outdoor, tie-ups and sampling activities in Modern Trade chains, Chemists and other key retail outlets. Nestle The Company sustained momentum during the year by driving distribution through innovative consumer promotions and trade offerings and supporting key price points. High temperatures are a typical characteristic of Indian subcontinent. Chocolate starts melting at such high temperatures thus making chocolate unfit for consumption. Hence, Nestle introduced an innovative Liquid Chocolate – Choco Stick at a price tag of Rs. 2/- which was an instant hit. Nestle Munch, which is the largest selling unit in the wafer segment and the most widely distributed, continued to gain in volumes. Nestle Chotu Munch, which was launched at Rs. 2/- price point, was well received. A range of other innovative and renovated products were launched which included Nestle Milk Chocolate, Nestle Fruit & Nut, Nestle Krunchy, Nestle Milkybar Starz, Nestle Choo, Nestle Chocolate Eclairs, Nestle Coffee Eclairs and various flavours for Chocostick, The company, in March 2008, launched two new products under its Kit Kat brand. While the Kit Kat Mini, priced at Rs 2, follows the similarly priced Munch version into rural markets, Kit Kat Chunky will allow customers controlled indulgence. The chocolate comes in three portions of 64 calories each, in line with Nestlé’s focus on nutrition, wellness and fitness and the increasing health consciousness amongst the urban population. The company is focused on growing its market share through renovation and innovation of its existing brands in India. Last year, it launched Munch Choc Pop, wafer cubes covered in chocolate. Their distribution reach is the largest in the category and are building on that. The Munch brand alone reaches over a million retail outlets. Differential Advantage for each company in terms of various factors: 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.

• Wide variety of brands: o 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.

o Nestle has been continuously working on the new products as per the needs of the consumers. Since the launch they have introduced many new products, which has placed a sweet taste in the heart of the customers. They have provided various products with different taste such as- Nestle classic, Bar one, Kit Kat, Fox, Crunch, Milky bar, Nestle éclairs etc.

• Quality products at low price: o 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.

o Quality is the cornerstone of the success of the Nestlé Company. Every day, millions of people all over the world show their trust in the company by choosing Nestlé products. This


I n d i a

trust comes from a quality image that has been built up for over a century. They provide products of all range i.e. for Polo the price changes from 1 Rs. to 3 Rs. and 7 Rs. also.

• Innovative & attractive packaging: o 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 color purple in the minds of the Indian consumer.

• Timely expansion of market: o In the 90's Cadbury realized 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.

o 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. .

• Constant diversification: o 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 Frutus Cadbury has taken the market by surprise.

o In the area of chocolate and confectionery Nestle Munch wafer biscuit with chocolayer, which was launched in select markets in 1999, was rolled out nationally during 2000 and had good growth. Continuing with the efforts to meet consumer expectation on price points, the pricing of KitKat was also reduced during the later half of the year.

• Commitment of expansion: o 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.

o Nestle who initially developed their market in urban areas is now expanding in the semi-urban and rural markets. They are providing various products at very low price. They had polo a mint with hole and now they have the remains of the hole of polo in cachets.

• Repositioning: o Cadburys has also 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.

o For 50 years, Cadbury's has successfully played the role of market leader and market maker by building brands that have a large base of loyal consumers. The last few years especially, have seen the company invest heavily in the entire value chain to successfully combat competition and continually move the market to the next stage of evolution. Nestles had build their brand base in coffee ‘Nescafe’ has recently introduced themselves in the market providing India with various taste in chocolate segment.


I n d i a

• Trade Marketing: Chocolate and Confectionery purchase being impulse led, demands eye catching, on-the-cash-counter visibility in as many of these outlets as possible. In order to best meet their dealer's display and vending needs, they have invested in an array of inputs to the trade.

• Jars: o Outlets like the neighbourhood Paan shop have just enough places for simple dispensers like

jars. Attractive jars / merchandising units in such shops ensure places of pride for Cadbury. o Nestle also provide free jars with many of their products which is easily available in any retail

shop. By purchasing the product, getting the jar free; attracted a large number of customers. This offer has proved successful in India.

• Amusement Parks & Tourist places: Cadbury's presence in the premier amusement parks such as Esselworld and Appu Ghar adds to the magic of chocolates by 'coming alive' for the consumer. Even Amul can be seen in nearly all the places all over India. Amul milk and other products individual stalls can be seen out of many famous places that are normally visited by tourist like Taj Mahal, Hawa Mahal etc. Nestle also has received considerable place in parks like Fantasy-land, Suraj water park etc. in Mumbai.

Expected future strategies

• Opening up of Café Cadbury: In the UK, Cadbury Schweppes has opened up its first Café Cadbury in Bath. There is a lively buzzing café on the first floor, and a relaxed, indulgent lounge on the second floor. The ground floor features a retail shop with premium chocolates and merchandise. The concept is modern, contemporary and simple, the ambience warm and friendly. Cadbury might replicate the model in India soon.

• Large foreign brands are entering the Indian market. The $5 billion global brand Hershey’s has inked a joint venture with Godrej Beverages & Foods, to create a new company, Godrej Hershey Foods & Beverages (GHFB). GHFB’s mandate isn’t too different from Cadbury’s and Cadbury runs the risk of losing market share to such new players as well as to premium imported chocolates. The game plan is to leverage further the Cadbury label with aggressive advertising and promotions. Cadbury needs to succeed in growing the market. It has to stick to its low price points even as input costs keep increasing. Price hikes could erode volumes.

• Cadbury wants to double its turnover by 2010, which calls for a growth rate of over 20 percent annually. It could get into new product categories like gums where the global portfolio is impressive.

• Cadbury can introduce an Energy bar in the Indian market to target the health and sports conscious people. Cadbury Schweppes has already launched ‘Boost Guarana’, a new chocolate countline bar which the company claims is the first mainstream chocolate bar sold in UK with proven energy stimulation properties. There is scope for introducing the same in India.

• Cadbury India wants to enhance its share of chocolate confectionery from 6% to 8% in impulse category. There is good scope to further widen its reach in the target urban population. Penetration in small towns needs to be increased. This can be addressed through new and unconventional channels with highly focused servicing areas.

• Cadbury can take up E-commerce initiatives like direct websites (B2C) and push B2B through Distributors portal, Information Management and better Working Capital Management. This will unlock lot of cash which can be ploughed back to grow the business.


I n d i a

Consumer behaviour in Indian Chocolate Market Chocolates are consumed as indulgence and not as snack food, as prevalent in western countries. Almost 75% chocolates and 90% confectionery are impulse purchases. Chocolates are bought predominantly by adults and gifted to children. Direct consumption by adults has also increased. In contrast, over 90% of confectionery products are purchased by children between the age of 6 and 14, directly. In most cases, parents do not approve of confectionery consumption, and children buy out of their pocket money. Chocolate consumption is concentrated largely in metropolitan cities. Confectionery consumption is wide spread. The unorganized sector has a greater dominance in rural areas. Confectionery consumption has a seasonal pattern. Sales peak of confectionery is in winter months from November to February. Off-take is lowest in the summer months as schools are closed and therefore children's pocket money is lower. Also in monsoon consumption falls as children are out of home for lesser time. Between February and April pressure of examinations causes lower sales. Brand loyalties are weak in confectionery products. Children look for novelty and excitement. Most purchases are impulse driven and POP retail displays (dispensers, etc) play an important role. Promotions such as stickers, cricketer/ star pictures have tremendous impact. Cross elasticity of demand - Different products amongst confectionery such as hard boiled sugar candy, bubble gum etc compete inter se and also with ice cream and chocolates. Confectionery market is extremely price sensitive. Re 1 is considered premium pricing. When raw material prices escalate, marketers find it difficult to pass on the same due to problems of coinage. Grown up adults feel guilty about eating chocolate, akin to stealing a child's food. Now days the consumption of chocolates has even more decreased because of preparing of chocolates at house. Many people for fun sake or during occasions prepare chocolates rather than bringing for market. Women has started classes for teaching preparation of chocolates at home which is comparatively cheaper and looks good if given to guest by name of homemade rather than a market chocolate. Many people have also started it as a business by selling on small scale and even selling to local shops for cheaper rates. Segmentation The Indian chocolate industry is extremely fragmented with a range of products catering to a variety of consumers. We have the bars/slabs, jellies, lollipops, toffees and sugar candies. Given India's mammoth population, it comes as a surprise that per capita chocolate consumption in the country is dismally low - a mere 20 gms per Indian compared to over 7 kgs in most developed nations. However, Indians consumed 41 MT of chocolate last year and consumption is growing at 15-20 percent annually. Both chocolate and sugar confectioneries have abysmally low penetration levels, in fact, even lower than biscuits, which reach 56 per cent of the households. Market growth in the chocolate segment has hovered between 10 to 20%. In the last five years, the category has grown by 14-15% on an average and will expect it to continue growing at a similar rate in the next five years. The market presently has close to 60mn consumers and they are mainly located in the urban areas. Growth will mainly come through an increase in penetration as income levels improve.


I n d i a

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.” Low priced unit packs, increased distribution reach and new product launches can be said to have fuelled this growth. The launch of lower-priced, smaller bars of chocolate in the last two years and positioning of chocolate as a substitute to traditional sweets during festivals, have boosted consumption. This is also because chocolate, which was considered to be an elitist food, has caught the fancy of buyers looking for a lifestyle item at affordable cost. Till recently, chocolate consumption had been restricted by low purchasing power in the market. Chocolates and other cocoa-based snack foods were looked upon as food suitable only for the well-off. After economic liberalization in 1991, major changes have occurred in food habits, partly on account of rise in gross domestic product (GDP) growth and higher purchasing power in the hands of the middle-class representing a third of the total population. Availability of chocolate products has also exploded. Targeting For 50 years, Cadbury's has successfully played the role of market leader and market maker by building brands that have a large base of loyal consumers. The last few years especially, have seen the company invest heavily in the entire value chain to successfully combat competition and continually move the market to the next stage of evolution. Traditionally, chocolates were always targeted at children. In fact, till the mid-nineties, Cadbury’s marketing communication campaigns were targeted at kids. The advertisements focused on the relationship between the parents and their children, where parents expressed their love by gifting the child a Dairy Milk. But stagnancy in growth rates made the companies re-think their strategies. In 1994, Cadbury India Ltd. changed its tack and the communication campaigns were targeted at adults, to expand the chocolate market and increase sales. Since low margins, high volumes, price sensitivity and high advertising expenses characterize the Chocolate industry, Cadbury’s long term strategy is to target lower price points in the chocolate segment to help pep up volume growth. 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. Cadbury has well adjusted itself to Indian custom. It has properly repositioned itself in India whenever required i.e. from children to adults, togetherness bar to energizing bar for young ones etc. Positioning Cadbury had its tryst with India when it kick-started operations in 1947. Today the brand claims a 70% share of the Indian chocolate market, despite heavyweight competitors like Nestle and domestic giants like Amul. With more than 50 years of its existence in India, Cadbury has built powerful brands for itself in the country like Five Star, Perk, Gems, Clorets or even the good old Cadbury diary milk. However, it was the real taste life campaign, which changed the fortunes of the company. For decades, Cadbury had existence in India, but the common perception was that “Chocolate is for children only”. This norm was to be broken to expand the Chocolate market share. Cadbury successfully achieved this through the repositioning exercise through Cadbury Dairy Milk (CMD) and the launch of Perk.


I n d i a

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. In order to make chocolates more acceptable and accessible amongst adults and erase the kiddy connotations, Cadbury in the last two-three years has positioned a number of its major brands as an indulgent, adult treat. Cadbury's India Ltd. tops in Advertising with 52% share of the Chocolate advertising pie on television. Cadbury has successfully transformed its brand image from children to adults by convincing people that happiness and successes should be celebrated with Cadbury. This has led to a major thrust in increasing the number of distributors and retailers across the country with the result that Cadbury chocolates are available at any paan and cigarette shop in every nook and cranny of India. Cadbury has soon replaced “Mithai Ka Dibba” as gifts even at weddings by “Cadbury Celebrations”. It has also convinced people to give Cadbury chocolates as gifts, prizes and a fun confectionary to munch. Cadbury reinforced the market once again with vision, “A Cadbury in every pocket”, “khaane walon ko khaane ka bahana chaahye”, “and kuch khaas hai zindagi mein “and” maza aa gayaa”. In the past couple of years in the face of increasing competition from Swiss chocolates major Nestle India and the home-grown Amul, Cadbury has been pushing its products aggressively and targeting the adult audience especially to expand the market. Cadbury’s strategy to attract consumers is somewhat unique in a sense, instead of focusing on the product; it seeks to tap into emotions normally associated with chocolates. They have also adapted their strategies to the unique demands of the Indian retail sector. The strategy has clearly proved successful, as they have been able to build and maintain a leadership position in the market with many loyal 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. The strategy has driven volumes in the last two years and the volume growth is expected to continue in the coming years. Assumptions in Planning Process Marketing plans for the following years are usually drawn out for 3-5 yrs with suitable forecasts and assumptions. Several tools such as past data, market research, expectations, expansions plans are taken into accounts while making such assumptions. Marketing Potential Assumptions:

• In order to increase their market share, they intend to increase the market demand for chocolate through innovations and affordability. It assumes to contain the price and make it affordable inspite of the rising raw material prices. Cadbury is associated with its flagship brand – ‘DairyMilk’. Moving beyond this image, it intends to innovate and compete with the several foreign brands entering Indian markets.

• It intends to increase its brand value by diversifying its global portfolio. This may increase the revenues of Cadbury in general, but may or may not contribute to its market share in the chocolate (confectionary) segment.


I n d i a

Forecast Assumptions:

• Cadbury’s forecast that its market share would double from 2006-2010, which means about 20% growth annually. In order to attain this, they plan to add new capacity. They assume that new capacity would be operational and also meet the required market demand by 2010

• Cadbury India is the leader in the chocolate segment with about 70% market share. With increasing number of foreign brands entering the Indian markets, Cadbury would face a stiff competition. It assumes it could continue to maintain its leading share with increase in innovations, affordability and branding.

Other Assumptions:

Cadbury will continue to build up on its position in Indian Chocolate market. It can be safely said that Chocolate consumption will continue to rise in India both in rural and urban markets. There is a lot of potential for growth and a huge population who do not eat chocolates even today that can be converted as new users. But performance of Cadbury will also be dependent on these factors: Good monsoon ensures adequate availability of raw materials, which are mainly agricultural in nature. Raw material prices have significant influence on margins. Government policies in terms of licensing, duties, movement of agricultural commodities etc. also affect the introduction of products, time lag for a product launches, taxes, excise, etc all influence the business. Market growth driven by overall economic growth and urbanization also contributes. An overall booming economy will consume tonnes of chocolates because consumer spending increases. Also, the absolute number of consumers in middle class & upper middle class increases. Rupee depreciation improves export realizations; however it also makes import of raw material (esp. cocoa) expensive. Impact of imported brands. Usually, these imported chocolates taste better than domestic chocolate due to recipe difference. Hence consumers who are willing to spend a little more, prefer these imported chocolates. However, the premium brands, which come through official channels, do not pose a threat to the market, as these cater to a small niche market. Customer Target: The Chocolate market presently is close to 60mn consumers and they are mainly located in urban areas. Cadbury's has successfully played the role of market leader and market maker by building brands that have a large base of loyal consumers. Cadbury had its tryst with India when it kick-started operations in 1947. Today the brand claims a 70% share of the Indian chocolate market, despite heavyweight competitors like Nestle and domestic giants like Amul. With more than 50 years of its existence in India, Cadbury has built powerful brands for itself in the country like Five Star, Perk, Gems, Clorets or even the good old Cadbury diary milk. The last few years especially, have seen the company invest heavily in the entire value chain to successfully combat competition and continually move the market to the next stage of evolution. Traditionally, chocolates were always targeted at children. In fact, till the mid-nineties, Cadbury’s marketing communication campaigns were targeted at kids. The advertisements focused on the relationship between the parents and their children, where parents expressed their love by gifting the child a Dairy Milk. But stagnancy in growth rates made the companies re-think their strategies. This norm was to be broken to expand the Chocolate market share.


I n d i a

Cadbury successfully achieved this through the repositioning exercise through Cadbury Dairy Milk (CMD) and the launch of Perk. It changed its track and the communication campaigns were targeted at adults, to expand the chocolate market and increase sales. 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. Cadbury has well adjusted itself to Indian custom. It has properly repositioned itself in India whenever required i.e. from children to adults, Togetherness bar to energizing bar for young ones etc. Cadbury in the last two-three years has positioned a number of its major brands as an indulgent, adult treat. It has successfully transformed its brand image from children to adults by convincing people that happiness and successes should be celebrated with Cadbury. This has led to a major thrust in increasing the number of distributors and retailers across the country with the result that Cadbury chocolates are available at any paan and cigarette shop in every nook and corner of India. Cadbury’s strategy to attract consumers is somewhat unique in a sense, instead of focusing on the product; it seeks to tap into emotions normally associated with chocolates. Competitor Target: In the domestic market, Nestle India has been deriving its revenues from five product baskets - coffee (Nescafe Select, Sunrise); milk products (Milkmaid condensed milk and ready mixes, Coffeemate coffee creamer, Everyday dairy whitener);foods for infants (Cerelac, Nestum, Lactogen); chocolates/confectionery and malted beverages (Milo, Kitkat, Charge, Munch, Polo); and food products (Maggi noodles, soups). Nestlé describes itself as a food, nutrition, health, and wellness company. Recently they created Nestlé Nutrition, a global business organization designed to strengthen the focus on their core nutrition business. They believe strengthening their leadership in this market is the key element of their corporate strategy. This market is characterized as one in which the consumer’s primary motivation for a purchase is the claims made by the product based on nutritional content. Nestle, often stresses the energy giving aspects of chocolate (for example, in advertising for Nestle Charge), or on other attributes of the chocolate – taste in the case of Nestle Crunch, as a light snack in the case of Nestle Bar One. Nestle specifically targets children in the advertising for Milkybar, its white chocolate, again emphasizing its energy giving properties. To counter Milkybar, Cadbury has the Dairy Treat - where it targets mothers by trying to convey the message that its product is full of the goodness of milk, and so equivalent to consuming milk itself. Bar One chocolate has been re-launched in new tastes, packaging and pack sizes. And another variant of KitKat - white chocolate - has just been rolled out. Cadbury’s Perk parallel in Nestle - Munch Pop in the snacking arena has also taken well. In Nestle India per se, out of its various businesses, the revenues from chocolate segment are just 15% of its total revenues. The focus primarily has been in the growing Indian processed foods sector, though it comes second in the chocolate segment with a market share of 20%.

PRODUCT MIX – CHOCOLATES (Past and Present) PRODUCT BASKET

Bars Dairy Milk

Count Lines

Plain 5 Star Crunchy Fruit n Nuts Milk Treat Chocolate Roasted Almond Orange


I n d i a

Chunky Wafer Chocolate Perk 5-Star Perk XL Cadbury’s Dairy Milk (CDM): Cadbury’s Dairy Milk is the flagship brand of Cadbury’s not only in India but worldwide. CDM is the single largest selling unit in India. It has annual sales to the tune of Rs 200 crore. CDM not only accounts for 30 per cent of the total chocolate market in value, but commands nearly 26 per cent in volume terms and close to 30 per cent of Cadbury’s annual turnover. Moving from a predominantly adult positioning in the days of the legendary dancing girl ad, to the teens and the tweens, when the Cyrus Broacha ads hit the airwaves, CDM has made a long sweet journey. In spite of the new categories being explored by Cadbury, its star brand remains Cadbury Dairy Milk (CDM) which continues to corner almost 30 per cent of the chocolate market. Cadbury’s Temptation: Cadbury’s Temptation is premium chocolate brand aimed for high value consumption. Various variants available are Almond, Rum, Cashew & Orange. Cadbury’s temptation is priced at Rs. 40 Cadbury’s Celebration Cadbury India launched its premium Celebrations range, which contains traditional Indian dry fruits wrapped in Dairy Milk chocolate. This gifting option combines the pleasure of giving away dry fruits — which Indians traditionally consider a premium, healthy gift — with chocolate. Cadbury now has 90 per cent market share in this profitable segment. 5 Star: Consumer feedback suggested that the old 5 Star was too chewy, and people complained of it sticking to their teeth. It was made softer and melted easily in the mouth & introduced as 5 Star Crunchy. Perk: Perk was made much lighter and the size of the bar increased to match Nestlé’s Munch. Perk had been under fire from Nestlé’s deadly duo of KitKat and Munch, but after the re-launch, its market share is two per cent more than KitKat’s. And, the five-year-old brand is now almost as big as the decades-old 5 Star in size, both in the region of Rs 50-55 crore. Éclairs: Cadbury's Éclairs 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. Heroes: Packaging innovation has played a vital role in revamping of various Cadbury’s brands. Heroes brand is simply a multi-pack with miniatures of all its most popular brands in a single outer case. Product and Value Proposition “Kya Swad Hai Zindagi Mein” redefined the way Indians looked at Cadbury Chocolates. In March 2002, Cadbury launched its next advertisement campaign for its flagship chocolate brand, Cadbury's Dairy Milk (CDM). The campaign featured a television (TV) commercial that was significantly different from the company's earlier commercials for the brand. It featured Cyrus Broacha interviewing college students and asking why they liked to eat CDM. This was followed by college students 'singing' their excuses for eating CDM. Just as the commercial seems all set to end with the students and Cyrus singing the famous CDM theme, 'Khane Walon Ko Khane Ka Bahaana Chaahiye'

(those who want to eat, will find excuses), a student comes up and questions Cyrus, The advertisement aimed at conveying the idea that no specific occasion is required for consuming CDM. This was a significant departure from CIL's strategy of appealing to adults in India, who sought a rational justification for indulging in chocolate consumption. 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,


I n d i a

Perk’s sale surged Cadbury’s advertising has, over the past few years, aptly reflected India’s passion for chocolates. In another ad Cadbury tries to associate Celebrations with reliving old memories. Looking wistfully at a photograph, Mr. Bachchan thinks, he recollects the photo-shoot when he had thrown the cap off his friend's head. More recently, the 'Kuch Meetha Ho Jaaye' campaign associated Cadbury Dairy Milk with celebratory occasions and the phrase "Pappu Pass Ho Gaya" became part of street language. It has been adopted by consumers and today is used extensively to express joy in a moment of achievement .The interactive campaign for "Pappu Pass Ho Gaya" bagged a Bronze Lion at the prestigious Cannes Advertising Festival 2006 for 'Best use of internet and new media'. The idea involved a tie-up with Reliance India Mobile service and allowed students to check their exam results using their mobile service and encouraged those who passed their examinations to celebrate with Cadbury Dairy Milk.


I n d i a

Appendix A

Survey for chocolate brands

1. Which age group do you belong to?

Below 15

15 to 25

25 to 40

Above 40

2. Which chocolate brand do you normally consume?

Nestle

Cadburys

Others

Foriegn brands

3. If Cadburys, then which is the first brand that comes to your mind?

4. What is your average monthly spend on chocolates?

Below 50

50 to 100

100 to 200

Above 200


I n d i a

5. What are the features that you look for in a chocolate? (multiple options can be chosen)

Have a perfect taste or delicious to eat

Nutritious and healthy

For fun filled moment

Is value for money

Others

6. How often do you give chocolates as a gift?

Never

Often

Very often

Always

7. On what occasions would you gift chocolates?

Diwali

Raksha Bandhan

Birthday

Valentines Day

Anniversary

Others


I n d i a

8. Which chocolates would you like to gift?

Cadburys celebrations

Assorted Nestle pack

Foreign chocolates

Others

Results And Analysis of the Survey

A survey was carried out by us in order to find out the reach of Cadburys in India. The chocolate consumers were asked questions like the chocolate brand that they normally eat, and the features that they look for in a chocolate etc. The chocolate consumers had ranked Cadburys as the best chocolate brand and a few consider Nestle as a good chocolate brand. We also observed that Cadburys is facing strong competition from foreign brands. This could be due to the fact that the respondents of our survey were mostly the well to do population from the IT sector. We had 47 respondents to our survey. Most of the respondents were from the 15-25 and 25-40 age groups. Most of the respondents spent more than 100 rupees on chocolates in a month. Almost 70% people rated Dairy Milk the most consumed chocolate closely followed by 5 star and Perk. Also the reason why dairy milk was preferred was because of the taste. 66% people preferred to gift celebrations for many occasions as against 23% who prefer gifting foreign chocolates. Thus we understood better the chocolate market in India. Cadbury’s has a very good market share currently but will have to constantly revamp their strategies in order to compete with the foreign brands.

cad bury india

Documents