cadbury vs nestle

Marketing Project

V/S

Submitted to: Dr.Kartik Dave

IBM – Innovative Business Minds, PGDM (RM), BIMTECH 1

http://www.bimtech.ac.in/index.htm%00%E5%A1%B9%EF%92%81%E1%B4%BB%E4%A1%BF%E2%B2%AF%E5%B6%82%E8%97%84%E6%8C%A7%00%00%EA%AE%A5

http://www.scvso.org/images/logo-Nestle.jpg

http://images.google.co.in/imgres?imgurl=http://www.investmentnz.govt.nz/common/images/Cadbury.jpg&imgrefurl=http://www.investmentnz.govt.nz/section/14237/16357.aspx&h=369&w=550&sz=205&hl=en&start=1&tbnid=b0bk8ycCdx7YqM:&tbnh=89&tbnw=133&prev=/images%3Fq%3Dcadbury%26gbv%3D2%26svnum%3D10%26hl%3Den

Acknowledgement

An Old Chinese proverb says:

When eating your bamboo sprouts, remember the men who planted them.

Now that my sprouts are ready to eat, it is time for me to express my deepest

gratitude to all those who have made this possible.

We wish to express our sincere gratitude to Dr. Kartik Dave who guided us

and helped us from time to time to successfully conduct this research. We

think her direction was the best thing that could happen to us and our project.

We would also like to thank BIMTECH for letting us use the computer

resources and library.

We hope you enjoy reading the report as much as we enjoyed making it.

With Warm Regards,

IBM(Innovative Business Minds)


Executive Summary

This case study looks at the massive, complex worldwide operations that ensure that

chocolate products are on the shelves of retail outlets 365 days a year. We tend to treat this

achievement as routine. In reality, it represents a triumph for careful planning and

meticulous organisation.

The UK has long been a major manufacturer (and consumer) of chocolate products.

All over the world you will find prominent brands first developed in the UK e.g. Smarties,

Dairy Milk, Aero and of course Kit Kat (the UK's Number 1 selling confectionery brand

since 1985).

Large organisations like Nestlé are able to pass on to us the benefits of economies

of scale, coupled with their experience of producing high quality chocolates over many

years. As a result, we consumers are able to enjoy products built around cocoa beans from

a small farm and transformed by complex production processes into sophisticated products

such as Quality Street, Smarties, Aero, or many other forms of chocolate product.

Cadbury is the world's largest confectionery company and its origins can be traced

back to 1783 when Jacob Schweppe perfected his process for manufacturing carbonated

mineral water in Geneva, Switzerland. In 1824, John Cadbury opened in Birmingham

selling cocoa and chocolate.

Boston Consulting Group matrix method is based on product life cycle approach.To

use the chart, analysts plot a scatter graph to rank the business units (or products) on the

basis of their relative market shares and growth rates. The BCG matrix has been used in the

same to further analyse the issue..

The main objective for the design of the report is to find the causes underlying the

low market share of Nestle in the Indian markets as compared to Cadbury’s even though it

is a much bigger company in terms of size, turnover and product range.


http://en.wikipedia.org/wiki/Market_share

http://en.wikipedia.org/wiki/Scatter_graph

CONTENTS

1. Introduction……………………………………………………...5a) Introduction of problemb) Statement of Problemc) Relevance of Problem

2. Introduction: Industry………………………………………..8

3. Nestle…………………………………………………………..10a) Business principlesb) Value Chainc) Historyd) Portfolio Analysise) New Product Developmentf) SWOT Analysis

4. Cadbury……………………………………………………..25a) Historyb) Shareholdingc) Product Detailsd) New Product strategy

5. Review of Literature………………………………….………...35a) Chain of Productionb) Concepts of Marketingc) Niche Oriented Communicationd) Brand Strategye) Marketing- Global Environmentf) Growth Strategyg) Product Linesh) BCG Matrix Analysis

6. Analysis of Research…………………………………………..53


7. Limitations……………………………………………………..66

8. Conclusions………………….………………..………………..67

9. Recommendations………….…...……………………………..68

10. Annexure…...…….………………………………….………..69

11. Bibliography…….…………………………………………...76


Introduction

Introduction to the problem: The main objective for the design of the report is to find the causes underlying the

low market share of Nestle in the Indian markets as compared to Cadbury’s even though it

is a much bigger company in terms of size, turnover and product range.

It wouldn’t be untrue to state the fact that both Cadbury and Nestle are major

competitors of each other and host a number of brands in the market. Still Cadbury fares

better than Nestle when it comes to market share. A number of factors are responsible for

the above mentioned problem; most important of which could be the consumer preference

of the same and also how it has been positioned into the eyes of the customer.

The stated problem lead the research to various market places, places near the

kirana stores, tier 1 and tier II cities , focus group interviews etc.

Statement of the problem:To find the causes underlying the low market share of Nestle in the Indian markets

as compared to Cadbury’s even though it is a much bigger company in terms of size,

turnover and product range. Nestle, one of the largest and leading food processed company

and has various chocolate brands worldwide, which are doing well. But Cadbury the

market leader in chocolates segment in India has made it very tough for Nestle.

Relevance of the problem:Cadbury India the market leader in chocolates segment has a market share of 71.9%

while Nestle India chocolate has a total market share of 24.7% (Market share; Aarati

Krishnan)

The research method is a comparative one wherein the comparison between two big

brands has been done. Cities like Delhi, Meerut, Dhanbad etc have been taken under

consideration. The type of sampling chosen is random. The total sample size was around

200.


The analysis was carried out on the basis of the following:

The various age groups were designed between intervals of 5-13 yrs, 14-20yrs, 21-

27yrs, 28-35yrs, 36-45yrs, 45yrs and above.

The reasons foe which consumers buy chocolates i.e. for self- consumption, family

etc..

The preference of the chocolates was recorded.

Also the research has tried to analyze the problem by trying to find out as to

whether the consumers are aware of the brand or label to which various chocolates

belong.

The frequency at which chocolates are bought.

Since the survey was carried out during the Diwali season hence the gift packets of

both the brands were considered.

The advertisements, their frequency and their retention by the customers.

Factors like price, taste, company, pack size, packing, availability, calories

(ingredients) were ranked by the consumers on the basis of their preference.


Introduction- Industry

Most of us love chocolate in one form or another and every week a typical UK citizen

spends around £1.80 on it. Amazingly, UK consumers have a choice of over 5,000

chocolate lines available from 150,000 outlets. Because it is so widely and readily

available, we tend to take chocolate for granted, and few of us probably ever consider what

is involved in producing it.

This case study looks at the massive, complex worldwide operations that ensure that

chocolate products are on the shelves of retail outlets 365 days a year. We tend to treat this

achievement as routine. In reality, it represents a triumph for careful planning and

meticulous organization.

We don't know who first discovered that cocoa beans could be turned into a drink, but we

do know that by 600AD the Mayan people living in what is now Mexico were growing

cocoa in the jungles of Yucatan.

In the 16th century the Spaniards invaded South America, quickly learned the secrets of

making chocolate as a drink and started shipping back cargoes of cocoa beans. By the 18th

century, chocolate-based drinks were popular in British high society. In the mid-19th

century an English cocoa manufacturer, Joseph Storrs Fry, tried mixing cocoa butter with

sugar and cocoa paste and invented the world's first solid blocks of chocolate.

The UK has long been a major manufacturer (and consumer) of chocolate products. All

over the world you will find prominent brands first developed in the UK e.g. Smarties,

Dairy Milk, Aero and of course Kit Kat (the UK's Number 1 selling confectionery brand

since 1985).

Three producers dominate the chocolate market. Cadbury with around 28% while Mars and

Nestle each have around 24%. Sales of milk chocolate (96%) predominate, with plain and

white chocolate accounting for about 2% each. Boxed chocolates such as Quality Street

make up 15% of the confectionery market. Blocks and bars like Kit Kat and Yorkie


account for 65% and bitesize chocolates e.g. Smarties and Rolo make up 10%. Easter eggs

are another big seller, accounting for 5% of the market.

The UK's chocolate industry is over 150 years old. Chocolate manufacture provides steady

employment and job security for tens of thousands of employees in manufacturing

locations like York and Birmingham. The industry also generates jobs in marketing,

administration, transport and storage. Chocolate sales are an important source of income

for many retailers.

CONFECTIONARY INDUSTRY IN INDIA

The confectionery industry in India is approximately divided into:

Chocolates

Hard-boiled candies

Éclairs & toffees

Chewing gums

Lollipops

Bubble gum

Mints and lozenges

The total confectionery market is valued at Rupees 23 billion with a volume turnover of

about 145000 tones per annum. The category is largely consumed in urban areas with a

70% skew to urban markets and a 30% to rural markets.

Hard boiled candy accounts for 20%, Éclairs and Toffees accounts for 18%, Gums and

Mints and lozenges are at par and account for 13%. Digestive Candies and Lollipops

account for 1.5% share respectively.

Overall industry growth is estimated at 2.5 % in the chocolates segment and sugar

confectionery segment has declined by 3%.


Nestle

Nestle India is a subsidiary of Nestle S.A. of Switzerland. With seven factories and a large

number of co-packers, Nestle India is a vibrant Company that provides consumers in India

with products of global standards and is committed to long-term sustainable growth and

shareholder satisfaction.

The Company insists on honesty, integrity and fairness in all aspects of its business and

expects the same in its relationships. This has earned it the trust and respect of every strata

of society that it comes in contact with and is acknowledged amongst India's 'Most

Respected Companies' and amongst the 'Top Wealth Creators of India'.

BRAND PROMISE

Nestlé is a brand in its own right. For consumers, relevance of Nestlé as a company comes

first of all through contact with products that are branded Nestlé. If we want to be

perceived as the world's leading food company, we have to offer consumers an increasing

amount of products that they can identify as Nestlé's."

- Peter Brabeck Letmathe, CEO, Nestlé.

Nestlé’s Business Vision

Respected, Trustworthy Food, Nutrition, Health and Wellness Company”

Nestle India’s Business Vision

To rapidly build Nestlé India as the Respected and Trustworthy leading Food, Nutrition,

Health and Wellness Company ensuring long term sustainable and profitable growth

Nestlé Corporate Business Principles for Farming revolution in India….

Agricultural raw materials, milk, coffee, cocoa, cereals, vegetables, fruit, herbs, sugar


http://www.nestle.in/nestlestory.aspx

And spices are vital factors affecting the quality and costs of Nestlé manufactured food

products and, as a consequence, the Company’s business performance. In this context

Nestlé:

1) Provides agricultural assistance to farmers

2) Procures Agricultural raw materials either through trade channels or directly from

farmers

3) Supports farming practices and agricultural production systems that are sustainable; that

is those practices and systems that satisfy long-term economic, ecological and social

requirements;

4) Supports mechanisms that contribute to a more regular income for farmers;

5) Is not engaged itself in its own commercial farming activities

Nestle has also developed a series of business principles with the main focus on

communications with consumers. Two of these are:

(1) 'Nestle consumer communication should reflect moderation in food consumption and

not encourage overeating. This is especially important regarding children.

(2) Nestle consumer communication must [match the desire for] healthy, balanced diets.

Our advertising must not imply the replacement of meals with indulgence or snack foods,

nor encourage heavy snacking'.

The company strategy is to ensure that the consumer remembers recognize and understand

the nutritional content of the product they buy, by making the symbols immediately visible

on the front of packs at a glance. This has brought a positive effect on the reputation of the

company. Consumers can see that Nestlé is behaving responsibly and is communicating

effectively with them.


As a company responsive to Nutrition, Health and Wellbeing Company, Nestle is keen to

promote and facilitate healthy living for its employees as well. Nestle linked the launch of

its Guideline Daily Amounts on front of the packs with an internal communication

programmed to inform the employees about GDA’s and the labeling system. This proved to

be motivation employees as it showed that Nestle cared for their well-being and also the

families. Nestle's business principles and its approach to corporate responsibility were the

steps towards of what is known within Nestle as 'Creating Shared Value'.

This process of Creating Shared Value has two major components. It links the needs of the

shareholders and consumers to the need to respective persons and their environment.

Creating Shared Value implies that Nestle looks at the influence of each and every

corporate activity that it undertakes on the wider environment. This attitude is at the core of

everything that the company does or intends to do.

This process begins when products are brought from various parts of the world. It continues

through the manufacturing and distribution of the products. It gets over when the products

are finally rendered to the customers for e.g. supermarkets and ultimately sold to the

ultimate consumers (the public).

VALUE CHAIN

Each step in this value chain is critical and has harmful consequences if failed to be

managed properly. For example, without sustainable agricultural practices the natural

resources of farms worldwide would get damaged.

By carrying forward corporate responsibility in its business practices in this way, Nestlé is

able to contribute positively to societies across the globe.


ISSUES IN THE SUPPLY CHAIN

As a major buyer Nestlé seeks to be as closely involved in the supply chain as possible, to

ensure quality and fairness.

Currently Nestle is participating in a process to examine potential problems of forced child

labour on cocoa farms in West Africa. This is being done on an industry wide basis, in

consultation with governments, labour organizations and Non-Governmental Organisations

(NGO), as well as with other members of the cocoa and chocolate industry. We strictly

monitor that no child labour is used in Nestle facilities and reject industrial suppliers who

do so. We hope that the constructive dialogue that has been started on this issue will

continue, and that these discussions will result in pragmatic approaches to doing what is

best for workers in Western Africa.

THE HISTORY

In the mid-1860s, Henri Nestlé (Henri), a merchant, chemist, and innovator experimented

with various combinations of cow's milk, wheat flour and sugar. The resulting product was

meant to be a source of infant nutrition for mothers who were unable to breast-feed their

children. In 1867, his formula saved the life of a prematurely born infant. Later that year,

production of the formula, named Farine Lactee Nestlé, began in Vevey, and the Nestlé

Company was formed. Henri wanted to develop his own brands and decided to avoid the

easier route of becoming a private label. He also wanted to make his company a global

company.

In mid-1988, Nestlé SA (Nestlé), the world's largest consumer packaged foods company

based in Switzerland, acquired Rowntree Mackintosh PLC (Rowntree), in the largest ever


acquisition deal of a British company during that time. Rowntree was the world's fourth

largest manufacturer of chocolates and confectionery products, with well-known brands

like Kit Kat, After Eight, Smarties and Rolo.

The deal attracted considerable attention all over the world since several bids to acquire

Rowntree were rejected. Rowntree claimed that the bids were too low for its valuable, well-

recognized brands. In the end, Rowntree was acquired by Nestlé for £2.5 billion, two and a

half times the pre-bid price and eight times the net asset value of the company.

This acquisition made Nestlé the largest chocolate manufacturer in the world. Analysts felt

that Nestlé had paid £2.5 billion because of Rowntree's brands, not its past financial

performance. Industry observers wondered how Nestlé would manage Rowntree's brands.

Rowntree followed a "one product, one brand" policy.

The brands were simply Kit Kat, After Eight, Smarties and Rolo, Rowntree was never

mentioned. Moreover, Rowntree's brands were not strongly managed European brands. In

fact, according to an analyst , Kit Kat was one of the worst cases of an over-localized brand

of a company across Europe.

Within a few months of establishing his company, Henri began to sell his products in many

European countries. In the initial years, Henri restructured the organization to facilitate

research, improve product quality, and develop new pr In 1875, Daniel Peter, Henri's friend

and neighbor, developed milk chocolate. He soon became the world's leading chocolate

maker. Later, his company was acquired by Nestlé. In 1905, Nestlé merged with Anglo-

Swiss Condensed Milk Company, a manufacturer of milk-based infant food.

During World War I, there was a huge demand for dairy products and Nestlé capitalized on

this opportunity by executing military contracts of various countries productsand Nestlé

capitalized on this opportunity by executing military contracts of various countries.In 1938

after 8 years of research years of research, Nestlé discovered a soluble powder that

revolutionized coffee drinking around the world. The product was launched under the

brand name Nescafe and became an instant success.

The end of the World War II marked the beginning of a new phase of growth for Nestlé.

The company added many new products.

In its effort to expand its operations further, Nestlé merged or acquired several companies.

In 1947, Nestlé expanded into culinary products by merging with Alimentana, a Swiss


company that produced and sold Maggi soups, spices and other food products in many

countries. In 1950, Nestlé acquired Crosse & Blackwell, a British manufacturer of

preserves and canned foods. This was followed by the acquisition of Findus, a Swedish

company producing frozen foods (1963), Vittel, a French mineral water company (1969),

Libby's, a British fruits, vegetables and meat company (1971), Ursina Franck, a Swiss

company producing milk products, baby food and culinary products (1971), Stouffer's, a

US frozen foods company (1973), and L'Oreal, a leading French cosmetics manufacturer

(1974). All these acquisitions (Refer Exhibit II for other acquisitions by Nestlé) led to

substantial synergies in Nestlé's production, distribution and sales. A sneak Peak into the

activities -

1912: Acquired the Dutch company – Galak Condensed Milk Company of Rotterdam,

Holland and also established a skimmed milk powder company entirely for export market

1920: Entered South America by establishing a milk districts in Brazil, in Argentina in

1922, and in Peru in 1940

1961: Started to replicate its successful milk district models in Asian countries with Moga

in India, followed by Sri Lanka in 1982, Indonesia 1986, Pakistan 1988, China 1990,

Thailand 1991, Morocco 1993 and Uzbekistan 2001 China, India and Pakistan each

collect over 10, 00,000 Kg/day On an average Nestlé milk districts are growing 2% - 5%

annually, and in some cases as high as 10%.

PORTFOLIO ANALYSIS OF NESTLE

(Source Financial analysts meet Nov 2006)


Company’s Future Strategy (Source financial analysts meet Nov 2006)

RESEARCH AND DEVELOPMENT ACTIVITIES AT NESTLE

(Source Werner Bauer, Nestlé's Head of Technical, Production and R&D)


NEW PRODUCT DEVELOPMENT (INNOVATION AND RENOVATION) AT NESTLE

Each of Nestlé's factories is a centre of excellence that specializes in developing new areas

of food technology. New paste bouillon research and development is carried out at an

Austrian factory. New product development involves a number of important stages. To

give an idea of timescale, the development process for paste bouillons took 6 months:

Research and Development brief - the company gives the factory a clear written

document about the various details of the product. The product may or mayn’t be a part of

the repositioning strategy of the company. The briefing is all about the small details like

product specifications, details relating to the calories specifications and also the final price

range of the product.

Creation of the samples and tasting- the food technologists after completing their part

develop a variety of samples which are checked by the specialists.

Feedback and observations- after the testing part gets over the response of the specialists

is being forwarded to the factory as a part of company process and if any changes are to be

made it is being incorporated in the product.

Sign-off – the next step after making the recommended changes in the product when every

one is satisfied and an agreement is confirmed. Also, the final price of the product is

finalised. Before the company goes in for large scale production it has to produce

approximately 1 tonne. At that point the front labels are designed, product photography

commissioned, recipe sheets are produced and sales presenters are designed to make a

successful product launch.

KitKat UK: Have a break...

Strengths

High advertising spend creates high brand loyalty as well as barriers to entry

High brand recognition due to effective ‘Have a break’ slogan


Its position in 2 different markets (2-finger and 4-finger) gives it double the

retail Space which results in diversification of risk for the brand as well as

sales potential

Market leader in the 2-finger product; as the price-setter it enjoys high margins

in a market that has low price sensitivity

Cascade strategy system is efficient management that gives KitKat marketing

managers freedom and flexibility to act quickly

Cannibalization of 2-finger and 4-finger products avoided through two different,

targeted marketing and pricing strategies

Different packaging for grocers and independent sector diminishes the power

for multiple grocers to negotiate for higher profits, since consumers can’t

directly compare products

High brand equity in consumer’s eyes, as demonstrated by highly successful

launches of product extensions such as the orange and mint flavours

KitKat’s creation of the CBCL sector gives it brand recognition amongst

chocolate biscuit consumers as well as first mover advantage

KitKat is largest brand in Rowntree and designated as 1 of 5 brands to have an

innovation focus; as a result, will have lots of company resources and capital to

use.

Weakness

Production already at capacity, which means profitability is impacted,

particularly in 4-finger market where there is little opportunity to increase prices

to control demand

Yearly decline of 2.6% in CBCL market means the company may not have

enough resources for innovation, which is a key component of KitKat’s strategy

Current focus on physicality & packaging does not offer core product benefits

(like taste)

High advertising costs are not bringing ROI; consumers cannot tell the

difference despite positioning and segmentation strategies

Special foil packaging is expensive and not a sales driver. From a competitor

perspective (i.e. Cadbury), it is no longer necessary

4-finger product’s recent loss of market share affects available resources and

morale


High risk associated with 2-finger product’s price setter position; if priced

incorrectly, can easily lose market share

Brand space is undefined in consumer mind due to position between snack,

indulgence

Opportunities

In the 4-finger market, can build on 3rd place position as a market challenger

Build on the success of past product extensions (i.e. KitKat Chunky, Orange,

Mint) to meet competitors head-on

Leverage growth of multiple grocers by investing further in building

relationships with them to claim optimal retail space and as a result, increase

sales

Capitalize on growing confectionary snack market (20% growth over the last

five years)

Children’s market; is not specifically targeted to but identified as KitKat

consumers

Chocolate box assortment market.

Threats

High intensity of competition; Cadbury and Mars are established players, while

new entrants such as Fox’s Rocky bar, small brands, discount European

confectioners, grocery retailers’ own labels are increasing pressures

Chocolate confectionary market is saturated and stable with maturing growth

which may have cost implications due to the need for higher adaptation

Due to increasing crossover between chocolate countline and CBCL,

competitors like Cadbury are finding market entry easier, which encroaches on

KitKat’s market share (i.e. TimeOut chocolate vs. “Have a break”)

Competitors can take advantage of KitKat’s capacity issues and fill the market

void

Population of 15-24 year olds in Countline market is declining

CHANNEL STRATEGY IN THE U.K

Currently, Rowntree distributes KitKat through large grocers and CTN (confectioners,

tobacconists, newsagents) through cash-and-carries. Although both the 2-finger and 4-


finger varieties can be found in these two channels, they follow different strategies: Only

18% of the 2-finger variety is sold to CTN, while 80% of the 4-finger variety can be found

stocked at CTNs. Management plans to boost trade cooperation and become more

categories focused.

Key challenges with the existing distribution system:

Competing retail space with grocer’s own labels and new product lines like Time

Out

Large grocers like Sainsbury and Tesco want Kit Kat mini’s like Aldi

Current distribution system reaches the mass market effectively but is unfocused on

the specific target consumer groups

Some decline in product sales over the last 5 years (i.e. 4-finger multipacks have

declined –40% in sales to wholesale/independent retailers over 5 years, Exhibit 1.2)

RECOMMENDATION: Key elements in a channel strategy for Rowntree

Devote more resources in building stronger relationships in the CBCL sector:

o Since CBCL is a high-growth market, Rowntree will see long-term returns

o At 23,900 tonnes, the 2-finger variety distribution is larger than the 4-finger

at 19,600 tonnes (Exhibit 1.2) and as such, requires more attention

Work with large grocers to launch more promotions (i.e. repeat purchase incentives)

to gain optimal retail space in respective product categories

o Promotions will help compete with grocers’ own labels

Build relationship with retailers by launching internal promotions (i.e. Contest with

a prize for the supermarket that sells 200 bars the quickest) in order to generate

retailer interest and gain optimal retail space

Channels Current: Large grocers and CTNs through cash-and-carries

Recommendation: Diversify risk by exploring other

channels, i.e. gas stations, drug stores

While mass distribution is effective for a convenience good

such as Kit Kat, Rowntree can penetrate the specific target

markets better through also distributing to targeted channels,

such as focusing on coffee shops and tea houses for the 35-44

year old market in the 2-finger category, or distribution at

amusement parks for young people in the 4-finger category

Coverage Current: 2-finger targeted to 35-44 age groups (mostly

women), 12-15 age group and some children while 4-finger


targets 16-24 year olds

Recommend: Increase distribution coverage for the 4-finger

category to match Mars’, so it can meet the competition

head-on and be in the consumer’s consideration set during

the purchase decision

Assortments Current: 2-finger (single/multi/other) and 4-finger

(single/multi), minis

Recommend: In channels for mass market (i.e. large grocers),

ensure that both confectionary and biscuit aisles are stocked

with Kit Kat (4- and 2-finger categories, respectively) to

maintain competitive advantage of double the retail space,

due to its dual positioning

Locations Current: retailers across UK

Recommend: Conduct market research to find out what

regions in the UK the target market lives in, and work with

distributors and grocers to place Kit Kat products in those

locations

Inventory Current: Production capacity issues

Recommend: Given capacity issues, ensure that no Kit Kats

are wasted by implementing efficient JIT inventory system

THE VISION

To rapidly build Nestlé India as the Respected and Trustworthy leading Food, Nutrition,

Health and Wellness Company ensuring long term sustainable and profitable growth. Good

Food, Good Life. The market segment is impulse snackers and the target is kids and

teenagers. Positioning was done by TV advertisements with kids only

Nestle - A SWOT analysis Nestle India Limited is the Indian arm of Nestle SA, which holds a 51% stake in the company. It is one of the leading branded processed food companies in the country with a large market share in products like instant coffee, weaning foods, instant foods, milk products, etc. It also has a significant share in the chocolates and other semi-processed foods market.

Nestlé's leading brands include Cerelac, Nestum, Nescafe, Maggie, Kitkat, Munch and Milkmaid. To strengthen its presence, it has been the company's endeavor to launch new products at a brisk pace and has been quite successful in its launches.

Nestle business break-upSegments Brands CY01

salesCY02 sales

CY03 sales

Milk Products & Everyday Dairy Whitener, 8,159 8,847 9,880


nutrition milk powder, Milkmaid, Milk, Dahi, Butter, Cerelac, Nestogen

% of sales 42.5% 43.2% 43.4%

% growth 10.6% 8.4% 11.7%

Beverages Nescafe, Milo, Nestea 5,627 4,894 5,449

% of sales 29.3% 23.9% 23.9%

% growth 14.7% -13.0% 11.3%

Prepared dishes/cooking aids (Culinary)

Maggi (noodles, pickles,soups, sauces)

2,765 3,503 4,094

% of sales 14.4% 17.1% 18.0%

% growth 19.6% 26.7% 16.9%

Chocolates &confectionery

Munch, KitKat, Bar One, Classic,Choco Stick, MilkyBar Choo,Nestle Fruit & Nut

2,646 3,227 3,366

% of sales 13.8% 15.8% 14.8%

% growth 21.4% 21.9% 4.3%

Total Sales 19,197 20,470 22,790

% growth 14.4% 6.6%

*(figures in Rs m)

StrengthsParent support - Nestle India has a strong support from its parent company, which is the world’s largest processed food and beverage company, with a presence in almost every country. The company has access to the parent’s hugely successful global folio of products and brands.

Brand strength - In India, Nestle has some very strong brands like Nescafe, Maggi and Cerelac. These brands are almost generic to their product categories.

Product innovation - The company has been continuously introducing new products for its Indian patrons on a frequent basis, thus expanding its product offerings.

WeaknessExports – The company’s exports stood at Rs 2,571 m at the end of 2003 (11% of revenues) and continue to grow at a decent pace. But a major portion of this comprises of Coffee (around 67% of the exports were that of Nescafe instant to Russia). This constitutes a big chunk of the total exports to a single location. Historically, Russia has been a very volatile market for Nestle, and its overall performance takes a hit often due to this factor.


Supply chain - The company has a complex supply chain management and the main issue for Nestle India is traceability. The food industry requires high standards of hygiene, quality of edible inputs and personnel. The fragmented nature of the Indian market place complicates things more.

OpportunitiesExpansion - The company has the potential to expand to smaller towns and other geographies. Existing markets are not fully tapped and the company can increase presence by penetrating further. With India's demographic profile changing in favour of the consuming class, the per capita consumption of most FMCG products is likely to grow. Nestle will have the inherent advantage of this trend.

Product offerings - The company has the option to expand its product folio by introducing more brands which its parents are famed for like breakfast cereals, Smarties Chocolates, Carnation, etc.

Global hub - Since manufacturing of some products is cheaper in India than in other South East Asian countries, Nestle India could become an export hub for the parent in certain product categories.

Threat Competition - The company faces immense competition from the organised as well as the unorganised sectors. Off late, to liberalise its trade and investment policies to enable the country to better function in the globalised economy, the Indian Government has reduced the import duty of food segments thus intensifying the battle.

Changing consumer trends - Trend of increased consumer spends on consumer durables resulting in lower spending on FMCG products. In the past 2-3 years, the performance of the FMCG sector has been lackluster, despite the economy growing at a decent pace. Although, off late the situation has been improving, the dependence on monsoon is very high.

Sectoral woes - Rising prices of raw materials and fuels, and inturn, increasing packaging and manufacturing costs. But the companies’ may not be able to pass on the full burden of these onto the customers.

ConclusionThe food processing business in India is at a nascent stage. Currently, only about 10% of the output is processed and consumed in packaged form thus highlighting huge potential for expansion and growth. Traditionally, Indians believe in consuming fresh stuff rather


then packaged or frozen, but the trend is changing and the new fast food generation is slowly changing


Cadbury

Cadbury India is a food product company with interests in Chocolate Confectionery, Milk

Food Drinks, Snacks, and Candy. Cadbury is the market leader in Chocolate Confectionery

business with a market share of over 70%. Some of the key brands of Cadbury are Cadbury

Dairy Milk, 5 Star, Perk, Eclairs, Celebrations, Temptations, and Gems. In Milk Food

drinks segment, Cadbury's main product - Bournvita is the leading Malted Food Drink in

the country.

THE HISTORY

Cadbury is the world's largest confectionery company and its origins can be traced back to

1783 when Jacob Schweppe perfected his process for manufacturing carbonated mineral

water in Geneva, Switzerland. In 1824, John Cadbury opened in Birmingham selling cocoa

and chocolate. Cadbury and Schweppe merged in 1969 to form Cadbury Schweppes plc.

Milk chocolate for eating was first made by Cadbury in 1897 by adding milk powder paste

to the dark chocolate recipe of cocoa mass, cocoa butter and sugar. In 1905, Cadbury's top

selling brand, Cadbury Dairy Milk, was launched. By 1913 Dairy Milk had become

Cadbury's best selling line and in the mid twenties Cadbury's Dairy Milk gained its status

as the brand leader. Cadbury India began its operations in 1948 by importing chocolates

and then re-packing them before distribution in the Indian market. Today, Cadbury has five

company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior),


Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai,

Kolkota and Chennai). Its corporate office is in Mumbai. Worldwide, Cadbury employs

60,000 people in over 200 countries.

Major Achievements of Cadbury

Worlds No 1 Confectionery company

World's No 2 Gums company.

World's No 3 beverage company.

World's No 3 beverage company.

Cadbury Dairy Milk & Bournvita have been declared a "Consumer Superbrand" for

2006-7 by Superbrands India.

Cadbury India has been ranked 5th in the FMCG sector, in a survey on India's most

respected companies by sector conducted by Business World magazine in 2007.

INDIA AMONG CADBURY TOP 12 GLOBAL MARKETS.

The UK-based chocolate, confectionery and beverages major Cadbury Schweppes has

identified India among its top 12 focus markets globally, in an announcement made last

week. Under a new management structure which would emerge following the proposed

demerger of its beverages arm Americas Beverages into a separate company, the Cadbury

Schweppes management announced last week that its commercial strategy would hinge on

‘fewer top markets and brands’.

The Rs 1,058-crore Indian subsidiary, along with the UK, US, Australia, Mexico, Brazil,

Russia and Turkey, now represents around 70% of Cadbury Schweppes’ global revenues.

This, despite beverages brands such as Schweppes, Snapple and Dr Pepper not having a

presence in India. The 12 core markets have been forecast to account for growth in excess

of 60% over the next five years.

Cadbury India, growing in double digits the past two years, has forecast a healthy 2007

riding on the back of factors such as sharper focus on core brands, product rationalisation

and working closely with trade channels. The Indian subsidiary, which now operates under

five categories –- chocolates, snacks, beverages, candy and gums being the newest, is learnt

to be in the process of pushing products in categories other than chocolate where it is a

dominant player. Of Cadbury Schweppes’ 13 focus brands clocking above average revenue

growth and operating returns, two are in India as of now — Cadbury Dairy Milk and Halls.


SHAREHOLDING PATTERN

The share capital of the company is Rs. 35.7 crore and the number of total shares

outstanding amount to 3.57 crore. The face value per share is Rs.10. The share is currently

trading at Rs. 418, as on May 22, 2001. The market capitalization of the company is

Rs.1990.52 crore. The parent Cadbury Schweppes holds 51% stake in the company.

The Cadbury brand has a profound impact on individual product brands. Brands have

individual personalities aimed at specific target markets for specific needs e.g. Timeout, for

example, is an ideal snack to have with a cup of tea. These brands derive benefit from the

Cadbury parentage, including quality and taste credentials. To ensure the success of

product brands every aspect of the parent brand is focused on. A Flake, Crunchie or

Timeout are clearly different and are manufactured to appeal to a variety of consumer

segments. However the strength of the umbrella brand supports the brand value of each

chocolate bar. Consumers know they can trust a chocolate bar that carries Cadbury

branding. The relationship between Cadbury and individual brands is symbiotic with

Some brands benefiting more from the Cadbury relationship, i.e. pure chocolate brands

such as Dairy Milk. Other brands have a more distant relationship, as the consumer

motivation to purchase is ingredients other than chocolate, e.g. Crunchie. Similarly issues

such as specific advertising or product quality of a packet of Cadbury biscuits or a single

Crème Egg will, in turn, impact on the perception of the parent brand. Similarly the

umbrella brand has a strong brand value


CADBURY DAIRY MILK.

The story of Cadbury Dairy Milk started way back in 1905 at Bournville, U.K., but the

journey with chocolate lovers in India began in 1948.

The pure taste of Cadbury Dairy Milk is the taste most Indians crave for when they think of

Cadbury Dairy Milk.

The variants Fruit & Nut, Crackle and Roast Almond, combine the classic taste of Cadbury

Dairy Milk with a variety of ingredients and are very popular amongst teens & adults.

Recently, Cadbury Dairy Milk Desserts was launched, specifically to cater to the urge for

'something sweet' after meals.

Cadbury Dairy Milk has exciting products on offer - Cadbury Dairy Milk Wowie,

chocolate with Disney characters embossed in it, and Cadbury Dairy Milk 2 in 1, a

delightful combination of milk chocolate and white chocolate. Giving consumers an

exciting reason to keep coming back into the fun filled world of Cadbury.

Our Journey:

Cadbury Dairy Milk has been the market leader in the chocolate category for years. And

has participated and been a part of every Indian's moments of happiness, joy and

celebration. Today, Cadbury Dairy Milk alone holds 30% value share of the Indian

chocolate market.

In the early 90's, chocolates were seen as 'meant for kids', usually a reward or a bribe for

children. In the Mid 90's the category was re-defined by the very popular `Real Taste of

Life' campaign, shifting the focus from `just for kids' to the `kid in all of us'. It appealed to


the child in every adult. And Cadbury Dairy Milk became the perfect expression of

'spontaneity' and 'shared good feelings'.

The 'Real Taste of Life' campaign had many memorable executions, which people still

fondly remember. However, the one with the "girl dancing on the cricket field" has

remained etched in everyone's memory, as the most spontaneous & un-inhibited expression

of happiness.

This campaign went on to be awarded 'The Campaign of the Century', in India at the Abby

(Ad Club, Mumbai) awards.

In the late 90's, to further expand the category, the focus shifted towards widening

chocolate consumption amongst the masses, through the 'Khanewalon Ko Khane Ka

Bahana Chahiye' campaign. This campaign built social acceptance for chocolate

consumption amongst adults, by showcasing collective and shared moments.

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 / success.

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.

The 'Pappu Pass Ho Gaya' campaign also went on to win Silver for The Best Integrated

Marketing Campaign and Gold in the Consumer Products category at the EFFIES 2006

(global benchmark for effective advertising campaigns) awards.

Did You Know?

Cadbury Dairy Milk emerged as the No. 1 most trusted brand in Mumbai for the 2005

edition of Brand Equity's Most Trusted Brands survey.


During the 1st World War, Cadbury Dairy Milk supported the war effort. Over 2,000 male

employees joined the armed forces and Cadbury sent books, warm clothes and chocolates

to the front.

CADBURY 5 STAR

Chocolate lovers for a quarter of a century have indulged their taste buds with a Cadbury 5

Star. A leading knight in the Cadbury portfolio and the second largest after Cadbury Dairy

Milk with a market share of 14%, Cadbury 5 Star moves from strength to strength every

year by increasing its user base.

Launched in 1969 as a bar of chocolate that was hard outside with soft caramel nougat

inside, Cadbury 5 Star has re-invented itself over the years to keep satisfying the consumers

taste for a high quality & different chocolate eating experience.

One of the key properties that Cadbury 5 Star was associated with was its classic Gold

colour. And through the passage of time, this was one property that both, the brand and the

consumer stuck to as a valuable association. Cadbury 5 Star was always unique because of

its format and any communication highlighting this uniqueness, went down well with the

audiences. From 'deliciously rich, you'd hate to share it' in the 70's, to the 'lingering taste of

togetherness' & 'Soft and Chewy 5 Star' in the late 80's, the communication always paid

homage to the product format.


More recently, to give consumers another reason to come into the Cadbury 5 Star fold,

Cadbury 5 Star Crunchy was launched. The same delicious Cadbury 5 Star was now

available with a dash of rice crispies.

Cadbury 5 Star & Cadbury 5 Star Crunchy now aim to continue the upward trend. This

different and delightfully tasty chocolate is well poised to rule the market as an extremely

successful brand.

Did you know?

Cadbury 5 Star played an adept cupid for young couples in love in the 70's. In fact,

Cadbury 5 Star was a way of professing undying love for the significant other.

CADBURY PERK

A pretty teenager; a long line, and hunger! Rings a bell? That was how Cadbury launched

its new offering; Cadbury Perk in 1996. With its light chocolate and wafer construct,

Cadbury Perk targeted the casual snacking space that was dominated primarily by chips &

wafers. With a catchy jingle and tongue in cheek advertising, this 'anytime, anywhere'

snack zoomed right into the hearts of teenagers.

Raageshwari started the trend of advertising that featured mischievous, bubbly teenagers

getting out of their 'stuck and hungry' situations by having a Cadbury Perk. Cadbury Perk

became the new mini snack in town and its proposition "Thodi si pet pooja" went on to

define its role in the category.

As the years progressed, so did the messaging, which changed with changes in the

consumers' way of life. To compliment Cadbury Perk's values, the bubbly and vivacious

Preity Zinta became the new face of Perk with the 'hunger strike' commercial in the mid

90's.

In the new millennium, Cadbury Perk moved beyond just owning

'hunger' to a "Kabhi bhi kaise bhi" position, because the urge for

Cadbury Perk could strike anytime and anywhere.


With the rise of more value-for-money brands in the wafer chocolate segment, Cadbury

Perk unveiled two new offerings - Perk XL and XXL.

The temptation to have more of Cadbury Perk was made even greater with the launch of

Cadbury Perk Minis in 2003 for just Rs. 2/-

In 2004, with an added dose of 'Real Cadbury Dairy Milk' and an 'improved wafer', Perk

became even more irresistible. The product was supported in the market with a new look

and a new campaign. The advertisement spoke of the irresistible aspect of the brand, with

'Baaki sab Bhoola de' becoming the new mantra for Cadbury Perk.

Did you know?

Cadbury Perk advertising has been a launch pad for Bollywood stars - Preity Zinta,

Raageshwari, Gayatri Joshi and Amrita Rao, were all Perk models before they made it big

on cinema screens.

CADBURY CELEBRATIONS

Cadbury Celebrations was aimed at replacing traditional gifting options like Mithai and

dry- fruits during festive seasons.

Cadbury Celebrations is available in several assortments: An assortment of chocolates like

5 Star, Perk, Gems, Dairy Milk and Nutties and rich dry fruits enrobed in Cadbury dairy

milk chocolate in 5 variants, Almond magic, raisin magic, cashew magic, nut butterscotch

and caramels.

The super premium Celebrations Rich Dry Fruit Collection which is a festive offering is an

exotic range of chocolate covered dry fruits and nuts in various flavours and the premium

dark chocolate range which is exotic dark chocolate in luscious flavours.

Cadbury Celebrations has become a popular brand on occasions such as Diwali, Rakhi,

Dussera puja. It is also a major success as a corporate gifting brand. The communication is

based on the emotional route and the tag line says "rishte pakne do" which fits with the

brand purpose of strengthening your relationships with something sweet.


Did you know?The "Rishte Pakne do" jingle was penned by noted writer Gulzar

TEMPTATIONS

Ever see people hide away their chocolate since they don’t want to share it! If you have,

then its likely to be a bar of Cadbury Temptations! Cadbury Temptations is a range of

delicious premium chocolate in five flavours.

Research revealed a niche segment of “chocoholics” - those exposed to international

chocolates and those who love a variety of chocolates but possibly find the price of

international chocolates too high. Cadbury Temptations is a range targeted at this segment

of discerning chocolate lovers.

The Cadbury Temptations range is available in 5 delicious flavour variants- Roast

Jamaica. With its international quality chocolate Temptations soon became a popular brand

for "chocoholics".

The advertising positioned Cadbury Temptations as a chocolate range so delicious that it

was "too good to share".


STUDYING CADBURY OVER THE YEARS

The company Cadbury began its operation in India in 1948 by importing chocolates and

repacking them before distribution. After 59 years of existence it has five factories at Pune,

Thane, Malanpur, Banglore, Baddi and 4 sales offices at New Delhi, Kolkata and Mumbai.

CADBURY SECTORS

Currently Cadbury operates in three sectors chocolate, milk food drinks and candy. Under

our project we are studying only one sector that is chocolates. Key brands under the

chocolate sector are Cadbury dairy milk, perk, five star, éclairs and celebration. The flag

ship brand is Cadbury dairy milk in quality standards in India. The pure taste of CDM

defines the taste of Indian consumers.

NEW PRODUCT STRATEGY

Cadbury India announced the national launch of 'Ulta Perk', a wafer-based chocolate. 'Ulta

Perk' has been test marketed in southern states like Tamil Nadu and Karnataka for over 6

months and is now being launched in other parts of India.

The product is targeted towards teenagers and youth. 'Ulta Perk' will be the second product

offering from Cadbury in the chocolate-wafer segment, after the ‘Perk’ brand.

Commenting on the launch, Sanjay Purohit, executive director – marketing, Cadbury India

said, “The product construct and pricing for ‘Ulta Perk’ has been designed to meet the

needs of our largest target segment – the youth and will broaden our product appeal and

options to the consumers”. The product is currently priced at Rs 5.

Perk was launched in the market in 1995 and has seen consistent growth through the years,

said the company. The chocolate wafer market is around 35% of the total chocolate market

and has been growing at around 13% annually.

A 360-degree campaign will be rolled out in the first week of October. The campaign will

be a mix of television commercials, outdoor, consumer contact activities, etc. Cadbury

India has tied up with leading coffee chain Café Coffee Day for direct sampling of the

product in top cities. ‘Ulta Perk’ will see a multi-media marketing campaign to connect

with the target consumers


Review of Literature

George Bernard Shaw wrote, “What used are the cartridges in battle? I always carry

chocolates instant”. This is how chocolates are making our life sweeter everyday.

Chocolates are comprises of number of raw and processed food that are produced from

beans of coco tree. It is grown in tropical countries with high temperature, high rainfall,

and high humidity. Bringing the coco beans to the market involves heavy lifting, carrying

and sorting. Most of the crops grown in the tropical countries are sold to the MNC’s like

Cadbury Schweppes and Nestle.

CHAIN OF PRODUCTION

The supply chain is the sequence of activities and processes required to convert raw

materials and components into consumer goods and services and to deliver them to the

consumer. For cocoa, the chain is often complex and varies from one country to another.

However, a typical pattern would pass through the following stages.

Primary producers: The first stage is to grow the cocoa beans. Often the many small

farmers involved will live some distance from the market

They depend on people operating in the tertiary or service sector of the economy to collect,

purchase and transport the cocoa product to warehouses. In an exporting country like Ivory

Coast, export warehouses are located near one of the country's ports, Abidjan and San

Pedro.

It is at this stage that companies such as Nestlé play an important role in the supply chain

by checking consignments for quality

Nestlé may buy directly from an export warehouse, or it may approach intermediary

suppliers who buy cocoa beans in bulk from across the world and arrange shipment to the

confectionery manufacturers.

The secondary stage of production is the manufacturing companies. These companies bring

together the sugar, cocoa and other raw materials to manufacture the chocolate products we

know so well: they convert the beans into chocolate bars and other finished products.


The final stage in the production chain is selling (retailing) to final consumers. Just as

Nestlé buys in bulk from exporters and suppliers, retailers buy in bulk from Nestlé. Every

Kit Kat or other chocolate product that you buy will have been through all these stages of

production.

RESOURCES NEEDED FOR PRODUCTION

All goods and services depend on resources for their production; these are known as factors

of production one key factor is enterprise: the risk bearing associated with any business. In

the past, many firms owed their existence to perhaps just one person, who set it up.

Nowadays, with the growth of companies, business risk tends to be born by shareholders,

whilst managers exercise day to day control.

Manufacturing, marketing and distributing a product for worldwide consumption involves a

huge amount of careful planning.

A second major resource is the land: cocoa trees grow on it; chocolate factories are built on

it. Cocoa is grown in Central and South America, the west coast of Africa and more

recently in South East Asia. Eight countries - Ivory Coast, Ghana, Indonesia, Nigeria,

Brazil, Cameroon, Ecuador and Malaysia supply 88% of world output. Over 40% of the

world's supply comes from Ivory Coast, where cocoa is grown mainly on over 600,000

small, family-owned farms. Most cocoa farms occupy between one and three hectares.


Labour is another key input. Small farmers (who are entrepreneurs in their own right) have

developed the skill of producing a high yielding, top grade product. Cocoa production is

often their only source of income.

They may also grow subsistence crops such as yams or palms, but they typically rely on the

cash from cocoa to pay for extras such as health services and educating their children. Raw

materials are another important resource within the production process. Besides the cocoa

beans themselves, raw materials for the chocolate industry include sugar, milk and

wrapping/packaging materials e.g. paper, foil and card.

Another input is the buildings, plant and equipment required for manufacturing and

distribution e.g. factory premises, complex machines and fleets of trucks. These items are

known as capital.


PRODUCTION

Chocolate production consists of many stages. Farmers are at the start of the production

chain.

Cocoa plants are generally grown in low lying areas and planted in the shade of

other trees such as banana or coconut. It takes up to five years for a new plant to

fruit, after which it may have a life span of 30 years, unless severe weather or

disease destroys it.

Ripe pods are cut from the tree, broken open and the beans removed.

The beans are then allowed to ferment, often in baskets, perforated vats, holes in the

ground, or in piles covered by banana leaves. This process takes about six days.

The beans will by now have turned brown. They will then be spread out to dry in

the sun. Sometimes they are dried artificially. This process reduces the moisture

content from 60to 13

The beans are then sold. Manufacturers and processors are the major buyers.

The manufacturer then takes over the production process. This involves:

Cleaning: ensuring materials such as sticks and stones are removed

Winnowing: the shells are cracked open, the beans isolated, collected and heated

Roasting: the beans are roasted in furnaces at temperatures between 100ºc- 150ºc

for 20 to 50 minutes. This releases the cocoa's full flavour and aroma

Grinding: this process breaks down the cocoa butter on the beans and produces a

smooth liquid (cocoa paste)


Blending: different varieties of cocoa paste are combined to ensure a consistent

final product and to determine the flavour, quality and hardness of the chocolate.

Thereafter, manufacture follows two different paths to produce either cocoa powder (used

in chocolate drinks, pastries, ice creams and desserts) or solid chocolate.

Because cocoa powder requires a low fat content, the paste is pressed to remove most of

the cocoa butter. It is then crushed, pulverized and finely sieved.

Making solid chocolate requires combinations of four basic ingredients: cocoa paste, cocoa

butter, sugar and milk. The mixture depends on the type of chocolate being produced.

Other processes involved in providing high quality chocolate include:

Refining to reduce the size of the particles

Conching (stirring) to produce a smooth and glossy chocolate

Tempering (heating at 45ºc to produce an even smoother end product

Molding the chocolate into shape, before it is finally packaged.

Typically, chocolates are produced using a continuous flow method along a production line

dedicated to producing large quantities of a single product. To make soft-centre items such

as Rolo, liquid chocolate is poured into deep moulds. These are inverted very quickly,

leaving a coating of chocolate on the inside. Once this hardens, the mould is again turned

over. The filling is then poured inside and covered with another layer of chocolate to form

the base.

A continuous flow method is far more economical than producing in batches, for example,

because once the equipment settings have been established the line can run cost efficiently.

This production advantage is known as a technical economy of scale. By producing very

large quantities at very low costs per unit, a company like Nestlé is able to offer consumers

good value for money and so remain competitive.


CONCLUSION

Large confectionery companies meet customer requirements with a wide selection of

different types of chocolate products to meet a variety of tastes. A company like Nestlé is

involved at every stage of the production chain. It gets to know as many people as possible

in the supply chain, providing growers with technical advice, advising intermediaries about

quality issues, and of course researching the market to find out what the consumer wants.

Large organizations like Nestlé are able to pass on to us the benefits of economies of scale,

coupled with their experience of producing high quality chocolates over many years. As a

result, we consumers are able to enjoy products built around cocoa beans from a small farm

and transformed by complex production processes into sophisticated products such as

Quality Street, Smarties, Aero, or many other forms of chocolate product.

FUNDAMENTAL CONCEPTS OF MARKETING (2)

Needs, Want and Demand: Needs are basic human requirements. People need food, water

and clothing. These wants become needs when they are directed towards a specific

objective that may specify their need. Demands are specific products backed an ability to

pay.

STP: Segmenting, Targeting and Positioning A marketer can seldom satisfy everybody in

the segment so he begins by segmenting the market by identifying the identifying the

profile and distinct group of buyers. The marketer then studies which segment has the

maximum opportunity .He then targets that Market.

Offerings and Brand: The Intangible value proposition is made physical by offering. A

brand is an offering from a known source


Marketing environment: The marketing environment consists of the task environment

and broad environment. Task environment consists of (1)

o Company

o Supplier

o Distributor

o Dealers

o Target customers

The Broad environment consists of

o Demographic Environment

o Physical environment

o Technological Environment

o Political – Legal Environment

o Socio- Cultural Environment

NICHE ORIENTED COMMUNICATIONS (3)

As the target market is a small segment of consumers, marketing communications are less

costly and more effective. The message could be focused on selective media vehicles.

Premium products and brands can make use of niche media now widely available in India-

star, discovery, sun and other cable TVs. Celebrities could be selected and used for niche

consumers. There is also an option of resorting to direct marketing tools so that an effective

niche base of consumers could be established. A new technique which could be jointly used

by manufacturers of niche products is the videocals. These are video magazines which like

periodicals carry special- interest stories on a specific subject sandwiched with

commercials of niche products and services. The theme of the subject could vary

depending on the products and services figuring in the videocal. A specific aspect of

developing a niche should be that, the company should ensure that the communications do

not give rise to a confused positioning regarding the corporate image of the company.


A typical problem facing a niche marketer is cannibalization due to different items in the

product line. This could be avoided by marketing to multiple niches. A variety of credit

cards by Citibank, different brands of Godrej soap and the different schemes of mutual

funds offered by finance companies are good examples of attempts to minimize

cannibalization.

What Influences consumer Behaviour? (2)

1. Culture: It is the fundamental determinant of persons wants and behaviour

o Social Factors: Consumer Behaviour is affected by reference groups like

Primary groups and Secondary groups; Aspiration Groups and Dissociative

groups; Opinion leader

o Roles and statuses

2. Personal Factors

o Age and stage in life cycle

o Occupation and economic circumstances

o Personality and Self Confidence

o Life Style And Values

What is Brand Equity?

The American Marketing Association defines a brand as “a name, term, sign, symbol, or

design, or combination of them, intended to identify the goods or services of one seller and

to differentiate them from the competitor.

Product Differentiation

It Exists due to

1. Form: Distinction that exits due to the size, shape or physical structure of a product


2. Features: Distinction that exits due to varying basic and supplementary functions

that exists in the products.

3. Performance Quality: Distinction that exits due to varying performance level

4. Conformance Quality: Distinction that due to the exits as buyers expect to have

high conformance

5. Durability: Distinction that exits that due to products expected operating life

6. Reliability: Distinction that exits due to difference in measure of profitability

7. Style: Distinction that exits due to the look and feel of the product

BRAND STRATEGY

The company has come up with consistent, simple and imaginative contents to its category

distribution. Excess manufacturing capacity, pressures by sales force and distributors has

made product line extensions an essential part of company’s strategy. In order to lengthen

its product line it has followed the line stretching technique. The company follows a two

way line stretching technique- down market stretch and up market stretch.

Line Stretching

Down Market Stretch-

o Presence of strong growth opportunities

o Tying up with lower end competitors

o The company may find that middle level market is stagnating

Up Market Stretch-


o Companies try to enter into the high end of the market.

o Position themselves as full-line manufacturers.

o More growth, high margins.

MARKETING IN GLOBAL ENVIRONMENT

Economic Conditions *Stage of Development

*Buying Power of Consumers

*Type of Currency

Political and Legal Considerations *Political Stability

*Laws Limiting Trade

*Laws of Host Nations

Culture and Language *Cultural Influences o Buying Power

*Language Differences

Demographic and Lifestyle *Population Sizes

*Population Distribution

*Socio Economic Status

*Life Styles of foreign Buyers

Ethical Considerations *Impact of Marketing on Culture

*Bribery

*Human Rights


GROWTH STRATEGIES

NEW PRODUCT DEVELOPMENT

New product development means- a new brand of car in the market, a new model of TV, a

re-launch of a product, a reduced price version of a brand, or a totally new concept. Experts

identified the following categories of new product

1. Products new to the company but not new to the market.

2. Product that are significantly different from the existing ones but are good

replacements. Example: CD’s in the place of cassettes.

3. Innovative product. Example: microwave oven.

The new product come from the cutting edge of technology and orderly process of new

product development, and experienced persons well versed in product innovations. A

combination of observations made by experts on projects, firms and the connected theory

suggest some rules for organizations. These rules can be applied to new products of

different sizes, values and technological complexity. The rules are as follows-

1. Make sure that the project is well organized. There must not be an over crowding of

persons.

2. Having a precise and comprehensive definition of the product.

3. Efficient execution of new product program. The product development manager

must ensure that efficient market and technical assessments have been carried out to

avoid inept execution.

4. Detailed market study and research make efficient execution of the marketing

program possible.


MARKET PENENTRATION

Product Development

Diversification

Market Penetration

Market Development

5. Economizing on advertisements, sales promotion, personal selling, transportation

costs, stocks etc. can prove to be fatal.

6. Technologically weak product is most likely to fail. A quick technical assessment of

a new product needs to be done.

7. Efficient trial production should be carried out. Managements need to take a lot of

care and effort in developing the physical product.

8. Marketing of company resources and the needs of the project.

9. Familiar products should be chosen for development.

10. Availability of an attractive market for the new product.

11. Finally the product development manager needs to choose a less competitive

intensive segment. Launching a new product in an aggressively competitive market

can be frustrating, especially if it is price intensive. The increase in the intensity if

competition should be forecast correctly at the time of selecting the target segment.

Integration of the Existing Resources:

The basis of new product development for most firms today should be “to maintain core

business with minimum reinvestment” i.e., to use what you already have. Here are nine

different combinations that occur due to changes in the market and technology.

TECHNOLOGY

MARKET

NO CHANGE IMPROVEMENT NEW

NO CHANGE 1. Product re-launch

2. Product re- formulation

3. Product replacement

STRENGTHENED 4. Product remerchandising

5. Product augmentation

6. Product diversification

NEW 7. New usage 8. Extensive differentiation

9. Extensive diversification

Setting up an organizational form for new product development involves-1. Who is to be responsible for NPD?

2. What tasks are to be accomplished?

3. How are the tasks to be accomplished?

The standard NPD process model comprises of the following stages:

Idea generation


Idea screening

Concept development and testing

Marketing and strategy development

Business analysis

Product development

Market testing and commercialization.

There is also a need of financial calculations so , the total economic analysis or a

complete new product business plan should include estimates from marketing, production

and accounting personnel.

Test marketing: It comprises of investigating into buyers characteristics, trial and usage

rates, purchase frequencies, product applications response to an altered marketing mix,

trade response etc.

The launch cycle: this cycle contains four phases- pre launch, announcements, beach-

head and early growth.

Pre-launch involves-

1. Activities like developing marketing organizational and sales force, hiring an

advertising agency.

2. Building a network for service comprising locations, facilities, equipments, parts

and personnel.

3. Pre- announcements or press conference.

4. Stocking product where customer will want it.

Announcement- the new item is put on view for public, in trade or road show or press

conference is called.

Beach-head- this is the climax of new product development. Its objective is to induce trial

and repeat purchase.

Early growth involves activities like-

1. Product quality improvement.


2. Pressure on price.

3. Price cost.

4. New segment and,

Opportunities and Threats involved in a project or in a business venture. It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favourable and unfavourable to achieving that objective. The

technique is credited to Albert Humphrey, who led a research project at Stanford

University in the 1960s and 1970s using data from Fortune 500 companies.

If SWOT analysis does not start with defining a desired end state or objective, it runs the

risk of being useless. A SWOT analysis may be incorporated into the strategic planning

model. An example of a strategic planning technique that incorporates an objective-driven

SWOT analysis is SCAN analysis. Strategic Planning, including SWOT and SCAN

analysis, has been the subject of much research

Strengths: attributes of the organization those are helpful in achieving the

objective.

Weaknesses: attributes of the organization those are harmful in achieving

the objective.

Opportunities: external conditions those are helpful in achieving the

objective.

Threats: external conditions those are harmful in achieving the objective.

Identification of SWOT is essential because subsequent steps in the process of planning for

achievement of the selected objective are to be derived from the SWOT.

First, the decision makers have to determine whether the objective is attainable, given the

SWOT. If the objective is NOT attainable a different objective must be selected and the

process repeated.


DIFFERENT PRODUCT LINE

1. Changing consumers, needs

2. Reach out to a larger consumer base.

3. Pre-empt competition with regard to specific niches.

4. Need to have a complete product line to offer a value added bid.

5. Prevention of loyal customers from switching over to a competitive brand.

6. To gain short-term advantage before the company launches several

competitive models in the line to make itself competitive.

7. To add to product line by offering a technologically advanced version of the

product.

8. To enhance the image of the brand.

9. To expand the market and find new uses for an existing product.

10. To accommodate new forms of the product in response to the value based

consumer needs.


.

BCG Growth-Share Matrix

Companies that are large enough to be organized into strategic business units face the challenge of allocating resources among those units. In the early 1970's the Boston Consulting Group developed a model for managing a portfolio of different business units (or major product lines). The BCG growth-share matrix displays the various business units on a graph of the market growth rate vs. market share relative to competitors:

BCG Growth-Share Matrix

Resources are allocated to business units according to where they are situated on

the grid as follows:

Cash Cow - a business unit that has a large market share in a mature, slow growing

industry. Cash cows require little investment and generate cash that can be used to

invest in other business units.

Star - a business unit that has a large market share in a fast growing industry. Stars

may generate cash, but because the market is growing rapidly they require

investment to maintain their lead. If successful, a star will become a cash cow when

its industry matures.

Question Mark (or Problem Child) - a business unit that has a small market share

in a high growth market. These business units require resources to grow market

share, but whether they will succeed and become stars is unknown.


Dog - a business unit that has a small market share in a mature industry. A dog may

not require substantial cash, but it ties up capital that could better be deployed

elsewhere. Unless a dog has some other strategic purpose, it should be liquidated if

there is little prospect for it to gain market share.

The BCG matrix provides a framework for allocating resources among different business

units and allows one to compare many business units at a glance. However, the approach

has received some negative criticism for the following reasons:

The link between market share and profitability is questionable since increasing

market share can be very expensive.

The approach may overemphasize high growth, since it ignores the potential of

declining markets.

The model considers market growth rate to be a given. In practice the firm may be

able to grow the market.

Product range of Nestle Chococlates

KIT KAT

NESTLE KIT KAT has a unique finger format with a ‘breaking' ritual attached to

it.

NESTLE KIT KAT is one of the most successful brands in the world and every

year over 12 billion NESTLÃ

KIT KAT LITE

New KIT KAT Lite, a breakthrough innovation has the same great KIT KAT taste but with

50% less sugar. It is the first of its kind in the Nestle world and provides consumers a

choice for a healthier lifestyle. So the next time they want to indulge, they can enjoy KIT

KAT Lite “Do not Think, Just Bite”.

An explosive launch package including a multi-media campaign spanning television,

outdoors, magazines, etc. and consumer contact programs has been put in place to create an

impact. The catchy KIT KAT lite tune can be downloaded by consumers as their mobile


ring tones by sending a SMS to 8243. KIT KAT Lite can also be experienced through a

specially created website www.justbite.com.

Priced at Rs. 7/-, KIT KAT Lite will be available in the 2-finger format. It will be available

in major metros including Delhi, Mumbai, Kolkata, Bangalore, Chennai and Hyderabad.

NESTLE MUNCH:

NESTLE MUNCH is wafer layer covered with delicious Chocó layer. NESTLE MUNCH

is so crisp, light and irresistible that you just can't stop MUNCHing.' NESTLE MUNCH is

the largest selling SKU in the category!

"MUNCH POP CHOC" is a pack of delightful chocolate nibbles - Crispy wafer cubes

covered with delicious chocolayer. There a new & easy way to eat this chocolicious treats -

Just Open Pop & Enjoy!"

NESTLE MILKYBAR is a delicious milky treat which kids love. Relaunched in January

2006 with a Calcium Rich recipe, NESTLE MILKYBAR is a favourite with parents to treat

their kids with.

NESTLE MILKYBAR CHOO is a soft chewy fudge with white chocolayer that kids

love to ‘choo'. NESTLE MILKYBAR CHOO is also available in Strawberry flavour that

promises the fun of a strawberry shake in a MILKYBAR CHOO! Nestlé India

Presentation, Dec 7, 2006

The Milk District is an integral part of delivering high quality nutritional milk

Products to our consumers The Milk District is an integral part of delivering high quality

nutritional milk products to our consumers

Nestle adds value at each step of the milk supply chain…

• Technical assistance to farmers

• Farmer education – Good dairying practices, etc

• Technical assistance to farmers

• Farmer education – Good dairying practices, etc

• Milk Quality Policy


http://www.justbite.com/

• Expertise, Know how

• Milk Quality Policy

• Expertise, Know how

4 Nestlé Milk

Districts

Analysis

Question 1 Analyzed Below


1.1 To show that there is no gender distinction in purpose of purchasing the chocolates.

(Annexure 2: 1.1)

Inferential Analysis

According to the one-way ANOVA analysis, the calculated value of F-statistic is .000511

and the probability value for testing our hypothesis is .999489. Since this probability value

is larger than the level of significance .05. We cannot reject the hypothesis hence we

conclude that the mean value for purpose of purchasing the chocolates are not significantly

different gender wise.

As the variation within the group is very high so F-statistic is less than one .the reason

behind it may be the response error as we considered the appropriate sampling design.

1.2 The purposes of buying chocolates do not so significant difference

According to the one-way ANOVA analysis, the calculated value of F-statistic is 22.31401

and the probability value for testing our hypothesis is .005848. Since this probability value

is less than the level of significance 0.05 and the calculated value is greater than the critical

value so we don’t accept the hypothesis. Therefore it is concluded that the purposes of

buying chocolates shows significant differences.

Implies: The promotion activities are independent of gender but it should be focused on the

purpose of buying i.e. self consumption, family, gifts, others

Question 2


Inferential analysis

The chi test calculated value is 0.142152 and the tabulated value at level of significance .20

is 12.242 . hence the hypothesis that gender wise choice of chocolate is independent from

each other. At 80% confidence level we accept it.

To find out whether Male and female choice of chocolate are independent from each other

or not?

Inferential analysis (Annexure 2)The Chi test calculated value is 0.142152 and the tabulated value at level of

significance .20 is 12.242. Hence the hypothesis analysis at 80% confidence level shows

that gender wise choice of chocolate is independent from each other.

Implication

Chocolate name plays vital role to become choice of consumer so while prompting a product the product name should be highlighted rather that the brand name.


Question. 3

To find the relationship between the factors which are influencing the choice of consumer

in their buying of chocolates.(annexure 3)

Inferential analysis

The correlation analysis determines the strength of relationship between two variables.

Here, pack size and taste, price and availability, availability and friends, price and friends

are showing the direct relationship. The coefficient of correlation equals to 1 means almost

the regression line can easily explain 100% variation in one variable. While availability and

taste, price and taste, friends and taste, availability and pack size, price and pack size,

friend and pack size show indirect relationship

Implication:

Considering the relationship between any two parameters (say pack size and taste)

whenever there will be a change in one parameter the related parameter should also vary.

Further the relationship can be determined by fitting the regression line.


Question 5

The average mode value of the given data is 20. Hence, it is conclude that most the

chocolate consumption is weekly or occasionally.


External And Internal Environment of Chocolate Industry Analysed

Before studying the project in detail we need to identify the external and environment that

affects any the chocolate industry. We identified them as-

Media: Today media has unprecedented focus on nutrition. There are endless

articles on what to eat and what not too. Media has made consumer aware that high

calorie food is not good for their health. That is why media posses a big challenge

for the chocolates brands.

Population and demographics trends: the average life expectancy in India is 64.7

years. This aging population is “second lifers” who are health conscious and

therefore are away from the reach of the chocolate brands. Its not that their taste for

chocolate has died so this segment is an opportunity for the chocolate brands.

Globally more than one billion people are overweight. So this oversized population

is another challenge for the chocolate brands.

More authorities involved under the 2004 WHO global strategy on diet, physical

activity and health. An awareness campaign is launched worldwide against the

obesity, chronic diseases, absence of physical activities. This campaign is an anti

calorie drive.

INTERNAL FACTORS AFFECTING A CHOCOLATE MANUFACTURING COMPANY:

Cocoa Prices: Cocoa is the main ingredient of any chocolate .It contributes to 45% of the

manufacturing cost and in companies like Cadbury and Nestle it is outsourced.

Research and Development Support : R&D is the life line of any MNC today . In

chocolate industry, company has to understand the taste of the consumer and come up with

flavors which are new and acceptable.

Welfare EconomicsAfter studying the above factors and observing that the above factors have led the

chocolate manufacturers to practice what is known as welfare economics. Welfare


economics analyses individuals with their economic activity, which are the basic unit for

aggregating to social welfare whether of a group or a community, a society. The chocolate

industry has analyzed the consumer behavior and come up with low calorie sweet flavors

of chocolate like kitkat by nestle and perk and perk lite by Cadbury.

Welfare Economics By Cadbury

Cadbury’s commitment to the Environment

They realize that they are responsible for environmental, health and safety management.

They aim to look after the health and safety of our people and minimize the environmental

impact of our business around the world.

Migratory birds stop over at our Bangalore factory

Water is a precious resource. As part of Cadbury India's efforts to continuously increase

water conservation our Bangalore factory has constructed a check dam to store the

rainwater. This dam not only acts as a major ground water replenishing source for the bore

wells in the factories and surrounding community, but is also a stopover location for some

of the migratory birds.

Sarvam Program

With operations around the Pacific Ocean, we responded

immediately to the Asian Tsunami in late 2004. After initial

emergency relief donation we established a Tsunami

Regeneration Programme for essential long- term community

rebuilding.

Nestle’s Contribution to welfare Economics

Safe Drinking Water

Water is a scarce resource. In India, availability of clean drinking water is a major concern

for many communities. Almost 200 million people do not have access to clean drinking

water. Nestlé India is committed to improving the situation and believes that the first step is

to create awareness in the communities around its factories. A key focus area of our


Corporate initiatives is to help provide Clean Drinking Water and educate children in

schools to conserve this scarce resource.

Education and Training

Nestlé supports initiatives to create awareness about the right to education and encourages

the communities around its factories to send their children to school. Nestlé India

employees have developed a special play 'Let Us Go to School' for this purpose. This has

been staged amongst the communities around our factories, and its recordings screened at

smaller gatherings along the milk routes.

The Company also recognizes the active role that village women play in adopting good

dairying practices in dairy farms and regularly conduct special programs that help them

Nestlé India supports local schools, helps in the maintenance of public parks and green

belts, facilitates blood donation camps and health awareness programs. The key messages

of conservation, hygiene, health and wellness are progressively built into the communities

where the Company is present. All these initiatives strengthen the bond between Nestlé

India and the community

CADBURY NESTLE

STRENGTH 1. Strategically planned location of 5 factories.

2. Strong brand name like Cadbury dairy milk, five star and éclairs.

3. Rich product mix of different flavors of chocolate.

4. Support from parent company Cadbury Schweppes.

1.Strategically planned milk districts2.maket lead in wafer Chocolate category3. Only company with white chocolate

WEAKNESS 1. Lack of timely launch of new brands, unable to capitalize on

market leader strategies.

1. Though it has seven factories but is unable to maintain a even distribution in the country.2. Emphasis on promotion of other confectionary products under its brand name.3.Inadeqate product mix

OPPORTUNITY 1. The Indian urban market where penetration of

1.The Unexplored snacking category


chocolate is low can be developed though affordability and availability.

2. Using IT to bring efficiency in logistics and distribution.

3. capture the wafer coated chocolate segment with its brand name.

2. The R&D Center at Gurgaon

THREAT 1. Increase in competition.From Nestle, Amul, Mars, and other exotic chocolate brands.2. The company has large dependency on imported cocoa beans and cocoa butter which exposes inherent dependency on U.S pound sterling. this is dangerous due to rupee appreciation

1.Aggressive new product strategy being followed by Competitors

2.Threat of other products overpowering chocolate line

What has made Cadbury successful?

1. It has carved out a distinct role in consumer’s life by marketing itself as an essential part

of celebration in Indian families.

2. It has constantly maintained consumer delight year after year. It has given

consumers consistent value proposition by bringing out special value packages.

BRAND PROMISE

Cadbury promises that it will bring out the delicious the best tasting chocolates under its

brand name and create always create movements of pure magic. Cadbury dairy milk has

encaptured enormous breath of emotions which Indians are best known for. It has

recognized Indian values such as family togetherness (which is incomplete without

wholesome fun). It has also valued individual enjoyment and there by has always stood for

goodness.

To do so Cadbury has followed a mass marketing approach. By mass

marketing Cadbury has engaged in mass production, mass distribution and mass promotion

of its brand. It has led to the largest potential market, low cost and high margins. It has

given its consumer’s flexible market offering as consumers have diffused preference when

it comes to chocolates. Some consumers like the pure taste of chocolate in Cadbury dairy


milk; some want the chocolate to crackle with fruit and nut, roasted almonds, some love

chocolate to be mix with the Indian traditional sweets like Cadbury dairy milk desserts.

Some want Cadbury dairy milk wowie chocolate with Disney characters embossed in it.

The two in one milk chocolate and white chocolate is another preference for the consumers.

Cadbury has recognized these diffused preferences of the consumers and has come up with

innovative and sweet chocolates.

BRAND STRATEGY

The company has come up with consistent, simple and imaginative contents to its category



its product line it has followed the line stretching technique. The company follows a two

way line stretching technique- down market stretch and up market stretch.

Down Market Stretch- It followed the down market stretch in order to reach the

unexplored mass market by repositioning brands such as perk at a price of mere Rs.10 and

by launch of Cadbury mini perk for mere Rs.2.

Up Market Stretch- the up market strategy is followed by the company when it wishes to

enter the high end of market for more growth, higher margins or simply to position

themselves as full line manufacturers. Such products are premium products and targeted

towards the high end customers. Cadbury temptations is available in five delicious flavour

roast almond coffee, honey apricot, mint crunch, black forest and old jamica. It is the mast

costly chocolate under the Cadbury brand

Cadbury has identified the need of new product development in order to maintain the

market leader position in chocolates. It brought out new to the world product Cadbury

bites. It has also repositioned its product Cadbury five star by additions to the existing

product in form of five star lite, ulta perk. Also tempatations repositioned by reducing its

price from Rs.40 to Rs.35.

Studying the New Product Development by Cadbury : Cadbury Bytes

Market Background:

Cadbury is the market leader in chocolates but was a new entrant in the packaged snacking

category. The company had a loyal child following but snacking was driven by teens and


adults. The Indian palette also showed a distinct preference for salty snacks. Overall brand

Cadbury strengths in the confectionery market were weaknesses in the packaged snacking

market. Snacks were also largely driven by shared consumption vis s avis confectionery

which is largely an impulse individual consumption

Competition

Well entrenched competitors and local unorganized players which are synonymous with

snacking and dominated the market.

The Brand

Cadbury Bytes was a one of a kind snack, in that it was sweet and not salty and had the

irresistible taste of Cadbury chocolate in it. To be positioned effectively as a snack it had to

offer the irresistible taste of Cadbury chocolate in the context of shared snacking

The Brand Objective

Position Cadbury Bytes as the "people magnet" of snacking which led to being creatively

expressed as "Bytes Jahaan Public Wahaan!"

The Results

Cadbury Bytes expands the chocolate category.

Five Star Crunchy

Market Background:

Cadbury is the market leader in the chocolates category, with Cadbury

5 Star being its second largest brand. Cadbury 5 Star which is unique bar of nougat and

caramel enrobed in Cadbury Dairy Milk Chocolate provides one of the most distinctive and

involving chocolate eat experiences. However in recent years the Cadbury 5 Star franchise

was in decline.

Competition

The brand was under threat from other more offerings in the market.


The Brand

Cadbury 5 Star needed to introduce an element of surprise in its eat experience to gain

share among lapsed consumers. To do this the variant Cadbury 5 Star Crunchy was

launched- which still had the richness of caramel, chewiness of nougat but also contained

rice crispies.

The Strategy

The campaign was built around the proposition of an " unexpected surprise" which had a

surprise in every bit. This was creatively expressed as " Naya Five Star Crunchy.. Ab har

bite main Arrey!"

The campaign targeted at youth was executed in a lighthearted vein built around a boy-girl

relationship.

In order to engage youth the campaign was executed acrossTV, radio, internet, outdoor and

print media.

B

The Results

The brand registered double digit growth post the launch

BRAND STRATEGYThe company has come up with consistent, simple and imaginative contents to its category




its product line it has followed the line stretching technique.

Down Market Stretch- It followed the down market stretch in order to reach the

unexplored mass market by repositioning Kit Kat again and again by price reductions.

From Rs. 15 To Rs. 12 (Four Finger)

Nestle is not a market leader in chocolates and thus has to depend on new products to

increase its market share. Some of the new products are

1. "MUNCH POP CHOC"

Market Background

Nestle already has nestle munch in the market.

But I had not yet entered the snacking market. Munch Pop Choc was an attempt to enter

this category.

Competition

The competition in snaking category is from players like Haldiram, but they sell salt snacks

only. So the challenge was to reach the consumers

The Brand

Munch Pop Choc is a pack of delightful chocolatey nibbles - Crispy wafer cubes covered

with delicious chocolayer. There a new & easy way to eat this chocolicious treats - Just

Open Pop & Enjoy!"

The Branding Statergy

The product was positioned as a downward line extension. The Target was teenagers and

Adult Impulse snackers.It was Positioned Using Personality endorsement by Rani

Mukherjee On TV across the channels

2. NESTLÉ MILKYBAR CHOO


Market Background

Milkybar is an existing product line under Nestle Chocolates. Milkybar Choo is an

extention to the this product line.

Competition Competition is not clear and defined as it is new to te world prodoct – white

chocolate paste that can be chewed.

The Brand

Milky Bar Choo is a soft chewy fudge with white chocolayer that kids love to ‘choo'.

NESTLÉ MILKYBAR CHOO is also available in Strawberry flavour that promises

the fun of a strawberry shake in a MILKYBAR CHOO!

Limitations

Open ended questions were asked in the questionnaires. Analyzing these questions

would not require any quantitative statistical analysis. Hence the analysis could be

biased.


Also if vast variations are seen in the tastes and preferences in the tier II and tier I

cities then analysis might be affected.

Choice of the consumers is biased since the research was carried out during the

Diwali festival season, hence the choice of the customers could be biased.

Due to reasons like shortage of time, availability of adequate resources this research

could not give accurate picture about the opportunities and threats that could come

in the brands’ way, but this study can be helpful in pointing the areas where the

brands should concentrate and go for further research.

The sample size in the survey was about 100 customers, which was comparatively

small to the total number of existing chocolate customers. To get the better image

among the customers, this research could be carried on further by increasing the

sample size.

With so much of competition in the market it is difficult to make predictions about

the future

market trends.

Some of the respondents were not willing to give certain information because of

their own personal reasons.

Due to non-relevance of certain factors samples had to be rejected.

Inter willing customers sometime become difficult since they were in hurry.

Conclusion

The present study comes to the floor with the revelations having exciting and full of

curiosity determinants in relation to the specified objectives to identify the reasons which

makes customers buy Cadbury chocolates over Nestle Chocolates and to understand

customer Brand knowledge with regard to chocolates . As the study has been conducted, in

the context of Indian customers (where interviewed customers are from seven different


locations in North India), the investigation perspectives have been thrown, conditioning the

specified motives of Indian people, putting aside the motives outside India.

The following are the conclusion that have been drawn after analysing the data -

The main motive behind the purchase of the chocolate for both the male as well as

the female is self-consumption. It is being observed that there is similarity between

the objective of purchase in both the genders is use for self rather than other

purposes like gifts , friends etc

The purchase of the chocolate is highly influenced by the brand to which it belongs.

people identify Cadbury’s with dairy milk so even that feature

The basic attribute that leads to the purchase of a particular chocolate is the taste.

People were found more sensitive towards taste as an important factor

There is lot of awareness about the product line among the consumers as compared

to that of nestle.

The women are frequent purchasers of the chocolate as compared to that of the

male. There is also significant difference in the manner of purchase in terms of

time between male and female.

The most important conclusion that we can draw is that nestle proves to be a low in

demand product to that compared with Cadbury’s chocolate.

Recommendations

1) Nestle needs to be more specific of every product promotion rather then promoting

just few product lines like Maggi and coffee.

2) The premium chocolate segment which consists of chocolates like temptations etc

remains untapped.


3) It should go for aggressive selling in festive seasons especially in a country like

India.

4) It should pay importance to better packaging and looks.

5) It needs a stronger and more convincing brand ambassador to fight Cadburys

Amitabh Bachchan.

6) Its needs to generate more ads for its lost products like Classic, Crunch, and Milky

Bar etc.

7) Nestle lacks aggressive selling and promotion techniques for its new products like

Fruit N Nut unlike Dairy Milk which tries to create a position and demand for each

and every of its products.

8) The distribution channels need to be reallocated and a country wide presence needs

to be made

9) It needs to channelise more resources towards event sponsorships and other

promotional techniques for its chocolates like it does for other products like coffee.

10) Small retailers and dealers need to be targeted and steps should be taken to

negotiate deals with them so that they can give more shelf preference to nestle

chocolates over the major players like Cadbury.

11) It needs to tab Indian values like sharing and family consumption over

individualism as done by Cadbury.

12) It needs to touch the emotional Indian mindset as done beautifully by Cadbury

which shall help build loyalty also.

13) Nestle should follow market development policy that is it must increase its

customer base and new products.

14) Nestle needs to be more specific about its chocolate product strategy and pay more

importance then giving it a step product treatment.

Annexure

To show that there is no gender distinction in purpose of purchasing the chocolates.


Chart 1.ANOVA TABLE of 1.1

ANOVA: Single Factor

SUMMARY Groups Sum Average Variance

MALE 51 12.75 80.91667 FEMALE 50 12.5 123

ANOVA

Source of Variation df MS F P-value F crit

Between Groups 2 0.0625 0.000511 0.999489 5.786135 Within Groups 5 122.35 Total 7

ANOVA Table of 1.2

Anova: Single Factor

SUMMARYGroups Count Sum Average Variance

Self Consumption 2 52 26 8Family 2 26 13 0Gifts 2 17 8.5 24.5Others 2 6 3 2

ANOVASource of Variation SS df MS F P-value F crit

Between Groups 577.375 3 192.4583 22.31401 0.005848 6.591382Within Groups 34.5 4 8.625 Total 611.875 7

To find out whether Male and female choice of chocolate are independent from each

other or not?


Chart 2 Normal Table of 2

Question No.3

To find the

relationship

between the factors which are influencing the choice of consumer in their buying of

chocolates?

Correlation Table for 3


TastePack size Availability Price Friends

Taste 1 Pack size 1 1 Availability -1 -1 1 Price -1 -1 1 1 Friends -1 -1 1 1 1

Questionnaire

Age

5- 13 14-20 21-27 28-35 36-45 46 & above

Gender: Male Female

Place:

1) You buy chocolates mostly for:

Self consumption Family Gifts Others (________)

2) Rank the following chocolates on the basis of your preference:

3) Why do you prefer the above mentioned chocklates? ( one or more options )

Taste Pack size Availability Price Friends’ influence

4) Which brand/label do the following chocolates belong to?

CrackleKit katDairy milkPerkMunch Temptation5 starBar oneMilky barCrunch


http://images.google.co.in/imgres?imgurl=http://www.dailyexcelsior.com/00mar02/munch.jpg&imgrefurl=http://www.dailyexcelsior.com/00mar02/busi.htm&h=76&w=220&sz=18&hl=en&start=3&tbnid=74-oisYzdmz2WM:&tbnh=37&tbnw=107&prev=/images%3Fq%3Dnestle%2Bmunch%26as_st%3Dy%26gbv%3D2%26svnum%3D10%26hl%3Den

http://images.google.co.in/imgres?imgurl=http://www.domain-b.com/companies/companies_c/cadbury_india/images/perk.jpg&imgrefurl=http://www.domain-b.com/companies/companies_c/cadbury_india/20031128_worm.html&h=76&w=116&sz=3&hl=en&start=4&tbnid=ZCMftUv5vT6MUM:&tbnh=57&tbnw=87&prev=/images%3Fq%3Dcadbury%2Bperk%26as_st%3Dy%26gbv%3D2%26svnum%3D10%26hl%3Den

http://images.google.co.in/imgres?imgurl=http://www.ukgoods.com/images/nestle-kitkat.jpg&imgrefurl=http://www.ukgoods.com/nestle-kitkat-fingers-p-398.html&h=200&w=200&sz=12&hl=en&start=1&tbnid=jbFpGZueQTA_BM:&tbnh=104&tbnw=104&prev=/images%3Fq%3Dnestle%2Bkitkat%26as_st%3Dy%26gbv%3D2%26svnum%3D10%26hl%3Den

http://images.google.co.in/imgres?imgurl=http://atasteofhomeireland.com/images/c-02.jpg&imgrefurl=http://atasteofhomeireland.com/index.php/cPath/24%3FosCsid%3Db50ad237365ea34631376679d72ebabb&h=256&w=256&sz=13&hl=en&start=5&tbnid=HDKZH9ZjNahn5M:&tbnh=111&tbnw=111&prev=/images%3Fq%3Dcadbury%2Bdairy%2Bmilk%26as_st%3Dy%26gbv%3D2%26svnum%3D10%26hl%3Den

http://images.google.co.in/imgres?imgurl=http://www.indiaflowerplaza.com/images/cadbury_temptations.jpg&imgrefurl=http://www.indiaflowerplaza.com/flowers_gifts_surat.html&h=87&w=104&sz=19&hl=en&start=4&tbnid=BS79QVPCAJKqPM:&tbnh=70&tbnw=84&prev=/images%3Fq%3Dcadbury%2Btemptation%26as_st%3Dy%26gbv%3D2%26svnum%3D10%26hl%3Den

http://images.google.co.in/imgres?imgurl=http://www.cybercandy.co.uk/acatalog/827.jpg&imgrefurl=http://www.cybercandy.co.uk/aaasmt/index.php/url_indprod/xlc_827/Nestle%2520Milky%2520Bar%2520-%2520Milk%2520and%2520Cookies%2520-%252080g%2520Bar.html&h=84&w=213&sz=5&hl=en&start=19&tbnid=8RDDA50iUPT-xM:&tbnh=42&tbnw=106&prev=/images%3Fq%3Dnestle%2Bbar-one%2Bchocolate%26start%3D18%26as_st%3Dy%26gbv%3D2%26ndsp%3D18%26svnum%3D10%26hl%3Den%26sa%3DN

http://images.google.co.in/imgres?imgurl=http://www.nestle.in/export_chocklates/barone.jpg&imgrefurl=http://www.nestle.in/export_chocolates.aspx%3FOB%3D4&h=104&w=162&sz=7&hl=en&start=26&tbnid=2I_lCEec5GSffM:&tbnh=63&tbnw=98&prev=/images%3Fq%3Dnestle%2Bbar-one%2Bchocolate%26start%3D18%26as_st%3Dy%26gbv%3D2%26ndsp%3D18%26svnum%3D10%26hl%3Den%26sa%3DN

http://images.google.co.in/imgres?imgurl=http://www.nashik.com/giftshop/chocolates/images/crackle.jpg&imgrefurl=http://www.nashik.com/giftshop/chocolates/index.html&h=79&w=165&sz=8&hl=en&start=4&tbnid=Z-O0zBayZv6iYM:&tbnh=47&tbnw=99&prev=/images%3Fq%3Dcadbury%2Bcrackle%26as_st%3Dy%26gbv%3D2%26svnum%3D10%26hl%3Den

http://images.google.co.in/imgres?imgurl=http://www.blightys.com/images/Cadbury_FruitNut_250g.jpg&imgrefurl=http://www.blightys.com/Sweetshop.html&h=787&w=1703&sz=1263&hl=en&start=3&tbnid=3fTcLogAcVr5gM:&tbnh=69&tbnw=150&prev=/images%3Fq%3Dcadbury%2Bfruit%2B%2526%2Bnut%26as_st%3Dy%26gbv%3D2%26svnum%3D10%26hl%3Den

http://images.google.co.in/imgres?imgurl=http://www.nestle.co.za/images/products/Classic_selection.jpg&imgrefurl=http://www.nestle.co.za/products/confec_assortments.asp&h=116&w=170&sz=7&hl=en&start=47&tbnid=5a-bfM40GCOpxM:&tbnh=68&tbnw=99&prev=/images%3Fq%3Dnestle%2Bclassic%2Bchocolate%26start%3D36%26as_st%3Dy%26gbv%3D2%26ndsp%3D18%26svnum%3D10%26hl%3Den%26sa%3DN

http://images.google.co.in/imgres?imgurl=http://www.investmentnz.govt.nz/common/images/Cadbury.jpg&imgrefurl=http://www.investmentnz.govt.nz/section/14237/16357.aspx&h=369&w=550&sz=205&hl=en&start=1&tbnid=b0bk8ycCdx7YqM:&tbnh=89&tbnw=133&prev=/images%3Fq%3Dcadbury%26gbv%3D2%26svnum%3D10%26hl%3Den

http://www.scvso.org/images/logo-Nestle.jpg

5) How often do you buy chocolates?

Daily Weekly Monthly Occasionally

6) Do you prefer giving chocolate gift boxes?

yes no

7) If yes, which of the following do you prefer?

i) Nestle selections

ii) Bandhan

iii) Celebrations

iv) Heroes

Out of the above mentioned four, which is most easily available? ______________

8) Rank the following advertisements on the following basis.(1 -4, 1 being the highest and 4 being the lowest)

Brand ambassador

Jingle Informative Frequency

Kuch metha ho jaye

Papu paas ho gaya

Kit kat(have a break have a

kit kat)

Rani Mukherjee (munch ad)

9) Do controversies involving your favourite brand affect your buying of chocolates?

Yes No

10) How important are the following factors for you? (Rate 1- 7, 1 being the highest and 7 being the lowest)

Price ___ Taste ___Company ___Pack size ___Packing ___Availability ___Calories (ingredients) ___


GRAPH ANALYSIS

Ques1. You buy chocolates mostly for:

Purpose Of Purchase

2428

13

13

12

2 4

5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MALE FEMALE

GENDER

Per

cen

tag

e O

f R

esp

on

den

ts

Self Consumption Family Gifts Others

Ques2. Rank the following chocolates on the basis of your preference:

Munc

hPer

kK

itKat

Dairy

milk

Tempta

tion

Milk

yBar

Baron

eCra

ckle

Fruit

n Nut

Class

ic

MA

LE

6

5 5

1 1

10

7

8

2

10

65

3

1

1010

7

2

1

9

0

12

34

5

67

89

10

Ran

ks

Chocolate Brands

Choice of Chocolate

MALE FEMALE

Ques3. Why do you prefer the above mentioned chocklates? ( one or more options )

Factors Influencing Choice

2941

224

363

31

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Male Female

GENDER

Taste Pack size Availability Price Friends


Ques4. Which brand/label do the following chocolates belong to?

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Crackle Kit Kat Dairy milk Perk Munch Temptation 5star Bar1 Milkybar Crunch

Chocolate Brands

Chocolate Brand Awareness

Male Female

Ques5. How often do you buy chocolates?

Chocolate Consumption (MALES)

Daily7%

Weekly47%

Monthly13%

Occasionaly33%

Daily Weekly Monthly Occasionaly

Chocolate Consumption (FEMALES)

Daily23%

Weekly32%

Monthly4%

Occasionaly41%

Daily Weekly Monthly Occasionaly

Ques6&7. Do you prefer giving chocolate gift boxes? If yes, which of the following do you prefer?

13%

4%

77%

6%

Nestle Selection

Bandhan

Celeberation

Heroes


Ques9. Do controversies involving your favourite brand affect your buying of chocolates?

CONTROVERSIES AFFECTING CHOICE OF CUSTOMER

45%

55%

YES NO

Ques10. How important are the following factors for you?

Pric

e

Tas

te

Com

pany

Pack

Siz

e

Pack

ing

Ava

ilabi

lity

Cal

orie

sM

ALE

3

12

5

6

3

7

21

34

5

3

7

0

1

2

3

4

5

6

7

Ran

ks

Factors

Rank of Preference

MALE FEMALE


Bibliography

Gilber A. Churchil, Jr. J Paul Peter “Marketing – Creating Value For Customers”;Richar D Irwin INC;1995

Philip Kotler and Kevin Lane Keller “Marketing Management” ; Pearson Educational Inc. ; 2006

S.Ramesh Kumar “ Managing Indian Brands Marketing Concepts and Stratergies” Vikas Publishing House Pvt. Ltd

Mukesh Chaturvedi “New Product Development”; Vikas Publishing House Pvt. Ltd

Naresh Malhotra “Marketing Research” ; Pearson Publication

Business line internet edition (Thursday sep 16 2004)

www.quickmba.com/strategy/matrix/bcg/

www.wikipedia.org/wiki/Swot_analysis

www.cadburyindia.com

www.nestleindia

www.hinduonnet.com/businessline/catalyst/2001/12/20/stories/ 1920f051.htm

www.prdomain.com/companies/N/Nestle/newsreleases/ 200742342246.html


http://www.prdomain.com/companies/N/Nestle/newsreleases/200742342246.html

http://www.prdomain.com/companies/N/Nestle/newsreleases/200742342246.html

http://www.hinduonnet.com/businessline/catalyst/2001/12/20/stories/1920f051.htm

http://www.hinduonnet.com/businessline/catalyst/2001/12/20/stories/1920f051.htm

http://www.nestleindia/

http://www.cadburyindia.com/

http://www.wikipedia.org/wiki/Swot_analysis

http://www.quickmba.com/strategy/matrix/bcg/

cadbury vs nestle

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