A MARKETING PROJECT REPORT ON

NESTLE VS CADBURY

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THE INDUSTRY SCENARIO

With the entry of multinationals and home companies sprucing up their act, the confect ionery market i s booming. McKinsey & Co. has est imated the confectionery industry to touch a whopping Rs. 6500 crore by the year 2008.

Till the eighties, the chocolate market was small and the product category i t se l f was fuzzy . In the e ight ies , Cadbury ’s - the v i r tua l monopol i s t - had decided to focus its efforts on making chocolates a distinct category with an ident i ty of i t s own. And the marketer had sharp ly pos i t ioned i t s product at children to do that. Hence, chocolates bore an “Only for kids” tag, and kept adults at bay.

By the end of the eighties, Cadbury’s still ruled the roost with over 80 percent market share. And though several brands - like Amul and Camp co - tried to break into the market, none of them had succeeded in shaking the leader’s grip. In fact, Cadbury’s had become a brand virtually generic to chocolates. Then chocolates were used to reward and reinforce positive behavior and hence were categorized as a luxury reserved for special occasions. This was, a stark contrast to the west where chocolates were snacked on, eaten as mini meals or just to suppress pangs of hunger.

But constant working by players like Cadbury’s (re-launch of Cadbury’s Dairy Mi lk target ing adul ts and as a casua l any-t ime buy) and Nest le towards exploding the myth that chocolates are meant for children only, has resulted in the segment booming.

RESEARCH METHODOLOGY

As mentioned earlier, the objective of the study is to formulate a Marketing S t r a t e g y f o r a n y n e w e n t r a n t i n t h e I n d i a n C h o c o l a t e I n d u s t r y . W h i l e recommending the said strategy detailed information from both primary and secondary sources was collected and analyzed. This included:

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Primary Sources Four level primary information collections were undertaken.1. To ana lyze buy ing behav ior and in order to ga in an ins ight into the buyer need-sat i s fact ion leve l , a quest ionnai re was formulated and administered among 80 people. The profile of the respondents was as follows:

1. Consumers of chocolates – 12 years + in LUDHIANA. This was since; chocolate consumption was witnessed amongst all age groups.

2. A d is t r ibutor was a l so interv iewed so as to get pert inent in format ion regarding the most important ‘P’ of FMCG marketing – Place.

3. Extensive interviews were conducted with retailers in the LUDHIANA a r e a . T h e s e i n c l u d e d p a n s h o p s , g r o c e r y s h o p s , b a k e r i e s , departmental stores, etc. They provided information on various facts of chocolate distribution such as Point-of –purchase material (dispensers etc . ) , in f rastructure problems, c r i t i ca l in format ional regard ing the policies of the present players in the market, etc.

Secondary Sources A number of secondary sources of information were used. These were:

•Information: Industry statistics, problems facing the industry, future outlook, etc. Also measures being adopted for cocoa production development.

•Internet websites Of Cadbury’s, Nestle and indiainfoline.com, askjeeves.com

•Extensive use of secondary information in the form of magazines/journals/newspapers clippings, such as Business World, Business Today, Business India, A&M, Brand Equity, Economic Times, etc.

The methodology adopted was as follows:

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Industry Scenario Sketch (utilizing secondary information)

Extensive Interviews held with Primary/Secondary Sources (Companies/Chocolate manufacturers Association).

Extensive retailer interviews in LUDHIANA Area

Formulation and administration of a questionnaire

Formulation of the Recommended Strategy on the basis of the abovementioned Primary and Secondary Information

OBJECTIVES OF THE STUDY

1. To get familiar with their marketing strategies separately.2. To view the segments being targeted by these brands in the market.3. Up to what extent do the public respond to their products?4. To prepare a marketing plan for any brand that is planning to enter the

India chocolate market.5. To be a relevant guide for any brand launch in India.

ADVERTISING & SALES PROMOTION

As we have discussed the importance of Advertising and Sales promotion in introduct ion, so we know how much advert i s ing a im sa les promot ion are important.

The slogans of advertising are the tools of sales promotion are so important which couples the customer to purchase the product. Now we are going to discuss all these things one by one about Cadbury.

Following are a few advertising slogans used by Cadbury for introducing the product to the customers:-

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•THE REAL TASTE OF LIFE (DAIRY MILK)

•THODI SI PET POOJA KABHI BHI KAHI BHI (PERK)

•WHEN EVER ON HUNGER STRIKE (PERK) •TAN KI SHAKTI, MAN KI SHAKTI (BOURNVITA)

•KUCH ZADA HI SOLID (PICNIC)

•YEH CHOCOLATE KHAE AAP INHE KHAE (ECLAIRS)

All these slogans used by Cadbury are beautifully prepared because they can compel the consumer to buy the product to some extent.Now we wi l l d i scuss them in deta i l s wi th the he lp of which we can eas i ly understand how these slogans can leave these impression on the customer.

•The Real Taste of Life

This slogan was prepared for the first chocolate introduce by the Cadbury first time in India. The chocolate was ‘Dairy Milk’. This slogan says that there are many types of products present in the market, they have different taste but Dairy Milk is the best and the true taste of the life. This slogan also stands for the victory. On electronic media, the advertisement shows that a cricketer wins the match and after that he and his girl friend eats this product. Therefore, this stands for victory of any body eats this product will definitely win in his life.

•Thodi Si Pet Pooja Kabhi Bhi Kahi Bhi When Cadbury introduced its next chocolate named ‘Perk’ this slogan were used. This explains that if anybody is hungry and he do not have any thing to eat accept this Perk then he can have this. This shows that Perk is so good chocolate which can be used as a substitute of food and is a complete food.

•Whenever on Hunger Strike

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Later on Cadbury came out with new slogan on television; the advertisement shows that few students are on hunger strike. But they had the chocolate. This shows that nobody can control himself/herself if this product of Cadbury is lying in front of that person. This means that Cadbury product is so good that nobody can leave it.

•Tan Ki Shakti, Man Ki Shakti This slogan was used for ‘Bourn vita’. Bourn vita is full of proteins, vitamins, minerals and all those necessary things which are useful for our body and mind. Therefore, this slogan stood best for Bourn vita. TAN KISHAKTI, means the energy to the body. If anybody here this product, he /she will remain active for whole day. That person will look healthy, active and will look smart.

•YEH CHOCOLATE KHAIN, AAP INHE KHAIN When Éclairs toffee came in the market, this slogan was used. Éclairs is a toffee filled with chocolate. It means that instead of having chocolate you can h a v e é c l a i r s t o f f e e t o o . I t a p e r s o n d o e s n o t w a n t t o h a v e 1 2 p i e c e s o f chocolate, can have one or two éclairs toffee.

•KUCH ZADA HI SOLID Nowadays new chocolate has been introduced by the Cadbury and th is slogans going on creating demand for this new product. In this ad we can see that one chocolate falls on a car and damages the car. This chocolate is sostrong due to lots of nuts, caramel etc. etc. present in this chocolate. This also shows that this is for adventurous people who love thrills, adventure etc.

Direct Competition

At present there are three major players Nestle, Cadbury’s and Amul in the Indian Chocolate market. Campco initially tried to break into market but failed. Brief profile of the same has been entailed below: Cadbury’s India Ltd.

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Cadbury’s India Ltd, has been in India since 1948. Its brands: Dairy Milk, 5Star, Gems and Chocolate Eclairs are the households names in India today. In a l l the segments i .e . molded chocolates , count chocolates and panned chocolates, it is undoubtedly the market leader.

Cadbury’s has its manufacturing units at Thane (Mumbai), Malanpur, Indori(near Pune), Mithuri and Kolapur. It has a strong distribution network with about 500 distributors in North India and more than 3 lac retail outlets beingserviced all over India.

In 1997, Cadbury planned to pump in Rs.80-crore to up production capacity at a couple of Cadbury’s factories. This cash is exactly double of what’s been invested in 1996.

The Company launched Perk, a wafer enrobed chocolate in 1995. This was reactionary to the launch of Kit Kat and has been able to counter competition.

Nestle India Ltd. Nestle India Ltd. has been in India for more than 35 years now. The world’s largest marketer of chocolates (became world number one when it acquired R o w n t r e e M a c i n t o s h o f t h e U K ) - N e s t l e , m a d e i t s f o r a y i n t h e I n d i a n chocolate Industry in November 1990. It launched three products - the milk chocolate , the b i t ter chocolate and Crack le (a crunchy chocolate) - in the slabs category and Bar One in count lines.

Cadbury ’s was qu ick to react , and launched a whole host of products in succession: All Silk milk chocolate, Creamy Bar, and a new version of 5 Star.

Nestle, in the beginning did not have its own manufacturing facility. It had an alliance with Camp co to manufacture chocolates. Later, in 1995 a state-of-art manufacturing plant was set up at Ponda, Goa at a cost of Rs. 50 crores. This unit

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took care of the entire Kit Kat production. However, the production tie-up with Camp co still continued.

INDIRECT COMPETITION

Since the target audience includes, consumers of not only chocolates but also of biscuits and confectionery, it faces indirect competition from these product categories. Also, other confectionery products like toffees, candies etc have proved to be ind i rect compet i t ion (however would be l imi ted s ince we are targeting small kids segment).

MARKET RESEARCH

In order to recommend and execute an ef fect ive s t rategy for market ing of goods and services, a systematic market research needs to be undertaken. The buyer preference research would play a vital role in the assessment of c o n s u m e r s t a s t e / p u r c h a s e h a b i t s a n d a b e t t e r u n d e r s t a n d i n g o f t h e consumers mind. In fact the strategy formulation/recommendations in this report of the marketing mix relies heavily on these research findings.

A q u e s t i o n n a i r e w a s a d m i n i s t e r e d ( a s m e n t i o n e d i n t h e M e t h o d o l o g y ) amongst people of different age groups and professions. Results from this research provided interesting cues, which were extremely beneficial in the formulation of the recommended marketing mix.

The main object of this research/questionnaire was as follows:

•To find out the current the current taste/chocolate eating habits.•To find out the extent of brand loyalty.•To get feed back of consumers perception about flavors and conventional outlets.•To find out extent of price sensitivity•Retail outlet preference.•Brand preference etc.

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OBSERVATIONS Based on the basis of the questionnaire research, some of the facts that came to the fore have been listed below. These research findings played a key role in the development of the recommended marketing strategy.

•Kit Kat and CDM had a high unaided awareness level and also, both these brands en joyed a h igh consumer preference. Amul i s perce ived for g iv ing value for money.

•Chocolates are no more a children’s item.

•Most of people buy chocolate by impulse dec is ion. Chocolates are even considered as a good gift option.

•C o n s u m e r s p r e f e r e n c e v i s - à - v i s p l a c e o f p u r c h a s e , s i z e / f o r m / t a s t e o f chocolates, etc

•Most of the respondents had a high ad. Recall level for Cadbury’s Dairy Milk and Kit Kat.

•When it comes to gifting, usually the receivers are1. A f r iend of oppos i te sex2 . C h i l d r e n

•The idea of making chocolates available at sweet shops, gift shops, ice cream parlors, fast food joints/restaurants was asked to be rated. The concept of exclusive chocolate parlors was rated favorably (around 63%).

•The product category does not enjoy high brand loyalty levels.

•People are not price sensitive and consider the prices of chocolates available in India, “reasonably O.K.”. They are ready to pay a premium for good quality. Suitable price for a 40gm chocolate was felt to be between Rs10/- to Rs15/-.

Data analysis & Interpretation9

1. What brand of chocolate are you aware of?

OPTIONS NO OF RESPONDENTSCadbury 45Nestle 25Amul 20Other 10

Cadbury Nestle Amul Other0

5

10

15

20

25

30

35

40

45

50

INTERPRETATION:

This chart shows that 45% of respondents are aware of Cadbury brand,20% of

respondents are aware of amul,25% of nestle and 10% awareness of other brand.

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1. If you buy chocolate?

OPTIONS NO OF RESPONDENTSA gift 20Spouse 10Children 30Friends 40

A gift Spouse Children Friend0

5

10

15

20

25

30

35

40

45

INTERPRETATION:

This chart shows that 20% respondent buy chocolate for a gift purpose,

10% for their spouse, 30% respondents buy chocolate for children, and 40% for

their friends.

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SUGGESTIVE MARKETING MIX FOR INTRODUCING A NEW PRODUCT:

The objective of the marketing mix developed is:

“To develop a product that is available, affordable, based on local raw m a t e r i a l , a n d a d a p t e d t o t h e t a s t e a n d t h e n u t r i t i o n a l h a b i t s o f t h e population”. The e lements of the mix - Product , Pr ice , P lace & Promot ion have been entailed below:

Product

As ment ioned ear l ier , the two most important segments of the market are Moulded and Count line segment (segments have a high share of the market).Also, it can be seen in the findings, the Indian consumer does not recognize the d i f ference between Moulded and Count l ine segment . Further , a key decision that needs to be taken is to decide whether to have a core brand focus or have a plethora of brands. Here, it would be advisable to launch a complete basket of products covering both the count line and the Moulded chocolate segment (at least i f not Panned) . A range of brands can he lp cushion out risks over the entire offering. Also, it has been that to sustain in the long term, a complete portfolio of chocolates for every taste is essential. However, a concentration strategy may be adopted in the first phase, focusing on one core flagship brand.

Promotion:

This involves communicating persuasively to the consumers, in o r d e r t o a r o u s e t h e i r i n t e r e s t i n t h e p r o d u c t . A d e t a i l e d p r o m o t i o n p l a n involving advertisement, sales promotion and public relations is proposed.

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Positioning:The pos i t ion ing of the var ious brands in the market has been listed below:

Cadbury’s Brands Positioning Nestle’s brand Positioning

Cadbury’sDairy milk

“The Real Taste of Life”

Classic Milk chocolate

Positioned as an affordable, enriched milk chocolate

Fruit n Nut Positioned atCreamy Bar Adults as anRoast Almond Impulse anytimeNut Milk purchaseCrackle Self expressionBoonville Values attached

5 Star / Perk Perk-Positionesed as a snacking consumption.

Kit Kat Positiond as a snacking consumption

Break/Crisp/Double Decker

“Thodi Si Pet Pooja”5Star-Energy Bar

“Have a Break, Have a Kit Kat”

Reach for the Stars Bar One Positioned as a trendy,cool anytime snack

Gems/Eclairs

Positioned asButterscotch Variety, giftingCaramels/Overtures

and taste preference

Nutties/All SilkTiffins

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Relish

The flagship brand may be positioned as a premium (see pricing) anyplace, anyt ime snack . S ince , snack ing propos i t ion i s the growth eng ine for the industry , pos i t ion ing should hence, be focused on that . The two dr ivers - impulse purchase and need to snack .

IMPLEMENTATION

A w e l l d e s i g n e d m a r k e t i n g p l a n c o u n t s f o r n o t h i n g , i f n o t i m p l e m e n t e d proper ly . Success in the market p lace depends upon the way the p lan i s i m p l e m e n t e d . T h e l a u n c h i s r e c o m m e n d e d t o b e b e f o r e w i n t e r s - s a y September or October, since –

•That period would facilitate high Diwali sales, and

•D u r i n g w i n t e r s t h e r e w o u l d n o t b e m u c h n e e d f o r r e f r i g e r a t i o n . H e n c e company would get valuable time its infra in place.

The success of the brand would largely depend on the following:

•Sales Distribution Network

•Quality standards

•Research and Development-continuous innovative products

•Technology support

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CONCLUSION

The growth and expans ion of the Ind ian chocolate market in the past has -been hampered, due to stiff excise duties on chocolates (at 18 percent – while other agro based products are being charged as low as 8% and a few, even0% excise) and non-availability of quality cocoa in the country.

Also, import of chocolates has been put in the OGL category, with duties being reduced (in a phased manner). The industry has made recommendations to the Indian government to go back to the Special item list category, in order to safeguard the domestic industry.

However , cont inuous market ing focus by the p layers in the market has resulted in the industry looking up like never before. These companies/brands have become much more market savvy . The Ind ian chocolate market i s transforming and new players (Sara Lee is planning to set up base in India)are entering the market. Hence, considering the low per capita consumption of chocolates, the future of the industry seems to upbeat.

ANNEXURE

1. Please rank the following attributes in a chocolate on a scale of 1-7

According to their importance to you? (1-most important, 7-least

Important)

a. Taste

b. Quality

c. Packaging

d. Price

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e. Flavour

f. Add-ons (wafer, nuts, etc)

g. Brand image

2. If particular brand is not available with the retailer, you wil-

a. Drop the idea of buying a chocolate

b. Go to another retail outlet

c. Try another (competitor’s) brand

3. You purchase (of a chocolate) is

a. Occasion-led (say on a birthday, etc.)

b. As a gift

c. Casual purchase

4. What brand of chocolate are u aware of

a. Cadbury

b. Amul

c. Nestle

d. Other

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