International Marketing

INTRODUCTION

Cadbury Dairy Milk is a brand of milk chocolate currently manufactured byCadbury,

except in the United States where it is made by Mondelēz International. It was

introduced in the United Kingdom in 1905 and now consists of a number of products.

Every product in the Dairy Milk line is made with exclusively milk chocolate.

In June 1905 in England, Cadbury made its first Dairy Milk bar, with a higher

proportion of milk than previous chocolate bars, and it became the company's best

selling product by 1914. George Cadbury Junior, responsible for the development of

the bar, has said "All sorts of names were suggested: Highland Milk, Jersey and Dairy

Maid. But when a customer’s daughter suggested Dairy Milk, the name stuck.". Fruit

and Nut was introduced as part of the Dairy Milk line in 1928, soon followed by Whole

Nut in 1933. By this point, Cadbury's was the brand leader in the United Kingdom. In

1928, Cadbury's introduced the "glass and a half" slogan to accompany the Dairy Milk

bar, to advertise the bar's higher milk content.

In September 2012, Cadbury made the decision to change the shape of the bar chunks

to a more circular shape in order to reduce the weight. The bar had not seen such a

significant change in shape since 1905.

Since 2008 Cadbury had a trademark in the United Kingdom for the distinctive purple

colour (Pantone 2865C) of its chocolate bar wrappers, originally introduced in 1914 as

a tribute to Queen Victoria. In October 2013, however, an appeal by Nestlé succeeded

in overturning that court ruling.

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About Cadbury Dairy Milk Chocolate (CDM)

Cadbury Dairy Milk encapsulates an enormous breath of emotions, from shared values

such as family togetherness, to the personal values of individual enjoyment. It stands

for goodness. A moment of pure magic!

Cadbury Dairy Milk (CDM) entered the Indian market in 1948, and since then for

consumers across India, the word Cadbury has become synonymous with chocolate.

CDM remains at the top of the Indian chocolate market not only because of its most

delicious, best tasting chocolate but also because of its memorable communication.

Cadbury’s own milk chocolate bar, made by adding milk powder paste to the dark

chocolate recipe of cocoa mass, cocoa butter and sugar, was launched in 1897. But it

did not attract a lot of interest. Swiss manufacturers were leading the field in milk

chocolate, with much better products than their rivals. So in 1904 George Cadbury was

tasked with developing a milk chocolate bar that was to have more milk than anything

else on the market.

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All sorts of names were suggested: Highland Milk, Jersey and Dairy Maid. But when a

customer’s daughter suggested Dairy Milk, the name stuck.’ George Cadbury Dairy

Milk was launched in June 1905. It was sold in unwrapped blocks that could be broken

down into penny bars. Gradually it became more and more successful – Cadbury’s

biggest seller by the beginning of the First World War. And by the early 1920s it had

taken over the UK market. And of course, it’s still with us today. Cadbury Dairy Milk

has become a megabrand, available in many different varieties and all over the world.

Cadbury Chocolate constantly creates or acquires new products to add to their range of

offerings. Major chocolate brands produced by Cadbury include the bars Dairy Milk,

Crunchie, Caramel, Wispa, Boost, Picnic, Flake, Curly Wurly, Chomp, and Fudge;

chocolate Buttons; the boxed chocolate brand Milk Tray; and the twist-wrapped

chocolates Heroes

Earnings sensitivity factors:-

- Cocoa bean, Sugar & Solid milk (milk powder) prices: Domestic as well as

international prices of key raw material – cocoa, Sugar & Milk has significant impact

on margins. Good monsoon ensures adequate availability of raw materials, which are

mainly agricultural in nature.

- Rupee depreciation improves export realizations; however it also makes import of raw

material (esp. cocoa) expensive.

- Excise duties: Changes in excise levied on malt and chocolate influences end product

prices and thereby volume growth as well as margins.

- Changes in custom duties and foreign exchange fluctuations, as 20% of raw material

are imported.

- Competition from MNCs like Nestle as well as imported brands. Increasing

competition puts pressure on advertisement budget and margins. However on the

positive side, it helps in expanding the market.

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Some of the key growth drivers being:-- Tradition of gifting sweets

- Shifting in consumer preference (from traditional ‘mithai’ to chocolates)

- Increasing awareness - demand for sugar-free and diet chocolates among consumers.

- Expansion potential due to lesser penetration

- Rising income levels and rapid development in rural markets.

However, there is a long way to go for the Indian chocolate industry. Increasing

awareness, rising disposable income, shifting in Indian consumer preference and rapid

development in rural markets shows there is a huge untapped market that the chocolate

manufactures can capture.

Cadbury India distribution network India

Cadbury’s brands are available in over a million outlets across the country. Cadbury

is also focusing intensively on achieving distribution equity. Though it takes much

more time and effort to build, but once built, distribution equity is hard to erode. With

technology and competitive pressure slash in it is becoming increasing difficult for

marketers to retain a unique product differentiation for long period. In a product and

price parity situation, the brand that sells more is the one that reaches the highest

number of customers.

To tap this huge potential Cadbury's distribution channels include the manufacturing

warehouses where the chocolate production takes place. This is followed by wholesaler

& then followed by retailer.

Due to 65 years of presence in India - has deep penetration- 2,500 distributors; 550,000

retailers, 60 mid urban (22%) customers. The modern trade is handled separately

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S.W.O.T ANALYSIS

Strength

Cadbury being a reputed company has its brand name as one of its biggest strengths. It

has been present for over 65 years even before competition could peep-in. Due to its

presence for so many years people tend to associate chocolate with Cadbury. It is

almost as if Cadbury is synonymous with generic category chocolate. Cadbury is a very

profitable organization, generating revenue in billions. Cadbury India Ltd is supported

by its parent company, Mondelez International. A large range of products like -

chocolates, beverages, malted foods etc. are manufactured by Cadbury. These products

are reasonably priced to suit different economic consumer categories. Celebrity

endorsements have increased sales and also added glitter to the brand name. Cadbury

India has the biggest market share at 67 per cent while Nestle is the second largest at 21

per cent. Amul & other holds the rest. In spite of innovation in the chocolate segment,

their basic chocolate, Dairy Milk, still seems to remain the all-time favourite of most

people.Low cost of production due to economic of scale. That means higher profits,

better market penetration with the strong distribution network.

Weaknesses

The scenario of worms being found in Cadbury chocolates lead to a temporary decline

in sales. Also Cadbury offers a limited variety of products as opposed to other leading

competitive brands, e.g. Amul and Nestle that offer an array of products like biscuits,

dairy products, etc. One of the major raw material i.e. Cocoa has to be imported leading

to bunched imports and higher inventory. Also majority of markets in India are not Air

conditioned and hence cannot store chocolates at least during hot summers, which

limits the market access. There is lack of penetration in the rural market where people

tend to dismiss it as a high end product.

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It is mainly found in urban and semi-urban areas.The operating profit of the company

declined,declining profitability will adversely affect the operations of the

company.Poor technology in India compared to current international technologies.

Opportunities

As Cadbury has established itself very well in the Indian market, it can now narrow

down to some popular products and can bring down its own individual Cadbury’s store.

It has capabilities to increase the range of products manufactured. The company can

easily venture into new segments individually or jointly. Another very important

opportunity that can be observed is the introduction of foreign products in India. The

company can focus on targeting urban areas and developing sectors by working on

availability and affordability. The company aims at bringing efficiency in logistics and

distribution. This can very well be achieved by using information technology. Cadbury

can also focus on gaining profits through chewing gum market in India.

Threats

As Cadbury has already faced a worm scandal, its reputation has been put at stake by

the competitors trying to exploit this situation. Cadbury faces a serious threat in the

confectionery segment from companies like Amul, Nestle, etc. As Cadbury produces

chocolates and a few related products, effective management of all the areas proves to

be difficult at times. Trends of purchase may change with the ever-changing taste

preference of consumers. Changing restrictions and rules from Government quality

control boards may result in pressure on the production of the company & cost increase.

Also, Cadbury is exposed to rise in the cost of cocoa beans, dairy products and other

vital ingredients.

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5C Analysis

Company: -Cadbury dairy milk is a brand of chocolate made by Cadbury Plc. unit of

Kraft

Foods and sold in several countries around the world. It first went on sale in 1905 in the

United Kingdom. The current parent is Mondelez International.

Customers: - The prospective customer of dairy milk range from 5 to 60 years of age.

Since dairy milk has a range of product suited for every member of the family. The aim

is to strengthen the brand relationship in the current consumer’s life. The ranges of

customers vary for diary milk. Whereas some buy it as an alternative for sweet others

buy it as a gift item. The consumers mostly buy the product on impulse and are

influenced by taste/flavour and then by company/brand.

Competitors: - The main competitors of Dairy milk in India are Nestle, Ferrero

Rocher, Amul chocolates & unbranded chocolate. The high end chocolates (Bournville

and silk) also face competition also face competition from the imported Swiss

chocolates. But one of the biggest advantages the dairy milk has over its competitors is

the brand loyalty that it has got. The excellent advertising, reach and accessibility have

made it the top of mind brand in the chocolate category.

Climate: - The climate for the chocolate industry and dairy milk in particular seems

very attractive in a country like India. With the size of the market being so big along

with encouraging category growth the prospects look very good. Since the product is

not seasonal and the margin is also good makes the climate for the industry even better.

With new innovations coming up in terms of product and packaging the market is still

on a growth curve.

Collaborators: - As already said Cadbury dairy milk manages a huge range of retailers

and whole sellers who make up the collaborators. Over the years the company has

partnered with various other companies like Adam Philippines in 2001 so that diary

milk has a much wider distribution network in the Philippines.

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Impulsive Chocolate Buying Behaviour and Pricing

Impulsive behaviour occurs when the consumer is looking for immediate hedonic

benefits. It is commonly associated with urges to smoke, drink, overspend or overeat.

'Impulsive behaviour' is defined by 'Consumers experiencing an irresistible urge to

consume', which they might even regret later.

Whether an individual focuses on cost or the benefit of impulsiveness depends on the

chronic values of the consumer, which forms the core of its personality. Hedonic

personalities will focus selectively on the benefits than the cost of impulsiveness and

are considerable uninfluenced by the costs. Hence, such individuals become insensitive

to price aspect when their hedonic urge is driving the purchase decision.

Let us explain the growth of the market at the higher end of the spectrum in recent

years in chocolate category with this argument. The product offerings on the higher end

are of rich chocolate (e.g. Dairy Milk Silk) based products (associated with taste and

pleasure) instead of wafer-based offerings (which serve as a snack). This shows that

brands command a better premium when an impulsive urge rather than functional

benefits are the prime motivators for purchase.

Even though chocolate buying behaviour is impulsive, research suggests that the

relative accessibility of inputs such as costs versus the benefits of impulsiveness

influences impulsive behaviour. Impulsiveness is unaffected by cost highlighting

arguments which explains the ineffectiveness of advertisements discouraging cigarettes,

alcohol, etc.

When the benefit of impulsiveness was the pleasure of yielding to temptation, the

advertisements, that 'triggered the desire' or 'highlighted the benefits of giving in to the

temptation' appealed most to the hedonic individuals. However, the prudent

personalities give more value to the cost than the benefits. Thus, the benefits are

relatively noninfluential in judgment. Thus, advertisements that justify the cost of

impulsiveness can help provoke impulsiveness in such consumers.

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CONSUMER TRENDS

- Mithai- the traditional Indian sweats is getting expensive and substituted by

chocolates among upwardly mobile Indians. Instead of buying sweets on Raksha

Bandhan, Diwali, people prefer to buy chocolates.

- The range and variety of chocolates available in malls seems to be growing day by

day, which leads to lot of impulse sales for chocolate companies - Chocolates which

use to be unaffordable, is now considered mid-priced.

- Designer chocolates have become status symbols.

This clearly means that the three main factors like demand for products, conducive

regulations and customised talent are abundant in India.

Traditionally, chocolates were always targeted at children. But stagnancy in growth

rates made the companies re-think their strategies. Cadbury was the first chocolate

company that took the market by storm by repositioning brands at adults, as opposed to

children.

Chocolates are consumed as indulgence and not as snack food, as prevalent in western

countries. Almost 75% chocolates are impulse purchases. Chocolates are bought

predominantly by adults and gifted to children. The wholesaler usually deals in all

kinds of FMCG goods, Foodstuff in addition to the chocolates. The items like

chocolates are placed near the counter.Chocolates are primarily sold through Kirana

Stores, Gift stores, Medical Stores, canteens, Pan-Bidi stores, Bakeries, Sweet Shops,

Super market etc.

The majority of consumers are buying chocolates from Super market & discounted

stores.

The details summary from where the consumers are buying is shown in the below

graph.

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INTERNATIONAL MARKET

Market Growth:-

• The international chocolate market is estimated to be around $106 billion.

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• 100 tons – of chocolate are consumed every second.

Global Chocolate retail market Value (Source: Euromonitor)

Figure:2.1 Global Chocolate Region wise Market (Source: Euromonitor)

Although the global market is still dominated by Western Europe and North America,

emerging markets clearly represent the future. The BRIC countries (Brazil, Russia,

India and China) accounted for 55% of global confectionery retail growth in 2011.

According to trade analyst figures, current hotspots include India (annual growth rate

15%), China (9%), Russia (6%) and Mexico (3.8%).

Men's love of chocolate is on par with women's preference for the treat: A UK study by

research group Mintel revealed 91% of all women admit to eating chocolate – with the

men not far behind at more than 87%.

There are a number of trends within the chocolate industry that are driving growth; and

product innovation in 2010-11 brought a 16% increase in new product releases over

2009. Increasing disposable incomes as well as changing public sentiments regarding

health and our global community is the driving forces behind this growth in innovation.

Annual Per Capita Chocolate Consumption 2012.

Annual Per Capita Chocolate Consumption-2012

In Asia, chocolate hasn't traditionally been the sweet of choice, market analysis firm

Euro monitor International reports. Right now, Indians eat only 165 grams (less than 6

ounces) of chocolate a year. The Chinese eat only 99 grams (3.5 ounces).

The per-capita consumption in India of chocolates has increased from 40gm in 2005 to

150-165 gm now and there is a lot of scope to grow even further.

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UNITED KINGDOM

The confectionery business in the UK is called Cadbury (formerly Cadbury Trebor

Bassett) and, as of August 2004, had eight factories and 3,000 staff in the UK. Biscuits

bearing the Cadbury brand, such as Cadbury Fingers, are produced under licence

by Burton's Foods. Cadbury also owns Trebor Bassett, Fry's. Maynards

Ice cream based on Cadbury products, like 99 Flake, is made under licence

by Frederick's Dairies. Cadbury cakes and chocolate spread are manufactured under

licence by Premier Foods, but the cakes were originally part of Cadbury Foods Ltd with

factories at Blackpole in Worcester and Moreton on the Wirral, with distribution depots

throughout the UK.

Other Kraft subsidiaries in the UK include: Cadbury Two LLP, Cadbury UK Holdings

Limited, Cadbury US Holdings Limited, Cadbury Four LLP, Cadbury Holdings

Limited, and Cadbury One LLP.

IRELAND

Cadbury Ireland Limited is based in Coolock in Dublin. Cadbury opened their first Irish

factory in Ossary Road, Dublin in 1933, when the company manufactured and sold just

three products. Today, it exports over 200 of its products to 30 countries worldwide,

making a contribution of €110 million of Irish trade. Cadbury Ireland uses local

ingredients. More than €250 million worth of Cadbury chocolate produced in Ireland is

exported every year, bringing Ireland valuable foreign earnings.

Cadbury Ireland operates three factories in Ireland with two in Dublin,

in Coolock (where the headquarters of Cadbury Ireland are located) and Tallaght. The

third is in Rathmore, County Kerry. Products made by Cadbury in Ireland include

Cadbury Dairy Milk, Wispa, Flake, and Crunchie.

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UNITED STATES

Cadbury Adams produces candy, gum, breath mints and cough drops. It is

headquartered in Parsippany, New Jersey. The company was formed after the then

Cadbury Schweppes purchased the Adams brand from Pfizer in December 2002 for

US$4.2 billion.

American Chicle was purchased by Warner-Lambert in 1962; Warner-Lambert

renamed the unit Adams in 1997 and merged with Pfizer in 2000.

Cadbury merged with Peter Paul in 1978. Ten years later, The Hershey

Company acquired the chocolate business from Cadbury.[61] Accordingly, although the

Cadbury group's chocolate products have been sold in the US since 1988, the products

are manufactured by Hershey. Before the May 2008 demerger, the North American

business also contained beverage unit Cadbury Schweppes Americas Beverages. In

1982, Cadbury Schweppes purchased the Duffy-MottCompany.

AUSTRALIA AND NEW ZEALAND

Cadbury operates three Australian factories as well as one in New Zealand; two

in Melbourne, Victoria (Ringwood and Scoresby), one

in Hobart, Tasmania (Claremont), and one in Dunedin, New Zealand. The Claremont

factory was once a popular tourist attraction and operated daily tours; however, the

factory ceased running full tours mid-2008, citing health and safety reasons. Cadbury

has been upgrading its manufacturing facility at Claremont, Tasmania, Australia, since

2001

On 27 February 2009 the confectionery and beverages businesses of Cadbury

Schweppes in, Australia were formally separated and the beverages business began

operating as Schweppes Australia Pty Ltd. In April 2009, Schweppes Australia was

acquired by Asahi Breweries.

In late June 2012, Cadbury introduced Marvellous Creations a new chocolate range

with three flavours – Peanut Toffee Cookie, Jelly Crunchie Bits or Jelly Popping Candy

Beanies covered in Dairy Milk Chocolate

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Canada

Cadbury Canada produces and/or imports several products that are sold under the Cadbury

and Maynards labels, including the following:

Cadbury

Dairy Milk  (various flavours)

Crunchiee

Crispy Crunch

Starbar  as Wunderbar

Cadbury Coconut

Mr. Big

Caramilk

Flake

Creme Egg

Mini Eggs

Pep

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CHOCOLATE MARKET IN INDIA

India is the world's fastest growing market for chocolates. Registering 15% annual

growth between 2008 and 2012, the Indian chocolate industry is projected to grow at an

even higher rate in the coming years

Currently, the Indian chocolate market is worth around Rs 5,562 crore.

The Population of India in 2013 is 1.27 billion. The chocolate consumption number

comes around 2,09,550 ton.

400 Kgs of chocolate consumption in India per minutes.

Low priced unit packs, increased distribution reach and new product launches can be

said to have fuelled this growth.

The industry has a positive outlook due to phenomenal growth in the confectionery

industry, rising per capita income and gifting culture in the country. The per capita

consumption of chocolates is increasing in the country which will continue to flourish

the market revenues. It is expected that India chocolate industry will be growing at the

CAGR 23% by volume between the years 2013-2018 and reach at 3,41,609 Tons. The

dark chocolates are expected to account for the larger market share when compared to

milk and white chocolates in the coming years. The introduction of medicinal and

organic ingredients in the manufacturing of chocolates had lead to a new trend and

development in the country, which will be adapted by major manufacturers to remain

active in the market.

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Indian Chocolate Market Shares 2013

In India chocolate consumption was very low in the early 90’s but as the decade

advanced the consumption drastically increased. The late 90’s witnessed a good

chocolate market condition. The chocolate market in India is dominated by two

multinational companies – Cadbury and Nestle. The national companies - Amul and

Campco are other candidates in this race. Cadbury holds more than 67% of the total

share of the market. Nestle has emerged by holding almost 21% of the total share.

Apart from chocolate segment, there is also a big confectionery segment which is

flooded by companies like Parry's, Ravalgaon, Candico and Nutrine. All these are

leading national players. The multinational companies like the Cadbury, Nestle and

Perfetti are the new entrants in the sugar confectionery market. (Management paradise)

There are several others which have a minor share in these two segments. According to

statistics, the chocolate consumption in India is extremely low. If per capita

consumption is considered, it comes to only 160gms in the urban areas. This amount is

very low compared to the developed countries where the per capita consumption is

more than 8-10 Kg. Observing this fact it would not be appropriate to consider the rural

areas of India as it will be extremely low. This low consumption is owing to the notion

behind consuming chocolates. Indians eat chocolates as indulgence and not as snack

food. The major target population is the children. India has witnessed a slow growth

rate of about 10% pa from the 70’s to the 80’s. But as the century advanced the market

stagnated. This was the time when Cadbury launched its product- Dairy Milk as an

anytime product rather than an occasional luxury. All the advertisements of Dairy Milk

paid a full attention to adults and not children. And this proved to be the major 16

breakthrough for Cadbury as it tried to break the conventional ideas of the Indians

about chocolate. One of the oldest products of Cadbury which is still going strong is the

Cadbury’s Five Star which was launched in the year 1968 in India. Cadbury’s Five Star

is the most resistant chocolate to temperature and hence it is widely distributed all

across the country.

In early 90’s, the Cocoa prices became high due to which the manufacturers were

forced to raise their product prices. But as the new variety of chocolate was launched –

the wafer and the chocolate variety with the brand name Perk, the volume grew

significantly. In the late 90’s new players like Nestle also introduced these wafer

chocolates with the name Kit Kat resulting into the growth of the market.

Dark Chocolate is growing at a rate of 13% globally. But India is still at nascent stage.

There is less than 25% awareness amongst the young age segment.

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CADBURY INDIA

Cadbury India — a subsidiary of Mondelez International, the $32 billion global

snacking major formed in October last year after Kraft Foods decided to split its

business.

Cadbury controls over 67% share in the Rs 5,562 crore chocolates segment in India,

followed by Nestle with 21% share and Ferrero with 6% share, industry insiders said

quoting data from market research agency Nielsen. Last year, sales of Ferrero India and

Nestle's chocolate segment grew 30% and 6%, respectively. The chocolate industry in

India works at different levels that include chocolate giants like Cadbury's Dairy Milk,

Nestle etc., small chocolate manufacturers, chocolate retailers, chocolate importers and

people who make chocolates at home.

Cadbury India operates in five categories – Chocolate confectionery, Beverages,

Biscuits, Gum and Candy. In the Chocolate Confectionery business, Cadbury has

maintained its undisputed leadership over the years. Some of the key brands are

Cadbury Dairy Milk, Bournvita, 5 Star, Perk, Bournville, Celebrations, Gems, Halls,

Eclairs, Bubbaloo, Tang and Oreo.

In India, Cadbury began its operations in 1948 by importing chocolates. After over 60

years of existence, it today has six company-owned manufacturing facilities at Thane,

Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh)

Hyderabad and 4 sales offices (New Delhi, Mumbai, Kolkata and Chennai). The

corporate office is in Mumbai.

Cadbury India enjoys a value market share of over 67 percent in the chocolate category

and our brand Cadbury Dairy Milk (CDM) is considered the "gold standard" for

chocolates in India. The pure taste of CDM defines the chocolate taste for the Indian

consumer.

In the Milk Food drinks segment main product is Bournvita - the leading Malted Food

Drink (MFD) in the country. Similarly in the medicated candy category Halls is the

undisputed leader. Cadbury recently entered the biscuits category with the launch of the

Worlds No 1 biscuit brand Oreo. 18

Toblerone, the legendary triangular Swiss chocolate, is over a century-old brand and

prides itself on being the only triangular chocolate.The launch of Toblerone in India is

in line with the business objective of growing and leading the premium gifting

chocolate market with ‘Gift like no one else’ as the brand theme.

The Cadbury Logo

Brand names act as a simple perceptual cue that identifies a product as one people are

familiar with or one they associate with particular attributes or features (Achenreiner

and John 2003). The famous Cadbury white/purple script logo is unique and original,

yet simple, familiar and somehow approachable (Figure 4.0). There is some element of

a guarantee about the product created by the signature logo. In fact, in Australia,

Cadbury is regularly voted as the most trusted brand in the country (Bradley, 2008).

The appetising visual of two glasses pouring milk into the signature is also well known

and provides a pictorial heuristic for the perceived benefit of “a glass and a half of full

cream dairy milk”.

Cadbury is also instantly recognisable because of its iconic purple packaging. Colour

has emotional significance and can prompt swifter recognition to packaging than either

written words or imagery (Tutssel, 2001). Cadbury uses colour for quick brand

recognition across its many forms of marketing communications, for example, in

outdoor advertising and television advertising. One recent survey has found that 88 per

cent of UK respondents recognised Cadbury’s purple, making it the third most

recognised brand of those tested

(Fitzgerald, 2009). Cadbury’s particular shade of purple has also long had associations

with royalty and luxury (Bradley, 2008).

Cadbury’s signature colour is considered so valuable to the company for brand recall

and brand recognition that it has spent millions of dollars in legal fees attempting to

prevent other chocolate companies such as Darrel Lea from using purple in their

marketing communications.

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The Cadbury logo, its brand name and signature colour is always clearly visible in all

marketing communications providing ease of brand recognition.

Cadbury India’s Market Share in different Segments 2012

For more than six decades now, Cadbury has enjoyed leadership position in the Indian

chocolate market to the extent that 'Cadbury’ has become a generic name for chocolate

products. Cadbury has leading brands in all the segments viz bars (Dairy Milk, Crackle,

Temptations), count lines (5 star, Milk Treat).

Cadbury’s Market Segment:-

Market place for any product is comprised of many different segments of consumers,

each with different needs and wants. Market segmentation can be defined in a number

of ways such as:

Demographic variables: - (e.g. Consumers age groups, gender, material states income

nb etc…).Current Population of India - India, with 1,270,272,105 (1.27 billion) people

is the second most populous country in the world.With the population growth rate at

1.58%, India is predicted to have more than 1.53 billion people by the end of

2030.More than 50% of India's current population is below the age of 25 and over 65%

below the age of 35.

Geography: - About 72.2% of the population lives in some 638,000 villages and the

rest 27.8% in about 5,480 towns and urban agglomerations. So India is the biggest

market for Chocolate in terms of population.

The lifestyle of consumers (i.e. their interests and activities) the benefits which

consumers look for in a product or on the occasions when the product might be

consumed.

Cadbury takes into account all these factors when producing a range of products. It

targets different segments within the market, are as follows: -

Break segment: – Products which are normally consume as a snatched break and often

with tea and coffee, for example Cadbury’s Perk and Oreo Biscuits.

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Impulse segment: – These products are often purchase on impulse, eating these and

then. They include product such as Cadbury’s Dairy Milk.

Take home segment: – This describes product that are normally purchased from

supermarkets, taken home consumed at a later stage.

The price of Cadbury dairy milk is reasonable and affordable. So a person does not

need to think much before purchasing it, they can easily buy it any time when they want

to buy.

The income of a person does not play any important role in it.

Cadbury dairy milk will not be much affected by the generation differences. All types

of peoples like to purchase the Cadbury dairy milk when they want to buy it.

Behavioural factors: -

Decision: - The decision is taken by the children and youngsters. They play an

important role in taking the decision of when to buy the Cadbury dairy milk.

Occasions: - For purchasing the Cadbury dairy milk no special occasions are required.

People can easily purchase it on regular basis. Occasionally such as Diwali,

Rakshabandhan, the sales of Dairy Milk increases.

Psychographic: - The psychology of how consumers think, feel, reason, and select

between different alternatives (e.g., brands, products, and retailers).The psychology of

how the consumer is influenced by his or her environment (e.g., culture, family, signs,

media). Here Cadbury wins the race & Cadbury become a part of lifestyle as a loyal

brand.

Brands in fact influence consumer behaviour in a number of ways:

Reassurance: - A brand is a stamp of authenticity. It adds value by promising

‘replicability’ and helps to establish repeat purchase patterns. In a foreign country,

people seek the reassurance of familiar brands, even though they are presumably

traveling to find new experiences! This is why tourists and travelers around the world

feel comfortable on eating at McDonald’s. 21

Value Expression: We choose brands that reflect the individual values that we possess

as individuals. We do this to communicate the desired signals in the highly social

environment we inhabit.

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Growth Opportunities in Indian Chocolate Industry

Untapped Market & Limited Consumption

The fact that chocolate is not a traditional food, high prices and domestic production

Problems will provide the main problems to market growth. As these markets develop,

prices will fall making these products more accessible to the wider population.

However the Indian market is still untapped and provides immense scope for growth,

both geographically as well as product basket wise.

Chocolates right now reaches about 70mn to 75mn consumers. It is estimated that

Chocolates have a potential market of about 116mn consumers.

Chocolate consumption in India is extremely low. Per capita consumption is around

160gms in the urban areas, compared to 8-10kg in the developed countries. The per

capita chocolate consumption in India is still much below the East Asian standards.

Hence per capita consumption has an immense scope for improvement.

In rural areas, it is even lower. Chocolates in India are consumed as indulgence and not

as a snack food. A strong volume growth was witnessed in the early 90's when Cadbury

repositioned chocolates from children to adult consumption. The biggest opportunity is

likely to stem from increasing the consumer base. Leading players like Cadbury and

Nestle have been attempting to do this by value for money offerings, which are

affordable to the masses. We also believe that the near term opportunity lies in

increasing penetration rather than increasing intensity of consumption.

Changing Attitudes & Consumption Pattern

In the past, chocolate consumption had been restricted by low purchasing power in the

market. Chocolates and other cocoa-based snack foods were looked upon as food

suitable only for elitist consumption till recently. But with the launch of lower-priced,

smaller bars of chocolate in the last two years and positioning of chocolate as a

substitute to traditional sweets during festivals, have boosted consumption.

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Urban consumers now buy chocolates and confectionery for everyday consumption.

Earlier, they would buy them mostly during festivals. Also, more and more Indian

consumers are replacing traditional sweets with chocolates.

Almost 20% of chocolate sales in at the retailer come from adult chocolates. "Adult

chocolate consumption is getting a fillip from modern retail.

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PRODUCT LIFE CYCLE OF CDM

The product life cycle model helps marketers identify the different stages that the sales

and profits of a product go through during the course of its lifetime. There are five

stages to the product life cycle: introduction, growth, maturity, saturation and decline.

1. Introduction: Sales are slow as the product is not yet known. Costs are high due to

heavy marketing spend to create awareness. Emphasis is on advertising and

distribution. The Cadbury Dairy milk launched by Cadbury in 1905 is an example of a

brand at the introduction stage.

2. Growth: This stage shows growing market acceptance and increasing profits.

Competitors begin to enter the marketplace. The business concentrates on optimising

product availability. The Cadbury Dairy milk is the market leader in chocolate market

with 30 % market share example of brand at growth stage.

3. Maturity: The rate of sales growth slows down as the product has been widely

distributed and sold. The company now focuses on creating brand extensions and

promotion offers to boost sales. New product research is critical to ensure future sales.

The Cadbury Dairy Milk Silk chocolate range is an example of creating brand

extensions brand at the maturity stage.

4. Decline: Sales slow down dramatically and profits fall off. The product may be

dropped to make way for new products and the cycle recommences. So far CDM has

not reached at this stage because of extension in maturity stage.

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MARKETING PLAN DAIRY MILK

Marketing Objectives:-

Over the years Cadbury dairy milk has positioned itself as an all-time favourite

chocolate that is meant for all irrespective of the age, class and gender. It has been

always marketed as a chocolate having the contemporary taste but which is affordable,

with several variants to select from and over the time it has been trying to position itself

as an alternative to the traditional Indian sweet. Whereas the corporate strategies are

cantered towards ensuring profitable growth in the market and grow shareholder value

over the long term the marketing strategies are more particular which can be stated a

follows:-

Increase sales & profit of Cadbury diary milk.

Positioning diary milk as a successful alternative to the traditional Indian sweets in

order to cash in the rich tradition of Indian people associated with desserts.

Sustain market share over the year through product innovation in product development

and packaging the variants Fruit & Nut, Crackle and Roast Almond, combine the taste

of Cadbury Dairy Milk with a variety of ingredients and are very popular amongst teens

& adults.

Today, “Cadbury Dairy Milk alone holds 30% value share of the Indian chocolate

market”.

The Dairy Milk Brand is marketed using market penetration strategy. As there is huge

competition in the industry therefore the brand is marketed at low profit margin in order

to win market share & to maximise profit by increase the sale volume.

In our view the marketing strategy use to market the product is fair enough because this

attracts the right people at right time & probably at right place.

This strategy takes into account all the factors that are essential in promoting the brand

like this & it pays close attention to the market demand & customer expectation.

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The expenditure on the marketing of the brand also seems to be fair enough to by

comparing it with the competitors. In our view some more efforts are required to

promote the brand like some sort of unique promotion techniques to be used in order to

make marketing strategy more successful. But on the whole the strategy is good &

working nicely.

Financial Objective

Cadbury India experienced a slowdown in sales and profit in 2012, despite launching

legendary Swiss triangular chocolate brand Toblerone, as consumers cut back on

discretionary products, many even trading pricier chocolates with lower priced candies

and confectionery.

Cadbury India had launched products such as Silk and Bournville, and entered the

biscuits segment in the past two years, which drove the growth,” The availability of

foreign brands such as Ferrero Rocher and Lindt in the premium segment could be

hampering growth in that category."

The growth rate of sales & PAT was decreasing in the 2012-13 period. This was mainly

due to competition that it faced because of foreign brands entering into India. But in

recent past Cadbury has been successful in increasing its growth rate. This is mainly

due to increase in market size.

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SEGMENTATION, TARGETING, POSITIONING OF CADBURY DIARY

MILK

Dairy Milk chocolate bars have been in existence since 1905. Their packaging has

changed, although their promotions remain somewhat constant but the positioning has

evolved over the years. Their actual Diary Milk chocolate has not been altered over

time except for when being sold to different regions –Indians like creamier chocolate

than do those from England so Dairy Milk in India contains more of a milk content.

Segmentation: -

The segmentation of the market for dairy milk is based on three things. The first one

being based geography. Geographically, Dairy Milk bars are segmented by consumer

preferences in the area and are sold more predominantly in regions which consume

more snack/junk food. The other type of segmentation is catering to the impulse

purchasers. These types of consumers form a major chunk of the consumer base that the

product caters to. Dairy Milks are often stocked in convenience stores and the check-

out aisles of supermarkets due to impulse purchasers who are buying the chocolate for

purchase and consumption now. The other segment is the gift segment. Giving away

chocolates as gifts is a trend that is fast catching up in India Cadbury dairy milk wants

to cash in on that. The latest segment that Cadbury dairy milk is catering to is the

dessert segment. The tradition of having a dessert after meal is present in every

civilization and this is a huge segment. The latest drive of dairy milk is to become the

national dessert of the country. As far as segmenting the market on income there are

different variants of dairy milk (Bournville and silk) targeted towards the higher class

(Premium Segment) who are ready to pay the premium for extra dark chocolate.

Targeting: -

Starting from 1905 the purchasers of dairy milk have changed from children to all age

groups. When Cadbury started its operation in India their main buyers were children

and the youth who brought chocolates to celebrate special occasion. This limited the

market for Cadbury dairy milk. This is a reason that Cadbury came out with the

campaign of

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(‘kuch meetha ho jaye’) to make dairy milk synonymous with sweet so that it could

target all the age groups. In India it was a mentality that chocolates are for children and

the adults were more inclined towards to the conventional sweets. This campaign

targeted them and saw a change in the target market for the brand. Now the target

market for dairy milk is every member of the family.

Cadbury’s Dairy milk always aimed for the bigger bite of the Indian market. It has been

the market leader in the chocolate category for years.

The main objective of Cadbury’s dairy milk is very clear, reach the audience by

showing them their reflection. Showing small happiness and cheerful moments that we

see in our day to day life is cherished by enjoying a bite of Cadbury’s Dairy milk and

by adding an emotional touch to it, & has won the Indian audience thoroughly.

We are Positioning Diary milk as a successful alternative to the traditional Indian

sweets in unique way in order to cash in the rich tradition of Indian people associated

with desserts, birthday gifting through Facebook, gifting in schools (15 th August & 26th

Jan-13) & on birthdays, gifting in offices on birthday’s & gifting with marriages

invitation card & after marriage ceremony.

Positioning: - Cadbury Dairy Milk excels at positioning. Not only can the chocolate

bars have many different positions based on which segment they are in, but also none of

the positions damper the effects of other positions! Youth see with word Cadbury as a

synonym for chocolate, others see it as synonyms for sweet and love and bliss. In India

it positioned itself as “spontaneous, special, carefree, real moments (‘Mazza aa gaya’)

in the initial stage. But later it tried to position itself as brand that is synonymous with

sweet

(‘Kuch meetha ho jaye’). The most recent campaign (‘Shubh Aarambh’) tries to take

forward the initial positioning of dairy milk as an alternative for the traditional sweet

and positions itself as something that is as auspicious as the sweet which is generally

offered as ‘bhog’ to gods.

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MARKETING PLAN FOR AGE GROUP 19 TO 35

The total population in this age group is 0.343 billion.

This segment can be targeted in many ways. Research shows that the best way to catch

this population on internet (on Facebook). India has 78 million active users who access

Facebook (DNA News).Most of the people wishes birthday to their friends & family

member on Facebook every day.

We propose, Cadbury to tie up with Facebook & launch the online chocolate gifting

programme on facebook.In the application one week before birthday Facebook will

give the reminder. By using this application you can delight your dear one by choosing

the perfect Chocolate & delivering it on Birthday with your birthday message for him

or her.

Customers can choose the best Chocolate gift they want to send it across India.

Cadbury will take great care in delivering those Chocolate gifts across India (Through

distribution network). Through these gifts, we deliver the emotions and heartfelt love

that you send.

Select the Chocolate, Gift wrapping & Birthday message for your friend & place the

order online. The order will be received in district distributor system; same will be

packed & dispatched by Courier at the delivery address.

The below graph shows the scenario if we are able to get 1 % market share in total

population at the rate of Rs. 55 per unit of this age group then company can increase its

sales by 189 million INR & if we consider the best case of getting 6% market share

then company can increase the market share by 1,132 million INR.

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MARKETING PLAN FOR AGE GROUP 36 TO 60

The total population in this age group is 0.381 billion.This is majorly working

population of India.

This segment can be targeted in many ways. Chocolates in the corporate gifting

segment

(gifting on Birthday at office) is the new trend, with variety of gift-packaging and

customisation in branding. Chocolates have become a premium gifting option.

Hospitality is another segment that is growing at a consistent rate.

This population can be targeted on marriages (with wedding invitation card & after

marriage gift), on festivals, special occasions & many more occasions.

The below graph shows the scenario if we are able to get 1 % market share in total

population at the rate of Rs. 100 per unit of this age group then company can increase

its sales by 381 million INR & if we consider the best case of getting 6% market share

then company can increase the market share by 2,286 million INR.

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THE MARKETING MIX OF CADBURY DAIRY MILK CHOCOLATE (CDM)

Product: - The product Diary Milk is a chocolate bar that is made from real dark

chocolate. The design of the chocolate is nearly same throughout the world with slight

changes that are made according to the different regions. The amount of milk content in

dairy milk is the highest as compared to other competitors. The components that are

used in making the chocolate are sugar, cocoa butter, vegetable fats, cocoa mass and

emulsifiers. The various variants of dairy milk are Wowie, Crackle, Fruit and Nut,

Crunchie, Temptations (roasted almond, rum raisins and raisin apricot), Bournville and

Silk.

Price: - Cadbury Dairy Milk has always adopted a competitive pricing strategy for the basic

product whereas has gone for premium pricing on the other variants. The price list is given as

follows:-

Segments Product Pack size Rate

Value Dairy Milk 9.2 Gram Rs. 5

Value Dairy Milk Shots 18.6 Gram Rs. 10

Value Dairy Milk 17 Gram Rs. 10

Value Dairy Milk 38 Gram Rs. 22

Mid-Tier Dairy Milk Crackle 42 Gram Rs. 35

Mid-Tier Dairy Milk Roast Almond 42 Gram Rs. 35

Mid-Tier Dairy Milk Fruit & Nut 42 Gram Rs. 35

Premium Dairy Milk Silk 60 Gram Rs. 55

Premium Dairy Milk Silk Fruit & Nut 60 Gram Rs. 55

Premium Dairy Milk Orange Peel 60 Gram Rs. 55

Super Premium Dairy Milk Silk 145 Gram Rs. 125

Super Premium Dairy Milk Silk Fruit & Nut 145 Gram Rs. 125

Super Premium Dairy Milk Orange Peel 145 Gram Rs. 125

Place: - The company has five company owned manufacturing capacities in Thane,

Induri (Pune), Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh). The sale

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offices are located in the metros and the head office is located in Mumbai. The

distribution structure is such that Cadbury dairy milk chocolates are sold directly to the

retailers and the whole sellers. Cadbury’s distribution network used to encompass 2100

whole sellers and 450,000 retailers.

Promotion: -Typically it is said that chocolates are being eaten when everyone is

happy. And this is something advertising has always portrayed. But it is found

chocolates are eaten under diverse conditions and moods - when people are anxious,

when they are sad, when happy -a whole range of emotions. Condensing these views &

thoughts, it can be said chocolate is a true soul mate. Someone who is with you through

the ups and downs of life, helping you bounce back. And that's what Cadbury's Dairy

Milk (CDM) positioned itself as - a special friend. Creation of a strong brand is very

important in the confectionery industry. Almost 80 percent of the chocolate purchases

are unplanned and are on impulse. The media mix for any campaign for diary milk

comprises of TV, radio, print, OOH and Internet. The advertisements are used to create

and emotional bonding with the consumers and hence are high on the emotional

content. The print media is for making the consumers more knowledgeable about the

brand and digital media is used for more targeted two way communication. Over the

years dairy milk has concentrated heavily on TV advertising but lately there is a shift

towards digital media. The promotions have been done keeping in mind to increase

brand loyalty and to encourage repeat purchases at the same time increasing market

share. Apart from the mass media the other strategies include making dairy milk a

visible brand in the market and encouraging free samples through competitions to gain

trust and familiarity among the target audience.

Human Resource:-

HR’s role continues to be critical in the Chocolate industry, especially in the Sales &

marketing environment where the success or lack of success is directly attributed to

talent. A career path in Sales & Marketing can offer experiences in areas sales

management, exposure to marketing plans, brand initiatives, brand analysis and new

product development.

The Cadbury Fit: Essential Requirements for Sales Force

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- MBAs from premier institutes with 2 to 10 years of Sales and Marketing experience

preferably in an FMCG

- Influencing and networking skills

- Strategic and breakthrough thinking

- High energy and commercial orientation - Ability to effectively analyze data

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SUCCESS FACTORS OF CADBURY INDIA LIMITED

1. Global management processes:-

India occupies a high profile position in the global organization, with advocates in

regional and global headquarters. Global management has allowed the local operation a

high degree of flexibility in growing the business, understanding that asset utilization

may be lower and returns slower to arrive, but expecting volume share to compensate

for lower margins in the long run.

2. Local management processes:-

The Cadbury India team is all-Indian and has a deep understanding of local market

dynamics. The business is set in a way that highlights localization across all facets –

driving the belief that the only way to succeed in India is by developing localized

business models. For example, the company tailored the chocolate formula in India to

prevent melting in the country’s open-air high frequency store environment.

3. Customized business models:-

Local management has set up systems to test and develop products from the ground up

with specialized interlinked cells that execute innovation and market testing hand-in-

hand.

Cadbury India is known as a key product innovator. Besides Dairy Milk, the entire

Cadbury product portfolio in India has been developed locally to suit Indian consumer

tastes. Packaging, marketing and distribution have all been tailored to local market

conditions.

4. Royalty Structure:-

Royalty to Cadbury Schweppes is around 1 per cent of the turnover. But with that, the

company gets unlimited access to latest technology, new products and so on. They can

also introduce new products from the parent, if it is suitable for Indian market.

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5. Subtle reengineering of raw material mix led to cost savings:-

Cadbury has reduced its dependence on cocoa, thus lowering its exposure to volatile

raw material prices as well as cutting costs. It appears that they have subtly altered its

recipe by using less of costlier cocoa and more of milk and sugar. Cadbury's launch of

Perk has also contributed significantly in reducing the proportion of cocoa in the overall

raw material mix.

6. Brand Building:-

Since its inception, Cadbury in India has stayed ahead thanks to their constant

marketing initiatives, that have at all points in time understood the needs of and

opportunities in a changing nation but Nestle had stood firm in second position

resulting from their responsibilities and providing quality products. Amul an Indian

company has been able to create brand quality and thus selling their product through

their name.

7. Wide variety of brands:-

The '60s was a decade which saw the launch of brands that are etched in the hearts of

generations of Indians - Tiffins, Nut Butterscotch, Caramels, Crackle, 5 Star and Gems.

It was a strategy that introduced consumers to a variety of tastes and product forms

leading to a rapid increase in chocolate consumption.

8. Quality products at low price:-

Cadbury's Eclairs was launched in 1972, at the then princely sum of 0.25p and was an

instant hit. It continues to be one of the biggest brands in the Cadbury portfolio and

offers the lowest price point at which consumers can experience the real taste of

chocolate. But as compared to other companies the price are very high because of lack

of competition.

9. Innovative & attractive packaging:-

In the years that followed, Cadbury invested in technology and made an impact through

innovative packaging. This decade experienced a continuous growth in volumes as

Cadbury launched a flurry of brands with different pack sizes, at various price points. 36

The now ubiquitous Sheet Metal Dispenser seen on cash counters of thousands of shops

for dispensing chocolates was an innovation that helped brand the colour purple in the

minds of the Indian consumer.

10. Timely expansion of market:-

In the 90's Cadbury realised both the scope and the need to expand the market. Hitherto

perceived only as a children's product, Cadbury 'universalized' the chocolate market.

The multi-award winning advertising campaign - 'The Real Taste of Life' - was

launched, capturing the childlike spontaneity in every adult.

Moulded chocolate and éclairs also showed satisfactory growth. This has also helped in

improving the infrastructure and distribution reach of the company in chocolate and

confectionery segment.

11. Introducing new products:-

Cadbury 5 Star with its “Energizing Bar” campaign targeted the youth, offering them a

mind and body charge. While pre-empting competition, Cadbury Perk - the light

chocolate snack - pushed chocolates into the wider area of snacking by promising

'Thodi Si Pet Pooja Kabhi Bhi Kahin Bhi' (anytime, anywhere) and has introduced new

flavours like ‘Mint Hint’, ‘Mango Tango’, Very Strawberry’. It has also introduced

various new chocolates like Gollum and Fruits in recent years.

12. Constant diversification:-

Faced with rapidly changing markets and increased competition, Cadbury launched

Truffle to hit the high ground of great tasting chocolate. This was followed by Picnic in

1998, which with its unique, multi-ingredient construct promises to take chocolates

straight into the realm of snacks. With the introduction of Gollum and Fruits Cadbury

has taken the market by surprise.

13. Commitment of expansion:-

With the launch of Trebor Googly, the tangy, fizzy candy, Cadbury took the market by

surprise and marked the entry of Trebor into the fast growing Indian sugar 37

confectionery market. The extension of Googly to a Mint flavour reinforces Cadbury's

commitment to establish the Trebor name as a strong player in the value added sugar

confectionery market.

14. Repositioning:-

Cadburys has been repositioning its products for children to adults and for celebrative

occasions. A repositioning campaign was arranged for dairy milk that showed adults

doing unconventional things (like a lady breaking into a jig in the middle of the

overflowing Cricket (stadium) driving home the message that adults could enjoy

chocolate as well.

15. Information technology:-

At Cadbury India they believe that effective communication n and availability of

information 'at the right time and the right place' is critical for an edge in business. In

order to achieve this they realised the importance of and have in place, an effective IT

infrastructure.

Through IT investment, they aim to

- Remain competitive in the fast changing environment.

- Incorporate best practices in the business processes.

- Arrive at uniform software and business practices globally within Cadbury Schweppes.

- Achieve flexibility of systems to keep pace with changing environments.

- Increase speed of response to business processes.

- Minimise working capital.

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CONCLUSION

The Indian Chocolate Industry is a unique mix with extreme consumption patterns,

attitudes, beliefs, income level and spending. Understanding the consumer demands and

maintaining the quality will be essential. Pricing is the key for Cadbury’s to make their

product reach to every consumer houses. Right pricing will make or break the product

Success. There’s also an immense scope for growth of chocolate industry in India,

geographically as well as in the product offering. So we think that bringing online

sales(through facebook) & increasing the institutional sales(in unique way) would bring

prosperity and increase the sales of Cadbury’s as a whole again resulting in the

goodwill of the company.

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BIBLIOGRAPHY

• www.google.com

• www.wikipedia.com

• www.cadburyindia.com

• www.economicstimes.com

• www.thehindu.com

• www.youtube.com

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