Cadbury PLC Essay
1 - Cadbury PLC Essay introduction. Introduction
Cadbury Plc has invariably been in the limelight since August this twelvemonth when its portion monetary value rose by more than 200 pence when Kraft placed its hostile coup d’etat command worth $ 17 billion. Since so other challengers such as Hershey, Ferrero and Nestle have besides made involvement for acquisition of the company. It is likely go oning due to the facts that Cadbury Plc has been confronting liquidness jobs that prohibited rapid enlargement, while at the same clip holding exceptionally strong presence in emerging markets and holding strong trade names.
Cadbury Plc operates in a really competitory confectionery market characterised by fast-changing consumer attitudes and values. Hence the demand for a strategic position on marketing ne’er lessens. Furthermore, ( Financial Times, 2009 ) the confectionery industry is fighting in the recession as consumers seek out cheaper nutrients restricting discretional disbursement on confectionery. These cheaper options, coupled with the “derisory” coup d’etat command from Kraft nutrients, has caused a deep cloud of uncertainness to linger on Cadbury Plc ‘s hereafter, farther intensifying the demand for a strategic position on selling.
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2. Business Strategy
Business scheme can be defined as the way and range of the concern over the long-run, which achieves advantage for the administration through its agreement of resources within a appropriately ambitious environment, to fulfill the demands of the market and fulfil stakeholder outlooks ( Brassington et al. , 2006 ) . Strategy can be at different degrees in a concern entity:
Corporate scheme – concerns the allotment of resources within the administration to accomplish the concern way and range specified within corporate aims. It helps to command and organize the different countries of the administration such as finance, selling, research and development etc. Quite frequently corporate scheme is explicitly envisioned in a “ mission statement” . ( Making Brands People Love, 2009 ) For illustration Cadbury Plc ‘s vision is to be the biggest and the best confectionery company in the universe.
Competitive scheme ( concern unit scheme ) – determines how a concern competes successfully, in a peculiar market with peculiar respect to the comparative placement of rivals. Marketing scheme – defines mark markets, what way to be taken for a defendable competitory place, compatible with overall corporate scheme within those markets.
The strategic direction procedure comprises three chief constituents as shown in Figure 2 below: Strategy Implementation is frequently the hardest portion in the strategic direction procedure. However, this study merely concentrates on scheme analysis and pick.
3. Strategic analysis
Strategic analysis involves the analysis of the concern ‘ strength, place and understanding the overriding external factors that may act upon that place. The methods below were used to help in a strategic analysis for Cadbury Plc:
- FiveForces Theory – a technique for placing the forces which affect the degree of competition in an industry developed by Michael Porter.
- Analysis of the Human Resources.
- Corporate and Operational issues.
- International Export Dimension.
- Swot Analysis.
3.1. The Five Forces Analysis
- Lindt & A ; Sprungli SpA
- Fujiya Co. , Ltd.
- HARIBO GmbH & A ; Co KG
- Hsu Fu Chi International Limited
- Kraft Foods Inc
- Lotte Confectionery Co Ltd
- Nestle SA
- Perfetti Van Melle SpA
- The Hershey Company
- Tootsie Roll Industries Inc
- Red planets Inc
In prosecuting an advantage over its challengers, Cadbury Plc has in the past adopted such tactics as:
- Changing monetary values to derive a impermanent advantage ( docstoc web site ) . For illustration, a monetary value decrease by three rupees for a mini Perk – a Cadbury Plc ‘s trade name in India helped Perk perforate the rural market increasing Cadbury Plc ‘s market portion in India by 1 % with a farther 10 % rise in overall cocoa gross revenues.
- Bettering merchandise characteristics – Cadbury Plc ‘s trade name, Dairy Milk, is the universe ‘s most celebrated trade name name and the company ‘s prima cocoa saloon by gross. The company has used this to its advantage by making new Dairy Milk assortments such as Wispa and Fruit & A ; Nut.
- Creative usage of channels of distribution – assorted mercantile establishments such as supermarkets, peddling machines and convenient shops have been efficaciously utilised by Cadbury Plc and its challengers. Consequently, originative advertisement has been the cardinal factor in increasing market portion. ( Adbrands website ) Advertising Age estimated planetary advertisement outgo by Cadbury Plc to be in the part of $ 425m in 2007, doing it the universe ‘s 83rd largest advertizer in advertisement outgo.
Menace of replacements – in Porter ‘s, theoretical account replacements refer to any merchandises in other industries with lower monetary values or better public presentation parametric quantities for the same intent. Harmonizing to confectionery intelligence web site, a turning tendency towards healthy merchandises by consumers has resulted in a bead in the value of the overall UK confectionery. Consequently, dark cocoa which is perceived to hold great wellness benefits, has had an addition in popularity. As a affair of fact, in 2008 Cadbury Plc re-launched its Bourneville trade name ( dark cocoa ) to counter this at hand menace and capitalise on the popularity of dark cocoa.
Consumer power – this is the impact that purchasers pose on a production industry. The magnitude of the impact can be due to several factors. A large factor in the confectionery industry is that of a well educated consumer perceptual experience of the merchandise. ( The Epoch Times ) This was so apparent when consumer force per unit area resulted to Cadbury New Zealand endorsing down from an enterprise to replace chocolate butter to vegetable fat and palm oil. The latter would hold increased palm oil production and the associated growing in plantations could take to extended devastation of plantations in Indonesia and Malaysia. Furthermore, the consumers were non merely unhappy with the merchandise ‘s new gustatory sensation and texture, but besides the weight of each saloon had significantly reduced.
Supplier power – providers refer to the entity that provides the industry with the natural stuffs. Powerful providers can exercise an influence on the production industry by selling natural stuffs at a higher monetary value to capture some of the industry ‘s net income.
Barriers/threat to entry – as a house operating in the free endeavor universe, any house should be free to come in and go out the market. However, industries exhibit some characteristics that protect high net income houses therefore suppressing the entry of new challengers. Barriers may originate from the:
Government – which can develop and implement policies in relation to several macroeconomic influences, in bend impacting markets and administrations such as Cadbury Plc. Cadbury Plc have to run harmonizing to the regulations and ordinances stated by the authoritiess. Their merchandises have to conform to the safety Torahs, for illustration, fabrication procedures in Cadbury Plc are capable to pollution controls.
The authorities implicates Fiscal policy, which involves changing authorities expenditure/taxation. For Cadbury Plc to see an addition in net incomes in the hereafter, they will desire the authorities to implicate expansionary financial policy whereby the authorities would raise authorities outgo, taking to an addition in aggregative demand or by cutting revenue enhancements, which would go forth consumers with more money to pass on merchandises such as those made by Cadbury Plc ; in bend raising aggregative demand and therefore net incomes ( Advisors in Fiscal Policy ) .
The authorities could nevertheless present Contractionary Fiscal policy which would see aggregative demand be reduced by cutting authoritiess outgo or by raising revenue enhancements and hence cut downing consumer ‘s outgo. For Cadbury Plc to increase their net incomes, they will be against the authorities presenting Contractionary Fiscal policy.
The Government besides provide Cadbury Plc with inducements to open new mills and other work chances where there is a high unemployment rate.
Patents and properness cognition – thoughts that provide competitory advantage are treated as private belongings when patented. Hence others can non utilize them, which creates a barrier for entry.
Cadbury Plc is strongly positioned due to a big merchandise patent footing and their heavy investing in their research and development section.
Expensive capital – possible entrants are loath to perpetrate to geting extremely specialised expensive machinery. As a affair of fact, even though Cadbury Plc being one of the largest confectionery companies in the universe, it is confronting liquidness jobs impeding their enlargement into new parts ( Data Monitor – Cadbury PLC, 2009 ) .
3.2. Human Resource
The biggest human resource issue confronting Cadbury Plc today is the loss of occupation security amongst many of their employers. As demonstrated in Maslow ‘s hierarchy of demands, a popular and recognized motivational theory, occupation security is an of import factor in the motivation and wellbeing of a house ‘s employees ( Mottershead et al. , 2006 ) .
With respectable newspapers and other enlightening media ( The Guardian, Wall Street Journal, BBC etc. ) foretelling big occupation losingss in Cadbury Plc should a possible coup d’etat win, many employees are presently fearing for their occupations and this may impact their public presentation ( Rohwedder, 2009 ; No Author, 2009 ; Clark, 2009 ) .
Cadbury Plc brotherhood leaders have met with Kraft ( a US based concern offering to coup d’etat Cadbury Plc ) in order to protect Cadbury Plc employees and guarantee that their employees ‘ occupations are still unafraid should Kraft ‘s proposed command be accepted. However, this action in itself demonstrates the sum of agnosticism that exists within many Cadbury Plc employees and high spots the deficiency of occupation security with many of the workers. This cynicism may be due to the fact that employees are unable to understand how Kraft can do their possible quoted nest eggs without a important loss of occupations ( No Author, 2009 ; Griffin, 2009 ) .
The loss of occupation security may non merely affect mill workers but may besides impact directors and employees in higher places within Cadbury Plc. During a coup d’etat there is a batch of restructuring within all companies involved and many occupations tend to be lost as companies find that functions overlap. These occupation losingss occur at all degrees of employability and there tends to be a period where the company has a really high employee turnover degree.
Although Kraft is the strongest bidder for Cadbury Plc, Hershey and Ferrero ( an Italian based concern ) have late released independent statements uncovering their involvement in a possible coup d’etat of Cadbury Plc. However as both concerns are significantly smaller than Kraft, beginnings near to both houses have revealed that Hershey and Ferrero have been in negotiations about a possible articulation command for Cadbury Plc. Although, Cadbury Plc brotherhood leaders remain steadfast in their belief that the best option for Cadbury Plc ‘s many employees is for Cadbury Plc to stay an independent company ( Clark, 2009 ) .
As we enter a more technological epoch, the of all time changeless fright for mill workers is the fright that they will be replaced by computing machines. This is a smaller human resource issue confronting Cadbury Plc ; nevertheless it is of all time present and therefore is an issue that must be systematically paid attending to and addressed.
At a recent visit, to the Bourneville site of Cadbury Plc, pupils were able to see both the modern mill and the older 1. At the older mill, it was clear to the pupils that more human interaction with the merchandise existed. While in the modern mill pupils saw that a batch of the human interaction had been replaced with faster and more efficient equipment.
It is of import that the human resource section in Cadbury Plc address the above issues as the motive and overall wellbeing of the employees will impact the company ‘s public presentation in the long term. As Cadbury Plc ‘s is the biggest confectionary company in the universe ( Cadbury plc, 2009 ) they stand to lose a batch.
3.3. Corporate and Operational Issues
With different concerns trying to coup d’etat Cadbury Plc, there are a batch of different factors that will impact the manner Cadbury Plc is viewed as a corporation and in bend how they operate should a possible coup d’etat win.
One of the chief merchandising points for Cadbury Plc in Britain and Ireland, who account for 24 % ( Cadbury plc, 2009 ) of their gross, is the fact that Cadbury Plc began and has remained a British concern ( up until today ) and therefore it lends an genuineness to the trade name that most rivals do non hold.
British front-runners, such as Cadbury Dairy Milk, may get down to lose out to rivals should Kraft ‘s proposed coup d’etat win. This is because a batch of the populace in the United Kingdom do non back up the proposed coup d’etat and some MPs have even gone every bit far as bespeaking a gesture that ensures that Cadbury Plc remains in British custodies ( No Author, 2009 ; Rohwedder, 2009 ) .
Cadbury Plc have besides had negative promotion towards the coup d’etat with Felicity Loudon who is a descendent of John Cadbury ( the laminitis ) , publically saying that Cadbury Plc is a “brand that is synonymous with Britain” and should the Kraft coup d’etat win it will “become a commercial wasteland” . These are strong words and may deter people from purchasing the one time popular Cadbury trade name ( Rohwedder, 2009 ; No Author, 2009 ) .
As a consequence of the negative promotion potency coup d’etats have received, Cadbury Plc will be forced to utilize a different selling scheme should a coup d’etat command be accepted as some of the British genuineness that Cadbury Plc as a trade name antecedently had will be lost in the coup d’etat. Cadbury Plc must be prepared to face losingss in the UK market as clients may take non to purchase Cadbury Plc trade names due to the coup d’etat and the possible loss of occupations at Cadbury Plc UK sites. However, if Cadbury Plc is able to establish a successful selling scheme, so they may be able to restrict the loss caused by a coup d’etat.
3.4. International Export Dimension
As a taking planetary confectionary company with an outstanding portfolio of cocoa, gum and confect trade names, Cadbury Plc employ about 45,000 people and has direct operations in over 60 states, selling their merchandises everyplace around the universe
The company operates its concern through four different concern sections viz. Britain, Ireland, Middle East and Africa ( BIMA ) , Americas, Europe and Asia Pacific. Britain and Ireland are the largest concern unit in the group. The company ‘s chief markets in Middle East and Africa include South Africa, Namibia, Kenya, Egypt, Lebanon, Morocco, Nigeria and Ghana.
The company ‘s American concern comprises of the three largest confectionary markets in the universe, US, Canada and Mexico. This besides extends through Central America and the Caribbean and it besides has operations in South American states which include states like Brazil, Argentina, Peru, etc. With a market portion of about 20 % , the company is the taking participant in South America.
In Europe, the company operates in bulk of Western Europe, Scandinavia, Turkey and Russia. The company ‘s biggest European operating unit is in France. The Company ‘s Asiatic concerns are concentrated in India, China, Malaysia and Thailand. In the Pacific parts, the company ‘s operations are chiefly located in Australia, New Zealand and Japan. Cadbury Plc has a prima place in Australia with an overall 30 % market portion. ( Data Monitor – Cadbury PLC, 2009 )
In each of the four different sections, selling is really of import component in advancing the merchandise and is done different to each other due to the merchandises being sold in those countries. For illustration, Perk is a Cadbury ‘s merchandise which is sold in India. The merchandise is aimed at the young person. Selling for this merchandise is done in a manner so it entreaties to the Indian community. This includes advertizements which are shown their national linguistic communication, Hindi and is usually performed by high fecund people of India like histrions and actresses of Bollywood ( Indian Cinema ) .
3.5. SWOT Analysis
The chief strength of Cadbury Plc is that they have a really good repute and have a widely recognised trade name name which has led them to go the universe ‘s figure one confectionary company holding bought Adams ( the proprietor of masticating gum trade names including Trident and Stride ) in 2003. They have matchless strength and comprehensiveness of engagement. It is the market leader in the planetary confectionery sector with a market portion of 10.5 % . Cadbury Plc has a diversified merchandise base as the company offers cocoa, gums and confect merchandises ; the company is good diversified in footings of gross coevals from all its operating parts. Cadbury Plc should take to equilibrate the portion of gross from its operating parts to derive planetary laterality ( See Figure 4, Figure 5 and Figure 6 ) . ( Cadbury PLC- Our Strengths ) .
This shows the market portion of cocoa between Cadbury Plc and their challengers. Cadbury Plc is presently figure one, with Mars/Wrigley a really close second. ( Cadbury PLC- Purple B & A ; I, 2009 )
It is clear that the chief beginning of Cadbury Plc ‘s gross comes from their cocoa and chocolate drinks. However, it is clearly profitable to the company that they have diversified into other markets. ( Cadbury PLC- Creating brands people love, 2009 )
However, Cadbury Plc has a weak liquidness place. At the twelvemonth stoping December 31, 2008, Cadbury Plc ‘s current assets were $ 2,635 million compared to the current liabilities of $ 3,388 million. This could negatively impact the operational efficiency and growing enterprises. Another failing is the company ‘s employee efficiency, i.e. the entire gross per employee. It is well lower than rival companies such as Hershey, and Chocolade Fabriken Lindt & A ; Sprungli ( Lindt ) . The low grosss per employee indicate comparatively lower employee productiveness. This can be solved by offering inducements to employees, i.e. fillips for high productiveness.
Due to the increasing consciousness of dark cocoa and its wellness benefits, there is a aggressive market in many parts of the universe ; combined with ethical concerns, the demand for organic and fair-trade cocoa have increased. Cadbury Plc has legion sums of premium cocoa merchandises across the universe so an addition in the client penchant for premium merchandises would increase gross revenues. Cadbury Plc can besides look to increase gross revenues and their presence in the US confectionary market ; it is already good positioned to capture the turning demand for the confectionery in the part.
Recently, people are going more witting about their wellness which accordingly consequences in a bead in gross revenues for Cadbury Plc dairy merchandises. This is a turning concern for the company and an issue that must be addressed. Cadbury Plc could perchance put in a low Calorie bite scope which could hike gross revenues dramatically.
The lifting cost of many of Cadbury Plc ‘s natural stuffs ( particularly chocolate and peanuts ) could do a serious impact on the company ‘s profitableness. Monetary values are expected to go on lifting in the close hereafter for chocolate because the International Cocoa Organisation ( ICCO ) reduced its estimation by 0.1 million dozenss whilst the demand for chocolate is increasing. At present, Cadbury Plc imports its chocolate merchandises straight from 3rd party providers so possibly puting in their ain chocolate farm would be good in the long tally.
The confectionary market is extremely disconnected with increasing competition. Many big concerns have merged together to derive more market portion escalating competition. Therefore Cadbury Plc would be under force per unit area to alter monetary values of merchandises, cut downing its borders. Rising labor costs will dramatically cut into Cadbury Plc ‘s net income border because a bulk of their employees are from the US and Europe. Minimum pay has increased significantly in both the US and the UK. Cadbury Plc needs to pull and retain efficient employees in all sections of its concern to go even more successful. ( Data Monitor – Cadbury PLC, 2009 )
Looking at the informations collected from the questionnaires, it is evident that Cadbury merchandises are easy accessible to the populace ( shown in Figure 12 ) so Cadbury Plc should look to maintain this up. However, a big figure of people do non cognize that Trident and Halls are portion of Cadbury Plc. Figure 11 shows that members of the populace would be more willing to purchase Trident and Halls merchandise due to the fact that it is portion of a well represented company. More than half of the general public idea that Cadbury merchandises were good priced, with mainly pupils believing that Cadbury Plc overprice their merchandises. Cadbury Plc should look into the possibility of publishing price reduction cards to pupils as this may promote them to purchase more Cadbury merchandises.
Figure 4 and 6 shows the portion of gross between Cadbury merchandises and their planetary sites severally. It is clear that cocoa and chocolate drinks are their chief beginning of finance. Cadbury Plc need to concentrate on countries such as Asia and the Middle East as the portion of gross is 6 % and 7 % severally. Cadbury Plc could sell their sites in those parts and concentrate on Europe, North America, Britain and Ireland, as these countries generate a combined sum of 66 % of Cadbury Plc ‘s portion of gross. Figure 7 ( in the appendix ) shows that Cadbury Plc has had the biggest portion motions over the past twelvemonth compared to their chief challengers.
This shows the portion of gross across the universe. Britain and Ireland current generate the most gross followed by North America and so Europe. ( Cadbury PLC – Creating brands people love, 2009 )
4. Business doctrine
Cadbury ‘s Schweppes adopted a Pull offing for Value doctrine in 1997. They are committed to utilizing their assets to work growing chances and to drive value creative activity. The chief end of Cadbury Plc is to systematically bring forth major stockholder returns. They support this by two other commercial ends: to productively and significantly increase the planetary confectionary portion and to procure and to turn the regional drinks portion.
Cadbury Plc had a strategic reappraisal of Europe Beverages its spouse company, the decision being in the best involvement of the stockholders to look into the sale of the Europe Beverages concern. The board decided Europe Beverages did non hold a high plenty possible growing and returns. The board besides realised that the money made from the sale could assist cut down the company ‘s debts hence on the 1st September 2005, Cadbury Plc announced they were selling the Europe Beverages group.
Cadbury Plc presently possesses nine Board Members dwelling of two Executive Directors and seven Non-Executive Directors. The Board of Directors are responsible for the overall direction and public presentation of the company, and the blessing of the long-run aims and commercial scheme. They besides delegate daily direction to the Chief Executive ‘s Committee ( CEC ) . The CEC studies to the Board and are accountable for the daily direction of the operations and execution of scheme. Driving high degree public presentation of growing, efficiency and capableness programmes are The CEC ‘s duty to the Board. ( Cadbury PLC- Our Management )
Cadbury Plc besides adopts a policy of democratic direction. All members of staff are made to work together as a squad for the good of the company. Decisions are reached amongst the assorted groups by first taking into history everyone ‘s inputs, thoughts and suggestions. This manner of direction plants for Cadbury Plc because the workers feel as though they have power in determination devising and therefore are more free and able to do suggestions that they experience could merely change the concern this motivates workers and makes them experience more engaged with the company.
Cadbury Plc as an administration has developed a strong image for the Cadbury corporate name to move as a shelter for all its merchandise trade names. Branding is the creative activity of a 3-dimensional character for a merchandise, defined in footings of name, packaging, colorss, symbols etc. Tthat helps to distinguish it from its rivals and helps the client to develop a relationship with the merchandise. As a consequence Cadbury Plc merchandises benefit from both the fondness that consumers hold for the corporate name and from the single character developed for its merchandises such as Cadburys Flake, Cadburys Hot Chocolate and Cadburys Dairy Milk ( Principles of Marketing ) .
Draw a bead oning rivals of Cadbury Plc purpose to construct a strong trade name. For illustration supermarket own-label merchandises are packaged and branded in similar manner to Cadburys ; this has posed a menace to Cadbury Plc as frequently the supermarket own-label merchandises are cheaper than Cadbury Plc merchandises and, in today ‘s economic instability, this could take to them going more popular and hence lead to a decrease in gross revenues for Cadbury Plc. There is besides a possibility that Cadbury Plc could go self-satisfied with their stigmatization and non seek to better on it which could hence take to consumers going bored with the merchandise or possibly even consumer ‘s demands could alter which could take to Cadbury Plc falling behind in the market.
For Cadbury Plc their trade name name is good known, but due to the grounds stated above their name is non plenty to guarantee that they remain the chief trade name in the industry. To remain on top of the market Cadbury Plc should invariably research into their trade name name and expression to put money into bettering the trade name image to maintain up with today ‘s altering times.
To vie with the lower priced supermarket own-label trade names, Cadbury Plc may hold to cut down their monetary values. However the job for Cadbury Plc is that if they cut down their monetary values so that could be associated with impairment in quality. One manner Cadbury Plc could take down their monetary values to vie with its rivals without damaging the trade name is to offer price reductions on majority purchases for illustration a battalion of 5 Bounty cocoa bars for ?1.25 which equates to 25p each whereas the individual Bounty saloon would be sold at 45p each. The consumer recognises that the lower monetary value is due to bulk purchasing and does non tie in it with the trade name quality.
6. Strategic Choice
Involves placing the strategic options, measuring and choosing strategic options.
6.1. Possible schemes to see and current concern issues
Recent command from Kraft Foods Inc and possible new commands from Hershey Co, Nestle SA and Ferrero SpA have made the state of affairs Cadbury Plc is confronting today exceptionally complex and adds multiple picks of possible coup d’etats and amalgamations to schemes by and large needed to see.
Kraft taking over CadburyPlc
An offer deserving $ 17 billion and placed by Kraft would supply Cadbury Plc with attendant advantages and disadvantages. For case, late Kraft stated that the ‘takeover would increase graduated table in developing markets and make a company with about $ 50 billion in gross… [ it ] would accomplish at least $ 625 million of cost nest eggs yearly by the terminal of the 3rd twelvemonth ‘ ( Bloomberg ) , whereas conversely Lord Mandelson cautioned that Kraft would be confronting ‘huge resistance from the local population… and from the British authorities ‘ ( Telegraph ) . Furthermore, this could take to occupation cuts in Bourneville, hence UK‘is likely to seek warrants from Kraft on decision-making and employment ‘ ( FT ) . Recently, Kraft Food Inc has now taken the coup d’etat offer for Cadbury Plc straight to stockholders. Kraft offered a mixture of hard currency and portions for each Cadbury Plc portion. This offer included 300 pence in hard currency and 0.2589 new Kraft portions for each Cadbury Plc portion.
Alternate take-overs/mergers from Hershey, Nestle and Ferrero
Hershey, Nestle and Ferrero have made involvement in geting Cadbury Plc. Accepting offers from any of the mentioned companies would be more advantageous than to accept Kraft ‘s command, since these are more confectionary marked oriented and therefore are concerned with similar issues Cadbury Plc is confronting. For illustration, Hershey, the largest U.S. cocoa shaper, has ‘about 14 per centum of its $ 5.13 billionrevenueoutside its place market in 2008 ‘ , whereas Cadbury Plc has 22 per centum of gross revenues coming from outsideNorth America ( Bloomberg ) . This merge could take to strongest and biggest planetary confectionary company. Nestle, the universe ‘s biggest nutrient company, could stand in and ‘buy back the U.S. rights to Kit Kat and Rolo trade names from Hershey, giving Hershey the power to fund a combination with Cadbury… another option would be for Nestle to get Cadbury ‘s gum unit… and so sell the cocoa division to Hershey orFerrero SpA ‘ ( Bloomberg ) .Expand emerging markets ( India, South America, Middle East, and Africa )
Harmonizing to Todd Stitzer, CEO of Cadbury Plc ; the company has the largest concern of any of rivals in emerging markets that already contribute for more than a 3rd of grosss. Cadbury Plc has already created strong foundations such as distribution systems and consumer relationships in these states. For illustration, the company has experienced over 20 % one-year growing for the last three old ages in India ( Creating Brands People Love, 2009 ) . Expand developed markets ( Europe, North America, Australia )
Although these markets are well saturated, harmonizing to Cadbury Plc there still is much untapped potency ( Creating Brands People Love, 2009 ) . Expansion here is based on largely new developed merchandises and inventions in advertisement.
Concentrate more on luxury and natural merchandises
Since consumer consciousness, such as healthy life style, just trade issues etc. , is lifting, more consumer attending is made on natural and luxury merchandises. Recent coup d’etat of Green and Black ‘s, The Natural Confectionery Co and Fair-trade enfranchisement proves the importance. New relevant coup d’etats could better the portion of the turning market.
Invest more in development and inventions
In order to spread out, particularly in the developed markets ; scientific discipline and development drama great portion. Making new merchandises sometimes is the lone manner to spread out in such parts, because of high market impregnation.
Move mills to states with less expensive work force
Since mills are largely based in western states, high and lifting rewards play major function for little border, hence traveling to states with less expensive work force could be good ( for case, in Europe, traveling from UK and France to Eastern European states and the Baltic States, In Northern America, traveling from USA to Mexico ) , nevertheless, there would be strong resistance from western authoritiess and brotherhoods that happened during recent mill move from UK to Poland. ( Daily Mail )
6.2. Future Business Environment
New engineerings, alterations in cultural development and differences between civilizations globally lead Cadbury Plc to be flexible in nearing the alterations to ease the addition of market portions. It is of import to be cognizant of possible alterations today to be successful tomorrow. Following are the possible alterations in future concern environment.
Changing consumer consciousness and behavior
Consumers could go more interested in natural and healthier merchandises because of turning consciousness of healthy life style. Furthermore, environmental issues and sustainability become more of import, therefore Cadbury Plc should go on its ‘green ‘ runs such as ‘Purple Goes Green ‘ and ‘Cocoa Partnership ‘ . Supporting 3rd universe states has already become a norm in the market, therefore the company should go on keeping up the coaction with ‘Fair-trade Foundation ‘ ( Creating Brands People Love, 2009 ) .
Ad and publicities
As mentioned, in different parts, different attacks to advertisement are needed. This is to be brought farther with increasing alterations in cultural values and apprehensions that need to be integrated in future runs. With promotion of engineering, on-line advertisement and online shopping would be needed to be developed. Increasing importance of stigmatization is to come, specifically in developed markets due to high market competition and impregnation. Cadbury Plc is being one of the most original in developing new advertisement runs ( e.g. Cadbury ‘s Gorilla, Eyebrows ) , go oning this pattern would be good in future.
Increased concentration on emerging markets
More companies are understanding the turning chances in developing markets that could shortly go merely as or even more profitable than developed markets.
Besides new engineering available to pass on with consumers, new progresss in technology and scientific discipline is increasing, take downing fringy costs and increasing efficiency. Therefore it is important to put in R & A ; D for future environment.
6.3. Fiscal Decisions and Recommendations
As Cadbury Plc is sing liquidness jobs, low employee productiveness and comparatively high rewards, the company could travel to cheaper work force countries to cut down costs and increase productiveness. That would lend to more effectual resource allotment, better efficiency in supply concatenation and end product, and lower marginal costs. Effective resource allotment is the key to win to spread out emerging markets ( e.g. Brazil, India ) . Cadbury Plc presently has the largest portion gross but there is merely a 0.1 % difference between them and their closest challengers Mars/Wrigley. Therefore, it would be good for Cadburys to equilibrate the portion of gross across its operating parts, i.e. increase the portion of gross of Asia, South America, Middle East and Africa.
An option would be to sell these sites and concentrate on their three chief parts of gross but it is non recommended since these markets have strong possible – even today a tierce of gross comes from these markets, therefore it should be ranked as the highest precedence. In the instance of developed markets ( North America, Europe ) different attack should be made – since these markets are extremely saturated and with many strong rivals, puting in merchandise development and engineering would non merely supply securities for future concern but besides could increase the market portions. Amalgamations and coup d’etats should be considered as the simplest manner of deriving market portions.
That leads to possible command credence, if one is to be made, from Hershey or Ferrero, nevertheless, Kraft ‘s command should be ignored due to the deficiency of experience in the confectionery sector when compared to the other companies mentioned antecedently. Cadbury Plc should go on its originality in successful advertisement runs ( Cadbury ‘s Gorilla, Eyebrows ) that has led non merely to many selling awards ( Purple B & A ; I, 2009 ) , but besides provides better and more effectual trade name communicating. Other modern attacks to publicizing such as on-line advertisement and publicities ( e.g. Trident and the Beyonce Tour ) should be implemented more due to of all time altering client behavior. Recent questionnaires have shown that increasing the consciousness of Cadbury Plc‘s relationship with Trident and Halls would increase their involvement in those merchandises, farther increasing Cadbury Plc ‘s place in the confectionery market.
Cadbury Plc must besides increase the degree of motive in employees as Cadbury Plc presently fall behind their challengers in employee efficiency. Implementing wages strategies for high productiveness may decide this issue and may retain employees for longer. Cadbury Plc could put in a low Calorie bite due to the increased consciousness of wellness issues. This could farther hike Cadbury Plc ‘s place in the confectionary market as Cadbury Plc presently lacks a low Calorie scope. Cadbury Plc ‘s net income border could be cut dramatically due to expected rises of natural stuffs, it may be good in the long tally to put in Cadbury Plc‘s ain chocolate farm alternatively of importing from 3rd parties. Cadbury Plc may besides hold to take a cut in their net income border to derive a wider portion of the market. This is due to supermarket own-label trade names which are normally cheaper than Cadbury Plc ‘s and may take a portion of the market due to the economic instability.
There are many possibilities that could be implemented to increase Cadbury ‘s laterality in the confectionary market. Cadbury Plc should earnestly see the advantages of unifying with the likes of Hershey or Ferrero to supply more capital and cut down the liquidness jobs within the company. This would let for enlargement in the current markets every bit good as increased investing in future stigmatization communicating
Besides, Cadbury Plc could concentrate more on emerging markets ; the emerging economic systems have been sing a rapid growing rate for the last decennary hence a great chance for increased gross. Introducing new characteristics based on the parts taste penchant on established trade names such as dairy milk can give them a competitory advantage. A good illustration was in India with the trade name fringe benefit which increased Cadbury Plc market portion.
The company should seek to put both clip and money into their research and development sectors to invariably better their stigmatization, to maintain their merchandises up to day of the month taking into consideration the demands of today ‘s society. They could besides better on advertisement which would give the benefits of making out to consumers desiring healthier options for illustration by increasing the consumer cognition of the wellness benefits of dark cocoa.
Cadbury plc Essay
Cadbury plc, formerly known as Cadbury-Schweppes plc, before it demerged from its Americas Beverages manufacturing business in 2008 (Peston, 2008), is the world’s leading confectionery manufacturer and distributor - Cadbury plc Essay introduction. Cadbury plc “operates in over 60 countries, works with over 35,000 direct and indirect suppliers and employs around 50,000 people” (Cadbury India Ltd. , 2008). (i) Cadbury’s Vision Statement According to CEO Todd Stitzer, Cadbury’s vision statement is outlined in its Vision In Action (VIA) plan (refer to Appendix A), that covers the company’s plans for the next 4 years. Our objective is to deliver superior shareholder returns by realizing our vision to the be the world’s biggest and best confectionery company. We are currently the biggest, and we have an enduring commitment to become the undisputed best. At the heart of our plan is our performance scorecard, delivered through our priorities, sustainability commitments and culture (Cadbury plc, 2008).
Cadbury plans to “deliver superior shareholder returns” (Cadbury plc, 2008) by measuring its financial progress in the areas of growth, efficiency, capabilities and sustainability from 2008 to 2011 (Cadbury plc, 2008). (ii) Cadbury’s Mission Statement Cadbury’s mission statement outlines its overall business objective and its commitment to its customers. Our core purpose “Working together to create brands people love” captures the spirit of what we are trying to achieve as a business. We collaborate and work as teams to convert products into brands.
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Simply put, we spread happiness! (Cadbury plc, 2008) Furthermore, Cadbury stresses the importance that it places on quality. Apart from its mission statement, it also references the slogan, “Cadbury means quality” as an integral part of its business’s activities (Superbrands, 2008). Lastly, Cadbury also aims to put “A Cadbury in every pocket” (Karvy Research, n. d. ) by targeting current consumers and encouraging them to make impulse purchases and by maintaining a superior marketing mix (Karvy Research, n. d. ).
Cadbury India Ltd, as the Indian subsidiary of this confectionery giant, also utilizes the same mission and vision statements of its parent firm when operating in the Indian market, albeit with different business strategies and approaches. Since Cadbury’s activities vary from country to country, this report will simply examine the activities of Cadbury India Ltd in the Indian market, one of the fastest growing confectioneries markets in the world (Financial Express, 2008). Products offered by Cadbury India Ltd.
Cadbury plc manufactures and sells three different kinds of confectionery: chocolate, candy and chewing gum (Cadbury India Ltd. , 2008), but in the Indian market, its product line is split up into the chocolate confectionery, milk food drinks, candy and gums categories (Cadbury India Ltd. , 2008). This report will examine two different products offered to the Indian market by Cadbury India: Cadbury Dairy Milk (chocolate category) and Cadbury Bournvita (milk drinks category). (a) Cadbury Dairy Milk (i) Pricing Cadbury India enjoys controlling 70% of the confectionery market in India, of which 30% is directly due to the success of its Dairy Milk product, which averages sales of around 1 million bars per day (Cadbury Dairy Milk, 2008; Marketing Communications, 2008). Cadbury Dairy Milk bars are Cadbury India’s cash cow in the country’s 4000 tonne, Rs. 6. 50 billion (around 1. 6 billion CAD) chocolate market (Gupta, 2003), as such, has been designated its flagship brand (Cadbury India Ltd. , 2008; Chatterjee, 2000).
Part of Cadbury Dairy Milk’s success lies in its shared history with India’s identity (it was first sold in 1948, one year after the country was made independent from the British Empire) (Cadbury Dairy Milk, 2008) but also in the fact that it is priced relatively cheaply (Chatterjee, 2006) and is relatively affordable by the Indian masses. Even its smallest Dairy Milk bar, the 13 gram version, is priced at Rs. 5 (about 0. 13 CAD), affordable by many middle-class Indians as an occasional treat, but not affordable for those who buy from the less-then-3-rupee (Rs. ) segment of the market (Chatterjee, 2006). Its history of operating in the country and its average level pricing of chocolate bars, has made the Cadbury dairy Milk bar synonymous with high quality, affordable pure milk chocolate for many Indian customers (Cadbury Dairy Milk, 2008). (ii) Consumer segments served and advertising/promotional strategies used Cadbury India Ltd continuously markets Dairy Milk as a relatively inexpensive treat, towards market segments divided by age, income, technological knowledge and health-consciousness.
In the 1990’s, the company stated promoting the chocolate for “the kid in everyone”, in an attempt to appeal to adults as well as children (Cadbury Dairy Milk, 2008). In order to appeal to potential lower-income customers in the villages of India, further marketing in the form of the “Real taste of life” campaign (Cadbury Dairy Milk, 2008) attempted to absorb these customers into its market share.
By using opinion leaders from Bollywood and using extensive advertising in newspapers, television, magazines and massive billboards across the country, Cadbury managed to capture the attention of the nation and cement its market share superiority in India (Cadbury Dairy Milk, 2008; Marketing Communications, 2008). Nowadays, Cadbury’s is trying to tap into the potential market of younger generation Internet users by offering contests and hosting competitions online, the most notable being its “Pappu Pass Ho Gaya” (Pappu Passed! joint venture operation with Reliance India Mobile, a branch of India’s largest network service provider, which allowed students across the country to check their examination grades online and celebrate with Cadbury’s Dairy Milk if they did well (Cadbury Dairy Milk, 2008). Furthermore, Cadbury India continuously develops new versions of its Dairy Milk brand in order to keep its adult and children consumers satisfied and interested.
Variations include the Fruit & Nut and Crackle & Roast Almond variations (Cadbury Dairy Milk, 2008) which are meant for snacking, as well as the Cadbury Dairy Milk Desserts, “to cater to the urge for ‘something sweet’ after meals” (Cadbury Dairy Milk, 2008). The Cadbury Bournville Dark Chocolate bar, similar to the Dairy Milk bar, targets the health-conscious market segment of the chocolate market, who wish to enjoy the taste of dark chocolate but also its health benefits (Financial Express, 2008). Lastly, Cadbury Dairy Milk Wowie, with Disney haracters embossed on each chocolate square (Cadbury Dairy Milk, 2008) clearly targets the child segment of its market. Cadbury’s market segmentation is quite effective because it allows them to target all three major market segments: children, adults and technologically-savvy consumers, but it does not serve those segments of the market that have been divided by income levels. Although Dairy Milk is affordable to the upper and middle-income consumers who view it as a mid-priced item (Kochhar, 2007), lower income consumers who buy from the less-than-3-rupee range of chocolate cannot afford to buy Cadbury Dairy Milk regularly.
Cadbury will need to address the needs of this market segment in order to boost its sales of Dairy Milk. Indian consumers seem to be satisfied with Cadbury Dairy Milk as its marketing promotes it as an occasional indulgence, despite popular opinion that it is a relatively expensive luxury product (Cadbury India Ltd. Analysts Meet, 1999). This restrained marketing has allowed the chocolate to slowly become a measure of quality for many Indians, as Cadbury Dairy Milk is their “Gold Standard” for chocolate, where the “pure taste of Cadbury Dairy Milk defines the chocolate taste for the Indian consumer” (Cadbury India Ltd. 2008). In fact, Cadbury Dairy Milk was voted one of the India’s most trusted brands in a poll conducted in 2005 (Cadbury Dairy Milk, 2008). (iii) Product Positioning Cadbury India Ltd’s main sources of competition come from Amul, India’s own dairy company and Nestle India, Nestle’s subsidiary in India. As seen in Appendix B, Cadbury India controls around 70% (Cadbury India Ltd. , 2008) of the chocolate market, whereas Amul controls around 2% (Dobhal, n. d. ) and Nestle India around 27% (Nestle to expand, 2008).
As mentioned earlier, Cadbury’s main strength comes from it ability to market Dairy Milk products “through altering the theme and functionality of the product as the time demands” (Cadbury India Ltd Analysts Meet, 1999). Although this has allowed it to control more of the market than its closest competitors, the reasons for its success may also lie in the fact that many Indians still view its chocolates as luxury products (Cadbury India Ltd Analysts Meet, 1999) and not as household goods. This contradicts Cadbury’s assertion that its leadership is maintained by a “superior marketing mix” (Karvy Research, n. . ).
Cadbury India may have misinterpreted the popularity of Dairy Milk as a sign that the Indian public has accepted it as a household product. In fact, the booming economy and the increasing affluence of the burgeoning middle class (Basu, 2004) has promoted the use of status symbols, where the regular consumption of so-called luxury chocolates such as Cadbury Dairy Milk is viewed as fashionable (Kochhar, 2007). Despite Amul’s longer history in India, its chocolates are viewed as being local and not luxurious, justifying a lower price tag (Chansarkar et al. 2006). Cadbury India must maintain its current marketing strategy but slowly start to promote Dairy Milk as a household good so that consumers spend their rising disposable incomes on it and boost its sales (Rai, 2006). Amul’s origins as a community welfare program in Gujarat, one of India’s most industrialized states, to becoming a national enterprise (Amul, 2008) spanned the decades during which newly-independent India forged its identity, thus becoming an integral part of India’s identity and giving its marketing strategy a new source of authority.
Cadbury simply cannot match this kind of national endorsement, so by at least promoting the fact that it has been operating in India for almost as long as Amul, it can try to be “Indian” too. This, in combination with the longest running advertising campaign that Amul is famous for gives it a brand awareness boost. Moreover, Amul’s reputation for credibility, safety and consumer satisfaction was only reinforced when Cadbury India’s Chinese-made products were found to be contaminated with worms and melamine (Sinn and Karimi, 2008).
The “Gold Standard” (Cadbury Dairy Milk, 2008) was no longer gold, nor was it a standard anymore, as people’s confidence in its safety was shattered. In order to position its products as safe and affordable treats once again, Cadbury India should make attempts to be even more sensitive to consumer demands. Customer satisfaction must be given the utmost importance, even if the company has to run at a loss for a few months, as this will eventually allow it to negate some of the extensive damage that this negative publicity has to the firm’s reputation.
The new extra-layer packaging of chocolate that is now being used in the manufacture of Dairy Milk is a good first step to take in reclaiming some of the public’s trust (Vivek, 2004). Lastly, Amul’s innovative ideas will be the bane of Cadbury. Their release of diabetic friendly chocolate and chocolates catering to different ethnic flavours (Janve and Dogra, 2007) as well as chocolates for festive seasons allow them to rapidly sway consumers over to their products. This accounts for their soaring annual market growth rates of 18% annually (Indian Express, 1999).
In comparison to Nestle India however, Cadbury India’s longer track history gives it a competitive edge. Cadbury has more of a brand recognition power than Nestle has, and it uses this extensively to promote Cadbury Dairy Milk all over the country. Nestle still has to break into the Indian market; one way to do this would be to follow Amul’s lead and develop and market products that meet specific ethnic needs, such as chocolates for Diwali and Rakshabandan (two different Indian festivals) (Kochhar, 2007) , concepts that Cadbury India has yet to explore.
Cadbury India must counter this threat that Nestle and Amul pose, namely, the production of chocolates specifically for the festive seasons of India. By doing so, Cadbury will be able to position its chocolates as chocolate specifically designed for India, endearing it to the consumers and boosting its sales. (a) Cadbury Bournvita (i) Pricing Cadbury Bournvita was first sold on the Indian markets in 1948, soon after Cadbury India Ltd (then known as Cadbury-Fry) was incorporated (Cadbury Bournvita, 2008).
As a result of being one of the first products offered on the Indian market by Cadbury, combined with successful marketing strategies and promotional offers, Cadbury Bournvita enjoys a 17% market share of the malt-based food drink market (Cadbury Bournvita, 2008). India alone accounts for 22% of the world’s malt-food milk drink retail sales (BeverageDaily, 2004), but unlike Cadbury Dairy Milk, Cadbury Bournvita does not control a large share of India’s malt-based food drinks market.
Bournvita is largely sold in 500 gram bottles for around Rs. 95 (2. 35 CAD) a piece despite other sizes being available, and is perceived to be quite expensive (Hawa, 2002). However, due to its long history with India, and the fact that it is used a staple source of nourishment by Indian mothers for their children, Bournvita’s still remains popular (Hawa, 2002). (ii) Consumer segments served and advertising/promotional strategies used Cadbury markets its Bournvita product in diverse market segments.
Bournvita has been marketed mainly towards children, but also finds followers amongst elderly people, pregnant women and athletes (Hawa, 2002; Cadbury Bournvita, 2008). Continuous brand re-invention, a “rich brand heritage” and complete overhauls in packaging, product design, promotion and distribution have allowed Cadbury Bournvita to maintain its 17% market share over the years in India’s 220,000 tonne malt-food market (Cadbury Bournvita, 2008; BeverageDaily, 2004).
Over the years, Cadbury has marketed Bournvita in order to appeal to the change in perceptions and tastes of its consumers. It focused on the “Good Upbringing, Goodness that grows with you” campaign to promote Bournvita as an essential health drink for children (Cadbury Bournvita, 2008). This campaign was conducted mainly on the radio, the primary medium of communication for many Indians at the time (Ranjan, 2007).
This campaign was followed by the massively successful “Brought up right, Bournvita bright” television, newspaper and magazine campaign (Cadbury Bournvita, 2008) to reach out to more children and promote the link between intelligence and Bournvita, a concept that appealed to many children. In order to cement their consumer base and ensure brand loyalty, in the 1990s, Bournvita challenged the public by promising complete physical and mental development for its consumers (Cadbury Bournvita, 2008), where the subsequent television marketing campaign secured Cadbury Bournvita’s place in the Indian market.
The most recent marketing campaign undertaken by Cadbury Bournvita is the one specially designed to harness consumers’ uncertainty about the challenges of the new millennium. The “Real Achievers who have grown up on Bournvita” campaign focused on preparing consumers with the health, vitality and nutrition necessary for facing the challenges of the new millennium (Cadbury Bournvita, 2008) and allowed Cadbury Bournvita to keep “pace with the evolving mindsets of the new age consumers” (Cadbury Bournvita, 2008).
This marketing campaign was broadcast on television and published in newspapers in an effort to recruit contestants (Kapoor, 2007). The release of new versions of the original Bournvita such as Bournvita 5-Star, combining the flavour of the original chocolate Bournvita with the flavor of Cadbury 5-Star (Cadbury Bournvita, 2008), one of its caramel chocolates helps maintain consumer interest.
The new product is being aimed at the segment of children who want nutrition but also taste (Cadbury Bournvita, 2008). By also sponsoring the Indian Olympic team to the Moscow Olympics of 1980 (Cadbury Bournvita, 2008), Cadbury Bournvita has managed to appeal to an athletic market segment as well. Recently, by supporting sports competitions and sponsoring athletes across the country, Cadbury Bournvita has managed to promote itself as a sports drink for athletes (Kapoor, 2007).
Furthermore, one of the most famous Indian examples of Cadbury Bournvita’s ingenious marketing is its sponsorship of the Bournvita Quiz Contest. The Bournvita Quiz Contest is the longest running quiz show in India, having first been aired in 1972. The Contest spans 7 countries, has involved more than 4000 schools and more than 1 million students, making it one of the most popular high school contests (Cadbury Bournvita, 2008), as well as one of Cadbury’s most successful marketing ventures till date.
However, despite Cadbury Bournvita’s history of serving consumers in the Indian market, and amidst allegations of declining quality and taste of the Bournvita brand (Hawa, 2002), many customers still feel that Bournvita does not have the appeal that other brands, such as Horlicks do (refer to Appendix C) and thus the market is slowly switiching over to white malt-based food drinks such as Horlicks (Karvy Research, n. d. ; Cadbury India Ltd Analysts Meet, 1999). (iii) Product Positioning
The malt-based food drinks market in India is divided into brown drinks and white drinks categories (Cadbury India Ltd Analysts Meet, 1999; Karvy Research, n. d. ), with white drinks being popular in the southern and eastern parts of the country, and the brown drinks being popular in the northern and western parts of the country (Karvy Research, n. d. ). Cadbury Bournvita’s major source of competition comes from GlaxoSmithKline’s Horlicks and Heinz Food’s Complan.
As seen in Appendix C, Horlicks is the market leader with a 44% market share (Chatterjee, 2006), followed by Cadbury Bournvita with its 17% market share (Chatterjee, 2006) and then Complan with its 13% market share (Samajdar, 2006). As mentioned earlier, the malt-drinks market is split up into the white and brown drinks categories. The white drinks category is mainly led by Horlicks whereas the brown drinks category is led by Bournvita (Karvy Research, n. d. ).
Lately, more consumers have started switching over to consuming white drinks than brown drinks, thereby giving Horlicks a larger market share than Bournvita (Karvy Research, n. d. ). When competing with Horlicks, Cadbury Bournvita’s current marketing strategy is simply not enough. Given than Horlicks has been operating in the Indian market for longer than Cadbury (Horlicks, 2008), this larger market share may be explained by more consumer familiarity with Horlicks than with Bournvita, however, Horlicks’ extensive marketing campaigns may also have played a part.
Horlicks has always marketed itself as a “Great Family Nourisher” with products such as Mother’s Horlicks designed for different members of the family (Horlicks, 2008), which makes it more appealing to a wider section of the market, with products designed for different members of the family, such as Mother’s Horlicks (Horlicks, 2008), than Bournvita’s mainly child-oriented approach. Thus, even elderly and convalescent consumers can consume the product without feeling conscious of consuming a child-only product.
Even the Bournvita Quiz Contest, effectively Bournvita’s longest running marketing campaign, mainly attracts more child consumers to its product (Radakrishnan, 2002), and thus cannot compete with Horlicks’ wider appeal. Thus, the solution lies in Cadbury India marketing Bournvita as an adult drink as well. Only then will it be able to compete effectively with Horlicks. Meanwhile, Complan’s market share of 13% (Samajdar, 2006), is less than Bournvita’s. Although both products are targeted at children, Complan has marketed itself as a “perfect nutritional supplement” (Complan, n. d. rather than as a healthy drink for children, which is Bournvita’s approach. Since the words ‘nutritional supplement’ connote a need for extra nourishment, this may possibly work against Complan as many families may feel that their child receives enough nourishment and does not require more. Although Cadbury Bournvita currently has a larger market share of the two, it must continue to market itself as a child-friendly drink, and not as a nutritional supplement, in order to maintain its superiority. Delivering Cadbury products to customers India’s 300 billion USD retail market is growing at a rate of 30% per annum (Rai, 2006).
In a country where half a billion people are under the age of 25, disposable incomes are on the rise and the economy is growing at a rate of 8% annually (Rai, 2006), selling treats such as Cadbury Dairy Milk bars and Cadbury Bournvita powder will generate massive returns. However, in order to be able to sell these products to customers, proper distribution channels must be identified. The Indian retail sector is composed of 97% “family-run, street corner stores” (Rai, 2006) and the remaining 3% consisting of malls and shopping complexes. Therefore, Cadbury India Ltd. roduces its products in factories spread geographically across India, but also sells its products through a chain of over 300,000 retailers spread across India (Cadbury India Ltd Analysts Meet, 1999). The efforts of these retailers are augmented by the support of 1900 distributor locations and 27 depots (Cadbury India Ltd Analysts Meet, 1999). Furthermore, of a total of 3600 locations that sell Cadbury products, almost 3100 locations are directly supplied by Cadbury India Ltd distributors at least thrice a month (Cadbury India Ltd Analysts Meet, 1999).
These distribution networks give Cadbury India its competitive edge in India’s massive consumer market. SWOT Analysis of Cadbury India Ltd. Cadbury India Ltd’s objective of putting a “Cadbury in every pocket” (Karvy Research, n. d. ) can only be done if the company markets its Cadbury Dairy Milk as a household good and its Bournvita as a family-friendly drink. Until then, its Cadbury Dairy Milk success will only be short-term in nature and Bournvita will not be able to reverse the trend towards the consumption of white malted drinks (Cadbury India Ltd Analysts Meet, 1999) and compete with Horlicks.
As seen in Appendix D, if Cadbury Dairy Milk can be marketed extensively enough to break the ‘luxury’ perception that consumers have of it currently (Cadbury India Ltd Analysts Meet, 1999), it can benefit from inelastic demand as a household product, thus generating a constant stream of revenue and cementing the Dairy Milk brand as a cash cow product. This objective can be accomplished by simply building on the good reputation and trust that it has earned, and by listening to the needs of its consumers.
Bournvita meanwhile needs to be extensively marketed in order to reduce the damaging effect that Horlicks’ family-friendly marketing mix is having on its market share. Furthermore, the key threat that can affect Cadbury India Ltd’s success in India is Amul’s innovative marketing strategy. As a result of its witty marketing strategies, length of time serving India and its ability to develop and market products specifically tailored for Indian consumers, Amul’s yearly growth rate of 18% may slowly start to eat away at Cadbury’s success (Indian Express, 1999). Conclusion Cadbury India Ltd’s position in India is relatively strong.
In order to maintain its lead in such a large market, it must learn to address the specific needs of its consumers and continue to maintain their goodwill, while also analyzing its competitors’ marketing strategies. By doing so, it will be able to isolate the benefits and drawbacks of its competitors’ marketing mix and use those to its own advantage. Cadbury must also appreciate the advantages of a positive reputation and always stress consumer satisfaction. One key aspect of this lies in maintaining the safety of its products so that the name of Cadbury is always synonymous with high quality safe products.
Repeats of the recent melamine and worms issues cannot be allowed to happen as once consumer confidence in its brand name is shattered, Cadbury India’s brand recognition aspect will immediately work against it by highlighting the link between its name and contaminated food products. This will cripple sales and reverse the fruits of 70 years of hard work in the country, leaving the path open for more efficient local companies like Amul to learn from Cadbury India’s mistakes and take over its market share.