Cadbury-Schweppes plc Bussinesss Analysis

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 “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).

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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.

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 PositioningThe 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.

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