STEP Analysis is a strategic tool used by management to examine the impact of four external factors (Social, Technological, Economic, and Political) on an organization’s performance. This method helps improve a company’s profitability. The social factor involves understanding ethical and cultural beliefs, demographics, lifestyles, and education which can affect growth. Conversely, changes in technological factors can modify the competitive environment of a company.
In order to develop new strategies and products, it is important to consider the environment, ecology, and financial costs associated with improvisation and innovation. The company’s economic structures, including stock exchange fluctuations, interest rates, inflation rates, and national economic policies and performance, directly affect its operations. Additionally, changes in government, political pressures, opportunities for growth or change in the political system, and leadership values also have a significant impact on the company.
The text covers various aspects of Cadbury’s business in India, such as taxes, rules, political factors, and involvement. The word “chocolate” has its origins in ancient civilizations like the Aztec and Maya in central America. Chocolate was originally made from roasted cocoa beans and was primarily consumed as a drink throughout history. It held great value as a precious gift for occasions like the birth of a child or religious events and even served as currency for trade purposes. Sir Hans Sloane, an English doctor, introduced a chocolate milk recipe from South America to England, which eventually led to the creation of Cadbury milk chocolate. Global cocoa production consists mainly of hybrid and forestero trees in West Africa, with only 10% being accounted for by the cocoa crillo variety. Hot regions with ideal soil conditions facilitate the growth of cocoa plantations. The process of making chocolate involves harvesting, fermenting, drying, cleaning, roasting, crushing and shelling cocoa beans; blending them; and grinding them to produce cocoa butter.
Cocoa powder. Kneading. Rolling. Conching. In Birmingham, England, in 1824, at Bull Street, John Cadbury began vending coffee, tea, and drinking chocolate. Eventually, he decided to focus on chocolate drinks and beverages. He attained the prestigious title of Royal by the queen and ceased his tea business, opting to import cocoa into the UK instead. He experimented with numerous cocoa varieties, although the cost was not affordable for consumers. To overcome this challenge, he partnered with his brother and embarked on his entrepreneurial journey in the Cadburys chocolate making business.
One of the most significant inventions in the confectionery industry was the introduction of “Cadburys Dairy Milk,” a molded chocolate, in 1905. Despite numerous competing brands from leading chocolate companies, Dairy Milk achieved success and recognition 95 years later. Step Analysis Social remarks, “The story of Cadbury dairy milk started in 1905 at Bourneville UK, but the journey with chocolate lovers in India began in 1948.” The UK confectioner Kraft foods and Cadburys formed a business deal and aimed to enter the international market.
Despite the challenges faced in the Indian market, Kraft remained determined to introduce a range of products including toblerone, milka, cheese, and Oreo cookies. However, these offerings were not readily accepted by Indian consumers. Nonetheless, C. Y. Pal, the non-executive chairman of Cadbury India, described India as a successful market for both Kraft and Cadbury, stating that it has been a “very happy story”. Cadbury has become the largest confectionery company in the country over the course of 60 years.
The company’s commendable accomplishments include overcoming obstacles and diversifying its product offerings in chocolates, drinks, gums, candies, etc. However, despite the modern preferences of Indian customers and the company’s efforts to cater to them, the traditional culture of enjoying mithai remains irreplaceable. Ramesh Srinivas, executive director of KPMG Advisory services India, acknowledges that Indians have a massive sweet tooth but it is primarily filled with mithai rather than chocolate. Even Cadburys – a multinational giant – struggled to penetrate the market due to low chocolate consumption in India at only 54gms per capita.
Cadbury collaborated with Amul in an attempt to create a fusion of mithai with chocolate in an Indo-Western style. However, this concept did not attract customers initially. In response, Cadbury conducted extensive research and began promoting their products through various media channels. They eventually came up with the catchy slogan “just for kids in the 90s” and shifted their focus to targeting teenagers who could relate to memorable moments in life, such as a girl dancing on a cricket field. This particular campaign won the prestigious “campaign of the century in India” award. Subsequently, Cadbury aimed at promoting chocolate consumption among adults, led by the renowned actor Mr. Amitabh Bachchan. This campaign portrayed special relationships, festive occasions, and reunions, showcasing the happiest moments in life with the slogan “kuch meeta ho jaya” (let something sweet happen). This clever approach successfully bridged the cultural gap between chocolates and mithai in India. In addition, Cadbury made a technological leap by introducing a purple packaging that made their brand easily recognizable in the Indian market.
Technically, Indians have different tastes when it comes to food and confectionery. Therefore, the variety of chocolates that Indians desire, apart from Dairy Milk, includes “fruits and nuts,” “crackle,” and “roast almond.” These flavors were popular among both young and adult consumers. To attract children, Cadbury began offering goodies and rewards with the purchase of their chocolate. The creative team launched an advertising campaign through various media channels, showcasing Cadbury chocolate as a luxurious alternative to the smaller confectionery brands in India.
The marketing strategy and campaign for the famous Indian game cricket has also improved the punch lines. As a result, it dominated 70% of the share market. In India, the evening snack market was significant, leading to the introduction of Cadbury’s bytes. Cadbury has retained its reputation for providing high quality and value for money. Additionally, they introduced Cadbury dairy milk as a dessert with the slogan “something sweet after a meal.” For kids, they offered the wowie chocolate with Disney characters imprinted on it. Another product was the 2in 1 dairy milk, which consisted of a combination of white chocolate and milk chocolate.
Economically, the acquisition of Cadbury’s and Kraft’s was priced, but they individually grew in strength in most countries. Kraft’s became the key market globally when they joined forces, but in India, they relied more on Cadbury’s, making it the leader in the confectionary business. Compared to Cadbury, Nestle was a distant number two. According to the marketing research firm AC. Nelson, Cadbury’s brand, along with its milk additive Bourn Vita, earned 70% of India’s market, generating $425 million. It also held 30% of the sugar-boiled confectionary category, which brought in $1 billion. Cadbury’s business network spans across India’s 1.2 billion shops, as India still has a predominantly agrarian society where food is primarily purchased from neighborhood stores known as ‘kirana shops’. Despite Cadbury’s attempts to launch new products like their first apple drink and dollops ice-cream, Indian consumers still recognize the purple color as synonymous with Cadbury’s brand. In India, Cadbury had to adjust its purchasing price, which globally stood at around 10% with the inclusion of interest and taxes. Krafts paid a margin of 27%.
Cadbury gained a strong presence in India through its low prices. In addition, retailers in India focus on doing business based on daily working capital and fast-moving products. This led to a marketing strategy where Cadbury segregated their products into different lines such as gums, chocolates, mints, drinks, etc. Foreign markets attempting to enter the Indian confectionary market would face pricing challenges and potential losses. As a result, Cadbury adopted a localization strategy to cater to the unique tastes of Indian customers.
Most retailers in India do not have refrigerators, so they have introduced mini packs for Cadbury Dairy Milk products. These mini packs are designed to withstand the heat of India and keep the chocolate contained without any external influence. The cost of packaging has decreased from 50 cents to 4 cents. This strategy has benefited both retailers and consumers, as Cadbury has maintained quality, price, and adapted to the taste preferences of Indian consumers. This approach has been well-received and has successfully conveyed the message that value for money is maintained and satisfies Indian culture and taste.
Political The largest confectionery brand in the world, Cadbury chocolate, has entered the Indian market with its mouth-watering products. Despite taking 60 years to establish itself in India, it has a workforce of 50,000 employees across 60 countries. In India, its slogan is ‘creating brands people love’. Additionally, Cadbury has collaborated with the Indian government to develop cocoa cultivation and has conducted research at Kerala Agricultural University to educate farmers. Currently, it operates four categories in India: chocolate confectioneries, milk food drinks, gums, and candies.
The biggest global threat to Cadbury Schweppes was the Salmonella scare. Salmonella is a type of bacteria that was caused by a leaking pipe. This incident may have occurred during the process of mixing chocolate crumb at the Marlbrook chocolate plant, where it is turned into milk chocolate. Unfortunately, this information was not reported to the Food Standard Agency, resulting in the need to recall one million chocolate bars. The presence of this bacteria posed a serious health risk and led to a cost of 30 million pounds in damages for the company.
Despite facing six charges for breaching health and safety legislation, they decided to keep the entire stock. Their dedication to the environment was evident in their water conservation efforts at the Bangalore factory, where they implemented innovative techniques and started using solar energy to reduce carbon dioxide emissions and combat global warming. Additionally, they took a stance against the prevalent issue of child labor in South Africa’s cocoa cultivation industry, as it accounts for 90% of the world’s largest producers, and actively fought against it.
They not only created and supported needs for underprivileged children, but also brought smiles to their innocent faces with Cadbury chocolate. The brand followed a methodology that defined Cadbury as the gold standard for chocolate in India. Although Cadbury was already doing a lot of international business, when they entered the Indian market, Kraft had to rely on them.
Where a culturally different customer did not accept Kraft’s brands, after a slow persuasion the purple covered product that is Cadbury’s has taken over 70% of the confectionary market in a span of 60 years. They implemented excellent marketing strategies that focused on connecting with Indian values through slogans that touched the hearts of Indian customers and brought smiles to their faces, from children to adults. This strategy proved to be an exemplary demonstration of brand loyalty and a customer-centric approach to business. However, they faced numerous setbacks earlier when they failed to cater to the taste preferences of their customers.
Conclusion: ‘The Taste of Life’ is a slogan that has connected people for many years. It demonstrates how the product has become the most trusted in Mumbai, India and is considered a marketing leader that has changed the taste of India. Cadbury has also ensured that its product line includes nutritional elements. The candies and gums have been strategically designed to appeal to children, offering a range of both salty and sweet options. Cadbury Bytes are like snacks compared to their chocolate varieties, but they maintain the same level of quality.
The loyalty towards Cadbury’s brand, driven by its value and purpose, is significant and should not be underestimated. Consumers trust the exquisite product that has been enjoyed by every generation. Cadbury’s dispelled misconceptions and provided factual information about the benefits of chocolate through a global study called ‘CHOCOLOGY’. Visit http://www.cadburyindia.com/heritage/chocology.asp for more information on Cadbury’s heritage and ‘CHOCOLOGY’. Additional references about Cadbury can also be found at http://en.wikipedia.org/wiki/Cadbury_plc and http://www.cadbury.com/ourbrands/Pages/brandhistory.aspx. For further details, visit http://www.provenmodels.com/32.
