1. A Marketing Strategy template on Cadbury Chocolate A Template of marketing strategy- An overview for Submitted to- Prof. Jitendra Sharma Prepared by: Chetan Panara Vishal Soni Jay AkhaniXcellon Institute-School of Business Page 1
2. A Marketing Strategy template on Cadbury ChocolateXcellon Institute-School of Business Page 2
3. A Marketing Strategy template on Cadbury Chocolate OVERVIEW OF MARKET ANALYSIS* • CHARACTERISTICS • SALES POTENTIAL • SHARE ESTIMATE • PROFIT FROM SERVING Driving Forces and Implications for the Company in Order of Magnitude of EffectXcellon Institute-School of Business Page 3
4. A Marketing Strategy template on Cadbury Chocolate 1. Driving Force: implication/impact:Advertisement Increase in sales 2. Driving Force: implication/impact:Chocolate as desire Create needs 3. Driving Force: implication/impact:Brand Name Top of the mind recall 4. Driving Force: implication/impact:Brand ambassadors Increase brand awareness Increase brand equity Increase sales 5. Driving Force: implication/impact:Distribution AvailabilityXcellon Institute-School of Business Page 4
5. A Marketing Strategy template on Cadbury Chocolate Market Analysis We have already completed the first level of analysis in identifying the driving forces that lead to changes in our industry. The next step is to analyze individual consumers (individuals, and organizations) and to set out our primary and secondary segments or target markets. Customer Need AnalysisKey Customer Groups Customer Needs 1. Children 1. Desire for Chocolate 2. Youth 2. Gift 3. B2B 3. Revenue generation (Distributer, Wholesaler, Retailer and All type of channel members) 4. Parents 4.Care of own children 5. Old age 5. After having lunch or dinner as sweetXcellon Institute-School of Business Page 5
6. A Marketing Strategy template on Cadbury Chocolate Product/Service Analysis Product/Service Benefit 1. Chocolate 1. Tasty 2. Satisfactory 3. Healthy (In some cases) Target Segments on Order of Priority Now match the needs of the customer segments with the benefits of the product /service. Prime Market: Youth Secondary Market: Child Tertiary Market: Entire family Peripheral Market: Replacement of sweet Describe the characteristic of the target groups in a little more detail in order to understand the scope of the markets: Target Group: Primary Market Characteristics: • Influence by advertisement • Fashion-trend • Increased Use of chocolate as gift Sales Potential: • Biggest Market • Second highest population • India has highest number of youth in the world with 45% population will be youth by 2050 • Increase of chocolate average consumption by 8 times per head in last 7 yearsXcellon Institute-School of Business Page 6
7. A Marketing Strategy template on Cadbury Chocolate Share Estimate: According to us share of this segment should be around 45% in total sales Target Group: Secondary Market: Characteristics: • Increased influence on purchase over the period of time • Emotion bonding with family Sales Potential: Chocolate was and will be always a first desire for any children so there will be no doubt on the salespotential of this segment Share Estimate: • 25% Target Market: Tertiary Market: Family Characteristics: • To fulfill children’s need • To show care for children to the world and to increase their image in the public places Sales Potential:Biggest say on spending of incomeControl over the income Share Estimate: 17% Target Market: Peripheral Market Characteristics: Positioning from company as sweet replacer Use as gift instead of sweets on occasions like Diwali, Rakshabandhan, etc Sales Potential:India as Sweet friendly nationNumber of occasions to celebrate and give gift Share Estimate: 13%Xcellon Institute-School of Business Page 7
8. A Marketing Strategy template on Cadbury Chocolate Research Information is not always available from secondary sources but only from primary sources. A list of needs with cost estimates may identify gaps. Information Needed Source Cost 1. Choice of brand ambassador The KPMG Group 5o lacs 2. Route map for the sales team The KPMG Group 30 Lacs Competitive Analysis The first step is to identify the competition and analyze their strengths and weakness. Competitor Strength Weakness 1. Nestle Strong brand equity in High price, Low customer base high class market 2. Proctor Strong brand equity I low market Low distribution and low quality 3. Amul Strong brand loyalty of company still not a national playerXcellon Institute-School of Business Page 8
9. A Marketing Strategy template on Cadbury Chocolate Competitive Price Analysis Price Competitor Product/ServiceNestle High priceProctor Low priceAmul Same priceXcellon Institute-School of Business Page 9
10. A Marketing Strategy template on Cadbury Chocolate Competitive Analysis Key Success Factor Nestle Amul Proctor Product/Service Offering 3 3 2 Product Service 3 3 3 Product/Service Quality 4 4 3 Cost Management Marketing 4 4 2 Skills Marketing Effort 2 2 3 Technology 4 2 3 Sales Force Distribution 2 4 2 Pricing Manufacturing 2 3 2 Financial Strength 4 4 2 Location 2 3 2 Promotion/Advertising 3 3 3 Total 33 35 27Xcellon Institute-School of Business Page 10
11. Organizational Analysis This is the internal situation analysis. We need to know our internal strengths and weaknesses and where we stand in terms of being able to compete effectively in the marketplace. We also need to know our capacity to take advantage of opportunities. To start with, a listing of the past five years’ performance provides the sketch of the past successes. EvaluatorsBalance Sheet of Cadbury India ------------------- in Rs. Cr. ------------------- Dec 09 Dec 08 Dec 07 Dec 06 Dec 05 12 mths 12 mths 12 mths 12 mths 12 mthsSources Of FundsTotal Share Capital 31.07 32.18 33.20 34.36 35.71Equity Share Capital 31.07 32.18 33.20 34.36 35.71Share Application Money 0.00 0.00 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00 0.00 0.00Reserves 499.73 432.22 372.94 357.73 398.10Revaluation Reserves 0.00 0.00 0.00 0.00 0.00Networth 530.80 464.40 406.14 392.09 433.81Secured Loans 2.28 32.02 1.28 3.26 3.71Unsecured Loans 9.89 9.68 7.48 6.75 4.51Total Debt 12.17 41.70 8.76 10.01 8.22Total Liabilities 542.97 506.10 414.90 402.10 442.03 Dec 09 Dec 08 Dec 07 Dec 06 Dec 05 12 mths 12 mths 12 mths 12 mths 12 mthsApplication Of FundsGross Block 724.75 586.94 544.77 430.21 395.50Less: Accum. Depreciation 372.09 335.55 299.18 265.13 234.88Net Block 352.66 251.39 245.59 165.08 160.62Capital Work in Progress 152.53 123.86 25.58 82.18 29.55Investments 18.01 2.92 298.49 253.42 258.21Inventories 199.82 222.81 151.02 122.08 102.33Sundry Debtors 31.09 19.67 13.14 11.37 10.68Cash and Bank Balance 271.50 269.59 8.90 11.20 18.40Total Current Assets 502.41 512.07 173.06 144.65 131.41Loans and Advances 74.20 69.82 72.34 44.27 53.39Fixed Deposits 0.00 0.00 0.62 0.62 0.00Total CA, Loans & Advances 576.61 581.89 246.02 189.54 184.80Deffered Credit 0.00 0.00 0.00 0.00 0.00
12. Current Liabilities 534.02 433.56 370.89 275.84 205.09Provisions 22.83 20.40 29.91 25.96 13.41Total CL & Provisions 556.85 453.96 400.80 301.80 218.50Net Current Assets 19.76 127.93 -154.78 -112.26 -33.70Miscellaneous Expenses 0.00 0.00 0.00 13.68 27.35 S.W.O.T. Analysis The quickest way to get to a qualitative assessment of the company is via the strength, weakness, opportunity and threat analysis (S.W.O.T.).Strengths • Maintain a stable growth of a company, • With its brand name, Cadbury could counterattack the competitors. • Keep up with the financial strength by increasing its sales and profit. • Acquisition rules in UK, reduce its dependence on the UK market. • Overall, Cadbury has been successful through the new products (development) it has to offer.Weakness • Weak position in the US market. • Lack of distribution network. • Total French production of chocolate bars and confectionary has slowed down in more recent years, partly due to the economic slump. • Consumption of chocolate products, fall in demand due to the gloomy economic situation. • Sales of milk chocolate bars, which account for 24 per cent by volume of total sales of chocolate bars, decreased by 3.7 per cent.Opportunities • Through its confectionary product line, to build viable positions in prioritized markets. • Cadbury has other opportunities to have market development in Russia and China. • This company is also at the same time distributing its products via the internet – Develop Gourmet Line. • Besides developing the “Low Calorie” line of chocolates and sweets, they also offer the “Sugar Free” sweets line. • Therefore in order to get the product into a new foreign market, France, Cadbury would have good opportunities in store for them.Threats • The company should take note of the changes in the consumer’s buying trend.
13. • Price wars would occur between its competitors like Mars, Hershey and Nestle.• There would be seasonal sales slumps all year round which will reflect to an increase in cost of the raw materials needed.• Cadbury would then have to be prepared for growth of small local gourmet chocolates and regional candy manufacturers.• Also to be aware of the cost of packaging materials as it has increased over time.• Increase Marketing and Promotion globally by marketing products in emerging markets.
14. Identification of the Company’s Competitive Advantage Competitive Advantages (current)Innovation is at the heart of creating brands people love. Cadbury’s investment in technology of taste,flavor, packaging, process development and nutrition has never been greater. Cadbury is supporting ourbrands with innovative approaches to marketing and advertising. • Scale of production • Distribution channel • Loyal base of customers Competitive Advantages (to be developed) • Segmentation on the basis of income of the people in terms of branding • Packaging • Availability in the rural areas Issues that the Organization Needs to Address Based on the Situation Analysis 1. Create product on the basis of the competitors 2. Customize products on the basis of product portfolio the nations 3. Highest R&D player but still need to be consistent as Nestle.
15. MissionCadburys means quality: this is our promise. Our reputation is built upon quality: Our commitment tocontinuous improvement will ensure that our promise is delivered Objectives Overall Company Objectives: 1. Grow shareholder value…over the long term 2. “Deliver superior shareholder returns” 3. To deliver superior shareholder returns by 4. To make lots of chocolate realizing our vision to the world’s biggest and best confectionery company. . 5. Improve the quality of their chocolate Marketing Objectives: 1. To have offerings in 2. Cadbury in every pocket every category to widen the market 3. Marketing strategy is aimed at 4. Profitability Objective achieving this vision by growing the market
16. Financial Objectives: 1. To achieve the higher ROE in every financial year 2. To provide maximum benefits to the share holder 3. To become most transparent financial company 4. To increase the consistent cash inflow for its stake holders Strategy The first thing to do is to analyze the options and decide where the strategy is heading. In a general way, there are four directions: Current Product/Service New Product/Service Present Market I II New Market III IV Penetrations (Risk/opportunities in Quadrant I) Cadburys was to use market penetration for their product, I feel this would not help at all as the current product they have out in the market which is the Brunchbar, is not doing very well and people would not buy it, so I feel this would be the worst option to choose. Product Development (Risk/opportunities in Quadrant II) Cadburys was to use product development for their product; I feel this could possibly be successful, although after the failure of their previous product people may not buy their new product. Market Development (Risk/opportunities in Quadrant III) Cadburys was to use market development; I feel that again there could possibly be a chance of success, as they may have aimed their previous product at the wrong market, although people from the new market may also not be keen to buy their product. Diversification (Risk/opportunities in Quadrant III) It is clear that if Cadburys was to use diversification and aim a new product at a new market, there would be ahigh chance of success as long as the new product was to meet customer needs, which can be done throughextensive market research to help gather an idea of people who would regularly purchase their product
17. The ChoicesMarketing strategies are statements of the direction of the company’s marketing effort. Four 1choices must be made : 1. The chosen market and target segments. • Youth • Child • Entire Family • Replacement of Sweet 2. The market position and value provided to the selected market. • Advertisement related to all target segment • Use of holistic communication strategy 3. The distribution channels to be used to reach the market. Distribution • Chocolate needs to be distributed directly, unlike other fmcg products like soaps and • Detergents, which can be sold through wholesale network. 90% of chocolate products are sold • Directly to retailers. • Cadburys distribution network used to encompasses 2100 distributors and 450,000 retailers • To avoid cannibalization of its higher priced products from lower priced ones, Cadbury is • Setting up two separate distribution channels – one for core business & other for mass markets 4. A list of the activities to be undertaken in order to support the direction taken. • Trade promotions • Retailers connection program • Advertisements to achieve the sales
18. Statement of Investments Needed to Implement the Strategy1. Capital funds • R&D: 500 Cr. Next 5 year • Advertisement o TVCs: 20 Cr. Next year o Print: 10 Cr. Next year o Radio: 2 Cr. Next Year • Sponsorship of the events:3 Cr. Next Year • Distribution channel member:120 Cr. Next year entire India (incentives, promotional offer etc.)2. Human capital • R&D Team: 30 people • Advertisement: 10 people • Events Teams: 10 people • Distribution Channel: 2000 people3. Expenses • Transportation: 50 Cr. • TA, DA, HRA and other perks: 30 Cr. • Miscellaneous Expenses: 20 Cr. Organizational Structure to Carry Out Strategy
19. Action Needed to Create a Market Strategy Supported Culture1. Advertisement according to the keeping cultural aspect in mind2. Signing brand ambassador as per the mind spaces of the Indian consumer.3. Target the rural market of the segment as 70% of the population still live the rural area.
20. TacticsTactics have traditionally been summarized by four variables: price, promotion, product and place (4 P’s). Thefollowing is a good start in developing tactics.Product/Service:A price competitive edge while the distribution strategies will ensure that the products reach the finalconsumers.Product descriptionThis marketing strategy will be offering a particular product in the market. It is specifically offering whitechocolate in the Indian market. The main brand that is to be introduced in the market is Cadburys Dream whichis mainly targeted for the adult female population. The product will be offered in 45 gm packages, 100 gm and200 gm packages. These will be the most important sized packages that the product will be sold in. it will besold in whole sale and retail.Pricing strategiesSince the product is being offered for the first time in the market, the company will use price penetrationstrategy where it will use low prices strategy to penetrate the market. However this will be combined with costplus pricing since it will have to operate at a profit market. However the initial price set up will be based on thelow prices to penetrate the market. The product will be offered at Rupee 2 per 45 gm size bar.Distribution strategiesTo ensure that the products reach the intended consumer, the company will use the current existing distributionchanging. It will sell the product in wholesale to intermediary wholesales who will in return sell to the retailers.To reduce on the cost of operation, retailers and distributors will be expected to obtain the product directly fromthe company store to reduce the cost of production. However the company will establish a number of stores onall provinces to take the product close to the retailers. Taking the product near to the consumer will be the mainpillar for the success of the distribution marketing strategy.