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  1. 1. Marketing Project onRe-launch Strategy ofCadbury’s PicnicProject Guide: Prof. Kuldip Kawatra Project by Mr. Heemanish Midde Roll No.: 220 2007 - 2009 Xavier Institute of Management & Research, Mumbai Mumbai University 1
  2. 2. EXECUTIVE SUMMARY“A Study of Indian Chocolate Industry & Re-Launch Strategy for Cadbury’s Picnic in India” is asweet CHOCOLATE story of chocolates in the hot and humid plains of INDIA, which enlightens usabout the size & status of chocolate industry in India. The project gives information about thecompetitors, their market share, and their product basket and highlights success features.The project also covers a brief study of Cadbury’s India Limited – the biggest player in the IndianChocolate Industry with reference to its presence, market share, product offerings, marketingstrategies, strengths & weaknesses, success factors and Worm Controversy Management. Also, theimplication of pricing, distribution strategies and impact of external environment has been recorded.The project throws light on one of the Cadbury’s product (Cadbury’s picnic) which failed in Indiamarket. Gives an overview of the reasons for the failure and try to give a promotion strategy as to howCadbury can re-launch the product.This project aims at understanding the overall Chocolate Industry in India, various factors affectingthe growth and success of chocolate industry in India, the challenges and opportunities which themarket offers and the changing trends in the Indian Chocolate Industry. The project also covers a briefstudy of Cadbury’s India with reference to above points.Apart from that, the project also gives a detailed study on Cadbury’s Picnic - A product that failed inThe Indian market and gives a marketing strategy for re-launching the product in the India. 2
  3. 3. TABLE OF CONTENTS EXECUTIVE SUMMARY1. INDIAN CHOCOLATE INDUSTRY 1.1. Overview 1.2. Marketing of chocolates in India 1.3. Problems & challenges in Indian chocolate industry 1.4. External factors affecting growth of chocolate industry in India 1.5. Growth opportunities in Indian chocolate industry 1.6. Strategies for growth & success in India 1.7. Market size (by value & by volume) 1.8. Major players2. CADBURY’S IN INDIA 2.1. Cadbury’s overview 2.2. History of Cadbury 2.3. Cadbury’s India limited 2.4. Objectives and values 2.5. Vision 2.6. Business 2.7. SWOT analysis of Cadburys 2.8. Product mix - chocolates 2.9. Product innovations3. STRATEGIES OF CADBURY’S 3.1. Cadburys creative launch 3.2. Pricing 3.3. Volume led growth strategy 3.4. Price woes 3.5. Distribution 3.6. Promotion 3.7. Re-inventing Cadbury 3.8. Cadbury advertisements 3.9. Cadbury and the worm controversy 3.10. Cadbury’s fight-back 3.11. The big ‘b’ factor 3.12. Cadbury’s singing sweetly again 3.13. Success factors of Cadbury’s India limited 3
  4. 4. 4. CADBURY PICNIC 4.1. Background 4.2. Cadbury picnic: an appeal to the five senses5. MARKET SURVEY 5.1. Objective of the study 5.2. Collection and analysis of data 5.3. Research methodology6. DATA FINDINGS AND ANALYSIS 6.1. Data analysis for consumers 6.2. Data analysis of retailers7. RECOMMENDATION 7.1. Reasons for failure 7.2. Proposed re-launch of picnic 7.3. STP analysis 7.4. Marketing mix: 7.5. Proposed advertisements for Cadbury’s picnic8. CONCLUSION ANNEXURES BIBLIOGRAPHY 4
  5. 5. INDIAN CHOCOLATEINDUSTRYOVERVIEWChocolate consumption in India is extremely low. Cadbury dominates the chocolate marketwith about 70% market share. Nestle has emerged as a significant competitor with about20% market share. Key competition in the chocolate segment is from co-operative ownedAmul and Campco, besides a host of unorganized sector players. There exists a largeunorganized market in the confectionery segment too. Leading national players are Parrys,Ravalgaon, Candico and Nutrine. MNCs like Cadbury, Nestle, Perfetti, are recent entrants inthe sugar confectionery market. Other competing brands such as GCMMFs Badam bar andNestles Bar One have minor market shares.Chocolate consumption in India is extremely low. Per capita consumption is around 160gmsin the urban areas, compared to 8-10kg in the developed countries. In rural areas, it is evenlower. Chocolates in India are consumed as indulgence and not as a snack food. Indianchocolate market grew at the rate of 10% pa in 70s and 80s, driven mainly by the childrensegment. In the late 80s, when the market started stagnating, Cadbury repositioned its DairyMilk to any time product rather than an occasional luxury. Its advertisement focused onadults rather than children. Cadburys Five Star, the first count chocolate, was launched in1968. Due to its resistance to temperature, the chocolate has become one of the mostwidely distributed chocolate in the country.In the early 90s, high cocoa prices compelled manufacturers to raise product prices andreduce their advertisement budget affecting the volumes significantly. The launch of waferchocolates Kit Kat and Perk spurred volume growth in the mid 90s. These chocolates 5
  6. 6. positioned as snack food rather than on the indulgence platform compete with biscuits andwafers. A strong volume growth was witnessed in the early 90s when Cadbury repositionedchocolates from children to adult consumption. The mid 90s saw the entry of new playerslike Nestle, which created categories like wafer chocolate and spurred growth.The chocolate industry in India as it stands today is dominated by two companies, bothmultinationals. The market leader is Cadbury with a lions share of 70 percent. Thecompanys brands (Five Star, Gems, Eclairs, Perk, Dairy Milk) are leaders their segments.Till the early 90s,Cadbury had a market share of over 80 percent, but its party was spoiled when Nestleappeared on the scene. The latter has introduced its international brands in the country (KitKat, Lions), and now commands approximately 15 percent market share. The Gujarat Co-operative Milk Marketing Federation (GCMMF) and Central Arecanut and CocoaManufactures and Processors Co-operative (CAMPCO) are the other companies operatingin this segment. Competition in the segment will get keener as overseas chocolate giantsHersheys and Mars consolidate to grab a bite of the Indian chocolate pie. Per Capita Chocolate Consumption (in pounds) of first 15 countries of the world Italy Finland Netherlands France United States Sweden Australia Cu ty o nr Belgium Series1 United Kingdom Denmark Norway Germany Ireland Austria Switzerland 0 5 10 15 20 25 Consumption in PoundINDIA, stands nowhere even near to these countries when compared in terms of Per CapitaChocolate Consumption. The Indian chocolate industry is extremely fragmented with a range 6
  7. 7. of products catering to a variety of consumers. We have the bars/slabs, jellies, lollipops,toffees and sugar candies.Given Indias mammoth population, it comes as a surprise that per capita chocolateconsumption in the country is dismally low - a mere 20 gms per Indian. Compare this to over7 kgs in most developed nations.Datamonitor figures show that the Indian chocolate market was worth just $188.6 million in2006, despite having a population of over one billion; this compares to the US market valueof $15.2 billion, where the population is just under 300 million. Furthermore, Indianconsumers sweet snack of choice is currently the traditional candy known as mithai, and,therefore, a significant marketing push would be required in order to persuade them totransfer their allegiance to chocolate.In addition, there are already two global giants operating in the Indian chocolate market,Nestle and Cadbury, which hold over 90% of market value share between them.Both chocolate and sugar confectioneries have abysmally low penetration levels, in fact,even lower than biscuits, which reach 56 per cent of the households. Market growth in thechocolate segment has hovered between 10 to 20%. In the last five years, the category hasgrown by 14-15% on an average and will expect it to continue growing at a similar rate in thenext five years.The market presently has close to 60mn consumers and they are mainly located in the urbanareas. Growth will mainly come through an increase in penetration as income levelsimprove.However, almost all of this consumption is in the cities, and rural India is nearly ‘chocolate-free’. But the fact is that three quarters of Indians live in Rural Areas. “Average summertimetemperatures reach 43 degrees Celsius in India. Chocolate melts at body temperature of 36degrees.”Per capita consumption of chocolates in India is minuscule at 20gms in India as compared toaround 5-8 kgs and 8-10 kgs respectively in most European countries. Awareness aboutchocolates is very high in urban areas at over 95%.Despite these barriers, however, the Indian market offers great potential for growth in thelong term. Datamonitor figures state that the average annual growth of the Indian chocolatemarket, in value terms, was 8% between 2002 and 2006, and this growth is forecast tocontinue, with expected annual growth of 4.3% between 2006 and 2010 7
  8. 8. Growth of other lifestyle foods such as malted beverages and milk food have actuallydeclined by 3.7 per cent and 11.7 per cent, however the CHOCOLATES continue to grow atthe rate of 12.6%.Low priced unit packs, increased distribution reach and new product launches can be said tohave fuelled this growth.The launch of lower-priced, smaller bars of chocolate in the last two years and positioning ofchocolate as a substitute to traditional sweets during festivals, have boosted consumption.This is also because chocolate, which was considered to be an elitist food, has caught thefancy of buyers looking for a lifestyle item at affordable cost.Till recently, chocolate consumption had been restricted by low purchasing power in themarket. Chocolates and other cocoa-based snack foods were looked upon as food suitableonly for the well-off. Chocolate Consumption Structure in India 33% Children Adults 55% Young Adults 12% 8
  9. 9. MARKETING OF CHOCOLATES IN INDIATraditionally, chocolates were always targeted at children. But stagnancy in growth ratesmade the companies re-think their strategies. Cadbury was the first chocolate company thattook the market by storm by repositioning brands at adults, as opposed to children.BUYING BEHAVIOURChocolates are consumed as indulgence and not as snack food, as prevalent in westerncountries. Almost 75% chocolates are impulse purchases. Chocolates are boughtpredominantly by adults and gifted to children. The wholesaler usually deals in all kinds ofFMCG goods, Foodstuff in addition to the chocolates. The items like chocolates are placednear the counter.Chocolates are kept in cardboard boxes and are also delivered in the same. ... In a few ofthe cases the chocolates were kept separately (as per equipment provided by themanufacturer – e.g. VISI Coolers), In addition to marketing promotions companies havebeen focusing extensively on the promotions by the sales staff. Also the companies candevise there marketing strategies that are catering to specific segments and are thus moreeffective.NATURE OF RETAIL OUTLETChocolates are primarily sold through Kirana Stores, Gift stores, Medical Stores, canteens,Pan-Bidi stores, Bakeries, Sweet Shops etc. This is true for chocolates also. The spaceallocated for the chocolates was less when compared to the total area of the shop. Of thespace allocated for chocolates, Cadbury brands occupied more than Nestle brands. Thechocolates category thrives on excitement. Its all about giving the consumer a choice andtaste which they enjoy.STOCKING OF THE PRODUCTSIn most of the cases, various brands of chocolates are kept together. In some of the casesthe chocolates are stocked depending on the manufacturer’s provision. The chocolates arekept in Glass Jars and boxes – These are provided by the respective companies along withthe product. The chocolates are kept there. But in most of the cases chocolates are stockednear the counter. Ideally the shopkeeper tries to keep chocolates within the reachable(sitting on the counter) distance. 9
  10. 10. Chocolates are kept at or below the eye level. This is to facilitate visibility of the chocolatesfor the customer who is visiting the store.PROBLEMS & CHALLENGES IN INDIAN CHOCOLATE INDUSTRYTEMPERATUREA peculiar problem that hinders the distribution to far-off places is the tendency of chocolatesto melt under even moderate heat. The temperatures can reach as high as 48 degrees insummers, whereas chocolate starts melting at body temperature (about 37-38 degrees).Manufacturers have to take precautionary measures to ensure the preservation ofchocolates especially in summer.UNAVAILABILITY OF CONTROLLED REFRIGERATIONIndia does not have controlled refrigerated distribution. Air-condition supermarkets are rare.Cadbury loses 1.5 percent of annual sales of Rs. 6.8 billion to heat damage. Companiesrevise ingredients to make chocolate withstand heat, and so Indian chocolates are moreresilient to heat than Eurupean chocolates by a factor of 2 degrees. Ironically, the chocolatemarket has grown recently because smaller retailers have stuffed fridges and coolerssupplied by the cola companies Coke and Pepsi with chocolates.Nestle and Cadbury have tried to provide loans for retailers to buy fridges, but to hold downpower costs the shopkeepers switch off the fridges at night. As a result the cocoa fat meltsand migrates to the main body of the chocolate bar. When the cooling is switched on in themorning, the cocoa fat solidifies and turns white, presenting a bizarre, un-sellable white onblack form. Nestle tried to provide fridges with see-through doors, but was appalled to see itschocolates sandwiched between dead chicken, butter and vegetables.Small coolers were provided to retailers to keep the chocolate from melting, but that didntquite do the trick. Electricity costs money and is not provided in a uniform way, so on and offthe electricity goes and the product may suffer.RAW MATERIALSCocoa is the key raw material and accounts for around 35% of the total material cost(including packaging) of chocolates. The price of cocoa has been hitting a new high of late. 10
  11. 11. TRANSPORTATIONChocolate needs to be distributed directly, unlike other FMCG products. 90% of our productsare sold directly to retailers. Building such a direct network in rural areas is a daunting tasksince the infrastructure is poor in India in rural areas.THREAT FROM IMPORTED BRANDS:Free availability of imported brands bought through illegal routes pose a threat to thedomestic chocolate industry. Usually, these imported chocolates taste better than domesticchocolate due to recipe difference. Hence consumers who are willing to spend a little more,prefer these imported chocolates.However, the premium brands, which come through official channels, do not pose a threat tothe market, as these cater to a small niche market. However there is a lot of dumping fromneighboring countries like Dubai, Nepal, etc of inferior brand of imported chocolates. Theseare not only of low quality, but are brought very near to their expiry dates. Most of the cheapchocolate brands that are available do not meet Indian Food Regulations.EXTERNAL FACTORS AFFECTING GROWTH OF CHOCOLATE INDUSTRY ININDIA• Good monsoon ensures adequate availability of raw materials, which are mainly agricultural in nature. Raw material prices have significant influence on margins.• Government policies in terms of licensing, duties, movement of agricultural commodities etc. also affect the introduction of products, time lag for a product launches, taxes, excise, etc all influence the business.• Market growth driven by overall economic growth and urbanization also contributes. An overall booming economy will consume tonnes of chocolates because consumer spending increases. Also, the absolute number of consumers in middle class & upper middle class increases.• Rupee depreciation improves export realizations; however it also makes import of raw material (esp. cocoa) expensive. 11
  12. 12. GROWTH OPPORTUNITIES IN INDIAN CHOCOLATE INDUSTRYUNTAPPED MARKET & LIMITED CONSUMPTION:The fact that chocolate is not a traditional food, high prices and domestic productionproblems will provide the main problems to market growth. As these markets develop, priceswill fall making these products more accessible to the wider population. However the Indianmarket is still untapped and provides immense scope for growth, both geographically as wellas product basket wise.Chocolates right now reaches about 70mn to 75mn consumers. It is estimated thatchocolates have a potential market of about 116mn consumers.Chocolate consumption in India is extremely low. Per capita consumption is around 160gmsin the urban areas, compared to 8-10kg in the developed countries. The per capita chocolateconsumption in India is still much below the East Asian standards. Hence per capitaconsumption has a immense scope for improvement.In rural areas, it is even lower. Chocolates in India are consumed as indulgence and not as asnack food. A strong volume growth was witnessed in the early 90s when Cadburyrepositioned chocolates from children to adult consumption. The biggest opportunity is likelyto stem from increasing the consumer base. Leading players like Cadbury and Nestle havebeen attempting to do this by value for money offerings, which are affordable to the masses.We also believe that the near term opportunity lies in increasing penetration rather thanincreasing intensity of consumption.CHANGING ATTITUDES & CONSUMPTION PATTERN:In the past, chocolate consumption had been restricted by low purchasing power in themarket.Chocolates and other cocoa-based snack foods were looked upon as food suitable only forelitist consumption till recently.But with the launch of lower-priced, smaller bars of chocolate in the last two years andpositioning of chocolate as a substitute to traditional sweets during festivals, have boostedconsumption.Chocolates which were considered to be an elitist food hit the fancy of masses looking for achange in life style at affordable cost. 12
  13. 13. RURAL EXPANSION:Rural market and small town markets are seen as the key to spurring double-digit growth.Products such as liquid chocolate packs from the existing portfolio are expected to enablerapid acceptance.LEVERAGE INDIA FOR OFF-SHORING:India is being leveraged for export of finished goods, as a superior destination formanufacturing best practices, and for BPO opportunities.All the above points bring us to a conclusion that there’s an immense scope for growth ofchocolate industry in India not only in its offering pattern but also for increment in its totalconsumption value and size.STRATEGIES FOR GROWTH & SUCCESS IN INDIA• Revamp the product to keep the excitement alive.• Companies should look at new avenues, while expanding the reach of its products. Distribution will hold the key. Companies need to reach out to smaller towns, where three-fourths of the population does not even know the product.• Merger & Acquisitions: Mergers & Acquisitions with companies that match the product portfolio & overall growth strategy should be considered which will not only strengthen the company to establish a stronger hold in the country but also ward off possible competition in the select category. Such collaborations will also facilitate companies to use each other’s distribution networks.MARKET SIZE (BY VALUE & BY VOLUME)The Indian chocolate market is valued at $188.6 million in 2006. TheThe total sale of the chocolate was $394 million per annum in 2008 with total Chocolatesales per capital of $0.36.According to market researcher Euromonitor International chocolate confectionary sales inIndia have doubled, growing sales by 64% over the last five years.Chocolate penetration in the country is a little over 4 percent, with Indias metros proving tobe the big draw clocking penetration in excess of 15 percent. Next, comes the relatively 13
  14. 14. smaller cities/towns where consumption lags at about 8 percent. Chocolates are a luxury inthe rural segment, which explains the mere 2 percent penetration in villages.The market presently has close to 60mn consumers and they are mainly located in the urbanareas.MAJOR PLAYERSThe major players in the Indian Chocolate Industry are:1. CADBURY’S INDIA LIMITED:Cadbury India is a food product company with interests in Chocolate Confectionery, MilkFood Drinks, Snacks, and Candy. Cadbury is the market leader in Chocolate Confectionerybusiness with a market share of over 70%. Some of the key brands of Cadbury are CadburyDairy Milk, 5 Star, Perk, Eclairs, Celebrations, Temptations, and Gems. In Milk Food drinkssegment, Cadburys main product - Bournvita is the leading Malted Food Drink in thecountry. Cadbury is the worlds largest confectionery company and its origins can be tracedback to 1783 when Jacob Schweppe perfected his process for manufacturing carbonatedmineral water in Geneva, Switzerland. In 1824, John Cadbury opened in Birmingham sellingcocoa and chocolate. Cadbury and Schweppe merged in 1969 to form Cadbury Schweppesplc. Milk chocolate for eating was first made by Cadbury in 1897 by adding milk powderpaste to the dark chocolate recipe of cocoa mass, cocoa butter and sugar. In 1905,Cadburys top selling brand, Cadbury Dairy Milk, was launched. By 1913 Dairy Milk hadbecome Cadburys best selling line and in the mid twenties Cadburys Dairy Milk gained itsstatus as the brand leader. Cadbury India began its operations in 1948 by importingchocolates and then repacking them before distribution in the Indian market. Today, Cadburyhas five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur(Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi,Mumbai, Kolkota and Chennai). Its corporate office is in Mumbai. Worldwide, Cadburyemploys 60,000 people in over 200 countries.2. NESTLE INDIANestle India is a subsidiary of Nestle S.A. of Switzerland. Nestle India manufactures avariety of food products such as infant food, milk products, beverages, prepared dishes &cooking aids, and chocolates & confectionary. Some of the famous brands of Nestle areNESCAFE, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID, NESTEA,NESTLE Milk, NESTLE SLIM Milk, NESTLE Fresh n Natural Dahi and NESTLE Jeera 14
  15. 15. Raita. Nestle was founded in 1867 in Geneva, Switzerland by Henri Nestle. Nestles firstproduct was "Farine Lactee Nestle", an infant cereal. In 1905, Nestle acquired the Anglo-Swiss Condensed Milk Company. Nestles relationship with India started 1912, when itbegan trading as The Nestle Anglo-Swiss Condensed Milk Company (Export) Limited,importing and selling finished products in the Indian market. After independence, in responseto the then economic policies, which emphasized local production, Nestle formed a companyin India, namely Nestle India Ltd, and set up its first factory in 1961 at Moga, Punjab, wherethe Government wanted Nestle to develop the milk economy. In Moga, Nestle educated andadvised farmers regarding basic farming and animal husbandry practices such as increasingthe milk yield of the cows through improved dairy farming methods, irrigation, scientific cropmanagement practices etc. Nestle set up milk collection centres that ensured promptcollection and paid fair prices. Thus, Nestle transformed Moga into a prosperous and vibrantmilk district. In 1967, Nestle set up its next factory at Choladi (Tamil Nadu) as a pilot plant toprocess the tea grown in the area into soluble tea. Nestle opened its third factor inNanjangud (Karnataka) in 1989. Thereafter, Nestle India opened factories in Samalkha(Haryana), in 1993 and two in Goa at Ponda, and Bicholim in 1995 and 1997 respectively.Today, Nestle is the worlds largest and most diversified food company. It has around2,50,000 employees worldwide, operated 500 factories in approximately 100 countries andoffers over 8,000 products to millions of consumers universally.3. THE GUJARAT CO-OPERATIVE MILK MARKETING FEDERATION (GCMMF) – AMULGujarat Cooperative Milk Marketing Federation (GCMMF) is Indias largest food productsmarketing organisation. It is a state level apex body of milk cooperatives in Gujarat whichaims to provide remunerative returns to the farmers and also serve the interest of consumersby providing quality products which are good value for money.AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya,"was suggested by a quality control expert in Anand. Variants, all meaning "priceless", arefound in several Indian languages. Amul products have been in use in millions of homessince 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, AmulChocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have madeAmul a leading food brand in India. (Turnover: Rs. 52.55 billion in 2007-08). Today Amul is asymbol of many things. Of high-quality products sold at reasonable prices.The company is trying to push its chocolate sales through its extensive dairy distributionnetwork. It is giving discount offers for its recently launched sugar-free chocolates. Thecompany has also placed its chocolate products at lesser price points compared with its 15
  16. 16. competitors. Other chocolate brands by Amul include Bindaaz, Fundoo, Almond bar, Milkchocolate and Fruit-n-nut. Yet chocolate has never been a major thrust area for thecompany. It still remains one of its non-core categories. Its chocolate drinks have receivedbetter response than its chocolates.The chocolate category in India is also seeing increased activity with MNCs such asHershey’s planning to introduce products from its global stable in India in the coming year.Amul is looking at building a bigger portfolio in this category by introducing new types ofchocolates 16
  17. 17. CADBURY’S IN INDIACADBURY’S OVERVIEWHalf a century of constant innovation, constant value addition, constant success. CadburyIndia Ltd. (CIL), a part of the Cadbury Schweppes group, is Indias leading confectionerymanufacturer with a 70% volume share of the chocolate market. And is synonymous withchocolate in the minds of countless Indians - young and old. The company is also a keyplayer in the malted food drink and sugar confectionery markets in the country. Today, thegoverning objective for Cadbury India is to deliver Superior Shareholder Value and to seethe brand in every pocket, in every home.HISTORY OF CADBURYThe Cadbury story is a fascinating story of a family business that grew into one of thebiggest, most loved chocolate brands in the world. A story that you will remember as thestory of the real taste of life as the business grew, it was moved to a larger factory in BridgeStreet in 1847. John Cadbury then took his brother Benjamin into a partnership. And thebusiness came to be Cadbury Brothers, Birmingham". In 1853, the Cadbury Brothersreceived a royal warrant as chocolate manufacturers to Queen Victoria a royal appointmentthat the company holds to this day.22-year-old John Cadbury opened a one-man grocery business in Birmingham, selling tea,coffee, hops, mustard and cocoa. To this list he soon added drinking chocolate which heprepared using a mortar and pestle. Young Cadbury had a considerable flair foradvertisement, which inspired him to install a pate glass window in his store - the first in 17
  18. 18. Birmingham. This along with a Chinaman in native costume presiding over the countercreated quite a stir and drew a lot of attention. The growing sales and popularity ofCadburys superior quality cocoa and chocolates resulted in the business shifting to a largerwarehouse in Crooked Street in 1831.Dissatisfied with the quality of products produced by all manufacturers, including their own,the brothers Cadbury took a momentous step which was to change the way the chocolatebusiness was done in England. Following a visit to Van Houten in Holland, they introduced aprocess for pressing the cocoa butter from the beans to produce cocoa essence, which wasreally the forerunner of the cocoa we know today. This essence was advertised as -Absolutely Pure, Therefore Best. From the mid 1860s, Cadbury introduced many new kindsof eating chocolate. Not only the more refined forms of plain chocolate but chocolate cremes- fruit flavoured centres covered with chocolate. These exotic chocolates were sold indecorated boxes, which Richard Cadbury with his distinct artistic talent designed. In fact,many of his original designs still exist. Elaborate chocolate boxes were extremely popularwith the late Victorians, with designs extending from superb velvet covered caskets withbeveled mirrors, to pretty boxes showing kittens, flowers, landscapes or beautiful girls.As the company prospered, the brothers implemented new ideas in their work practices like,office picnics to the country, a sports field, kitchen and well heated dressing rooms for theworkers. While these practices are common in organisations today, they were unheard of inthe 19th century. Among the many innovations in the factory was the appointment ofFrederic Kinchelman, a master confectioner from the continent, who was engaged to impartthe secrets of his craft to Bournville. Cadbury was soon making nougats, pistache, patebabricot, avelines and other delights. All of the quality that Fredric the Frenchman, as hewas known, was renowned for. Over the next few years, Cadbury opened up chocolatemarkets in Australia, New Zealand, South Africa, India, the West Indies, South America, theUnited States and Canada.Every successful company has its famous brands and Dairy Milk, today one of the mostpopular moulded chocolates in the world, is one of the biggest Cadbury success stories.Cadbury has grown from strength to strength with new technologies being introduced tomake the Cadbury confectionery business one of the most efficient in the world. The mergerin 1969 with Schweppes and the subsequent development of the business have led toCadbury Schweppes taking the lead in both the confectionery and soft drinks markets in theUK and becoming a major force in international markets. Cadbury Schweppes todaymanufactures products in 60 countries and trades in over a staggering 120. 18
  19. 19. CADBURY’S INDIA LIMITEDCadbury was originally incorporated as a wholly owned subsidiary of Cadbury SchweppesOverseas Ltd (CSOL) in 1948. The company’s original name was Cadbury Fry (India) Ltd. In1978, CSOL diluted its equity stake to 40% to comply with FERA guidelines. In 1982, thename was changed to Hindustan Cocoa Products. CSOL’s shareholding was increased to51% in Jan ’83 through a preferential rights issue of Rs700mm. The current name wasrestored in Dec ’89. In 2001,Cadbury Schweppes made an open offer to acquire the 49% public holding in the company.The parent holds over 90% of the equity capital after the first open offer. A second open offerhas been made to buyback the balance shareholding, after which the company wouldoperate as a 100% subsidiary of Cadbury Schweppes Plc, Ever since the Cadbury is in Indiain 1947; Cadbury chocolates have ruled the hearts of Indians with their fabulous taste. Thecompany today employs nearly 2000 people across India.Its one of the oldest and strongest players in the Indian confectionary industry with anestimated 68 per cent value share and 62 per cent volume share of the total chocolatemarket. It has exhibited continuously strong revenue growth of 34 per cent and net profitgrowth of 24 per cent throughout the 1990’s. Cadbury is known for its exceptionalcapabilities in product innovation, distribution and marketing.With brands like Dairy Milk, Gems, 5 Star, Bournvita, Perk, Celebrations, Bytes, Chocki,Delite and Temptations, there is a Cadbury offering to suit all occasions and moods. Today,the company reaches millions of loyal customers through a distribution network of 5.5 lakhsoutlets across the country and this number is increasing everyday.OBJECTIVES AND VALUESCadbury’s objective is to grow shareholder value over the long term. Cadbury in everypocket.Cadbury’s marketing strategy is aimed at achieving this vision by growing the market, byappropriate pricing strategy that will create a mass market and to have offerings in everycategory to widen the marketAdopting Value Based Management for major strategic and operational decisions andbusiness systems 19
  20. 20. Creating an outstanding leadership capability within the management and Sharpening thecompany culture to reflect accountability, aggressiveness and adaptabilityAligning the management rewards structure with the interests of our shareowners.VISIONLife Full Of CadburyCadbury is an organization which impacts and interacts with the consumers. Cadbury ispresent in most happy occasions in the life of our consumer. The brands excite theconsumer. Cadbury is an expression of a consumers life. Cadbury Full Of Life Cadbury as acompany is vibrant. Cadbury is a fun and energizing workplace. Cadbury is robust and alive.BUSINESSCadbury dominates the Indian chocolate market with above 65 – 70 % market share.Besides, it has a 4% market share in the organized sugar confectionery market and a 15%market share in milk/ malted foods segment.Cadburys Indian operations are not just the largest in Asia but also the cheapest. In India,Cadbury has the largest market share anywhere in the world and has been the fastestgrowing FMCG Company in the last three years with a compound annual growth rate of 12.5per cent.SWOT ANALYSIS OF CADBURYSStrength 1. Cadbury is a company, which is reputed internationally as the topmost chocolate provider in the world. 2. The brand is well known to people & they can easily identify it from others. 3. Cadbury the world leaders in chocolate, is a well-known force in marketing and distribution. 4. Users have a positive perception about the qualities of the brand. 5. Cadbury main strength is Dairy milk. Dairy milk is the most consumed chocolate in India. 20
  21. 21. 6. By using popular models like Cyrus Brocha, Preety Zinta and others Cadburys has managed to portray a young and sporty image, which has resulted in converting buyers of other brands to become its staunch loyalists. 7. Cadbury has well adjusted itself to Indian custom. 8. It has properly repositioned itself in India whenever required i.e. from children to adults, togetherness bar to energizing bar for young ones etc.Weaknesses 1. There is lack of penetration in the rural market where people tend to dismiss it as a high end product. It is mainly found in urban and semi-urban areas. 2. It has been relatively high priced brand, which is turning the price conscious customer away. 3. People avoid having their chocolate thinking about the egg ingredients.Opportunities 1. The chocolate market has seen one of the greatest increases in the recent times (almost @ 30%) 2. There is a lot of potential for growth and a huge population who do not eat chocolates even today that can be converted as new users.Threat 1. There exists no brand loyalty in the chocolate market and consumers frequently shift their brands. 2. New brands are coming and existing brands are introducing new variants to add up to an already overcrowded market.PLANT LOCATIONSCadbury’s manufacturing operations started in Mumbai in 1946, which was subsequentlytransferred to Thane. In 1964, Induri Farm at Talegaon, near Pune was set up with a view topromote modern methods as well as improve milk yield. In 1981-82, a new chocolatemanufacturing unit was set up at the same location in Talegaon. The company, way back in1964, pioneered cocoa farming in India to reduce dependence on imported cocoa beans.The parent company provided cocoa seeds and clonal materials free of cost for the first 8years of operations. Cocoa farming is done in Karnataka, Kerala and Tamil Nadu. 21
  22. 22. In 1977, the company also took steps to promote higher production of milk by setting up asubsidiary Induri Farms Ltd near Pune. In 1989, the company set up a new plant atMalanpur, MP, to derive benefits available to the backward area. In 1995, Cadburyexpanded Malanpur plant in a major way. The Malanpur plant has modernized facilities forGems, Eclairs, Perk etc. Cadbury also operates third party operations at Phalton, Waranaand Nashik in Maharashtra.PRODUCT MIX - CHOCOLATESPRODUCT BASKET- Category Brand Variants • Bars Dairy Milk Plain • Fruit n Nuts • Double Decker • Roasted Almond • Chunky • 5-Star • 5 Star Count Lines 5 Star Chrunchie • Milk Treat Chocolate • Orange • Wafer Chocolate Perk Perk • Perk XL • Other Chocki Mint, Strawberry & Chocolate • Premium/ Gift Chocolates Temptation Rum, Cashew, Almond & Orange • Celebrations Various Gift Packs 22
  23. 23. Cadbury’s Dairy Milk (CDM):Cadbury’s Dairy Milk is the flagship brand of Cadbury’s not only in India but world wide.CDM is the single largest selling unit in India. It has annual sales to the tune of Rs 200 crore.CDM not only accounts for 30 per cent of the total chocolate market in value, but commandsnearly 26 per cent in volume terms and close to 30 per cent of Cadbury’s annual turnover.Moving from a predominantly adult positioning in the days of the legendary dancing girl ad,to the teens and the tweens, when the Cyrus Broacha ads hit the airwaves, CDM has madea long sweet journey. In spite of the new categories being explored by Cadbury, its starbrand remains Cadbury Dairy Milk (CDM) which continues to corner almost 30 per cent ofthe chocolate market.Cadbury’s Temptation:Cadbury’s Temptation is premium chocolate brand aimed for high value consumption.Various variants available are Almond, Rum, Cashew & Orange. Cadbury’s temptation ispriced at Rs. 40Cadbury’s CelebrationCadbury India launched its premium Celebrations range, which contains traditional Indiandry fruits wrapped in Dairy Milk chocolate. This gifting option combines the pleasure of givingaway dry fruits — which Indians traditionally consider a premium, healthy gift — withchocolate. Cadbury now has 90 per cent market share in this profitable segment.PRODUCT INNOVATIONS5 STAR:Consumer feedback suggested that the old 5 Star was too chewy, and people complained ofit sticking to their teeth. It was made softer and melted easily in the mouth & introduced as 5Star CrunchyPERK:Perk was made much lighter and the size of the bar increased to match Nestle’s Munch.Perk had been under fire from Nestle’s deadly duo of KitKat and Munch, but after the 23
  24. 24. relaunch, its marketshare is two per cent more than KitKat’s. And, the five-year-old brand isnow almost as big as the decades-old 5 Star in size, both in the region of Rs 50-55 crore.HEROES:Packaging innovation has played a vital role in revamping of various Cadbury’s brands.Heroes brand is simply a multi-pack with miniatures of all its most popular brands in a singleouter case.NEW PRODUCT LAUNCHESCADBURY 5 STAR CRUNCHYThe same delicious Cadbury 5 Star was now available with a dash of rice crispies.Cadbury 5 Star & Cadbury 5 Star Crunchy now aim to continue the upward trend. Thisdifferent and delightfully tasty chocolate is well poised to rule the market as an extremelysuccessful brand.COLLECTION – A RANGE OF PREMIUM CHOCOLATE GIFT BOXES.Available in attractive packs, the Collection caters to a premium gifting consumer and is anideal festive gift. It is a unique combination of the best Cadbury chocolate and premium dryfruits and comes in four different formats each of which is a mix of select premium dry fruitsenrobed in rich Cadbury Dairy Milk chocolate.BOURNVILLE FINE DARK CHOCOLATECadbury India launched its dark chocolates- Cadbury Bournville Fine Dark Chocolate - in theIndian market.Globally, dark chocolate is the fastest-growing segment. It is loved by millions of consumersbecause of its rich taste and intrinsic health and well-being benefits.The chocolate is available in four different variants - Rich Cocoa, Almond, Hazelnut andRaisin & Nut - priced at Rs 75 a pack. 24
  25. 25. STRATEGIES OF CADBURY’SCADBURYS CREATIVE LAUNCHA new ‘after dinner segment Cadbury Desserts “for sweet moments after dinner”“Khaane Ke baad Kuch Meetha Ho Jaye” Rs. 20/- per packet of 44 gmsCadbury Dairy Milk (CDM) Desserts – with rich indulgent crème center, in exotic & traditionalflavors of Tiramisu and Kalakand. CDM Desserts offer the perfect rounding off taste, aftermeal that adds special ‘Meetha moments to the family. The rich tastes of CDM combinedwith the unique crème center in exotic flavors provide a special chocolate experience. CDMDesserts add delight to the after-meal moments, especially with the consumers whosecurrent choice of sweets range from home made delicacies to fruits to meethai.PRICINGAfter the roaring success of Nestle’s Munch and Chocostick, Cadbury’s empire struck backhard.The Rs 5 price point accounts for more than half of all chocolate sales. Nestle had seizedthe initiative at this price point, with its launch of Munch, now a roaring success (and thelargest selling product at that price point). Today, Cadbury has four products at this pricepoint: CDM, Perk, 5 star and Gems — and the five-rupee CDM bar is its single largest-selling SKU.“This is a potent price point in India, because the average purchasing power is abysmallylow,” is what industry analyst have to say. 25
  26. 26. Nestle kicked off one of the biggest success — the liquid chocolate category with its brandChocostick priced at Rs.2 — three months ahead of competition. Cadbury did react withChocki, priced at Rs 2, expanding the concept of sachetisation to new frontiers. Chocki hasbeen the single biggest growth driver for Cadbury as well as the entire chocolate category.The novelty of the format endeared itself to the existing customer. In less than one year, itconstituted nearly 10 per cent of the total chocolate market, split equally between Cadburyand Nestle.VOLUME LED GROWTH STRATEGYCadbury has followed a well-planned strategy of fuelling volume growth by introducingsmaller unit packs at lower price points. Simultaneously, the company seems to haveastutely juggled with the larger pack sizes and raised prices to a degree higher than whatappears at face.PRICE WOESChocki, selling at a potent price point of Rs 2, was ideal for smaller towns, especially since itdid not need refrigeration. But Chocki started to cannibalise other higher-priced chocolates inlarger markets.DISTRIBUTIONChocolate needs to be distributed directly, unlike other FMCG products like soaps anddetergents, which can be sold through a wholesale network. 90% of chocolate products aresold directly to retailers.Distribution, in the case of chocolates, is a major deterrent to new entrants as the producthas to be kept cool in summer and also has to be adapted to suit local tropical conditions.Cadburys distribution network used to encompasses 2100 distributors and 450,000 retailers.The company has a total consumer base of over 65 million. Besides use of IT to improvedistribution logistics, Cadbury is also attempting to improve distribution quality. To addressthe issues of product stability, it has installed VISI coolers at several outlets. This helps inmaintaining consumption in summer, when sales usually dip due to the fact that the heataffects product quality and thereby offtake. 26
  27. 27. To avoid cannibalization of its higher priced products from lower priced ones, Cadbury issetting up two separate distribution channels – one for CORE business & other for MASSmarkets, with different stockists, wholesalers and retailers. One set will be dedicated toCadbury’s high-end products and traditional chocolates. The other will cater to the massmarket brands namely Chocki, Halls, Eclairs et al — all products priced below Rs 3.But today, Cadburys distribution network reaches out to six lakh outlets each for itschocolate & confectionery brands (i.e. total reaching12 lakh outlets).PROMOTIONTypically it is said that chocolates are being eaten when everyone is happy. And this issomething advertising has always portrayed. But it is found chocolates are eaten underdiverse conditions and moods - when people are anxious, when they are sad, when happy -a whole range of emotions. Condensing these views & thoughts, it can be said chocolate is atrue soul mate. Someone who is with you through the ups and downs of life, helping youbounce back. And thats what Cadburys Dairy Milk (CDM) positioned itself as - a specialfriend. 27
  28. 28. RE-INVENTING CABDURY“Kya Swad Hai Zindagi Mein” redefined the way Indians looked at Cadbury Chocolates. (Thecommercial showed a beautiful young lady overcoming all obstacles on the cricket ground,crossing boundary, watchman, securities and embracing her lover who won the game byhitting a six). This theme introduced in around mid 90’s bought instant growth to Cadbury’sDairy Milk. The Ad campaign ran successful for about four years and immersed deeperinside hearts of Indians.In March 2002, Cadbury launched its next advertisement campaign for its flagship chocolatebrand, Cadburys Dairy Milk (CDM). The campaign featured a television (TV) commercialthat was significantly different from the companys earlier commercials for the brand. Itfeatured Cyrus Broacha interviewing college students and asking why they liked to eat CDM.This was followed by college students singing their excuses for eating CDM. Just as thecommercial seems all set to end with the students and Cyrus singing the famous CDMtheme, Khane Walon Ko Khane Ka Bahaana Chaahiye (those who want to eat, will findexcuses), a student comes up and questions Cyrus.The advertisement aimed at conveying the idea that no specific occasion is required forconsuming CDM. This was a significant departure from CILs strategy of appealing to adultsin India, who sought a rational justification for indulging in chocolate consumption. Cadburyroped in Preity Zinta for its PERK brand. Preity Zinta’s angelic dimples laid the foundation forwhat would become the Indian teenager’s favorite snack. After this campaign, PERK’S salesurged.Cadbury’s advertising has, over the past few years, aptly reflected India’s passion forchocolates.CADBURY ADVERTISEMENTS • Dil ko jab kushi choo jaye..."...kuch meetha jo jaye.." • Akhir barvi pass ho hi gaya." kuch meetha jo jaye.. • Log Cadbury Kyon Khate Hai….Khaane waalon ko khaane ka bahaana." • Cadbury’s Dairy Milk…..Asli swad zindagi ka • CADBURY DESERTS - “khaane ke baad kuch meetha ho jaaye.” 28
  29. 29. • Cadbury’s Celebrations - Rishto ki MithasCADBURY AND THE WORM CONTROVERSYThe discovery of worms in some samples of Cadbury’s Chocolate in early October 2003created one of the biggest controversies in India against a Multi National reputed for being abenchmark of QUALITY.The controversy created an deep adverse impact on the company with their sales not onlydrastically dipping down, but at the same time allowing the competitors to establish theirfoothold and taking maximum advantage of Cadbury’s misfortune.The controversy, and the adverse publicity received in several countries, set back its plan ofoutsourcing model which would have resulted in significant revenue generation, severalmonths back.The "worms’ controversy" came at the worst time….the next few months were the peakseason of Diwali, Eid & Christmas. Cadbury sells almost 1,000 tonnes of chocolates duringDiwali. In that year, the sales during festival season dropped by 30 per cent. The companysaw its value share melt from 73 per cent in October 2003 to 69.4 per cent in January 2004.In May, however, it inched up to 71 per cent. CDM sales volumes declined from 68 per centin October ’03 to 64 per cent in January 2004Clearly, the worm controversy took a toll on Cadburys bottom-line. For the year endedDecember 2003, its net profit fell 37 per cent to Rs 45.6 crore (Rs 456 million) as comparedwith a 21 per cent increase in the previous year.However, Cadbury’s reiterated that all through the 55 years of leadership in India that it hasremained synonymous with chocolates and has remained committed to high quality andconsumer satisfaction."CABDBURY’S FIGHT-BACKProject Vishwas“Steps to ensure quality & regain the confidence” 29
  30. 30. Following the controversy over infestation in its chocolates, Cadbury India Ltd unveiledProject Vishwas, a plan involving distribution and retail channels to ensure the quality of itsproducts.The companys team of quality control managers, along with around 300 sales staff, checkedover 50,000 retail outlets in Maharashtra and replaced all questionable stocks withimmediate effect.The Vishwas programme was intended to build awareness among retailers on storagerequirements for chocolates, provide assistance in improving storage conditions andstrengthen packaging of the companys range of products.Cadbury reduced the number of chocolates in its bulk packets to 22 bars from the present 60bars. These helped stockists display and sell the products "safely and hygienically" 190,000retailers in key states were covered under this awareness programme.THE BIG ‘B’ FACTORThe big factor that has pushed up CDM sales is the Amitabh Bachchan campaign. It helpedrestore consumers faith in the quality of the product. In early January, Cadbury appointedAmitabh Bachchan as its brand ambassador for a period of two years.The company believed that the reputation he has built up over the last three decadescomplements their own, which was built over a period of 50 years. Yet, the entire credit ofrecovery could not be attributed to the brand mascot.Incisive action taken by the company also helped. Some of which were:1. Responded to consumers concern over the issue rapidly. Also, the communicationcampaign worked effectively in giving out the central message.2. The packaging was changed to include a sealed plastic wrapper inside the outside foil.Cadbury’s launched a new purity-sealed packaging for its flagship product, Cadbury DairyMilk. The packaging is in response to foreign bodies, notably worms, being found in itsproducts. Over the next few weeks Cadbury will work towards introducing either aheatsealed or a flow-pack packaging that offers a high level of resistance to infestation fromimproper storage. 30
  31. 31. 3. New advertising & promotion campaigns were in place which accounted for an Ad spendof nearly Rs 40 crore (Rs 400 million) Cadbury invested nearly Rs 25 crore (Rs 250 million)this year on new machinery for the improved packaging.CADBURY’S SINGING SWEETLY AGAINAll is well that ends well. And for Cadbury’s India, nothing can be sweeter than RegainingBack the Consumer Confidence.Thanks to quick action taken to recover the damage done by the worm controversy likeOperaion Vishwas, adopting new packaging & massive advertising with Mr. AmitabhBachchan as their brand ambassador, Cadbury’s regained its market share.Cadbury India appointed management consultancy firm AT Kearney to draw up a strategy tocontrol costs in several areas, including sourcing of raw materials and packaging. This waspartly an outcome of the worms’ controversy more than a year ago. Among other things, itchanged the wrappers for its Cadbury Dairy Milk brand and introduced better coolers.The consultancy firm will also look at the sourcing of direct and indirect materials likerenegotiating with suppliers for longer term contracts and vendor management. Other costs(indirect expenses) like travel costs and hotels were also being studied.In other words, Cadbury is trying to reduce the cost per stock keeping unit (SKUs, or packs).The aim is to improve efficiencies. 31
  32. 32. SUCCESS FACTORS OF CADBURY’S INDIA LIMITED1. Global management processes:India occupies a high profile position in the global organization, with advocates in regionaland global headquarters. Global management has allowed the local operation a high degreeof flexibility in growing the business, understanding that asset utilization may be lower andreturns slower to arrive, but expecting volume share to compensate for lower margins in thelong run.2. Local management processes:The Cadbury India team is all-Indian and has a deep understanding of local marketdynamics.The business is set in a way that highlights localization across all facets – driving the beliefthat the only way to succeed in India is by developing localized business models. Forexample, the company tailored the chocolate formula in India to prevent melting in thecountry’s open-air high frequency store environment.3. Customized business models:Local management has set up systems to test and develop products from the ground up withspecialized interlinked cells that execute innovation and market testing hand-in-hand.Cadbury India is known as a key product innovator. Besides Dairy Milk, the entire Cadburyproduct portfolio in India has been developed locally to suit Indian consumer tastes.Packaging, marketing and distribution have all been tailored to local market conditions.4. Royalty Structure:Royalty to Cadbury Schweppes is around 1 per cent of the turnover. But with that, thecompany gets unlimited access to latest technology, new products and so on. They can alsointroduce new products from the parent, if it is suitable for Indian market.5. Subtle reengineering of raw material mix led to cost savings:Cadbury has reduced its dependence on cocoa, thus lowering its exposure to volatile rawmaterial prices as well as cutting costs.It appears that they have subtly altered its recipe by using less of costlier cocoa and more ofmilk and sugar. Cadburys launch of Perk has also contributed significantly in reducing theproportion of cocoa in the overall raw material mix. 32
  33. 33. 6. Brand Building:Since its inception, Cadbury in India has stayed ahead thanks to their constant marketinginitiatives, that have at all points in time understood the needs of and opportunities in achanging nation but Nestle had stood firm in second position resulting from theirresponsibilities and providing quality products. Amul an Indian company has been able tocreate brand quality and thus selling their product through their name.7. Wide variety of brands:The 60s was a decade which saw the launch of brands that are etched in the hearts ofgenerations of Indians - Tiffins, Nut Butterscotch, Caramels, Crackle, 5 Star and Gems. Itwas a strategy that introduced consumers to a variety of tastes and product forms leading toa rapid increase in chocolate consumption.8. Quality products at low price:Cadburys Eclairs was launched in 1972, at the then princely sum of 0.25p and was aninstant hit. It continues to be one of the biggest brands in the Cadbury portfolio and offers thelowest price point at which consumers can experience the real taste of chocolate. But ascompared to other companies the price are very high because of lack of competition.9. Innovative & attractive packaging:In the years that followed, Cadbury invested in technology and made an impact throughinnovative packaging. This decade experienced a continuous growth in volumes as Cadburylaunched a flurry of brands with different pack sizes, at various price points. The nowubiquitous Sheet Metal Dispenser seen on cash counters of thousands of shops fordispensing chocolates was an innovation that helped brand the colour purple in the minds ofthe Indian consumer.10. Timely expansion of market:In the 90s Cadbury realised both the scope and the need to expand the market. Hithertoperceived only as a childrens product, Cadbury universalized the chocolate market. Themulti-award winning advertising campaign - The Real Taste of Life - was launched,capturing the childlike spontaneity in every adult. 33
  34. 34. Moulded chocolate and éclairs also showed satisfactory growth. This has also helped inimproving the infrastructure and distribution reach of the company in chocolate andconfectionery segment.11. Introducing new products:Cadbury 5 Star with its “Energizing Bar” campaign targeted the youth, offering them a mindand body charge. While pre-empting competition, Cadbury Perk - the light chocolate snack -pushed chocolates into the wider area of snacking by promising Thodi Si Pet Pooja KabhiBhi Kahin Bhi (anytime, anywhere) and has introduced new flavours like ‘Mint Hint’, ‘MangoTango’, Very Strawberry’. It has also introduced various new chocolates like Gollum andFrutus in recent years.12. Constant diversification:Faced with rapidly changing markets and increased competition, Cadbury launched Truffleto hit the high ground of great tasting chocolate. This was followed by Picnic in 1998, whichwith its unique, multi-ingredient construct, promises to take chocolates straight into the realmof snacks. With the introduction of Gollum and Frutus Cadbury has taken the market bysurprise.13. Commitment of expansion:With the launch of Trebor Googly, the tangy, fizzy candy, Cadbury took the market bysurprise and marked the entry of Trebor into the fast growing Indian sugar confectionerymarket. The extension of Googly to a Mint flavour reinforces Cadburys commitment toestablish the Trebor name as a strong player in the value added sugar confectionery market.14. Repositioning:Cadburys has been repositioning its products for children to adults and for celebrativeoccasions. A repositioning campaign was arranged for dairy milk that showed adults doingunconventional things (like a lady breaking into a jig in the middle of the overflowing cricketstadium) driving home the message that adults could enjoy chocolate as well. 34
  35. 35. 15. Information technology:At Cadbury India they believe that effective communication and availability of information atthe right time and the right place is critical for an edge in business. In order to achieve thisthey realised the importance of and have in place, an effective IT infrastructure.Through IT investment, they aim to • Remain competitive in the fast changing environment. • Incorporate best practices in the business processes. • Arrive at uniform software and business practices globally within Cadbury Schweppes. • Provide Y2K compliant software for all group companies. • Achieve flexibility of systems to keep pace with changing environments. • Increase speed of response to business processes. • Minimise working capital. 35
  36. 36. Cadbury PicnicBACKGROUNDCadbury Picnic is a chocolate bar with milk chocolate and peanuts, covering nougat,caramel, and puffed rice. Picnic is a random composition and has different fairly chunkyingredients.The Picnic brand was launched in India in the year 1998. Cadbury launched Picnic, which isone of its major chocolate from its international portfolio. Picnic was launched to furtherevolve the chocolate market into the snacking area, a task that has already been initiated byPerk.Picnic was specifically designed for Russian taste thus not suited to the Indian consumer.Indians felt that this chocolate had too many textures and too many flavours, none of whichreally made a coherent experience. Indians are very particular about tastes and may nothave taken the product taste too well. Picnic was re-launched with a changed composition insmaller packs in the year 1999 – 26 gm pack priced at Rs. 10 and 43-gm pack priced atRs.15.Picnic is shaped in a very rough manner and can rightly be called ugly looking.Nothing agrees with this better than the slogan for this particular product "Deliciously Ugly".The bars are lumpy in shape and may not have been liked by the Indian consumer.1998 was a time when India was not really open to such a product. Targeted at males of 18-29 at time when a third of population was below 15 years of age in 2000 points that timingwas not correct. Picnic was “wrong product in wrong time at wrong place” destined to fail !! 36
  37. 37. CADBURY PICNIC: AN APPEAL TO THE FIVE SENSESThe Packaging• The packaging is purple.• The word ‘Picnic’ covers most of the front and also it depicts peanuts and raisins.• The packaging informs you in gold writing that it’s ‘Packed with Peanuts and Raisins’.• Turning the bar over, the – nutritional information, barcode, best before date, weight, ingredients and contact information can be seen.Appearance upon Opening• Cadbury PICNIC is around five inches long and it appears to be packed with SOMETHING. There are large bumps all over the upper surface of the rounded bar.• The chocolate is brown colored milk chocolate.The Smell• The smell of the chocolate lacks the appealing smell associated with other chocolates.The Taste• Cadbury PICNIC is crunchy (at the top teeth) and chewy (bottom) (due to the cereal and nuts for the crunch, and the caramel and raisins for the chew).• The peanuts are not a dominating flavour in the Picnic unlike in Snickers; in fact, the raisins have a stronger flavour. The cereals are the most noticeable crunch texture, and the caramel makes the bar chewy.• The flavour is difficult to describe, perhaps because there were so many different flavours and textures presenting in one bar. The flavours bind together, providing a very appealing taste sensation. 37
  38. 38. MARKET SURVEYOBJECTIVE OF THE STUDY:The Objective of my study is: • The study consumer’s preferences for chocolate • To study the recall value of Cabdury’s Picnic among the consumers and retailers • To find a Gap to Relaunch and reposition Cadbury’s Picnic in the Indian market.COLLECTION AND ANALYSIS OF DATA: • Primary Data Surveys/Questionnaires 1. Customers Survey – A sample size of 100 is chosen. 2. Retailors – A sample size of 25 is chosen. Interactive 1. Interaction with customers in the Market/Household 2. Interaction with Retailers. • Secondary Data 1. Data accessibility from Prowess and EBSCOO 2. Internet 3. Newspapers, Magazines and Other Published Journals • Statistical Analysis of the collected primary data • Report preparation 38
  39. 39. RESEARCH METHODOLOGY: • Types of questionnaire For the convince of conducting survey for 100 customers and 25 Retailers the questionnaire is structures, undisguised and closed ended so that it becomes easy for the customers to response. • Mode of administration Personal interview and interaction have been done with few retailers and customers to framing of the questionnaire. • Sampling detail Unit: The total size (N) = N1 + N2 Where, N1 = 100 Customers N2 = 25 Retailers Frame: For Customers & retailers Survey – Customers & Retailers across Mumbai were surveyed 39
  40. 40. Data findings and AnalysisDATA ANALYSIS FOR CONSUMERS 1. Do you like to eat chocolates? LIKE AND DISLIKE OF CHOCOLATES 2% 11% Very much Okay Okay 28% Not much 59% Not at allAs far as the demand of the chocolate majority of customers like to eat chocolate. There istremendous scope for the Indian Chocolate market which can be fulfilled by variouschocolate players in the market. 40
  41. 41. 2. How frequently do you buy chocolates? BUYING PATTERN Special occasions Once every 25% day Once every day 33% 2-3 times a week Once a Once a week week Special occasions 12% 2-3 times a week 30%33% of people responded that they buy chocolate on daily basis People buying chocolates 2or 3 times in a week was 30%.This shows that the overall buying patter of chocolate amongcustomers is good and the market should has great potential. 3. Where do you normally buy chocolates from? PREFFERED DISTRIBUTION CHANNEL 12% 9% Kirana shop Supermarkets Both 79%The buying patter of the customers shows that most of the customers prefer to buychocolate from small local kirana shops. That shows that in order to succeed in thechocolate market the players have good relationship with the Kirana shops. 41
  42. 42. 4. Which brand of chocolates you prefer? MARKET LEADER 2% Cadbury’s 2% Nestle & Cadbury 2% 9% Cadbury & Foreign Brands 10% Only Foreign Brands 57% 18% Amul Nestle Nestle & Foreign BrandsThe customers most preferred choice of brand is Cadbury followed by Nestle. Cadbury rulesthe Indian market and is customers 1st choice.5. Would you prefer to switch to another brand if the prices are high??? PRICE SENSITIVITY OF CONSUMERS Indifferent 4% No No 43% Yes Yes 53% IndifferentIt could be seen that Indian customers are very much price sensitive. 53% of the customersresponded that if the price of chocolate is increased they might even change the brand theyprefer. 42
  43. 43. 1. What is the first word that comes to mind (your first reaction) on looks of the below chocolate? Nuts 21% 19% Ugly Crunchy 18% 27% Weired 15% Wont Buy it at all27% of the customers responded that they found the shape of picnic ugly and many evenresponded that since the shape does not appeal to their eyes they will not buy it.7. Now that you have seen how the chocolate looks, would you like to buy it? Give youranswer just based on its looks. 15% Yes No 85%Even after taking a look at the package of the chocolate customers responded that since thepackaging was not appealing to them they will not buy the chocolate 43
  44. 44. 8. Your reaction on shape of the chocolates? · I don’t care; I am ok with uneven shapes! 5% 10% · I like bar shape (e.g.: 30% Dairy Milk, Kit Kat) · I like spherical shape (e.g.: Munch 55% balls, Gems) · I am OK with any shape, it should be even!The bar shape chocolate is the most preferred choice of the customers followed by sphericalshape.9. Do you know the brand of below chocolate? 25% Yes No 75%Most of the customers were not able to recognize the Brand that manufactures Picnic norwere they able to recollect that such a brand was ever launched in India. 44
  45. 45. 10. Rate your preferences in choice of chocolates on a scale of 1-5 (5 being highest rank) PREFERENCES Packaging Taste 20% 28% Taste Brand Ingredients Ingredients Packaging 25% Brand 27%On an average the scale of preference was as follows:1st priority: Taste2nd priority: Brand3rd priority: Packaging4th priority: Flavors5th priority: Sweetness/less sweet6th priority: Calories7th priority: PriceThe customers prefer taste and they even go for brand reliability. Brand and the taste ofchocolate is the most important factor that influences customer’s decision. 45
  46. 46. DATA ANALYSIS OF RETAILERS1. Which brands of chocolates does the shop sell? 5% 23% 39% Cadbury’s Nestle Amul Imported brands 33%Most of the retailers sell Cadbury’s brand. This shows the distribution network of Cadbury’sand their relationship of the company across various distribution channels2. Which Brand of Chocolate Sell the Most? 3% 12% Cadbury’s Nestle 25% Amul 60% Imported BrandsCadbury’s is the most selling brand in the Indian market. It’s the most preferred choice of thecustomers and that the reason it’s the most preferred choice of retailers. 46
  47. 47. 3. What are customer’s preferences in the choice of chocolates? Taste Sweetness 19% 22% Price Calories 15% 8% Brand of the chocolate 15% Packaging 18% 3% Ingredients/ flavorsAccording to the retailers customers give 1st preference to taste and another importancethey give to brand of chocolate.4. Sales of chocolates are highest during which period? 12% Festival Constant throughout the year 88%Festival season is the time when the sale of chocolate really goes up. This shows that thecustomers buying trend is changing and they are moving from traditional sweets tochocolates. 47
  48. 48. 5. Are there any customer complaints about the existing brands of chocolates? 5% Yes No 95%Most of the customers do not have any complain with the chocolate they buy. They havealmost forgotten the Cadbury’s warm story and are almost satisfied with brand they buy.6. Do you know the brand of below chocolate? 12% Yes No 88%88% of the retailers were not able to recognize Picnic chocolate brand. This very well showsthat the chocolate when it was launched was not a successful product in the Indian market. 48
  49. 49. 7. Has the demand for chocolates risen in the past few years? 25% Yes No 75%Ever the last period the sale of chocolate has risen. The product is getting acceptable by thecustomers and is the buying pattern and taste of customers is changing. 49
  50. 50. RECOMMENDATIONREASONS FOR FAILURE • Physical appearance o Its irregular shape did not appeal to the customers. o Varying quantity of peanuts and raisins in each PICNIC bar resulting into low standardization. o Due to irregular mold of the chocolate opening and eating it was a problem. • Packaging o In the packaging the letter PICNIC was so large that it covered most of the front side which was unlikely the Cadbury way to brand. o This resulted in poor brand association with the customers. o Also the name Cadbury could not be clearly and easily seen. o The word picnic was surrounded by what looked like a jam spoilage or may be blood giving a negative impact about the product to the customers. • Pricing o The PICNIC bar was priced at Rs.10 whereas its competitor Nestle sold Munch for Rs.5 and used aggressive marketing. • Inconsistent taste o Due to inconsistent proportion of raisins and peanuts taste varied from each picnic bar to bar. o Also due to this the chocolate could not meet the taste requirement of some customers resulting in unsatisfied customers. 50
  51. 51. o Also peanuts and raisins were not properly fried resulting in varying taste. • Improper communication about the value proposition to the target audience o Cadbury PICNIC chocolate was not properly promoted by the company since it was not its flagship product. o Also lack of association with brand ambassador when compared to its competitors resulted into low sales. o Also the promotional campaign positioned it as an alternate to full diet which is contrary to the mindset of an Indian customer.PROPOSED RE-LAUNCH OF PICNIC Rationale behind the re-Launch • Considering the current competitive market and intense competition Cadbury can no longer rely on its flagship product even though it faces low competition in the market • By re-launching Cadbury PICNIC chocolate as an energy bar the product portfolio should be expanded which can prove to be a flanking strategy for Cadbury. • Considering the average age composition of the Indian population which lies around 25-30 Cadbury PICNIC chocolate if launched as energy bar on the move it can have a huge target segment. • Also the company has a state of art manufacturing unit for the production of Cadbury PICNIC bar which can be used without causing additional cash outflow in infrastructure development. • Cadbury PICNIC chocolate being rich with peanuts and raisins should be re- launched since it can fulfill energy needs in a tasty way and its nutritional facts can be highlighted for this purpose. • Cadbury can use the re-launch to make competitors re-strategize also it can have the first mover advantage. • There is a very low competition in the market for an energy bar at an affordable price. So, Cadbury being the market leader in Indian chocolate industry with deep financial backing, advanced technology, extensive distribution network and a trusted name can easily cover the gap. 51
  52. 52. STP ANALYSISSegmentation • Cadbury’s ‘Picnic’ is a mass market product. This confirms that all demographic segments & geographic segments have the potential. • Customers for chocolate can be distinctly identified by their behavior patterns (perceived benefit of the product). Thus, behavioral segmentation is adopted as the basis of segmentation. • The market is segmented as per the benefit sought by the consumers. • The market can be divided into customers looking for – Fun & Relishing, Filling, Instant Energy, Socializing.Targeting • The target chosen for re-launching this product are the consumers looking for Instant energy amidst their fast-paced life. • Cadbury Picnic scoring high on nutritional facts and has energy giving ingredients like peanuts, raisins it can initially target from teenagers to working class people. • These would involve school-going children during their lunch breaks, college students, working people under stress during the office hours.Positioning: • We propose to position Cadbury Picnic Bar as “TOTAL ENERGY REPLENISHER ON THE MOVE” as a meal between the meals.MARKETING MIX:Product:• Cadbury PICNIC should be showcased as an Instant Tasty Energy Bar for all those who have the need for energy replenishment on the run.• Cadbury Picnic should have a proper mould which would give all the Picnic Bars a uniform shape and size making it much more acceptable. 52
  53. 53. • The Picnic Bars should also have a prefixed amount of peanuts and raisins which will make the taste of the Picnic bar uniform and also the calories in each bar at the same quantity.Place:• Cadbury PICNIC should make full utilisation of the highly efficient distribution network to make sure that Cadbury Picnic taps the full potential market.• One more strategy that Cadbury Picnic should use is a higher or an increase in the trade discount should be given.• Also Cadbury Picnic has to concentrate more on the Tier I and Tier II cities where the people would actually like a chocolate energy bar to fulfill their energy needs.Price:• The price of the energy bar should be around 10 Rs. per bar which would not only be the same as that of the older price but will also be in correspondence to the similar products available in the market today.Promotion:• Cadbury Picnic has to go for an aggressive promotion and marketing campaign.• The traders should be motivated to gain maximum shelf space for PICNIC leading to more visibility.• Selection of a brand ambassador for the bar who should be such that there is an easy association for the ambassador and the energy bar Picnic. Brand Ambassador like Akshay Kumar should be roped in as he is considered a Man with of lot energy and has a good popularity among the Indian Masses.• Heavy display of the Cadbury Picnic bar at Public Places by the use of banners, billboards, dazzlers and kiosks.• Sponsoring of certain sports and other energy sapping events should be done in such a way that would help in gaining a good presence in the consumers mind.• Also advertisements should be displayed or telecasted during the primetime in order to get the maximum viewership. 53
  55. 55. Advertisement 2In the above shown advertisements the clear cut message of energy could be seen.Popeye spinach is considered as a great source of energy for him and in the aboveadvertisements his Spanish is replaced with Cadbury’s picnic which now gives hisinstant energy and is his new choice. 55
  56. 56. Advertisement 3 Part 1 56
  57. 57. Advertisement 3 Part 2Advertisement 3 is an innovative advertisement, in which the 1st page would be part 1and it will open out to part 2 of the advertisement. Cadbury’s “Pappu Pass Ho Gaya”was a Hit campaign and trying to leverage that same Advertisement “Pappu Pahalwanban Gaya” campaign could be launched. 57
  58. 58. CONCLUSIONThe Indian Chocolate Industry is a unique mix with extreme consumption patterns, attitudes,beliefs, income level and spending. At one hand, we have designer chocolates that areconsumed when priced at even Rs 2500/kg while there are places in India where peoplehave never even tasted chocolates once.Understanding the consumer demands and maintaining the quality will be essential.Companies will have to keep themselves abreast with the developments in other parts of theworld.PRICING is the key for companies to make their product reach consumers’ pockets. Rightpricing will make or break the product SUCCESS. Economical distribution of the productswill also be equally important.The companies’ strategies should focus on driving sales through a right product mix, efficientmaterials procurement, reduced wastages, increased factory efficiencies and improvedsupply chain management.There’s an immense scope for growth of chocolate industry in India - geographically as wellas in the product offering. The Indian Chocolate Industry is destined to grow and will do so inthe future. 58
  59. 59. ANNEXURESCHOCOLATESTYPES OF CHOCOLATESDepending on what is added to (or removed from) the chocolate liquor, different flavors andvarieties of chocolate are produced. Each has a different chemical make-up; the differencesare not solely in the taste.1. Unsweetened or Baking chocolate is simply cooled, hardened chocolate liquor. It is usedprimarily as an ingredient in recipes, or as a garnish.2. Semi-sweet chocolate is also used primarily in recipes. It has extra cocoa butter andsugar added. Sweet cooking chocolate is basically the same, with more sugar for taste.3. Milk chocolate is chocolate liquor with extra cocoa butter, sugar, milk and vanilla added.This is the most popular form for chocolate. It is primarily an eating chocolate.CATEGORIES OF CHOCOLATESChocolate market can be segmented as follows:Large units bars/ slabs, • Count lines, • Panned varieties, • Small value added units.Confectionery products can be categorized as • Hard boiled sugar candies, lollipops, jellies • Toffees 59
  60. 60. • Chewing candies • Breath freshners, digestives, throat relieversGum based products are • Chewing gum • Bubble gumChocolates and Confectionery IndustryChocolates Sugar confectionery Gum basedBars/ Slabs Hard boiled Chewing gumCount lines Toffees Sugar coated chewing gumPanned (Gems) Soft chew Bubble gumEclairs Jelly candiesAssorted Deposit candies Lollipops Mints, etc.CHOCOLATE SEGMENTATIONChocolate market can be segmented into moulded chocolates, count chocolates, pannedchocolates, eclairs and assorted chocolates.Type of chocolates % Share in chocolate marketMoulded 37%Count 30%Eclairs 20%Panned 10%Others 3% Others Panned 3% 10% Moulded Moulded Count Eclairs 37% 20% Eclairs Panned Count Others 30% 60
  61. 61. Moulded chocolates, like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premium, NestleMilky Bar, is the largest segment accounting for more than 1/3rd of the market.Count lines (5 Star, Perk, Kit Kat, Picnic) are the second largest segment accounting for30% of the volumes. The Count line segment has been growing at a faster pace during thelast three years driven by growth in Perk and Kit Kat volumes.Panned products include Cadburys Gems, Nutties, and Nestles Marbles. In pannedsegment, Cadbury dominates with over 95% market share.Eclairs (droplets of hard caramels with a soft chocolate fillings) are a low unit priced product.Cadbury Eclairs was launched in 1972. Parle Products launched Melody in 1991. Nestle is arecent entrant in the segment. Nutrines Eclairs has done extremely well in the market.FORM OF CONSUMPTIONa. Pure Chocolatesb. Toffeesc. Cakes & Pastriesd. Malted Beveragese. Wafer Biscuits & Baked Biscuitsf. Chocolate Desserts 61