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Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
Final report on chaco
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Final report on chaco

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REPORT ON CHOCO USERS

REPORT ON CHOCO USERS

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  • 1. 1UTTAR PRADESH TECHNICAL UNIVERSITY
  • 2. INTRODUCTION ―A comparative analysis of buying behavior of different brands of chocolate user in lucknow market‖ is about the customer perception & satisfaction level toward various brands of chocolate. Product category comes under Fast Moving Consumer Foods (FMCG). Purchased as a convenience good. Chocolates had its beginnings in the times of the Mayas and the Aztecs. Chocolate market is predominantly urban with coverage of 95%. General characteristics of this product are: Low involvement product. Lot of brand switching. The chocolate market in India is estimated to be around 30800 tonnes. It is dominated by 2 major players, Cadbury India Ltd and Nestle India Ltd, which together account for about 90% of the total chocolate market. Some commodities in one segment are used as inputs in another segment of the food processing industry, e.g., skimmed milk powder (SMP) used as raw-material for chocolate, ice cream etc sugar, edible oil used as raw materials for a number of items, molasses for alcohol etc. 2UTTAR PRADESH TECHNICAL UNIVERSITY
  • 3. There has been a rise in the prices of all such commodities which have impacted the overall cost of production in the food processing industry sectors. There is a need for review of all such cases involving the users and the producers. Chocolate is a preparation made from the fruit of the cacao tree and used as a flavoring and as an ingredient of beverages and various kinds of confectionery. The recipe for chocolate will vary from country to country – according to different tastes and from brand to brand. The typical bar is made up of: 10% cocoa mass 14% cocoa Butter 25% milk 45% sugar 5% vegetable fat. The best plain chocolate can contain up to 70% cocoa solids. This is the favorite type of chocolate in Continental Europe. It is made by mixing the cocoa paste with cocoa butter and sugar. Without sugar the chocolate would be quite bitter. Milk gives the chocolate a creamy taste and texture. Cocoa beans are roasted and ground to produce three main products: Cocoa Liquor - gives flavor to the chocolate. Cocoa Mass - used for cocoa powder or hot chocolate. Cocoa butter - melts at just below body temperature so it melts in the mouth. The entire market can be divided into 7 major categories, namely Hard Boiled Candies (HBC), Toffees, Eclairs, Chewing gums, Bubble gum, mints and Lozenges. The confectionary market is highly fragmented with several players with strong regional presence. Leading players are Cadbury India, Nestle, Nutrine, Parrys Confectionary, Parle, Ravalgon, Candico etc. 3UTTAR PRADESH TECHNICAL UNIVERSITY
  • 4. Malt- and chocolate-based drinks are often seen as relatively unsophisticated in developed markets in the west, but in many countries, in particular in Latin America, they are big business indeed, marketed mostly as an excellent source of nutrition in countries where food quality is often poor. But improving sales in other countries will depend on finding a premium positioning. Global retail volume sales of both malted and chocolate-based hot drinks reached 956,702 tones in 2003, according to a recent report from market analysts Euro monitor, with Latin America alone accounting for over one third of total sales. Indeed, Latin America accounts for two of the top three markets for chocolate-based drinks (Brazil and Mexico, the third being Spain), and manufacturers are increasingly focusing their marketing efforts on young people in these countries, according to the report. This goes hand-in-hand with the widespread introduction of value-added products in these markets. In recent years, for example, the Mexican market saw the launch of a number of chocolate-based powders in new packaging, formats and formulas - often with new flavors. These products generally targeted consumers prepared to pay a premium, though some were aimed at low-income segments of the population, according to Euro monitor. Brazilian manufacturers also met consumer demand by offering premium chocolate- based products, helped by the fact that Brazilian consumers are more aware of health issues than many of their Latin American counterparts. Brazilian consumers often upgrade by purchasing healthier chocolate-based products such as low-calorie and diabetic-friendly alternatives, Euro monitor said, highlighting the 2003 launch of Toddy Light by PepsiCo as an example of this trend. Malt drinks, meanwhile, are most popular in India, which accounts for 22 per cent of the world‘s retail volume sales. They are traditionally consumed as milk substitutes there and marketed as a nutritious drink, mainly consumed by the old, the young and the sick. Sales have also been aided by improved retail and distribution in recent years, combined with a large child and youth consumer base, the report said. India also recorded the highest growth (53 per cent in US$ terms) during 1998-2003, again spurred by consumers trading up to value-added products. In 2003, for example, Glaxo Smith Kline re-launched Horlicks for Kids, specifically targeted at young children, as well as launching Horlicks in three new flavors. 4UTTAR PRADESH TECHNICAL UNIVERSITY
  • 5. With its Horlicks brand (often seen as an old-fashioned drink in its home market in the UK) Glaxo Smith Kline in fact accounts for 70 per cent of malt-based hot drinks, with India alone contributing nearly 60 per cent of the company‘s global sales of the product. Other major players include Cadbury Schweppes and Nestlé. But if developing nations have a growing taste for malt- and chocolate-based drinks, other more sophisticated markets have yet to catch on. Indeed, the report shows that the performance of malt- and chocolate-based drinks in mature western markets was characterized by of stagnation and decline during 1998-2003. The US, for example, has seen a sharp decline in value sales of both malt- and chocolate-based drinks over the past few years, mainly as these products largely remained outside the overarching consumer trend for premium and healthy products. In fact, malt-based drinks have an almost negligible presence in the US, with manufacturers largely failing to attract the important child and youth consumer groups – a category more interested in soft drinks. The performance of malt- and chocolate-based drinks in Western Europe was more positive than that of the US, but nonetheless there was little in the way of growth during 1998-2003. A relative lack of innovation and marketing activities, allied to demographic factors such as falling birth rates, saw important western European markets such as Germany record modest growth, according to Euro monitor. The warmer winters experienced in Western Europe in recent years also contributed to the lower demand for chocolate- and malt based drinks. The UK experienced sharp decline of 13 per cent in retail volume terms in malt-based drinks and only moderate growth in chocolate drinks during 1998-2003. Among major markets, China is forecast to be the fastest growing market in both chocolate-based (up 35 per cent by value) and malt-based (up 29 per cent by value) up to 2008. China‘s booming economy along with rising levels of disposable income and increased availability of quality products will encourage further consumption, the analysts predict. Following China‘s accession to WTO, multinationals are also expected to penetrate the country further, driving up. 5UTTAR PRADESH TECHNICAL UNIVERSITY
  • 6. THE CHOCOLATE INDUSTRY IN INDIA The chocolate industry in India has a size of 20000 tones and is worth about Rs 400 crores. The chocolate market has been growing by nearly 35 %. However there has been some slowdown in the last two years. The chocolate market is predominantly urban with coverage of 95 %. The sales volume has decreased by 5% in the last year and the chocolate market had declined with the average consumption coming down by 25% from 16000 tones to the current level of 125000 tones Chocolate consumption in India is extremely low. Per capita consumption is around 160gms in the urban areas, compared to 8-10kg in the developed countries. In rural areas, it is even lower. Chocolates in India are consumed as indulgence and not as a snack food. A strong volume growth was witnessed in the early 90s when Cadbury repositioned chocolates from children to adult consumption. The biggest opportunity is likely to stem from increasing the consumer base. Leading players like Cadbury and Nestle have been attempting to do this by value for money offerings, which are affordable to the masses. Cadbury, a subsidiary of Cadbury Schweppes is a dominating player in the Indian chocolate market with strong brands like Dairy Milk, Five Star, Perk, and Gems etc. Dairy milk is the largest chocolate brand in India. Chocolates & Confectionery contribute to 75% of Cadbury‘s turnover. Cadbury also has a strong brand Bourn vita in the malted health drink category, which accounts for 24% of turnover. 6UTTAR PRADESH TECHNICAL UNIVERSITY
  • 7. AMUL: THE FLIGHT WHICH FAILED TO TAKE OFF Gujarat cooperative milk marketing federation limited (Amul) Amul is the third player in the chocolate market in India. The brand doesn‘t have any international lineage and is miniscule in terms of market share in chocolates and compared to the two other players Cadburys and nestle. Amul had an extremely focused positioning of a gift for someone you love albeit not target to a single group however Amul failed to capitalize on it seemingly due to the following reasons. a. Chocolates have never been Amul‘s main products and hence there was lack of organizational commitment. The company has never really supported or pushed its chocolates. This reflects on the drastic cutback on advertisement expenditure for its chocolates which has negatively affected its top of the mind awareness level b. The company has enjoyed high customer equity and pulls in butter and so it offered a very low retailer margin of 3.1 % as against the industry average of around 7-8 % Amul tried the same technique in chocolates too. However since it was neither leader nor enjoyed a customer pull like in butter the company got very little support for its chocolates. Following are the major brands of Amul Amul premium Milk Amul badam bar Amul orange Amul fruit and nut Amul crisp 7UTTAR PRADESH TECHNICAL UNIVERSITY
  • 8. NESTLE: Nestle India limited Nestle is a strong player in the chocolates world wide but it entered the Indian market much later in (1991) than one of its global competitor Cadbury. Nestle initial foray into the Indian market was not very successful. The problem was in the formulation of the product. They were soft chocolates with high fat content which were unsuitable to the Indian climate. Also the distribution focus has been on the larger cities and urban areas which limited their customer base. It was with the launch of Chitchat that the company‘s strategy changed with respect to both product and distribution. It increased its distribution network to cover small towns and interiors as well so as to increase the customer base .It also modified the formulation of Moulded chocolate to suit the Indian condition. The company used three layers of foil packaging so that Kitkat could survive the summer heat. Today nestle poses a formidable threat to Cadbury. Kitkat has captured a sizeable chunk of the market within a short span of launch. Nestle, as in 2002-2003 has around 24 % market share with Kitkat alone accounting for 12% market share points. Nestle Bar One is another brand with a market share of 6%. Nestle recently withdrew its Nestle bitter chocolate brand. The other brands of nestle are nestle milky bar and nestle crunch. Nestle have also entered the sugar confectionery market in direct Compton with Cadbury by offering Allen‘s splash and Allen‘s coffees and Allen‘s Butterscotch. Amul has also entered into another foray of the confectionery team that being ice creams. The distribution of this has been pretty good with Amul ice-cream being available all around India. The advertising for the company in India is being handled by love lint‘s. Nestle has been increasing its adverting figure the latest being in 2002 RS 25 crores. Major Products 8UTTAR PRADESH TECHNICAL UNIVERSITY
  • 9. Chocolate Products Crunch: Crunch Chocolate is one of the best-loved foods everywhere in the world. It is one of lifes little pleasures. The attractive tastes and textures of chocolate and chocolate products delight the senses of all ages. Introduced in 1938, today Crunch is Nestlé‘s third largest confectionary brand sold in about 40 countries worldwide. Nestlé Crunch is available in the following varieties: Nestlé Crunch, Nestlé White Crunch, Nestlé Crunch Pieces, Nestlé Bunch Crunch and new products Nestlé Crunch with caramel and Nestlé Crunch assorted minis. Launched in 1938 in the USA, Crunch was the first chocolate bar to combine milk chocolate and crunchy crisps. Crunch is a unique combination of smooth Nestlé chocolate and crisped rice, which delivers an exciting eating sensory experience of distinctive taste, texture and sound. Kitkat: Kitkat Chocolate is one of the best-loved foods everywhere in the world. It is one of lifes little pleasures. The attractive tastes and textures of chocolate and chocolate products delight the senses of all ages. The product, developed as Wafer Crisp, was initially launched in London, UK in September 1935 as Rowntrees Chocolate Crisp. It became Kitkat in 1937, two years before the Second World War. Within two years of launch Kitkat was established as Rowntrees leading product, a position that it has maintained ever since. During the Second World War Rowntree Kitkat was seen as a valuable wartime food and advertising described the brand as What active people need. For most of its life Rowntree Kitkat has appeared in the well-known red and white wrapper. It did, however, change to a blue wrapper in 1945, when it was produced with a plain chocolate covering due to a shortage of milk following the war. 9UTTAR PRADESH TECHNICAL UNIVERSITY
  • 10. This blue packaging was withdrawn in 1947 when the standard milk chocolate Kitkat was reintroduced. No one can be absolutely sure where the name Kitkat came from but it is believed to be from the famous 1920s Kitkat Club in South East London which had some influence. As the building had very low ceilings, it could only accommodate paintings which were wide and not very high. In the art world, these paintings were known as Kats. Its believed that Kitkat derived its name from paintings, which had to be snapped off to fit into the rooms with the low ceilings. Reinventing Nestle A detail analysis by the companies management to turnaround nestle Top line growth, bottom-line contribution, difficult market situations. Nestle Indias trademark `renovate and innovate strategy is churning with action. Catalyst finds out more. JUST how much can a housewife influence a Rs 1,688-crore company? Take, for example, the exhaustive experimental kitchen and sensory laboratory at the plush corporate headquarters of Nestle India at Gurgaon. Its obviously a first-of-its- kind facility and research centre for any food company in India. The objective? Consistent product development. Also, achieving a preference ratio of 60:40 for every Nestle product as opposed to competition. The kitchen comprises a panel of application groups and 15 professional tasters checking out new products for consistency in quality and product evolution on a regular basis. The exercise, has resulted in the creation of two different flavors of Maggi noodles (curry and tomato), Fruitips candy, besides new formulations of Nescafe and Bar One chocolate in recent months. "And this research model isnt a substitute for consumer research, or regular test-marketing with the real consumer. Based on an international research and development model proprietary to Nestle SA, the kitchen is just one component of the Rs 3,000 crore allocated for a centralized research and development cell for the foods conglomerate worldwide, against Rs 2,500 crore spent on the same earlier. Another component is the third in a series of multi-cuisine recipe collections cutting across all Nestle products, in place of the two earlier ones which centered on Milkmaid and Maggi. The Nestle `renovate and innovate mantra, meanwhile, is on in full swing. 10UTTAR PRADESH TECHNICAL UNIVERSITY
  • 11. Four existing brands - Nescafe, Milo, Bar One chocolates and Maggi super seasonings - have been re-launched in new tastes, packaging and pack sizes. And another variant of Kitkat - white chocolate - has just been rolled out. On the launch block a month from now are 10 new product variants spread across the culinary and confectionery segments. The restructuring exercise of Excelcia Foods Ltd - the joint venture company in which Nestle acquired management control following Dabur Indias decision to exit non-core areas - has neared completion. Following that, Nestle proposes to enter fresh product categories such as biscuits in the forthcoming months. Beverage Partners Worldwide (BPW), the joint venture between Nestle SA and the Coca Cola Company too is looking to tap the Indian market for possible coffee and tea variants. While Nestle has done exceptionally well in Western food categories such as ketchup, condensed milk, noodles, coffee and weaning foods, the company hasnt been able to handle Indian product categories such as pickles and tea too well. No one is really making money in pickles. Not only is the unorganized and made-at-home sector too well-entrenched, even the consumer shows no brand loyalty towards pickles. What drives her purchase pattern is new taste and not brand preference. The market for ready-to-cook mixes and soups too has been largely fragmented with a distinct skew towards the unorganized sector. In the chilled dairy segment, Nestle dahi has recently been extended to Mumbai and Pune. While the market for this continues to be very small with only Mother Dairy and Amul giving Nestle competition in the organized sector, milk in cartons is a concept thats yet to go down well with the Indian consumer. Apart from being expensive, the Indian consumer is still not ready to consume milk without boiling it. And research has proved that three-fourths of Indians prefer hot milk. On the pricing front, Nestle continues to target the premium segment. They make inroads into markets which represent not only potential for consumption, but also potential for bottom-line. Nestlé‘s premium pricing strategy is a strength thats worked in most categories it operates in. 11UTTAR PRADESH TECHNICAL UNIVERSITY
  • 12. Fruitips, therefore, occupies price points of 50 paisa and Re 1 per unit against HLLs Max which attacks the unorganized sector with an extremely aggressive 25 paisa per unit price. Its the association with quality that works in Nestlé‘s favour in most product categories. That this hasnt really worked in case of Nestlé‘s bottled water brand, Pure Life, is more distribution-related, feel industry watchers. Pure Life, launched earlier this year at a price point of Rs 12, has been a lukewarm performer compared to Coca- Colas Kinley and Pepsi Aquafina besides, of course, market leader Bisleri. Discounting at the trade level has been a problem area with bottled water. Nestle Business Nestle has a presence in the following categories - Baby Food, Milk products, Beverages (Coffee, malted beverage), Chocolates & confectionery and other processed food products. Category wise turnover breakup and growth. Sales growth in 2007 led by a robust 20% growth in volumes Nestlé‘s domestic sales registered a 18.5% volume growth during the first 4 months of 2008. Exports registered a 31% year of year volume growth. In value terms, domestic sales grew by 15.8% year of year to Rs12.1bn, while Exports grew by 26.4% year of year to Rs2.4bn. Segment wise realization decline has been the highest in Beverages. Milk product and culinary product prices have been more or less maintained at previous year‘s level, while the company has been able to improve realizations on its chocolate & confectionery portfolio. Realizations (Rs/kg) Category % yoy 2007 2006 Milk & Nutrition Products 113 112 +1.4 Beverages 202 238 -15.1 Culinary Products 70 69 1.9 Chocolates & Confectionery 152 143 6.8 Beverages leading volume growth, value growth being led by culinary segment 12UTTAR PRADESH TECHNICAL UNIVERSITY
  • 13. Beverage sales have grown at a fast pace of 42% in the first 9 months of 2001 driven by rising exports and revised pricing strategy in domestic market. Growth in value terms is however lower due to a sharp 15% decline in realizations. Culinary product sales grew by 20% in volumes and 22% in value. Volume growth in chocolate & confectionery segment was 12%, which was higher then market leader and average industry growth, signifying that the company has been able to improve market share in the category. Turnover Growth Contribution by Volume Value Volume Value Realizations Milk & Nutrition Products 47 43 15 13 -1.4 Beverages 18 29 42 21 -15.1 Culinary Products 24 14 20 22 1.9 Chocolates & Confectionery 11 14 12 20 6.8 Milk products, which account for a significant 43% of Nestlé‘s revenues, have grown at steady 15% in volume terms. Turnover contribution of beverages is 29%, while culinary products and chocolate & confectionery each contribute 14% to Nestle Rs14.5bn turnover in the first 9 months of 2006. Profit Margin Operating margins have improved from 18.1% to 18.5% in 2006 driven by lower material cost. Raw material cost declined from 44.4% of sales in F12/05 to 43.1% of sales in F12/06. Operating Margins 2006 2007 EBITDA 18.5 18.1 Adjusted EBITDA 18.5 17.7 Improved working capital and asset management The company has been able to improve working capital management. Operating cash flow has registered a CAGR of 15% in the last 4 years. 13UTTAR PRADESH TECHNICAL UNIVERSITY
  • 14. Fixed asset turnover has also gradually improved over the last 3 years. Net indebtedness (total financial liabilities net of liquid assets) has declined from a high 2.5x in 1998 to 0.3z currently. 2003 2004 2006 2007(dec) Operating Cash Flow 1743 2391 2420 1966 Rotation of Operating Net Working Capital 7.1 9.6 14.7 18.1 Rotation of Fixed Assets 4.0 3.9 4.2 4.7 Net Indebtedness 2.5 1.0 0.9 0.3 "India Infoline Ltd (IIL) and India Infoline Securities Ltd (IISL) do not have any positions in any DIRECTORS REPORT (7th March, 2009) 1. Operations: Domestic Sales grew by 7% in value and 15% in volume terms, during the year. Export Sales grew by 16% in value and 32% in volume. Profit after Tax grew by 20% from Rs985mn to Rs1186mn. The market and economic growth continued to be sluggish during 2005. Concerted efforts of the management to maintain the price of products (in some cases even reduction of prices), better working capital management, continuous improvement of supply chain and a focus on flagship brands, contributed significantly towards the above profitability. The favourable impact of the commodity prices during parts of the year and the product mix, also contributed significantly towards improvement in profitability. During the year, the Company retired certain fixed assets from active use at various locations and the impairment loss on such fixed assets has been charged to the Profit and Loss Account. Out of business prudence, the Company supplemented the Contingency Provision with further amount in 2005 of Rs295mn (net) to provide for various contingencies resulting from matters mainly relating to issues under litigation, dispute and management discretion. 14UTTAR PRADESH TECHNICAL UNIVERSITY
  • 15. Your Companys overall sales and profit progression during 2005 can be considered satisfactory and in line with the expectations. The current year has commenced as per plan in the domestic market and your Directors are hopeful of continued good results. However, with the current level of inflation and economic indicators pointing towards a sluggish market, it would be difficult for the Company to maintain the level of earnings unless the Company takes price increase on finished products which would depend on market conditions and competitor activities. 2. Exports: Export Sales for the year at Rs2655mn have grown by 32% in volume terms, over the last year. This has been mainly due to the higher exports of NESCAFE to Russia, buoyant sales of Instant Tea and good performance of the culinary products. However, depressed green coffee prices in domestic and international markets kept the export realizations low. Measures taken for tapping new market and product opportunities have also contributed to this growth. The export competitiveness of value added instant coffee manufactured in India continues to be adversely affected by the purchase tax levied on green coffee. Efforts continue to tap new market and product opportunities. 3. Dividends: Interim dividend of Rs. 8.00 per equity share, including Rs4.50 per equity share out of undistributed profits of the previous financial years, was paid during 2005. Your Directors are pleased to recommend to the Annual General Meeting a final dividend of Rs6.00 per equity share. The dividend, if approved, shall be payable to the shareholders registered in the books of the Company and beneficial owners furnished by the Depositories, determined with reference to the book closure from 16th June, 2006. 15UTTAR PRADESH TECHNICAL UNIVERSITY
  • 16. 4. Business Development: In line with the Companys objective to provide superior value in every product category and market sector, efforts were focused to provide quality products to customers at attractive price points. While the Company continued to generally maintain price points across all the product categories, the pricing of some products were also reduced to meet consumer expectations. MAGGI Noodles re launched in 1999 in response to popular consumer taste preference, continued to boost sales during 2000 in the culinary segment. New flavour profiles were introduced in the bouillon business. The market continued to react positively to the initiatives taken in the recent past to grow the consumption of instant coffee in the domestic market. The new NESCAFE pricing and bringing the popular SUNRISE brand under NESCAFE umbrella to benefit from its association continued to strengthen the category. NESCAFE Frappe a blend of coffee, mocha and vanilla, which makes a delicious frothy cold coffee, was launched in select metropolitan cities in the third quarter. This was another strategic launch and seeks to address consumer with preference for cold drinks. NESCAFE Frappe has received encouraging response. In the area of Chocolate and Confectionery NESTLE MUNCH Crisp wafer biscuit with chocolayer, which was launched in select markets in1999, was rolled out nationally during 2000 and had good growth. Continuing with the efforts to meet consumer expectation on price points, the pricing of KITKAT was also reduced during the later half of the year. Moulded Chocolates and Éclairs also showed satisfactory growths. This has also helped in improving the infrastructure and distribution reach of the Company in the Chocolate and Confectionery segment. In the milk and cereal categories, EVERYDAY Dairy Whitener and cereals had satisfactory growth. NESTLE Growing up Milk; a new product offering superior nutrition, launched in 1999 was rolled out nationally during the year. 16UTTAR PRADESH TECHNICAL UNIVERSITY
  • 17. Your Company has also entered the Chilled Dairy business with the recent launch of NESTLE Dahi in select cities of the North. The initial response has been very encouraging and your Company is working on plans to further leverage the international expertise of Nestle Group, Switzerland in the area of Chilled Dairy. The performances of other products were generally in line with expectations. A few products whose performance was not considered satisfactory are under constant review for corrective action. Your directors are pleased to report the implementation of the two new projects undertaken by the Company during 2000 packaged milk and packaged drinking water. Both the projects seek to leverage the worldwide experience and knowledge of Nestle Group, Switzerland who are the leaders in these product categories. In line with its objective of long term growth and entry in significant value added food segments, the Company forayed into the Ultra Heat Treated (UHT) liquid milk business in April 2000 by launch in Mumbai. Packaged UHT milk seeks to address growing consumer concerns on adulteration and product safety and brings with it reliability, complete hygiene and safety. It offers convenience to the consumer, in terms of a shelf life without any deterioration in the product quality and easy usage without refrigeration or boiling. UHT Milk has received encouraging response and has been rolled out in select cities of the West, South and North. The project for bottled water was implemented at the Samalkha factory and water launched in February, 2001 under the brand NESTLE PURE LIFE and is available in select cities. NESTLE PURE LIFE contains a balance of essential minerals and a light pleasant taste and is manufactured under stringent quality control. The packaging has been specially designed to maximize safety for the consumer and protect from possible tampering. The new categories like bottled water and liquid milk are lower margin categories and will require considerable investments. Your Company sees them as strategic and as requiring support on a sustained basis. 17UTTAR PRADESH TECHNICAL UNIVERSITY
  • 18. The two new Sales Branches at Bangalore and Chandigarh set up in 1999 to further strengthen the flexibility of the Sales organization and for speedier response to the market conditions, have started showing positive results during the year. With a view to expand distribution and increase penetration in smaller towns, a concerted drive was undertaken to make products affordable and accessible to consumers. An initiative taken includes more penetrative pricing and smaller packs covering brands such as EVERYDAY Dairy Whitener, MAGGI Noodles, MILO Chocolate Energy Drink and NESCAFE Instant Coffee. The response has been encouraging. The Alternative Trade Channel unit created in 1999 undertook initiatives to tap the opportunities for out of home consumption, particularly for instant coffee and chocolate and confectionery and to extend availability of product to nontraditional outlets. The outcome of these initiatives has been encouraging and is being consolidated. Availability of NESCAFE has been enhanced through an expansion of the vending machine network and new consumption opportunities for Chocolates and Confectionery were identified and developed in areas like railway platforms, college canteens and major events. On the manpower development front, programmes during the year continued to be focused on the operational front more particularly sales and production. To support the growth plans and distribution strategy, and simultaneously improve the operational efficiency, the thrust on strengthening supply chain continued to receive attention during the year. In addition to consolidating the improvements made over the last two years, significant progress was recorded in following areas: a) Reduction in finished goods inventory pipeline to improve freshness of stocks and reduce working capital. b) Control of distribution costs through innovative measures, despite steep increases in cost of fuel. c) Sustained improvement in customer service level to improve product availability across all geographies and channels. d) Reduction in obsolescence of materials. 18UTTAR PRADESH TECHNICAL UNIVERSITY
  • 19. 5. New Head Office: The Company moved into its new Head Office at Gurgaon. The new Head Office has been designed to provide the employees with work environment that enhances white collar productivity. The new Office design seeks to stimulate improved internal communication and enhance transparency in working. State of the art facilities for training, tasting, and a fully equipped test kitchen, have been made available that will facilitate the efforts for innovation and renovation. 6. Technology from Nestle: The Company being a part of Nestle Group, Switzerland benefits from its access to proprietary technology, technical and non technical expertise and the fruits of the extensive centralized Research and Development. The diversified knowledge and expertise have contributed significantly to the operations of your Company over the years. Some of the key areas, which have benefited are: a) Manufacture of products of truly international quality. Product quality, which encompasses taste, appearance, convenience and overall value for money, is a critical factor in consumer choice and in a competitive market like India could determine the very survival of the products. The high quality of products of your Company is borne out by the position and image the products enjoy in the market and your Company continuing to be a leading exporter of value added Instant Coffee in the country. b) Benchmarking of products against competition to achieve an advantage in product quality, for increasing competitiveness. c) Access to latest technological developments, such as Spear point Technology for Cocoa based products implemented during 2000 which would improve product quality and competitiveness and the MUCH technology for instant coffee manufacture implemented during 1999, which would enhance the productivity by increased extraction of coffee solids from coffee beans. d) Implementation of project for bottled drinking water. 19UTTAR PRADESH TECHNICAL UNIVERSITY
  • 20. e) Product innovation and renovation some illustrations are MUNCH Crisp wafer biscuit with chocolayer; Nestle Dahi; Nestle Milk (UHT); Junior Foods; NESCAFE Frappe; KITKAT Milky; new and improved flavours profiles of bouillons; and re- launch of MAGGI Noodles. f) Enhancement of skill and competence of Company personnel due to the training received. g) Implementation of environmentally sound business practices. h) Technical expertise in various forms including Information Technology, which has enabled the business of your Company to grow and sustain. i) Providing assistance by way of improved technical and quality standards to local manufacturers, who have contract manufacturing arrangements with your Company. Your Directors are pleased to report the signing of the General License Agreement with the collaborator providing license of all intellectual property rights for the products manufactured and sold by the Company using such intellectual property. The General License Agreement which is effective 1st January, 2001 aligns the Company with the global practice of Nestle Group and would be beneficial to the Company. Undoubtedly, without the know-how provided and ongoing technical assistance, your Company would have found it difficult to achieve the progress that has been attained. Your Directors note with satisfaction that being a part of Nestle Group, the ongoing technology transfer and access to the fruits of extensive Research and Development and authorization to use internationally famous brands, would help the Company significantly in its efforts to remain competitive in the market. 7. Moga Milk District: Your Company which started milk collection in Moga in 1961 with a daily collection of 510 kg of milk from 180 farmers has expanded its operations to an average daily collection of 540,000 kg of milk with total yearly collection of around 200 million. Kg of milk from nearly 81,000 farmers in its milk district. The Company owns no farms or cattle but through its Agricultural Services world wide initiative of Nestle Group, works closely with the farmers to obtain the highest quality raw material. 20UTTAR PRADESH TECHNICAL UNIVERSITY
  • 21. Recognized as "Partners in Progress", Nestle Agricultural Services at Moga factory has contributed its mite to the up-liftment of the milk district. Some significant steps taken by the Company in the recent past are: a) Installation of farm coolers. b) Milk Collection Centers provided with new and improved equipment to enable on the spot testing of quality. c) Initiation of mechanization of large dairy farms. d) Farmer development programmes. The Company has over the past decades been providing facilities and support to the dairy farmers in areas such as veterinary services, breed improvement; balanced cattle feed mixture, feeding for dairy herds, fodder seeds and training for improved farm management practices. The milk district is a reflection of your Companys commitment to nurturing quality, technology and improved systems in the community and the companys initiatives to improve living in the region. 9. Information Technology: Your Company continued to make significant investments in the Information Services of Technology area to cope with the growing information needs necessary to manage operations more effectively in a complex supply chain environment. 21UTTAR PRADESH TECHNICAL UNIVERSITY
  • 22. CADBURY: THE LEADER Cadbury, a subsidiary of Cadbury Schweppes is a dominating player in the Indian chocolate market with strong brands like Dairy Milk, Five Star, Perk, etc. Dairy milk is in fact the largest chocolate brand in India. Cadbury India now stands only second to Cadbury UK in sales of Dairy Milk. The company is pushing the gifting segment, through occasion linked gifts. Chocolates contribute to 64%of Cadbury‘s turnover. Confectionery sales‘, accounting for 12% of turnover, is contributed largely by Éclairs. The company attempted expanding its confectionery product portfolio, with launch of sugar based confectionery Googly and Fritos, without much success. Cadbury also has a strong brand Bourn vita in the malted health drink category, which accounts for 24% of turnover. Chocolate consumption: in India is extremely low. Per capita consumption is around 160gms in the urban areas, compared to 8-10kg in the developed countries. In rural areas, it is even lower. Chocolates in India are consumed as indulgence and not as a snack food. A strong volume growth was witnessed in the early 90s when Cadbury repositioned chocolates from children to adult consumption. The biggest opportunity is likely to stem from increasing the consumer base. Competition: Cadbury continues to dominate the chocolate market with about 69% market share. Nestle has emerged as a significant competitor with about 20% market share. Key competition in the chocolate segment is from co-operative owned Amul and Campco, besides a host of unorganized sector players. There exists an even larger unorganized market in the confectionery segment. Cadbury holds 4% of the market share in this segment. Leading national players are Nutrine, Parrys, Ravalgaon, Candico, Parle‘s, Joyco India and Perfetti. The MNC‘s such as Joyco and Perfetti have aggressively expanded their presence in the country in the last few years. 22UTTAR PRADESH TECHNICAL UNIVERSITY
  • 23. Malted food drinks: Category consists of white drinks and brown drinks. White drinks account for almost two-thirds of the 82,000 ton market. South and East are large markets for food drinks, accounting for the largest proportion of all India sales. Cadbury‘s Bourn vita is the leader in the brown drink (cocoa based) segment. In the white drink segment, SmithKline‘s Horlicks is the leader. Other significant players are Heinz (Complan), Nestle (Milo), GCMMF (Nutramul) and other SmithKline brands (Boost, Maltova, Viva). Cadbury holds 14% market share in food drinks segment. Performance: Despite tough market conditions & increased competition Cadbury managed to record a double digit (11%) top line growth in 2005. The company achieved a volume growth of 5.2%. This was achieved through innovative marketing strategies and focused advertising campaigns for flagship brand Dairy Milk... Net profit rose sharply by 41.8% to Rs520mn. Reduced material and energy costs and tighter control over working capital and capital expenditure enabled the company to improve profitability. Company added 8mn new consumers and saw its outlets grow to 4.5 lakhs and consumers to 60mn. Outlook: The Cadbury management has cut down on its growth target by setting a 10% average volume growth target for the next three years (as against previous growth target of 12% volume growth and 20% value growth). Coupled with inflationary price increases, this could translate into a top line growth of 14-15%. This target also appears difficult to achieve given the consumer slowdown and the fact that the company is dependent on a single category – Chocolates to drive growth. In the malted food drinks category the company faces stiff competition from SmithKline Beecham, and market share has been stagnant at around 14% despite the company‘s efforts and investments in repositioning the brand. Efforts at expanding confectionery portfolio have also not yielded desired results. The management has declared its intention to focus only on Éclairs (which form a major portion of its 4% share in the confectionery segment) for the time being in this category. In chocolates too, the onus remains on the 2-3 key brands such as CDM, Perk and Éclairs, which have supported growth in the past. 23UTTAR PRADESH TECHNICAL UNIVERSITY
  • 24. Cadbury’s Ad Campaign Kuch meetha ho jaye suggests Cadbury India, its brand ambassador Amitabh Bachchan smiling down the hoardings lined along Mumbais Marine Drive right down to the companys corporate head office at Mahalakshmi. While the chocolate major is waiting for Diwali to see a turnaround in its business after the worms controversy, at the moment its all about driving growth for the category which has seen a decline since the first quarter of this year. Being the market leader in chocolates with a 70 per cent share, the company has attempted to stretch the boundaries within chocolate confectionery. It has also been adventurous in unleashing a brand new category within chocolate early this year. Introducing the concept of sweet snacking, it launched Cadbury Bytes in the south with the positioning `Snacking ka meetha funda. The product is a crunchy wafer pillow with a choco-cream centre and is being rolled out nationally. Explaining the need to introduce this new category, Bharat Puri, Managing Director, Cadbury India, says, "While we were sure of our core competencies, there was need for innovation to deliver double-digit growth. What we found was that we were under-represented in the area of snacking on the go and that there was a need for a light crunchy snack." While entry into salted snacks was ruled out, sweet snacks were the obvious choice, and Bytes is unique to the chocolate majors Indian portfolio. Getting the right product and packaging was a challenge for the company. It has sub- contracted the product to get the volumes and is poised for a national launch. Adds Puri, "After all this was the first category anywhere in the world that Cadbury was entering and we did not have the expertise. So the best way was to test-market the product and today we find that it has already bagged five per cent of the chocolate market." The company has no apprehensions of cannibalization of its chocolate brands. It believes that while its chocolates are more of indulgence products, Bytes is about snacking when one is hungry and can be treated as a snack in between meals. 24UTTAR PRADESH TECHNICAL UNIVERSITY
  • 25. Cadbury follows small packs strategy Small has indeed proved to be beautiful for Cadbury. The company, after finding exceptional success in the launch of small packs of Perk chocolate, has now launched Picnic in small packs of 26 Gms. priced at Rs 10. The 43-gm packs are still available and are priced at Rs 15. Cadbury has embarked on a strategy which involves increased consumption of its products through enhanced reach, affordability and visibility, which it feels can be attained by creating new markets, widening the depth of its distribution network and working towards a comprehensive portfolio with brands across all price segments. On the distribution front, the company aims to increase the number of its distribution outlets from the present 4 lakhs to 5 lakhs by the year 2000. To attain the objectives of affordability, over the past two years Cadbury has been changing its product portfolio from pure chocolate items to confectionery which includes caramel, nuts, raisins and wafers. The aim is to bring down the price line and enter other markets than the purely urban ones. In line with this, it launched Googly in early 1997, and followed it up with products like Mocka and English Toffee. The strategy of the company has been to launch one major product and follow it up with smaller products, for instance, the launch of Picnic was followed by Cadbury Gold and a couple of sugar confectionery launches. Intense competition from Nestle is one of the reasons Cadbury has reworked its product range and made efforts to enter the mass product segment. In 1998, the company moved into smaller sized versions of Diary Milk and Perk and found to its delight that the introduction of economy priced models led to more people eating 25UTTAR PRADESH TECHNICAL UNIVERSITY
  • 26. chocolate. In the same year, small packs increased chocolate volumes of Cadbury by 19 per cent and market share to 70 per cent from 69 per cent in the previous year. Cadbury now has a market share of 70 per cent of the chocolates market. It manufactures chocolates, sugar confectionery and malted drinks. Chocolates constitute 71 per cent of the total turnover, malted drinks 22 per cent, and sugar confectionery 7 per cent. Nestle, with a 20 per cent share in the chocolates market, is expected to respond with Munch, a chocolate brand meant to counter Picnic. Cadbury’s Business Cadbury dominates the Indian chocolate market with a 65% 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. Current market shares Chocolate 69.2% Sugar Confectionery 4.0% Food Drinks 14.2% Future strategy Maintain dominance in chocolate confectionery and market leadership in brown drinks. New channels such as Gifting, child connectivity and Value for Money offerings to be the lay growth drivers Grow volume sales at 10% pa over the next three years. Achieve the goal of best manufacturing location in Cadbury Schweppes world for Dairy Milk and Éclairs One new major product launch every year 26UTTAR PRADESH TECHNICAL UNIVERSITY
  • 27. Chocolates and confectionery products (75% of turnover) For more than five decades now, Cadbury has enjoyed leadership position in the Indian chocolate market to the extent that Cadbury‘ has become a generic name for chocolate products. Cadbury has leading brands in all the segments viz bars (Dairy Milk, Crackle, Temptations), count lines (5 star, Milk Treat), panned confectionery (Gems) and wafer chocolates (Perk), éclairs (Cadburys Éclairs), toffees (English Toffee). During 2001, Cadbury‘s chocolate sales (65% turnover) registered a 9% value growth, aided primarily by growth in the flagship brand Dairy Milk. Dairy Milk contributes an estimated 30% to Cadbury‘s sales. Gems and Five Star were re- launched during the year to stem their de-growth. Perk registered a de-growth during 2001 despite launch of new variants. New brand initiatives included the launch of Temptations in the premium segment and Chocki a low priced chocolate confectionery targeted at children. Cadbury entered the hard-boiled sugar confectionery market with the launch of Googly in 1996. In 1997, the company launched a coffee based sugar confectionery product Mocka. Cadbury has a 4% market share in the confectionery segment, largely contributed by Éclairs. Other confectionery brands such as Gollum, Frutus, Nice Cream, etc launched in the last two years did not receive a good market response and the company has decided to minimize focus on those brands. Éclairs was re-launched with unique packaging in cartons during 2001. Food drinks (25% of turnover) Cadbury‘s Bourn vita is the leading brand in the brown drinks segment of milk/ malted food products. Overall share in the malted food drinks market is estimated at 15%. Brown drinks earlier positioned as taste enhancers were losing market to white drinks during the last few years. Cadbury re-launched Bourn vita with a new formulation and advertising campaign positioning it on the health benefit platform to compete with white drinks. The brand was re-launched in the South – the largest food drink market in the country, during 2001. Bourn vita sales registered a 12% growth in value terms in 2001 to Rs, contributing 24% to total turnover. Cadbury‘s other products include Cadbury’s Drinking Chocolate and Cadbury’s Cocoa powder. These account for only 1% of Cadbury‘s turnover. 27UTTAR PRADESH TECHNICAL UNIVERSITY
  • 28. Distribution Cadburys distribution network encompasses 2100 distributors and 450,000 retailers. The company has a total consumer base of over 65mn. Besides use of IT to improve distribution logistics, Cadbury is also attempting to improve distribution quality. To address the issues of product stability, it has installed Visi coolers at several outlets. This helps in maintaining consumption in summer, when sales usually dip due to the fact that the heat affects product quality and thereby off take. Strategy increasing the consumer base by focusing on the twin proposition of affordability and availability is being followed to drive future growth. Small affordable priced packs have been launched, which have helped improve penetration. Also advertising for chocolates is aimed at changing consumer perception and eating habits by creating new reasons for consumption. Cadburys Market Segments he marketplace for any product is comprised of many different segments of consumers, each with different needs and wants. Market segmentation can be defined in a number of ways, such as: demographic variables (e.g. consumers age groups, gender, marital status, income etc) the lifestyle of consumers (i.e. their interests and activities) The benefits which consumers look for in a product or n the occasions when the product might be consumed. Cadbury takes into account all of these factors when producing a range of products. It targets different segments within the market, such as the: break segment - products which are normally consumed as a snatched break and often with tea or coffee, for example Cadburys Timeout and Snack range Impulse segment - these products are most often purchased on impulse, eating there and then. They include products such as Cadburys Twirl, Moro, Star bar, Crunchie, Fuse and Dairy milk take-home segment - this describes products that are normally purchased in supermarkets, taken home and consumed at a later stage 28UTTAR PRADESH TECHNICAL UNIVERSITY
  • 29. Earnings sensitivity factors Cocoa bean prices: Domestic as well as international prices of key raw material - cocoa have significant impact on margins. Excise duties: Changes in excise levied on malt and chocolate influences end product prices and thereby volume growth as well as margins. Changes in custom duties and foreign exchange fluctuations, as 20% of raw material is imported. Competition from MNCs like Nestle as well as imported brands. Increasing competition puts pressure on advertisement budget and margins. However on the positive side, it helps in expanding the market. CADBURYS FAILURES: How Cadburys positioning went haywire with gems Gems present an unusual case of how a textbook-perfect, ultra-sharp positioning can actually become a disadvantage At 34, Gems is one brand in the Cadbury‘s portfolio that refuses to grow up. Of course, that is not such a liability now that children play a key role as consumers. What it does mean, however, is that Cadbury has to constantly work at keeping its ageing brand forever young. How has it managed so far? Gems was a sluggish performer in the late nineties and its market share slid dramatically. Now, the brand appears to be regaining some of its toddler energy and a campaign that is scheduled to break in 2003 is expected to help further. 29UTTAR PRADESH TECHNICAL UNIVERSITY
  • 30. Gems presents an unusual case of how a textbook-perfect ultra-sharp positioning can actually become a disadvantage. Of course, Cadbury doesn‘t consider this a problem yet. Cadbury actually consider Gems one of our power or advantage brands simply because it was specifically developed for the kids segment. And it has no competition at all in India. Cadbury‘s problem is that Gems — which is technically called a ―sugar-panned‖ confectionery item that comes in colourful little buttons — has traditionally been so sharply targeted at children below ten years that it did not lend itself readily to brand stretch as its target audience grew older. Even as Cadbury successfully extended its appeal from children to adults from 1996 onwards for its regular chocolates, the company learnt a bitter lesson when it tried doing the same with Gems. Through the seventies and eighties, Gems was one of the few options available to the Indian consumer, and more specifically the child, in terms of chocolate brands, the others being CDM, Cadbury‘s Five Star and Amul chocolates. The other major advantage that Gems enjoyed probably created problems for Cadbury‘s later — the fact that it never faced competition. Nestle and Mars never brought their global brands — Smarties and M&M respectively. This was because, both the international brands are not developed keeping the climatic rigours of India in mind. So as against Gems, which is a product formulated specifically for India, the sugar shells of Smarties and M&M cracked easily in a tropical climate. The result was that Cadbury‘s never had the chance to benchmark its performance as far as Gems was concerned. Other than ads in storybooks and comics like Champak, Tinkle and Amar Chitra Katha, there was little focus on advertising till the late eighties. The first significant commercial for Gems broke in 1989. This ―Gems Bond‖ campaign was an animated commercial based on the character of James Bond, which was used in promotional stickers. However, the campaign was taken off in the early nineties. It was actually the storyline and the animation that was working. The character was not for the child. 30UTTAR PRADESH TECHNICAL UNIVERSITY
  • 31. The early nineties saw the emergence of pester power. Strangely, Cadbury did not capitalize on this trend. What made Cadbury sit up was the entry of brands in the early nineties, like Wrigley‘s, Freshmint, Boomer‘s, Big Babool and candies from Perfetti, Candico and Parle Products, all of which were priced at Re 1 or Rs 2 compared with Rs 5 for a 20 gm pack of Gems. So it was no longer just chocolates vying for the child‘s attention but chips, candy, and sugar boiled sweets, bubblegum, all of which were upping their noise levels. This was worrying for Cadbury‘s, as almost half Gems‘ sales came from impulse purchase. Meanwhile, international players like Nestle were expected to enter the scene with brands like Kit-Kat and Milkybar. In 1994, Cadbury re-launched Dairy Milk with the theme line ―The real taste of Life‖, positioning it as chocolate with universal appeal. Just as Cadbury flanked Perk to target young adults and reworked Cadbury Dairy Milk‘s appeal to include adults, in 1996 it attempted to extend Gems‘ appeal to teenagers. The new campaign was pegged on the baseline — ―Smart, very smart‖ — derived from Mad magazine. The trouble was that this campaign was not backed by product changes, so teenagers, who were always edgy about being associated with a children‘s brand, were unimpressed. By 1997, the overall slowdown in the fast moving consumer durables market had affected the chocolate segment. In spite of the re-launch, Cadbury‘s net profit dropped by 5 per cent to Rs 18.6 crore. Perk had not overtaken Kit-Kat as expected. The only Cadbury brand doing reasonably well was the low-priced sugar boiled confectionery — Googly — which went on to become a Rs 15-crore brand in its first year. Gems had staggered down to a growth rate of 3 to 5 per cent and its market share slipped to 6 or 7 per cent from 10 to 12 per cent in the early nineties. In 1998, the company went back to Gems‘ imagery of a children‘s brand. A new campaign was launched to target the urban child. It now included a whole range of Chocogem characters, who were supposed to symbolize a child‘s partners in fun (Masti ka partner). Also, for the first time, the communication emphasized the chocolate content. However, this re-launch did not really contribute to the brand‘s revival simply because the brand still lacked excitement. This was when the company decided to look at market trends abroad. 31UTTAR PRADESH TECHNICAL UNIVERSITY
  • 32. Internationally, brands targeted at younger children sold because they offered value- ads like toys. Also consumer research revealed that the chocolate flavour and CDM‘s equity was not being utilized fully. So the company decided to constantly change the packaging and include add-ons like play value around Gems core proposition. The problem was that in the Indian market, promotions like toys on smaller stock keeping units (SKUs) at low cost can be very difficult. So the company had to opt for innovations on pack sizes and formats first. INDUSTRY STRUCTURE AND DYNAMICS With Cadbury cornering almost 65 % market share and nestle getting another 24 % industry has all the characteristics of a duple. This industry is characterized by a near total absence of unorganized sector as compared to its substitutes like ice creams chips etc. Various internationally famous brands such as mars Hershey etc are either imported in a very small quantity or are smuggled to avoid high import duty. Other chocolates like Toblerone Twix snickers are being imported through California foods in India. These help in expanding the premium imported segment of the chocolate market. As these brands have miniscule volumes and high price they are not giving any serious competition to Indian brands. The market has been stable over a long period of time with two major companies Cadbury and nestle occupying the major share in the market. . However with the threat of entry of new competitors and also the broad basing of the market the repositioning of the entire chocolate eating concept we foresee a lot of action in the market. This is already seen in the war of perk and Kitkat, which had very nearly taken on the intensity of cola wars. Nestle has started threatening the long enjoyed lead of Cadbury and Cadbury is all set to defend its territory. There have not been many changes in the competitive strategies, Marketing practices product modification of different brands till 1994. All major brands have been repositioned once or twice only. But with the maturing market the new marketing strategy is to target a new breeds of consumer the consenting adult rather then the indulged child. 32UTTAR PRADESH TECHNICAL UNIVERSITY
  • 33. In keeping with this market redefinition a lot of brands have been repositioned onto a new plank the most successful plank being Cadbury diary milk which led to an increase in 20 % of consumption. Till now frequency of the new product development was also very low but after the launch of Kitkat this industry is experiencing a lot of action. Cadbury came with perk in response to Kitkat in a very share time frame. Cadbury had also launched relish a brand in count line bar segment there has not been significant technological development in India in chocolate. But to create excitement and growth in the category Cadbury has launched many new products, which led to change in consumer taste and preferences. These products are based on strong international R &D capability of the chocolate majors. Kit Kat is manufactured in a newly commissioned plant in go and due to cumulative production volume nestle is not likely to enjoy the benefits of learning curve. But apart from relative cost advantage Cadbury has pursued vigorously product differentiation strategy. Apart from manufacturing products suitable for Indian taste and distribution Cadbury has established strong brand equity and brand loyalty among Indian consumers. Seasonal factors like weather festival etc do affect the demand for chocolates. In summers due to lack of cold chain at all places chocolate are not able to bear the heat and humid condition. Thus retailer do not stock them this shows high bargaining power of the retailers. Chocolates have emerged as a gift item to be used during traditional Indian festivals like deepawali and New Year. Companies like Cadbury come with special gift packs thus demands shoot up during festival season Demand is also sensitive to economic factors like recession in economy or substantial increase in price of chocolates. However in the year 1997, chocolate manufacturers were spending only 80 % of the festival budget as compared to the previous year. Advertisements spent across corporate India were pruned in the last festival seasons which led to a fall in demand. Companies are hopeful of being able to reverse the trend for the current year. 33UTTAR PRADESH TECHNICAL UNIVERSITY
  • 34. POSITIONING WITH RESPECT TO THE PRICE SEGMENTS Positioning Drives attitude and Drives snacking and Drives variety, gifting and Price behaviour consumption taste preferences Cadbury’s Fruit & Nut High Cadbury’s Roast Almond (above Rs.25 KitKat Cadbury’s Bournville for 40 gms.) Cadbury’s Nut Milk Tango Almond Tango Fruit & Nut Cadbury’s Creamy Bar Medium Cadbury’s Crackle Tango Cashew (Rs. 10-25 for Cadbury’s Perk Cadbury’s Dairy Milk Tango Crispy 40 gms.) Amul Fruit & Nut Nestle Crunch Amul Milk Chocolate Nestle Milkybar Amul Bitter Kandos Low Nestle Premium Milk Amul Orange Chuckles (below Rs. 10 Nestle Classic Amul Crisp Nestle Bar One for 40 gms.) Tango Milk Cadbury’s Relish Cadbury’s Break Nestle Rich Dark Cadbury’s Five Star Mystique 34UTTAR PRADESH TECHNICAL UNIVERSITY
  • 35. Price, Positioning and Ad descriptions of all the brands Advertisement Company Brand Price Positioning Campaign Product for people who Dairy Milk The real taste of Rs 15 are natural and Chocolate life spontaneous Fruit & Nut Rs. 19 Roast Rs. 38 Piggybacking on Almond Rs. 11 Cadbury’s Dairy Milk Creamy bar Rs. 13 Bournville Product for teenagers, Crack, Crack, Crackle Rs. 12 fun alternative to Dairy Crackle. Milk Source of energy for 5Star Rs. 10 Energy bar Cadbury’s body & mind Anytime, anywhere Thodi si Pet Perk Rs. 12 snack Puja. Light chocolate bar to Break Rs. 6 fulfil a snack need rather I want a Break than just taste Close to chocolate with Eclairs teenager Dairy Milk a twin taste - tough from - jo bhi khaye Rs. 0.75 Eclairs the outside and soft duniya bhool creamy filling within jaye. Relish Rs. 2.50 Nutties Rs. 13 Tiffins Rs. 12 Have a break, Have a KitKat; KitKat Rs. 15 Snack for routine usage Have a KitKat, Play it Cool. Nutrition for children Milkybar, Give Milkybar Rs. 13 and a sugary taste me the Power Nestle Chicken or Egg, Crunch Rs. 13 Fun Product have a Crunch For those in Bar One Rs. 9 Snack between times Classic Rs.10 Eclairs Rs. 0.50 Premium Rs. 9 Milk Amul Orange Gift for all ages - Gift for someone Rs. 8.50 Crisp expression of love you love. Rs. 11 Fruit & Nut Bitter Advertisement Company Brand Price Positioning Campaign 35UTTAR PRADESH TECHNICAL UNIVERSITY
  • 36. Tango Milk Tango Rs. 10 Cashew Inexpensive chocolates Rs. 14 Tango for young adults in the The bigger bar Rs. 17 almond age group 18 - 25 Rs. 15 Tango Fruit & Nut Lotus Affordable chocolate for Chuckles Rs. 4 children and adults Something the child can Mystique Rs. 5 have alone without sharing Fun Chocolate for Supercar children Love Birds Rs. 13 Romantic Milk Chocolate Choco- Dolphin Rs. 24 Attractive novelty Swiss Chocolate Rs. 60 shapes for children –Animals Melody Hai Parle Melody Rs. 0.75 Rich in Chocolate Chocolatey Consumer Buying Behavior The product comes under Fast Moving consumer Foods (FMCG) and the product is generally purchased as a convenience good. The general characteristics of this product are: It is a low involvement product, but there are significant differences in various brands in market. The following matrix may help in studying the behavior of consumer for this particular product. In this product, consumers are often found to do a lot of brand switching. Although The consumer expects some benefits from chocolates, but he chooses a brand without much evaluation, and evaluates it during consumption only. But next time, quite often he may reach for another brand out of boredom or a wish for a different taste. Brand switching occurs for the sake of variety rather than dissatisfaction. 36UTTAR PRADESH TECHNICAL UNIVERSITY
  • 37. Consumer Buying Behavior High Involvement Low Involvement Significance Difference in Complex buying behavior Variety seeking behavior Brands Few Difference in Brands Dissonance reducing Habitual buying behavior buying behavior Cadbury has 70% of market share, and hence this variety-seeking behavior had not affected its sales negatively. This had been possible due to various factors like lack of strong competition. However, with the new entrants in the market, there has been stiff competition. There are few segments like water chocolates segment where company faces strong competition from Nestle, the second major player in the market. In these segments company should try to increase brand loyalty for its brands. This increased consumer loyalty will also act as deterrent towards development of strong competitions in other segments. 37UTTAR PRADESH TECHNICAL UNIVERSITY
  • 38. 38UTTAR PRADESH TECHNICAL UNIVERSITY
  • 39. LITERATURE REVIEW CHOCOLATE INDUSTRY SCHEREPPES: BEVERAGES ON BLOCK To concentrate on its core business of confectioneries chocolate schereppes, the U.K major, in an ambitious are structuring drive is spinning. The main ingredient of chocolates is cocoa grown mainly on the equatorial zone of South America. The other ingredients that go into the permitted emulsifies cocoa constitutes nearly 40% of the total raw material cost. Chocolates had its beginnings in the times of the Mayas and the Aztecs when they beat cocoa into a pulp and made a bitter frothy chocolate out of them. They first became popular in Europe in a highly unrefined form. Then the Hershey Food Company was the first to bring out chocolates in the currently popular solid form. The main ingredient of chocolates is cocoa, grown mainly on the equatorial zones of South America. The other ingredients that go into the making of chocolates are: sugar, milk solids, and permitted emulsifiers. Cocoa constitutes nearly 40% of the total raw material cost. The following report attempts to make a study on the chocolate industry and the position of the chocolate brand, Cadbury. The brand name chosen is the umbrella brand as we feel that the corporate name is recognized as a brand, not so much its individual products. Chocolate most commonly comes in dark, milk, and white varieties, with cocoa solids contributing to the brown coloration. Chocolate has been used as a drink for nearly all of its history. The earliest record of using chocolate pre-dates the Maya. In November, 2007, archeologists reported finding evidence of the oldest known cultivation and use of cacao at a site in Puerto Escondido, Honduras, dating from about 1100 to 1400 BC. The residues found and the kind of vessel they were found in, indicate that the initial use of cacao was not simply as a beverage, but the white pulp around the cacao beans was likely used as a source of fermentable sugars for an alcoholic drink. The chocolate residue found in an early classic ancient Maya pot in Río Azul, northern Guatemala, suggests that Mayans were drinking chocolate around 400 A.D. 39UTTAR PRADESH TECHNICAL UNIVERSITY
  • 40. In the New World, chocolate was consumed in a bitter, spicy drink called xocoatl, and was often flavored with vanilla, chile pepper, and achiote (known today as annatto). Xocoatl was believed to fight fatigue, a belief that is probably attributable to the theobromine content. Other chocolate drinks combined it with such edibles as maize starch paste (which acts as an emulsifier and thickener), various fruits, and honey. In 1689 noted physician and collector Hans Sloane, developed a milk chocolate drink in Jamaica which was initially used by apothecaries, but later sold by the Cadbury brothers. Chocolate was also an important luxury good throughout pre-Columbian Mesoamerica, and cacao beans were often used as currency. For example, the Aztecs used a system in which one turkey cost one hundred cacao beans and one fresh avocado was worth three beans. Chocolate is created from the cocoa bean. A cacao tree with fruit pods in various stages of ripening. Roughly two-thirds of the entire worlds cocoa is produced in Western Africa, with 43% sourced from Côte dIvoire. Like many food industry producers, individual cocoa farmers are at the mercy of volatile world markets. The price can vary from £500 ($945) to £3,000 ($5,672) per ton, in the space of just a few years. While investors trading in cacao can dump shares at will, individual cocoa farmers cannot increase production or abandon trees very quickly. When cocoa prices drop, farmers in West Africa sometimes cut costs by using slave labor. It has been alleged that an estimated 90% of cocoa farms in Côte dIvoire have used some form of slave labor in order to remain viable.[13] According to the World Cocoa Foundation [WCF], some 50 million people around the world depend on cocoa as a source of livelihood. The industry is dominated by three chocolate makers, Barry Callebaut, Cargill and Archer Daniels Midland Company (ADM) and in the UK, 99.999% of chocolatiers, whether they be large companies such as Cadbury Schweppes or small independents, purchase their chocolate from them, to melt, mould and package to their own design. Despite some disagreement in the EU about the definition, chocolate is any product made primarily of cocoa solids and cocoa fat. The different flavours of chocolate can be obtained by varying the time and temperature when roasting the beans, by adjusting the relative quantities of the cocoa solids and cocoa fat, and by adding non- chocolate ingredients. 40UTTAR PRADESH TECHNICAL UNIVERSITY
  • 41. Production costs can be decreased by reducing cocoa solid content or by substituting cocoa butter with a non-cocoa fat. Cocoa growers oppose allowing the resulting food to be called "chocolate", because that would lower demand for their crops. There are two main jobs associated with creating chocolate candy, chocolate makers and chocolatiers. Chocolate makers use harvested cacao beans and other ingredients to produce couverture chocolate. Chocolatiers use the finished couverture to make chocolate candies (bars, truffles, baked goods, etc.). Cacao trees are small, understory trees that need rich, well-drained soils. They naturally grow within 20 degrees of either side of the equator because they need about 2000 milimeters of rainfall a year, and temperatures in the range of 21 to 32 degrees Celsius, and cannot tolerate a temperature lower than 15 degrees Celsius (59 degrees Fahrenheit). The three main varieties of cacao beans used in chocolate are criollo, forastero and trinitario. Representing only five percent of all cocoa beans grown, criollo is the rarest and most expensive cocoa on the market and is native to Central America, the Caribbean islands and the northern tier of South American states.[citation needed] There is some dispute about the genetic purity of cocoas sold today as Criollo, because most populations have been exposed to the genetic influence of other varieties. Criollos are particularly difficult to grow, as they are vulnerable to a variety of environmental threats and produce low yields of cocoa per tree. The flavour of Criollo is unique. It is described as delicate yet complex, low in classic chocolate flavour, but rich in "secondary" notes of long duration. The most commonly grown bean is forastero, a large group of wild and cultivated cacaos, most likely native to the Amazon basin. The African cocoa crop is entirely of the Forastero variety. They are significantly hardier and of higher yield than Criollo. The source of most chocolate marketed, forastero cocoas are typically strong in classic "chocolate" flavour, but have a short duration and are unsupported by secondary flavours, producing "quite bland" chocolate. There are exceptional forasteros, such as the "Nacional" or the "Arriba" varieties, which can be very complex flavors. "Chocolate" products should not be classified as covertures, or even as chocolate, because of the low or virtually non-existent cocoa content. 41UTTAR PRADESH TECHNICAL UNIVERSITY
  • 42. Vegetable oils and artificial vanilla flavor are often used in cheaper chocolate to mask poorly fermented and/or roasted beans. OBJECTIVE: The basic objective of this project is to perform a thorough market analysis of the Chocolate Industry. Along with a detailed analysis of its major product Chocolate dairy milk. The analysis incorporates – market segmentation, company analysis, competitor analysis, market analysis, corporate strategies and our recommendations. CONCLUSION: The study will focus on the marketing and advertising strategy employed by Chocolate in the context of the Indian macro environment and industry structure. The advertising strategy will be studied with respect to Chocolates business and marketing objectives. The strategies adopted will be analyzed for each product offering. The report initially focuses on an examination of the industry environment and the product class. The report then goes on to analyze the corporate, marketing and advertising strategies adopted by the selected company and its main competitor. It concludes by looking at the future challenges and recommendations for the industry and the company. FAIZAN ALI 42UTTAR PRADESH TECHNICAL UNIVERSITY
  • 43. 43UTTAR PRADESH TECHNICAL UNIVERSITY
  • 44. RESEARCH METHODOLOGY Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. It is necessary for the researcher to know not only the research methods/techniques but also the methodology. Researchers not only need to know how to develop certain indices or tests, how to calculate the mean, the mode, the median or the standard deviation or chi-square, how to apply particular research techniques, but they also need to know which of these methods or techniques, are relevant and which are not, and what would they mean and indicate and why. Thus when we talk of research methodology we not only talk of the research methods but also consider the logic behind the methods we use in the context of our research study and explains why we are using a particular method or technique and why we are not using others so that research results are capable of being evaluated either by the researcher himself or by others. This section contains the methodological issues in research. It focuses primarily on providing help with the tools and techniques used in the research. These tools and techniques differ from discipline to discipline. Researchers also have specific blazes. Some will prefer Qualitative over Quantitative approaches or vice-versa. Generally speaking, an integrated approach is advisable. A study that contains only qualitative data or solely quantitative data messes the rich texture of interpretation that an integrated approach makes possible. While this section may be organized in a way that suggests a defined process, this is not the intention. "Marketing research is the systematic design, collection, analysis and reporting of data and findings and relevant to specific marketing situations facing the company." 44UTTAR PRADESH TECHNICAL UNIVERSITY
  • 45. RESEARCH OBJECTIVE Gauge the chocolate consumption habit of the consumers. To find out the important attributes of the product that affects the buying decision of the consumer. To find out perception of customer‘s toward various chocolate brands. To find out customer satisfaction level in different chocolate brands. To find out market share in different chocolate brands. RESEARCH DESIGN A research project conducted scientifically has a specific framework of research from the problems identification to the presentation of the reports. This framework of conducting research is known as the RESEARCH DESIGN. A research design is the arrangements of conditions and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. Research design provides the glue that holds the research project together. A design is used to structure the research, to show how all of the major parts of the research project-the samples or the groups, measures, treatments or programs, and methods of assignment-work together to try to address the central research questions. There can be following types of research design: EXPLORATORY RESEARCH STUDIES: Exploratory Research studies are also termed as formulate research studies. The main purpose of such studies is that of such studies is that of formulating a problem for more precise investigation or of developing the working hypothesis from an operational point of view. The major emphasis in such studies is on discovery of idea and insight. As such research designs appropriate for such studies must be flexible enough to provide opportunity for considering different aspects of a problem under study. 45UTTAR PRADESH TECHNICAL UNIVERSITY
  • 46. Inbuilt flexibility in research design is needed because the research problem, broadly defined initially is transformed into one with more precise meaning in exploratory studies. DESCRIPTIVE RESEARCH STUDIES: Descriptive Research studies are those studies which are concerned with are concerned with describing the characteristics of a particular individual, or of a group. Studies concerned with narration of facts and characteristics concerning individual, group or situation are all examples of descriptive research study most of the social research comes under this categories. SAMPLING PLAN When field studies are undertaken in practical life, consideration of time and cost almost invariably lead to a selection of respondents i.e., selection of only few items. The respondents selected should be as representative of the total population as possible in order to produce a miniature cross-section. The sampling design used in this research is non-probability convenience sampling. PROBABILITY SAMPLING: Probability sampling is also known as ‗random sampling ‗or ‗chance‘ sampling. Under this sampling design every item of inclusion in the sample. It is, so to say, a lottery method in which individual units are picked up from the whole group not deliberately but by some mechanical process. NON-PROBABILITY SAMPLING: Non-Probability sampling is that sampling is that sampling procedure which does not afford any basis for estimating the probability that each item in the population has of being included in the sample. On-Probability sampling is also known by different names such as deliberate sampling, purposive sampling and judgment sampling. In this type of sampling, items for the sample are selected deliberately by the research. 46UTTAR PRADESH TECHNICAL UNIVERSITY
  • 47. CONVENIENCE SAMPLING In convenience sampling selection, the researcher chooses the sampling unit on the basis of convenience or accessibility. It is called accidental samples because the sample-unit enters by accident. This is also knows as a sample of the man in the street, i.e. , selection of units where they are. Sample units are selected because they are accessible. For example, in testing a potential new product, the sample works is done by adding the new product to the appropriate shops in the locality. Purchasing and selling of the new product is observed there. For the purpose of this research we have used Non Probability Convenience Sampling. STEPS IN SAMPLE PLAN Type of universe: The first steps in developing any sample design are to clearly define the set of objects, technically called the universe, to be studied. The universe can be finite or infinite. In finite universe the number of items is certain, but in of an infinite universe the number of items is infinite i.e., we cannot have any idea about the total number of items. Sample Size: 70 This refers to the number of items to be selected from universe to constituent the names. This major problem before a researcher the size of sample should neither be expressively large nor should too small it be optimum. Sampling unit: A decision has to be taken concerning a sampling unit before selecting sample. Sampling unit may be a geographical one such as state, district, village, etc or a construction unit such as house flat, etc, or it may be social unit such as family, club school etc, or it may be an individual. My sampling unit is Customer in Lucknow city. 47UTTAR PRADESH TECHNICAL UNIVERSITY
  • 48. METHODS OF DATA COLLECTION & INSTRUMENT USED The task of collecting the data begins after a research problem has been defined and research design/plan chalked out. While deciding about the method of data collection to be used for the study the researcher should keep in mind two types of data viz., primary and secondary.  Primary source- The primary data are those which are collected afresh and for the first time, and thus happen to be in original in character. "Primary data may be described as those data that have been observed and recorded by the researchers for the first time to their knowledge." Primary source of data collection used is - Questionnaires  Secondary source- The secondary data are those which have been already collected by someone else and which have already been passed through the statistical tool. "Secondary data are statistics not gathered for the immediate study at hand but for some other purposes." - Websites - News letters - Books - Articles QUESTIONNAIRE: This method of data collection is quite popular particularly in the case of big enquiry. It is being adopted by private individual, research worker, private & public organization & even by the government. In this method a questionnaire is sent to the person concerned with a request to answer the question and return the questionnaire. A questionnaire consists of a number of question printed or type in a definite order on a form of or set of forms. For the purpose of study close-ended, multiple choice structured questionnaire having 10 questions has been used. 48UTTAR PRADESH TECHNICAL UNIVERSITY
  • 49. 49UTTAR PRADESH TECHNICAL UNIVERSITY
  • 50. DATA ANALYSIS Q-1 Do you like to consume chocolate? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS a YES 70 100% b NO 0 0% Interpretation; 100% respondents says yes they consume chocolate. 50UTTAR PRADESH TECHNICAL UNIVERSITY
  • 51. Q-2 If yes, which brand you prefer? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS a FOREIGN 10 14.28% b NATIONAL 60 85.72% Interpretation; 85.72% respondents says they use national brand chocolate while 14.28% respondants say they use foreign brand chocolate. 51UTTAR PRADESH TECHNICAL UNIVERSITY
  • 52. Q-3 If national which one of below? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS a AMUL 14 20% b CADBURY 46 65.72% c NESTLE 10 14.28% Interpretation; 65.72% respondents say that they use Cadbury while 20%, & 14.28% respondents say that they consume Amul & Cadbury respectively. 52UTTAR PRADESH TECHNICAL UNIVERSITY
  • 53. Q-4 On what basis you select the chocolate brand? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS a BRAND 12 17.14% b TASTE 42 60% c PRICE 06 08.58% d QUALITY 10 14.28% Interpretation; 60% respondents say that they select the chocolate on the bases of taste while 17.14%,14.28% & 08.58% says they select chocolate on the bases of brand, quality & price respectively. 53UTTAR PRADESH TECHNICAL UNIVERSITY
  • 54. Q-5 How frequently you consume chocolate ? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS a DAILY 18 25.71% b WEEKLY 24 34.28% c MONTHLY 09 12.08% d OCCASIONALLY 19 27.93% Interpretation; 34.28% respondents say that they consume chocolate weekly while 27.93%,25.71% & 12.08% say that they consume chocolate occasionally, daily and monthly respectively. 54UTTAR PRADESH TECHNICAL UNIVERSITY
  • 55. Q-6 Which type of chocolate you prefer? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS a WAFERS 20 28.57% b MILKY 50 71.43% Interpretation; 71.43% respondents say that they prefer milky chocolate while 28.43% respondents say that they prefer wafers chocolate. 55UTTAR PRADESH TECHNICAL UNIVERSITY
  • 56. Q-7 How do you come to know about particular brand? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS A T.V ad. 39 55.71% B NEWSPAPER 13 18.57% C PRINT MEDIA 06 8.57% D WORD OF 12 17.14% MOUTH Interpretation; 55.71% respondents say that they know about particular chocolate brand from T.V.ad whereas 18.57%,17.14% & 08.57% respondents say that know from newspaper, word of mouth & print media respectively. 56UTTAR PRADESH TECHNICAL UNIVERSITY
  • 57. Q-8 You consumes chocolate for the purpose of ? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS A To fulfill a snack 11 15.71% need B Just for taste 35 50% C Source for energy 09 12.85% D Gift for all age 15 21.42% Interpretation; 50% respondents say that they consume chocolate for the purpose of only just for taste whereas 21.42%,15.71& 12.42% respondents say that they consume chocolate for the purpose of gift for all age, to fulfill a snack need & source of energy respectively. 57UTTAR PRADESH TECHNICAL UNIVERSITY
  • 58. Q-9 Who mostly influences the selection? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS A My self 29 41.42% B Children 05 07.14% C Seller 01 01.44% D Friends 35 50% Interpretation; 50% respondents say they are influenced to buy chocolate selection from friends whereas 41.42%,7.14 &1.44% respondents say they are influenced to buy chocolate from my self, children & seller respectively. 58UTTAR PRADESH TECHNICAL UNIVERSITY
  • 59. Q-10 Does packaging attract you? S.N OPTIONS NO. OF PERCENTAGE OBSERVATIONS A YES 53 75.75% B NO 17 24.25% Interpretation; 75.75% respondents say that yes packaging attract to buy chocolate whereas 24.25% respondents say no packaging doesn‘t attract to buy chocolate. 59UTTAR PRADESH TECHNICAL UNIVERSITY
  • 60. Analysis 1. The person who mostly consume chocolate is age between 20-24 at second position children age between 5-14 and after that teenagers and the percentage of adults is very few which is 10%. 2. The respondent‘s of female in consumption of chocolate is less than male. 3. Mostly others like student and housewife purchase the chocolate and after that employee and businessman has lowest percentage. 4. Upper class people who have higher income level have highest Percentage to purchase chocolate and after that middle class and at the last lower class 5. 50% people like to consume chocolate for taste and rest 50% people of other some other reason. 6. Mostly people like to purchase national brand that is 85.72% and rest 14.28% purchase foreign brand because of status and other reason. 7. People mostly like Cadbury because of taste and quality that is 65.72% and after that they like Amul that is 20% and Nestle capture the little market segment that is 14.28%. 8. Mostly people consume chocolate weekly that is 34.18%,occasionally 27.93%,daily 25.71% &monthly 12.08% respectively.. 9. 50% respondents say that they consume chocolate for the purpose of only just for taste whereas 21.42%,15.71& 12.42% respondents say that they consume chocolate for the purpose of gift for all age, to fulfill a snack need & source of energy respectively. 10. Consumer prefers the milky and temptation chocolate like 5Star and Barone in comparison to wafers like perks and munch. 11. Mostly consumer comes to know about a particular brand through TV Advertisement after that through word of mouth. and at last newspaper than print media. 60UTTAR PRADESH TECHNICAL UNIVERSITY
  • 61. FINDING Research and Development: With increasing competition in the industry R&D may become an important and critical factor for success in newly emerging segments of the market. Indian players like Amul are not able to launch chocolates in fast growing count line wafers segment of the market, as they don‘t have appropriate technology. But still moulded chocolates which constitute 62 % of the market do not require any special R&D. Price: Price can be used as a basis for competition in the industry. In 1995 perk was launched at a price Rs 4 less than Kitkat was. This brand was specially produced for Indian markets and successfully competed with internationally famous Kitkat. But low on price without brand equity may not really help as Amul and various regional brands are priced lower then category leaders without having much success. International Lineage: The international image associated with chocolates acts as a propeller for the sales considering the significance of user imagery and aspiration aspect of this product category. The lead can be attributed to the international lineage despite the higher price compared to the price of perk However this has to be taken into consonance with the price factor considering that the Indian consumer is price sensitive. Product Quality: Product quality per se may not be critical success factor. But many instances prove that poor product supported with high decibel advertising is; likely to be a failure Cadbury has constantly improved the product quality along with rest of the marketing mix as a tool to create growth in the category. Distribution: Chocolate being an impulse purchase wide and heterogeneous distribution channels are important so that the consumers have it within arms length of desire. In India distribution of chocolates gain special significance due to very hot weather condition during summer months 61UTTAR PRADESH TECHNICAL UNIVERSITY
  • 62. SUGGESTIONS Looking at the Future The consumption of chocolates in India is among the lowest in the world. A comparison with the world wide industry average is an eye opener. In India the average per capita consumption is a mere 20 gm compared to the world average per capita consumption of 2.24kg. Moreover data on world wide chocolate consumption indicates that – in the mature markets this figure is as high as 9.36kg, while even the emerging markets total up to 1.16 kg. While looking at the consolidated averages – would be misleading, even the consumption among the potential consumers of chocolates is extremely low as compared to the world average. . For this purpose the populations in the age groups of 5 yrs to 35 yrs falling in the income groups having an annual household income of Rs 62000and above have been reconsidered. The total population in this group is about 80 million split into 45 million urban consumers and 35 million rural consumers. As the consumption of chocolates is skewed towards the urban consumers, it can be estimated that 80 % of the chocolate consumed is in urban areas. Using these figures the per capita consumption for the relevant target population is as given in the table below Chocolate Consumption Share of Tonnage Relevant target Gms. per market population consumer (millions) Urban 80 % 12800 45.7 280 Sales Rural 20 % 3200 34.5 40 Sales Total 100 % 16000 80.2 200 62UTTAR PRADESH TECHNICAL UNIVERSITY
  • 63. As eating habits of large parts of Indian society are becoming consistent with the rest of the world; the category is poised for a significant growth. The wafer wars between Perk and Kit Kat is an interesting indication of the times to come and it has reached almost the same intensity as the cola wars!! As these new players and existing companies introduce new type of chocolates, distinction between chocolates, biscuits, ice-cream will become less and many hybrids product will grow. Along with this the potential to expand the consumer base by incorporating a wider array of taste and needs of the consumers. Segmentation of market based on consumer age is increasingly becoming irrelevant. There are expected to be many products target at specific new segments. This is very obvious with the emerging segmentation policy of using the ego states. A shift in media strategy of various companies can also be estimated. Instead of present use of mass media, specialized media targeted at different segment will catch the fancy of media planners. At the same time one can see an increasing association between the brands and various highly published events in order to increase the brand equity in the minds of all the stake holders .Further there will be lot of improvement in packaging and modification of products as per Indian conditions. 63UTTAR PRADESH TECHNICAL UNIVERSITY
  • 64. CONCLUSION The objective of the study was to study the Marketing Segmentation of Amul, Nestle, and Cadbury, Consumer Buying Behavior of Chocolate Industry and also to study the Industry Structure and Dynamics. a. Advertising plays an important role in creating brand awareness, brand recall and brand recognition which are important in helping a customer make purchase decision of that brand. b. Brand should adopt itself to the local culture. c. Brand should be kept alive. d. The styles and code to the brand should change as clientele advance and grow. e. Brand should continuously evolve with the culture and the product should innovate. Thus, we can say that companies which want to make their brands No. 1 should adopt the above findings in their brand building exercise. However for generalization of the results, a study needs to be undertaken based on a larger sample across different industries. 64UTTAR PRADESH TECHNICAL UNIVERSITY
  • 65. LIMITATIONS OF RESEARCH Due to shortage of time, it was not possible for me to pass more time on collecting & analyzing the data. Limitation of non responsiveness of customers. Companies do not provide all real & complete information so all data is considered as accurate. 65UTTAR PRADESH TECHNICAL UNIVERSITY
  • 66. BIBLIOGRAPHY 1. Kotler, Philip. ―Marketing management ‘‘ 3. Business Line ―Catalyst‖ 4. Times Of India ― Brand Equity ‘‘ 5. Back Issues of business world 6. Research Methodology ( C.R. kothari) 7. Chocolate Industry Schereppes: Beverages On Block The analyst ( Corporate Strategy) Sep-2007 8. Internet Sources www.cadbury.co.in www.business-standard.com www.economictimes.com www.india-today.com www.google.co.in 66UTTAR PRADESH TECHNICAL UNIVERSITY

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