MARKETING MIX

Report
MARKETING MIX
CADBURY
BY
RAGHAVENDRA MISHRA
INTRODUCTION
• CADBURY IS A LEADING GLOBAL
CONFECTIONERY COMPANY WITH AN
OUTSTANDING PORTFOLIO OF
CHOCOLATE, GUM AND CANDY BRANDS. IT
EMPLOY AROUND 50,000 PEOPLE AND
HAVE DIRECT OPERATIONS IN OVER 60
COUNTRIES, SELLING PRODUCTS IN
ALMOST EVERY COUNTRY AROUND THE
WORLD CADBURY.IT IS A BRITISH
CONFECTIONERY AND BEVERAGE
COMPANY WITH ITS HEADQUARTERS IN
LONDON, UNITED KINGDOM
HISTORY
• Cadbury is a very old trusted name. It all
started in Birmingham in England when John
Cadbury started his family grocery shop with
side business of cocoa and chocolate
products in around 1824. His two sons,
Richard and George, expanded their family
business of cocoa and chocolate. Bournville,
a town near Birmingham, was build by them
as a part of expansion of their business.
MARKETING OBJECTIVES
• GROW SHAREHOLDER VALUE…OVER THE
LONG TERM
• CADBURY IN EVERY POCKET
• MARKETING STRATEGY IS AIMED AT
ACHIEVING THIS VISION BY GROWING THE
MARKET, BY APPROPRIATE PRICING
STRATEGY THAT WILL CREATE A MASS
MARKET AND TO HAVE OFFERINGS IN
EVERY CATEGORY TO WIDEN THE
MARKET
TARGET MARKET
• THE INDIAN CHOCOLATE MARKET IS VALUED AT
RS. 650 CRORES (I.E. RS. 6.50 BILLION) A YEAR.
THE INDIAN CHOCOLATE BAZAAR IS ESTIMATED
TO BE IN THE REGION OF 22,000-24,000 TONNES
PER ANNUM, AND IS VALUED IN EXCESS OF US$ 80
MILLION.
• INDIA'S METROS PROVING TO BE THE BIG DRAW
CLOCKING PENETRATION IN EXCESS OF 15
PERCENT. NEXT, COMES THE RELATIVELY
SMALLER CITIES/TOWNS WHERE CONSUMPTION
LAGS AT ABOUT 8 PERCENT. CHOCOLATES ARE A
LUXURY IN THE RURAL SEGMENT, WHICH
EXPLAINS THE MERE 2 PERCENT PENETRATION IN
VILLAGES. THE MARKET PRESENTLY HAS CLOSE
TO 60MN CONSUMERS AND THEY ARE MAINLY
LOCATED IN THE URBAN AREAS.
MARKET SEGMENTATION
• MARKET SEGMENTATION IS THE PROCESS
IN MARKETING OF GROUPING A MARKET
(I.E. CUSTOMERS) INTO SMALLER
SUBGROUPS. THESE MARKETS ARE OFTEN
TERMED NICHE MARKETS OR SPECIALTY
MARKETS
• THE PURPOSE OF SEGMENTATION IS TO
IDENTIFY AND TARGET PRIME CUSTOMER
GROUPS (EG THE 20% THAT ACCOUNT FOR
80% OF YOUR SALES) SO THAT YOU GET
THE MAXIMUM RETURN FROM A LIMITED
MARKETING BUDGET
GEOGRAPHIC SEGMENTATION
• THE MARKET PRESENTLY HAS CLOSE TO 60MN
CONSUMERS AND THEY ARE MAINLY LOCATED IN
THE
• URBAN AREAS. GROWTH WILL MAINLY COME
THROUGH AN INCREASE IN PENETRATION AS
INCOME LEVELS IMPROVE.
• HOWEVER, ALMOST ALL OF THIS CONSUMPTION
IS IN THE CITIES, AND RURAL INDIA IS NEARLY
‘CHOCOLATE-FREE’. BUT THE FACT IS THAT
THREE QUARTERS OF INDIANS LIVE IN RURAL
AREAS. “AVERAGE SUMMERTIME TEMPERATURES
REACH 43 DEGREES CELSIUS IN INDIA.
CHOCOLATE MELTS AT BODY TEMPERATURE OF
36 DEGREES.”
DEMOGRAPHIC SEGMENTATION
AGE• CHILDREN - 55%
• ADULTS - 12%
• YOUNG ADULTS - 33%
• INCOME LEVEL- IN THE MIDDLE AND
HIGHER INCOME GROUPS
MARKETING MIX
• THE TOOLS AVAILABLE TO A BUSINESS TO GAIN
THE REACTION IT IS SEEKING FROM ITS TARGET
MARKET IN RELATION TO ITS MARKETING
OBJECTIVES. IT IS THE GENERALLY ACCEPTED AS
THE USE AND SPECIFICATION OF THE “FOUR P’S”
DESCRIBING THE STRATEGIC POSITION OF A
PRODUCT IN THE MARKETPLACE.
• PRODUCT
• PRICE
• PLACE
• PROMOTION
PRODUCT
• PRODUCT VARIANTS
• CURRENTLY CADBURY INDIA OPERATES IN
FOUR CATEGORIES VIZ. CHOCOLATE
CONFECTIONERY, MILK FOOD DRINKS,
CANDY AND GUM CATEGORY
• CADBURY DAIRY MILK, 5 STAR, PERK,
ÉCLAIRS AND CELEBRATIONS
• CANDY CATEGORY HALLS
• BUBBLE GUM BRAND BUBBALOO
• BOURNVITA - THE LEADING MALTED FOOD
DRINK (MFD)
PRODUCT INNOVATIONS
•
 5 STAR:
•
CONSUMER FEEDBACK SUGGESTED THAT THE OLD 5 STAR WAS
TOO CHEWY, AND PEOPLE COMPLAINED OF IT STICKING TO THEIR
TEETH. IT WAS MADE SOFTER AND MELTED EASILY IN THE MOUTH
& INTRODUCED AS 5 STAR CRUNCHY
•
 PERK:
•
PERK WAS MADE MUCH LIGHTER AND THE SIZE OF THE BAR
INCREASED TO MATCH NESTLE’S MUNCH. PERK HAD BEEN UNDER
FIRE FROM NESTLE’S DEADLY DUO OF KITKAT AND MUNCH, BUT
AFTER THE RELAUNCH, ITS MARKETSHARE IS TWO PER CENT
MORE THAN KITKAT’S. AND, THE FIVE-YEAR-OLD BRAND IS NOW
ALMOST AS BIG AS THE DECADES-OLD 5 STAR IN SIZE, BOTH IN
THE REGION OF RS 50-55 CRORE.
•
 HEROES:
•
PACKAGING INNOVATION HAS PLAYED A VITAL ROLE IN REVAMPING OF
VARIOUS CADBURY’S BRANDS.HEROES BRAND IS SIMPLY A MULTI-PACK
WITH MINIATURES OF ALL ITS MOST POPULAR BRANDS IN A SINGLEOUTER
CASE.
PACKAGING
THE PACKAGING WAS CHANGED TO INCLUDE A
SEALED PLASTIC WRAPPER INSIDE THE OUTSIDE
FOIL. CADBURY’S LAUNCHED A NEW 'PURITYSEALED' PACKAGING FOR ITS FLAGSHIP
PRODUCT, CADBURY DAIRY MILK. OVER THE NEXT
FEW WEEKS CADBURY WILL WORK TOWARDS
INTRODUCING EITHER A HEATSEALED OR A FLOWPACK PACKAGING THAT OFFERS A HIGH LEVEL OF
RESISTANCE TO INFESTATION FROM
• IMPROPER STORAGE. CADBURY INVESTED
NEARLY RS 25 CRORE (RS 250 MILLION) THIS YEAR
ON NEW MACHINERY FOR THE IMPROVED
PACKAGING.
•
PRICE
• THE RS 5 PRICE POINT ACCOUNTS FOR
MORE THAN HALF OF ALL CHOCOLATE
SALES
• TODAY, CADBURY HAS FOUR PRODUCTS
AT THIS PRICE POINT: CDM, PERK, 5 STAR
AND GEMS — AND THE FIVE-RUPEE CDM
BAR IS ITS SINGLE LARGEST-SELLING SKU.
• “THIS IS A POTENT PRICE POINT IN INDIA,
BECAUSE THE AVERAGE PURCHASING
POWER IS ABYSMALLY LOW,” IS WHAT
INDUSTRY ANALYST HAVE TO SAY
VOLUME LED GROWTH
STRATEGY
• CADBURY HAS FOLLOWED A WELLPLANNED STRATEGY OF FUELLING
VOLUME GROWTH BY INTRODUCING
SMALLER UNIT PACKS AT LOWER
PRICE POINTS. SIMULTANEOUSLY, THE
COMPANY SEEMS TO HAVE ASTUTELY
JUGGLED WITH THE LARGER PACK
SIZES AND RAISED PRICES TO A
DEGREE HIGHER THAN WHAT
APPEARS AT FACE.
HIRES AT KEARNEY TO CURB
COSTS
• CADBURY INDIA APPOINTED MANAGEMENT
CONSULTANCY FIRM AT KEARNEY TO DRAW UP A
STRATEGY TO CONTROL COSTS IN SEVERAL
AREAS, INCLUDING SOURCING OF RAW
MATERIALS AND PACKAGING.
• THE CONSULTANCY FIRM WILL ALSO LOOK AT THE
SOURCING OF DIRECT AND INDIRECT MATERIALS
LIKE RENEGOTIATING WITH SUPPLIERS FOR
LONGER TERM CONTRACTS AND VENDOR
MANAGEMENT. OTHER COSTS (INDIRECT
EXPENSES) LIKE TRAVEL COSTS AND HOTELS
WERE ALSO BEING STUDIED.
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
FLUCTUATION: AS 20% OF RAW MATERIAL IS IMPORTED, CHANGES
IN CUSTOM DUTIES & FOREIGN EXCHANGE FLUCTUATIONS HAVE
SIGNIFICANT IMPACT ON THE FINAL COST OF THE PRODUCT.
•
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.
PLACE
• PLANT LOCATIONS
• IN INDIA, CADBURY BEGAN ITS OPERATIONS IN
1948 BY IMPORTING CHOCOLATES. AFTER 60
YEARS OF EXISTENCE, IT TODAY HAS FIVE
COMPANY-OWNED MANUFACTURING FACILITIES AT
THANE, INDURI (PUNE) AND MALANPUR (GWALIOR),
BANGALORE AND BADDI (HIMACHAL PRADESH)
AND 4 SALES OFFICES (NEW DELHI, MUMBAI,
KOLKOTA AND CHENNAI). THE CORPORATE OFFICE
IS IN MUMBAI.THESE FACTORIES CHURN OUT
CLOSE TO 8,000 TONNES OF CHOCOLATE
ANNUALLY
DISTRIBUTION
• CHOCOLATE NEEDS TO BE DISTRIBUTED DIRECTLY, UNLIKE
OTHER FMCG PRODUCTS LIKE SOAPS AND
• DETERGENTS, WHICH CAN BE SOLD THROUGH A
WHOLESALE NETWORK. 90% OF CHOCOLATE PRODUCTS
ARE SOLD
• DIRECTLY TO RETAILERS.
• CADBURY'S DISTRIBUTION NETWORK USED TO
ENCOMPASSES 2100 DISTRIBUTORS AND 450,000 RETAILERS
• TO AVOID CANNIBALIZATION OF ITS HIGHER PRICED
PRODUCTS FROM LOWER PRICED ONES, CADBURY IS
• SETTING UP TWO SEPARATE DISTRIBUTION CHANNELS –
ONE FOR CORE BUSINESS & OTHER FOR MASS MARKETS
NATURE OF RETAIL OUTLET
• CHOCOLATES ARE PRIMARILY SOLD
THROUGH KIRANA STORES, GIFT STORES,
MEDICAL STORES, CANTEENS,
• PAN-BIDI STORES, BAKERIES, SWEET
SHOPS ETC. THIS IS TRUE FOR
CHOCOLATES ALSO. THE SPACE
ALLOCATED FOR
• THE CHOCOLATES WAS LESS WHEN
COMPARED TO THE TOTAL AREA OF THE
SHOP. OF THE SPACE ALLOCATED FOR
• CHOCOLATES, CADBURY BRANDS
OCCUPIED MORE THAN NESTLE BRANDS.
PROMOTION
•
•
ADVERTISEMENTS
THE ADVERTISEMENT AIMED AT CONVEYING THE IDEA THAT NO
SPECIFIC OCCASION IS REQUIRED FOR CONSUMING CDM
•
CELEBRITIES ENDORSEMENTS
•
CADBURY ROPED IN PREITY ZINTA FOR ITS PERK BRAND. PREITY
ZINTA’S ANGELIC DIMPLES LAID THE
FOUNDATION FOR WHAT WOULD BECOME THE INDIAN TEENAGER’S
FAVORITE SNACK. AFTER THIS CAMPAIGN,
PERK’S SALE SURGED
•
•
•
•
THE BIG ‘B’ FACTOR
THE BIG FACTOR THAT HAS PUSHED UP CDM SALES IS THE AMITABH
BACHCHAN CAMPAIGN. CADBURY APPOINTED AMITABH BACHCHAN
AS ITS BRAND AMBASSADOR
CHOCOLATE ADS SHIFT FOCUS
FROM KIDS TO YOUTH
• INDIAN CHOCOLATE MARKET IS ALMOST
TOTALLY DEPENDED ON PURCHASES OF
KIDS.
• WHILE CADBURY IS TRYING TO SELL
INDULGENCE TO ADULTS, KIT KAT IS
SELLING 'RITUALISTIC' BREAK TO
• TEENAGERS/ YOUNG ADULTS. THIS IS
REFLECTED IN THE CHANGING
ADVERTISING PATTERNS ACROSS
DIFFERENT
• CHANNELS.
CONCLUSION
WHEN PRICED AT EVEN RS 2500/KG WHILE THERE ARE PLACES IN
INDIA WHERE PEOPLE HAVE NEVER EVEN TASTED CHOCOLATES
ONCE.UNDERSTANDING THE CONSUMER DEMANDS AND
MAINTAINING THE QUALITY WILL BE ESSENTIAL.COMPANIES WILL
HAVE TO KEEP THEMSELVES ABREAST WITH THE
DEVELOPMENTS IN OTHER PARTS OF THE WORLD.PRICING IS
THE KEY FOR COMPANIES TO MAKE THEIR PRODUCT REACH
CONSUMERS’ POCKETS. RIGHTPRICING WILL MAKE OR BREAK
THE PRODUCT SUCCESS. ECONOMICAL DISTRIBUTION OF THE
PRODUCTS WILLALSO BE EQUALLY IMPORTANT.THE COMPANIES’
STRATEGIES SHOULD FOCUS ON DRIVING SALES THROUGH A
RIGHT PRODUCT MIX,EFFICIENT MATERIALS PROCUREMENT,
REDUCED WASTAGES, INCREASED FACTORY EFFICIENCIES AND
IMPROVED SUPPLY CHAIN MANAGEMENT.THERE’S AN IMMENSE
SCOPE FOR GROWTH OF CHOCOLATE INDUSTRY IN INDIA GEOGRAPHICALLY AS WELLAS IN THE PRODUCT OFFERING
BIBLIOGRAPHY
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WWW.CADBURY.CO.UK
WWW.CHOCOLATEREVIEW.CO.UK
WWW . CADBURYS CHWEPPES.COM
WWW.WIKIPEDIA.ORG
WWW.CADBURY.COM
WWW.OPPAPERS.COM
REFERENCES• PHILIP KOTLER

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