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Cadbury India 3.2

Study the effectiveness of retail environment classification of

Jan 6, 2017 Cadbury India's failure to conduct appropriate due diligence on, and monitor the 3 5 On February 2, 2010, Kraft acquired Cadbury and its  Cadbury chocolate is one of the world's best selling brands, with more than $3 billion in net

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India 3

Description

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c c'c c'c c'c c'c    c c'c We wish to express our heartfelt thanks to c' c   c

Ú       for his cooperation and guidance in successful completion of the assigned project

My overriding debt continues to be my sister who provided me with the time support and inspiration needed to prepare this project I am highly indepted to  c c cc  

!cfor her valuable guidance and support

While making this project we have gained knowledge of how an organization works day to day and how their polices regarding marketi ng and sales of the products has been made and how they strive continuously in today·s competitive environment to maintain and enhance their position in the market

Last but not least we are also thankful to all Cadbury India Ltd

family and retailers who helped us during our project work

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'(c he Cadbury·s India·s number one chocolate is able to share with their market insights based upon unparallel breath of chocolate experience

c he merge in 1969 with Schweppes and the subsequent development of the business have led to Cadbury Schweppes taking the lead in both the confectionery and soft drink market inside UK and becoming a major force in the international market

Cadbury Schwepp es today manufactures product in 60 countries and a trade in staggering 120

his project is a sincere effort to look for the market potential in chocolate and confectionery industry

A descriptive research procedure had been

applied to come to the conclusions of the project

A detailed questionnaire had been prepared and the responses of the concerned people had been collected for the analysis

he project later concluded in recommending the market potential of the chocolate and confectioneries

c îroject assigned to the researcher * c'c *+c   c',

c c - c%c

he Cadbury·s Inc has taken the opportunity to offer us a broader view of chocolate category

Cadbury has grown from strength to strength with new technologies being introduced to make the Cadbury confectionary business one of the most efficient in the world

he merge in 1969 with Schweppes and the subsequent development of the business have led to Cadbury Schweppes taking the led in both the confectionary and soft drink market inside UK and becoming a major force in the international market

Cadbury Schweppes today manufactures product in 60 countries and a trade in staggering 120

he Cadbury story is a fascinating story of a family business that grew in one of the biggest most loved chocolate brand in the world

A story that you remember as the story of ´he taste of lifeµ

Our main objective of the study on this project is to demonstrate the market segmentation and strategies of Cadbury India Ltd and comparison with major competitor

o arrive at my findings I have done few analyses:(a)cSWO Analysis (b)cî S Analysis (c)c Market Segmentation (d)cMarket Survey And also 5 î·s of Marketing:-

c îroduct c îrice c îhysical Distribution c îromotion c îositioning c'c

)35) ² By this year the business had changed from a grocery shop and John Cadbury had become a manufacturer of drinking chocolate and cocoa

his was the start of Cadbury manufacturing business as it is known today

A larger factory in Bridge Street Birmingham was rented in 1847 John Cadbury was joined by his brother Birmingham and the business became Cadbury Brother of Birmingham

)36) ² John Cadbury resigned his business and handed over to his sons Richard 25 and George 21 who after 5 difficult years almost shut down the business to take up other vocation

Fortunately for generation of chocolate lovers they didn·t

)366 ² Saw a turning point for the company with the introduction of a process for pressing the cocoa butter from the coca beans

his not only enabled Cadbury Brothers to produce pure coca essence but the plentiful supply of coca butter remaining was also used to make new kind of eating chocolate

he essence was advertised as ¶Absolutely pure therefore best·

c')378 ² Business prospered from this time and Cadbury Brother outgrew the Bridge Street factory moving in 1879 to a ¶Greenfield· site some miles from the center of Birmingham which came to call Bourneville

he opening of the Cadbury factory in a garden also heralded a new era in industrial relations and employee welfare with joint consultation being just one of the introduced by the pioneering Cadbury Brothers

c )388 ² In this year the business private limited company ² Cadbury Brothers Limited

îrogress since the start of the century through the inter ² war years onward has been rapid

Chocolate has moved being a ´luxuryµ item to well within the financial reach of everyone

)89: ² Cadbury has many famous brands with one of major success story being Cadbury·s Dairy Milk chocolate launched in 1905 today Britain·s favorite modeled chocolate bar

Cadbury today is the market leader in the U

K chocolate confectionary market

management information and control techniques

he company is the confectionary division of Cadbury Schweppes plc which is major force in the confectionary and soft drinks international market

Quality has been the focus of the Cadbury business from the very beginning as generations have worked to produce chocolate with that very special taste smoothness and snap so characteristics of Cadbury·s chocolate

c ccccccccccc c'c c'c c'c c'c c'c c

 c Milk chocolate for eating was first made by Cadbury in 1897 by adding milk powder paste to the dark chocolate recipe of cocoa mass cocoa butter and sugar

By today·s standards this chocolate was not particularly good as it was very coarse and dry and was not sweet or milky enough for public tastes

At that time there was a great deal of competition in the U

K from continental manufactures not only the French with their fancy chocolates but also from the Swiss who were renowned for their milk chocolate

Led by George Cadbury junior the Bourneville experts set out to meet the challenge

A considerable amount of time and money was spent on r esearch and new plant design to produce the new chocolate in much large quantities

A new recipe was formulated fresh milk and new production processes were developed to produce milk ² chocolate not as merely as good as but better than the imported milk chocolate

Four years of hard work were invested in the project and in 1905 what was to be Cadbury·s top selling brand was launched

hree names were considered Jersey Highland Milk and Dairy Maid

Dairy Maid became Dairy Milk and Cadbury·s Dairy Milk wi th its unique flavor and smooth creamy texture was ready to challenge the Swiss domination of the milk chocolate market

By 1913 it had become the company·s best selling line and in the mid twenties Cadbury·s Dairy Milk gained its status as the brand leade r a position that it has held ever since

oday more than 250 million bars of Cadbury·s Dairy Milk are made every year and sales reach over 100 million îound in value

While advertising and label design g-have changed with fashion and considerable strides have been made in manufacturing technologies the

c recipe for Cadbury·s Dairy Milk its ¶glass and a half of full cream milk in every half pound produced· is still basically the same as when it was launched

c c c* cc Chocolate

manufacturing process was developed in the Victorian imes

Good chocolatiers is an art form depending on recipe traditions which have grown over the years

Chocolatiers have use their skills to make balanced rec ipe in which all the ingredients combine to produced chocolate with all the characteristics that enable full delicious taste to be enjoyed by the consumers

By today·s standards the first chocolate for eating would have been considered quite unpalatable

I t was the introduction of the Van Houten cocoa press from Holland that was the major break through in the chocolate production as it provided extra cocoa butter needed to make a smooth glossy chocolate

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attitude higher disposable income a large youth population and low penetration of chocolate (22

of urban population) point towards a big

opportunity of increasing the share of chocolate in the branded impulse among the costly alternative in the branded impulse market

It appears that company is likely to play the value game to expand the market encouraged by the recent success of its low priced ¶value for many packs·

Various measures are undertaken in all areas of operation to create value for the future

New channel of marketing such as gifting and child connectivity and low end value for money product for expanding the consumer base have been identified

manufacturing efficiencies and creating a world class manufacturing location for CDM and Éclairs

he company is today the second best manufacturing location of Cadbury·s Schweppes in the world

fficient sourcing of key raw material i

coca through forwa rd purchase of imports higher local consumption by entering long term contract with farmer and undertaking efforts in expanding local coca area developing

he initiatives in the terms of development a long term domestic coca a sourcing base would field maximum gains when commodity prices start moving up

c Use of it to improve logistic and distribution competitiveness c Utilizing mass media to create and maintain brands

he company has added 8 million new consumer in the current year and how has consumer base of 60 million although the growth in absolute numbers is lower than

c targeted the company has been able to increase the width of its consumer base through launch of low priced products

c Improving distribution quality by addres sing issues of product stability by installation of visi coolers at several outlets

his would be really effective in maintaining consumption in summer when sales usually dip due to the fact that the heat effects product quality and thereby consumption

c he above are some steps being taken internally to improve future operation and profitability

At the same time the management is also aware of external changes taking place in the competitive environment and is taking steps to remain competitive in the future environment of free imports lower barrier to trade and the advent of all global players in to the country

he management is not unduly concerned about the huge deluge of imported chocolate brands in the market place

It is of the view that size of this imported premium market is look small to threaten its own volumes or sales in fact the company looks at the tree important as an opportunity where it could optimally use the global Cadbury Schweppes portfolio

he company would be able to not only provide greater variety but it would also be more cost effective to test market new product as well as improve speed of response to change in consumer preference through imports

he only concerns that the company has in this regard is the current high leve l'of duties which limit the opportunity to launch value for money products

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c 5 )c' '0c% c A research design is simply a plan or framework for a study that is used in collecting and analyzing the data

his framework is to ensure that relevant information is collected and that too depending upon the objectives of the study

he research design can be classified into three categories

B* * c  2c It seeks to discover new relationships emphasis on discovery of ideas

his research is used when very little is known about the problem being examined

xploratory research studies are also termed as formulative

research studies as its main purpose is to formulate a problem

research is used here is flexible and the areas where this type of research used are to know the: c Brand preference c Attitude of the consumers c Market potential c Buyer·s behaviour c Consumer·s awareness

he purpose of this type of research is to gain insight into problem

he research design used for the project at hand is of exploratory in nature

xploratory research is always based on small non-representative samples and data obtained are subjected to qualitative analysis

In this project Random Sampling is used and the sample size is taken as: Sample Size

Retailers

c xploratory research helps to gather information about practical problems in carrying out the research and to provide insight into and an understanding of the problem confronting the researcher c'c

 Cc  2c It attempts to determine the frequency with which something occurs or the relationship between two phenomenon

It is a type of conclusive research that

Descriptive research gives a clear statement of the problem specifies hypothesis and detailed information needs

it is conducted for the for the reasons like to describe characteristics of relevant group are associated and to make specific predict ions to estimate the percentage of units in a specified population exhibiting a certain behavior to determine the perceptions of product characertics to determine the degree to which marketing variables

A descriptive design requires a clear specification of who what when where why and way of research

Descriptive research used the following methods: c Observation

c Questionnaires c Interviews c

Some of the examples are: c market studies c Market share studies c Sales analysis studies c Image studies

c' 2cc his design is often adopted in order to discover and determine the cause and effect relationship

It is also experimental research as its major objective is to obtain evidence regarding cause and effect relationship

It re quires a planned and structured design

he main method of experiment research is

c experimentation and hypotheses are specific

useful in cases where variables are manipulated in a relatively controlled environment

As the primary object is to study the market segmentation and strategies secondary objective of the project is to compare Cadbury with the existing competitors in the market an d'the impact of Nestle on Cadbury the research methodology adopted is basically based on primary data via which the most recent and accurate piece of first hand information could be collected

Secondary data has been used to support primary data wherever needed

î            Î* c 2*c  c% C=c 2*cc - C*c 2* c'he main tool used was the questionnaire method

Further direct interview method where a face to face formal interview was taken

Lastly observation method has been continuous with the questionnaire method as one continuously observes the surrounding environment he works in

Fo these geographical area questionnaire was filled by 100 people the questionnaire was a combination of both open ended and closed ended questions

c Fhe date during which questionnaires were filled was between six week

FSome dealers were also interviewed to know their prospective

Interviews with the honor of retailer of Cadbury were also conducted

#Finally the collected data and information was analyzed and compiled to arrive at the conclusion and recommendations given

     Used to obtain information on Cadbury and its competitor history current issues policies procedures etc wherever required

# Internet # Magazines # Newspapers

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c Very strong brand equity in India

c Due to its 54 years presence in India ² has deep penetration ² 2100 distributors

Chocs (70# share) Confec (4# ) food drinks (14 # leader in brown segment)

c Low cost of production due to economies of scale

Cadbury

Schweppes

technologies (Godiva Mozart Fazer Dint Naushans etc

Key products only one central brand (CDM)

îralines range totally wising in India

c ´Make in Indiaµ tag once the economy opens up wore and imports rush in

c remendous scope for per capita consumption (160 gms of 8 ² 10 kg) 2

c Growing middle class and growing urban population

c Substitute to ´Mithaisµ with higher calories/cholesterol

c Increasing departmental stores concept ² impulse @ at cash counters

c Globalization: optimal use of global Cadbury Schweppes

Due to low cost and highest brand equity it is today in India

b)c  % :Globalization will being in better brands for upper end of the market (Liest Monarch Godiva etc«)

c c'4 1ccc îrior to deciding on the communication strategy for Cadbury Dairy Milk it was important to understand the habits and mindset towards chocolates

A large scale usage and attitude study was conducted among adults

he research revealed that: Adults were primarily purchasers and not consumers of chocolates

However as for most children·s product they exercised a strong influence on the children·s consumption behavior

Adults acted as gatekeepers of sorts when it came to food items

Considering the advertising history it came as no surprise that chocolate were perceived as ´kiddyµ product and certainly not part of the repertoire for prod ucts consumed socially

Chocolate consumption among adults evoked feeling of self indulgence and guilt

Chocolates seemed to offer virtually no significant positive and certainly no overt psychogenic benefits

Food and nutritive values associated with chocolates were low

And in fact they were categorized as a hazard being responsible for obesity dental and respiratory problems

Brands images were undifferentiated and the category had low saliency ´can do withoutµ

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c he only variation was in the Rituals where communication had shifted from and special occasion to every moment

A strong volume growth was witnessed in the early 90·s when Cadbury repositioned chocolates from children to adult consumption

he biggest opportunity is likely to stem from increasing the consumer base

c ,'$ cc Satisfaction suffices

But delight dazzles the average company will compete for customer by conforming to her expectation consistently

But the winner will surpass them by constantly exceeding her expectation delivering to her door step additional benefits which she would never have imagined possible

Cadbury·s offer such product

he wide variety products offered by the company include: %  2**c 'c*+* cc 1) Dairy Milk 2) Fruit & Nut 3) 5 Star 4) Break 5) îerk 6) Gems 7) Éclairs 8) Nutties 9) emptation 10) Milk reat

%%  "C  cc %%%  **c cc 1) Bournvita 2) Drinking chocolate 3) Cocoa

Second î of marketing is not another name for blindly lowering prices and relying on this strategy alone to increase sales dramatically

he strategy used by Cadbury·s is for matching the value that customer pays to buy the product with the expectation they have about what the production is worth to them

Cadbury·s has launched various products which cater to all customer segments

So every customer segment has different price expectation from the product

herefore maximizing the returns involves identifying right price level for each segment and then progressively moving through them

Dairy Milk

Fruit and Nut

Nutties

Bournvita (500 gm)

Drinking chocolate

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ndic c 1c billionc poplc 155c illionc hoholdc hc ovc 4c illionc  ilc o l c inc 5351c bnc k c ndc 552725c villc pdc oc 3 28c illionc  c k c lviionc hc ldc pidc ndc popl ionc oc onp ionc ndc hc k c hoc nc  c'oc hc oc hc onc hdc oc op i ionc illc ivc c hdcc oc c ov kc ld c  c' inc hic nc ninc ildlc din c'in-li c lnc vlc  c lic  lc npo c'ndc oni ionc n ok c ndc oc bndc i c in c'oinc oc hlpc hnc i c'oc oc klinc hc i cc c

c Own distribution network consist of clearing and forwarding (C&F) agents & distribution stockiest

his network of distribution can either contact wholesalers and which in turn retailers or the distributors can contact to th e retailers directly

Once the stock product reaches retailers the prospective customers can have access to the product

Cadbury·s distributes the product in the manner stated above

Cadbury·s distribution network has expanded from 1990 distributors last year to 2100 distributors and 450000 retailers

Beside use of I tom improves logistics Cadbury is also attempting to improve the distribution quality

o address the issue of product stability it has installed visi colors at several outlets

his helps in maintaining consumption in summer when sales usually drops due to the fact that the heal effects product quality and thereby off takes

Looking at the low penetration of the chocolate a distribution expansion would itself being incremental volume

 he other reason is arch rival Nestle reaches more than a million retailers

his increase in distribution is going to be accompanied by reduction in channel costs

Cadbury·s marketing costs at 18 * of total costs is much

higher than Nestlé·s 12* or even p ure sugar confectionery major îarry·s

he company is looking to reduce this parity level

At Cadbury they believe that selling confectionery is it like selling soft drinks

advertising is rarely hectoring or loudly explicit«

It often both attracts and generates arm feelings

More often than not a successful campaign has a stronger element of the unexpected a quality that good advertising shares with much worthwhile literature

o penetrate into the inner recesses of her memory communication must first ensure exposure grab her attention evoke her comprehension grab her acceptance and then extract retention competing with thousands of other units of communication trying to do the same

Finding showed that the adults felt too conscious to be seen consuming a product actually meant for children

he strategic response address the emotional appeal of the band to the child within the adult

Naturally that produced just the value vacuum that Cadbury was looking to fill

hereafter it was the job of the advertising to communicate customer the wonderful feeling that he could experience by re

for CMD and * 2*c c ,c ,**Hc