Cadbury plc is a confectionery and beverage company with its headquarters in London, United Kingdom, and is the world’s largest confectionery manufacturer. The firm was formerly known as Cadbury Schweppes plc before demerging in May 2008, separating its global confectionery business from its Americas beverage unit, which has been renamed Dr Pepper Snapple Group Inc. In 1825, John Cadbury began vending tea, coffee, and (later) chocolate at Bull Street in Birmingham in the UK and sometimes in India. The company was later known as Cadbury brothers.
After John Cadbury’s retirement, his sons, Richard and George, opened a major new factory at Bourneville. Over the years many mergers and acquisitions were undertaken. The biggest merger came in 1969. Cadbury’s merged with drinks company Schweppes to form Cadbury Schweppes in 1969. With this merger, besides chocolate confectionary, Cadbury entered into the drinks business with brands such as Snapple, Mistic and many more. In May 2008, Cadbury Schweppes split its business into two separate entities: one focusing on its main chocolate and confectionery market; the other on its U.
S. drinks business. Thus the firm was renamed Cadbury plc and the beverage unit, was renamed Dr Pepper Snapple Group Inc. Cadbury plc operates in over 60 countries. They work with around 35,000 direct and indirect suppliers and employ around 50,000 people. Cadbury India Ltd: Cadbury India Limited is a 51% subsidiary of Cadbury Plc, UK. Cadbury India Ltd began its operations in 1948 by importing chocolates and then re-packing them before distribution in the Indian market.
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). It has its cocoa operations at Cochin. The corporate office is in Mumbai. The 4P’s of cadbury 1. Product :- Objective: A Dairy Milk in every pocket. Sizes: Dairy Milk comes in many sizes, the smallest being a 3. 5 gms pack. The most widely sold packs are the 3. 5gm, 12gm and 28gm packs.
The smaller packs were introduced mainly to make Dairy Milk affordable to rural population and the lower and lower middle class of the urban areas. Variants: CDM has many variants around the world. The ones available in India are – plain, Fruit & Nut, Roasted Almond, Crackle, Desserts, Wowie, Bournville. Packaging : CDM is available in ‘Purity Seal’ packaging which includes aluminium foil enclosed in a sealed poly-flow pack. Larger CDMs are available in poly-coated, heat-sealed aluminium foil wrapped in the branded outer package.
The company believes that these steps are the ‘first ever’ in chocolate packaging in India. Labelling: Swirls in the new Cadbury logo give ‘milk goodness’ cues. Cadbury logo enlarged as a stamp of quality. Dairy Milk brand is endorsed across all variants. It has a ‘Glass and Half Full Milk’ logo with a Purplised background. Overall strategy: Over the years CDM has implemented line stretching suitably and successfully. Cadbury has employed a two-way stretch strategy. CDM has sought the task of universalising consumption from the smallest town in India to the largest metro and from the youngest child to the oldest adult.
CDM has become richer and smoother, has strategically employed ‘master-branding’ or megabranding on packaging to bring the entire moulded range under the CDM umbrella and at the same time it has enhanced child connect to compete more effectively with the increased range in sugar confectionery and other impulse products like branded potato chips. 2. Price : Objective: Maximize sales (double the turn over) and profit and increase market share of CDM. It wants to double its turnover by 2010, which calls for a growth rate of over 20 per cent annually.
Since CDM is Cadbury’s biggest brand its sales figures are going to be crucial in doubling the turnover. So Cadbury wants to get more people to eat more chocolate, which calls for making it more affordable and being more innovative. Moreover the chocolate segment is characterized by high volumes, low margins and price sensitivity. So the only way to achieve a high turnover is by increasing sales and so pricing strategy is of prime importance. Strategy: market penetration pricing – they have clearly used market penetration pricing. To penetrate the market they didn’t reduce their prices.
Instead they introduced smaller packs with lower prices (5Rs). They offered products at affordable price points so as to increase its market penetration. This strategy worked for them as the most revenue is generated on sale of these smaller – low priced packs. Thus their strategy worked. Appealing to a broader range of consumers is at the heart of their plan. So the penetration strategy is appropriate for rural segments and lower income segments. But the higher income segments in urban areas associate price with quality. For this segment price acts as a signal for quality and size as a symbol of affluence.
So the small sized low priced packs would not appeal to them. Moreover these low prised packs would not be appropriate for the gift segment either. Furthermore Cadbury is a big brand with high brand equity. Sometimes low prices can damage the brand name. Keeping that in mind Cadbury has caters to the urban segment by bigger 15 Rs and 40 Rs packs on plain Dairy Milk. Also the almond and nutty variants are targeted at the teenagers and urban rich at a premium price. The same variants in bigger sizes and at much higher prices are targeted towards the gift segment.
Combination of larger packs, expensive variants and premium pricing is the strategy employed to attract the rich. 3. Promotion : Objectives: Leverage further the brand name Cadbury (chocolate = Cadbury) and the brand name Dairy Milk. Target a new broader segment. To leverage the Cadbury label, the company has been doing aggressive advertising and promotions. Promotion budget is decided as percentage of sales. Cadbury spends about 12-13 % of sales revenues on advertising. 70 % of this budget is being spent above the line and 30 % is spent below the line.
Their budgets are fair because they don’t need to invest to create awareness as the brand is fairly well known and has a huge market share and consumer base. But at the same time CDM is still in its growing stage implying that there are still more people CDM can target by advertising. Also CDM has no major rivals and enjoys the no. 1 position but increase in easy availability of imported chocolates could lead to competitive advertising requiring larger budgets. Cadbury only uses non-personal communication channels such as advertising, sales promotion, and events and experiences.
A brand like Cadbury would not require personal selling. Advertising (above the line promotions): Objective: To give people NOVEL reasons to celebrate and celebrate it with CDM. To target more people and larger segments. Reminding the consumer and reinforcing the brand are implied objectives. Advertisements for Cadbury Dairy Milk have been dominated by use of emotional appeals. These adverts have made a conscious effort to communicate values of chocolate at the highest experiential level. Sales promotion (below the line promotions): Sampling and Give-Aways: For new products i. e.
new variants Cadbury gives out samples at malls, cafes etc. This is done over and above a massive advertising campaign and a grand launch. This was done for its dark chocolate variant. Point-of-Sale Promotion and Displays: Cadbury India Ltd rolled out a slew of customised marketing and communication initiatives at the retail end. The purple package and now the glossy purple package has forever been a very attractive feature of CDM prompting customers to choose the vibrant purple over other brands. 4. Place: Outlet location: The decision for location of retail shops is a very simple one for Cadbury.
They should be everywhere. Outlets must to accessible because people will not too far from home for a 10 Rs chocolate (with the exception of rural areas). Moreover there must be suitable outlets for different segment. Thus the outlets must range from an exclusive chocolate shop in an A grade mall to an ordinary kirana shop. So the retail outlets in urban areas include pan-shops, kirana shops, chemists, departmental stores, super markets malls etc. Retail outlets in rural areas only include the kirana shops and chemists and to a certain extent the pan-shops.
Small eateries in rural areas are also known to stock chocolates. Keeping up the non-traditional route: CIL plans to sell Cadbury products through non-traditional outlets like music stores (such as MusicWorld), renowned bookstores and popular apparel outlets (such as Pantaloons and Wills Sport boutiques). Hence Cadbury clearly implements Intensive Distribution by using a large number of intermediaries at all the levels especially the retail level. Channels of distribution: Objective: To reduce total channel cost and to improve the quality of the supply-chain i. e. ensuring safe handling of CDM at the retailer end.
First thing to consider is that Cadbury uses a pull strategy. Intermediaries are of great importance in pull strategies. Cadbury might spend a lot on advertising and attract a great number of customers, but all will be in vain if the intermediaries don’t keep sufficient stocks to meet the demands. Cadbury uses a vertical marketing channel with 2- levels i. e. the wholesaler and retailer. In retail they have store-retailing. Cadbury has over 2100 distributors and over 7 lakh retailers who sell over 1 million Cadbury Dairy Milk bars every day. SWOT ANALYSIS SWOT analysis for Cadbury and CDM Strengths:
It has a strong brand name and brand equity and a significant amount of trust and loyalty from consumers. ? It has Strong leadership position in confectionary markets and the chocolate market not only in India but world over. Cadbury and CDM both have a rich product mix. Cadbury India Limited has strategic as well as monetary support from the parent Cadbury Plc. It has 200 years of experience in chocolate making. Cadbury is not completely reliant on just chocolate products. It has a well balanced portfolio which includes leading brands across the chocolate, sugar, confectionery, chewing gum segments to name a few.
Weaknesses: Lack of launch of new brands in Chocolates segment. They have introduced more and more variants of CDM but have not introduced anything new in the market. This implies that their R & D section is not at its strongest. ? Vulnerability to raw material price fluctuations. Low melting point. Opportunities: New product launches especially healthy chocolates. More collaborations or co-brandings like the one with Disney for Wowie. ? The market for traditional sweets in India is worth 11,000 Cr. Even a small share of this market could prove to be very profitable.
? Improving the istribution channels to improve the quality of service and to increase profit margins. Using information and technology to bring efficiency in logistics and distribution. Threats: Growing Health Concerns among people is leading to lower consumption of sugar and fat. ? Threats from new entrants in the market (foreign chocolate). Some of these new entrants are huge brands with deep pockets. ? The company has large exposure to foreign currency exchange rate risk, mainly on account of imported cocoa beans and cocoa butter in US Dollar and Pound Sterling.