Final report on chaco

1UTTAR PRADESH TECHNICAL UNIVERSITY

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.


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, Parry's

Confectionary, Parle, Ravalgon, Candico etc.

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.

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.

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 90's 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.

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

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

Chocolate Products

Crunch: Crunch Chocolate is one of the best-loved foods everywhere in the world. It

is one of life's 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 life's 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 Rowntree's Chocolate Crisp. It became 'Kitkat' in 1937, two years

before the Second World War.

Within two years of launch Kitkat was established as Rowntree's 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.

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 1920's 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'. It's 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 India's 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. It's 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 isn't 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.

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 India's 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 hasn't 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 that's 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 that's worked in most

categories it operates in.

Fruitips, therefore, occupies price points of 50 paisa and Re 1 per unit against HLL's

Max which attacks the unorganized sector with an extremely aggressive 25 paisa per

unit price.

It's the association with quality that works in Nestlé’s favour in most product

categories. That this hasn't 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-

Cola's 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.

CategoryRealizations (Rs/kg)

% yoy

2007 2006

Milk & Nutrition Products113 112 +1.4

Beverages202 238 -15.1

Culinary Products70 69 1.9

Chocolates & Confectionery152 143 6.8

Beverages leading volume growth, value growth being led by culinary segment

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

Contribution by

Growth

Volume Value Volume Value Realizations

Milk & Nutrition Products47 43 15 13 -1.4

Beverages18 29 42 21 -15.1

Culinary Products24 14 20 22 1.9

Chocolates & Confectionery11 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 Margins2006 2007

EBITDA18.5 18.1

Adjusted EBITDA18.5 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.

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 Flow1743 2391 2420 1966

Rotation of Operating Net Working Capital7.1 9.6 14.7 18.1

Rotation of Fixed Assets4.0 3.9 4.2 4.7

Net Indebtedness2.5 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.

Your Company's 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.

4. Business Development:

In line with the Company's 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.

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.

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.

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.

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.

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 Company's commitment to nurturing quality,

technology and improved systems in the community and the company's 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.


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 90's 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, Parry's, 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.

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.

Cadbury’s Ad Campaign

Kuch meetha ho jaye suggests Cadbury India, its brand ambassador Amitabh

Bachchan smiling down the hoardings lined along Mumbai's Marine Drive right down

to the company's 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 it's 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 major's 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.

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

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

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.

Distribution Cadbury's 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.

Cadbury's 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 Cadbury's Timeout and Snack range

Impulse segment - these products are most often purchased on impulse, eating

there and then. They include products such as Cadbury's 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

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.

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.

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.

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.

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.

POSITIONING WITH RESPECT TO THE PRICE SEGMENTS

Positioning

Price

Drives attitude and

behaviour

Drives snacking and

consumption

Drives variety, gifting and

taste preferences

High

(above Rs.25

for 40 gms.)

KitKat

Cadbury’s Fruit & Nut

Cadbury’s Roast Almond

Cadbury’s Bournville

Cadbury’s Nut Milk

Tango Almond

Medium

(Rs. 10-25 for

40 gms.)

Cadbury’s Crackle

Cadbury’s Dairy MilkCadbury’s Perk

Tango Fruit & Nut

Cadbury’s Creamy Bar

Tango Cashew

Tango Crispy

Amul Fruit & Nut

Nestle Crunch


Low

(below Rs. 10

for 40 gms.)

Nestle Premium Milk

Nestle Classic

Tango Milk

Nestle Milkybar

Kandos

Chuckles

Nestle Bar One

Cadbury’s Break

Cadbury’s Five Star

Amul Milk Chocolate

Amul Bitter

Amul Orange

Amul Crisp

Cadbury’s Relish

Nestle Rich Dark

Mystique


Price, Positioning and Ad descriptions of all the brands

Company Brand Price PositioningAdvertisement Campaign

Cadbury’s

Dairy Milk Chocolate

Rs 15Product for people who are natural and spontaneous

The real taste of life

Fruit & NutRoast AlmondCreamy barBournville

Rs. 19Rs. 38Rs. 11Rs. 13

Piggybacking on Cadbury’s Dairy Milk

Crackle Rs. 12Product for teenagers, fun alternative to Dairy Milk

Crack, Crack, Crackle.

5Star Rs. 10Source of energy for body & mind

Energy bar

Perk Rs. 12Anytime, anywhere snack

Thodi si Pet Puja.

Break Rs. 6Light chocolate bar to fulfil a snack need rather than just taste

I want a Break

Dairy Milk Eclairs

Rs. 0.75

Close to chocolate with a twin taste - tough from the outside and soft creamy filling within

Eclairs teenager - jo bhi khaye duniya bhool jaye.

Relish NuttiesTiffins

Rs. 2.50Rs. 13Rs. 12

Nestle

KitKat Rs. 15 Snack for routine usage

Have a break, Have a KitKat;Have a KitKat, Play it Cool.

Milkybar Rs. 13Nutrition for children and a sugary taste

Milkybar, Give me the Power

Crunch Rs. 13 Fun ProductChicken or Egg, have a Crunch

Bar One Rs. 9 SnackFor those in between times

ClassicEclairs

Rs.10Rs. 0.50

Amul

Premium MilkOrangeCrispFruit & NutBitter

Rs. 9

Rs. 8.50Rs. 11

Gift for all ages - expression of love

Gift for someone you love.

Company Brand Price PositioningAdvertisement Campaign


Lotus

Tango MilkTango CashewTango almondTango Fruit & Nut

Rs. 10Rs. 14Rs. 17Rs. 15

Inexpensive chocolates for young adults in the age group 18 - 25

The bigger bar

Chuckles Rs. 4Affordable chocolate for children and adults

Mystique Rs. 5Something the child can have alone without sharing

SupercarFun Chocolate for children

Choco-Swiss

Love Birds Rs. 13 Romantic Milk Chocolate DolphinChocolate –Animals

Rs. 24Rs. 60

Attractive novelty shapes for children

Parle Melody Rs. 0.75 Rich in ChocolateMelody Hai 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.

Consumer Buying Behavior


High Involvement Low Involvement

Significance Difference in

Brands

Complex buying behavior Variety seeking behavior

Few Difference in Brands Dissonance reducing

buying behavior

Habitual 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.


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.

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.


http://en.wikipedia.org/wiki/John_Cadbury

http://en.wikipedia.org/wiki/Apothecaries

http://en.wikipedia.org/wiki/Jamaica

http://en.wikipedia.org/wiki/Hans_Sloane

http://en.wikipedia.org/wiki/Honey

http://en.wikipedia.org/wiki/Emulsion

http://en.wikipedia.org/wiki/Maize

http://en.wikipedia.org/wiki/Theobromine

http://en.wikipedia.org/wiki/Annatto

http://en.wikipedia.org/wiki/Achiote

http://en.wikipedia.org/wiki/Chile_pepper

http://en.wikipedia.org/wiki/Vanilla

http://en.wikipedia.org/wiki/New_World

http://en.wikipedia.org/wiki/Guatemala

http://en.wikipedia.org/w/index.php?title=R%C3%ADo_Azul&action=editredlink

http://en.wikipedia.org/wiki/Maya_civilization

http://en.wikipedia.org/w/index.php?title=Puerto_Escondido%2C_Honduras&action=editredlink

http://en.wikipedia.org/w/index.php?title=Puerto_Escondido%2C_Honduras&action=editredlink

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 world's cocoa is produced in

Western Africa, with 43% sourced from Côte d'Ivoire. 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 d'Ivoire 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.

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


http://en.wikipedia.org/wiki/Couverture_chocolate

http://en.wikipedia.org/wiki/Cacao

http://en.wikipedia.org/wiki/Cocoa_butter

http://en.wikipedia.org/wiki/Cocoa_fat

http://en.wikipedia.org/wiki/Cocoa_solids

http://en.wikipedia.org/wiki/European_Union

http://en.wikipedia.org/wiki/Cadbury_Schweppes

http://en.wikipedia.org/wiki/UK

http://en.wikipedia.org/wiki/Archer_Daniels_Midland_Company

http://en.wikipedia.org/wiki/Cargill

http://en.wikipedia.org/wiki/Barry_Callebaut

http://en.wikipedia.org/wiki/Choclate#_note-9%23_note-9

http://en.wikipedia.org/wiki/Slave_labor

http://en.wikipedia.org/wiki/C%C3%B4te_d'Ivoire

http://en.wikipedia.org/wiki/Avocado

http://en.wikipedia.org/wiki/Turkey_(bird)

http://en.wikipedia.org/wiki/Mesoamerica

http://en.wikipedia.org/wiki/Pre-Columbian

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.

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.


http://en.wikipedia.org/wiki/Vanilla

http://en.wikipedia.org/wiki/Artificial_flavor

http://en.wikipedia.org/wiki/Amazon_basin

http://en.wikipedia.org/wiki/Wikipedia:Citation_needed

http://en.wikipedia.org/wiki/South_American

http://en.wikipedia.org/wiki/Caribbean_islands

http://en.wikipedia.org/wiki/Caribbean_islands

http://en.wikipedia.org/wiki/Central_America

http://en.wikipedia.org/w/index.php?title=Trinitario&action=editredlink

http://en.wikipedia.org/w/index.php?title=Forastero&action=editredlink

http://en.wikipedia.org/wiki/Criollo

http://en.wikipedia.org/wiki/Cacao

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


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."

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.

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.

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.

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.



DATA ANALYSIS

Q-1 Do you like to consume chocolate?

S.N OPTIONS NO. OF OBSERVATIONS

PERCENTAGE

a YES 70 100%

b NO 0 0%

Interpretation; 100% respondents says yes they consume chocolate.


Q-2 If yes, which brand you prefer?


PERCENTAGE

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.


Q-3 If national which one of below?


PERCENTAGE

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.


Q-4 On what basis you select the chocolate brand?


PERCENTAGE

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.


Q-5 How frequently you consume chocolate ?


PERCENTAGE

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.


Q-6 Which type of chocolate you prefer?


PERCENTAGE

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.


Q-7 How do you come to know about particular brand?


PERCENTAGE

A T.V ad. 39 55.71%

B NEWSPAPER 13 18.57%

C PRINT MEDIA 06 8.57%

D WORD OF MOUTH

12 17.14%

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.


Q-8 You consumes chocolate for the purpose of ?


PERCENTAGE

A To fulfill a snack need

11 15.71%

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.


Q-9 Who mostly influences the selection?


PERCENTAGE

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.


Q-10 Does packaging attract you?


PERCENTAGE

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.


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.


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


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

market

Tonnage Relevant target

population

(millions)

Gms. per

consumer

Urban

Sales

80 % 12800 45.7 280

Rural

Sales

20 % 3200 34.5 40

Total 100 % 16000 80.2 200


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.

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.


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.


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


http://www.india-today.com/

http://www.economictimes.com/

http://www.business-standard.com/

http://www.cadbury.co.in/