Relaunch strategy of Cadbury

8/7/2019 Relaunch strategy of Cadbury

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Relaunch strategy of Cadburys Picnic - Document Transcript

1. Marketing Project on Re-launch Strategy of Cadburys Picnic Project Guide: Prof. KuldipKawatra Project by Mr. Heemanish Midde Roll No.: 220 2007 - 2009 Xavier Institute of

Management & Research, Mumbai Mumbai University 1

2. EXECUTIVE SUMMARY A Study of Indian Chocolate Industry & Re-Launch Strategy forCadburys Picnic in India is a sweet CHOCOLATE story of chocolates in the hot and humidplains of INDIA, which enlightens us about the size & status of chocolate industry in India. Theproject gives information about the competitors, their market share, and their product basket andhighlights success features. The project also covers a brief study of Cadburys India Limited the biggest player in the Indian Chocolate Industry with reference to its presence, market share,product offerings, marketing strategies, strengths & weaknesses, success factors and Worm

Controversy Management. Also, the implication of pricing, distribution strategies and impact ofexternal environment has been recorded. The project throws light on one of the Cadburysproduct (Cadburys picnic) which failed in India market. Gives an overview of the reasons forthe failure and try to give a promotion strategy as to how Cadbury can re-launch the product.This project aims at understanding the overall Chocolate Industry in India, various factorsaffecting the growth and success of chocolate industry in India, the challenges and opportunitieswhich the market offers and the changing trends in the Indian Chocolate Industry. The projectalso covers a brief study of Cadburys India with reference to above points. Apart from that, theproject also gives a detailed study on Cadburys Picnic - A product that failed in The Indianmarket and gives a marketing strategy for re-launching the product in the India. 2

3. TABLE OF CONTENTS EXECUTIVE SUMMARY 1. INDIAN CHOCOLATE INDUSTRY1.1. Overview 1.2. Marketing of chocolates in India 1.3. Problems & challenges in Indianchocolate industry 1.4.External factors affecting growth of chocolate industry in India 1.5.Growth opportunities in Indian chocolate industry 1.6. Strategies for growth & success in India1.7. Market size (by value & by volume) 1.8. Major players 2. CADBURYS IN INDIA 2.1.Cadburys overview 2.2. History of Cadbury 2.3. Cadburys India limited 2.4. Objectives andvalues 2.5. Vision 2.6. Business 2.7. SWOT analysis of Cadburys 2.8. Product mix - chocolates2.9. Product innovations 3. STRATEGIES OF CADBURYS 3.1. Cadbury's creative launch 3.2.Pricing 3.3. Volume led growth strategy 3.4. Price woes 3.5. Distribution 3.6. Promotion 3.7. Re-

inventing Cadbury 3.8. Cadbury advertisements 3.9. Cadbury and the worm controversy 3.10.Cadburys fight-back 3.11. The big b factor 3.12. Cadburys singing sweetly again 3.13.Success factors of Cadburys India limited 3


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4. 4. CADBURY PICNIC 4.1. Background 4.2. Cadbury picnic: an appeal to the five senses 5.MARKET SURVEY 5.1. Objective of the study 5.2. Collection and analysis of data 5.3.Research methodology 6. DATA FINDINGS AND ANALYSIS 6.1. Data analysis for

consumers 6.2. Data analysis of retailers 7. RECOMMENDATION 7.1. Reasons for failure 7.2.Proposed re-launch of picnic 7.3. STP analysis 7.4. Marketing mix: 7.5. Proposed advertisementsfor Cadburys picnic 8. CONCLUSION ANNEXURES BIBLIOGRAPHY 4

5. INDIAN CHOCOLATE INDUSTRY OVERVIEW Chocolate consumption in India is extremelylow. Cadbury dominates the chocolate market with about 70% market share. Nestle has emergedas a significant competitor with about 20% market share. Key competition in the chocolatesegment is from co-operative owned Amul and Campco, besides a host of unorganized sectorplayers. There exists a large unorganized market in the confectionery segment too. Leading

national players are Parry's, Ravalgaon, Candico and Nutrine. MNC's like Cadbury, Nestle,Perfetti, are recent entrants in the sugar confectionery market. Other competing brands such asGCMMF's Badam bar and Nestle's Bar One have minor market shares. Chocolate consumptionin 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 inIndia are consumed as indulgence and not as a snack food. Indian chocolate market grew at therate of10% pa in 70's and 80's, driven mainly by the children segment. In the late 80's, when themarket started stagnating, Cadbury repositioned its Dairy Milk to any time product rather than anoccasional luxury. Its advertisement focused on adults rather than children. Cadbury's Five Star,the first count chocolate, was launched in 1968. Due to its resistance to temperature, thechocolate has become one of the most widely distributed chocolate in the country. In the early

90's, high cocoa prices compelled manufacturers to raise product prices and reduce theiradvertisement budget affecting the volumes significantly. The launch of wafer chocolates KitKat and Perk spurred volume growth in the mid 90's. These chocolates 5

6. positioned as snack food rather than on the indulgence platform compete with biscuits andwafers. A strong volume growth was witnessed in the early 90's when Cadbury repositionedchocolates from children to adult consumption. The mid 90's saw the entry of new players likeNestle, which created categories like wafer chocolate and spurred growth. The chocolate industryin India as it stands today is dominated by two companies, both multinationals. The market

leader is Cadbury with a lion's share of 70 percent.The company's brands (Five Star, Gems,Eclairs, Perk, Dairy Milk) are leaders their segments. Till the early 90s, Cadbury had a market

share of over80 percent, but its party was spoiled when Nestle appeared on the scene. The latterhas introduced its international brands in the country (Kit Kat, Lions), and now commandsapproximately 15 percent market share. The Gujarat Co- operative Milk Marketing Federation(GCMMF) and Central Arecanut and Cocoa Manufactures and Processors Co-operative(CAMPCO) are the other companies operating in this segment. Competition in the segment willget keener as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the


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Indian chocolate pie. Per Capita Chocolate Consumption (in pounds) of first 15 countries of theworld Italy Finland Netherlands France United States Sweden Australia Cu ty o nr BelgiumSeries1 United Kingdom Denmark Norway Germany Ireland Austria Switzerland 0 510 15 2025 Consumption in Pound INDIA, stands nowhere even near to these countries when comparedin terms of Per Capita Chocolate Consumption. The Indian chocolate industry is extremely

fragmented with a range6

7. of products catering to a variety of consumers. We have the bars/slabs, jellies, lollipops, toffeesand sugar candies. Given India's mammoth population, it comes as a surprise that per capitachocolate consumption in the country is dismally low - a mere 20 gms per Indian. Compare thisto over 7 kgs in most developed nations. Datamonitor figures show that the Indian chocolatemarket was worth just $188.6 million in 2006, despite having a population of over one billion;this compares to the US market value of $15.2 billion, where the population is just under 300million. Furthermore, Indian consumers' sweet snack of choice is currently the traditional candy

known as mithai, and, therefore, a significant marketing push would be required in order topersuade them to transfer their allegiance to chocolate. In addition, there are already two globalgiants operating in the Indian chocolate market, Nestle and Cadbury, which hold over 90% ofmarket value share between them. Both chocolate and sugar confectioneries have abysmally lowpenetration levels, in fact, even lower than biscuits, which reach 56 per cent of the households.Market growth in the chocolate segment has hovered between 10 to 20%. In the last five years,the category has grown by 14-15% on an average and will expect it to continue growing at asimilar rate in the next five years. The market presently has close to 60mn consumers and theyare mainly located in the urban areas. Growth will mainly come through an increase inpenetration as income levels improve. However, almost all of this consumption is in the cities,and rural India is nearly chocolate- free. But the fact is that three quarters of Indians live inRural Areas. Average summertime temperatures reach 43 degrees Celsius in India. Chocolatemelts at body temperature of 36 degrees. Per capita consumption of chocolates in India isminuscule at 20gms in India as compared to around 5-8 kgs and 8-10 kgs respectively in mostEuropean countries. Awareness about chocolates is very high in urban areas at over 95%.Despite these barriers, however, the Indian market offers great potential for growth in the longterm. Datamonitor figures state that the average annual growth of the Indian chocolate market, invalue terms, was 8% between 2002 and 2006, and this growth is forecast to continue, withexpected annual growth of4.3% between 2006 and 2010 7

8. Growth of other lifestyle foods such as malted beverages and milk food have actually declinedby 3.7 per cent and 11.7 per cent, however the CHOCOLATES continue to grow at the rate of12.6%. Low priced unit packs, increased distribution reach and new product launches can be saidto have fuelled this growth. The launch of lower-priced, smaller bars of chocolate in the last twoyears and positioning of chocolate as a substitute to traditional sweets during festivals, haveboosted consumption. This is also because chocolate, which was considered to be an elitist food,has caught the fancy of buyers looking for a lifestyle item at affordable cost. Till recently,chocolate consumption had been restricted by low purchasing power in the market. Chocolates


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and other cocoa-based snack foods were looked upon as food suitable only for the well-off.Chocolate Consumption Structure in India 33% Children Adults 55% Young Adults 12% 8

9. MARKETING OF CHOCOLATES IN INDIA Traditionally, chocolates were always targeted atchildren. But stagnancy in growth rates made the companies re-think their strategies. Cadburywas the first chocolate company that took the market by storm by repositioning brands at adults,

as opposed to children.

BUYING BE

HAVIOUR Chocolates are consumed as indulgence and notas snack food, as prevalent in western countries. Almost 75% chocolates are impulse purchases.Chocolates are bought predominantly by adults and gifted to children. The wholesaler usuallydeals in all kinds of FMCG goods, Foodstuff in addition to the chocolates. The items likechocolates are placed near the counter. Chocolates are kept in cardboard boxes and are alsodelivered in the same.... In a few of the cases the chocolates were kept separately (as perequipment provided by the manufacturer e.g. VISI Coolers), In addition to marketingpromotions companies have been focusing extensively on the promotions by the sales staff. Alsothe companies can devise there marketing strategies that are catering to specific segments and arethus more effective. NATURE OF RETAIL OUTLET Chocolates are primarily sold throughKirana Stores, Gift stores, Medical Stores, canteens, Pan-Bidi stores, Bakeries, Sweet Shops etc.

This is true for chocolates also.

The space allocated for the chocolates was less when comparedto the total area of the shop. Of the space allocated for chocolates, Cadbury brands occupiedmore than Nestle brands. The chocolates category thrives on excitement. It's all about giving theconsumer a choice and taste which they enjoy. STOCKING OF THE PRODUCTS In most of thecases, various brands of chocolates are kept together. In some of the cases the chocolates arestocked depending on the manufacturers provision. The chocolates are kept in Glass Jars andboxes These are provided by the respective companies along with the product. The chocolatesare kept there. But in most of the cases chocolates are stocked near the counter. Ideally theshopkeeper tries to keep chocolates within the reachable (sitting on the counter) distance. 9

10.Chocolates are kept at or below the eye level. This is to facilitate visibility of the chocolates forthe customer who is visiting the store. PROBLEMS & CHALLENGES IN INDIANCHOCOLATE INDUSTRY TEMPERATURE A peculiar problem that hinders the distributionto far-off places is the tendency of chocolates to melt under even moderate heat. Thetemperatures can reach as high as 48 degrees in summers, whereas chocolate starts melting atbody temperature (about 37-38 degrees) .Manufacturers have to take precautionary measures toensure the preservation of chocolates especially in summer. UNAVAILABILITY OFCONTROLLED REFRIGERATION India does not have controlled refrigerated distribution.Air-condition supermarkets are rare. Cadbury loses 1.5 percent of annual sales of Rs.6.8 billionto heat damage. Companies revise ingredients to make chocolate withstand heat, and so Indianchocolates are more resilient to heat than Eurupean chocolates by a factor of 2 degrees.Ironically, the chocolate market has grown recently because smaller retailers have stuffed fridgesand coolers supplied by the cola companies Coke and Pepsi with chocolates. Nestle and Cadburyhave tried to provide loans for retailers to buy fridges, but to hold down power costs theshopkeepers switch off the fridges at night. As a result the cocoa fat melts and migrates to themain body of the chocolate bar. When the cooling is switched on in the morning, the cocoa fatsolidifies and turns white, presenting a bizarre, un-sellable white on black form. Nestle tried toprovide fridges with see-through doors, but was appalled to see its chocolates sandwichedbetween dead chicken, butter and vegetables. Small coolers were provided to retailers to keep thechocolate from melting, but that didn't quite do the trick.Electricity costs money and is notprovided in a uniform way, so on and off the electricity goes and the product may suffer. RAW


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MATERIALS Cocoa is the key raw material and accounts for around 35% of the total materialcost (including packaging) of chocolates. The price of cocoa has been hitting a new high of late.10

11.TRANSPORTATION Chocolate needs to be distributed directly, unlike other FMCG products.90% of our products are sold directly to retailers. Building such a direct network in rural areas is

a daunting task since the infrastructure is poor in India in rural areas.

THRE

AT FROMIMPORTED BRANDS: Free availability of imported brands bought through illegal routes pose athreat to the domestic chocolate industry. Usually, these imported chocolates taste better thandomestic chocolate due to recipe difference. Hence consumers who are willing to spend a littlemore, prefer these imported chocolates. However, the premium brands, which come throughofficial channels, do not pose a threat to the market, as these cater to a small niche market.However there is a lot of dumping from neighboring countries like Dubai, Nepal, etc of inferiorbrand of imported chocolates. These are not only of low quality, but are brought very near totheir expiry dates. Most of the cheap chocolate brands that are available do not meet Indian FoodRegulations.EXTERNAL FACTORS AFFECTING GROWTH OF CHOCOLATE INDUSTRYIN INDIA Good monsoon ensures adequate availability of raw materials, which are mainly

agricultural in nature.

Raw material prices have significant influence on margins.

Governmentpolicies in terms of licensing, duties, movement of agricultural commodities etc. also affect theintroduction of products, time lag for a product launches, taxes, excise, etc all influence thebusiness. Market growth driven by overall economic growth and urbanization also contributes.An overall booming economy will consume tonnes of chocolates because consumer spendingincreases. Also, the absolute number of consumers in middle class & upper middle classincreases. Rupee depreciation improves export realizations; however it also makes import ofraw material (esp. cocoa) expensive.11

12.GROWTH OPPORTUNITIES IN INDIAN CHOCOLATE INDUSTRY UNTAPPEDMARKET & LIMITED CONSUMPTION: The fact that chocolate is not a traditional food, highprices and domestic production problems will provide the main problems to market growth. Asthese markets develop, prices will fall making these products more accessible to the widerpopulation. However the Indian market is still untapped and provides immense scope for growth,both geographically as well as product basket wise. Chocolates right now reaches about 70mn to75mn consumers. It is estimated that chocolates have a potential market of about 116mnconsumers. Chocolate consumption in India is extremely low. Per capita consumption is around160gms in the urban areas, compared to 8-10kg in the developed countries. The per capitachocolate consumption in India is still much below the East Asian standards. Hence per capitaconsumption has a immense scope for improvement. In rural areas, it is even lower. Chocolatesin India are consumed as indulgence and not as a snack food. A strong volume growth waswitnessed in the early 90's when Cadbury repositioned chocolates from children to adultconsumption. 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 moneyofferings, which are affordable to the masses. We also believe that the near term opportunity liesin increasing penetration rather than increasing intensity of consumption. CHANGINGATTITUDES & CONSUMPTION PATTERN: In the past, chocolate consumption had beenrestricted by low purchasing power in the market. Chocolates and other cocoa-based snack foodswere looked upon as food suitable only for elitist consumption till recently. But with the launchof lower-priced, smaller bars of chocolate in the last two years and positioning of chocolate as asubstitute to traditional sweets during festivals, have boosted consumption. Chocolates which


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were considered to be an elitist food hit the fancy of masses looking for a change in life style ataffordable cost.12

13.RURAL EXPANSION: Rural market and small town markets are seen as the key to spurringdouble-digit growth. Products such as liquid chocolate packs from the existing portfolio areexpected to enable rapid acceptance. LEVERAGE INDIA FOR OFF-SHORING: India is being

leveraged for export of finished goods, as a superior destination for manufacturing best practices,and for BPO opportunities. All the above points bring us to a conclusion that theres an immensescope for growth of chocolate industry in India not only in its offering pattern but also forincrement in its total consumption value and size. STRATEGIES FOR GROWTH & SUCCESSIN INDIA Revamp the product to keep the excitement alive. Companies should look at newavenues, while expanding the reach of its products. Distribution will hold the key. Companiesneed to reach out to smaller towns, where three-fourths of the population does not even know theproduct. Merger & Acquisitions: Mergers & Acquisitions with companies that match theproduct portfolio & overall growth strategy should be considered which will not only strengthenthe company to establish a stronger hold in the country but also ward off possible competition inthe select category. Such collaborations will also facilitate companies to use each others

distribution networks.

MARKE

T SIZE

(BY VALUE

& BY VOLUME

) The Indian chocolatemarket is valued at $188.6 million in 2006. The The total sale of the chocolate was $394 millionper annum in 2008 with total Chocolate sales per capital of $0.36. According to marketresearcherEuromonitor International chocolate confectionary sales in India have doubled,growing sales by 64% over the last five years. Chocolate penetration in the country is a little over4 percent, with India's metros proving to be the big draw clocking penetration in excess of15percent. Next, comes the relatively 13

14.smaller cities/towns where consumption lags at about 8 percent. Chocolates are a luxury in therural segment, which explains the mere 2 percent penetration in villages. The market presentlyhas close to 60mn consumers and they are mainly located in the urban areas. MAJOR PLAYERSThe major players in the Indian Chocolate Industry are: 1. CADBURYS INDIA LIMITED:Cadbury India is a food product company with interests in Chocolate Confectionery, Milk FoodDrinks, Snacks, and Candy. Cadbury is the market leader in Chocolate Confectionery businesswith a market share of over 70%. Some of the key brands of Cadbury are Cadbury Dairy Milk, 5Star, Perk, Eclairs, Celebrations, Temptations, and Gems. In Milk Food drinks segment,Cadbury's main product - Bournvita is the leading Malted Food Drink in the country. Cadbury isthe world's largest confectionery company and its origins can be traced back to 1783 when JacobSchweppe perfected his process for manufacturing carbonated mineral water in Geneva,Switzerland. In 1824, John Cadbury opened in Birmingham selling cocoa and chocolate.Cadbury and Schweppe merged in 1969 to form Cadbury Schweppes plc. Milk chocolate foreating was first made by Cadbury in 1897 by adding milk powder paste to the dark chocolaterecipe of cocoa mass, cocoa butter and sugar. In 1905, Cadbury's top selling brand, CadburyDairy Milk, was launched. By 1913 Dairy Milk had become Cadbury's best selling line and inthe mid twenties Cadbury's Dairy Milk gained its status as the brand leader. Cadbury India beganits operations in 1948 by importing chocolates and then repacking them before distribution in theIndian market. Today, Cadbury has five company-owned manufacturing facilities at Thane,Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 salesoffices (New Delhi, Mumbai, Kolkota and Chennai). Its corporate office is in Mumbai.Worldwide, Cadbury employs 60,000 people in over 200 countries. 2. NESTLE INDIA NestleIndia is a subsidiary of Nestle S.A. of Switzerland. Nestle India manufactures a variety of food


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products such as infant food, milk products, beverages, prepared dishes & cooking aids, andchocolates & confectionary. Some of the famous brands of Nestle are NESCAFE, MAGGI,MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID, NESTEA, NESTLE Milk, NESTLESLIM Milk, NESTLE Fresh 'n' Natural Dahi and NESTLE Jeera 14

15.Raita. Nestle was founded in 1867 in Geneva, Switzerland by Henri Nestle. Nestle's first productwas "Farine Lactee Nestle", an infant cereal

.In

190

5, Nestle acquired the Anglo- SwissCondensed Milk Company. Nestle's relationship with India started 1912, when it began trading

as The Nestle Anglo-Swiss Condensed Milk Company (Export) Limited, importing and sellingfinished products in the Indian market. After independence, in response to the then economicpolicies, which emphasized local production, Nestle formed a company in India, namely NestleIndia Ltd, and set up its first factory in 1961 at Moga, Punjab, where the Government wantedNestle to develop the milk economy. In Moga, Nestle educated and advised farmers regardingbasic farming and animal husbandry practices such as increasing the milk yield of the cowsthrough improved dairy farming methods, irrigation, scientific crop management practices etc.Nestle set up milk collection centres that ensured prompt collection and paid fair prices. Thus,Nestle transformed Moga into a prosperous and vibrant milk district. In 1967, Nestle set up its

next factory at Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area intosoluble tea. Nestle opened its third factor in Nanjangud (Karnataka) in 1989. Thereafter, NestleIndia opened factories in Samalkha (Haryana), in 1993 and two in Goa at Ponda, and Bicholim in1995 and 1997 respectively. Today, Nestle is the world's largest and most diversified foodcompany. It has around 2,50,000 employees worldwide, operated 500 factories in approximately100 countries and offers over8,000 products to millions of consumers universally. 3. THEGUJARAT CO-OPERATIVE MILK MARKETING FEDERATION (GCMMF) AMULGujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food productsmarketing organisation. It is a state level apex body of milk cooperatives in Gujarat which aimsto provide remunerative returns to the farmers and also serve the interest of consumers byproviding quality products which are good value for money. AMUL means "priceless" inSanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a qualitycontrol expert in Anand. Variants, all meaning "priceless", are found in several Indian languages.Amul products have been in use in millions of homes since 1946. Amul Butter, Amul MilkPowder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Icecream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India.(Turnover: Rs.52.55 billion in 2007-08). Today Amul is a symbol of many things. Of high-quality products sold at reasonable prices. The company is trying to push its chocolate salesthrough its extensive dairy distribution network. It is giving discount offers for its recentlylaunched sugar-free chocolates. The company has also placed its chocolate products at lesserprice points compared with its 15

16.competitors. Other chocolate brands by Amul include Bindaaz, Fundoo, Almond bar, Milkchocolate and Fruit-n-nut. Yet chocolate has never been a major thrust area for the company. Itstill remains one of its non-core categories. Its chocolate drinks have received better responsethan its chocolates. The chocolate category in India is also seeing increased activity with MNCssuch as Hersheys planning to introduce products from its global stable in India in the comingyear. Amul is looking at building a bigger portfolio in this category by introducing new types ofchocolates 16

17.CADBURYS IN INDIA CADBURYS OVERVIEW Half a century of constant innovation,constant value addition, constant success. Cadbury India Ltd. (CIL), a part of the Cadbury


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Schweppes group, is India's leading confectionery manufacturer with a 70% volume share of thechocolate market. And is synonymous with chocolate in the minds of countless Indians - youngand old. The company is also a key player in the malted food drink and sugar confectionerymarkets in the country. Today, the governing objective for Cadbury India is to deliver SuperiorShareholder Value and to see the brand in every pocket, in every home. HISTORY OF

CADBURY The Cadbury story is a fascinating story of a family business that grew into one ofthe biggest, most loved chocolate brands in the world. A story that you will remember as thestory of the real taste of life as the business grew, it was moved to a larger factory in BridgeStreet in 1847. John Cadbury then took his brother Benjamin into a partnership. And the businesscame to be 'Cadbury Brothers, Birmingham". In 1853, the Cadbury Brothers received a royalwarrant as chocolate manufacturers to Queen Victoria a royal appointment that the companyholds to this day. 22-year-old John Cadbury opened a one-man grocery business in Birmingham,selling tea, coffee, hops, mustard and cocoa. To this list he soon added drinking chocolate whichhe prepared using a mortar and pestle. Young Cadbury had a considerable flair foradvertisement, which inspired him to install a pate glass window in his store - the first in 17

18.Birmingham. This along with a Chinaman in native costume presiding over the counter createdquite a stir and drew a lot of attention

.

The growing sales and popularity of Cadbury's 'superiorquality cocoa and chocolates resulted in the business shifting to a larger warehouse in CrookedStreet in 1831. Dissatisfied with the quality of products produced by all manufacturers, includingtheir own, the brothers Cadbury took a momentous step which was to change the way thechocolate business was done in England. Following a visit to Van Houten in Holland, theyintroduced a process for pressing the cocoa butter from the beans to produce cocoa essence,which was really the forerunner of the cocoa we know today. This essence was advertised as -'Absolutely Pure, Therefore Best'. From the mid 1860's, Cadbury introduced many new kinds ofeating chocolate. Not only the more refined forms of plain chocolate but chocolate cremes - fruitflavoured centres covered with chocolate. These exotic chocolates were sold in decorated boxes,which Richard Cadbury with his distinct artistic talent designed. In fact, many of his originaldesigns still exist.Elaborate chocolate boxes were extremely popular with the late Victorians,with designs extending from superb velvet covered caskets with beveled mirrors, to pretty boxesshowing kittens, flowers, landscapes or beautiful girls. As the company prospered, the brothersimplemented new ideas in their work practices like, office picnics to the country, a sports field,kitchen and well heated dressing rooms for the workers. While these practices are common inorganisations today, they were unheard of in the 19th century. Among the many innovations inthe factory was the appointment of Frederic Kinchelman, a master confectioner from thecontinent, who was engaged to impart the secrets of his craft to Bournville. Cadbury was soonmaking nougats, pistache, pate b'abricot, avelines and other delights. All of the quality that'Fredric the Frenchman', as he was known, was renowned for. Over the next few years, Cadburyopened up chocolate markets in Australia, New Zealand, South Africa, India, the West Indies,South America, the United States and Canada.Every successful company has its famous brandsand Dairy Milk, today one of the most popular moulded chocolates in the world, is one of thebiggest Cadbury success stories. Cadbury has grown from strength to strength with newtechnologies being introduced to make the Cadbury confectionery business one of the mostefficient in the world. The merger in 1969 with Schweppes and the subsequent development ofthe business have led to Cadbury Schweppes taking the lead in both the confectionery and softdrinks markets in the UK and becoming a major force in international markets. CadburySchweppes today manufactures products in 60 countries and trades in over a staggering 120.18


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19.CADBURYS INDIA LIMITED Cadbury was originally incorporated as a wholly ownedsubsidiary of Cadbury Schweppes Overseas Ltd (CSOL) in 1948. The companys original namewas Cadbury Fry (India) Ltd. In 1978, CSOL diluted its equity stake to 40% to comply withFERA guidelines. In 1982, the name was changed to Hindustan Cocoa Products. CSOLsshareholding was increased to 51% in Jan 83 through a preferential rights issue of Rs700mm.

The current name was restored in Dec 89.

In 2001, Cadbury Schweppes made an open offer toacquire the 49% public holding in the company. The parent holds over 90% of the equity capital

after the first open offer. A second open offer has been made to buyback the balanceshareholding, after which the company would operate as a 100% subsidiary of CadburySchweppes Plc, Ever since the Cadbury is in India in 1947; Cadbury chocolates have ruled thehearts of Indians with their fabulous taste. The company today employs nearly 2000 peopleacross India. Its one of the oldest and strongest players in the Indian confectionary industry withan estimated 68 per cent value share and 62 per cent volume share of the total chocolate market.It has exhibited continuously strong revenue growth of 34 per cent and net profit growth of 24per cent throughout the 1990s. Cadbury is known for its exceptional capabilities in productinnovation, distribution and marketing. With brands like Dairy Milk, Gems, 5 Star, Bournvita,

Perk, Celebrations, Bytes, Chocki, Delite and Temptations, there is a Cadbury offering to suit alloccasions and moods. Today, the company reaches millions of loyal customers through adistribution network of5.5 lakhs outlets across the country and this number is increasingeveryday. OBJECTIVES AND VALUES Cadburys objective is to grow shareholder value overthe long term. Cadbury in every pocket. Cadburys marketing strategy is aimed at achieving thisvision by growing the market, by appropriate pricing strategy that will create a mass market andto have offerings in every category to widen the market Adopting Value Based Management formajor strategic and operational decisions and business systems 19

20.Creating an outstanding leadership capability within the management and Sharpening thecompany culture to reflect accountability, aggressiveness and adaptability Aligning themanagement rewards structure with the interests of our shareowners. VISION Life Full OfCadbury Cadbury is an organization which impacts and interacts with the consumers. Cadbury ispresent in most happy occasions in the life of our consumer. The brands excite the consumer.Cadbury is an expression of a consumer's life. Cadbury Full Of Life Cadbury as a company isvibrant. Cadbury is a fun and energizing workplace. Cadbury is robust and alive. BUSINESSCadbury dominates the Indian chocolate market with above 65 70 % market share. Besides, ithas a 4% market share in the organized sugar confectionery market and a 15% market share inmilk/ malted foods segment. Cadbury's Indian operations are not just the largest in Asia but alsothe cheapest. In India, Cadbury has the largest market share anywhere in the world and has beenthe fastest growing FMCG Company in the last three years with a compound annual growth rateof12.5 per cent. SWOT ANALYSIS OF CADBURYS Strength 1. Cadbury is a company, whichis reputed internationally as the topmost chocolate provider in the world. 2. The brand is wellknown to people & they can easily identify it from others. 3. Cadbury the world leaders inchocolate, is a well-known force in marketing and distribution.4. Users have a positiveperception about the qualities of the brand.5. Cadbury main strength is Dairy milk. Dairy milk isthe most consumed chocolate in India. 20

21.6. By using popular models like Cyrus Brocha, Preety Zinta and others Cadburys has managed toportray a young and sporty image, which has resulted in converting buyers of other brands tobecome its staunch loyalists. 7. Cadbury has well adjusted itself to Indian custom.8. It hasproperly repositioned itself in India whenever required i.e. from children to adults, togetherness


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bar to energizing bar for young ones etc. Weaknesses 1. There is lack of penetration in the ruralmarket where people tend to dismiss it as a high end product. It is mainly found in urban andsemi-urban areas. 2. It has been relatively high priced brand, which is turning the price consciouscustomer away. 3. People avoid having their chocolate thinking about the egg ingredients.Opportunities 1. The chocolate market has seen one of the greatest increases in the recent times

(almost @ 30%) 2.There is a lot of potential for growth and a huge population who do not eatchocolates even today that can be converted as new users. Threat 1. There exists no brand loyalty

in the chocolate market and consumers frequently shift their brands. 2. New brands are comingand existing brands are introducing new variants to add up to an already overcrowded market.PLANT LOCATIONS Cadburys manufacturing operations started in Mumbai in 1946, whichwas subsequently transferred to Thane. In 1964, Induri Farm at Talegaon, near Pune was set upwith a view to promote modern methods as well as improve milk yield. In 1981-82, a newchocolate manufacturing unit was set up at the same location in Talegaon. The company, wayback in 1964, pioneered cocoa farming in India to reduce dependence on imported cocoa beans.The parent company provided cocoa seeds and clonal materials free of cost for the first 8 yearsof operations. Cocoa farming is done in Karnataka, Kerala and Tamil Nadu. 21

22.In 1977, the company also took steps to promote higher production of milk by setting up asubsidiary Induri Farms Ltd near Pune. In 1989, the company set up a new plant at Malanpur,MP, to derive benefits available to the backward area. In 1995, Cadbury expanded Malanpurplant in a major way. The Malanpur plant has modernized facilities for Gems, Eclairs, Perk etc.Cadbury also operates third party operations at Phalton, Warana and Nashik in Maharashtra.PRODUCT MIX - CHOCOLATES PRODUCT BASKET- Category Brand Variants BarsDairy Milk Plain Fruit n Nuts Double Decker Roasted Almond Chunky 5-Star 5 StarCount Lines 5 Star Chrunchie Milk Treat Chocolate Orange Wafer Chocolate Perk Perk Perk XL Other Chocki Mint, Strawberry & Chocolate Premium/ Gift Chocolates TemptationRum, Cashew, Almond & Orange Celebrations Various Gift Packs 22

23.Cadburys Dairy Milk (CDM): Cadburys Dairy Milk is the flagship brand of Cadburys not onlyin India but world wide. CDM is the single largest selling unit in India. It has annual sales to thetune of Rs 200 crore. CDM not only accounts for 30 per cent of the total chocolate market invalue, but commands nearly 26 per cent in volume terms and close to 30 per cent of Cadburysannual turnover. Moving from a predominantly adult positioning in the days of the legendarydancing girl ad, to the teens and the tweens, when the Cyrus Broacha ads hit the airwaves, CDMhas made a long sweet journey. In spite of the new categories being explored by Cadbury, its starbrand remains Cadbury Dairy Milk (CDM) which continues to corner almost 30 per cent of thechocolate market. Cadburys Temptation: Cadburys Temptation is premium chocolate brandaimed for high value consumption. Various variants available are Almond, Rum, Cashew &Orange. Cadburys temptation is priced at Rs.40 Cadburys Celebration Cadbury India launchedits premium Celebrations range, which contains traditional Indian dry fruits wrapped in DairyMilk chocolate. This gifting option combines the pleasure of giving away dry fruits whichIndians traditionally consider a premium, healthy gift with chocolate. Cadbury now has 90 percent market share in this profitable segment. PRODUCT INNOVATIONS 5 STAR: Consumerfeedback suggested that the old 5 Star was too chewy, and people complained of it sticking totheir teeth. It was made softer and melted easily in the mouth & introduced as 5 Star CrunchyPERK: Perk was made much lighter and the size of the bar increased to match Nestles Munch.Perk had been under fire from Nestles deadly duo of KitKat and Munch, but after the 23


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24.relaunch, its marketshare is two per cent more than KitKats. And, the five-year-old brand is nowalmost as big as the decades-old 5 Star in size, both in the region of Rs 50-55 crore. HEROES:Packaging innovation has played a vital role in revamping of various Cadburys brands. Heroesbrand is simply a multi-pack with miniatures of all its most popular brands in a single outer case.NEW PRODUCT LAUNCHES CADBURY 5 STAR CRUNCHY The same delicious Cadbury5

Star was now available with a dash of rice crispies.

Cadbury5

Star & Cadbury5

Star Crunchynow aim to continue the upward trend. This different and delightfully tasty chocolate is wellpoised to rule the market as an extremely successful brand. COLLECTION A RANGE OFPREMIUM CHOCOLATE GIFT BOXES. Available in attractive packs, the Collection caters toa premium gifting consumer and is an ideal festive gift. It is a unique combination of the bestCadbury chocolate and premium dry fruits and comes in four different formats each of which is amix of select premium dry fruits enrobed in rich Cadbury Dairy Milk chocolate. BOURNVILLEFINE DARK CHOCOLATE Cadbury India launched its dark chocolates- Cadbury BournvilleFine Dark Chocolate - in the Indian market. Globally, dark chocolate is the fastest-growingsegment. It is loved by millions of consumers because of its rich taste and intrinsic health andwell-being benefits. The chocolate is available in four different variants - Rich Cocoa, Almond,

Hazelnut and Raisin & Nut - priced at Rs 75

a pack.

24

25.STRATEGIES OF CADBURYS CADBURY'S CREATIVE LAUNCH A new after dinner'segment Cadbury Desserts for sweet moments after dinner Khaane Ke baad Kuch Meetha HoJaye Rs. 20/- per packet of44 gms Cadbury Dairy Milk (CDM) Desserts with rich indulgentcrme center, in exotic & traditional flavors of Tiramisu and Kalakand. CDM Desserts offer theperfect rounding off taste, after meal that adds special Meetha' moments to the family. The richtastes of CDM combined with the unique crme center in exotic flavors provide a specialchocolate experience. CDM Desserts add delight to the after-meal moments, especially with theconsumers whose current choice of sweets range from home made delicacies to fruits to meethai.PRICING After the roaring success of Nestles Munch and Chocostick, Cadburys empire struckback hard. The Rs 5 price point accounts for more than half of all chocolate sales. Nestle hadseized the initiative at this price point, with its launch of Munch, now a roaring success (and thelargest selling product at that price point). Today, Cadbury has four products at this price point:CDM, Perk, 5 star and Gems and the five-rupee CDM bar is its single largest- selling SKU .This is a potent price point in India, because the average purchasing power is abysmally low, iswhat industry analyst have to say. 25

26.Nestle kicked off one of the biggest success the liquid chocolate category with its brandChocostick priced at Rs.2 three months ahead of competition. Cadbury did react with Chocki,priced at Rs 2, expanding the concept of sachetisation to new frontiers. Chocki has been thesingle biggest growth driver for Cadbury as well as the entire chocolate category. The novelty ofthe format endeared itself to the existing customer. In less than one year, it constituted nearly 10per cent of the total chocolate market, split equally between Cadbury and Nestle. VOLUMELED GROWTH STRATEGY Cadbury has followed a well-planned strategy of fuelling volumegrowth by introducing smaller unit packs at lower price points. Simultaneously, the companyseems to have astutely juggled with the larger pack sizes and raised prices to a degree higherthan what appears at face. PRICE WOES Chocki, selling at a potent price point of Rs 2, wasideal for smaller towns, especially since it did not need refrigeration. But Chocki started tocannibalise other higher-priced chocolates in larger markets. DISTRIBUTION Chocolate needsto be distributed directly, unlike other FMCG products like soaps and detergents, which can besold through a wholesale network. 90% of chocolate products are sold directly to retailers.


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Distribution, in the case of chocolates, is a major deterrent to new entrants as the product has tobe kept cool in summer and also has to be adapted to suit local tropical conditions. Cadbury'sdistribution network used to encompasses 2100 distributors and 450,000 retailers. The companyhas a total consumer base of over65 million. 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 insummer, when sales usually dip due to the fact that the heat affects product quality and therebyofftake. 26

27.To avoid cannibalization of its higher priced products from lower priced ones, Cadbury is settingup two separate distribution channels one for CORE business & other for MASS markets, withdifferent stockists, wholesalers and retailers. One set will be dedicated to Cadburys high-endproducts and traditional chocolates. The other will cater to the mass market brands namelyChocki, Halls, Eclairs et al all products priced below Rs 3. But today, Cadbury's distributionnetwork reaches out to six lakh outlets each for its chocolate & confectionery brands (i.e. totalreaching12 lakh outlets). PROMOTION Typically it is said that chocolates are being eaten wheneveryone is happy. And this is something advertising has always portrayed. But it is found

chocolates are eaten under diverse conditions and moods - when people are anxious, when theyare sad, when happy - a whole range of emotions. Condensing these views & thoughts, it can besaid chocolate is a true soul mate. Someone who is with you through the ups and downs of life,helping you bounce back. And that's what Cadbury's Dairy Milk (CDM) positioned itself as - aspecial friend. 27

28.RE-INVENTING CABDURY Kya Swad Hai Zindagi Mein redefined the way Indians lookedat Cadbury Chocolates. (The commercial showed a beautiful young lady overcoming allobstacles on the cricket ground, crossing boundary, watchman, securities and embracing herlover who won the game by hitting a six). This theme introduced in around mid 90s boughtinstant growth to Cadburys Dairy Milk. The Ad campaign ran successful for about four yearsand immersed deeper inside hearts of Indians. In March 2002, Cadbury launched its nextadvertisement campaign for its flagship chocolate brand, Cadbury's Dairy Milk (CDM). Thecampaign featured a television (TV) commercial that was significantly different from thecompany's earlier commercials for the brand. It featured Cyrus Broacha interviewing collegestudents and asking why they liked to eat CDM. This was followed by college students 'singing'their excuses for eating CDM. Just as the commercial seems all set to end with the students andCyrus singing the famous CDM theme, 'Khane Walon Ko Khane Ka Bahaana Chaahiye' (thosewho want to eat, will find excuses), a student comes up and questions Cyrus. The advertisementaimed at conveying the idea that no specific occasion is required for consuming CDM. This wasa significant departure from CIL's strategy of appealing to adults in India, who sought a rationaljustification for indulging in chocolate consumption. Cadbury roped in Preity Zinta for its PERKbrand. Preity Zintas angelic dimples laid the foundation for what would become the Indianteenagers favorite snack. After this campaign, PERKS sale surged. Cadburys advertising has,over the past few years, aptly reflected Indias passion for chocolates. CADBURYADVERTISEMENTS Dil ko jab kushi choo jaye..."...kuch meetha jo jaye.." Akhir barvi passho hi gaya." kuch meetha jo jaye.. Log Cadbury Kyon Khate Hai.Khaane waalon ko khaaneka bahaana." Cadburys Dairy Milk..Asli swad zindagi ka CADBURY DESERTS -khaane ke baad kuch meetha ho jaaye. 28

29. Cadburys Celebrations - Rishto ki Mithas CADBURY AND THE WORM CONTROVERSYThe discovery of worms in some samples of Cadburys Chocolate in early October 2003 created


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one of the biggest controversies in India against a Multi National reputed for being a benchmarkof QUALITY. The controversy created an deep adverse impact on the company with their salesnot only drastically dipping down, but at the same time allowing the competitors to establishtheir foothold and taking maximum advantage of Cadburys misfortune. The controversy, andthe adverse publicity received in several countries, set back its plan of outsourcing model which

would have resulted in significant revenue generation, several months back.

The "wormscontroversy" came at the worst time.the next few months were the peak season of Diwali, Eid& Christmas. Cadbury sells almost 1,000 tonnes of chocolates during Diwali. In that year, thesales during festival season dropped by 30 per cent. The company saw its value share melt from73 per cent in October 2003 to 69.4 per cent in January 2004. In May, however, it inched up to71 per cent. CDM sales volumes declined from 68 per cent in October 03 to 64 per cent inJanuary 2004 Clearly, the worm controversy took a toll on Cadbury's bottom-line. For the yearended December 2003, its net profit fell 37 per cent to Rs 45.6 crore (Rs 456 million) ascompared with a 21 per cent increase in the previous year. However, Cadburys reiterated that allthrough the 55 years of leadership in India that it has remained synonymous with chocolates andhas remained committed to high quality and consumer satisfaction." CABDBURYS FIGHT-

BACK 'Project Vishwas' Steps to ensure quality & regain the confidence 2930.Following the controversy over infestation in its chocolates, Cadbury India Ltd unveiled 'ProjectVishwas', a plan involving distribution and retail channels to ensure the quality of its products.The company's team of quality control managers, along with around 300 sales staff, checkedover50,000 retail outlets in Maharashtra and replaced all questionable stocks with immediateeffect. The Vishwas programme was intended to build awareness among retailers on storagerequirements for chocolates, provide assistance in improving storage conditions and strengthenpackaging of the company's range of products. Cadbury reduced the number of chocolates in itsbulk packets to 22 bars from the present 60 bars. These helped stockists display and sell theproducts "safely and hygienically" 190,000 retailers in key states were covered under thisawareness programme. THE BIG B FACTOR The big factor that has pushed up CDM sales isthe Amitabh Bachchan campaign. It helped restore consumers' faith in the quality of the product.In early January, Cadbury appointed Amitabh Bachchan as its brand ambassador for a period oftwo years. The company believed that the reputation he has built up over the last three decadescomplements their own, which was built over a period of50 years. Yet, the entire credit ofrecovery could not be attributed to the brand mascot. Incisive action taken by the company alsohelped. Some of which were: 1. Responded to consumers concern over the issue rapidly. Also,the communication campaign worked effectively in giving out the central message. 2. Thepackaging was changed to include a sealed plastic wrapper inside the outside foil. Cadburyslaunched a new 'purity-sealed' packaging for its flagship product, Cadbury Dairy Milk. Thepackaging is in response to foreign bodies, notably worms, being found in its products. Over thenext few weeks Cadbury will work towards introducing either a heatsealed or a flow-packpackaging that offers a high level of resistance to infestation from improper storage. 30

31.3. New advertising & promotion campaigns were in place which accounted for an Ad spend ofnearly Rs 40 crore (Rs 400 million) Cadbury invested nearly Rs 25 crore (Rs 250 million) thisyear on new machinery for the improved packaging. CADBURYS SINGING SWEETLYAGAIN All is well that ends well. And for Cadburys India, nothing can be sweeter thanRegaining Back the Consumer Confidence. Thanks to quick action taken to recover the damagedone by the worm controversy like Operaion Vishwas, adopting new packaging & massiveadvertising with Mr. Amitabh Bachchan as their brand ambassador, Cadburys regained its


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market share. Cadbury India appointed management consultancy firm AT Kearney to draw up astrategy to control costs in several areas, including sourcing of raw materials and packaging. Thiswas partly an outcome of the worms controversy more than a year ago. Among other things, itchanged the wrappers for its Cadbury Dairy Milk brand and introduced better coolers. Theconsultancy firm will also look at the sourcing of direct and indirect materials like renegotiating

with suppliers for longer term contracts and vendor management.

Other costs (indirect expenses)like travel costs and hotels were also being studied. In other words, Cadbury is trying to reducethe cost per stock keeping unit (SKUs, or packs). The aim is to improve efficiencies. 31

32.SUCCESS FACTORS OF CADBURYS INDIA LIMITED 1. Global management processes:India occupies a high profile position in the global organization, with advocates in regional andglobal headquarters. Global management has allowed the local operation a high degree offlexibility in growing the business, understanding that asset utilization may be lower and returnsslower to arrive, but expecting volume share to compensate for lower margins in the long run. 2.Local management processes: The Cadbury India team is all-Indian and has a deepunderstanding of local market dynamics. The business is set in a way that highlights localizationacross all facets driving the belief that the only way to succeed in India is by developing

localized business models.

For example, the company tailored the chocolate formula in India toprevent melting in the countrys open-air high frequency store environment. 3. Customizedbusiness models: Local management has set up systems to test and develop products from theground up with specialized interlinked cells that execute innovation and market testing hand-in-hand. Cadbury India is known as a key product innovator. Besides Dairy Milk, the entireCadbury product portfolio in India has been developed locally to suit Indian consumer tastes.Packaging, marketing and distribution have all been tailored to local market conditions.4.Royalty Structure: Royalty to Cadbury Schweppes is around 1 per cent of the turnover. But withthat, the company gets unlimited access to latest technology, new products and so on. They canalso introduce new products from the parent, if it is suitable for Indian market.5. Subtlereengineering of raw material mix led to cost savings: Cadbury has reduced its dependence oncocoa, thus lowering its exposure to volatile raw material prices as well as cutting costs. Itappears that they have subtly altered its recipe by using less of costlier cocoa and more of milkand sugar. Cadbury's launch of Perk has also contributed significantly in reducing the proportionof cocoa in the overall raw material mix. 32

33.6. Brand Building: Since its inception, Cadbury in India has stayed ahead thanks to their constantmarketing initiatives, that have at all points in time understood the needs of and opportunities ina changing nation but Nestle had stood firm in second position resulting from theirresponsibilities and providing quality products. Amul an Indian company has been able to createbrand quality and thus selling their product through their name. 7. Wide variety of brands: The'60s was a decade which saw the launch of brands that are etched in the hearts of generations ofIndians - Tiffins, Nut Butterscotch, Caramels, Crackle, 5 Star and Gems. It was a strategy thatintroduced consumers to a variety of tastes and product forms leading to a rapid increase inchocolate consumption.8. Quality products at low price: Cadbury's Eclairs was launched in1972, at the then princely sum of 0.25p and was an instant hit. It continues to be one of thebiggest brands in the Cadbury portfolio and offers the lowest price point at which consumers canexperience the real taste of chocolate. But as compared to other companies the price are veryhigh because of lack of competition. 9. Innovative & attractive packaging: In the years thatfollowed, Cadbury invested in technology and made an impact through innovative packaging.This decade experienced a continuous growth in volumes as Cadbury launched a flurry of brands


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with different pack sizes, at various price points. The now ubiquitous Sheet Metal Dispenser seenon cash counters of thousands of shops for dispensing chocolates was an innovation that helpedbrand the colour purple in the minds of the Indian consumer.10. Timely expansion of market: Inthe 90's Cadbury realised both the scope and the need to expand the market. Hitherto perceivedonly as a children's product, Cadbury 'universalized' the chocolate market. The multi-award

winning advertising campaign - 'The Real Taste of Life' - was launched, capturing the childlikespontaneity in every adult. 3334.Moulded chocolate and clairs also showed satisfactory growth. This has also helped in

improving the infrastructure and distribution reach of the company in chocolate andconfectionery segment.11. Introducing new products: Cadbury 5 Star with its Energizing Barcampaign targeted the youth, offering them a mind and body charge. While pre-emptingcompetition, Cadbury Perk - the light chocolate snack - pushed chocolates into the wider area ofsnacking by promising 'Thodi Si Pet Pooja Kabhi Bhi Kahin Bhi' (anytime, anywhere) and hasintroduced new flavours like Mint Hint, Mango Tango, Very Strawberry. It has alsointroduced various new chocolates like Gollum and Frutus in recent years.12. Constantdiversification: Faced with rapidly changing markets and increased competition, Cadbury

launched Truffle to hit the high ground of great tasting chocolate.

This was followed by Picnic in1998, which with its unique, multi-ingredient construct, promises to take chocolates straight intothe realm of snacks. With the introduction of Gollum and Frutus Cadbury has taken the marketby surprise.13. Commitment of expansion: With the launch of Trebor Googly, the tangy, fizzycandy, Cadbury took the market by surprise and marked the entry of Trebor into the fast growingIndian sugar confectionery market. The extension of Googly to a Mint flavour reinforcesCadbury's commitment to establish the Trebor name as a strong player in the value added sugarconfectionery market.14. Repositioning: Cadburys has been repositioning its products forchildren to adults and for celebrative occasions. A repositioning campaign was arranged for dairymilk that showed adults doing unconventional things (like a lady breaking into a jig in the middleof the overflowing cricket stadium) driving home the message that adults could enjoy chocolateas well. 34

35.15. Information technology: At Cadbury India they believe that effective communication andavailability of information 'at the right time and the right place' is critical for an edge in business.In order to achieve this they realised the importance of and have in place, an effective ITinfrastructure. Through IT investment, they aim to Remain competitive in the fast changingenvironment. Incorporate best practices in the business processes. Arrive at uniform softwareand business practices globally within Cadbury Schweppes. Provide Y2K compliant softwarefor all group companies. Achieve flexibility of systems to keep pace with changingenvironments. Increase speed of response to business processes. Minimise working capital. 35

36.Cadbury Picnic BACKGROUND Cadbury Picnic is a chocolate bar with milk chocolate andpeanuts, covering nougat, caramel, and puffed rice. Picnic is a random composition and hasdifferent fairly chunky ingredients. The Picnic brand was launched in India in the year1998.Cadbury launched Picnic, which is one of its major chocolate from its international portfolio.Picnic was launched to further evolve the chocolate market into the snacking area, a task that hasalready been initiated by Perk. Picnic was specifically designed for Russian taste thus not suitedto the Indian consumer. Indians felt that this chocolate had too many textures and too manyflavours, none of which really made a coherent experience. Indians are very particular abouttastes and may not have taken the product taste too well. Picnic was re-launched with a changedcomposition in smaller packs in the year1999 26 gm pack priced at Rs.10 and 43-gm pack


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priced at Rs.15. Picnic is shaped in a very rough manner and can rightly be called ugly looking.Nothing agrees with this better than the slogan for this particular product "Deliciously Ugly".The bars are lumpy in shape and may not have been liked by the Indian consumer.1998 was atime when India was not really open to such a product. Targeted at males of18- 29 at time whena third of population was below 15 years of age in 2000 points that timing was not correct. Picnic

was wrong product in wrong time at wrong place destined to fail !! 3637.CADBURY PICNIC: AN APPEAL TO THE FIVE SENSES The Packaging The packaging is

purple. The word Picnic covers most of the front and also it depicts peanuts and raisins. Thepackaging informs you in gold writing that its Packed with Peanuts and Raisins. Turning thebar over, the nutritional information, barcode, best before date, weight, ingredients and contactinformation can be seen. Appearance upon Opening Cadbury PICNIC is around five incheslong and it appears to be packed with SOMETHING. There are large bumps all over the uppersurface of the rounded bar. The chocolate is brown colored milk chocolate. The Smell Thesmell of the chocolate lacks the appealing smell associated with other chocolates. The Taste Cadbury PICNIC is crunchy (at the top teeth) and chewy (bottom) (due to the cereal and nuts forthe crunch, and the caramel and raisins for the chew). The peanuts are not a dominating flavour

in the Picnic unlike in Snickers; in fact, the raisins have a stronger flavour.

The cereals are themost noticeable crunch texture, and the caramel makes the bar chewy. The flavour is difficultto describe, perhaps because there were so many different flavours and textures presenting in onebar. The flavours bind together, providing a very appealing taste sensation. 37

38.MARKET SURVEY OBJECTIVE OF THE STUDY: The Objective of my study is: The studyconsumers preferences for chocolate To study the recall value of Cabdurys Picnic among theconsumers and retailers To find a Gap to Relaunch and reposition Cadburys Picnic in theIndian market. COLLECTION AND ANALYSIS OF DATA: Primary DataSurveys/Questionnaires 1. Customers Survey A sample size of100 is chosen. 2. Retailors Asample size of 25 is chosen. Interactive 1. Interaction with customers in the Market/Household 2.Interaction with Retailers. Secondary Data 1. Data accessibility from Prowess and EBSCOO 2.Internet 3. Newspapers, Magazines and Other Published Journals Statistical Analysis of thecollected primary data Report preparation 38

39.RESEARCH METHODOLOGY: Types of questionnaire For the convince of conductingsurvey for100 customers and 25 Retailers the questionnaire is structures, undisguised and closedended so that it becomes easy for the customers to response. Mode of administration Personalinterview and interaction have been done with few retailers and customers to framing of thequestionnaire. Sampling detail Unit: The total size (N) = N1 + N2 Where, N1 = 100 CustomersN2 = 25 Retailers Frame: For Customers & retailers Survey Customers & Retailers acrossMumbai were surveyed 39

40.Data findings and Analysis DATA ANALYSIS FOR CONSUMERS 1. Do you like to eatchocolates? LIKE AND DISLIKE OF CHOCOLATES 2% 11% Very much Okay Okay 28%Not much 59% Not at all As far as the demand of the chocolate majority of customers like to eatchocolate. There is tremendous scope for the Indian Chocolate market which can be fulfilled byvarious chocolate players in the market.40

41.2. How frequently do you buy chocolates? BUYING PATTERN Special occasions Once every25% day Once every day 33% 2-3 times a week Once a Once a week week Special occasions12% 2-3 times a week 30% 33% of people responded that they buy chocolate on daily basisPeople buying chocolates 2 or 3 times in a week was 30%.This shows that the overall buyingpatter of chocolate among customers is good and the market should has great potential. 3. Where


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do you normally buy chocolates from? PREFFERED DISTRIBUTION CHANNEL 12% 9%Kirana shop Supermarkets Both 79% The buying patter of the customers shows that most of thecustomers prefer to buy chocolate from small local kirana shops. That shows that in order tosucceed in the chocolate market the players have good relationship with the Kirana shops.41

42.4. Which brand of chocolates you prefer? MARKET LEADER 2% Cadburys 2% Nestle &Cadbury 2% 9% Cadbury & Foreign Brands

10% Only Foreign Brands

57%

18% Amul NestleNestle & Foreign Brands The customers most preferred choice of brand is Cadbury followed by

Nestle. Cadbury rules the Indian market and is customers 1st choice.5. Would you prefer toswitch to another brand if the prices are high??? PRICE SENSITIVITY OF CONSUMERSIndifferent 4% No No 43% Yes Yes 53% Indifferent It could be seen that Indian customers arevery much price sensitive.53% of the customers responded that if the price of chocolate isincreased they might even change the brand they prefer.42

43.1. What is the first word that comes to mind (your first reaction) on looks of the belowchocolate? Nuts 21% 19% Ugly Crunchy 18% 27% Weired 15% Wont Buy it at all 27% of thecustomers responded that they found the shape of picnic ugly and many even responded thatsince the shape does not appeal to their eyes they will not buy it. 7. Now that you have seen how

the chocolate looks, would you like to buy it? Give your answer just based on its looks.

15

% YesNo 85% Even after taking a look at the package of the chocolate customers responded that sincethe packaging was not appealing to them they will not buy the chocolate 43

44.8. Your reaction on shape of the chocolates? I dont care; I am ok with uneven shapes! 5% 10% I like bar shape (e.g.: 30% Dairy Milk, Kit Kat) I like spherical shape (e.g.: Munch 55% balls,Gems) I am OK with any shape, it should be even! The bar shape chocolate is the mostpreferred choice of the customers followed by spherical shape. 9. Do you know the brand ofbelow chocolate? 25% Yes No 75% Most of the customers were not able to recognize the Brandthat manufactures Picnic nor were they able to recollect that such a brand was ever launched inIndia.44

45.10. Rate your preferences in choice of chocolates on a scale of1-5 (5 being highest rank)PREFERENCES Packaging Taste 20% 28% Taste Brand Ingredients Ingredients Packaging 25%Brand 27% On an average the scale of preference was as follows: 1st priority: Taste 2nd priority:Brand 3rd priority: Packaging 4th priority: Flavors 5th priority: Sweetness/less sweet 6thpriority: Calories 7th priority: Price The customers prefer taste and they even go for brandreliability. Brand and the taste of chocolate is the most important factor that influencescustomers decision.45

46.DATA ANALYSIS OF RETAILERS 1. Which brands of chocolates does the shop sell? 5% 23%39% Cadburys Nestle Amul Imported brands 33% Most of the retailers sell Cadburys brand.This shows the distribution network of Cadburys and their relationship of the company acrossvarious distribution channels 2. Which Brand of Chocolate Sell the Most? 3% 12% CadburysNestle 25% Amul 60% Imported Brands Cadburys is the most selling brand in the Indianmarket. Its the most preferred choice of the customers and that the reason its the most preferredchoice of retailers.46

47.3. What are customers preferences in the choice of chocolates? Taste Sweetness 19% 22% PriceCalories 15% 8% Brand of the chocolate 15% Packaging 18% 3% Ingredients/ flavorsAccording to the retailers customers give 1st preference to taste and another importance theygive to brand of chocolate.4. Sales of chocolates are highest during which period? 12% FestivalConstant throughout the year88% Festival season is the time when the sale of chocolate really


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goes up. This shows that the customers buying trend is changing and they are moving fromtraditional sweets to chocolates.47

48.5. Are there any customer complaints about the existing brands of chocolates? 5% Yes No 95%Most of the customers do not have any complain with the chocolate they buy. They have almostforgotten the Cadburys warm story and are almost satisfied with brand they buy.6. Do you

know the brand of below chocolate?1

2% Yes No88

%88

% of the retailers were not able torecognize Picnic chocolate brand. This very well shows that the chocolate when it was launchedwas not a successful product in the Indian market.48

49.7. Has the demand for chocolates risen in the past few years? 25% Yes No 75% Ever the lastperiod the sale of chocolate has risen. The product is getting acceptable by the customers and isthe buying pattern and taste of customers is changing.49

50.RECOMMENDATION REASONS FOR FAILURE Physical appearance o Its irregular shapedid not appeal to the customers. o Varying quantity of peanuts and raisins in each PICNIC barresulting into low standardization. o Due to irregular mold of the chocolate opening and eating itwas a problem. Packaging o In the packaging the letter PICNIC was so large that it coveredmost of the front side which was unlikely the Cadbury way to brand. o This resulted in poor

brand association with the customers.

o Also the name Cadbury could not be clearly and easilyseen. o The word picnic was surrounded by what looked like a jam spoilage or may be bloodgiving a negative impact about the product to the customers. Pricing o The PICNIC bar waspriced at Rs.10 whereas its competitor Nestle sold Munch for Rs.5 and used aggressivemarketing. Inconsistent taste o Due to inconsistent proportion of raisins and peanuts tastevaried from each picnic bar to bar. o Also due to this the chocolate could not meet the tasterequirement of some customers resulting in unsatisfied customers.50

51.o Also peanuts and raisins were not properly fried resulting in varying taste. Impropercommunication about the value proposition to the target audience o Cadbury PICNIC chocolatewas not properly promoted by the company since it was not its flagship product. o Also lack ofassociation with brand ambassador when compared to its competitors resulted into low sales. oAlso the promotional campaign positioned it as an alternate to full diet which is contrary to themindset of an Indian customer. PROPOSED RE-LAUNCH OF PICNIC Rationale behind the re-Launch Considering the current competitive market and intense competition Cadbury can nolonger rely on its flagship product even though it faces low competition in the market By re-launching Cadbury PICNIC chocolate as an energy bar the product portfolio should be expandedwhich can prove to be a flanking strategy for Cadbury. Considering the average agecomposition of the Indian population which lies around 25-30 Cadbury PICNIC chocolate iflaunched as energy bar on the move it can have a huge target segment. Also the company has astate of art manufacturing unit for the production of Cadbury PICNIC bar which can be usedwithout causing additional cash outflow in infrastructure development. Cadbury PICNICchocolate being rich with peanuts and raisins should be re- launched since it can fulfill energyneeds in a tasty way and its nutritional facts can be highlighted for this purpose. Cadbury canuse the re-launch to make competitors re-strategize also it can have the first mover advantage. There is a very low competition in the market for an energy bar at an affordable price. So,Cadbury being the market leader in Indian chocolate industry with deep financial backing,advanced technology, extensive distribution network and a trusted name can easily cover thegap.51

52.STP ANALYSIS Segmentation Cadburys Picnic is a mass market product. This confirmsthat all demographic segments & geographic segments have the potential. Customers for


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have never even tasted chocolates once. Understanding the consumer demands and maintainingthe quality will be essential. Companies will have to keep themselves abreast with thedevelopments in other parts of the world. PRICING is the key for companies to make theirproduct reach consumers pockets. Right pricing will make or break the product SUCCESS.Economical distribution of the products will also be equally important. The companies

strategies should focus on driving sales through a right product mix, efficient materialsprocurement, reduced wastages, increased factory efficiencies and improved supply chainmanagement. Theres an immense scope for growth of chocolate industry in India -geographically as well as in the product offering. The Indian Chocolate Industry is destined togrow and will do so in the future.58

59.ANNEXURES CHOCOLATES TYPES OF CHOCOLATES Depending on what is added to (orremoved from) the chocolate liquor, different flavors and varieties of chocolate are produced.Each has a different chemical make-up; the differences are not solely in the taste.1.Unsweetened or Baking chocolate is simply cooled, hardened chocolate liquor. It is usedprimarily as an ingredient in recipes, or as a garnish. 2. Semi-sweet chocolate is also usedprimarily in recipes. It has extra cocoa butter and sugar added. Sweet cooking chocolate is

basically the same, with more sugar for taste.

3.

Milk chocolate is chocolate liquor with extracocoa butter, sugar, milk and vanilla added. This is the most popular form for chocolate. It isprimarily an eating chocolate. CATEGORIES OF CHOCOLATES Chocolate market can besegmented as follows: Large units bars/ slabs, Count lines, Panned varieties, Small valueadded units. Confectionery products can be categorized as Hard boiled sugar candies, lollipops,jellies Toffees 59

60. Chewing candies Breath freshners, digestives, throat relievers Gum based products are Chewing gum Bubble gum Chocolates and Confectionery Industry Chocolates Sugarconfectionery Gum based Bars/ Slabs Hard boiled Chewing gum Count lines Toffees Sugarcoated chewing gum Panned (Gems) Soft chew Bubble gum Eclairs Jelly candies AssortedDeposit candies Lollipops Mints, etc. CHOCOLATE SEGMENTATION Chocolate market canbe segmented into moulded chocolates, count chocolates, panned chocolates, eclairs and assortedchocolates. Type of chocolates % Share in chocolate market Moulded 37% Count 30% Eclairs20% Panned 10% Others 3% Others Panned 3% 10% Moulded Moulded Count Eclairs 37% 20%Eclairs Panned Count Others 30% 60

61.Moulded chocolates, like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premium, NestleMilky Bar, is the largest segment accounting for more than 1/3rd of the market. Count lines (5Star, Perk, Kit Kat, Picnic) are the second largest segment accounting for 30% of the volumes.The Count line segment has been growing at a faster pace during the last three years driven bygrowth in Perk and Kit Kat volumes. Panned products include Cadburys' Gems, Nutties, andNestle's Marbles. In panned segment, Cadbury dominates with over 95% market share.Eclairs(droplets of hard caramels with a soft chocolate fillings) are a low unit priced product. CadburyEclairs was launched in 1972. Parle Products launched Melody in 1991. Nestle is a recent entrantin the segment. Nutrine's Eclairs has done extremely well in the market. FORM OFCONSUMPTION a. Pure Chocolates b. Toffees c. Cakes & Pastries d. Malted Beverages e.Wafer Biscuits & Baked Biscuits f. Chocolate Desserts 61

62.MARKET SURVEY FOR CHOCOLATES QUESTIONNAIRE FOR CONSUMERSName: .. Age :


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.Gender . Questions List 1. Do you like to eat chocolates? Verymuch Okay Okay Not much Not at all 2. How frequently do you buy chocolates? Everyday 3-4 times a week 1-2 times a week 1-2 times a month Never 3. Where do you normally buy

chocolates from? Your local kirana shops Supermarkets like Big Bazaar4.

Which brand ofchocolates you prefer? Cadburys Nestle & Cadbury Cadbury & Foreign Brands OnlyForeign Brands Amul Nestle Nestle & Foreign Brands 5. Would you prefer to switch toanother brand if the prices are high? 62

63. Yes No Indifferent 6. What is the first word that comes to mind (your first reaction) on looksof the below chocolate? Nuts Ugly Crunchy Weird Wont buy it 7. Now that you haveseen how the chocolate looks, would you like to buy it? Give your answer just based on its looks. Yes No 8. Your reaction on shape of the chocolates? I dont care; I am ok with unevenshapes! I like bar shape (e.g.: Dairy Milk, Kit Kat) I like spherical shape (e.g.: Munch balls,Gems) I am OK with any shape, it should be even! 9. Do you know the brand of belowchocolate? Yes No 63

64.10. Rate your preferences in choice of chocolates on a scale of1-5 (5 being highest rank) Taste Sweetness Price Calories Brand of the chocolate Packaging Ingredients/ flavours 6465.MARKET SURVEY FOR CHOCOLATES QUESTIONNAIRE FOR RETAILERS Name of the

Shop Location .. Questions List 1. Which brands of chocolates does theshop sell? Cadburys Nestle Amul Imported Brands 2. Which Brand of Chocolate Sell theMost? Cadburys Nestle Amul Imported Brands 3. What are customers preferences in thechoice of chocolates? Taste Sweetness Price Calories Brand of the chocolate PackagingIngredients/ flavors 4. Sales of chocolates are highest during which period? Constantthroughout the Year65

66. Festival Season 5. Are there any customer complaints about the existing brands of chocolates? Yes No 6. Do you know the brand of below chocolate? Yes No 7. Has the demand forchocolates risen in the past few years? Yes No 66

67.BIBLIOGRAPHY References Websiteshttp://www.candysnob.com/archives/2009/02/review_cadbury_picnic_bar_from.php http://www.hinduonnet.com/businessline/iw/2000/10/01/stories/0201b053.htm 3.http://budgetwithet.economictimes.indiatimes.com/Economic_Survey/Your_Say/Forum/Impact_on_You/Young_India_to_reap_demographic_dividends/esarticleshow/28 23066.cms http://www.icmrindia.org/casestudies/catalogue/Marketing/Reinventing%20Cadbury% 20-%20Marketing%20Case.htm http://www.chocablog.com/reviews/cadbury-picnic/ http://www.domain-b.com/news_review/199908aug/19990815newsa.html http://www.thehindubusinessline.com/2006/01/17/stories/2006011701531100.htm

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Relaunch strategy of Cadbury