SCOPE OF THE STUDY

Cadbury Under Microscope

As learning is a human activity and is as natural, as breathing. Despite of the fact

that learning is all pervasive in our lives, psychologists do not agree on how
learning takes place. How individuals learn is a matter of interest to marketers.
They want to teach consumers in their roles as their roles as consumers. They
want consumers to learn about their products, product attributes, potential
consumers benefit, how to use, maintain or even dispose of the product and new
ways of behaving that will satisfy not only the consumers needs, but the
marketers objectives.
The scope of my study restricts itself to the analysis of marketing strategies and
the subsequent change in consumer preferences, perception and consumption
of Cadbury Chocolates.
There are many other brands of chocolates available but my study is limited to
Cadbury India leaving behind the others. The scope of my study is also restricts
itself to Kolkata region only.

Introduction

Cadbury Under Microscope

Confectionery is a unique impulse category because its eaten regularly

throughout the day rather than specifically at meal times. Confectionery now
accounts for 24% of all food media spend, more than any other food category.
According to a survey, purchase levels for confectionery are significantly higher
than any other impulse category

(Refer Fig1). Fig1: % Population buying each Impulse Category

The four major confectionery categories are- chocolate confectionery, sugar
confectionery, gum and cereal bars. The Indian confectionery market reached a
value of around $500 million in 2005. Indias chocolate market is dominated by
two just companiesCadbury, which entered the country 60 years ago and has
nearly 60% market share, and Nestl, which has about 32%. The two have
prospered by luring consumers with attractively packaged chocolate
assortments to replace the traditional dried fruits and sugar confectioneries
offered as gifts on Indian holidays, and by offering lower-priced chocolates,
including bite-sized candies costing less than 3 cents. With growth just starting
to kick in, Asia is going to remain a sweet spot for chocolate makers for years to
come.
The Indian chocolate market is estimated to be worth Rs. 3.2 billion, with an
annual growth rate of 10 percent. Per Capita Consumption levels are very low in
India, as compared to 8.7 kg per year in the U.K. The market therefore offers
tremendous potential for growth. In our analysis we are concentrating on the
chocolate industry in general and Cadburys in particular. Cadbury India Limited
(CIL), a part of the Cadbury Schweppes Group, is Indias leading confectionary
manufacturer. Cadburys Dairy Milk, 5 Star, clairs, Perk and Gems are the
largest selling brands in their segments. CIL is estimated to have a 65 percent
share of the Indian chocolate market. In fact the word Cadbury is a classic
example of a brand coming to symbolize a product
category.

About Cadbury
Cadbury is a British multinational confectionery company owned by Mondelz
International. It is the second largest confectionery brand in the world after
Wrigley's. Cadbury is headquartered in Uxbridge in Greater London and operates
in more than fifty countries worldwide.

Cadbury Under Microscope

Cadbury was established in Birmingham, England in 1824, by John Cadbury who

sold tea, coffee and drinking chocolate. Cadbury developed the business with his
brother Benjamin, followed by his sons Richard and George. George developed
the Bourneville estate, a model village designed to give the company's workers
improved living conditions. Dairy Milk chocolate, introduced in 1905, used a
higher proportion of milk within the recipe compared with rival products. By
1914, the chocolate was the company's best-selling product.
Cadbury merged with J. S. Fry & Sons in 1919, and Schweppes in 1969. Cadbury
was a constant constituent of the FTSE 100 from the index's 1984 inception until
the company was bought by Kraft Foods in 2010.

About Cadbury India

Cadbury India began its operations in India in 1948 by importing chocolates. It
now has manufacturing facilities in Thane, Induri (Pune) and Malanpur (Gwalior),
Hyderabad, Bangalore and Baddi (Himachal Pradesh) and sales offices in New
Delhi, Mumbai, Kolkata and Chennai. The corporate head office is in Mumbai.
The head office is presently situated at Pedder Road, Mumbai, under the name
of "Cadbury House". This monumental structure at Pedder Road has been a
landmark for the citizens of Mumbai since its creation. Since 1965 Cadbury has
also pioneered the development of cocoa cultivation in India. For over two
decades, Cadbury has worked with the Kerala Agricultural University to
undertake cocoa research.
Cadbury was incorporated in India on 19 July 1948. Currently, Cadbury India
operates in five categories Chocolate confectionery, Beverages, Biscuits, Gum
and Candy. Some of the key brands are Cadbury Dairy Milk, Bournvita, 5 Star,
Perk, Bournville, Celebrations, Gems, Halls, clairs, Bubbaloo, Tang and Oreo. Its
products include Cadbury Dairy Milk, Dairy Milk Silk, Bournville, 5-Star,
Temptations, Perk, Gems (a version of M&M's), Eclairs, Bournvita, Celebrations,
Bilkul Cadbury Dairy Milk Shots, Toblerone, Halls, Tang and Oreo.
It is the market leader in the chocolate confectionery business with a market
share of over 70%. Cadbury India, on 21 April 2014, changed its name to
Mondelez India Foods Limited.

Objectives of the Project

To examine the marketing strategies
To conduct a SWOT analysis of Cadbury India
To conduct a PEST analysis of Cadbury India
To understand the essence of the 4 Ps of Marketing with respect to the
marketing efforts of Cadbury India

Cadbury Under Microscope

To analyze the impact of Cadburys stunning marketing techniques in causing a

sea-change in the Indian psyche.

Aim
By conducting research to evaluate marketing strategies of Cadbury India by
using proper theories.

The objectives of the marketing strategies employed by the company are

manifold. They have been segmented into proper heads for our greater
understanding.

Corporate objectives

Sales objectives

Advertising objectives

Each of the following are discussed in detail ahead.

Corporate Objectives

Broadening consumer appeal and extending reach to newer markets

Sustained growth of market share through aggressive product development
Striving for international quality in the products and processes
Focusing on cost competitiveness, productivity and innovative utilization of
assets
Energizing and developing its people

Cadbury Under Microscope

In India, Cadbury India has defined its vision as

"Life full of Cadbury, Cadbury full of life"
India wants to achieve in the next four years what it has in the last 50 years.

Marketing Objectives:

Double its turnoverwhich stood at Rs.1, 0000 crore in 2014by 2020. This
calls for a growth rate of over 20 percent annually and will be done by
setting up new capacity, and increasing volumes

Get more people to eat more chocolate, which calls for making it more
affordable and being more innovative

Could get into new product categories like gums where the global portfolio
is impressive

Aiming for a larger footprint in the

confectionery space

To be stronger in health drinks

Like most players with near-monopoly

shares, Cadbury runs the risk of losing share
to new players like Hersheys, ITC (with brands
like Minto and Candyman) as well as to
premium imported chocolates. But that may
not be much of a worry if Cadbury succeeds
in growing the market. They could, for
instance, hold a 50 per cent share but of a
much larger pie.
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Advertising Objective
Leverage further the Cadbury label, which is what the company has been doing
with aggressive advertising and promotions (these costs account for 12-13 per
cent of sales, with 30 percent of that spend being below the line).
Consumer focus:

Appealing to a broader range of consumers is at the heart of the plan.

Future activities will cover further improvisation of product & packaging to
deliver superior value to the consumers
Greater innovation in packaging & product presentation across various
power brands
Product introduction to provide new texture & taste experience to
consumers

Cadbury Under Microscope

Suppliers and business partners:

Continue using Ethical Sourcing Standards when working with suppliers

Continue to engage in regular dialogue with its suppliers and responds to

their suggestions

Continue evaluating potential suppliers against a set of standards such as

environmental
protection and ethical labour practices prior to doing business with them

Cadbury Under Microscope

Analysis of Overall Objectives of

Cadbury V/S its Competitor (Nestle)

Situation Analysis
The chocolates market is estimated at around
33,000 tonnes valued at approximately Rs 8.0 bn.

Cadbury with its Dairy Milk, Five Star, Milk Treat, Eclairs,
Golden, is ruling the roost. In chocolate-based drinks, it
claims
nearly 50% of the market. Cadbury India's market share in
cocoa-based products is 35%, with Dairy Milk brand alone
accounting for 29%. Perk and Five Star account for another
20%. Cadbury derives 76% of its revenues from chocolates
and other confectionery sales.
The next closest competitor to Cadbury in this segment is
Nestle 22%. Besides that large foreign brands like
Hersheys and local ones like ITC are trying to tread into
Cadburys turf. Imported chocolates are available via
modern trade in higher end
segments where Cadburys presence is arguably weaker.
To push sales further, chocolate majors have been
Targeting adult audiences. Chocolates are being presented
as snack food for the new target audiences. Another
strategy sought is the introduction of smaller editions.
Although the players have resorted to very aggressive
promotional drives, there has been stagnation
in the market from time to time perhaps, due to increase
in cocoa prices.
After the worm controversy in October 2003, there was a
meltdown in chocolate sales. Cadbury India appears to
be on a recovery path.
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Cadbury Under Microscope

Cadbury is the leader in Chocolate with 70% share. It has

actually become the generic name for chocolates in India.

Chocolate Market in India

India is the world's fastest growing market for chocolates. Registering 15%
annual growth between 2008 and 2012, the Indian chocolate industry is
projected to grow at an even higher rate in the coming years

Currently, the Indian chocolate market is worth around Rs 5,562 crore.

Cadbury Under Microscope

The Population of India in 2013 is 1.27 billion. The chocolate consumption

number comes around 2,09,550 ton.

400 Kgs of chocolate consumption in India per minutes.

Low priced unit packs, increased distribution reach and new product
launches can be said to have fuelled this growth.

The industry has a positive outlook due to phenomenal growth in the

confectionery industry, rising per capita income and gifting culture in the
country. The per capita consumption of chocolates is increasing in the
country which will continue to flourish the market revenues. It is expected
that India chocolate industry will be growing at the CAGR 23% by volume
between the years 2013-2018 and reach at 3,41,609 Tons. The dark
chocolates are expected to account for the larger market share when
compared to milk and white chocolates in the coming years. The
introduction of medicinal and organic ingredients in the manufacturing of
chocolates had lead to a new trend and development in the country, which
will be adapted by major manufacturers to remain active in the market.

Source:
Economic Times
3rd May, 2014
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Chocolate Market in India

Cadbury Under Microscope

In India chocolate consumption was very low in the early 90s but as the decade
advanced the consumption drastically increased. The late 90s witnessed a good
chocolate market condition. The chocolate market in India is dominated by two
multinational companies Cadbury and Nestle. The national companies - Amul
and Campco are other candidates in this race. Cadbury holds more than 67% of
the total share of the market. Nestle has emerged by holding almost 21% of the
total share. Apart from chocolate segment, there is also a big confectionery
segment which is flooded by companies like Parry's, Ravalgaon, Candico and
Nutrine. All these are leading national players.
The multinational companies like the Cadbury, Nestle and Perfetti are the new
entrants in the sugar confectionery market. (Management paradise) There are
several others which have a minor share in these two segments. According to
statistics, the chocolate consumption in India is extremely low. If per capita
consumption is considered, it comes to only 160gms in the urban areas. This
amount is very low compared to the developed countries where the per capita
consumption is more than 8-10 Kg. Observing this fact it would not be
appropriate to consider the rural areas of India as it will be extremely low. This
low consumption is owing to the notion behind consuming chocolates. Indians
eat chocolates as indulgence and not as snack food. The major target population
is the children. India has witnessed a slow growth rate of about 10% pa from the
70s to the 80s. But as the century advanced the market stagnated.

This was the time when Cadbury launched its product- Dairy Milk as an anytime
product rather than an occasional luxury. All the advertisements of Dairy Milk
paid a full attention to adults and not children. And this proved to be the major
breakthrough for Cadbury as it tried to break the conventional ideas of the
Indians about chocolate. One of the oldest products of Cadbury which is still
going strong is the Cadburys Five Star which was launched in the year 1968 in
India. Cadburys Five Star is the most resistant chocolate to temperature and
hence it is widely distributed all across the country.

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Chocolate Market in India

Cadbury Under Microscope

In early 90s, the Cocoa prices became high due to which the manufacturers were
forced to raise their product prices. But as the new variety of chocolate was
launched the wafer and the chocolate variety with the brand name Perk, the
volume grew significantly. In the late 90s new players like Nestle also introduced
these wafer chocolates with the name Kit Kat resulting into the growth of the
market.
Dark Chocolate is growing at a rate of 13% globally. But India is still at nascent
stage. There is less than 25% awareness amongst the young age segment.

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RESEARCH METHODOLOGY

Cadbury Under Microscope

Achieving accuracy in any research requires in depth study regarding the

subject. As the prime objective of the project is analyze the marketing strategies
of Cadbury, the research methodology adopted is basically based on primary
data via which the most recent and accurate piece of first hand information
could be collected. Secondary data has been used to support primary data
wherever needed.

Primary data was collected using the following techniques

Questionnaire Method

Observation Method

The main tool used was, the questionnaire method, observation method has
been continuous with the questionnaire method, as one continuously observes
the surrounding environment he works in.
Procedure of research methodology

Target geographic area was Kolkata

To the above mentioned geographical area questionnaire was given.
Finally the collected data and information was analyzed and compiled to arrive
at data the conclusion and recommendations given.
Sources of secondary
Used to obtain information on , Cadbury and its competitor history, current
issues, policies, procedures etc, wherever required.

Internet

Magazines

Newspapers

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RESEARCH METHODOLOGY
Data Analysis:
The data is analyzed on the basis of suitable tables by using mathematical
techniques. The technique that I have used is bar technique.

Cadbury Under Microscope

Survey design:
The study is a cross sectional study because the data were collected at a single
point of time. For the purpose of present study a related sample of population
was selected on the basis of convenience.
Sample Size and Design:
A sample of 100 people was taken on the basis of convenience. The actual
consumers were contacted on the basis of random sampling.
Research Period:
Research work is carried for 3 weeks.
Research Instrument:
This work is carried out through self-administered questionnaires. The questions
included were open ended, dichotomous and offered multiple choices.

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THE WORM CONTROVERSY

Cadbury Under Microscope

In India chocolate consumption was very low in the early 90s but as the
decade advanced the consumption drastically increased. The late 90s
witnessed a good chocolate market condition. The chocolate market in
India is dominated by two multinational companies Cadbury and Nestle.
The national companies - Amul and Campco are other candidates in this
race. Cadbury holds more than 67% of the total share of the market. Nestle
has emerged by holding almost 21% of the total share. Apart from
chocolate segment, there is also a big confectionery segment which is
flooded by companies like Parry's, Ravalgaon, Candico and Nutrine. All
these are leading national players. The multinational companies like the
Cadbury, Nestle and Perfetti are the new entrants in the sugar
confectionery market. (Management paradise) There are several others
which have a minor share in these two segments. According to statistics,
the chocolate consumpt Cadbury & the Worm Controversy
The discovery of worms in some samples of Cadburys Chocolate in early
October 2003 created one of the biggest controversies in India against a
Multi-National reputed for being a benchmark of quality.
The controversy created an deep adverse impact on the company with their
sales not only drastically dipping down, but at the same time allowing the
competitors to establish their foothold and taking maximum advantage of
Cadburys misfortune.
The controversy, and the 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 "worms controversy" 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, the sales during
festival season dropped by 30 per cent. The company saw its value share
melt from 73 per cent in October 2003 to 69.4 per cent in January 2004.
14

THE WORM CONTROVERSY

In May, however, it inched up to 71 per cent. CDM sales volumes declined
from 68 per cent in October 03 to 64 per cent in January 2004
Clearly, the worm controversy took a toll on Cadbury's bottom-line. For the
year ended

Cadbury Under Microscope

December 2003, its net profit fell 37 per cent to Rs 45.6 crore (Rs 456
million) as compared with a 21 per cent increase in the previous year.
However, Cadburys reiterated that all through the 55 years of leadership in
India that it has remained synonymous with chocolates and has remained
committed to high quality and consumer satisfaction.

15

KILLINNG THE WORMS

Cadburys Fight- Back:'Project Vishwas'-Steps to ensure quality & regain the confidence

Cadbury Under Microscope

Following the controversy over infestation in its chocolates, Cadbury India

Ltd unveiled 'Project Vishwas', 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, checked over 50,000 retail outlets in Maharashtra and replaced
all questionable stocks with immediate effect.

The Vishwas programme was intended to build awareness among retailers

on storage requirements for chocolates, provide assistance in improving
storage conditions and strengthen packaging of the company's range of
products.
Cadbury reduced the number of chocolates in its bulk packets to 22 bars
from the present 60 bars. These helped stockists display and sell the
products "safely and hygienically" 190,000 retailers in key states were
covered under this awareness programme.

16

THE BIG B Factor

The BIG B Factor
The big factor that has pushed up CDM sales is the 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 of two years.

Cadbury Under Microscope

The company believed that the reputation he has built up over the last
three decades complements their own, which was built over a period of 50
years. Yet, the entire credit of recovery could not be attributed to the brand
mascot.
Incisive action taken by the company also helped. 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. The packaging was changed to include a sealed plastic wrapper inside
the outside foil. Cadburys launched a new 'purity-sealed' packaging for its
flagship product, Cadbury Dairy Milk. The packaging is in response to
foreign bodies, notably worms, being found in its products. Over the next
few weeks Cadbury will work towards introducing either a heat-sealed or a
flow-pack packaging that offers a high level of resistance to infestation from
improper storage.
3. New advertising & promotion campaigns were in place which accounted
for an Ad spend of nearly Rs 40 crore (Rs 400 million) Cadbury invested
nearly Rs 25 crore (Rs 250 million) this year on new machinery for the
improved packaging.
Cadbury Singing Sweetly Again:-

All is well that ends well. And for Cadburys India, nothing can be sweeter

than Regaining Back the Consumer Confidence.

17