CADBURY SCHWEPPES

Launching A New Product Into A Developed Market

Introduction
Established markets generate intense competition during which new and innovative marketing
strategies are required and new and existing products are developed. As a market develops,
consumers become more experienced and discerning and look for more benefits from the products
they choose. Although some organizations products may appear unchanged at this developed
stage of a market, the more successful businesses re-work existing brands and continue to
develop new ones to meet changing consumer needs. The development of strong brands has
always been a feature of the confectionery market.

Background to the confectionery market

Per capita confectionery consumption in the UK is among the highest in the world, exceeded only
by Ireland and Denmark. Chocolate confectionery accounts for around 70of sales value in the UK
market, with sales of sweets (sugar confectionery) at around 30 per cent.

Historically, the chocolate confectionery market has been characterized by the dominance of a
number of well established brands, such as Cadbury's Dairy Milk, Mars Bar and Kit Kat. Although
some brands enjoy a rich heritage, the key need in a busy and developed market sector is
innovation, not just of existing brands but also in the development of completely new brands.

Brand-led innovation is a vital component in the growth of this market as it enables organizations
to build competitive advantage. Over recent years, competitors in the chocolate market have made
significant investments in new product development. Indeed, over 15 per cent of volume sales in
the last ten years have been generated by new products. For Cadbury, this figure is even higher,
at 20 per cent with new brand launches such as Wispa Gold and Time Out.
This case study focuses on the launch of Cadbury's Fuse. In the face of strong competition from
well-known brands in an already busy market sector, the launch of Fuse represented a significant
investment in a new brand.

An overview of Cadbury Schweppes

Cadbury Schweppes is a global business which manufactures, markets and distributes branded
products in over 200 countries. It aims to provide pleasure, taste and enjoyment through the

manufacture and marketing of a wide range of beverage and confectionery brands sold to
consumers of all ages.

Cadbury Schweppes employs over 40,000 people worldwide. The Group's strategy is to increase
profitability, brand strength and volume on a global basis in its two business streams, beverages
and confectionery, through a combination of internal growth, targeted acquisitions and joint
ventures. In the beverages business, Cadbury Schweppes is currently No 3 in global soft drinks,
where it licenses its brands to bottling partners in 92 countries and has its own or joint venture
bottling operations in a further 14 countries.

In the confectionery business, Cadbury Schweppes is the world's fourth largest supplier of
chocolate and sugar confectionery. The Group has manufacturing plants in 25 countries and sales
in a further 165. Cadbury Limited is Cadbury Schweppes' UK confectionery operation and it is
responsible for the production of all of Cadbury's best-known UK brands.

The Snack Market

It is not difficult to find out about 'snacking'. Walk into any newsagent, supermarket and petrol
station and you are confronted by many different types of confectionery, as well as different
varieties of crisps, cakes, nuts, pies and doughnuts. This is the snacking business.
'Held in the hand' categories include:

Confectionery 4.9bn (chocolate sector 3.4bn)

Biscuits 1.7bn

Snacks 1.2bn

Crisps 1.1bn

Ice Cream 0.8bn.

Snacking is said to reflect the fast pace and busy lifestyle of many people in the 1990s. It is fast,
convenient, easy and mess-free. The key snack consumers, 16-34 year olds, represent 37 per
cent of all snack buyers.

Market Research
Market research is a process designed to link managers to consumers through information. It is
used to identify opportunities and make better informed decisions about products which have future
market potential.

Market research has revealed that snacks play more of a functional role than one of pure
indulgence: they are often a meal substitute. Research also shows that successful snack brands
in the confectionery category tend to have more 'foody' values and often contain ingredients such
as cereal, wafer, biscuits, peanuts and fruit to break up the chocolate delivery.

Cadbury's philosophy is to continue as a driving force in the confectionery market, and thus
constantly analyze its offerings for consumers. The core objective of Cadbury's innovation program
is to generate incremental volume for the company and achieve the vision of market leadership in
every segment in which it operates. The role of innovation is critical as it allows Cadbury to develop
ahead of its competitors in those areas of the market which are new or growing.

Product Development
Cadbury set out two objectives for the development of Fuse:

To grow the market for chocolate confectionery.

To increase Cadbury's share of the snacking sector.

The 'Fuse' concept was developed after market research identified the growth of snacking and a
definite gap in the market for a chocolatier snack. A number of ingredients were devised and tested
following a survey which questioned consumers about their snacking habits and preferences.
A research and development team was then asked to develop a number of product recipes which
addressed the needs expressed by consumers. Not all products successfully emerge from the
product development phase.

Research and development involves combining various ingredients to develop potential new
products.
Considerable development time was spent on Fuse, carefully engineering the ingredients in order
to deliver the right balance of chocolate, food elements and texture. More than 250 ingredients
were tried and tested in various combinations before the recipe was finalized.

Any new product in the snacking sector must establish points of difference from existing products
within the market - thus creating a unique selling proposition (USP) i.e. a product with unique
appeal which is not shared by any of its competitors.

Whereas other confectionery snacking products focus primarily upon ingredients, with chocolate
used only to coat the bar, the product developers decided to use Cadbury's chocolate to 'Fuse'
together a number of popular snacking ingredients such as raisins, peanuts, crisp cereal and fudge
pieces.

Early Costumer Testing

As products are developed, they must be tested to ensure that consumers would be willing to buy
them. As approximately 85 per cent of all new products launched into the grocery and allied trade
sectors fail in their first year, extensive research helps to reduce the risk of launching a new product
into an already competitive market.
Fuse went through two extensive 'in home placement' tests. The results of these tests were
multiplied into repeat purchase and purchase frequency figures to allow Cadbury to anticipate the
volume of bars required for the launch of Fuse and post-launch.

Pack design and brand name

A key element of any new product launch is the development of a strong pack design and brand
name. The design brief for Fuse had two clear requirements:

To communicate the dynamic and slightly wacky 'personality' of the new product and create
interest at point-of-purchase (i.e. in store).

To bring the brand name to life by communicating the fusion of Cadbury's chocolate with the
snacking ingredients.

Pack Design
Packaging enables a manufacturer to convey both the tangible and intangible attributes of a
product. The packaging for Cadbury's new product sought to position it as a unique, exciting and
delicious chocolate snack which would stand out from its competitors. It was important to
emphasize the qualities and appeal of Fuse whilst at the same time reinforcing that it was a
Cadbury brand.

The packaging achieved impact by using bright, fiery colors for the product name and contrasting
them against the deep and instantly recognizable 'Cadbury purple' which communicated the
manufacturer's heritage. The colors were also used in a gun powder style to suggest an explosive
taste. The vibrancy of the design aimed to differentiate it from other products in the sector so that
it would have an immediate point-of-sale impact both on-shelf and in store display units.
Three different packaging formats were developed in order to maximize the various multi-purchase
opportunities available. The key pack size was the single bar, designed to entice trial and to
encourage repeat purchase. The 'treat size' and the multi-packs were aimed at families.

Brand name
Like packaging, brand names play a critical role in the success of a product, by helping to create
a product's 'personality'. The new product aimed to have broad appeal to 16-34 year olds, although
it was primarily targeted at 16-24 year olds.
The name Fuse was chosen to communicate the fusion of snacking ingredients. The logo was
bright and fiery with a mock fuse - alight in several places - which aimed to give the new bar the
quirky and humorous style which Cadbury sought to appeal to this younger target market.

Further consumer testing

Testing is vital throughout the entire product development process. It helps to provide valuable
information that can be used to fine-tune the product and minimize many of the launch risks.

In research, Fuse scored higher for texture, 'interesting eat' and combination of ingredients, than
its competitors and achieved the highest rating ever for a new Cadbury product - 82 per cent of
consumers rated Fuse as excellent or very good and 83 per cent said they would buy it regularly.

The launch strategy

The launch strategy of any new product is critical. Cadbury has two targets for its products - trade
customers who stock the product and consumers who buy it. In recent years, product launching
has become an art which can make or break a product. A successful launch makes potential
customers aware of the new product and keen to try it.

Before consumers could try the product, however, it was important for Cadbury to gain the support
of its trade customers. Retailers had to view it as helpful in encouraging customers to visit their
shops. If the product had failed to interest retailers and distributors, the costs of investment would
not have been met and they would not have stocked the product.

Cadbury conducted one-to-one briefings with over 70 key trade customers. This helped Cadbury
build awareness and commitment to the launch and obtain significant orders for in-store displays
and merchandising ahead of the launch date. The trade commitment was reflected in high levels
of display support in store during the launch.
Traditionally, new confectionery products are initially launched in one region of the country, in order
to gauge the product's success, before moving on to other regions over a period of time. Time Out
and Wispa Gold, for example, were launched in this way. The commitment to the success of Fuse
was so great, however, that it was Cadbury's first completely national launch for 20 years.

There were certain key requirements to the co-ordination of the launch:

Secrecy had to be paramount!

Marketers who had identified the gap in the market had to work closely with individuals from
research and development as well as other external agencies.

Manufacturing operations, in conjunction with marketing and finance, had to evaluate a new
factory investment for Board approval.

Having a catchy 'look' for a new launch helps to make consumers notice the product. Cadbury and
its trade customers managed the first availability of Fuse around one day, Tuesday 24th
September, aptly christened 'Fuseday'. This involved tight management of stock distribution, with
more than 40 million bars being moved from Cadbury depots into the trade only a few days prior
to the launch date.
Press releases were tailored to specific audiences. In each case, a strict embargo was imposed to
ensure that the impact of Fuseday was not diluted. The only exceptions were briefings with The
Grocer, and Marketing (trade publications) and The Daily Telegraph, which reviewed the product
in its business pages.

Public relations (PR) support was substantial. It told the story of Fuse, explained that it had taken
five years to develop, and involved an investment of 10 million, the development of a new plant
at Somerdale near Bristol and 4 million in advertising costs. The TV campaign and PR campaign
were so successful that Cadbury was under pressure to meet repeat orders post-launch!

Post-launch results
After a new product launch, it is important to analyze whether the product has managed to meet
its launch objectives. During 1996, the chocolate market grew by 9 per cent with 19 per cent of this
growth attributable to Fuse - a single brand which had only been available for a quarter of the year.

One way of evaluating the effectiveness of advertising and promotional campaigns is to ask market
research volunteers to identify advertisements using prompts in a recall test. The Fuse launch had
created massive awareness of the new brand, achieving greater prompted awareness than the
celebrated Wispa launch.

Within just one week of the launch, a record 40 million Fuse bars were sold into the trade and
within eight weeks of sale, Cadbury's Fuse was the UK's favorite confectionery line, outselling both
Mars Bar and Kit Kat by 20 per cent and capturing an astonishing 6.5 per cent of hand-held
confectionery product sales.
It had also contributed significantly to Cadbury's growth in 1996. The launch had exceeded
expectations, with consumers buying 70 million Fuse bars within the first three months of its launch.
Cadbury's competitors reacted to the success of Fuse by increasing their own new product activity.
Conclusion
This case study has examined Cadbury's ability to use innovation in a developed and crowded
market-place. There were three clear elements in this process:

the use of consumer research to identify a significant market opportunity

product research and development combined with extensive consumer testing

massive trade and consumer hype generated by a national launch.

Snacking remains the big opportunity to expand the chocolate market even further. As Fuse moves
through the growth phases of its product life-cycle, the next stage is to move it into the 'super brand'
league. As it does so, the key requirement will be to maintain the product's momentum by
continuing to develop innovative approaches to marketing it to consumers.

Source:
http://businesscasestudies.co.uk/cadbury-schweppes/launching-a-new-product-into-a-developedmarket/