Launching a new product into a developed market

A Cadbury Schweppes case study

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
organisations' 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.

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.

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, 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 analyse 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 favourite 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.