Marketing Report

Cadbury is a major player in the confectionery industry with a worldwide consumer base. The industry consists of multiple players with different sizes and resources. Cadbury is the second largest confectionery brand in the world after Wrigley. This market study aims to help Cadbury assess its progress to date and opportunities in the Indian market. This will help the company maintain and expand its customer base in Asian countries.

1.2 Current and Potential Markets

Cadbury brand now has a global presence. The top markets for their products are the United Kingdom, United States, Australia, New Zealand, India, and Canada. It also operates in more than 60 countries in the world. It has markets in more than 120 countries in the world. The European market is the largest consumer of Cadbury’s products, led by the UK. The Asia-Pacific market then follows it. These two markets consume close to half of the output from the confectionery industry collectively.

The company’s products serve several market segments. These include the health foods market, beverages market, and confectionery market. Cadbury has continuously diversified and currently manufactures products for children as well as adults.

India is a country with a big population of approximately 1.3 Billion people. This big population is a tremendous potential for Cadbury to enlarge its market base. Cadbury currently holds a staggering 70% of the Indian confectionery market.

Company Brief

Cadbury is a multinational corporation headquartered in the United Kingdom. The company was established almost two centuries ago. It is currently one of the major confectionery manufacturers in the world. It has operations in several parts of the world. Cadbury brand has also spread its market far and wide in the local and international markets. Its core business is to manufacture confectionery such as chocolates, sweets, biscuits, chewing gums among others.

The company has severally restructured to merge with or acquire other confectionery and beverage companies. These mergers include the Schweppes merger.

2.1 Customer service

The company strives to attain the highest level of customer satisfaction. Its products are therefore made with the customer in mind. The company is open for feedback and customer complaints by setting a 24 Hour toll-free customer care number.

2.2 Codes of practice

Cadbury has a detailed code of practice used for their marketing endeavours. Among the major codes include being accurate and truthful, protection of children, and attentiveness of local sensitivities among others.

Vision and mission statements

Vision

The company’s vision is: “working together to create brands people love.” This echoes the working philosophy by Cadbury workers. The vision shows that the company puts much emphasis on customer satisfaction.

Mission

Cadbury’s mission is: “Cadbury means quality: this is our promise. Our reputation is built upon quality; our commitment and continuous improvement will ensure that our promise is delivered.” The mission further reinforces their commitment to delivering quality products to their customers. It also shows the company’s commitment to innovativeness and creativity.

Company position in the market

The company has authoritatively asserted its position in the market by maintaining a global brand for close to two centuries. It is currently ranked position two as a confectionery manufacturer and marketer. Positioning occurs when a company promotes a particular philosophy until it defines the company in the customers’ mind(Etzel, Walker & Stanton, 2007). The consistent philosophy observed in the Cadbury brand is delivering more value at a less price.

Products

As expressed in its mission and vision, Cadbury is highly committed to customer satisfaction by delivering high-quality products. This has helped build the company’s positive reputation. Cadbury has a much-diversified product portfolio which covers confectionery, beverages and health foods. The major products offered by Cadbury include Dairy Milk, Éclairs, Milk Treat, Gems, Nutties, Bourn Vita, Drinking Chocolate, among others.

Cadbury is at the maturity stage of product life cycle. It has already captured a substantial market size for itself. It caters for over 70% of the current chocolate market.

Pricing

Cadbury aims at matching the price of its products with customer value. This ensures that customers’ expectations are met so that they can get the value for their money. Research shows that customers would rather pay more for a high-quality product than pay less for a substandard product(Etzel, Walker & Stanton, 2007). The company has a broad range of products to cater to different market segments. This caters for all levels of income.

New opportunity in India: Retail market expansion

India already has a relatively big market and the potential for growth is tremendous. However, the growth in demand for Cadbury products is beginning to outpace the supply. The level of production and availability of Cadbury products in existing retail stores is still low. The research team has exuded confidence in the existence of a big opportunity for Cadbury by expanding the supply.

This will entail a three step strategy. First, Cadbury will have to invest more in increasing their production capacity in India. Secondly, they will have to expand their distribution chain and enhance their footing in more retail stores in India. Finally, they will have to conduct a comprehensive promotion and advertising campaign. Advertising and promotion will help to increase the number of consumers of Cadbury products.

Benefits of retail market expansion

This strategy is a way of fulfilling the company’s promise stated in the mission of continuously improving their services. Taking the product closer to the customer will also help to improve the Cadbury brand.

This will help take the products closer to the customers in the expansive country. Low availability results to lost sales for individuals willing and able to buy, but cannot access the products due to unavailability(Peter & Olson, 2010).

It will also lead to increased sales revenue. The increase in supply volume coupled with a vibrant marketing campaign will help to drive up sales volume.

Risks of retail market expansion

Fluctuations in the cost of raw materials may result in losses. This strategy will be capital intensive which requires a good return on investment for it to be feasible. Fluctuations in input costs in the production process will make this venture unprofitable.

SWOT analysis of retail market expansion

Strengths

Cadbury is already an established brand which gives it a competitive advantage over its competitors. The strong brand image will help the company achieve the targeted sales.

The company has a good reputation internationally. A good reputation helps to boost the consumer confidence in the product, which translates into more sales.

Weaknesses

Poor distribution network continues to be a major challenge for the company in its attempt to expand its retail markets.This is partly caused by infrastructural development issues in hard to reach areas.

Opportunities

Cadbury can complement the ambitious retail market expansion strategy with e-commerce. An e-commerce strategy will help reach a wider consumer base throughout India(Peter & Olson, 2010).

Threats

There are still major competitors in the market with vast resources, such as Nestle who are working hard to increase their market share.

There have been health campaigns that advocate against the consumption of sugary foods. Most of Cadbury’s products are sugary and such campaigns are therefore gradually shrinking the confectionery market.

Impact of retail market expansion

Return on investment

This new marketing strategy will have an estimated return on investment of about 25%. This will mean a strong growth of revenue in the Indian business unit. This will lead to a positive impact on the overall business of the company.

Ethical issues

Promotional campaigns are sometimes faced with challenges concerning ethics(Sewell, 2015). For instance, different societies view the use of children for advertisement differently. Another ethical challenge is that the company wishes to increase its sales, but at the same time it is aware that excessive uptake of sugary foods is harmful to a person’s health.

7. 0 External factors that determine the financial viability

7.1Political factors

Political factors determine the impact in which the Indian government has on the Cadburys chocolate company. Aspects of taxation, trade restrictions, environmental laws, import and export laws among others are covered under political. Political factor enables the investor to ensure that the business complies with the set rules of the target company(Doole, Lowe & Kenyon, 2016). This aspect is used to determine the financial viability of the opportunity.

7.2. Social factors

Social factors are equally important in determining the financial viability of the investment. The aspects considered include beliefs, culture, and attitudes of the people towards Cadbury’s chocolate. The social factors of a particular population are shaped by ethnicity, nationality and the race. This factor will determine the financial viability of the opportunity by testing the responsiveness of the target population towards the product.

7.3. Technology

Technology affects the sales and revenue of any business in the modern world. Technology is a major factor that affects the financial viability of Cadburys chocolate. Analysis of technology will help the company realize distribution channels and a better marketing platform. A better marketing platform will impact into the increase in the sales of the product(Sewell, 2015).

7.4 Legal factors

Legal factors entail the environmental regulatory issues that involve the product. The legal aspects affect product labeling, the way of advertising the product, and the safety of the product to the consumers. The leadership of the Cadburys chocolate must ensure that their product complies with the legal requirement of India. For instance, all the products of the Cadburys chocolate company must be safe for consumption. This factor determines the financial viability by ensuring adherence to the regulations of the target market(Sewell, 2015).

8.0 Summary of the analysis

The factors above when taken into consideration puts the company in a good position and ensures the increase in the sales. Political factors in India are business friendly to attract foreign investors. This makes the management of the company confident in setting up business in India.

The management of Cadburys chocolate will also determine if the investment in India will result in profit or loss, by evaluating social factors. India’s technology infrastructure is also relatively developed. This will assist to complement the marketing strategy with technology. Legal factors in India are meant to protect the consumer and enforce fair business practices. Cadbury’s compliance department will ensure that the company adheres to all legal requirements.

9.0 Probable ROI and potential competitors

Research shows that the competition in the chocolate market has increased by a significant percentage. Cadburys chocolate, therefore, has several competitors that deal with the same products. Imported chocolate is the major competitor of Cadbury in the industry. Such companies that import include Mars and Snickers. However, the company has outpaced the local chocolate dealers such as Nestle and Cadbury. This marketing strategy will be necessary to maintain and improve this position.

10.0 ROI for the marketing opportunity

Return on investment is calculated by dividing the net income by the cost of investment. That is, Net Income = (Gain from investment- Cost of investment)

Return on Investment = Net Income/Cost of Investment

The estimated cost of this marketing opportunity is US $200 Million. The increase in net income attributable to this marketing opportunity is forecasted to be US $50 Million annually.The estimated ROI of this new marketing opportunity in India is 50/200 = 0.25

The Return On Investment will be 25%.

11.0 Changes needed to take advantage of the opportunity

Several changes can be made in the current operations to build on the opportunity. Product diversification can be used to expand the market for their products(Doole, Lowe & Kenyon, 2016). For instance, they can sell other products while maintaining their chocolates and beverages. Their products are not consumed on the regular basis because it is a confectionary industry. They can, therefore, produce other items that can be consumed daily.

The company should integrate e-commerce to boost its supply channels. This strategy will increase their sales thus increased revenue. They will have a competitive advantage over their competitors by implementing electronic commerce in the strategy.

12.0 Changes in the organization for the last five years

12.1 Palm oil saga

There were several changes made in the organization after the palm oil saga. Such changes include the sudden stop of using palm oil in chocolate and dairy milk. Palm oil is an ingredient that contributes significantly to the global warming. The management made the decision of excluding palm oil from their products after several feedbacks from the customers. The production of goods that are free from palm oil has a positive impact on the opportunity. Cadbury must ensure they avoid such mistakes as they may cripple their retail expansion strategy.

12.2Acquisition by Kraft Foods

Kraft Foods successfully took over Cadbury in the year 2010 after lengthy negotiations since 2009. The deal cost Kraft Foods US$18.9 billion for a 75% shareholding. This constitutes one of the recent major restructurings by Cadbury. A takeover like this one affects the organization by changing the organizational and management structure.

References

Doole, I., Lowe, R., & Kenyon, A. (2016). International marketing strategy. Hampshire, UK: Cengage Learning.

Etzel, M., Walker, B., & Stanton, W. (2007). Marketing. Boston: McGraw-Hill/Irwin.

Hendon, D. (2001). Classic failures in product marketing. Petaling Jaya, Selangor, Malaysia: HardKnocks Factory.

Lawley, B. (2007). Expert product management. Cupertino, Calif.: Happy About.info.

Peter, J., & Olson, J. (2010). Consumer behavior & marketing strategy. Boston: McGraw-Hill Irwin.

Sewell, J. (2015). Marketing and market assessment. Abingdon, OX [u.a.]: Routledge.