Cadbury India

A Marketing Project Study

Submitted by BM-B Group 3:

Swapna K (B08113)
Usha Venugopal (B08115)
Vaibhav Maheshwari (B08116)
Vishal Agarwal (B08121)
Vivek S (B08122)

1|Page Cadbury India

Introduction:
Confectionery is a unique impulse category
because it’s 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. India’s
chocolate market is dominated by two just companies—Cadbury, which entered the country 60 years
ago and has nearly 60% market share, and Nestlé, 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 Cadbury’s in
particular.
Cadbury India Limited (CIL), a part of the Cadbury Schweppes Group, is India’s leading
confectionary manufacturer. Cadbury’s Dairy Milk, 5 Star, Éclairs, 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.

Objectives:

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

Focussing on cost competitiveness, productivity and innovative utilization of assets

Energising and developing its people

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

2|Page Cadbury India

Marketing Objectives:

Double its turnover—which stood at Rs.1, 058 crore in 2006—by 2010. 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 Hershey’s, 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.

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
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

3|Page Cadbury India

Situation Analysis

Demand : Past & Future The chocolates market is estimated at around 33,000 tonnes
valued at approximately Rs 8.0 bn.
Year MT
2004-05 35.5 Cadbury is the leader in Chocolate with 70% share. It has
2005-06 38.4 actually become the generic name for chocolates in India.
2006-07 41.3
2007-08 44.2
Cadbury with its Dairy Milk, Five Star, Milk Treat, Eclairs,
2008-09 47.2
Golden, is ruling the roost. In chocolate-based drinks, it claims
2009-10 50.2
nearly 50% of the market. Cadbury India's market share in
cocoa-based products is 35%, with Dairy Milk brand alone
Lead Players accounting for 29%. Perk and Five Star account for another
20%. Cadbury derives 76% of its revenues from chocolates
Company Share (%)
and other confectionery sales.
Cadbury's 68
The next closest competitor to Cadbury in this segment is
Nestle 22 Nestle 22%. Besides that large foreign brands like Hershey’s
Amul 8 and local ones like ITC are trying to tread into Cadbury’s turf.
Imported chocolates are available via modern trade in higher-
Market Growth Rates end segments where Cadbury’s presence is arguably weaker.
1990-91 - 1996-97 6.9% To push sales further, chocolate majors have been targeting
1996-97 - 2001-02 8.9% adult audiences. Chocolates are being presented as snack food
2001-02 - 2006-07 11.5% for the new target audiences. Another strategy sought is the
2004-05 - 2009-10 7.2% introduction of smaller editions.
2009-10 - 2014-15 6.0%
Although the players have resorted to very aggressive
Market Segmentation promotional drives, there has been stagnation in the market
Segment Share (%)
from time to time perhaps, due to increase in cocoa prices.
2 to 8 years old 16
8 to 25 years old 53 After the worm controversy in October 2003, there was a
25 to 54 years old 22
meltdown in chocolate sales. Cadbury India appears to be on a
recovery path.
Over 55 years old 7
North 35
Competitor Portfolio: In the domestic market, Nestle India
East 12
has been deriving its revenues from five product baskets -
West 33
South 20
coffee (Nescafe Select, Sunrise); milk products (Milkmaid
condensed milk and ready mixes, Coffeemate coffee creamer,
Product Variation
Everyday dairy whitener); foods for infants (Cerelac, Nestum,
Segment Share (%)
Lactogen); chocolates/confectionery and malted beverages
Moulded Chocolates 50
(Milo, Kitkat, Charge, Munch, Polo); and food products (Maggi
Countline bars 33
noodles, soups). The recovery in exports and price increases in
Sugar panned 13 chocolates has helped Nestle record a healthy growth in profits
Choco panned 4 (26% at Rs 2.62 bn). Nestles' chocolate portfolio of Kitkat,
Munch and Charge has slowed down significantly. The company has ventured into new areas - liquid
milk, bottled water and biscuits.

4|Page Cadbury India

Micro-Environmental Analysis:

(1) Market Concentration & Competition

The chocolate industry is highly concentrated. Cadbury and Nestle together account for 90%
of the retail sales with Cadbury being the market leader. Competition in this industry is fierce,
especially between Cadbury and Nestle. Both Cadbury and Nestle have rival products in every
segment (Cadbury’s DairyMilk, 5 Star, Perk vs. Nestle’s Classic, bar-one, munch, etc.)

(2) Barriers To Entry

The industry’s main barrier to entry is with respect to advertising. The incumbent firms have spent
millions of rupees to create brand-loyalty with consumers. The cumulative effects of advertising
create an absolute cost advantage for the incumbent firms, thus entrants must overcome not only
current advertising efforts, but also the lingering impact of past marketing campaigns. High sunk
costs also act as a barrier to entry.
Sunk costs in this industry include establishing channels of distribution, advertising expenditures, and
initial research and development costs. All these factors create difficult barriers to entry for a new
firm entering the market and an advantage for successful first movers such as Cadbury and Nestle.
But recent happenings like Ferrero planning to start production in 2009 at a new factory near Mumbai,
and Hershey partnering with domestic confectioner Godrej Industries to distribute Hershey products
have actually changed the equation a lot.

(3) Supplier Power

Industry uses a wide range of raw materials in manufacturing chocolate products, the main ones being
cocoa beans, sugar and other sweeteners (including polyols and artificial sweeteners such as
aspartame), dairy products (including milk), gumbase and fruit and nuts.
Cadbury buys its raw materials from suppliers around the world. No single supplier accounts for more
than 10% of their raw material purchases. One of the methods implemented by Cadbury to minimise
the impact of price fluctuations and ensure security of supply is by entering into forward agreements
and long-term contracts wherever available.
Cadbury imports cocoa beans from West Africa, primarily Ghana, and the Americas. West Africa
accounts for over 60% of world production. They buy cocoa beans and cocoa butter from a range of
suppliers, and try to minimise the effect of cocoa price movements and secure our future requirements
by entering into forward and future contracts.
In order to ensure assured supply of raw material for its chocolates, Cadbury India Limited has
decided to sell cocoa seedlings to coconut farmers in Tamil Nadu at Rs 4 per seedling. A MoU was
signed between Cadbury India and the Tamil Nadu government to this effect. They purchase most of
the sugar at prices essentially set by national government through
quotas and duties. So far no difficulty has been experienced in obtaining adequate supplies of
sugar for their operations, and they do not anticipate any future difficulties, given the many available
sources.

(4) Buyer Power

End consumers have strong buyer power because of the availability of substitutes, both generic and
brand names. It is easy for a consumer to purchase a nearly identical product for a lower price. This
gives consumers a great deal of leverage and leads Cadbury to spend millions of rupees to create
product differentiation via advertisements and new products to catch up with the evolving trends in
the market.
Retail stores have significant buyer power due to their ability to charge high fees for shelf
space, which is important channel of distribution for Cadbury. Cadbury has worked hard to
build strong relationships with these retailers to minimize this affect.

5|Page Cadbury India

(5) Substitutes
The current trends in the market suggest that traditional sweets are possible substitutes for chocolates.
This is further stressed by the fact that till a few years back chocolate was not considered to be a gift
item unlike sweets. However, in recent years this scenario has changed quite rigorously because of an
innovative strategy taken up by Cadbury.
In order to strengthen the special relationship consumers share with chocolates, Cadbury India
launched its all-year-round ‘Cadbury Celebration gifting’ range with an array of newly designed
Cadbury Celebration packs. The range features a selection of stylish new packs available in
“Nutbutterscotch”, “Caramel”, “Almond Magic”, “Cashew Magic” & “Raisin Magic”. The range is
priced between Rs 145 & Rs. 155 and is available in all premium retail outlets across major towns in
India. There is also a wide selection of online vendors that offer
Cadbury Celebration range for all kinds of occasions.

Macro Environmental Factors (PEST Analysis):

Political:
• Liberalisation measures prompted by WTO affecting sales by way of competition from
imports; Direct imports from Cadbury Schweppes by dollar stores might erode market share
• Change in government policies has allowed entry of foreign players; US-based chocolate-
maker Hersheys is mulling a foray into the Indian chocolate market through its joint venture
with Godrej
• “Too good to share” Kashmir ad campaign for ‘Temptations’ (2002) lead to a major
controversy; Political parties staged rallies outside its offices and newspaper editorials
lambasted the company for its insensitivity. The Ad campaign was withdrawn and a public
apology was issued
• The Food Safety and Standard Bill, 2005 with penal provisions requires a review as the same
gives huge powers to the Inspecting Officers to seize food articles without authorization and
may create unwanted confusion to the detriment of the company

Economic:
• The prices of cocoa and milk, the chief ingredients used in chocolates, have gone up by 50 per
cent, while the price of sugar, another important raw material, has come down. The overall
input costs have gone up by 20 per cent. India imports most of its cocoa requirements and the
prices of cocoa have risen globally due to unavailability of cocoa. If the prices of these
commodities keep increasing, Cadbury will be forced to increase the prices
• Low margins, high volumes, price sensitivity of the industry and competition from cheaper
substitutes leaves little room for price manoeuvring

Social:
• In October 2003, seizure of chocolates stock from Pune plant after worms were found by
customers in Dairy Milk packages; Sales dropped by 30 percent where it was expected to
grow by 15 percent owing to the festive season; Advertisements went off air for a month and
half; To regain the lost faith of customers, Cadbury invested in technology to the tune of
Rs.15 crore, roped in Amitabh Bachchan as the brand ambassador and upped ad spends by 15
percent
• “Indianisation” of the brand to increase width of consumption by entering the Indian mind-
space - Making Cadbury a part of Indian customs and traditions – positioning chocolates as a
substitute to sweets

6|Page Cadbury India

Technological:
• Adoption of JDA software’s space and category management solution resulted in 93.75%
reduction in planning and processing time and increase in productivity
• e-Commerce has not picked up that well - not much turnover through this route – future
growth prospects of this channel

Analysis of Objectives for Cadbury and its Competitors:

Objectives Cadbury India Nestle India
Corporate Objectives • Broadening consumer appeal • Constant focus on
and extending reach to newer innovation and renovation
markets and providing greater value
• Sustained growth of market to consumers
share through aggressive • Striving for low cost
product development operation by pursuing and
• Striving for international accelerating industrial
quality in the products and restructuring and aiming for
processes manufacturing efficiency
• Focussing on cost • Regaining an impulse
competitiveness, productivity distribution culture
and innovative utilization of
assets
• Energising and developing its
people
Marketing Objectives • Setting up new capacity and • Distribution through
increasing volumes innovative consumer
• Get more people to eat more promotions and trade
chocolate, which calls for offerings and supporting
making it more affordable and key price points
being more innovative • Maintain the trust of
• Could get into new product customers on Nestle
categories like gums where the products that comes from a
global portfolio is impressive quality image that has been
• Aiming for a larger footprint in built up for over a century
the confectionery space
Advertising Objectives • Leverage further the Cadbury • To create focus on
label, which is what the nutrition, wellness and
company has been doing with fitness and the increasing
aggressive advertising and health consciousness
promotions amongst the urban
population

Cadbury’s Strategy:

Cadbury India began its operations in 1948 by importing chocolates and then re-packing them before
distribution in the Indian market. After 59 years of existence, it today has five company-owned
manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi
(Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkata and Chennai). The corporate
office is in Mumbai.

7|Page Cadbury India

Currently Cadbury India operates in three sectors viz. Chocolate Confectionery, Milk Food Drinks
and in the Candy category.

Branding Strategy:
Cadbury’s strategy to attract consumers is unique in a sense. Instead of focusing on the product, it
seeks to tap into emotions normally associated with chocolates. They have also adapted their
strategies to the unique demands of the Indian retail sector. The strategy has clearly proved successful,
as they have been able to build and maintain a leadership position in the market with many loyal
customers.

Marketing Strategy:
In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the
years. Some of the key brands are Cadbury Dairy Milk, 5 Star, Perk, Éclairs and Celebrations.
Cadbury enjoys a value market share of over 70% - the highest Cadbury brand share in the world. The
flagship brand Cadbury Dairy Milk is considered the "gold standard" for chocolates in India.
The Cadbury India Brand Strategy has received consistent support through simple but imaginative
extensions to product categories and distribution. The diversified product categories enable them to
reach out to different customer segments thus broadening their reach. While the usual brands in the
lite category are stocked at most of the mom and pop stores, and groceries, the premium brands are
sold at premium food stores and modern trade formats to achieve ‘differential visibility.

Supplier Strategy:
Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over two
decades, they have worked with the Kerala Agriculture University to undertake cocoa research and
released clones, hybrids that improve the cocoa yield. Their Cocoa team visits farmers and advises
them on the cultivation aspects from planting to harvesting. They also conduct farmers meetings &
seminars to educate them on Cocoa cultivation aspects. Their efforts have increased cocoa
productivity and touched the lives of thousands of farmers.

Advertising Strategy:
Television, the print media and posters have been the main media of communication for Cadbury’s
advertisements. However, with their understanding of the peculiarities of the Indian market, Cadbury
has also explored many new ways of getting their message across to the consumers.
Sheet Metal Dispensers: This purple salesperson for Cadbury’s is found in almost every shop stocking
their chocolates. Since it is placed on the cash counter, it’s design offers visibility, ease of vending,
and protection from the elements. It is also placed in the most appropriate position to cater to the
impulse buyers. This ‘first’ from Cadbury has become so popular that is now the standard design for
all chocolate manufacturers.

Visicoolers: Visibility for chocolates drops in the summer, as they disappear into the refrigerator. In
high throughput outlets, the visicooler serves the need for cooling while still maintaining the visibility
of the product.
Jars: These are provided to small outlets, where they are prominently displayed.
Vending machines: These high visibility machines are provided at busy locations.
Presence in Amusement Parks: Cadbury’s also maintains a presence in many amusement parks across
the country, strengthening the association of its chocolates with ‘fun’ occasions.
8|Page Cadbury India
Competitor strategy - Nestle
Nestlé describes itself as a food, nutrition, health, and wellness company. Recently they created
Nestlé Nutrition, a global business organization designed to strengthen the focus on their core
nutrition business. They believe strengthening their leadership in this market is the key element of
their corporate strategy. This market is characterized as one in which the consumer’s primary
motivation for a purchase is the claims made by the product based on nutritional content.
Cadbury’s biggest competitor, Nestle, often stresses the energy giving aspects of chocolate (for
example, in advertising for Nestle Charge), or on other attributes of the chocolate - taste in the case of
Nestle Crunch, as a light snack in the case of Nestle Bar One. Nestle specifically targets children in
the advertising for Milkybar, its white chocolate, again emphasizing its energy giving properties.
To counter Milkybar, Cadbury has the Dairy Treat - where it targets mothers by trying to convey the
message that its product is full of the goodness of milk, and so equivalent to consuming milk itself.
Bar One chocolate has been re-launched in new tastes, packaging and pack sizes. And another variant
of KitKat - white chocolate - has just been rolled out. Cadbury’s Perk parallel in Nestle - Munch Pop
in the snacking arena has also taken well.
In Nestle India per se, out of its various businesses, the revenues from chocolate segment are just 15%
of its total revenues. The focus primarily has been in the growing Indian processed foods sector,
though it comes second in the chocolate segment with a market share of 20%.

Marketing Mix

Product
Cadbury India Limited (CIL) confectionary products include Dairy Milk, 5 Star, Eclairs, Perk, Halls,
Bytes and Gems which are the largest selling brands in their segments.
Cadbury’s Dairy Milk (CDM) is its flagship brand, having a market share of 30% and average daily
sales of 1 million bars. It also introduced ‘Cadbury Celebrations’ range with an array of newly
designed Cadbury Celebration packs for various festivals.
Its closest competitor Nestle, comes second with a market share of 22% and comparatively less
diversified products in chocolates. Its products are Kit-Kat, Munch, Milky-bar, Charge, Classic, Polo.
Kit-Kat is their premium brand in chocolates. In Nestle, the diversification and revenues across other
segment like snacks, coffee, milk products, infant food, beverages is higher.
While Cadbury gets 76% of its revenues from Chocolates and Nestle a much lower proportion we
observe that Cadbury’s primary focus is in the Chocolate segment. It no doubt has an edge in the
premium chocolate segment. Cadbury is considering diversifying into other segments too.

Pricing
The price charged for a chocolate bar can determine whether a consumer will buy it and the level of
sales achieved can determine whether or not Cadbury will make a profit. Price is also affected by
factors such as the state of the economy, what competitors are charging, the stage reached in the
products life cycle and above all what price the Indian market will bear. Cadbury products are in the
range of Rs10 to Rs 20 and has also introduced the ‘Cadbury Celebration gifting’ ranges available in
“Nutbutterscotch”, “Caramel”, “Almond Magic”, “Cashew Magic” & “Raisin Magic”. The range is
priced between Rs 145 & Rs. 155. The entire Cadbury Celebrations line notched a 25% growth in
sales for the fiscal year ending March 2007. It has many variations: The basic range is priced between
Rs 60 and Rs 100. The panned/gift range is Rs 145-155. Cadbury’s Heroes is Rs 50-Rs 100. The Rich
Dry Fruit collection will be in the region of Rs 200-500. The entire line is distributed nationwide at

9|Page Cadbury India

175,000 outlets and the panned or gift line is sold at 100,000 outlets across one-million-plus
population towns and cities.

Cadbury Nestle
5 star Rs 5 – 10 BarOne Rs 5 – 10
Perk Rs 5 – 10 Munch Rs 5 – 10
Celebrations Rs 60 - 155 -
- Kitkat Rs 6 – 24
Temptations Rs: 30 - 60 -
Gems Rs 10 -
Figure 1: Prices of Cadbury products and it’s Nestle equivalent
Promotion
The basic purpose of promotion and advertising by Cadbury is to make Cadbury synonymous with
chocolate and -

• Educate the market

• Build brand awareness
• Increase consumption
• Encourage seasonal purchases

Promotion Strategies:

• Use of emotional appeals in advertising

• Customer surveys as a means to align the advertisements with evolving sets of customers.
• Packaging as a tool to communicate quality

Till the mid-nineties, Cadbury’s marketing communication campaigns for CDM were targeted at kids.
The advertisements focused on the relationship between the parents and their children, where parents
expressed their love by gifting the child a Dairy Milk. However, Cadbury changed its tack and the
communication campaigns were targeted at adults, to expand the chocolate market and increase sales.

Place
Cadbury India has manufacturing locations at Thane, Pune, Himachal Pradesh, Gwalior and
Bangalore and has Cocoa operations at Cochin. Cadbury's distribution network reaches out to six lakh
outlets each for its confectionery and chocolate brands. Chocolates need to get retailed at larger and
better outlets while all the products below Rs 3 need a different distribution network. Chocolate needs
to be distributed directly, unlike other FMCG products like soaps and detergents, which can be sold
through a wholesale network. 90% of chocolate products are sold directly to retailers. Distribution, in
the case of chocolates, is a major deterrent to new entrants as the product has to be kept cool in
summer and also has to be adapted to suit local tropical conditions. Cadbury's distribution network
used to encompasses 2100 distributors and 450,000 retailers. The company has a total consumer base
of over 65 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 in summer, when sales usually dip due to the
fact that the heat affects product quality and thereby off take. To avoid cannibalization of its higher
priced products from lower priced ones, Cadbury is setting up two separate distribution channels –
one for Core business & other for Mass markets, with different stockists, wholesalers and retailers.
One set will be dedicated to Cadbury’s high-end products and traditional chocolates. The other will
cater to the mass market brands namely Chocki, Halls, Eclairs et al — all products priced below Rs 3.

10 | P a g e Cadbury
India
But today, Cadbury's distribution network reaches out to six lakh outlets each for its chocolate &
confectionery brands (i.e. total reaching12 lakh outlets).

Analysis of Value chain

The last few years have seen the company invest heavily in the entire value chain to successfully
combat competition and continually move the market to the next stage of evolution.
o At Cadbury India they believe that effective communication and availability of information 'at
the right time and the right place' is critical for an edge in business. In order to achieve this
they realized the importance of and have in place, an effective IT infrastructure. Through IT
investment, they aim to
o Remain competitive in the fast changing environment.
o Incorporate best practices in the business processes.
o Arrive at uniform software and business practices globally within Cadbury Schweppes.
o Achieve flexibility of systems to keep pace with changing environments.
o Increase speed of response to business processes.
o Minimise working capital.

o Cadbury continued to make significant investments in the information Services/ Technology

area to cope with the growing needs necessary to manage operations more effectively in
complex supply chain management. Technical expertise in various forms of information
technology enabled the business of company to grow and sustain.

• New Technology:
o A Wide Area Network comprising of 31 VSATs across the country connect the branch
offices, factories, depots and the corporate office. This is used for e-mail and accessing
SAP/R3, which is the application package, used across the Cadbury Group. The
implementation of SAP gives them up-to-date information in terms of stocks at factories and
depots, sales across the country, and the financial impact of all the above transactions at any
given moment of time.
o The company being a part of the Cadbury group benefits from its access to proprietary
technology, technical expertise and the fruits of the extensive centralized Research and
development. The diversified knowledge and expertise have contributed significantly to the
operations of the company over the years. Some of the key areas, which have benefited are:
o Benchmarking of products against competition to achieve an advantage in product
quality, for increasing competitiveness.
o Access to latest technological developments, such as Spear-point technology for cocoa
based products implementing during 2000, which would improve quality and
competitiveness.
o Enhancement of skill and competence of company personnel due to training received.
o Implementation of environmentally sound business.

• Trade Marketing: Chocolate and Confectionery purchase being impulse led, demands eye
catching, on-the-cash-counter visibility in as many of these outlets as possible. In order to best
meet their dealer's display and vending needs, they have invested in an array of inputs to the trade.

• The Sheet Metal Dispenser: This ubiquitous, purple salesperson for Cadbury is found in almost
any shop stocking their chocolates. While being on the cash counter, its unique design offers
visibility, ease of vending and protection from the elements. Available in various sizes, it can
meet the needs of any outlet. This 'first' from Cadbury, has become so popular, today it is the
standard dispenser design for all chocolate manufacturers.

11 | P a g e Cadbury
India
• Visicoolers & Refrigerators: Come summer, visibility for chocolates drop as they disappear into
the refrigerator. In high throughput outlets, the visicooler with a glass front not only maintains eye
contact with the consumer, but offers perfect chocolates throughout summer as well.

• Vending machines: First introduced in the country by Cadbury, these impressive coin operated
machines can be seen dispensing chocolates in high traffic areas from the World Trade Centre at
Mumbai to New Delhi railway station. Nowadays vending machines of Amul and Nestle can also
been seen everywhere in the market. Vending machines have formed a part of selling products
saving on sales person and opening shops.
• Chocolates are primarily sold through Kirana Stores, Gift stores, Medical Stores, canteens, Pan-
Bidi stores, Bakeries, Sweet Shops etc. This is true for Cadbury also. The space allocated for the
chocolates was less when compared to the total area of the shop. Of the space allocated for
chocolates, Cadbury brands occupied more than Nestle brands.

Profits (In Rs Crore)

Company\Year 2003 2004 2005 2006 2007

Cadbury India 45.65 41.29 45.95 68.81 117.65

Nestle India 263.08 251.92 309.57 315.10 413.81

Figure 2 : Profit figures for Nestle and Cadbury India division over the years
Note: Profits are of complete group and not restricted to chocolate segment only.

Product Innovation and Revamping

Cadbury
At Cadbury, careful screening of the ideas is carried out to see whether they are economically and
technically viable and whether consumers would be interested in such new concepts. Ideas must be
relevant. Business analysis involves financial, technical and sales forecasting to estimate the potential
for the ideas. ‘Market needs’ must match the technological possibilities or the new product could end
up being far too expensive to produce. Actual product development follows if these two hurdles are
passed. Ideas are translated into real products which can be packaged, promoted and launched.
Questions that arise include – recipe – are the ingredients economically readily available; process –
does machinery exist that is able to meet the needs previously identified such as shape, size and form;
packaging - is it suitable to withstand being transported from A to B?. New product performance must
be consistent before the project moves on. Production run after production run is carried out on a pilot
scale during development to get it right.

Marketing development plans are drawn up at the same time. A suitable name must be chosen and
registered; it must be unique to the product and in today’s business arena, it should be capable of
international use. Careful checks must be made to ensure that the selected name does not mean
something different in other languages. Pack design must be finalised making sure that it is in line
with product targeting in the market place. Certain styles appeal to different age groups and use of
cartoon characters for children’s products can be hazardous as tastes and fashions change rapidly!
While deciding final price, Cadbury has to be sure that a top-quality product can be produced and
distributed, with margins for the company, wholesalers and retailers, within the price that the
consumer will be willing to pay.
Recent Product Launch: Cadbury Lite (Feb 2008) is the first ‘No added sugar’ product in the Cadbury
India portfolio and will mark the company’s foray in catering to specific dietary needs of consumers.
Cadbury Lite is currently being launched in Tamil Nadu and Andhra Pradesh markets and will roll out
12 | P a g e Cadbury
India
to the other states in a phased manner. The 40g bar is priced at Rs. 28. An integrated marketing
campaign will be launched in the second week of March to create awareness around the product. The
360-degree marketing communication will encompass TV, Print, Outdoor, tie-ups and sampling
activities in Modern Trade chains, Chemists and other key retail outlets.

Nestle
The Company sustained momentum during the year by driving distribution through innovative
consumer promotions and trade offerings and supporting key price points.
High temperatures are a typical characteristic of Indian subcontinent. Chocolate starts melting at such
high temperatures thus making chocolate unfit for consumption. Hence, Nestle introduced an
innovative Liquid Chocolate – Choco Stick at a price tag of Rs. 2/- which was an instant hit.
Nestle Munch, which is the largest selling unit in the wafer segment and the most widely distributed,
continued to gain in volumes. Nestle Chotu Munch, which was launched at Rs. 2/- price point, was
well received.
A range of other innovative and renovated products were launched which included Nestle
Milk Chocolate, Nestle Fruit & Nut, Nestle Krunchy, Nestle Milkybar Starz, Nestle Choo, Nestle
Chocolate Eclairs, Nestle Coffee Eclairs and various flavours for Chocostick,

The company, in March 2008, launched two new products under its Kit Kat brand. While the Kit Kat
Mini, priced at Rs 2, follows the similarly priced Munch version into rural markets, Kit Kat Chunky
will allow customers controlled indulgence. The chocolate comes in three portions of 64 calories
each, in line with Nestlé’s focus on nutrition, wellness and fitness and the increasing health
consciousness amongst the urban population. The company is focused on growing its market share
through renovation and innovation of its existing brands in India. Last year, it launched Munch Choc
Pop, wafer cubes covered in chocolate. Their distribution reach is the largest in the category and are
building on that. The Munch brand alone reaches over a million retail outlets.

Differential Advantage for each company in terms of various factors:

Brand Building: Since its inception, Cadbury in India has stayed ahead thanks to their constant
marketing initiatives, that have at all points in time understood the needs of and opportunities in a
changing nation but Nestle had stood firm in second position resulting from their responsibilities and
providing quality products.

• Wide variety of brands:

o The '60s was a decade which saw the launch of brands that are etched in the hearts of
generations of Indians - Tiffins, Nut Butterscotch, Caramels, Crackle, 5 Star and Gems. It was
a strategy that introduced consumers to a variety of tastes and product forms leading to a
rapid increase in chocolate consumption.
o Nestle has been continuously working on the new products as per the needs of the consumers.
Since the launch they have introduced many new products, which has placed a sweet taste in
the heart of the customers. They have provided various products with different taste such as-
Nestle classic, Bar one, Kit Kat, Fox, Crunch, Milky bar, Nestle éclairs etc.

• Quality products at low price:

o Cadbury's Eclairs was launched in 1972, at the then princely sum of 0.25p and was an instant
hit. It continues to be one of the biggest brands in the Cadbury portfolio and offers the lowest
price point at which consumers can experience the real taste of chocolate. But as compared to
other companies the price are very high because of lack of competition.
o Quality is the cornerstone of the success of the Nestlé Company. Every day, millions of
people all over the world show their trust in the company by choosing Nestlé products. This

13 | P a g e Cadbury
India
 trust comes from a quality image that has been built up for over a century. They provide
products of all range i.e. for Polo the price changes from 1 Rs. to 3 Rs. and 7 Rs. also.

• Innovative & attractive packaging:

o In the years that followed, 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 with different pack sizes, at various price points. The now
ubiquitous Sheet Metal Dispenser seen on cash counters of thousands of shops for dispensing
chocolates was an innovation that helped brand the color purple in the minds of the Indian
consumer.

• Timely expansion of market:

o In the 90's Cadbury realized both the scope and the need to expand the market. Hitherto
perceived only 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 childlike spontaneity in every adult.
o Moulded chocolate and éclairs also showed satisfactory growth. This has also helped in
improving the infrastructure and distribution reach of the company in chocolate and
confectionery segment.
.
• Constant diversification:
o 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 in 1998, which
with its unique, multi-ingredient construct, promises to take chocolates straight into the realm
of snacks. With the introduction of Gollum and Frutus Cadbury has taken the market by
surprise.
o In the area of chocolate and confectionery Nestle Munch wafer biscuit with chocolayer,
which was launched in select markets in 1999, was rolled out nationally during 2000 and had
good growth. Continuing with the efforts to meet consumer expectation on price points, the
pricing of KitKat was also reduced during the later half of the year.

• Commitment of expansion:
o With the launch of Trebor Googly, the tangy, fizzy candy, Cadbury took the market by
surprise and marked the entry of Trebor into the fast growing Indian sugar confectionery
market. The extension of Googly to a Mint flavour reinforces Cadbury's commitment to
establish the Trebor name as a strong player in the value added sugar confectionery market.
o Nestle who initially developed their market in urban areas is now expanding in the semi-
urban and rural markets. They are providing various products at very low price. They had
polo a mint with hole and now they have the remains of the hole of polo in cachets.

• Repositioning:
o Cadburys has also been repositioning its products for children to adults and for celebrative
occasions. A repositioning campaign was arranged for dairy milk that showed adults doing
unconventional things (like a lady breaking into a jig in the middle of the overflowing cricket
stadium) driving home the message that adults could enjoy chocolate as well.
o For 50 years, Cadbury's has successfully played the role of market leader and market maker
by building brands that have a large base of loyal consumers. The last few years especially,
have seen the company invest heavily in the entire value chain to successfully combat
competition and continually move the market to the next stage of evolution. Nestles had build
their brand base in coffee ‘Nescafe’ has recently introduced themselves in the market
providing India with various taste in chocolate segment.

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 • Trade Marketing: Chocolate and Confectionery purchase being impulse led, demands eye
catching, on-the-cash-counter visibility in as many of these outlets as possible. In order to best
meet their dealer's display and vending needs, they have invested in an array of inputs to the
trade.

• Jars:
o Outlets like the neighbourhood Paan shop have just enough places for simple dispensers like
jars. Attractive jars / merchandising units in such shops ensure places of pride for Cadbury.
o Nestle also provide free jars with many of their products which is easily available in any retail
shop. By purchasing the product, getting the jar free; attracted a large number of customers.
This offer has proved successful in India.

• Amusement Parks & Tourist places: Cadbury's presence in the premier amusement parks
such as Esselworld and Appu Ghar adds to the magic of chocolates by 'coming alive' for the
consumer. Even Amul can be seen in nearly all the places all over India. Amul milk and other
products individual stalls can be seen out of many famous places that are normally visited by
tourist like Taj Mahal, Hawa Mahal etc. Nestle also has received considerable place in parks
like Fantasy-land, Suraj water park etc. in Mumbai.

Expected future strategies

• Opening up of Café Cadbury: In the UK, Cadbury Schweppes has opened up its first Café
Cadbury in Bath. There is a lively buzzing café on the first floor, and a relaxed, indulgent
lounge on the second floor. The ground floor features a retail shop with premium chocolates
and merchandise. The concept is modern, contemporary and simple, the ambience warm and
friendly. Cadbury might replicate the model in India soon.
• Large foreign brands are entering the Indian market. The $5 billion global brand Hershey’s
has inked a joint venture with Godrej Beverages & Foods, to create a new company, Godrej
Hershey Foods & Beverages (GHFB). GHFB’s mandate isn’t too different from Cadbury’s
and Cadbury runs the risk of losing market share to such new players as well as to premium
imported chocolates. The game plan is to leverage further the Cadbury label with aggressive
advertising and promotions. Cadbury needs to succeed in growing the market. It has to stick
to its low price points even as input costs keep increasing. Price hikes could erode volumes.
• Cadbury wants to double its turnover by 2010, which calls for a growth rate of over 20
percent annually. It could get into new product categories like gums where the global
portfolio is impressive.
• Cadbury can introduce an Energy bar in the Indian market to target the health and sports
conscious people. Cadbury Schweppes has already launched ‘Boost Guarana’, a new
chocolate countline bar which the company claims is the first mainstream chocolate bar sold
in UK with proven energy stimulation properties. There is scope for introducing the same in
India.
• Cadbury India wants to enhance its share of chocolate confectionery from 6% to 8% in
impulse category. There is good scope to further widen its reach in the target urban
population. Penetration in small towns needs to be increased. This can be addressed through
new and unconventional channels with highly focused servicing areas.
• Cadbury can take up E-commerce initiatives like direct websites (B2C) and push B2B
through Distributors portal, Information Management and better Working Capital
Management. This will unlock lot of cash which can be ploughed back to grow the business.

15 | P a g e Cadbury
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Consumer behaviour in Indian Chocolate Market

Chocolates are consumed as indulgence and not as snack food, as prevalent in western countries.
Almost 75% chocolates and 90% confectionery are impulse purchases. Chocolates are bought
predominantly by adults and gifted to children. Direct consumption by adults has also increased.
In contrast, over 90% of confectionery products are purchased by children between the age of 6 and
14, directly. In most cases, parents do not approve of confectionery consumption, and children buy
out of their pocket money. Chocolate consumption is concentrated largely in metropolitan cities.
Confectionery consumption is wide spread. The unorganized sector has a greater dominance in rural
areas.
Confectionery consumption has a seasonal pattern. Sales peak of confectionery is in winter months
from November to February. Off-take is lowest in the summer months as schools are closed and
therefore children's pocket money is lower. Also in monsoon consumption falls as children are out of
home for lesser time. Between February and April pressure of examinations causes lower sales.
Brand loyalties are weak in confectionery products. Children look for novelty and excitement. Most
purchases are impulse driven and POP retail displays (dispensers, etc) play an important role.
Promotions such as stickers, cricketer/ star pictures have tremendous impact.
Cross elasticity of demand - Different products amongst confectionery such as hard boiled sugar
candy, bubble gum etc compete inter se and also with ice cream and chocolates. Confectionery market
is extremely price sensitive. Re 1 is considered premium pricing. When raw material prices escalate,
marketers find it difficult to pass on the same due to problems of coinage.
Grown up adults feel guilty about eating chocolate, akin to stealing a child's food. Now days the
consumption of chocolates has even more decreased because of preparing of chocolates at house.
Many people for fun sake or during occasions prepare chocolates rather than bringing for market.
Women has started classes for teaching preparation of chocolates at home which is comparatively
cheaper and looks good if given to guest by name of homemade rather than a market chocolate. Many
people have also started it as a business by selling on small scale and even selling to local shops for
cheaper rates.

Segmentation
The Indian chocolate industry is extremely fragmented with a range of products catering to a variety
of consumers. We have the bars/slabs, jellies, lollipops, toffees and sugar candies. Given India's
mammoth population, it comes as a surprise that per capita chocolate consumption in the country is
dismally low - a mere 20 gms per Indian compared to over 7 kgs in most developed nations. However,
Indians consumed 41 MT of chocolate last year and consumption
is growing at 15-20 percent annually.
Both chocolate and sugar confectioneries have abysmally low
penetration 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 a similar rate in the next five years.
The market presently has close to 60mn consumers and they are
mainly located in the urban areas. Growth will mainly come
through an increase in penetration as income levels improve.

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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 in Rural Areas. “Average summertime temperatures
reach 43 degrees Celsius in India. Chocolate melts at body temperature of 36 degrees.”
Low priced unit packs, increased distribution reach and new product launches can be said to have
fuelled this growth. The launch of lower-priced, smaller bars of chocolate in the last two years and
positioning of chocolate as a substitute to traditional sweets during festivals, have boosted
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 and other cocoa-based snack foods were looked upon as food suitable only for the well-
off.
After economic liberalization in 1991, major changes have occurred in food habits, partly on account
of rise in gross domestic product (GDP) growth and higher purchasing power in the hands of the
middle-class representing a third of the total population. Availability of chocolate products has also
exploded.

Targeting
For 50 years, Cadbury's has successfully played the role of market leader and market maker by
building brands that have a large base of loyal consumers. The last few years especially, have seen the
company invest heavily in the entire value chain to successfully combat competition and continually
move the market to the next stage of evolution. Traditionally, chocolates were always targeted at
children. In fact, till the mid-nineties, Cadbury’s marketing communication campaigns were targeted
at kids. The advertisements focused on the relationship between the parents and their children, where
parents expressed their love by gifting the child a Dairy Milk. But stagnancy in growth rates made the
companies re-think their strategies.
In 1994, Cadbury India Ltd. changed its tack and the communication campaigns were targeted at
adults, to expand the chocolate market and increase sales. Since low margins, high volumes, price
sensitivity and high advertising expenses characterize the Chocolate industry, Cadbury’s long term
strategy is to target lower price points in the chocolate segment to help pep up volume growth.
Cadbury 'universalized' the chocolate market. The multi-award winning advertising campaign - 'The
Real Taste of Life' - was launched, capturing the childlike spontaneity in every adult. Cadbury has
well adjusted itself to Indian custom. It has properly repositioned itself in India whenever required i.e.
from children to adults, togetherness bar to energizing bar for young ones etc.

Positioning
Cadbury had its tryst with India when it kick-started operations in 1947. Today the brand claims a
70% share of the Indian chocolate market, despite heavyweight competitors like Nestle and domestic
giants like Amul. With more than 50 years of its existence in India, Cadbury has built powerful brands
for itself in the country like Five Star, Perk, Gems, Clorets or even the good old Cadbury diary milk.
However, it was the real taste life campaign, which changed the fortunes of the company. For
decades, Cadbury had existence in India, but the common perception was that “Chocolate is for
children only”. This norm was to be broken to expand the Chocolate market share. Cadbury
successfully achieved this through the repositioning exercise through Cadbury Dairy Milk (CMD) and
the launch of Perk.

17 | P a g e Cadbury
India
A repositioning campaign was arranged for dairy milk that showed adults doing unconventional
things (like a lady breaking into a jig in the middle of the overflowing cricket stadium) driving home
the message that adults could enjoy chocolate as well.
In order to make chocolates more acceptable and accessible amongst adults and erase the kiddy
connotations, Cadbury in the last two-three years has positioned a number of its major brands as an
indulgent, adult treat. Cadbury's India Ltd. tops in Advertising with 52% share of the Chocolate
advertising pie on television.
Cadbury has successfully transformed its brand image from children to adults by convincing people
that happiness and successes should be celebrated with Cadbury. This has led to a major thrust in
increasing the number of distributors and retailers across the country with the result that Cadbury
chocolates are available at any paan and cigarette shop in every nook and cranny of India.
Cadbury has soon replaced “Mithai Ka Dibba” as gifts even at weddings by “Cadbury Celebrations”.
It has also convinced people to give Cadbury chocolates as gifts, prizes and a fun confectionary to
munch. Cadbury reinforced the market once again with vision, “A Cadbury in every pocket”, “khaane
walon ko khaane ka bahana chaahye”, “and kuch khaas hai zindagi mein “and” maza aa gayaa”. In the
past couple of years in the face of increasing competition from Swiss chocolates major Nestle India
and the home-grown Amul, Cadbury has been pushing its products aggressively and targeting the
adult audience especially to expand the market.
Cadbury’s strategy to attract consumers is somewhat unique in a sense, instead of focusing on the
product; it seeks to tap into emotions normally associated with chocolates. They have also adapted
their strategies to the unique demands of the Indian retail sector. The strategy has clearly proved
successful, as they have been able to build and maintain a leadership position in the market with many
loyal customers.
Cadbury has followed a well-planned strategy of fuelling volume growth by introducing smaller unit
packs at lower price points. Simultaneously, the company seems to have astutely juggled with the
larger pack sizes and raised prices to a degree higher than what appears at face. The strategy has
driven volumes in the last two years and the volume growth is expected to continue in the coming
years.

Assumptions in Planning Process

Marketing plans for the following years are usually drawn out for 3-5 yrs with suitable forecasts and
assumptions. Several tools such as past data, market research, expectations, expansions plans are
taken into accounts while making such assumptions.

Marketing Potential Assumptions:

• In order to increase their market share, they intend to increase the market demand for
chocolate through innovations and affordability. It assumes to contain the price and make it
affordable inspite of the rising raw material prices. Cadbury is associated with its flagship
brand – ‘DairyMilk’. Moving beyond this image, it intends to innovate and compete with the
several foreign brands entering Indian markets.
• It intends to increase its brand value by diversifying its global portfolio. This may increase the
revenues of Cadbury in general, but may or may not contribute to its market share in the
chocolate (confectionary) segment.

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Forecast Assumptions:

• Cadbury’s forecast that its market share would double from 2006-2010, which means about
20% growth annually. In order to attain this, they plan to add new capacity. They assume that
new capacity would be operational and also meet the required market demand by 2010
• Cadbury India is the leader in the chocolate segment with about 70% market share. With
increasing number of foreign brands entering the Indian markets, Cadbury would face a stiff
competition. It assumes it could continue to maintain its leading share with increase in
innovations, affordability and branding.

Other Assumptions:

Cadbury will continue to build up on its position in Indian Chocolate market. It can be safely said that
Chocolate consumption will continue to rise in India both in rural and urban markets. There is a lot of
potential for growth and a huge population who do not eat chocolates even today that can be
converted as new users. But performance of Cadbury will also be dependent on these factors:
Good monsoon ensures adequate availability of raw materials, which are mainly agricultural in nature.
Raw material prices have significant influence on margins.
Government policies in terms of licensing, duties, movement of agricultural commodities etc. also
affect the introduction of products, time lag for a product launches, taxes, excise, etc all influence the
business.
Market growth driven by overall economic growth and urbanization also contributes. An overall
booming economy will consume tonnes of chocolates because consumer spending increases. Also, the
absolute number of consumers in middle class & upper middle class increases.
Rupee depreciation improves export realizations; however it also makes import of raw material (esp.
cocoa) expensive.
Impact of imported brands. Usually, these imported chocolates taste better than domestic chocolate
due to recipe difference. Hence consumers who are willing to spend a little more, prefer these
imported chocolates. However, the premium brands, which come through official channels, do not
pose a threat to the market, as these cater to a small niche market.

Customer Target:
The Chocolate market presently is close to 60mn consumers and they are mainly located in urban
areas. Cadbury's has successfully played the role of market leader and market maker by building
brands that have a large base of loyal consumers. Cadbury had its tryst with India when it kick-started
operations in 1947. Today the brand claims a 70% share of the Indian chocolate market, despite
heavyweight competitors like Nestle and domestic giants like Amul. With more than 50 years of its
existence in India, Cadbury has built powerful brands for itself in the country like Five Star, Perk,
Gems, Clorets or even the good old Cadbury diary milk. The last few years especially, have seen the
company invest heavily in the entire value chain to successfully combat competition and continually
move the market to the next stage of evolution. Traditionally, chocolates were always targeted at
children. In fact, till the mid-nineties, Cadbury’s marketing communication campaigns were targeted
at kids. The advertisements focused on the relationship between the parents and their children, where
parents expressed their love by gifting the child a Dairy Milk. But stagnancy in growth rates made the
companies re-think their strategies. This norm was to be broken to expand the Chocolate market
share.

19 | P a g e Cadbury
India
Cadbury successfully achieved this through the repositioning exercise through Cadbury Dairy Milk
(CMD) and the launch of Perk. It changed its track and the communication campaigns were targeted
at adults, to expand the chocolate market and increase sales. Cadbury 'universalized' the chocolate
market. The multi-award winning advertising campaign - 'The Real Taste of Life' - was launched,
capturing the childlike spontaneity in every adult. Cadbury has well adjusted itself to Indian custom.
It has properly repositioned itself in India whenever required i.e. from children to adults, Togetherness
bar to energizing bar for young ones etc. Cadbury in the last two-three years has positioned a number
of its major brands as an indulgent, adult treat. It has successfully transformed its brand image from
children to adults by convincing people that happiness and successes should be celebrated with
Cadbury. This has led to a major thrust in increasing the number of distributors and retailers across
the country with the result that Cadbury chocolates are available at any paan and cigarette shop in
every nook and corner of India. Cadbury’s strategy to attract consumers is somewhat unique in a
sense, instead of focusing on the product; it seeks to tap into emotions normally associated with
chocolates.
Competitor Target:
In the domestic market, Nestle India has been deriving its revenues from five product baskets - coffee
(Nescafe Select, Sunrise); milk products (Milkmaid condensed milk and ready mixes, Coffeemate
coffee creamer, Everyday dairy whitener);foods for infants (Cerelac, Nestum, Lactogen);
chocolates/confectionery and malted beverages (Milo, Kitkat, Charge, Munch, Polo); and food
products (Maggi noodles, soups).
Nestlé describes itself as a food, nutrition, health, and wellness company. Recently they
created Nestlé Nutrition, a global business organization designed to strengthen the focus on
their core nutrition business. They believe strengthening their leadership in this market is the
key element of their corporate strategy. This market is characterized as one in which the
consumer’s primary motivation for a purchase is the claims made by the product based on
nutritional content.
Nestle, often stresses the energy giving aspects of chocolate (for example, in advertising for Nestle
Charge), or on other attributes of the chocolate – taste in the case of Nestle Crunch, as a light snack in
the case of Nestle Bar One. Nestle specifically targets children in the advertising for Milkybar, its
white chocolate, again emphasizing its energy giving properties. To counter Milkybar, Cadbury has
the Dairy Treat - where it targets mothers by trying to convey the message that its product is full of
the goodness of milk, and so equivalent to consuming milk itself. Bar One chocolate has been re-
launched in new tastes, packaging and pack sizes. And another variant of KitKat - white chocolate -
has just been rolled out. Cadbury’s Perk parallel in Nestle - Munch Pop in the snacking arena has also
taken well. In Nestle India per se, out of its various businesses, the revenues from chocolate segment
are just 15% of its total revenues. The focus primarily has been in the growing Indian processed foods
sector, though it comes second in the chocolate segment with a market share of 20%.

PRODUCT MIX – CHOCOLATES (Past and Present)

PRODUCT BASKET

Bars Dairy Milk Count Lines

Plain 5 Star Crunchy

Fruit n Nuts Milk Treat Chocolate
Roasted Almond Orange
20 | P a g e Cadbury
India
Chunky Wafer Chocolate Perk
5-Star Perk XL

Cadbury’s Dairy Milk (CDM):

Cadbury’s Dairy Milk is the flagship brand of Cadbury’s not only in India but worldwide. CDM is the
single largest selling unit in India. It has annual sales to the tune of Rs 200 crore. CDM not only
accounts for 30 per cent of the total chocolate market in value, but commands nearly 26 per cent in
volume terms and close to 30 per cent of Cadbury’s annual turnover.
Moving from a predominantly adult positioning in the days of the legendary dancing girl ad, to the
teens and the tweens, when the Cyrus Broacha ads hit the airwaves, CDM has made a long sweet
journey. In spite of the new categories being explored by Cadbury, its star brand remains Cadbury
Dairy Milk (CDM) which continues to corner almost 30 per cent of the chocolate market.
Cadbury’s Temptation:
Cadbury’s Temptation is premium chocolate brand aimed for high value consumption. Various
variants available are Almond, Rum, Cashew & Orange. Cadbury’s temptation is priced at Rs. 40
Cadbury’s Celebration
Cadbury India launched its premium Celebrations range, which contains traditional Indian dry fruits
wrapped in Dairy Milk chocolate. This gifting option combines the pleasure of giving away dry fruits
— which Indians traditionally consider a premium, healthy gift — with chocolate. Cadbury now has
90 per cent market share in this profitable segment.
5 Star:
Consumer feedback suggested that the old 5 Star was too chewy, and people complained of it sticking
to their teeth. It was made softer and melted easily in the mouth & introduced as 5 Star Crunchy.
Perk:
Perk was made much lighter and the size of the bar increased to match Nestlé’s Munch. Perk had been
under fire from Nestlé’s deadly duo of KitKat and Munch, but after the re-launch, its
market share is two per cent more than KitKat’s. And, the five-year-old brand is now almost as big as
the decades-old 5 Star in size, both in the region of Rs 50-55 crore.
Éclairs:
Cadbury's Éclairs was launched in 1972, at the then princely sum of 0.25p and was an instant hit. It
continues to be one of the biggest brands in the Cadbury portfolio and offers the lowest price point at
which consumers can experience the real taste of chocolate. But as compared to other companies the
price are very high because of lack of competition.
Heroes:
Packaging innovation has played a vital role in revamping of various Cadbury’s brands. Heroes brand
is simply a multi-pack with miniatures of all its most popular brands in a single outer case.

Product and Value Proposition

“Kya Swad Hai Zindagi Mein” redefined the way Indians looked at Cadbury Chocolates. In March
2002, Cadbury launched its next advertisement campaign for its flagship chocolate brand, Cadbury's
Dairy Milk (CDM). The campaign featured a television (TV) commercial that was significantly
different from the company's earlier commercials for the brand. It featured Cyrus Broacha
interviewing college students 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 and Cyrus singing the famous CDM theme, 'Khane Walon Ko Khane Ka Bahaana Chaahiye'
(those who want to eat, will find excuses), a student comes up and questions Cyrus, The
advertisement aimed at conveying the idea that no specific occasion is required for consuming CDM.
This was a significant departure from CIL's strategy of appealing to adults in India, who sought a
rational justification for indulging in chocolate consumption.
Cadbury roped in Preity Zinta for its Perk brand. Preity Zinta’s angelic dimples laid the foundation for
what would become the Indian teenager’s favorite snack. After this campaign,

21 | P a g e Cadbury
India
Perk’s sale surged Cadbury’s advertising has, over the past few years, aptly reflected India’s passion
for chocolates.
In another ad Cadbury tries to associate Celebrations with reliving old memories. Looking wistfully at
a photograph, Mr. Bachchan thinks, he recollects the photo-shoot when he had thrown the cap off his
friend's head. More recently, the 'Kuch Meetha Ho Jaaye' campaign associated Cadbury Dairy Milk
with celebratory occasions and the phrase "Pappu Pass Ho Gaya" became part of street language. It
has been adopted by consumers and today is used extensively to express joy in a moment of
achievement .The interactive campaign for "Pappu Pass Ho Gaya" bagged a Bronze Lion at the
prestigious Cannes Advertising Festival 2006 for 'Best use of internet and new media'. The idea
involved a tie-up with Reliance India Mobile service and allowed students to check their exam results
using their mobile service and encouraged those who passed their examinations to celebrate with
Cadbury Dairy Milk.

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India
Appendix A

Survey for chocolate brands

1. Which age group do you belong to?

Below 15

15 to 25

25 to 40

Above 40

2. Which chocolate brand do you normally consume?

Nestle

Cadburys

Others

Foriegn brands

3. If Cadburys, then which is the first brand that comes to your mind?

4. What is your average monthly spend on chocolates?

Below 50

50 to 100

100 to 200

Above 200

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India
5. What are the features that you look for in a chocolate? (multiple options
can be chosen)

Have a perfect taste or delicious to eat

Nutritious and healthy

For fun filled moment

Is value for money

Others

6. How often do you give chocolates as a gift?

Never

Often

Very often

Always

7. On what occasions would you gift chocolates?

Diwali

Raksha Bandhan

Birthday

Valentines Day

Anniversary

Others

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8. Which chocolates would you like to gift?

Cadburys celebrations

Assorted Nestle pack

Foreign chocolates

Others

Results And Analysis of the Survey

A survey was carried out by us in order to find out the reach of Cadburys in India. The chocolate
consumers were asked questions like the chocolate brand that they normally eat, and the features that
they look for in a chocolate etc. The chocolate consumers had ranked Cadburys as the best chocolate
brand and a few consider Nestle as a good chocolate brand. We also observed that Cadburys is facing
strong competition from foreign brands. This could be due to the fact that the respondents of our
survey were mostly the well to do population from the IT sector.
We had 47 respondents to our survey. Most of the respondents were from the 15-25 and 25-40 age
groups. Most of the respondents spent more than 100 rupees on chocolates in a month. Almost 70%
people rated Dairy Milk the most consumed chocolate closely followed by 5 star and Perk. Also the
reason why dairy milk was preferred was because of the taste. 66% people preferred to gift
celebrations for many occasions as against 23% who prefer gifting foreign chocolates.
Thus we understood better the chocolate market in India. Cadbury’s has a very good market share
currently but will have to constantly revamp their strategies in order to compete with the foreign
brands.

25 | P a g e Cadbury
India