9/21/2017 Cadbury Strategic Analysis

2
 UKESSAYS (/)  

(https://www.scanmyessay.com/?utm_source=ukessays-essays&utm_medium=banner&utm_content=top_banner)

Cadbury Strategic Analysis

 PRINT  REFERENCE THIS

Published: 23rd March, 2015 Last Edited: 21st July, 2017

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Keywords: cadbury target audience, cadbury pricing strategy

The individual report assesses the critical aspects of the strategic choices available to Cadbury. Recommendations are given to assess the company's
perspectives on the revenue growth and pro t as well as market share. The report assesses marketing strategy models applied by Cadbury to indicate its
market and competitive position.

Furthermore, strategic segmentation is critically evaluated on the basis of the multi-step process to identify the most nancially attractive segments for Cadbury.
Available industry position strategic options are identi ed on the basis of the strategic framework. Competitor reaction provides critical assessment of possible
competitors' reactions as well as competitors' strategic options that are counteractive to Cadbury's strategic plans. Finally, the report proposes and justi es the
most preferable strategic option for its further business operations.

Cadbury's background
In 1831 John Cadbury founded his company Cadbury which has successfully covered and revolutionized the cocoa processing market since 1866. In 1969
Cadbury successfully merged with Schweppes. Today, internationally acknowledged as a reputable corporation with the acclaimed international status, Cadbury
Schweppes PLC (hereinafter referred to as - Cadbury) successfully employs more than 50,000 people in 60 countries of the world [1] .

The company is strategically positioned as the fourth top supplier of sugar confectionery and chocolate in the world. The most successful product promoted by
the company since 1905 is 'Dairy Milk' which has become the most popular moulded chocolate in the UK as well as internationally acclaimed chocolate bar in
terms of revenue [2] . Overall,

Cadbury's strategic success is due to three core pillars: high quality, sound advertising, and value for money [3] .

1. Marketing Strategy Models

Cadbury strategically applies marketing models as a combination of activities to transfer its products to the end-customers. Vast variety of marketing activities
requires proper management of to e ectively promote products on the confectionary markets through marketing channels. In its strategic choice of appropriate
marketing model, Cadbury emphasizes on such strategic issues:

Connecting Cadbury with customers;

Performing sales, promotions and advertising;
Impacting Cadbury's pricing strategy;
In uencing product strategy through willingness to stock, branding policies, and pro t customizing [4] .

The selection of the most advantageous marketing strategy for Cadbury depends on a number of factors. Thus, marketing strategy should be perceived as the
designated action plan which will help Cadbury to reach its strategic aims and objectives. Cadbury's long-term marketing strategy (based on Anso matrix)
concerns the launch of new chocolate brands and their promotion on the global markets. Alternatively, the company should win more international markets
through the manufacturing and exporting new products (e.g. cereal bars). Further recommendations concern the appropriateness of the strategic choices to be
made by Cadbury in the nearest future [5] .

In terms of further strategic growth, Cadbury should apply Anso Growth Matrix while focusing on new products and perspective markets. Apparently, there is
no need for Cadbury to advance and promote the existing chocolate products since they are already widely acknowledged in terms of quality and high
reputation among the Cadbury's target markets [6] .

Appropriate marketing channels set up the strategy which enables Cadbury to win competition, avoid tactical mistakes, maximize pro ts and achieve success.
Cadbury should therefore gure out how it measures success before it can go out and conquer it, whether it is market share, pro t margin, return on
investment, residual income, brand image, a reputation for being environmentally green, stock share price, or some other measure its stakeholders deem
worthy [7] .

Most companies compete in the market by applying competitive priorities, including quality, cost, exibility as well as other priorities, depending on their
manufacturing capacity. Top management support is the major driver of quality management, which signi cantly correlates with other quality management
practices. In addition to this, customer orientation is not signi cantly correlated with external quality results (pro tability). At that, top management support,
employee training, and employee involvement are the three statistically signi cant variables in explaining the variability in internal quality results [8] .

Cadbury's marketing channels are aimed at the consumer market. The company is focusing much on the needs and wants of the consumer and what exactly
di erentiates its products from the competition to develop more sales in this market. Thus, Cadbury is working on the promotion of its direct model to create a
better position for itself in the consumer market. The peculiarity of Cadbury's advertising campaign consists in its focus on the emotions of the chocolate lovers
compared to merely logical side of marketing and sales. In such a way, Cadbury reassures its customer support by applying strong emotional advertising
campaign focusing on the preferences and likes of the consumers when they opt for a chocolate purchase. In addition to faster transactions, shorter lines and
happier customers, such strategic approach to market modeling enables to see interaction with the business through the eyes of the customer, understand
customers' values and demands, and seek ways to disrupt the competitive balance. For these purposes, the company is applying such customer-oriented
sources as print media, television, radio, Internet, as well as social networks.

https://www.ukessays.com/essays/marketing/strategic-marketing-report-on-cadbury-marketing-essay.php 1/5
9/21/2017 Cadbury Strategic Analysis
While aiming to increase Cadbury's sales, the company's management emphasizes on the appropriateness of particular marketing activities that would best
encourage the demand for Cadbury's products. Cadbury's marketing objectives coincide with its business strategy priorities ultimately targeted at pro t-making
and sales increase. Strategic marketing models for Cadbury are identi ed as follows:

(1) Pro t maximisation;

(2) Survival;

(3) Growth;

(4) Sales maximisation;

(5) Diversi cation; and

(6) Improvement of product image.

The rational combination of these strategic marketing models determines the competitive market position of Cadbury's. Through pro t maximisation, Cadbury
solves dual strategic task - withstanding competition, on the one hand, and restoring its nancial health, on the other hand. Through growth, Cadbury sells new
products and expands its exports overseas. This strategy model enables the company to cover new market niches internationally [9] .

As for now, the company is present in 60 countries worldwide. Meanwhile, the company permanently increases and maximizes its sales. Through diversi cation,
Cadbury spreads its business risks regardless of the successfulness of the sales of one particular product. In marketing terms, it is of utmost strategic
importance that Cadbury constantly improves the image of its products by: (1) launching new brands; (2) introducing innovative logos; and (3) applying attractive
and convenient packaging.

For instance, while promoting one of its chocolate products - 'Fuse', Cadbury marketing strategy was aimed at the growth of chocolate confectionery market, as
well as the intensi cation of its presence on the snacking sector. Prior to launching 'Fuse', Cadbury ensured that 'Fuse' di ered (had relevant points of
di erence) from the already existing competitors' chocolates. While conquering the snaking sector and establishing its competitive share therein, Cadbury
created USP (unique selling proposition) which meant that 'Fuse' had unique appeal which di ered from any of the existing rival chocolates.

It is apparent that the implementation of a successful marketing strategy model requires solid investment. While promoting 'Fuse', Cadbury heavily invested into
testing product's ingredients. As a result, nal recipe of 'Fuse' included a combination of more than 250 ingredients. This indicates that in marketing terms
Cadbury closely related product development to the specialized testing. This helped the company to reach proper consumer demand.

The desired outcome was to make each customer feel comfortable with purchased product and not regret their choice. At that, Cadbury is not applying the
methods of extreme advertising since its most powerful advertising tool is 'the word of mouth'. In addition, purchasing the products, the customers are feeling
they are backed.

To enhance consumer demand for its products and establish line promotion Cadbury actively applies available consumer media and advertising sources
(including popular magazines, Internet, radio, TV and newspapers). Since 1990s, the company promotes its brands through the taste-stimulating approach which
claims that 'Chocolate is Cadbury'. Such high recognition is owned to the brand values previously promoted by the Company, and so now the consumers
associate the name of a company with the 'chocolate' as well as the pleasure of chocolate tasting.

Since 2000, Cadbury Schweppes enters international markets with 'Choose Cadbury' marketing strategy. The promotional strategy considers consumer
awareness as well as the rationality of consumer buying behaviour. The choice of Cadbury's marketing strategy is built on the consideration of universal
consumer choice. In its strategic consumer-oriented thinking Cadbury developed proper texture and distinctive taste that appeal to the consumers all over the
world regardless of their national chocolate preferences [10] .

Cadbury's strategic marketing model was designated in a way to satisfy the major preferences of chocolate lovers. Therefore, the company produced its two
most successful brands - Dairy Milk to suit dark milk chocolate admirers, and Cadbury's 'Whole Nut', 'Dream' and 'CDM' to suit cream milk chocolate lovers [11] .

Cadbury's product-specialized market strategy enabled the company to grow its market share and lead competition with its main competitors on the
confectionery market.

2. Segmentation
The annual sales on the UK confectionary market ranges from 5 to 6 billion. Herewith, chocolate sales amount to about 70% and worth 3-4bilion accordingly.
Since 2003, Cadbury has been increasing own share on the UK confectionary market which makes up about 1/3 of the market. The remaining part is distributed
among Cadbury's main rivals Nestle and Mars.

While segmenting its target market Cadbury divides heterogeneous demand markets into homogenous groups which are grounded on similar features.
Homogeneous segment enables the company to divide its target markets on the basis of homogeneous features [12] . While dividing its target market into
segments, Cadbury applies segmenting criteria that particularly feature each part of the market:

Geographic Segmentation;
Demographic Segmentation;
Bene ts-Sought Segmentation;
Psychographic Segmentation;
Behavior/Usage Segmentation; and
Situation Segmentation

Segmentation Base groups diversify target markets on the basis of such criteria as: social class, lifestyles and psychological features (attitudes, interests and
opinions), and include the following:

Social class;
Life-cycle;
Income Level;
Education; and
Ethical background [13] 

Cadbury's target market is segmented on the basis of the bene ts demanded by the customers with regard to speci c chocolate products. Purchase situation
assumes:

Social surroundings;
Physical surroundings; and
Temporal perspective

The segmentation of Cadbury's target markets is made with the consideration of how often consumers buy chocolate products. In this regard, Pareto's Principle
of 80/20 indicates that 80% of revenue is generated by 20% of customers.

https://www.ukessays.com/essays/marketing/strategic-marketing-report-on-cadbury-marketing-essay.php 2/5
9/21/2017 Cadbury Strategic Analysis
Segmentation variables used to segment business markets:

Industry;
Size;
Product demand;
Purchasing approaches;
Geographic factors;
Situational factors; and
Seasonal trends

In addition, while segmenting its target markets, Cadbury considers the following issues:

Di erences in consumer preferences for particular chocolate products;

The co-relation of the variability of individual customer preferences with the measurable variables;
The pro tability of the targeted market segment considering its purchasing power and size capacity; and
The accessibility and attractiveness of the targeted market [14] .

3. Industry position strategic options

Cadbury's strategic positioning is determined by the choice of appropriate pricing techniques. While emphasizing on high quality of its products, e ective
promotion and sound advertising, as well as value for money, the company applies competitive pricing strategy to ensure that the adjusted prices do not exceed
those of the competitors' [15] . This strategic choice is reasonable and justi ed since regardless of individual taste preferences or any other essential factors,
consumers regard product value as one of the most decisive factors while making their purchasing decisions. Therefore, Cadbury cannot apply skimming pricing
technique in the course of designing and launching a new product. This technique can be applied under the conditions of inelastic demand [16] .

In addition to the e ectively applied competitive pricing strategy, Cadbury focuses on cost plus pricing which helps the company to maximize it pro ts. While
accurately accounting all its costs, Cadbury reaches optimal supply and demand balance and well-balanced positioning on the market compared to its
competitors. Alternatively, Cadbury applies positioning pricing to set up the prices with the consideration of demand-side concerns. Through polling and
surveying its target markets, Cadbury's experts designate the optimal price range that would satisfy the majority of the consumers. This positioning technique is
particularly applied to better sell Cadbury's chocolate bean, for example.

Optimal trading also depends on the nancial capacity of the demand-side. Therefore, Cadbury applies demand-based pricing to critically assess the purchasing
power of the majority of its consumers. Only under such conditions the company is able to trade its products in accordance with the strategically planned
volumes. Hence, selling at the customer's price brings Cadbury pro ts, good reputation and positive feedback from the majority of its customers.

4) Competitor reaction
Cadbury should develop new products and promote them domestically as well as internationally. Such product/market growth approach will ensure that the
company has diversi ed range of products which are available and well-recognizable in many countries of the world [17] . Such strategic choice will provide the
company with enormous comparative advantages over its competitors and will help it to better cope with the hurdles of the global economic crisis.

Most importantly, such strategic step will erase the common stereotype claiming that consumers mostly associate Cadbury with chocolate. Evidently, 'Chocolate
is Cadbury' marketing approach much facilitated the company's success over the last decade. However, considering the challenges of the global competitive
markets, this strategy will not be suitable any longer. Hence Cadbury should transform it into more powerful and innovative global image.

The variety of new high-quality and reasonably-priced products will add value to the business activity of Cadbury and will win new overseas markets for the
company. This task would require the company to carefully design and develop innovative brands of its products which are not yet present on any of the foreign
markets, and which will be potentially demanded by the consumers (i.e. target markets) [18] .

While developing innovative products and penetrating overseas markets, Cadbury should initially consider the demand-side of its target markets. Among the
most important criteria are the following:

(1) Average income;

(2) Average spending amount on one-time supermarket/store purchasing;

(2) Average amount consumers are ready to spend on chocolates, candies, cookies, and/or sweets;

(3) PESTLE analysis of the target market with the consideration of the adverse a ects caused by the global economic meltdown; and

(4) Porter analysis of the targeted market.

Such wide coverage of strategic issues will win Cadbury competitive advantage and increase its share on the foreign markets.

5) Preferred strategy

Cadbury's choice of the optimal marketing strategy should consider their chances of success in terms of market diversi cation. To reach optimal market
diversi cation, the company should ensure that its new product adheres to the customers' needs and preferences. Extensive market research will help Cadbury
to explicitly identify its potential target markets for a new product. Herewith, Cadbury's marketers should consider the following strategic factors:

(1) Financial health of the targeted market;

(2) Purchasing capacity of target market;

(3) National and individual preferences of target market;

(4) Previous experiences of target market in terms of buying and tasting the similar products produced by competitor companies;

(5) SWOT analysis in each individual case will ensure that Cadbury eliminates all the possible constraints to the minimum and transforms the threats into
potential opportunities.

Realistic and achievable strategic objectives should be set in accordance with the SMART approach which designates speci c, measurable, achievable, realistic,
and timed steps. All strategic steps should be done within the framework of the ongoing marketing research of the target markets as well as vast
communication with the potential customers. Questionnaires, opinion polls, surveys, feedbacks and any other networking and communication approaches
should be widely applied to critically examine the perspective of the product export to the new market. Prior to designate consumer-friendly price, Cadbury
should make the consumers want more. Thus, one of the commonest practices will be free-trial approach that will help Cadbury to seduce consumers with the
quality, design, taste, and odour of the new product.

https://www.ukessays.com/essays/marketing/strategic-marketing-report-on-cadbury-marketing-essay.php 3/5
9/21/2017 Cadbury Strategic Analysis
Eventually, in addition to the marketing research and consumer communication, Cadbury should vastly apply psychological approaches to evaluate the degree
of rationality of the buying behaviour of target market. Contrary to popular belief, most buying decisions and purchasing choices are made irrationally. This is
because most purchases are made in a rush as well as under the in uence of many additional factors, such as in-store in uencers, advice from relatives and/or
friends. Normally, buyers do not consult experts of which brand of chocolate to choose. This indicates that Cadbury should consider contingency and diversity
of consumer choices [19] .

Summing up the critical examination of Cadbury's strategic marketing choices, it is obvious that one-suit-it-all strategic approach will not bring the company
long-term bene ts. This means that under the conditions of booming globalization of goods and services, Cadbury should win competitive advantages, new
markets, and most importantly - consumers through exibility, innovation, and individual-based approaches to its target markets. The company's market
diversi cation should involve all the domestic factors and conditions as well as consumers as such if the company attempts to reach optimal supply and
demand balance, add value, and maximize its pro ts.

The analysis has also shown that single marketing strategy is not enough to achieve strategic objectives and nancial success in the contemporary business
conditions. Thus, Cadbury should permanently experiment and apply the mix of strategic marketing models which optimal combination will depend on the
individual conditions particular to the individual targeted markets. The successful implementation of any strategic marketing model would therefore require
situational exibility as well as the readiness to change under the circumstances. Such variability will enable the company to designate and implement strategic
marketing mix which will be individual and particular to each strategic marketing model [20] . For instance, the strategic marketing combination of approaches
to diversifying Indonesian market will be not the same as the strategic marketing mix applied to the Norwegian market. This is because both markets present
heterogeneous cultures, backgrounds, national traditions. These economies are di erent and diverse. This means that Cadbury should vary its strategic
approaches on each individual market.

Video: Discover UK Essays! 

Need help with your work?

We provide top quality academic writing to assist with your essay and help you achieve success!
Take a look at our essay writing service now!
(/services/essay-writing-service.php)

https://www.ukessays.com/essays/marketing/strategic-marketing-report-on-cadbury-marketing-essay.php 4/5
9/21/2017 Cadbury Strategic Analysis

(https://www.scanmyessay.com/?utm_source=ukessays-essays&utm_medium=banner&utm_content=lg_banner)

Dissertation Writing Service

Our Dissertation Writing service can help with everything from full dissertations to individual chapters. 
(/services/dissertation-writing-services.php)

Marking Service

Our Marking Service will help you pick out the areas of your work that need improvement. 
(/marking/premium-service.php)

All Services

Fully referenced, delivered on time. Get the extra support you require now. 
(/services/)

APA Referencing Tool FREE 

Harvard Referencing Tool FREE 

Vancouver Referencing Tool FREE 

Study Guides FREE 

https://www.ukessays.com/essays/marketing/strategic-marketing-report-on-cadbury-marketing-essay.php 5/5