Essay: Cadbury

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  • Cadbury
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Cadbury is the creation of John Cadbury which started in 1824 in Birmingham, United Kingdom. During that time, John sells his self-made cocoa and drinking chocolate. The brand became a confectionery brand in 1853. In the year 1860, the sons of John named Richard and George decided to expand the company further. The first milk chocolate bar was introduced in 1875 when Daniel, a Swiss manufacturer added milk in his recipe of chocolate. Throughout the world, Cadbury is the second largest confectionery company, second to Wrigley’s and it operates in about more than fifty countries in the world. Kumar, A. (2010, December 10). Cadbury Schweppes PLC. Retrieved from http://www.slideshare.net/aju721/cadbury-6110613

One of those countries where Cadbury operates is New Zealand where it is known to be the largest chocolate brand. It started in 1868, where Richard Hudson arrived in Dunedin, New Zealand and opened up his first biscuit bake house. In 1930, a big event happened. Mr Hudson and Cadbury teamed up to make the New Zealand’s first bar of Cadbury Dairy Milk chocolate. From 1931 up to present, Cadbury is continuously improving the variations in their product. Retrieved from https://cadbury.co.nz/our-chocolate/our-history/

Currently, Cadbury brand is under the Mondelēz International which holds about over 50 other international brands in different industries. Retrieved from http://www.mondelezinternational.com/brand-family

Mission

“Cadbury means equality”, this is our promise. Our reputation is built upon quality; our commitment to continuous improvement will ensure that our promise is delivered.

Vision

“To be the World’s biggest and best Confectionery Company”

Core Values

Performance, Quality, Respect, Integrity, and Responsibility

Core Purpose

“Working better together to create brands people love”

Product Information

Cadbury is one of the New Zealand’s leading and most popular Confectionery producer, manufacturing New Zealand favourites like the Jaffa, Caramello chocolate, famous New Zealand Pineapple Lumps, Pinky Bar, and Moro bars. Retrieved from https://productsfromnz.com/5170+Cadbury+Chocolates. It’s most famous Cadbury Dairy Milk has a glass and a half of milk in every half pound of chocolate bar produced. Retrieved from https://cadbury.co.nz/our-chocolate/dairy-milk/

Situational Analysis

Macro Environment

PESTEL Analysis

Political and Legal

Government laws. If there will be an increase in the taxes, there might also be a decrease in the number of consumers and sales of stocks. On the other hand, if the taxes will decrease, the consumers will buy more.

Costs to implement laws that protects the employees of Cadbury and ensure that there is a safe workplace. Business and Marketing Strategy Cadbury. (2010, August 31). Retrieved from http://managing-man.blogspot.co.nz/2010/08/business-and-marketing-strategy-cadbury.html

Economical

Interest rates might affect the Cadbury in a way that if the rates are high, the company might not borrow as much money to expand their business. Also, high interest rates might affect the consumers in paying for their loans and in return would affect them to buy less because of their lesser disposable income. Trayan, A. (2012, December 7) PESTLE Analysis of Cadburys . Retrieved from https://prezi.com/tgowbrjqxd1u/pestle-analysis-of-cadburys/

Social/Cultural

Vending machines are now a fad. Because of the busy schedules, there is an increased number of people who chooses “on-the-go” snacks.

Cadbury has now the “Cadbury World” that offers a tour in the chocolate factory. Small businesses around the area of the factory might have an increased sales because of the people who visits the place. Essays, UK. (November 2013). Marketing Analysis Of The Uk Chocolate Manufacturer Cadbury Marketing Essay. Retrieved from http://www.ukessays.com/essays/marketing/marketing-analysis-of-the-uk-chocolate-manufacturer-cadbury-marketing-essay.php?cref=1

The people who are health conscious might always read the labels of the food and might lessen the consumption of chocolate and sweet products.

Technological

Cadbury has now improved their website – a more interactive one and includes lot of information that people might want to know. It also improves their way advertising their products.

Research and development might help them in doing some innovations and keeping up with the competition and providing the consumers’ needs.

Investing in a more advanced machines would mean an increased in the capital expenditure. In effect of this, products will be produced faster and more efficiently but would cause lesser jobs for people.

Environmental

Cadbury has reduced the amount of cocoa in the chocolate bars and added palm oil to compensate. This has done because they claim that this will improve the customer experience. As to protect the rainforests and habitat of the orang-utans, they registered as board members of RSPO (Roundtable for Sustainable Palm Oil) and purchase Green Palm certificates which independently certify that the palm oil they purchase came from sustainable resources. Laugesen, R. (2013, April 8). Slippery issue of Palm Oil. Retrieved from http://www.listener.co.nz/current-affairs/ecologic/slippery-issue-of-palm-oil/

The company has partnered with TerraCycle, a New Jersey-based organization that collects non-recyclable or difficult to recycle wastes. The operation of TerraCycle in New Zealand will start by collecting used confectionery wrappers and will undergo to a process called “upcycling”. In this process, the wrappers will be truned into new products by squeezing it and it will produce fabrics that may turn to fun things like bags, etc. and can be sold in the market. Eagle, J. (2013, July 29). TerraCycle and Cadbury Launch Sweet Wrapper Assault on Asian Market. Retrieved from http://www.foodproductiondaily.com/Packaging/TerraCycle-and-Cadbury-launch-sweet-wrapper-assault-on-Asian-market

Micro Environment

Competitor Analysis

Nestlé

Strengths Weaknesses

Strong variety of products High cost in new product launching that will supplement older products

Growing research and development capabilities Company is highly dependent on advertisement

One of the most recognized and trusted brands Sales depend on few well-known brands

Product innovation

Ferrero Rocher

Strengths Weaknesses

Packaging is ideal for gifts Lack of advertisements / not advertised well

Easily recognizable due to packaging Highly priced

Offers quality and luxurious product Not easily available

Unique taste

Mars

Strengths Weaknesses

Highly known as international chocolate brand Not easily available

Wide range of products Known for product recalls

Loyalty of customers Strong competition from other market players

Whittaker’s

Strengths Weaknesses

Strong chocolate brand name in New Zealand Investment in research and development

Competes well with other international chocolate brands Small business units

Great taste

Porter’s Five Forces Analysis

Threat of Buyer’s Bargaining Power

The Cadbury’s buyer power is said to be in moderate to high. Being known as one of the largest confectionery producers in the world, their buyers are about in billion and scattered all over the world. The customer loyalty might be altered due to the lower costs offered by the competitors with almost the same product. The company must always consider the prices and how they satisfy their customers. Sharma, S. (2015. April 17). Principle of Engineering Economics and Management. Retreieved from http://www.slideshare.net/ShubhamSharma288/porters-five-forces-model-cadbury-47119374

Threat of Supplier’s Bargaining Power

Large number of suppliers
make the supplier power low. In this case, Cadbury has higher bargaining power than its suppliers for the reason that it depends heavily on the agro business supply chain. Raw materials are still sufficient enough to supply Cadbury’s production even though there is an existing competition. Also, compared to medium-sized businesses, Cadbury can buy their raw materials in bulk with a lower price because the company can use economies of scale.

Product and Technology Development

The level of threat of substitutes is moderate. There are supermarkets who copy well known chocolates and then sell it on their own brand at lower prices. Some people tend to make confectionery products as gifts or snacks. This method gives the consumers large number of substitutes like cakes, fruits, candies, etc.

Threat of New Entrants

The level of threat of new entrants is low because Cadbury and other competitors like Nestlé, Ferrero Rocher, Mars, and Whittaker’s are well-established already in the market. The new entrants that will make an attempt will have a hard time to start for they need a higher initial capital requirements.

Competitive Rivalry

The level of rivalry among Cadbury’s competitors – Nestlé, Ferrero Rocher, Mars, and Whittaker’s is high because many are planning to take over the power of Cadbury that it has for a number of years. Other companies are continuously doing some innovations in their products to compete effectively. The rivalry will always be high among these companies because they have the same product line and products are available in the same types of stores.

Customer Analysis

Cadbury’s customers are in a wide range. Aside from targeting kids, the target market is extended up to “the kid in every adult” through their “Real Taste of Life” campaign. Their campaigns have been influencing the consumers to convert from buying sweet products to chocolates. This is done by informing the consumers that chocolates could substitute sweet products in a lot of ways like during special occasions as a gift or for dessert after meals. Assignment 2 – Analysis of Existing IMC Plan of Cadbury Dairy Milk. Retrieved from http://thebestiims.blogspot.co.nz/p/assignment-2-imc-plan-of-cadbury-dairy.html

Cadbury’s customers buy the products to act as a gift, as a snack, and as a dessert. The products are available and being bought at different leading supermarkets, convenience stores, and even on the online stores. Factors that influence consumers to buy would include the taste, quality, and the brand or image of the certain product.

Internal Analysis

SWOT Analysis

Strengths

One of the largest confectionery brand in the world

Excellent research and development

Strong brand name

Weaknesses

Depends mainly on their confectionery business. The product portfolio is limited compared to the competitor’s diverse products.

The products are highly-priced that leads price-conscious consumers to purchase other brand’s products.

The product diversity can make it hard for the company to run every division easily.

Opportunities

Expand the business in other Western countries especially India, China, and Russia where the population is continually growing. This means that people’s disposable income in these countries are increasing and information about the products in social media sites are being easily accessible.

The company can take the advantage of the research and development resources to improve or widen the range of their products. Through this, they can also offer some sugar-free products and healthy snacks with lower calories.

Being a large company, Cadbury can benefit from this by cutting on cost structure as it expands to emerging economies.

Cadbury can partner with other brands under Mondelēz International to develop a unique product. In this way, they can reduce the costs through sharing of the resources.

Threats

People are becoming health-conscious and some are changing their lifestyles. Thus, lesser consumption of chocolates.

Increase in cost of raw materials and other costs included in the supply chain.

Competitive pressure brought by other brands in the same industry, leading to stronger tactics.

Marketing Strategy

Objectives

To increase company sales by 20% in one year;

To have a market share of 25% for Cadbury Dairy Milk Bubbly within the 2 years of launch; and

To lower the price of products up to 20-25% without compromising its quality.

4 P’s

Product

Cadbury has a very strong brand name and product range globally. It has a huge umbrella brand which balances brand equity and its diverse product range. Since it is in the maturity stage, some things have to be modified to help survive and retain in the market.

Price

Two of the objectives of Cadbury is to have a20% increase in its company sales in one year and increase the market share of its newly released Cadbury Dairy Milk Bubble by 25% for 2 years of being launched. These objectives will be achieved through the help of pricing strategy that will maximize the current profits and market share. According to the research, Cadbury has 70% market share all over the world.

The demand for the main ingredient of Cadbury – cocoa is predicted to increase by 20% in 2020. TheGuardian. Retrieved from http://www.theguardian.com/sustainable-business/fairtrade-partner-zone/chocolate-cocoa-production-risk. But the demand for chocolate products is falling. This is because of the effects to the health of sweet products and to the increasing prices of these products. Due to this falling demand, Cadbury should have a strategy that will encourage people to buy its products and at the same time increase its profit and market share constantly.

For the pricing method to be used and to achieve its objectives, Cadbury will use a Value pricing method that will sell their products at relatively low and affordable price giving its customers a good quality of products. In this way, consumers will be able to buy Cadbury’s products without compromising its taste or quality.

Place

The distribution channel of Cadbury is the conventional one – manufacturer to distributors to retailers to consumers. The manufacturer which is the Cadbury factory located in Dunedin will be producing the Cadbury products and then transfer the products to the distributors by plane for the reason that chocolates might melt and lose its form. From the distributors, the products will be transferred to retailers by land. From the retailers which include grocery stores and other convenience stores, products will be sold to customers near check-out counters or confectionery sections in the store. Because of this distribution channel, distribution costs might be high. But, the consumers of Cadbury will be assured that they can get the products in stores near them.

Promotion

Given that Cadbury is already a large company, it can afford to have a good advertisement. Since today’s generation has already developed technology, advertisements can easily reach everybody. Smart phone and computer software applications has these video advertisements that plays before they can use the respective applications and can help Cadbury to remind its customers about the products. Aside from that, using these advertisements can also be entertaining to the customers/viewers because Cadbury will use a musical themed advertisement. Television advertisement will still be used but more limited than the computer and other social media applications.

Positioning

Cadbury’s Dairy Milk is in the Cost Leadership strategy because it offers standardized products that has characteristics of being acceptable to its consumers. It sells premium quality chocolate at relatively lower prices compared to other international chocolate brands. This more for same positioning strategy is used for the basic chocolates bars that include Dairy milk plain, fruits and nuts, and roas
ted almonds.

Segmenting & Targeting

Cadbury Dairy Milk’s segmentation is based on three things. First is geography where Dairy milk bars are being segmented by preferences of consumers in a certain area and are sold mostly in places that consumes more junk foods or snacks. Another is supplying the impulsive buyers that form a big group of consumer base that the product supplies to. Most of the time, Dairy Milk are placed near check-out aisles of stores and in convenience stores due to impulse buyers. Next is the custom of having dessert after every meal and having it as a snack. In segmenting the market based on the income, there are various kinds of Dairy Milk targeted towards higher class that can afford and ready to pay premium dark chocolates. Last is considering chocolates as a gift particularly on special occasions.

Implementation and Controls

To be able to

References

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