MARKETING ENVIRONMENT
Executive Summary
The executive summary aims at introducing a brand new chocolate bar in the market. This chocolate bar is targeted at children. The project contains an analysis on customers, competitors, forces that affect its microenvironment and the possible threats and opportunities the product may have. After the marketing objectives set for the product, it also covers the four Ps of the market (Product, Price, Place and Promotion). It intends to base its product around quality and is priced like any other chocolate bar. Moreover, it follows the distribution channel all Cadbury brands follow and aims to promote the chocolate bar by celebrity endorsements, contests, and other incentives. Finally, it shows how the company intends to monitor the product.
Micro-environment
Customer analysis in the Marketing strategy of Cadbury
The Customers of Cadbury originate from all people and segments. All age groups consume chocolates. However, the major segments that consumes the most are the youngsters and the growing middle-income group.
Table 1: % OF CHOCOLATE CONSUMPTION IN AGE GROUPS
All together adults account for 81% of chocolate consumption, while children account for 19% (see Table 1). (Ellek, 2012)
Consumers of chocolate seek satisfaction from consuming chocolate.
Consumers can be segmented in the following criteria:
- Behaviour (brand loyal, brand switching, innovators)
- Usage (heavy or light)
- Age (Under 12, 12-17, 18-25, 25-44, 45-65, 65+)
- Social Class (upper-middle, middle, lower-middle, lower)
- Life cycle (young single, young couple, young parents, retired, etc.)
- Income
- Geography (urban or rural)
- Diet (healthy or unhealthy)
(Fahy and Jobber, 2012)
Cadbury’s Competitors
The confectionery industry is becoming more attractive and as a result, there is a larger demand for confectionary products. Because of this, many businesses have entered the market subsequently, creating intense competition within the industry. Every business that sells confectionery products is a competitor to Cadbury, however, only the more successful businesses pose a real threat to the business. These companies are:-
1) Mars
- Mars is a private company and outstanding competitor to Cadbury. Mars had a market share of 29.5% in the United States of America for the chocolate market in 2014. Some of the popular brands are M&M’s, Snickers, Starburst, Twix and Skittles.
- Chewing gum, pet care, food, chocolate, drinks and symbioscience. Are the six segments the company contests in. (Katje, 2015)
2) Hershey’s
- According to Katje (2015) “Hershey’s had a market share of 44% in the U.S. for the chocolate industry. The company has many well-known brands in the U.S., including Hershey’s, Reese’s, Jolly Rancher and Twizzlers. Hershey’s still gets more than 80% of its annual revenue from the North America market.”
- Hershey’s is also in a different position, because it also a distributor of Cadbury products.
3) Nestle
- Nestle is the biggest food company in the world (Johnston, 2009), however, the company\’s chocolate market is small. Moreover, regardless of the minuteness, It’s market share in the U.S is 5.8%
- It covers several separate subsectors of the market.
- The most recognisable brands of nestle are Kit Kat, Smarties and Gerber baby food. (Katje, 2015)
Competitive analysis of Cadbury
The confectionaries industry is very competitive and overcrowded by both local & national players. While company Cadbury is under, Mondelez International, is the world leader in bars and chocolates for the middle age income group, Nestle, Hershey’s , Mars, and other competitors have their own specialty or customer group in which they are specialized in. Due to high research and Development and changes in the organoleptic of milk, lifestyle of markets in Asia, eating habits etc. this industry will see high growth momentum in the long run. (Bhasin, 2016)
Macro-environment
In order to understand the different boundaries on the path to develop products, PESTLE is the tool for macro environment. It includes common strategic analysis like discovering the product, finding out proper ways to produce the product and finally to develop the product. All these things are integral and are connected since Cadbury has a renowned product dairy milk. PESTLE stands for political, social, technological, and economical or ecological, the company has to deal with multiple societal factors such as political and legal factors including policy made by the government, and numerous law structures that could have detrimental effects on how successful the brand will be. So that the right choices are made, the company also have to observe the political environment. (UK Essay, 2015)
Additionally, Cadbury has to deal with the economic or ecological factors i.e. is what to produce, how to produce and for whom to produce. This is mostly because of scarce resources and it is the duty of any business to preserve sparse and precious nature resources by utilizing them in the most efficient way (this is known as economic efficiency). Cadbury must also take into consideration other problems such as inflation, economic recessions, economic growth, increasing interest rates, wage rate policy, and lastly world trading conditions. For instance, due to Brexit, the price of cocoa (cost of production) has risen (Rodionova, 2016). Furthermore, ecological factors matter to the company as well. The company has to conform to various environmental laws while producing its goods and services, in order to protect the ecological surrounding of the territory.
Moreover, many social and cultural factors affect the overall wellbeing of the company. These factors are tough to quantify and predict as the attitudes, values and beliefs of people are involved. The festivals being celebrated, the society’s demographical structure (birth rates, population growth, regional population shift, life expectancy) and educational level of the society all have to be considered, in order to produce a favourable product.
Lastly, the company needs to pay attention at the Country’s technological factors. For instance, Cadbury needs to diligently focus on the available pool of technological resources in the country in order to be more efficient, productive and reduce waste. The company may be in a position to care for growing population’s needs and demands by expanding the business operation.
Threats and Opportunities Analysis
Cadbury is one of the topmost FMCG brands hence, unequivocally; the opportunities of Cadbury are a lot more than its weaknesses.
Opportunities
Consumers have a sweet tooth for chocolate. Moreover, these consumers love various flavours. Therefore, the demand for new tastes and flavours serve as a large opportunity for Cadbury to introduce its new brand. (Bashin, 2016) .With more and more people choosing a healthier eating habit and neglecting chocolate because of its accused unhealthiness, the demand for healthier confectioneries appears to be strong. Cadbury can take advantage of this situation by developing a low fat, organic and natural version to the new product. (UK Essays, 2015). However, it may be costly and this may not draw out enough revenue to continue.
Threats
Cadbury has had a bad record of terrible advertisements and a few cases where products were recalled. Instances like the former and latter damage the brand image and must not repeat itself, especially with this new chocolate bar. (Zigu, 2008).
In today’s society, health and healthy eating plays a major part in a lot of consumers’ buying decisions and corporate marketing plans. This has to do with Government policy on children’s eating habits, the recommended five-a-day diet and magazines or dietary book providing an outline for healthier eating. Cadburys as a major curator of chocolate may be affected in the future as people wish to readjust their eating habits, they seek to eliminate treats and indulgences which for many would be chocolate. For Cadbury to remain competitive they have to find a new marketing strategy in line with a range of products that fit in with the social requirements through low fat option ingredients and also promote and show that the brands can be part of a healthy dietary lifestyle.
MARKETING STRATEGY
Marketing Objectives
Before a business like Cadbury decides on their marketing strategy. Realistic and accurate marketing objectives must be considered in order to help the brand become as successful as possible in the future. According to UK Essays, “The best way for a business to ensure that they set realistic and achievable objectives would be by following the acronym of SMART.”
The objectives of Cadbury are:
1) Survive the first 6 months in the market.
2) Generate £500,000 of sales within the year.
3) Prove profitable by the end of the year.
4) Avoid product recall.
5) React swiftly to the wants of the target audience.
Targeting and Positioning Strategy
Segmentation, targeting, positioning in the Marketing strategy of Cadbury – The segmentation of Cadbury products is built on a mix of demographics, psychographic and behavioral factors such as on the basis of income & occasions. People of all age groups and demography can be found enjoying Cadbury products. According to Bhasin (2016),
“Cadbury’s product offerings are mainly based on the production capacity, pricing of the various packs, packaging designs, and storage facilities at the outlets, occasional & situational demands, celebrity endorsements and many other factors.”
Undifferentiated target marketing is adopted as customers of all age groups and segments consume chocolate. I propose Cadbury’s main target audience should be children. Although, their brand loyalty is also relatively high. However, there are numerous products already in the market aggressively competing. If the brand were from a company of a low market share, it would be completely ludicrous. Nevertheless, for a company such as Cadbury, it would be much easier. Moreover, the chocolate bar should focus on being a high quality sweetness with an affordable price. (See Table 2)
Table 2: PERCEPTUAL MAP OF CHOCOLATE BRANDS.
(The Cadbury Chocolatier, 2012)
Marketing Mix Strategy
Product – Cadbury has always had a wide range of products. The products are classified in season and vary according to the sales in each country. The brand new chocolate would be in the first stage of its product life cycle. As it is in its introductory stage, heavy promotion would be required to notify consumers. In the long run, product segmentation can be practiced. Product segmentation is the act of offering different versions of a single product. Not only does this strategy ensure the products are more closely aligned with the specific needs of customers, It is also an additional profit opportunity that can be exploited. (Horne, 2014) The product must also be easy to differentiate from other products. The focus in this part of the marketing mix should be a combination of quality and sweetness.
Price – Normally, Cadbury product are priced in relation to their quality. However, in order to cater to the needs of the other segments, the price of a product is adjusted e.g. Eclairs, Perk, Five Star. (Zigu, 2008). The price for a bar of chocolate is about 70p. Cadbury should follow its traditional pricing and in the long run, strategize to satisfy.
Place or Distribution – Cadbury’s distribution is obdurate, fantastic and widespread. It is strongly present in all urban areas as well as A, B and C category towns. Although the rural marketing of Cadbury is weak, that is because demand there is also weak. According to Bhasin (2015),
“Cadbury follows the same mantra of FMCG marketing which is breaking the bulk. The Cadbury chocolate is manufactured in Bourneville, England. Recently there was an advertisement which promoted that Cadbury buys only the best cocoa beans from Ghana for its chocolates. These chocolates are then distributed across the world. Cadbury is present in 200 or more countries. Once the chocolate reaches in bulk, it is broken down as follows.
Company >> C&F agent >> Distributors >> Retailers >> Consumers”
Due to the channel, the distribution costs of Cadbury are expensive. However, because of the demand in the market, the costs were going to be expensive regardless. That is something which has considered during the product distribution. In the end, Cadbury has a very srtong presence in the market and consequently, Cadbury products are located in any convenient store. Because of this presence, Cadbury’s new product can easily get to the final consumer.
Promotions – There are many ways to promote a product in several areas of media. E.g. the use of internet advertisements, newspapers or magazines, endorsements and special events to advertise their product. The aim of the promotion should be to create awareness that Cadbury has chocolate brand more design for kids. Cadbury could give incentives such as contests, free items or discounts in order to increase the sales of a given product. Social media (YouTube, Facebook, Twitter, etc.) has proven to be very effective in product exposure. Television commercials are also a good way to expose new products to the world. However, adverts are costly, and may do more harm than good (Cadbury has been accused of racial ads severally). Endorsing celebrities that a favoured highly by children such as, Odell Beckham Jr. Justin Bieber, DJ Khaled, Cristiano Ronaldo and Beyoncé, etc. may be effective.
Monitoring and Evaluation
As the product enters into the market, the business plan should be regularly scrutinised on a basis. A comparative analysis can be conducted by aligning review dates with both short and long terms goals outlined in the business plan. This is practiced monthly, quarterly or annually. Developing a tracking system can also help assess where the product stands in the market regularly. Through this approach, the business can make slight changes if the product is underperforming. Additionally, the business should update its plan if need to. A business plan is not to be treated as an unchangeable document. Moreover, coordinating business and marketing plans. Because, both plans overlap in several ways, reviewing both plans at the same time regularly helps monitor the goals of each plan. If a part of one plan was to change dramatically, an evaluation on the impact it may have on another plan is carried out. (McQueery, 2017) Lastly, Benchmarking is a proficient method to gain feedback about the performance of a business. According to tutor2u (2017)
“Benchmarking involves looking outward (outside a particular business, organisation, industry, region or country) to examine how others achieve their performance levels, and to understand the processes they use. In this way, benchmarking helps explain the processes behind excellent performance. When lessons learned from a benchmarking exercise are applied appropriately, they facilitate improved performance in critical functions within an organisation or in key areas of the business.”
16.1.2017