Cadbury Plc market environment

An area where there is effective sale of goods and services Cadbury operates in about 60 countries like India, Australia, Canada, Middle East, Pacific countries with its headquarters in UK.

Nature of business

Cadbury has a strong name in the market for selling a variety of products in three different categories like chocolates, candy and gum.

Chocolates- dairy milk, five star, time out, perk, munch etc.

Pest-G analysis:

This is an analysis in which political, social, economical and technological factors are taken into consideration when charting an organization’s long term plans. [2] 

Political:

Political decisions can be made by the Indian government like increasing the tax rate and this increase will lead to decrease in sales of the chocolate and therefore profits, this will also limit the opportunity for growth of the company.

Government can also endure restrictions concerning the welfare of the society and the workers, and so if the government decides to legislate the functioning and disposal methods of Cadbury this could lead to huge losses.

Since Cadbury is a chocolate factory, the government may highly be concerned about the health problems that Cadbury will cause and some more restrictions and rules could be made about the ingredients of Cadbury which could cause in change of the taste.

Economical:

Increase in interest rates due to some economical factors or phase such as recession, could lead to limiting the opportunity for Cadbury to undergo growing and expanding.

In such recession if incomes get lower then, Cadbury will experience decrease in sales as customer’s priorities change.

In the boom phase, expansion would be a lot easier, economy at the highest and sales are likely to increase.

Social:

The society perception has great effect on the functioning of the company; if alternative equal brands of chocolate appear then customers might switch brands.

Increase in the health consciousness of the society could lead to major losses to Cadbury.

Technological:

Cadbury’s traditional way of processing chocolate might get affected by the introduction of new machines and techniques, causing them more money and being more automated, this change will also force Cadbury to pump in more money for the training of the staff in order to adapt to new machinery and techniques.

The competition:

Cadbury’s Competitors:

Since Cadbury is one of the largest confectionary factories, it must face some competition from other chocolate brand. Cadbury’s main competitors are Nestle, Hershey’s and Mars. But Cadbury’s large range of products open up new means of competitions. Cadbury unlike its competitors have a strong base in countries like the UK, Australia, republic of Ireland, India and etc.

Sales and profit trend [3] 

Competition

Cadbury plc (CBY)[27]

Tootsie Roll Industries (TR)[28]

Rocky Mountain Chocolate Factory (RMCF)[29]

Hershey Foods (HSY)[30]

Wm. Wrigley Jr. Company (WWY)[31]

Imperial Sugar Company (IPSU)[32]

Cosan Limited (CZZ)[33]

Market Cap $Mil

16,960.00

1,310.00

57.80

7,500.00

21,100.00

186.88

2,640.00

Revenue $Mil

7,971.00

497.42

31.90

4,946.72

5,389.10

875.53

1,679.10

Gross Profit $Mil

3,927.00

186.67

13.70

1,631.97

2,853.85

104.95

487.80

Net Profit Margin %

5.11%

10.37%

15.56%

4.33%

11.73%

4.97%

20.83%

Operating Margin %

9.89%

14.24%

24.83%

9.28%

17.87%

6.14%

13.87%

Market Share [4] : it is the total percentage of the total market

occupied by a company.

Competition

Cadbury plc (CBY)

Mars

Nestle (NSRGY)

Wrigley (WWY)

Hershey (HSY)

Kraft Foods (KFT)

Ferrero

Global Confectionery Market

10.1%

8.9%

7.7%

5.5%

5.5%

4.3%

4.2%

Chocolate

7.3%

14.7%

12.5%

—

8.3%

7.8%

6.8%

Gum

27.0%

—

0.1%

34.5%

1.3%

0.1%

—

Candy

7.4%

2.8%

2.9%

2.2%

2.7%

0.3%

1.5%

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Target Markets:

These are group of customers the company had aimed to put all efforts in supplying their need. [6] 

Most obvious target would be young kids

Cadbury diversified its target audience to include old aged people along with adults

Retailers and chocolate companies

Link to text only version – Opens in a new window

The Company:

Profits and sales trend:

7According to the latest press release in 2010, Cadbury experienced a substantial increase in the total revenue and sales as well as profits for this year. Moreover, it was mentioned that the revenue increased by 5% and the second half of growth increased by 6%. This progress was a consequence of the increase in all the three categories of Cadbury. The chocolate grew by 7%, the gums by 2% and candy by 5%

Market share:

Business sector: Cadbury happens to be a business to business.

Cadbury lies in the confectionary sector.

Revenue [8] 

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XI. The project focus:

Cadbury sells a variety of products and in my project I will be focusing

on dairy milk Cadbury chocolate.

Dairy milk chocolate bar:

Most common and preferred Cadbury chocolate brand worldwide.

Ingredients [9] : Full Cream Milk, Sugar, Cocoa Mass, Cocoa Butter, Milk Solids, Vegetable Fat, Emulsifiers (Soya Lecithin, 476), Flavours. May contain traces of Nuts. Milk Chocolate contains Cocoa Solids 26%, Milk Solids 28%.

Contains the logo glass and a half milk, purple color packaging.

Lies in the chocolate category and country focus will be on Indian market.

Cadbury can also merge with their suppliers in order to have two way benefits and avoid conflicts

It can also start making their own cocoa and use of ingredients in order to save up money and import taxes.

Threats:

With health awareness increasing more day-by-day the production and sale of the chocolates will decrease

Some regional laws depending on the country might ban some ingredients or certain type of chocolate which might cause bad publicity and loss in customers and retailers.

Increased severe competition from other chocolate brands and using competitive pricing might cause reductions in the revenue and increase costs.

The increase of quality control and regulations announced regarding the safety of the ingredients and side effects.

The Company Marketing Strategy:

XIII. Market Segmentation: this refers to dividing the target market into groups according to their needs and interests. [10] 

Each company when launching new products or brand would consider market segmentation.

Demographic variables which implies to segmenting according to age, gender, income, marital status. In case of the age group Cadbury first targeted young children and eventually targeted the adults too. This helps in identifying the marketing mix and features that would attract that particular group.

For income, it will help set the prices of the products that normal customers can afford.

Segmenting according to lifestyles might help target people with certain habits, cuisines and fulfill their need of consumption of the products for example some people would go for the dark expensive chocolate due some certain traditions.

Benefits that the product brings: some customers find it very sensible to buy a basic product that would just satisfy their need like Cadbury dairy milk.

Occasions: this group of customers would only buy these chocolates on occasions such as Christmas, Halloween etc. known as seasonal buyers. (crème eggs, Easter eggs)

Cadbury also considers the basic preferences for example having a dairy milk hazelnuts chocolate bar with a cup of tea or coffee. Considering habituation is also segmenting.

XIV. Targeting:

This term refers to considering a certain group of people to make them customers of the brand.

Targeting changes with the change of product but basically for Cadbury target market is the whole population.

XV. Positioning of Cadbury:

When Cadbury entered the market, it was whole unique chocolate with the special recipe and packaging.

Effective positioning of Cadbury took place when advertising succeeded and different varieties of chocolates started coming up. It’s very important for company to have close relation to the customers which Cadbury was successful at doing and that the major factor that promoted the chocolate.

XVI. Differentiation:

Cadbury started off differently with its recipe of the dairy milk. Cadbury basically cannot be classified as chocolate since it doesn’t have enough cocoa and so is called dairy milk.

Cadbury dairy milk chocolate barC:UsersDanaDocumentsIMG_12112010_215635.png

Cadbury was placed in between the differentiated leader and cost leader because its unique but at the same time keeping costs as minimum as possible. (using cost-effective methods) [11] 

Cadbury dairy milk chocolate barXVII. Growth strategy: these are tactics towards gaining prosperity.Boston Matrix Diagram

Boston Matrix: it is a chart drawn to analyze the products as business units (product portfolio). [12] 

Ansoff matrix: it’s a chart drawn that allows marketers to grow business through existing markets/new product or new markets/new products. [13] 

Cadbury dairy milk chocolate barhttp://tutor2u.net/business/images/Ansoff%20Matrix%20w500.gif

The Marketing Mix:

XVIII. Product:

Cadbury’s product being discussed here is the dairy milk bar.

Cadbury dairy milk is known to have one and a half glass of cream milk in every 200 grams of dairy milk chocolate.

Packaging of Cadbury:

It has purple packaging as known

It contains the logo which is the glass and a half milk

It should be eye-catching specially if kids were targeted and highly classy if adults were targeted

Easy and safe to open and use

Should contain the ingredients and place of manufacture on the back

Should come in various sizes

Since its chocolate, thick packaging should be used in order to protect chocolate from heat and melting.

Cadbury dairy milk chocolate bar [14] http://t2.gstatic.com/images?q=tbn:ANd9GcTT1RiQe7BpQDznBQU1H-JtPCKN25WIZRaXRuqL_ei6z809YE4c

Product life cycle:

The latter shows the stages the product undergoes from its development until its decline. [15] 

XIX. Price:

-When launching a new chocolate, Cadbury should be considering the group of people targeted for this chocolate and based on that the pricing methods should be set. The price set should definitely cover the costs of the ingredients and the electricity for machines functioning and should also bring in revenue in order to be invested again.

XXI. Promotion:

The latter represents a link between the buyers and sellers where sellers use methods of promoting. [16] 

Cadbury was the first company to use visual advertising and is a leader in innovation. Promotion of Cadbury has been promoted through movie stars on the television, magazines and radios. Advertising strategy should be carefully chosen, it should be cost-effective and reachable to all around the world. Effective Advertising leads to attraction of customer to buy the chocolate, some advertisements even lead to brand loyality and prosperity.

Another aspect of promotion is the sales hence sales refer to reduction in price and usually happen seasonally or on special occasion like Christmas. Sometimes promotion is held to get rid of the lying stocks.http://im.rediff.com/movies/2009/may/05sl8.jpg

Evaluation of the Company’s Strategies and Tactics:

XXIII. Evaluation of the company’s current position:

What makes a good company? The answer to this question depends on every detail of the company’s basic strategies to its profit.

Cadbury has a strong presence in the confectionary market which I am aware of as customer. It has survived a long journey of ups and downs until date. Cadbury’s sales and profit have always been high, as well as its market share and the evidence can be seen below. Cadbury customers are very satisfied with the product, diversifications, advertising methods and distribution channels.

XXIV. Evidence of the company’s success:Image:CBY Revenue and Net Profit.jpg

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A Global Business – Cadbury Revenue Contribution By Region 2008

XXV. Prospects for future growth/success:

Cadbury after all this experience still has a chance of more progress and an opportunity to diversify and entering niche markets

It could develop more products like Cadbury biscuits and ice creams like other competitors.

Conclusions:

Cadbury is a well established company with about 7 operating units in 60 countries

Cadbury has a very high market share in the chocolate market

It is diversified and sells products in three different categories

Appendix:

Cash flow for Cadbury

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