Cadbury Business Analysis

Cadbury, a brand well known and loved by millions around the world, had a very humble beginning. It began with the opening of a grocer’s shop in Ball Street, Birmingham in the year 1824 by John Cadbury. This grew to become the most recognisable brands in the world. In most parts of the world just the word Cadbury symbolises chocolate. John who as a young Quaker was against alcohol sold tea, coffee, cocoa and drinking chocolate at his shop at the beginning, later he started producing cocoa and chocolate. After few years his brother Benjamin joined and later they got a Warrant as manufacturers of chocolate and cocoa to Queen Victoria. Later when John Cadbury retired his sons Richard and George took over the company. They thought the company could not survive in the dirty conditions of the city and were egger to move it out of Birmingham, they setup a factory 4 miles from the city and had a concept in mind which was “factory in garden”, to provide hygienic working environment for their employees, the factory had opened in the year 1879. The Cadbury brothers had named it Bournville. There was a rapid increase in the work force of the company by late 1880’s and the factory was expanded.

The first ever Cadbury chocolate bar was launched in the year 1897 and their famous brand Cadbury’s Dairy milk began in the year 1905. By the end of the 1930’s Cadbury had become the 24th largest manufacturing firm in the Britain. The Cadbury brothers believed that all human beings should live in peace and should be treated properly, which lead to the building of houses, schools and many other things for the community for which the Bournville Village Trust was set up George Cadbury. Then in the year 1969 the Cadbury brand merged with Schweppes to form Cadbury Schweppes, after this merger there was no owner from the Cadbury family till date. In the year 2008 Cadbury and Schweppes were demerged separating its confectionary and drinks business. Recently on February 2, 2010, Cadbury became part of Kraft Foods, the American giant in confectionery, food, and beverage. Source: (http://news.bbc.co.uk/1/hi/england/8467489.stm, http://news.bbc.co.uk/1/hi/england/8411696.stm).

2. Micro Environment: SWOT Analysis

2.1 SWOT:

A SWOT analysis allows managers to focus clearly on the meaningful strengths (S) and weaknesses (W) in the firm’s internal environment and opportunities (O) and threats coming from outside the firm, the external environment. A SWOT analysis enables a firm to develop strategies that make use of what the firm does best in seizing opportunities for growth while at the same time avoiding external threats that might hurt the firm’s sales and profits. So below I have done I SWOT analysis of Cadbury (Solomon, Marshall, Stuart, Barnes, Mitchell Marketing Real people, Real decisions, First European Edition Page 66).

Strengths

• Cadbury is world’s top most chocolate provider which has international reputation.
• Cadbury is well know and easily identifiable brand among.
• Cadbury is well known force in marketing and distribution strategies that is one of the reasons for it being the world leaders of chocolate industry.
• Users are assured about the qualities of the brand.
• The strength of Cadbury lies in Dairy milk. Which is the most sold chocolate in Indi
• Cadbury has adjusted itself to all the custom around the world according to the market.
• Cadbury is a leader in innovation and has established brand name, and has strong competence in manufacturing.
• Cadbury has a advantage as it has understanding of consumer in the segment of chocolate, candy and chewing gum.
• With 9.9% of global market share Cadbury is the largest confectionery in the world.

Weaknesses

• The competitors of Cadbury e.g. Nestle have a very diverse product portfolio, where as it only depend on the confectionery and beverage market, where as its competitors can use profits from other areas of the business.
• Cadbury doesn’t have great international experience like its other competitors; it has traditionally been strong in United Kingdom Europe only. New to America, it possibly lacks the understanding of the new emerging markets compared to competitors.

Threats

• Worldwide there has been an increase in demand for cost environment, particularly for energy, packaging, sugar and transport. Global supply chain in low cost locations.
• There is competitive pressure from other brands in the market, nationally and globally. Over aggressive promotion and price activity by its competitors – there is a possible price war in all developed markets.
• Social concerns, rise in obesity and consumer’s obsession with calorie count. Nutritional and healthier lifestyles is very much affecting demand for core products of Cadbury.

Opportunities

• The opportunities lie in new markets, i.e. developing countries and emerging markets like China, Russia, India and other Asian countries where populations are growing, the wealth of consumer is increasing and there is a high demand for confectionery products.
• The market of confectionery highly characterized by a degree of acquisition and merger activity in recent past. There are opportunities to increase the share through specific acquisitions.
• The main key for survival in the Fast Moving Consumer Goods (FMCG) market is increasing efficiency and cost reduction. Cadbury’s Fuel in Growth and cost efficiency of programmes seeks to bring huge cost savings by, Moving production to countries with low costs, where the raw materials required and labour cost is cheaper, reduce internal costs and use supply chain efficiently, global out sourcing and procurement, and wise investment in Research &Development.
• Innovation is the most important and key driver in any kind of market. To respond to variety in consumer preferences and tastes like healthier snacks with low calories needs to be developed. There should be more of sugar-free products in the Cadbury’s premium indulgence treats like its center filled chewing gum varieties. There is a high demand for low-fat, natural and organic confectionery.

2.2 Porter’s Five Forces Analysis

Supplier Power – The Cadbury Company has got many contracted suppliers that are able to support their on-going production operations. There is an existing competition in the market, for the raw materials such as nuts or special ingredients but still it is sufficient enough to satisfy their production requirements. Cadbury has maintained a very good relationship with their supplier which is considered as a very good an advantage.

Barriers to Entry – Cadbury is already very popularly and widely known, it can easily earn the trust of the countries. The only and the main hindrance that might affect the production of the Cadbury is to find a good positioning and gather the necessary requirements for the smooth entry and running of the factory and the foreign policy and laws that might affect the operation.

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Power of Buyer – The demands for chocolates have gone down because of the existence of health conscious. The price of the product is no longer subjected on the demand of the people but is now subjected to the increasing number of competitors in the market that offers the similar type of products at a much lower cost might be the cause of the customer loyalty alteration.

Rivalries – There are many competitors in the business who are planning to take over the supremacy of the company that has been kept for years. The difference in the choice of the customers depends on their taste and preferences. And in the recent past, companies like Nestle in this market are continuously developing their new products or innovating new ideas making it harder to compete.

Threats for Substitutes – There is not much of a threat which comes from other competitors, because of the well established brand name in the market created by the company. Through their huge level of equity, the brand name of Cadbury is transformed into three different classes that makes more effectiveness in the market.

3 .Macro Environment: PEST Analysis

Political: The Company has a strong advantage as it is very senior in confectionery business. With this advantage the company to manage to adjust in every country around the globe. Another advantage is the seniority of the management which enables the new foreign country to also welcome the company’s existence in their market because of its good competence in the market.

Economic: Without any doubt Cadbury is making a huge contribution in United Kingdom as well as in the economies of the other foreign countries where it operates. The number of sweet lovers around the world is very high which ranges from all sections of the society, the company has label to its name as the best choice available in the market for sweet loving consumers around the world. The economic downturn is another contradicting factor that is affecting all confectionery companies.

Social: People have sweets after every meal so the impact of this business on the society is really great. Therefore, many of the individuals can enjoy the happiness it brings inside the house. And in some other cases many people turn down the idea of eating chocolates because of many health related problems like obesity, stomach infections and dental problems i.e. cavity and gum weaknesses. When it comes to valuing of the people, Cadbury highly recognizes the rights of the workforce and has been valuing the ideas they might like to contribute for their progress. Providing hygienic and excellent work conditions for its work force has been one the top most aims of the company from the beginning of the company, it can be clearly seen in the ‘factory in garden’ concept of their Birmingham plant which opened in the late 19th century.

Technology – Cadbury has always been a company who recognises the traditional crafting of chocolates, but also knows the importance of technology in the line of production and in the industry. From the production line, Cadbury has incorporated into various types of machinery that make their production to be a very cost-efficient procedure.

4. Cadbury’s Marketing Mix

Product: A product is a good, service, an idea or a place- whatever is offered for sale in exchange. The product aspect of marketing also includes the packaging, physical features, design and any other associated services. So we know that a product is a many different elements put together for the success of the product (Solomon, et al Marketing Real people, Real decisions, First European Edition Page 37). In case of Cadbury there are a range of products from chocolate bars, cakes and biscuits, drinks, ice-cream and boxes, bags and tins of chocolates. To be more specific in the chocolate bars they provide from their classics like Dairy Milk, Bournville to the new products like Crunchie, Twirl, Wispa, Twisted, Flake, Boost, Chomp, Double Decker and one of its latest products launched in the year 2010 called the Silk. There product is mainly targeted towards the young population of the market. Source: (http://cadbury.co.uk/ourproducts/today/Pages/jsversion.aspx)

Price: Price is amount the consumer must give to receive an offering. Price is used as a way to increase consumers’ interest in a particular product, for example to put an item on sale (Solomon, et al Marketing Real people, Real decisions, First European Edition Page 37). Cadbury offers a range of chocolate bars and other products from the price range on 55p to £3. During Christmas it has special range of gift pack items which are available in packs of £18, £21.50, £35 and £50. Whereas the competitors in market have lower rates but Cadbury’s customers are assured of its quality. Source: (http://www.sainsburys.co.uk/sol/index.jsp, http://cadbury.co.uk/home/Pages/home.aspx)

Promotion: Promotional activities include what the marketers have undertaken to inform consumers of their product and to get new customers to buy these projects. There are many promotional activities which are run by Cadbury like the 2 for 1 offer and during the holidays they special gift packages which can be used for Christmas and New Year. It’s been in promotion from the early 1900’s when it used to use posters by famous artist. Cadbury Dairy Milk poster campaigns used the iconic ‘glass and half’ image to stress its high milk content. And in 50’s it showed ‘the Bournville Story’ in cinema halls. And during the TV age there was huge adverts with comic characters Mel Smith and Peter Cook. The Cadbury ‘Gorilla’ ad premiered, immediately becoming one of the most popular and critically acclaimed TV ads of recent years.Source: (http://cadbury.co.uk/cadburyandchocolate/ourstory/advertising/Pages/advertising.aspx)

Place: There is no use having a great product if the target customer cannot easily access it. This is where the place part of the marketing mix is important. Cadbury needs to find the most cost-effective channel of distribution to get their main products to their target customers. The nature of the product and its target audience will influence the places at which a company wishes to sell its products. As Cadbury’s product is low-priced, i.e. a chocolate bar and other chocolates, it uses intensive distribution by getting their product into as many retail shops and outlets as possible Source: (http://www.skillsspace.co.uk/business_studies/14to16/marketing/place.asp).

5. The Segmentation, Targeting and Positioning Strategy Cadbury:

a. Segmentation: Cadbury’s market place is comprised of many different segments of consumers, each with different wants and needs. It can be categorised into four segments i.e.

Break Segment: The products which are consumed as snatched break and normally consumed with tea or coffee, for instance Cadbury’s Time out and snack range.

Impulse Segment: Most of these products are just purchased on impulse, for consuming at the time on purchase only; they include Twirl, Star Bar, Crunchie and Dairy Milk.

Take Home Segment: These are the products which are purchased in a purchased in a super market and stored at home for later consumption, like Cocoa powder and hot chocolate.

Gift Segment: Specially packed boxes of a variety of Cadbury chocolates, for the purpose of giving as a gift on occasion like Birthday, New Year or Christmas.

b. Targeting: Targeting is a step in which marketers evaluate the attractiveness of each potential segment and decide which of these groups they will invest resources against to try to turn them into customers (Solomon, et al Marketing Real people, Real decisions, First European Edition Page 222). .Cadbury has many targeted markets around the world. The female population makes up more than Indian population in any country. This is a large customer base for the products. The main aim for targeting the female population is that it will be in a position to influence the rest of the population to purchase the product. The female population is the largest consumer of chocolate product not only in the United Kingdom market but in other markets as well. The other targeted market is that of the kids segment which also comprises of most of the sales of chocolate in any part of the world.

c. Positioning: Positioning means developing marketing strategy aimed at influencing how a particular market segment perceives a good in comparison to the competition (Solomon, et al Marketing Real people, Real decisions, First European Edition Page 227).

6. Recommendations:

• Cadbury should increase Marketing and promotion globally by marketing new and different products in emerging markets.
• It should focus on non-chocolate development and acquisitions by developing a new line of non-chocolate candies.
• Development of novelty and specialty markets like Gourmet Line on Internet, by developing gourmet line that is to be distributed via internet.
• Aggressive new product should be development like low calories, sugar free chocolates. This has to be done by researching and developing new products with joint venture.
• It should concentrate more on the American markets as it has high revenue in this particular industry and Cadbury doesn’t have any strong roots, it is mostly dominated by Hershey’s.
• It should also develop new products for the kids segment, which now days is a very huge market.