Cadbury Marketing Case Study
MARKETING Choose a product and then critically analyse its market situation and positioning, using relevant marketing concepts. Product Selected: Cadbury Dairy Milk (CDM) ASSUMPTIONS & LIMITATIONS ASSUMPTIONS: ? While analyzing the market segmentation of CDM assumptions are made for some of the segmentation variables. ? Model Market Segments are developed for CDM which are not the exact market segments of CDM. ? While preparing the Perceptual map (Price & Quality) users reviews about the chocolates from Mouthshut.
com and perceptual map of Indian chocolates from Tutor2u Limited are considered. In case of CDM’s Marketing Mix, some assumptions are made regarding marketing mix elements. Note : Wherever the assumptions are taken they are mentioned in the essay. LIMITATIONS: ? The scope of essay is limited to the Indian Market of CDM. ? Not much data is available for analyzing the Market Segmentation of CDM.
MARKETING Page 2 Table of Contents Page 1)Introduction 4 2)Product Profile 4 3)Market Situation Analysis 3. 1)Market Segmentation 3. 2)Target Market(s) 4 5 7 4)Positioning Analysis 4. 1)Perceptual Mapping 4. 2)Marketing Mix 9 10 10 5)Conclusion 12 6)References 13
MARKETING Page 3 1)Introduction “Marketing is a significant dimension of any business in today’s highly competitive environment and financial success is often dependent on marketing ability”(Kotler et al,2009) As in this contemporary world business is becoming more complex,awareness of changing business trend and use of marketing concepts to tackle these changes are requisite skills for next generation marketers.
Many of the products failed because customers are not aware of them,or they costs too much for their target consumers,or they are wrongly positioned in the markets.
Thus,it is required that companies should focus on marketing of their products and utilize marketing concepts like market segmentation,target marketing,positioning and others to understand customers demand and preferences,market segments,target markets,consumers buying behaviors and their core competences to cope up with competitors in target markets. Now in order to understand the practical importance of these marketing concepts in real world scenario lets critically analyze the market situation and positioning of Cadbury Dairy Milk(CDM) chocolate which is a product of Cadbury.
As Cadbury’s marketing varies according to countries,this essay will limit its examination to Cadbury India Ltd. and will critically analyze CDM’s market situation and positioning relative to its competitors in Indian market. This essay begins with a brief introduction of CDM and then deals with its Market Situation and Positioning analysis,and finally ends with a conclusion.
In Market Situation analysis,current market of CDM is analysed followed by its market segmentation and target market analysis.
In case of Positioning analysis,CDM’s positioning relative to its competitors is critically analysed using perceptual map and marketing mix. 2)Product Profile CDM was first launched in 1905 in Britain and now it is sold in 33 countries with average sales of more than 250 million bars per year(Cadbury,2011). In 1948,CDM first entered Indian market and currently dominating the market not only because its the most delicious and best tasting chocolate but also because of its affordable price and memorable communication(Cadbury India,2011). 3)Market Situation Analysis
The chocolate market in India is estimated around INR 2,000 crore with a growth rate of 1820 percent per annum(Business Standard,2011). Cadbury is the major player with market share of around 70%, of which 30% is because of the success of its Dairy Milk product.
CDM is also considered as the flagship brand of Cadbury with average sales of around 1 million bars per day(Cadbury India,2011). Cadbury is facing heavy competition from Nestle which accounts 25% market share(Business Standard,2011),and low scale competition from Amul and Lotte.
Both Cadbury and Nestle have enjoyed the leading position in market for a long MARKETING Page 4 time, however, globalization have escalate the competition by bringing new players in this field(Corporate Battles,2011). With the entrance of international firms like Mars and Hershey severe challenges for CDM are introduced as now Mars Bars and Snickers are sharing the shelves of stores with CDM and Nestle Kit Kat(Youth Ki Awaz,2010). The growth drivers of chocolate industry in India are increasing income level, affordable price of chocolates, and shift from traditional sweets to chocolates.
CDM as being a market player sees lots of opportunities and growth potential in this field,however it has threats of competition from international firms. Further on large scale, chocolate market is facing many challenges like increase in raw material prices,entry barriers because of duopolistic market and low scale government assistance(Business Standard,2011). 3. 1)Market Segmentation According to McDonald et al(1998),Market Segmentation is defined as a process of categorizing customers within a market into groups who share similar needs and wants.
Now lets analyze the market segmentation of CDM using four major segmentation variables described by Kotler et al(2009): Geographic:As CDM is focusing whole India(Cadbury India,2011),lets assume that on the basis of density India can be divided into 3 sub segments – rural,urban and suburban.
Demographic:In terms of age group,CDM is focusing teenagers and adults(Cadbury India,2011). In terms of family life cycle,it can be assumed that CDM may consider young/single or married,matriculates and college goers,married with no children under 18,empty nest couples and married old couple/old single.
Further,disposable income level can be assumed as high/ medium/low,in addition to this,for social class it can be assumed that CDM may target middle, upper,and lower uppers class. Psychographic:In regard to CDM,it can be assumed that personality traits may consists of people who wants to enjoy their life and life styles may include persons who are willing to try alternate products in place of conventional food items. Behavioral:In case of occasions,CDM includes both special and regular occasions(Cadbury India,2011). It can be assumed that benefits may include quality and economy, usage rate can be heavy/medium/light,readiness stage an be aware/informed/interested,and attitude towards product can be positive or negative.
Segment Formation For market segment formation, segmentation variables are combined in best possible way to divide whole market into segments. Now lets carry out CDM’s segment formation on the basis of above analysis, to divide the whole market into different model segments. The model segments developed below are not the exact market segments of CDM,these are developed to analyze the market segmentation of CDM in a better way and must be considered as an example or reference. MARKETING
Page 5 Fig1 According to Kotler et al(2009) for effective market segmentation market segments formed must be measurable,substantial,accessible,differentiable,and actionable. While carrying out the CDM’s segment formation effective market segmentation has taken into consideration as segmentation variables are combined in such a way that,first,model segments formed are measurable for example using density and disposable income level characteristic of a segment can be measured.
Second,model segments are substantial as all the formed segments are large and profitable enough to serve.
Third,model segments are conceptually distinguishable as for rural area social classes considered are middle and lower upper class assuming that considering upper class for rural areas is not feasible. Fourth,model segments are accessible as they can be effectively reached and served. And finally,model segments are actionable as only segments with positive attitude towards CDM are considered. MARKETING Page 6 3.
2)Target Market(s) Target Market is a group of consumers on which company has decided to focus with an aim to satisfy the group in a competitive way(Lancaster,2001).
CDM targets prospective customers – teenagers and adults including all the family members to celebrate any occasions. CDM in addition to upper class also targets the lower and middle class, by reducing its price to an affordable level. Further,CDM has targeted the gift occasions by providing the gift packs and offers at the time of festivals(Cadbury India,2011). Now lets discuss selection criteria’s which should be used by CDM for selecting target markets and implement them on model segments developed above.
These model segments are used here as reference models for carrying out the analysis.
Further,in this section after implementation of selection criteria CDM’s target market will be critically analyzed. Consumers Buying Behavior:The consumers buying behavior is impulsive in nature because of the fact that buying a chocolate is an impulse purchase and decision to buy a chocolate is not prepositioned. Further,buying behavior is also affected by word of mouth,desire to try new chocolates and festivals as consumers tends to gift chocolates instead of traditional sweets on festivals.
New Entrants:The threats of new entrants are minimal for CDM because of its strong brand name. However,at rural level domestic new entrants can affect the profit margins of CDM by providing products at very low cost.
Competition:CDM faces heavy competition from Nestle’s Kit Kat and Bar One,Amul’s Milk Chocolate and other international firm’s products like Mars Snickers. However,in suburban areas competition is medium because competitors are less as international firms like Mars and Hershey does not have presence in those areas.
Further,CDM has heavy competition in rural areas as lots of cheap domestic confectioneries are available in those areas in forms of rolls, chewing-gums,lollipops and others. CDM Competencies:Good quality,strong brand position,high awareness,extensive reach and affordable price are the key competencies of CDM which differentiate it from its competitors. Profitability:As rural parts of India lack infrastructure eg.
refrigeration,have limitation of disposable income and low consumption,it will hamper CDM’s perceived benefits.
Urban parts because of high population,income level,and usage rates have high profitability similarly suburban areas have moderate profitability. Overall Attractiveness:Urban areas have high attractiveness because income levels and usage rates are high and if most popular chocolate is consider than CDM steals the show. Similarly,the attractiveness for suburban areas is moderate,however,rural areas have low attractiveness because of low disposable income and low profitability. MARKETING Page 7 Fig2
From the implementation above,it can be concluded that Segment A is the best option for CDM and Segment B can be considered as second choice.
However,from the target market of CDM it seems that they are also targeting rural areas(Segment C)which does not appears as good option for them. From my research on CDM,I found that it seems CDM is following full market coverage with differentiated marketing as for rural areas they have extended CDM’s product line and came up with an innovative solution of CDM Shots which are made to withstand rural temperature fluctuations and are cheaply priced at INR 2 for 2 pieces(Cadbury India,2011).
Further,consumer buying behavior suggests that special occasion should be targeted and it seems that CDM has taken special occasions into account while selecting target market as they have targeted gift occasions, in addition to this they are also targeting all the occasions to celebrate(Cadbury India,2011). Further,on close analysis of CDM’s target market with Segment A,it seems that both are closely related in terms of targeting age group,occasions and social class.
It can also be said that CDM has carefully considered its unique selling propositions- quality and extensive reach,and competition in selecting target market so as to gain competitive edge over its competitors.
Thus,in laconic MARKETING Page 8 from my point of view CDM has carried out its selection of target market in an efficient and effective manner. 4)Positioning Analysis
According to Guiltion et al(1997),product positioning is defined as a process of creating a desired image for a product by tailoring the marketing programs- including product attributes, packaging,distribution and others – to meet the needs of customers within a target market. “Product positioning takes place within a target market segment and tells us how we can compete most effectively in that market segment. “(Urban et al,1991). Fig3 CDM has changed its positioning from time to time and currently it has positioned itself as a post dinner dessert(Cadbury India,2011).
However,its competitors Amul’s Milk Chocolate is positioned as an affordable,enriched milk chocolate(Amul,2011),Nestle’s Kit Kat is positioned as a snacking and Bar One is positioned as trendy,cool anytime snack(Nestle India,2011).
Now,lets critically analyze CDM’s positioning relative to its competitors using relevant marketing concepts: MARKETING Page 9 4. 1)Perceptual Mapping As customers perception plays an important role in product positioning(Kotler et al,2009),lets use perceptual map which is a graph that plots various positioning options and helps to understand customer perceptions that affects purchasing decisions.
Fig4 Source:Adapted from Tutor2u(2011);Mouthshut(2011) From the perceptual map of Indian chocolates,it can be interpreted that customers perception about CDM is high quality and affordable price chocolate,it seems that CDM has taken customers perception into consideration while positioning itself on the basis of following two reasons,first,as in India people are shifting from sweets to chocolates and there is tradition of having sweets after dinner,CDM being perceived as a quality chocolate can easily grab these customers by positioning itself as a post dinner dessert.
And second,as customers view CDM as an affordable price chocolate,CDM can persuade its customers for its regular consumption in form of post dinner dessert. 4. 2)Marketing Mix Marketing mix is defined as a framework which helps to structure the approach to target market, it consist of mainly 4 elements- Product, Price, Place and Promotion.
Every component that constitutes marketing mix must support the product’s positioning. Now,lets MARKETING Page 10 ritically analyze the marketing mix of CDM relative to its competitors,in order to find out whether or not these marketing mix supports the positioning of CDM in its target market: Fig5 Source:Kazemi et al(2010) Product:In terms of brand and quality CDM is ahead of Nestle’s Kit Kat,Bar One and Dark Chocolate,Amul’s Milk Chocolate,and Lotte’s Choco Pie and Coffy Bite. In relation to international firm Mars,CDM’s quality is low but CDM’s extensive reach in terms of its delivery network in India outweighs its low quality in comparison with Mars.
Further,many Indians still view CDM as luxury product and not as household goods. CDM has extra-layer packaging similar to Nestle,Amul,and Mars,but better than Lotte.
Price:The price range of CDM includes INR 5,10,15,25 ; 100 depending upon the weight/quantity,starting with smallest CDM of 10. 5 gm priced at INR 5(Cadbury India,2011). Earlier,smallest Nestle’s Kit Kat with four fingers was available at INR 10 but now it is available in new format of single finger at INR 5,similarly Nestle’s Bar One is also available at INR 5;10(Nestle India,2011).
Further,Lotte’s Choco Pie is priced at INR 10(Lotte India,2011) and smallest Mars’s Snicker is available at INR 10 in Indian market. Place:CDM has good physical distribution with 4 regional offices,6 factories and 1 cocoa operation plant(Cadbury India,2011). From my day-to-day experience,I found that CDM has presence in grocery and retail stores with Amul’s and Nestle’s chocolates.
In supermarkets,CDM,Amul’s,Nestle’s and Mar’s chocolates are present,however,Mars reach is limited to supermarkets and big retail stores only.
Further,I found that CDM is also available in sweet shops,gift shops,restaurants and ice cream parlors whereas other competitors like Mars’s,Nestle’s,& Amul’s chocolates are hardly present there. Promotion:CDM is carrying out its promotion through television,outdoor,word of mouth,radio as well as internet by offering contests and hosting competitions online(Cadbury India,2011), whereas it seems that Amul’s and Nestle’s chocolates rely mostly on TV commercials. CDM is also able to provide emotional appeal in their aids which differentiate it from other competitors.
Further,CDM has appointed Indian superstar Amitabh Bachchan as brand ambassador for its promotion. MARKETING Page 11 From the above analysis,it can be said that marketing mix of CDM are in relation to its positioning because of the following reasons,first,as CDM is positioned as a post dinner dessert its price should be affordable for regular intake,it seems that CDM have considered this as its starting price is INR 5 which is either equal or less than its competitors,and also easily affordable by most of the population.
Second,generally consumer tends to buy things for their post dinner dessert in large quantity and CDM’s variation in price relative to its quantity and family pack offers helps it to outweigh its competitors. Third,in terms of place,people prefer to buy post dinner desserts from their nearby stores instead of supermarkets which are generally located at the outer end of cities,thus,presence of CDM in small stores is beneficial.
Further,as in India there is a tradition of having sweets/ice cream as post dinner dessert but now it is shifting to chocolates,it appears that CDM has cleverly used its marketing mix to support its positioning by establishing its presence in sweets shops and ice cream parlors which are not targeted by other competitors. In addition to this,CDM has given a real meaning to its positioning by extending its delivery to restaurants which is a smart move and provides CDM a competitive advantage over its competitors.
Fourth,in case of promotion CDM steals the show as other competitors rely only on one source i.
e TV commercials whereas CDM uses different sources for its promotion. Further,its my own view that CDM has also cleverly chosen its brand ambassador relative to its positioning in order to gain a competitive edge,on the basis that as CDM has positioned itself for all age group choosing Amitabh Bachchan will meet their need because he is the only superstar in India which has large fan following among all the age groups.
And finally,in terms of product people generally like to have something good in quality as their post dinner dessert,thus,it seems that CDM has effectively used its strengths of quality and brand to gain competitive edge while deciding its positioning. However,in terms of product many Indians still view CDM as luxury product and from my point of view this consumer perception is not in line with CDM’s positioning,on the basis that people generally from middle and lower class prefer household products instead luxury products for their post dinner dessert.
In laconic,from my point of view CDM’s marketing mix clearly supports its positioning and CDM has correctly positioned itself in market at relatively better position than its competitors.
5)Conclusion From the market situation and positioning analysis of CDM,its my own personal view that CDM has relatively strong position and has effectively discovered different needs and groups in the marketplace and selected the target which it can satisfy in a competitive way. Also,CDM has correctly positioned itself to occupy a better image in the minds of its target customers in order to maximize its potential benefits.
However,many of the Indians still view CDM as a luxury product and not as a household product and this view can affect its positioning,thus,CDM should slowly start to promote itself as a household good so as to strengthen its positioning and gain sustained competitive advantage over its competitors. MARKETING Page 12 6)References Amul – The Taste of India (2011) Chocolate, [online] Available at: http://www. amul.
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