Marketing of Cadbury Company - Case Study Example

Cadbury Marketing research provides the vital information to help marketing managers understand those wants and needs and translate them into actions in their marketing activities. This information reduces the risk and uncertainty marketing manager face and helps them make better decisions. Marketing research is the process of defining a market problem and opportunity, systematically collecting and analyzing information and recommending a (Gibson, 2000). In the marketing research, secondary data which is most cost effective, easily available and less time consuming has to be recorded prior to project. Global scenario of Confectionary industry: The confectionary market consists of chocolates, gum, cereal bars and sugar confectionary. The global confectionary market grew by 3% in 2006 to reach a value of 100.9 billion dollars. Chocolate sales dominate, accounting for 54.4% of the global confectionery markets value. Out of total confectionary market worldwide, Europe generates 46.6% of the total global confectionary markets value. It has been projected that in 2011, the global confectionary market will become to the value of 116 billion dollars, an increase of 14.9% since 2006. By the year 2011, the global confectionary market is forecast to have a volume of 15.1 billion kg, an increase of 9.9% since 2006. (All the data has been extracted from the Data Monitor report on global confectionary, Feb 2008). The confectionary market in regions such as Western Europe and North America has become mature and nearing to saturation. Consumption level in these areas reached to nearly static position. Confectionary market is growing mostly in Central and Eastern Europe, India and China. It has been forecasted that global confectionary market between 2006 and 2010, grow @16% in value terms reaching more than 145 billion dollars. Volume sales have been expected to over 17.8 million tones by 2010. So it has been obvious that globally, confectionery market is expected to grow and Cadbury being the largest company after merger with Hershey it has strengthen their respective positions in the higher-growth markets for healthier forms of confectionery. Confectionary market worldwide is very competitive and it could be very well understood by the fact that the global confectionery market remains relatively fragmented, with the top six manufacturers accounting for less than half (45%) of value sales. Significance for Cadbury: The Company, Cadbury Schweppes is one of the largest confectionary companies based in UK and operates in almost 30 countries. UK has a well grown confectionery industry as a sub-sector of the British food industry. Within the European confectionery industry, the UK confectionery industry leads the field and the UK is unlikely to lose its place as the leading consumer of confectionery products. It has been estimated that in the last ten years consumer expenditure on food has increased to double but the expenditure on confectionary has tripled. It has been contributing considerably to British economy. This situation clearly shows that if Cadbury has to expand its business, it has to move in the areas like India, China, and East Europe etc. Market of confectionery is growing but in the developed country where market growth has stagnated, companies are trying various strategies like expanding its business in the areas which ultimately providing them proper opportunities to grow. Cadbury have 8 major competitors but one of the major competitors has merged with it and provided strategic mileage to the company. This market research has shown the direction of change as well as the direction of progress for Cadbury. It should know its competitors, which are mainly Mass Inc, Hearshey Food Corporation, Nestle SA, Ferrere etc. Most of the companies have similar types of distribution channel and developing new product range. Looking at the market situation it has been very obvious that confectionary market has the potential to grow and at the same time companies also have motivation and zeal to move ahead. 2. Understanding consumer motivation and behavior is not an option- it is an absolute necessity for competitive survival (Engel, Blackwell and Miniard, 1986). In an attempt to demonstrate the importance of the interaction between buyer behavior and marketing theory, Gummesson (1994) has proposed that successful management of process demands that the seller emphasizes the use of customer behavior data for bonding the seller to the customer as the basis for sustaining purchase loyalty. Need for research about customer's opinion and attitude: Here in the case of Cadbury, due to unsafe product (chocolate) supply to shops and failing to immediately inform the authorities after discovering the traces of food poisoning, which ultimately triggered salmonella out break has affected the image of Cadbury and due to this incident, consumers may lose trust in its products. Court observations and actual food poisoning and salmonella out break as well as reporting of incidents in the media adversely affected the Cadbury overall image. Concerns of executives due to this incidence are that the buyers may lose trust and it may harm the overall sale of Cadbury products apart from the losses due to infected products and court proceedings and compensation. So there is a need to start of an image building program for Cadbury and for that purpose one has to take research about consumer's attitudes and opinions about the Cadbury brand. Programme and methods for research: To take on the research about consumers' attitude and opinion we must confine to exploratory research activity. It is used to identify variables influencing consumers and discover how consumers may tend to react to these factors. This research occurs in situations when there is not enough know about consumers to draw conclusions about what variables are influencing their behavior. Two methods significantly used in this research will be consumer suggestions and focus group. Consumer's suggestions may be obtained through conducting a questionnaire survey at retailers point. Another way to find out consumers view is through suggestion boxes at retailers point as well as through telephones or E-mails. Another popular technique is the focus group interview. Bringing together 8 to 10 people with similar background and applying the principles of group dynamics and free association to a marketing problem. This method will provide us a general idea about consumers and market situation, suggest fresh and revitalized ideas, check an advertisement, package or product concept to determine if anything about it is confusing, misleading or negative understanding, consumers' attitude, motivations lifestyles and personalities and do a postmortem on a failed product (Bengston, 1980). After gathering information through questionnaire survey and focus group discussions we will come to know the behavior and attitude of our customers. In this case our basic aim is to have the knowledge of customer's attitude towards Cadbury brand especially after salmonella outbreak. To know the attitudes of the consumers we will use the self-reporting attitude rating scale. The scales are termed as self-reporting because consumer expresses their own evaluation of their attitudes by responding to the scale in the way they think most appropriate. We will use a semantic differentiation scale consists of pairs of bipolar adjectives or antonym phrases as end of a continuing with response options spaced between. Typically the seven position scale is utilized between the adjectives with the middle value being neutral. A consumer is asked to mark the position that most closely corresponds to his or her attitude toward the subject being studied. Responses will be tabulated and profiled, a procedure which dramatically illustrate consumer attitudes. 3. Need for marketing planning: New products are essential to a company's long-term success. The new product development process covers idea generation, screening, concept development and testing, marketing strategy development, business analysis, product development, market testing and commercialization. New product success is influenced by factors which include product superiority, economic value to the user, overall project fit, technological complexity and familiarity to firm. For launching the new product strategies could be sorted out according to prevalent macro (PESTEL Analysis) and microenvironment (SWOT Analysis) (For detail see Appendix). Market oriented strategic planning provides, the managerial process of developing and maintaining a viable fit between organizations objectives, skills and resources and its changing market opportunities. Strategic marketing deals with the bigger picture in a market which links customers, competitors and organizations ability to meet demand. Steps to formulate and evaluate integrated marketing mix for the new product: The first and foremost thing is to develop a prototype product and they are put through rigorous customer tests. After testing the prototype within the organization, product has to go through selected heterogeneous customers' testing. Customers may be randomly selected, may be users of the company products or potential customers. Several decision makers are involved in purchasing the product and opinion leadership from early adopters is sought (Peters, 1997). Consumer testing can take a variety of forms from bringing consumers into a laboratory to giving them samples to use in their homes. Now after the satisfaction of market planning team from products functional and psychological performance the product could be packed and have specific brand name. New product is introduced after analyzing the size of the market and assessing consumers, dealers or retailers reaction towards handling, using and repurchasing the products. In testing Cadbury's gift packs; we have to estimate four variables: trials, first repeat purchase, adoption and purchase frequency. The company hopes to find all of these variables at high levels. Initially consumers who tried the product at no cost are offered the product at a slightly reduced prices and company must note that how many customers select its products again and their reported level of satisfaction. This method could be used in price sensitive markets. For Cadbury, brand name is not a problem but the product preference and the products for which customers frequently ask for are the key criteria for new product development. These buyers also asked to look at commercials and print ads for the new product. Customers are also asked why they bought or did not buy; non buyers receive a free sample of new products and are re-interviewed later to determine product attitudes, usage satisfaction and repurchase intention (Power, 1992). Parallel to this activity, the company must put up the new product on the existing retail counters. The area of (Geographical) product launch is also having its own importance. Launching the new product in one locality, one region, several regions, the national market or the within a whole region and then move to the next region, although companies with national distribution generally new products nationally is also important for the success of the product. Requirement of the customer is directly related to its socio-economic and demographic situations. In the process of marketing plan to the new product, display of products at the stores and shelf position plays an in important role. Number of facings, displays and point of purchase promotion and pricing are the crucial factors leads to successful product. Company must advertise and promote for launching new products. Cadbury's new products basically cater the need for fifth segments. This fifth segment purchases the products as gifts. After assessing the complete market situation company has to go ahead for commercialization. Pricing of the product plays an all important role to make it success. Company must have the proper assessment for demand of the product, quantity of product and capacity of the plant always have an impact on the pricing strategy. Competitors pricing has to be taken into consideration for similar types of product. In addition to promotion, major decisions during this stage include timing, geographic Strategy, target, market prospects and introduce the market strategy. Marketing timing is critical; the new product should be launched at some festival time because gifts are generally exchanged at festival time such as Christmas or Easter. Launching of new products at festival time and first entry in the market (Being first to market lucking up key distributors and customers and gaining reputational leadership) is one of the important aspects of launching a new product. For the new product, the company must target its initial distribution and promotion to the best prospect groups. Presumably, the company has already profiled the prime prospects- who would ideally be early adopters, heavy users and opinion leaders who are able to be reached at a low cost (Kotler and Zaltman, 1976). The company should rate the various prospects groups on these characteristics and target the best group to generate strong sales as soon as possible, motivate the sales force and attract further prospects. To coordinate all the activities for the launching a new products, management of Cadbury must use network-planning techniques such as critical path schedule which uses a master chart to show that simultaneous and sequence activities that must taken place to launch the product. By estimating how much time is each takes, the planners must estimate the project completion time. A delay in any activity on the critical path will delay the entire project (Lockyer, 1984). So it has been very evident from the above discussion that as a marketing planner for the new product, one has to integrate all the marketing mix (i.e. 4p's: product, price, place & promotion) in such a way that all the 4p's complement each other and product range i.e. gift packs will become the maximum revenue & sales generating product. References: 1. Lawrence D. Gibson, (2000),"Quo Vadis, Marketing Research" Marketing research, Spring pp. 36-41 2. Engel J.F., Blackwell, R.D. and Miniard, P.W. (1986), Consumer behavior 5th edition Chicago: Dryden Press. 3. Gummesson, E. (1994), Making relationship market operational, The International Journal of Service Industry Management, 5(5):5-20. 4. Bengston, Roger E. (1980), Despite controversy, focus groups are used to examine a wide range of marketing questions, Marketing News, Sep. 19, 5. Peters, Tom (1997), The circle of Innovation, New York: Alfred A. knopf, pg 9. 6. Power, Christopher (1992), "Will it sell in podunk Hard to say" Business week, August 10, Pp.46-47 7. Kotler, Philip and Zaltman, Gerald (1976), Targeting prospects for a new product, Journal of Advertising Research, Feb: 7-20. 8. Lockyer, Keith, G. (1984), Critical path analysis and other project network techniques, London: Pitman, 9. Report on global confectionary report, Data Monitor, Feb 2008. Appendix: 1. PESTLE Analysis (PEST analysis) The PESTLE acronym: Some of the macro-environmental influences which might affect organizations. This framework categorizes environmental influences into following six main types. Political: It includes government stability, taxation policy, foreign trade regulations and social welfare policies. Economic: It includes business cycles, gross national product trends, interest rates, money supply, inflation, unemployment and disposable income. Social: It includes population demographics, income distribution, social mobility, lifestyle changes, attitude to work and leisure, consumerism and level of education. Technological: It includes government spending on research, government and industry focus on technological effort, new discoveries/development, and speed of technology transfer and rates of obsolescence. Legal: it includes monopolies legislation, employment laws, health and safety and product safety. Environmental: it includes environmental protection laws, waste disposal and energy consumption. PESTLE Analysis is a simple technique, which can be used in a fairly sophisticated way, particularly when it is combined with Risk Analysis, SWOT Analysis, an Urgency/Importancy Grid and expert knowledge about the organisation and its external factors. PESTLE Analysis is normally used to help organisations identify and understand the external environment in which they operate and how it will operate in the future. 2. SWOTs - Keys to Business Strategies Having built up a picture of the company's past aims and achievements, the all-important SWOT (strengths, weaknesses, opportunities and threats) analysis can commence. Strengths & Weaknesses Strengths and weaknesses are essentially internal to the organization and relate to matters concerning resources, programs and organization in key areas. These include: Sales - marketing - distribution - promotion - support; Management - systems - expertise - resources; Operations - efficiency - capacity - processes; Products - services - quality - pricing - features - range - competitiveness; Finances - resources - performance; R&D - effort - direction - resources; Costs - productivity - purchasing; Systems - organization - structures. If a startup is being planned, the strengths and weaknesses are related mainly to the promoter(s) - their experience, expertise and management abilities - rather than to the project. The objective is to build up a picture of the outstanding good and bad points, achievements and failures and other critical features within the company. Threats & Opportunities The external threats and opportunities confronting a company can exist or develop in the following areas: The company's own industry where structural changes may be occurring (Size and segmentation; growth patterns and maturity; established patterns and relationships, emergence/contraction of niches; international dimensions; relative attractiveness of segments) The marketplace which may be altering due to economic or social factors (Customers; distribution channels; economic factors, social/demographic issues; political & environmental factors) Competition which may be creating new threats or opportunities (Identities, performances, market shares, likely plans, aggressiveness, strengths & weaknesses) New technologies, which may be, causing fundamental changes in products, processes, etc. (Substitute products, alternative solutions, shifting channels, cost savings etc.) Once the SWOT review is complete, the future strategy may be readily apparent or, as is more likely the case, a series of strategies or combinations of tactics will suggest themselves. Use the SWOTs to help identify possible strategies as follows: Build on strengths Resolve weaknesses Exploit opportunities Avoid threats The resulting strategies can then be filtered and moulded to form the basis of a realistic strategic plan. Read More