Cadbury is the icon of the British confectionary industry, with a heritage which dates back to 1824. Since then, Cadbury has expanded its business throughout the world, through both organic and acquisition led growth. Today Cadbury is a leading global confectionery company, operating in over 60 countries. Cadbury has an outstanding portfolio of Chocolate, Gum and Candy brands. In 2008, Cadbury enjoyed a 10.5% market share of the global confectionery market, with revenue of GBP5.4 billion. The company employs about 50,000 people and work with around 35,000 direct and indirect suppliers globally. Cadbury manufactures markets and sells unique brands which give pleasure to millions of people around the world every day. Cadbury’s Vision is to be the biggest and best confectionary company in the world. One of Cadbury’s Strategic goals for 2009 to 2011 is to increase market share of the global confectionery market, with revenue growths of 4% to 6% annually.
Cadbury believes that the confectionery business still has significant unused potential. By exploiting the strengths of its innovative products/brands, it believes it can continue to grow its market share and returns, and achieve its Vision of becoming the biggest and best confectionery company in the world.
The Vision into action (VIA) plan embodies all aspects of our strategy. Our governing objective is to deliver superior shareowner returns by realizing our vision to be the world’s biggest and best confectionery company.
Cadbury’s philosophy of Vision into Action (VIA), a strategic plan for 2008 to 2011 is an example of how business strategy is translated to a Marketing plan to deliver positive impact to its revenue and margin performance.
Cadbury’s growth ambition is based on the following:-
Strengths of its brands and market position
Increased investment in Innovation, Marketing & Sales
Greater exposure to faster growing categories (e.g. gum) and markets (e.g. emerging markets)
1.2 Product, Market & Operational Characteristics
Cadbury is a leading global confectionery company with an outstanding portfolio of chocolate, gum and candy brands. Cadbury created few famous brands like Cadbury, Trident and Halls.
Green & Blacks
Cadbury featured brands are:
Cadbury featured brand:
Cadbury Crème Egg
Cadbury Dairy Milk
Born in 1824 when John Cadbury opened a shop in Birmingham selling cocoa and chocolate. Since then Cadbury have expanded their business throughout the world by a program of organic and acquisition led growth. On 7 May 2008, the separation of the confectionery and Americas Beverages businesses was completed creating Cadbury plc with a vision to be the world’s BIGGEST and BEST confectionery company.
Cadbury operates in over 60 countries and worked with around 35,000 direct and indirect suppliers. Cadbury have employ around 50,000 employees all over the world. Cadbury plc is managed by the Cadbury plc Board of Directors which delegates day-to-day management to the Chief Executive’s Committee (CEC).
Cadbury business is segmented to four main regions and they are:-
Britain, Ireland, Middle East and Africa
Cadbury team is performance driven, values led. Throughout changing times, our constant values have inspired us to be pioneers in business and in corporate responsibility. They help ensure we are proud of our company and are critical to our core purpose of creating brands people love.
Cadbury’s values are: Performance, Quality, Respect, Integrity and Responsibility to social, economic and the environment
Our Business Principles are our code of conduct and also take account of global and local cultural and legal standards. They confirm our commitment to the highest standards of ethics and business conduct.
02. Task One
2.1 Marketing Planning Principals
Analysis of the Market – Being in the confectionery business and dealing with consumers, Cadbury has always been a market and consumer focused organization. It consistently conducts market studies to determine the positioning of its brands, in current, new and future markets. This forms the foundation of the Marketing Plan.
Setting the Marketing Objectives – In order to deliver growth, Cadbury conducts many marketing programs for its brands every year. Each marketing program is accompanied with a Marketing Plan. Each marketing plan has clearly defined objectives for the project team to deliver.
Establishing the Strategies & Tactics – Based on the market analysis and set objectives, each Marketing Plan will contain strategies and tactics which will be necessary in delivering the desired outcome.
Developing an Action Plan – This is one of Cadbury’s key philosophies, “making things happen”. Therefore, every Marketing Plan in Cadbury has specific actions to be implemented by a person responsible, and within set time targets.
Monitoring of Progress – In Cadbury, every Marketing Plan is monitored monthly by the Senior Management Team of the respective SBU, to track the progress of the plan, as well as to make any necessary improvements or changes.
Resource & Financial Management – Once a marketing program has been approved by the Senior Management Team of Cadbury, the necessary resources will be provided in order to deliver the objectives set in the Marketing Plan. As in the case of providing the necessary resources, Cadbury also provides an appropriate financial budget for the project to deliver the objectives set in the Marketing Plan.
Measuring Success – Cadbury continuously measures the success of each of its marketing projects, and compares the results achieved vs. the objectives set in the Marketing Plan.
2.2 Marketing Audit / Situational Analysis
2.2.1 Market Environment
Conducts a complete external marketing audit which includes both the macro and micro environment of the confectionary industry and how these may have an impact on Cadbury’s Chocolate, Gum and Candy businesses. From this audit, the company will be able to identify the key issues impacting each business, and how the business can develop an effective plan with tactics and strategies to tackle these issues and ultimately achieve the Marketing Objectives.
184.108.40.206 Macro Environment
Macro factors are factors that we totally have no or extremely little control off. It is not just looking at a segment of the industry, but the effects these factors have on the whole industry. An example of an audit tool is the PESTEL analysis, which identifies the opportunities and threats of the external environment, which then helps the Company to develop appropriate plans.
Being in a confectionary industry, political factors have little impact on Cadbury’s business as chocolates, gums and candies are well established consumer products, and available everywhere. There are no political factors which restricts consumers from purchasing these products. However, in Singapore, the Government has banned the sale of gum, as it is seen as a nuisance to the environment. Therefore, in the UK, Cadbury’s businesses have no impact politically.
The state of the economy has an impact to most businesses. The credit crunch and slow down of economic growth, as we are currently experiencing, does effect consumer buying power, and hence Cadbury’s businesses. However, the reduction in interest rates does help consumers, as it creates consumer spending, and hence Cadbury’s businesses may have minimal impact.
In terms of social factors, there are many consumer groups which voices their own opinions and sometimes this have a major impact on regulations and legislations. Consumer businesses are highly impacted by social factors. As an example, Cadbury’s chocolate business may be impacted by health reasons, such as sugar and obesity, which will influence the sugar and ingredient content of its product, and ultimately the formulation and taste. The introduction of sugar free gums and dark chocolates are good examples of how the gum and chocolate industry has evolved over the past 2 decades.
The increase use of internet has impacted businesses worldwide. Consumers are more aware of product offerings, have greater access to information and knowledge about products and can make more educated choices of products. The internet has also brought consumers closer to companies such as Cadbury, who now have faster feedback from consumers about their products. All of this has both positive and negative impact to Cadbury’s businesses.
Advancement in manufacturing technology has also influenced the confectionery industry in terms of cost of production, shapes, sizes, packaging etc. All of these do affect Cadbury’s businesses in many ways.
As the world experiences greater environmental challenges, such as global warming, environmental legislations do impact Cadbury’s manufacturing, product and packaging. As a responsible company, Cadbury practices a zero discharge to the environment, which increases the company’s manufacturing costs. It also uses bio-degradable packaging material, which is a requirement in the EU.
The confectionery industry is a highly regulated industry. In each country, as in the UK, it is governed by legislations and monitored by the Food and Drug authorities. Influences from Environmental and Social groups, may introduce changes in legislations, which in turn impacts the confectionery business. As an example, the use of artificial colors, additives deemed to increase hyperactivity in children, has forced Cadbury and other confectionery companies to find alternatives, at higher costs.
The increasing manufacturing standards for food products have also impacted Cadbury’s businesses. Tighter standards means higher costs to manufacturers. Whilst this is good for society, it has a negative impact to Cadbury’s businesses.
220.127.116.11 Micro Environment
Analysis of the micro environment is equally important. These are the issues relating specifically within the organization and it is crucial that we clearly understand this in order to plan and develop the marketing plan. There are 6 factors and we use a simple tool SPICC
The Supplier is important to any business, as they can either support or destroy value. In the case of Cadbury, due to its economy of scale, and long standing partnerships with suppliers, it is able to obtain good support from its suppliers. This provides Cadbury with the necessary competitive advantage it requires.
In general the consumer and public at large tend to support a well established and responsible company such as Cadbury. However, there will always be minority groups who voice their concerns about products and companies, and these have to be handled with sensitivity.
The retailers and stores tend to have less power to negotiate when it is dealing with a company as big and well known as Cadbury. Every store wants to have the Cadbury brands on their shelves and would tend to agree with terms offered by Cadbury due to the pull of consumers this brand brings to their shop.
Customers do play a big part on the success of a company or its brands. As there are many choices in the market, the customer determines the value of a brand.
2.2.2 Industry Analysis
Porter’s Five Forces is very useful in this analysis;
Treat of Substitutes
Bargaining power of Buyer
Bargaining power of Supplier
Threat of new Entrants
Each of Porter Five Forces model contributes to the competitive environment in an industry:
Threat of new Entrants
With the confectionery industry showing good growth potential, new players may enter the market to get a small market share of a very large industry. However, due to high entry barriers, such as establishing a renowned Brand, as well as high manufacturing standards, the threat of new entrants remains low for the confectionery industry.
Threat of Substitutes
With new entrants in the market, a group of existing or new competitor may introduce new products/brands, for the chocolate sector, claiming the same consumer satisfaction, but at lower costs, e.g. Ice-creams, puddings which claim to be cheaper and healthier. The threat of substitutes is moderately high for the chocolate sector.
Bargaining power of Suppliers
As a long established player in the confectionery industry, Cadbury has the economics of scale to bargain for low cost raw materials. It works with the best suppliers in the world in order to ensure consistent quality and low cost materials. Therefore, the bargaining power of Cadbury’s suppliers is relatively low.
Bargaining Power of Buyers
In today’s world consumers have many choices, due to the intense rivalry in the confectionery industry. However, Cadbury has a number of established brands which command a relatively stronger pull, hence the bargaining power of buyers (eg wholesalers and supermarkets, B2B) is low but the bargaining power of the consumer is moderately high. (B2C)
Rivalry among Existing firms
The confectionery industry is a crowded, with many players. Some are well established players, such as Nestle and Mars, who have equally strong brands as Cadbury’s. Some have carved out sectors, e.g. in-house brands of Tesco, Marks & Spenser and Sainsbury. There are also many small players who have good positions in small sectors of the industry. Hence the rivalry among existing players is moderately high. However, Cadbury’s well established brands do provide some level of edge in the industry.
2.2.3 SWOT Analysis
There are factors within a company which affect the internal environment and these should be addressed. Being a global leader in the chocolate business, the product, Brand and Corporate image, service, value of the product and quality is inseparable. Therefore an audit of the internal environment is also important.
The SWOT analysis is a useful method in determining the key issues of a company, and will the company to develop a plan to mitigate threats and focus on opportunities.
SWOT analysis of Cadbury
Well established company since 1824
Global brands and innovative products
One of the top 4 leading confectionery
companies in the world
Only focuses on confectionary products.
Products available in almost all distribution
Financially strong, with continued revenue
And profit growth annually.
Too many products and brands
Highly dependent on confectionery market
High cost base when compared to some
Smaller confectionery companies.
Relatively small presence in emerging
Entry into new markets (e.g. India & China)
with its established Brands.
Ability to introduce new product extensions
in existing markets using its established
Acquisitions of other confectionery
New legislations and regulations which may increase costs
Social impact from consumer groups on
health related issues
New entrants into the confectionery
Products could be easily copied by competitors (carbon copy)
2.2.4 Value Chain Analysis
Formation: Includes general management, planning management, finance, legal, accounting, quality management, public affairs, etc .
Human Resource Management
Personal activities: All activities that links with recruiting, development (training, education), retention and compensation of employees, manager, etc .
R & D, etc : Include the technology development to support the value chain activities, i.e., Process automation, Research & Development, design and redesign, etc.
Purchasing inputs: The role of purchasing inputs i.e., procurement of raw materials, machines, spare parts, servicing, buildings, etc .
Receiving inputs : Activities that associates with receiving, storing, transportation scheduling, inventory control
Building the product/ providing the service : Includes packaging, assembly, machining, maintenance, testing, activities that transform the final input into final product
Distributing the product to buyers : Activities that involved the finished product to get to the customers; warehouse, orders, transportation, distribution, etc
Marketing & Sales
Pre-sale support : Activities associated with getting buyers to purchase the product including channel selection, promotion, advertising selling, pricing, retail management, etc
Post-sale support : the activities that maintain & enhance the product’s value, including customer support, repair services, installation, training, spare parts management, upgrading, etc
3.1 Marketing Objectives
As the business still has significant untapped potential – both in terms of top line growth and returns. By exploiting the strength of our leadership positions to continue to grow their market share and significantly increase the margins and returns, cadbury aim to achieve their vision of becoming the biggest and best confectionery company in the world.
Vision into Action (VIA) plan for 2008 to 2011 aligns the energies and efforts of the teams around the world behind a number of priorities which will make the most impact on our revenue and margin performance. In order to generate superior returns for our shareowners, our VIA will deliver six financial targets. These are set out in our financial performance scorecard below:
Organic revenue growth of 4% – 6% every year
Total confectionery share gain
Mid-teens trading margins by 2011
Strong dividend growth
An efficient balance sheet Growth in Return on Invested Capital (ROIC)
To achieve these financial goals, have a growth and efficiency strategy which aligns behind our focus on fewer, faster, bigger and better. This focus is being applied to all aspects of our business.
Achieve sales of min. GBP25 Mil in 2009 UK Market
Achieve sales of GBP80Mil in 20011, UK Market
To increase 6% by end 2009
Achieve min of 80% consumer awareness of CCE Twisted within 12 months of launch
Products, price, place promo, people, process, physical evidence
The strategy for any marketing project is the key to the success of the project. It should map out what needs to be done, targeting which consumers, and providing them with what value, through the product offered.
3.2.1 Segmentation of Market
Cadbury segments the UK Chocolate market based on Geography, Demographics and Psychographics to identify the target market segments for their Cadbury Cream Egg Twisted.
Cadbury geographically segments the UK chocolate market by:-
Urban market (Cities) – e.g. London, Glasgow, Cardiff, Manchester, etc
Suburb markets (Towns) – e.g. Barnstable, Abingdon, Stamford
Others (Villages) – e.g. Sawston
The company identifies the size of the chocolate market, per capita consumption, growth trends, as well as analyses each segment in terms of Cadbury’s market share, Cream Egg lovers and chocolate bar consumption. This will provide Cadbury the necessary information to target the right market for Cadbury Cream Egg Twisted.
Demographic segmentation allows Cadbury to understand the chocolate market by age, gender, income group, etc. This allows Cadbury to identify which groups are the chocolate lovers, which group prefers Cream Eggs, which group prefers bar chocolates, etc.
Psychographic segmentation is based on consumer lifestyle, attitudes and motives. Cadbury segments the UK chocolate market, based on consumers who prefer branded goods, those who prefer taste, texture or shapes. By doing this, the company is able to identify the target segment which will best suit the Cadbury Cream Egg Twisted product.
3.2.2 Targeting the market
After establishing the market segmentation, the next step is to evaluate each segment and choose which possible segments should the company target and offer Cadbury Cream Egg Twisted in order to meet its marketing objectives.
Based on the segmentation analysis, Cadbury is targeting the following groups:-
All locations around UK, with greater focus on urban markets.
Across all channels, especially super and hyper markets, and convenient stores, where the chocolate consumption per capita is high.
Children, teenagers and females, who are seen to be lovers of Cadbury
Chocolate bar lovers, the group which Cadbury is hoping to switch from traditional bars to the Cadbury
3.2.3 Positioning Cadbury
Cadbury is having broader ranges targeting many segments. Youth segment should position as “Love” and entertainment. Teenagers can attract through adventure aspiration. Children’s mind goes to various tastes and small gifts they are getting. Therefore should do the positioning accordingly.
3.2.4 BCG Matrix
The BCG or Boston Consulting Matrix is a tool used to analyze the portfolio of a company. It classifies business units or product ranges into four categories based on a matrix of market growth rate and market share position. The market growth rate determines the attractiveness of the industry and the relative market share shows the competitive position of the business. Below is the BCG Matrix.
Details about the 4 categories are as follows:-
Cash Cows – business units that have large market share in a mature, slow growing industry. Cash cows require little investment and generate cash that can be used to invest in other business units.
Stars- business units that have large market shares in a fast growing industries stars may generate cash, but because the market is growing rapidly they require investment to maintain their lead. If successful, a star will become a cash cow when its industry matures.
Question Marks – business units that have small market shares in high growth markets. These business units require resources to grow market share, but whether they will succeed and become stars is unknown.
Dogs – business units that have small market shares in mature industries. A dog may not require substantial cash but it ties up capital that could better be deployed elsewhere. Unless a dog has some other strategic purpose it should be liquidated if it has little prospect for it to gain market share.
In summary, the BCG matrix provides a framework for allocating resources among business units within a company, and it will be useful for us to review the portfolio of our Chocolate Business.
3.3 Marketing Mix
The marketing mix is a combination of critical factors that make up the marketing strategy for a product, which helps the company to successfully achieve the set marketing objectives.
Cadbury UK emphasizes on the need for strong brand image, and therefore all the decisions they make with regards to its products are in line with the brand image. The product and packaging are designed to project and communicate the brand image reflecting ‘Cadbury’ as who they are. The product reflects the innovation, high quality and nutritional value it provides to its customers, whilst the packaging clearly reflects the familiar purple corporate brand color and corporate brand logo, associated with reliability and quality.
Cadbury maintains the original Cream features and taste, which is a well loved product.
Uses no artificial colorants or banned additives, and meets all EU food standards.
Product is in a twisted bar form to attract chocolate bar lovers.
Personality of the Brand is fun and novel to target the young trendy and female market segment. Specially lovers
Packaging is colorful, to attract the children, teenage and young adult market.
Pricing of products is key in reflecting the image of a brand. This is why Cadbury carefully considers the image of the product, the value it offers to the consumer and who is the target consumer, before it determines the price of any of its products. It is obvious that different Cadbury products, targeted at different segments of the market are priced differently. The decision on pricing does have an impact to the brand. For example Cadbury offers its bar chocolates at a premium price compared to Tesco’s or Sainsbury’ bar chocolates, for the mass market. Cadbury also sells some of its high end products to reflect a luxury image, and can command good premiums, example Cadbury Milk Tray, Cadbury Roses and Green & Blacks. The price of a product is also dependent on customers perception of the brand which Cadbury takes into account before it prices its products. However, with the current economic scenario, Cadbury gives special deals, for example Cadbury Dairy Milk bars 20% more (means bigger size) at the same selling price without reducing the price and affecting the brand image.
Cadbury priced to competitive price
GBP per gram it is cheaper than the Cream, which allows differentiation.
Cadbury chooses carefully the distribution channels it places its products based on the brand image of the products. For example for its Cadbury Dairy Milk bar range of products, because it is targeted to the mass consumer, this range of products are accessible across all channels, in all super and hypermarkets, chain retail outlets, other convenience stores and even in the “mom and pop” shops. For the premium products, eg Green & Blacks brand, Cadbury carefully places them at high end outlet, such as Selfridges and Airports.
Cadbury will be available across all distribution channels in the UK market.
Focus will be in Hyper and Supermarkets as well as convenient stores, at prominent locations within the stores.
Greater visibility will be provided at urban segments (both cities and towns).
Depending on the brand image, the target consumer and market, Cadbury carefully chooses its communication strategy to meet the objectives of increasing awareness and ultimately pulling the consumer to purchase its products. Every promotional activity has its own strategy and this can can vary from increasing brand awareness, maintaining the brand value, educate consumers about a new product, increasing seasonal purchases, or campaigns such as ‘choose Cadbury’ to highlight the positive emotional value of the brand. However, due to the current economic downturn, Cadbury carefully selects its promotional activities; such that it has maximum returns for its promotional spend.
With the advent of the electronic media, Cadbury has created a number of websites for its popular brands for consumer/members to be active. These websites have education information, games, good associates such as ‘purple goes green’, cocoa partnership and fair-trade. Cadbury has recently agreed to partnership with the 2012 Olympic, which will give its brands, global recognition. Websites are www.cadbury.co.uk, www.cadburycremeegg.co.uk. www.aglassandahalffullproduction.com, etc.
Above the line promotion via TV, Radio and print media.
Advertising will focus on target groups, e.g. children, teenagers, young adults and females.
Below the line activities will be carried out at urban markets at high traffic outlets, such as Hyper and Supermarket concourses.
Special standees will be appropriately designed to portray the fun and novel personality of the product, and placed in major outlets.
4.1 Key Issues faced by Cadbury and Implications to the Marketing Plan
Implication to the Marketing Plan
The economic slowdown and credit crunch
Possibility that the market will shrink
Competition will be intensive driving prices to be more competitive.
Pressure from consumer groups on health related issues
Need to have more PR with consumer groups
Need to educate consumers on ingredients used in products
Higher legislations and standards for industry
To support this in order to create higher barriers to entry for new entrants into the industry
Too many products and brands
To implement a rationalization program to weed out older and low margin brands
Consumer awareness to create pull
To conduct effective A&P programs to bring awareness to consumers.
Conduct market research to establish consumer needs and trends
Growing in a challenging market
Introduce new products in existing markets using established Brands
Introduce existing Brands in new markets
Understanding the Competition
Conduct market research to determine level and position of competitors in the market
4.2 McKenzie’s 7S Framework
The McKenzie’s 7S framework is a value based management model, which looks at all the key elements which make up an organization, and it enables us to evaluate the effectiveness of our Marketing organization. An effective organization achieves a fit between all these 7 key elements, and should any element change, it affects all other elements and hence the organization as a whole.
The McKenzie’s 7S framework is made up of hard and soft elements. Hard elements are those which are easily identifiable and visible, whilst the Soft elements are those which are less visible and are below the surface. Most organizations tend to focus on the hard elements, and ignore the soft ones, which tends to be an ineffective way of diagnosing and solving an organization issue.
The 7S framework is a useful tool used to analyze the current state of an organization. Below is a pictorial view of the McKenzie’s 7S framework showing the Hard elements (green) and Soft elements (yellow)
Strategy – plans for the allocation of a firm’s scarce resources over time to reach identified goals.
Structure – the way the organization’s units relate to each other; centralized, functional divisions (top-down); decentralized (the trend in larger organizations), matrix, network, holding etc.
Systems – the procedures, processes & routines that characteri
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