Marketing Management in Practice Cadbury Ice Creams - Case Study Example

Marketing Management in Practice: A case study of Cadbury Ice Creams Marketing Management in Practice: A case study of Cadbury Ice Cream [Writer's Name] [Institution's Name] S. no. PARTICULARS Pg no. EXECUTIVE SUMMARY INTRODUCTION SITUATION ANALYSIS Internal analysis PEST analysis Micro analysis SWOT analysis OBJECTIVES JUSTIFICATION OF PRODUCT LAUNCH TARGET MARKET SEGMENT AND POSTIONING DEMAND ESTIMATE MARKETING MIX STRATEGY CONCLUSION BIBLIOGRAPHY Abstract: The main aim of this report is to undertake the analyses of the Cadbury limited and the opportunities for the company in the Australian market still remained unexplored. The report will also undertake the evaluation of the opportunities for the company to introduce new Product in the Australian Market which is Orange juices. The report contains a Marketing Plan for the product to be introduced by the Company. First part of the report provides information about the core business of Cadbury limited the range of products and its operations. The report will also contain the evaluation of the social, economical, technological and political factors which can affect the successful launch of the new product by the company. The competition which can be posed to the company and its new product is also evaluated. The report will also define the segments which need to be addressed by the company in order to enhance their sales. The later part of the report explains the justification of the product launch and various objectives which would be helpful to achieve targets, and finally it concludes with the sales forecast and the Marketing Mix. The report also considers the factors which need to be evaluated while introducing new product by a strong brand name such as Cadbury. Although soft drinks trends patterns are substantial in Australia still there are many factors which will play an important part in the acceptance of the product by the consumers. There is healthy demand for the imported fresh juices which can be fulfilled by Cadbury Orange Juice. INTODUCTION: Cadbury traces its history in Australia since the year 1919. It is one of the leading chocolate and Ice Cream manufacturers in Australia. The major specialty of the company is Chocolate. By merging with the Schweppes, Cadbury expanded its operation and identity. The expansion continued and in 1980 it acquired the Red Tulip confectionery company and broadened its range of fine products to include a vast array of Easter confectionery, as well as After Dinner Mints. The company entered the Asian region in 1995 and established a factory in Beijing, China. After being successful in the Chocolate and Ice Cream business the company is planning to launch the range of 100% pure orange juice that will use fresh, rather than concentrated juice. Following are some successful products of the company (Cadbury Schweppes Pty Ltd, 2009). 'Australian Chocolate Brands in last Two Decades: Time Out Bar (1995) The launch of chocolate-covered wafer Time Out bar was a phenomenal success - the first brand to reach the top five best-selling bars in its first year Favourites Boxed Chocolates (1998) Cadbury Australia introduced Favourites boxed chocolates in 1998, giving Cadbury fans a selection of their favourite Cadbury products in bite-size pieces. Dream Cadbury Dream Block (2001) The new Cadbury Dream block was promoted as "real whiter chocolate, wicked taste". It took four years of research to perfect the flavour, but it was an astounding success. Boost Boost Bar (2006) Boost bar was launched in 2006 and was immediately successful.' (Cadbury Schweppes Pty Ltd, 2009) 2.2 Macro Environmental (PESTLE) analysis: In order to understand the external environment of the Company it is important to undertake the PESTLE analysis, which is as follows: Political: Decrease in demand due to unstable political situation. Economic: Imposition of Tax or quota from the Government on the major players of market in order to avoid monopoly in the market. Socio-cultural: The population of Australia is getting more conscious about the problems related to obesity and health. Any product having the health effecting ingredients can lead to the loss of market share. Technological: Achievement of advanced technology by the competitors resulting in shape of economies to scale. Legal: Legal actions against the company as a result of disease due to fruits bred in unconventional manner. Environmental: The Company can face environmental threat because of the Agro-terrorism. 2.3 Micro analysis It is important for Cadbury to analyze all the trends prevailing in the Australian industry such as the consumers, the competition posed to the Company and the market trends. Market Characteristics: 'Cadbury Schweppes has a 55 per cent share of Australia's chocolate confectionery market, giving it a strong lead over Nestle and Master Foods, with 18 and 19 per cent shares respectively. The market leader is benefiting from steady growth in chocolate consumption in this market. Volumes of chocolate sold during 2004 increased by 3 per cent on the prior year to reach an estimated 108,000 tonnes, and sales of more than A$2 billion, according to analysts at Leatherhead Food. Cadbury's Australian drinks arm accounts for 6% of annual group revenue and holds a mid-20s soft drinks market share. Reports suggest a sale of the division may fetch up to GBP600m. Cadbury Schweppes increasedsales by 14% to GBP2.65bn in its first six monthsof 2008, and 7% excluding currency rate fluctuations. Underlying profit before tax rose 46% to GBP223m,although the group said it aimed to improve operating marginsandalso warned ofan "uncertain economic outlook" in 2009 because of input cost rises.' (Just-Drinks.com, 2008) Consumers: 'Australians are quite similar to the British when it comes to beverages. Australians are not the big beer drinkers they once were. Soft drink consumption is lower per capita than in North America, but is still substantial. Drinking habits differ from North America. It is not common to take a coffee on the go. Very few people drink while walking or even in their cars. Juices tend to be tarter (not as sweet) as in North America. The number of imported products shows that there is a healthy demand for imported beverages and especially specialty products. Considerations for imported product 'There could be some possibilities for certified organic beverages in Australia as offering is somewhat limited specialty beverages certified organic would help cater to both the health food and high end market. Flavours are also different. For example, Passion fruit is a very much sought-after flavour, and available in many products.' (Mercer, 2005) 2.4 SWOT Analysis of the Cadbury Company: "The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix is an important matching tool that helps managers develops four types of strategies: So Strategies, WO strategies, ST Strategies, and WT Strategies. SO strategies use a firm's internal strengths to take advantage of external opportunities. WO Strategies aim at improving internal weaknesses by taking advantage of external opportunities. ST Strategies use a firm's strengths to avoid or reduce the impact of external threats. WT Strategies are defensive tactics directed at reducing internal weaknesses and avoiding environmental threats." (David, 180-181) STRENGTHS Strong Brand name. Extended customer at more than 200 locations. Low threat of new entrants. Continuous training programs for employees. High budgets of advertising and promotion. Good relations with media. Web based presence. WEAKNESSES Low ROE Subsidiaries create legal and territorial problems. Lack of funds for regional bottlers to continue expansion Old image still exists. Inconsistent marketing message. OPPORTUNITIES Expansion in shape of introduction of new and innovative products. Expanding market due to globalisation. THREATS Current economic climate. Over reliance on the bottlers. Results to be achieved in future can be less than projected After performing the SWOT analysis the following objectives are found important to be considered urgently. In order to formulate the goals it is important to align them according to their importance. 3. SMART Objectives for the Cadbury Orange Juices: Promotional Objective: Improvement in promotion by introducing new methods, this will be achieved by: 1. By implementing web based advertising. 2. By sending e- newsletters. 3. By using the relationship with media more effectively. 4. By hanging billboards on important places. Market Share Objective: Gaining 25% of market share by: 1. By using aggressive marketing techniques. 2. By gaining knowledge about the competitors steps through continuous research 3. By continuous performance evaluation and improvement. 4. By introducing new products. Profitability Objectives: Increasing revenue for 30-35% by: 1. After gaining promotional and market share objectives. Increase in profit to be attained by continuing above-mentioned tasks. 2. By introducing new and attractive products for other age groups. 3. By introducing new nutritious and vitamin enriched flavours. 4. Justification of product launch The main strategy of the Cadbury Orange Juices is the manufacture of juices made with fresh, not concentrated juices. Hence the company uses the strategy of product differentiation. The company keeps on innovating new recipes fulfilling the demands of all ages from babies to youngsters and adults. The company will have to achieve a cutting edge as compare to other competitors by preserving the natural ingredients of the fruits in the juices. "Cadbury Drinks are based on a conventional and often-used idea: a pure and natural product. Yet the company will deliver this with such charm that they have managed to build a premium-priced and rapidly growing business Australia. A great brand starts with a great product, the company certainly have that, but they have much more too. It is the consistency of brand character and attention to detail that is outstanding." (Building Brands, 2005) The Company has remained innovative from the beginning, which is a key for its success. For example, the recent launch in 1-litre Tetra Pak cartons is expected to generate some AUSD30m revenue and the introduction of the first juice for children is expected to be very well received. Although Chocolates remain the major products of the Company but the size of other innovative products such as Juicy Water has also increased tremendously. The Company furthers aims to get the profits from ethics and to build the brand across Australia. Cadbury Orange Juices have real plans to expand their market Australia wide. "Society shapes our beliefs, values and norms. People absorb, almost unconsciously, a worldview that defines their relationship to themselves, to others, to organisation, to society, to nature and to the universe" (Kotler, 2000). According to Hofstede (1980) culture is a complex, multifaceted construct. There are two perspectives of culture. Individualism-collectivism dimension is one of them. In Zhang and Neelankavil's (1997) the researchers have mentioned the importance of cultural differences on the choice of advertising appeals and strategies by the different companies. According to Triandis (1990), individualistic cultures emphasise independence, achievement, freedom, high levels of competition, and pleasure; whereas collectivist cultures tend to embrace interdependence, family security, social hierarchies, co-operation; and low levels of competition. Australia has an individualistic culture, which constitutes the main factors of independence, achievement, freedom, high levels of competition, and pleasure. That's why the Cadbury drinks give very much importance to taste. With the increasing awareness among the target population regarding the problems of obesity and other health diseases Cadbury drink emphasises on the purity and the neutrality of the ingredients. These qualities correctly aiming at the demands of the customers will make Cadbury drinks the largest player of Chocolates market in Australia capturing 65% of the total market share. Advertising, as a form of social communication, is particularly reflective, and indicative of culture and its norms. To the extent that advertising does reflect cultural differences, and there exist clear differences between distinct cultural patterns, advertising appeals, which are specific approaches advertisers use to communicate how their products will satisfy customer needs (Arens & Bovee, 1994), should manifest such differences across these countries. The purpose of branding is to achieve a market position that will represent a sustainable competitive advantage. Companies are increasingly extending the line of variants available under a given brand, resulting in a family of related offerings. The reason for this is essentially economic and Cadbury has gain many such advantages by successfully introducing a range of products. As the Company "will launch the first range for kids that contains nothing but fruit and fresh juices. Packed in Tetra Wedge Aseptic 180ml cartons, the range includes two variants: apples & blackcurrants and oranges, mangoes & pineapples. The recipes contain 100% pure crushed fruit with no additives, preservatives or concentrates. The Tetra Wedge Aseptic carton, which is specially suited to the children's market, has a straw applied. To make the juices easier to suck up the straw, they are of a thinner consistency" (Tetra Pack, 2005) The Management of the company has dreams of expanding Cadbury's brand across other healthy sectors and can see a day when there is Cadbury a baby product; Cadbury body care and even a Cadbury island. The Company has a strong brand name, which can be used as an economic benefit in future but the two important factors should be properly addressed: 1. The benefits from the brand 2. The expectations of the target markets. 6. Demand Estimate 'Like many developed nations, the demand for premium fresh juice has been increasing quickly in Australia (although there was a slight decline during the past year) with some sectors of the consumer market even demanding not-from-concentrate juice. However, it appears that most consumers have little aversion to products made from FCOJ and even fresh juice blended with concentrate commands a substantial price premium. Finally, it should be noted that the lower quality juice products have recently decreased in price. The changes in tastes and prices have resulted in a steady increase in consumption of long life juices from 224 million litres in 2002 to 272 million litres in 2005. Over the same period the growth in premium fresh juices has been much slower and the juice processors are now focusing on rebuilding this market (Government of South Australia, 2005). 'Analysts predict that Australia's fruit juice industry alone will explode over the next few years, led by the strong emergence of juice bars. These outlets are expected to double their current $150m (90.5m) turnover in 2005, taking their share of Australia's $1bn juice industry to 30 per cent'. (Mercer, 2005) Total Australian orange juice production and consumption: Trends and projections Fiscal Year 2009 2010 2011 2012 2013 2014 2015 Juice Production 235,830 232,878 230,119 227,551 225,171 222,977 220,968 Apparent Consumption 695,593 723,592 753,359 784,994 818,607 854,310 892,223 Source (Government of South Australia) 7. Marketing Mix Strategy The company's first love though is the Chocolates but the mission statement of Cadbury caters all the aspects from stockholder's share values through maximizing returns to corporate responsibility by making them responsible citizens that make a difference throughout the country. On the other hand the mission of the Company is also to take care of the employee's wishes by being a great place to work so that the employees can become more productive and efficient and can help the company in achieving the highest position in the market by introducing new products and improved services. The philosophy of the company includes moments of optimism through the strong brand, value creation and customer satisfaction all over the country. It is not feasible for the company to sub contract their products as the brand establishment is not an easy job but the low quality products can severely harm the brand image. For Cadbury drinks, the question is not whether the brand should be extended, but when, where and how the brand should be extended. Well-planned and well-implemented extensions offer a number of advantages to marketers. Cadbury boys is a strong brand and the customers have positive associations about the parent brand in memory and that at least some of these positive associations will be evoked by the brand extension. Cadbury Boys have a long list of new successful products on its list. Hence rather than sub contracting the products it will be feasible for the company to introduce new products. Position: In order to increase the sale income and generate the revenue the Company needs to attract the customers from the target group of children and teenagers. The second important group, which needs to be targeted, is the adults and earning members of the community. Price: The Company should keep the price low as compare to the competitors in order to increase the income of the company. Place: The new outlook of the outlets should be eye-catching. It should be a venue, which can cater the present needs of the Company. The main necessity is to provide the building with the proper parking area. Establishment design: Interior layout will be designed in an effective manner to attract the customers. All the items in the museum will be played in an easy to reach and highly visible manner. To keep the environment clam and pleasing atmospherics-scent, lighting, colour, mirrors and music, will be used. The music will be light and related to the cultural background of Australia. The environment will be kept soothing to make the visitor enjoy the experience of the customer. Cleanliness of the displayed objects and fixtures will be an important priority. Promotion: In order to establish a brand image it is strongly suggested that the company should establish a logo and advertising message. In order to promote the products and services to the target audiences the management needs to follow the persuasive advertising. Advertisements can be given in newspapers and magazines. The company can place ads in trade publications/tourism guidebooks in order to attract the earning individuals. In order to effectively approach the target market it is important to advertise on television on regular basis. Another cost effective technique is to send mails and promotional promos through Emails. Another important approach is telemarketing. Direct mail is another option. Sales promotions such as coupons and contests are also important to be undertaken. It is also important that the company should also take care of the past client experience for future business, school field trips, as well as walk-ins sine it is important to retain the old customer rather than attracting the new customers. In order to achieve the higher level of customer satisfaction it important for company representatives to pay special attention to each and every visitor and should treat the customers in welcoming and friendly as well as helpful manner. Control: The Company for the first time is launching a planned marketing campaign for its new product. This will cost the management a sum total of 20,000,000. The campaign will constitute all the marketing techniques strategically in order to minimise the cost of the marketing campaign. A specially designed label will appear on each and every product in the print and web based ads. This will enhance the company fame in the country. The advertisement campaign will include direct mailing, ads in magazines and newspapers, advertisements on Internet and promotional emails. The above-suggested advertising channels will help the best to convey the message of company management to the masses. The financial allocation of the campaign is as follows: Ad in local Newspapers and Magazines: 2,000,000 AUD Advertisement on Internet and E mailing: 1,000,000 AUD To deal with the changing situation of the market and consumers inferences the marketing plan needs to be monitored and controlled. For the company I recommend to use annual plan control. The annual plan control is undertaken through setting small term objectives. The management should keep on analysing the performance in the market place. If there is deviation in the performance from the goals specified in the annual plan the reasons should be analysed. To check the plan performance sales analysis and expense to sales analysis should be undertaken. Another customer driven instrument of analysing the financial performance is scorecard which can be used. Through using market based score card two purposes can be served. 1) Provision of early warning signals. 2) Provision of early warning signals. The customer performance scorecard will use the analysis of following in order to analyse the performance of the Company. It will measure increase in the new customers. Number of lost customers. Quality of services provided. Quality of products presented. Right awareness of target market. The preferences of target market. Conclusion: Marketing variables play an important part in the presentation and exposure to the target population. Age and geographic variables are also important factors. It is important for the Company to target new segments in order to remain at the cutting edge. In order to remain competitive in the market it is important to present timely and effective information for the target population. The creation of a proper Marketing Information System and its updating on regular basis is very important for the Company to not only keep its presence felt but also to increase traffic. A step by step marketing plan should be undertaken in order to achieve the desired result. The management should undertake an annual evaluation of the plans and goals designed to achieve. This will help the company to correct its action towards the right direction. Continuous updating and promotion will make it possible for the Company to achieve its goals in future. References Bovee, C. L., & Arens, W. F. (1989). Contemporary advertising (3rd Ed.). Homewood, Ill.: Irwin. Building Brands, (2005). id You Know Innocent Drinks: Divinely good branding, available at http://www.buildingbrands.com/didyouknow/30_innocent_juice.php Fred R. David, Strategic Management Concepts and Cases, Eleventh Edition, pp.165-166. Government of South Australia, (2005). Growing Juice gap: Opportunities for South Australia, available at http://www.pir.sa.gov.au/__data/assets/pdf_file/0004/23755/the_growing_juice_gap_final.pdf Just-Drinks.com, (2008). AUSTRALIA: Cadbury Schweppes eyes soft drinks sale, available at http://www.just-drinks.com/article.aspxid=94619 Kotler, P., (2000). Marketing Management. Millenium Edition. Prentice hall International Mercer, C., (2005). Australia permits juice drinks fortified with calcium, available at http://www.nutraingredients.com/Regulation/Australia-permits-juice-drinks-fortified-with-calcium Schweppes Pty Ltd, (2009). Cadbury in Australia, available at http://www.cadbury.com.au/About-Cadbury/Cadbury-in-Australia.aspxTetra Pack, (2005). Innocent launches Smoothies for kids. Available from http://www.webpackaging.com/webpkg.aspxXS=eyptpfrqvtk54r45uekjba2u&SB=449904 Zhang, Y., & Neelankavil, J. P. (1997). The Influence of Culture on Advertising Effectiveness in China and the USA: A cross-cultural Study. European Journal of Marketing, 31(1), 134-149. Read More