The Uniqueness of Cadburys Branding Strategies - Term Paper Example

Strategic Marketing: Cadbury’s Re-launch of Caramel and Wispa Table of Contents Introduction 3 2.Standalone Branding 4 3.Umbrella Branding 5 4.Comparison and Contrast between the Standalone and Umbrella Branding 6 5.Uniqueness of Cadbury’s Branding Strategies 6 6.Key Strengths and Weaknesses of Cadbury 7 7.Soundness of the Re-launch Decision 8 8.Conclusion 9 References 11 1. Introduction Cadbury is one of those companies that are loved across the world. The bulk of its product range – chocolate, rings a bell in the minds of millions in almost every country, because of the sheer pleasure associated with it. After ruling the market for almost two centuries following its birth in 1824, Cadbury was taken into the folds of the largest American foods and beverages company, Kraft Foods, Inc. (Kraft) on 2nd February, 2010 (Cadbury-a, n.d.). While talking about Cadbury Dairy Milk, its current owner has asserted that the brand is “available in more than 60 delicious varieties, to satisfy local tastes across our markets” and it has also been said that it “generates more than $1 billion of sales each year” (Kraft Foods Inc.-a, n.d.). Achievement of such a sales figure is quite likely for a brand that is both loved and trusted by the masses. In a bid to describe the position that is enjoyed by Cadbury, the performance of Dairy Milk has to be mentioned so as to point at the cumulative strength of Cadbury’s brand portfolio. Even as the global chocolate market is expanding at 7.4 percent, Euromonitor International has reported that “Cadbury Dairy Milk is growing even faster, at 8.6 percent a year” (Kraft Foods Inc.-a, n.d.). It does require a mention in this context that in 2003, while Cadbury aimed at positioning Dairy Milk as its megabrand, two of its “famous and standalone brands, Wispa and Caramel, were discontinued and moved under Dairy Milk’s portfolio with Dairy Milk Bubbly and Dairy Milk Caramel” (Sharma, 2009, p.2). However, on realising that there is a great demand for both these brands, in 2007 they were re-launched as standalone brands. Within a period of just 7 weeks following its re-launch, the sales volume of Wispa bars was almost 20 million. Centred on this information the current research will aim at evaluating various tenets of strategic marketing in the light of the re-launch decision mentioned above. After shedding light upon the concepts of standalone as well as umbrella branding, efforts will be made to analyse the uniqueness of Cadbury’s branding strategies. Following this, the key strengths and weaknesses of the company along with the soundness of the re-launch decision taken by it will also be discussed. 2. Standalone Branding As the very name suggests, this is a branding measure centred on standalone brands – a type of individual brands that “are neither linked nor associated by consumers with an organisational unit” (Franzen & Moriarty, 2008, p.383). On a precise note, it may be said that although such brands serve as main brands, they do not hold reference to any company in particular. It is rather interesting that companies exploiting standalone brands can even stay anonymous. While embarking on this type of branding initiative, companies may introduce numerous competing brands in an attempt to give each brand as much independent position as possible. However, as has been observed in the case of Nestlé’s KitKat and Henkel’s Persil “sometimes a corporate brand or house brand is added to a standalone brand as an endorsement” (Franzen & Moriarty, 2008, p.383). It has been observed in the context of standalone brands that these are so highly independent that the name, address, and other details of the parent companies are included in their labelling only when they are required legally or deemed sensible from the consumers’ perspective (Franzen & Moriarty, 2008, p.412). Literature review has revealed that in spite of the strength that these brands have, scholars like Mikhailovic and Chernatony (1994) believe that “the strategic binding of a corporate brand with an individual brand can be one of the most powerful brand strategies that a company can consider”; in addition, while talking about the synergistic outcomes that may be achieved through strategic branding, Saunders and Guogun (1996) have expressed that “the combination of two brands is almost always assessed as better than the use of merely one brand as a standalone” (Franzen & Moriarty, 2008, p.417). 3. Umbrella Branding Umbrella branding necessitates a company to lay emphasis on “a monolithic brand for several products” (Capon, 2008, p.306). However, larger conglomerates may have a number of monolithic brands. While DaimlerChrysler has two main brands, viz. Chrysler and Mercedes under its hood, Chrysler has its own sub-brands that are better known as Dodge and Jeep. A closer look at the brand portfolio of the automobile behemoth will reveal that each of these sub-brands have their own sub-brands at an even finer level. Factors that commonly favour umbrella branding are as the following: 1) When a company opts for this particular branding strategy, it generally aims at achieving economies of scale. It goes without saying that “by promoting a single brand, the firm secures economies in advertising, logos, labelling, and other communications efforts” (Capon, 2008, p.306); 2) Umbrella branding ensures “transfer of positive customer experiences across products” (Capon, 2008, p.306), i.e. a positive experience with one particular product generally benefits other products that are similarly branded despite belonging to different product classes; 3) It showcases a positive corporate culture while enhancing the company’s ability to convey a unswerving message to its target customers; and 4) It reduces the chances of intra-firm antagonism (Capon, 2008, p.306). However, attention needs to be drawn in this context to the fact that strong products under a brand umbrella often run the risk of losing popularity if consumers draw a general conclusion on the basis of their negative perceptions pertaining to products that might not be equally good in spite of being similarly branded. 4. Comparison and Contrast between the Standalone and Umbrella Branding The previous two sections have described the major features of the two branding strategies i.e. standalone and umbrella. The primary difference between these two branding is that the umbrella brand is helpful in launching new products under the same brand name; whereas, standalone brand can be defined as autonomous brand that promotes the name of its parent company. Both the branding strategies are important and helpful for a company but from different perspectives. The umbrella brands lead to encourage the economies of scale and standalone brand strives to promote one particular type of product which is very important source of generating revenue for the company. However, from the customer point of view, the standalone brand is stronger than umbrella brand as former is more capable to influence consumers’ perception. 5. Uniqueness of Cadbury’s Branding Strategies It has been observed that Cadbury adopts a rather unique branding strategy; the chocolate czar prefers to “introduce new products or extend product lines, based upon the success of existing product and brand associations” (Beamish & Ashford, 2005, p.252) in realisation of the fact that whenever a new products rolls out from under its significantly wide umbrella, it is immediately associated with the firm’s brand by the consumers. Cadbury benefits immensely from the “conscious and unconscious feelings of passion, loyalty and enthusiasm” that exists in the global confectionery market and more particularly, the fact that “for many people, chocolate is Cadbury, and no other brand will do” (Beamish & Ashford, 2006, p.102). It has been identified that consumer loyalty plays a critical role in shaping the performance of chocolate manufacturers because of the rather simple reason that “a small number of consumers account for a large proportion of sales” (Beamish & Ashford, 2006, p.102). Furthermore, Cadbury has been successful in identifying the aesthetic brand values. As a result, the company adjusts its marketing communications (marcom) strategies in a way that reflects these intangible values in diverse markets located across the world. Back in 2006, it had been recognised in the case of this legendary organisation that “its strategy can vary from increasing brand awareness, educating potential customers about a new product, increasing seasonal purchases, or as is currently the case in the ‘Choose Cadbury’ campaign to highlight the positive emotional value of the brand” (Beamish & Ashford, 2006, p.102). Harris et al. (2008) have identified a number of marcom tools that are used by Cadbury for the purpose of communicating as well as developing its brand. These include (1) advertising, (2) point of purchase, (3) public relations, (4) direct marketing, (4) website, (5) personal selling, (6) exhibitions & events, (7) packaging, (8) sales promotions, (9) Café Cadbury, (10) Sponsorship (e.g. the British soap opera named Coronation Street), (11) trade promotions, (12) product placements, (13) Cadbury World, (14) field marketing, and (15) vending machines (Harris, Botten & McColl, 2008, p.136). 6. Key Strengths and Weaknesses of Cadbury Cadbury is undoubtedly a strong brand that has earned considerable amounts of loyalty as well as trust from its global consumer base over the years. While this is the key strength of the chocolate giant, it may also be mentioned that the company augments its strength by maintaining an evenly balanced brand portfolio that consists of top brands across various segments such as chocolate, confectionery, etc. Although, during the course of its merger and acquisition (M&A) deal with Kraft, Cadbury had argued time and again that “the offer undervalued the firm, was not a strategic fit, and would relegate Cadbury to slow growth”, it was observed that Kraft upheld its decision because it had full knowledge about the potential of Cadbury – this may be validated by mentioning that Kraft countered Cadbury’s argument by announcing that “the combination of Kraft’s strength with Cadbury’s product could create a powerhouse in the field and create positive synergies” (Drexel University, 2010). The fundamental premise of this research necessitates the adoption of a retrospective approach because of the fact that the supporting case study was developed at a time preceding the acquisition of Cadbury by Kraft. During that time it was highly necessary for the company to identify and address inefficiencies pertaining to production. Moreover, the company was burdened with a multitude of organisational issues that were triggered by the anticipated takeover by Kraft. However, it is worth mentioning that the weakness of Cadbury that led to its planned takeover by Kraft was rather extrinsic; against the backdrop of a weak economy, it was said that “a prime driver of corporate action will be foreign groups eager to exploit the weakness of sterling to buy British competitors” (Wachman, 2010). Cadbury became one of the most prominent and hapless victims of this phenomenon by chance and not by choice. 7. Soundness of the Re-launch Decision As has already been mentioned, the economy of Britain had taken a downturn prior to the takeover of Cadbury. It was observed that back in 2007, the brands under Cadbury’s umbrella were very much in demand in a sharp contrast to the fact that the company was critically challenged with low profitability. A host of social networking sites (SNSs) revealed that there existed an enormous demand for a particular brand that was discontinued by Cadbury – Wispa. Encouraged by the online campaign that served as a harbinger of hope, Cadbury took the bold decision of re-launching it permanently. That the decision was sound enough may be significantly justified by the fact that “in 2008, within seven weeks of its launch, 20 million Wispa bars were sold from the stores to become the fastest new product sold for Cadbury in the past 4 years” (Sharma, 2009, p.8). The re-launch decision was obviously judicious because it had helped Cadbury immensely in augmenting its appeal to the countless people who are connected round the clock via a string of SNSs. It goes without saying, that this particular strategic move was highly beneficial for the notable chocolate manufacturer to add fillip to its profitability and repositioning itself on its core competencies. Drawing inspiration from the positive result that it was able to garner by re-launching Wispa, Cadbury decided to implement the same strategy to another brand called Caramel, which was re-launched in 2009. The initiative was further bolstered by adopting measures such as repackaging, etc. and the outcomes were equally overwhelming. Owing to the highly impressive financial impact of this decision on the profitability of Cadbury, it is deemed logical to assert that it was definitely a sound one. 8. Conclusion During the course of this research, it has been observed that the branding strategies adopted by companies play a highly crucial role in determining the relative position that it enjoys in the market(s) that it cater(s) to. While standalone brands as well as umbrella brands have their unique characteristics, it has been found that the former are highly individual in nature and they are not affected by the status of the parent company. However, it has been argued that synergistic outcomes are achieved if these brands are associated with supporting/competitive brands. The research has revealed that Cadbury’s decision to re-launch a couple of brands that it had previously discontinued was judicious because the company could recognise at the right time the rising demands for these and reintroduced them to the market. It has been found that upon their re-launch, both Wispa and Caramel proved to be immensely successful, so much so that the sales volumes as well as the revenues of Cadbury were significantly enhanced. On a reiterative note, it may be said that a re-launch decision, if timed well, has a huge potential to augment the position of a successful standalone brand. References Beamish, K. & Ashford, R. 2005. Marketing Planning. CIM Coursebook 2005/2006 Series. Elsevier. Beamish, K. & Ashford, R. 2006. Marketing Planning. CIM Coursebook 2006/2007 Series. Butterworth-Heinemann. Cadbury-a. No Date. Cadbury – Kraft Foods. [Online]. Available at: http://www.cadbury.com/ [Accessed on November 16, 2010]. Capon, N. 2008. Managing Marketing in the 21st Century. Wessex Publishing. Drexel University. January 20, 2010. M&A Research Helps Explain Significance of Kraft-Cadbury Deal. [Online]. Available at: http://www.drexel.edu/news/headlines/ma-research-helps-explain-significance-of-kraft-cadbury-deal.aspx [Accessed on November 16, 2010]. Franzen, G. & Moriarty, S. 2008. The Science and Art of Branding. M.E. Sharpe. Harris, R. D., Botten, N. & McColl, J. 2008. Marketing for Stakeholders. CIM Coursebook. Butterworth-Heinemann. Kraft Foods Inc.-a. No Date. Cadbury Dairy Milk. Featured Brands. Our Brands. [Online]. Available at: http://www.kraftfoodscompany.com/brands/featured-brands/dairy_milk.aspx [Accessed on November 16, 2010]. Sharma, N. 2009. Cadbury’s Re-launch of Caramel and Wispa: Reposing Faith in Standalone Brands? Amity Research Center. Wachman, R. January 24, 2010. UK Firms Face Takeover Onslaught as Buyers Take Advantage of Weak Sterling. Guardian News and Media Limited. [Online]. Available at: http://www.guardian.co.uk/business/2010/jan/24/weak-sterling-fuels-takeover-boom [Accessed on November 16, 2010]. Read More