Key Facts about the Confectionery Market: Cadbury Brand - Assignment Example

QUESTION KEY FACTS ABOUT THE CONFECTIONERY MARKET Market Size "After a period of stagnation, the chocolate confectionery market is now worth 2,140 million, an 11.1% increase on 2003. This return to form has been driven by an increase in premium indulgence products and health perceptions about the benefits of dark chocolate. Dark chocolate, rich in anti-oxidants, fights free radicals in a similar way to red wine. Consumers' changing attitudes to health mean they are now eating for health rather than just restricting fat and calories, and this has resulted in the phenomenon of permissible indulgence - a treat that is both luxurious and beneficial in the eyes of the consumer." MINTEL This is a comprehensive statement by MINTEL a marketing intelligence company. This explains the sudden exceptional performance of Cadbury as an impact if the overall chocolate confectionary industry sector. However, questions to be asked at this juncture are: Is this growth uniform in the different segments of chocolates Can this growth be sustained in the future Future Trends The issue at this pointy in time for Cadbury is to sustain this growth.pattern. However, according to statistics, on one hand it would be able to match tis growth on the other hand other segments are offering greater returns. Euromonitor said the gum market offers better prospects than confectionery with an annual average growth rate of 3.3 per cent expected from 2007 - 2011. According to Industry Reports on 2006 Product Announcements and Sales "In 2006, thousands of new confectionery and snack products debuted tempting taste buds of consumers everywhere. 2,910 new confectionery products debuted, and Chocolate: 1,478 "Confectionery sales continue to cluster around major holidays, with Halloween leading sales in 2006 and Easter a close second. Halloween secured its lead with a 2.8 percent growth overall, while Easter stood out in 2006 posting a 7 percent sales increase thanks to a late April celebration. Also making gains, the winter holiday season and Valentine's Day both posted a 1 percent increase in 2006 and ranked third and fourth in overall holiday sales respectively."- www.whatsnewiningredients.com The above statement depicts a new trend in marketing that is of event marketing. All over the world companies are finding events the best way to market their products to the right audience. As for confectionaries, these are impulse products most consumed after reminder advertising, brand awareness on special occasions and events. It is thus no surprise that then sales increase by 1% due to Valentines day. New Product Development "Top trends driving product releases of 2007/08 include flavor fusions, international influences, artisan palate, sweet benefits, simply sugar-free, originally organic, reinventing classics, the dark side and child's play" (www.whatsnewiningredients.com) "Focussed attention in the premium and dark chocolate sectors of the market, which is providing strong growth opportunities. In April, Cadbury Schweppes relaunched the Old Gold dark chocolate brand and added a 70% cocoa variant. As a result, the brand grew 36% in Australia and by over 80% in New Zealand" (www.scoop.co.nz) Dark Chocolate segment: " In July, a new premium chocolate range was launched under the Cadbury Eden brand, positioning the business to tap into this fast growing segment of the market Our second half innovation program continues to build momentum with the exciting launch of Cadbury Eden into the premium chocolate segment"(www.snoop.co.nz, National Confectioners Association) It can be seen from the above statistics that the dark chocolate segment is an upcoming segment for Cadbury. Another segment that has a high potential is the organic food segment. Segmentation The various market segments that Cadbury brands are catering to are: - Cadbury gift boxes- for valentine gifts and for special occasions -priced higher. Cadbury Freddo-sells at a low price for kids to afford it. Cadbury 500 g bar with 10% more chocolate is for families with many kids Cadbury practices a psychological pricing strategy. It is always at par or at a higher side of price factor as compared to its competitors like Mars. However, Swiss Chocolates and French chocolates demand a higher price due to their exclusivity. This also identifies another area for the Cadbury management. The competitors in different segments especially separate brands tend to differ for e.g. the competitor of Cadbury Dairy Milk is Mars but the competitor of Dark Chocolates would be the Swiss Chocolates available in market. Distribution The greatest strength of Cadbury lies in its distribution management. Cadbury is an impulse product and consumers do not think about spending money on it while on the go. Due to this availability at all possible places is of utmost importance. Cadbury has a remarkable distribution network, as no matter which part of the world you are in, Cadbury would be available. In many countries, like Malaysia, Pakistan, Switzerland and Australia, Cadbury is being manufactured locally and the taste might vary slightly depending on the local preferred taste of the consumers. In this, none of the competitors of Cadbury can match this level of in-depth penetration across the globe. QUESTION 2 Outline and Evaluate a Programme of Research to identify Consumer's Attitudes and Opinions of the Cadbury Brand. Problem and Research Objectives: The background of conducting a research is that chocolate confectionary industry had been stagnant at a point for quite a few years. However, in 2006 onwards, it started showing tremendous growth. This growth was felt more in some segments as compared to others for e.g. the dark chocolate segment grew by approximately 3.3% due to which many companies including Cadbury entered in this new segment. The research objectives would be: To identify consumer's attitudes and opinions of the Cadbury brand The second, most important objective will be to identify whether Cadbury should opt for a Multi Branding Strategy or come up with variants under the same parent brand i.e. Cadbury. The background behind this is the Salmonella case due to which Cadbury brand was affected negatively. The Third objective would be to explore the changing chocolate tastes of the consumers and what they would prefer in the upcoming years. The fourth objective would be to determine the impact of advertising and what elements of the ad appeal most to the customers. This is necessary since the new ad of Cadbury, which contained nothing about the chocolate, had a very high appeal for the customers and became instantly popular. Developing the Research Plan. "Designing a research plan calls for decisions on the data sources, research approaches, research instruments, sampling plan, and contact methods" (Kotler, Marketing Management) The data sources are secondary and primary. Secondary research method is comparatively less costly as compared to primary research. The secondary research has given us the following outcomes: The customer tastes have changed over time The chocolate confectionary segment is likely to grow The Primary research would be able to determine: 1. The factors that prompt consumers to buy a certain brand of chocolate: Tasted a sample in the store Price Newly available Sale or special promotion 2.Reasons for Indulging in Chocolate To satisfy a sweet tooth Because it tastes good To make themselves feel good For health reasons To reward themselves To conduct primary research, it is proposed that Cadbury should hold Focus Groups, Surveys and Point of Sale Survey. Survey: According to Kotler, "Surveys are best suited for descriptive research". It is proposed that a survey should be designed for a sample space of 1000 individuals of the age group 10-30 in all the major geographical markets. The estimated cost for this is US $ 10,000. Another cost effective way of conducting primary research is by conducting focus groups. Since the target market can be approaches by taking a sample of individuals from schools, colleges and universities, this would not be difficult and can easily be carried out in the different market regions. Feedback and suggestions received in this way can be evaluated and seen if they can be implemented. The third method is be utilizing the same questionnaire devised for survey and keeping it at the point of sale i.e. retail outlets, super markets etc. Customers can be asked to fill up the feedback forms if their purchasing is in excess of US $ 50 at one time. The reason for keeping the $ 50 limitation is that it would limit the respondents to individuals with a high consumption of Cadbury. The information collected from the above methods should be compiled and analyzed keeping in view the secondary data collected as well. Averages and frequency distribution tables have to be drawn up for analyses. The last step is to present the findings to the management of Cadbury. The survey findings should be such that they would present a clear picture to the management of the current market situation and future prospects. According to our analysis, it is proposed that Cadbury should keep innovating like by launching Eden. They should also launch a product for the organic food segment. Question 3: Cadbury's recognizes that the key to success for the future lies in Innovating new products, and have decided to produce a new product for the gift giving market. You are required to participate in the marketing planning process at the product level to develop the marketing mix. Formulate and evaluate an integrated marketing mix (4P's) for the new range. As defined by Kotler, "Integrated marketing communications is when instead of heavy reliance on one communication tool such as advertising or sales force to blending several tools to deliver a consistent brand image to customers at every brand contact." In the recent years, the gift giving market has grown tremendously and new ways of personalizing and making the other person feel special are coming up On the other hand, event related advertising has proved itself not only the best below the line marketing activity but also one of the best ways to market the product and generate instant sales too. The Product Management Dilemma For Cadbury, it is more feasible to introduce line extensions and product variants carrying the same brand name. The question here is whether to opt for a line extension and introduce a product variant or to completely develop a new product The market survey has shown that Salmonella case has in fact affected the brand image and it would take quite some time before the consumers are ready to forgive the company and forget what happened. Considering this it is proposed that not only a new brand has to be introduced but also completely different product from the current business confectionery line of Cadbury. The Gift Product Idea Cadbury can launch "Cherishables", a gift pack including products of different brands: The gift would be packaged in the Body Shop bags. It would include a lip-gloss by Body Shop It would include a chic leather wallet by Jafferjees It would include Sun shades by Armani Deodorants by Body Shop "Love Bites" a new brand by Cadbury in the chocolate market segment comprising of small heart shaped dairy milk chocolates that are heart shaped. The chocolates would be in a small good looking plastic jar, also heart shaped. The whole package would be made to order and the customer would be able to request the desired sizes, colours and shades of their favorite brands. The gift bag would be custom made. It will not be available everywhere but would only be available at specific outlets having all four brands on one floor. "Cherishables" would be a brand of Cadbury's with 45% investment coming from Cadbury.25% investment would come from the Body Shop and 15% each by Jafferjee's and Armani. For this purpose a co-branding strategy is recommended. The outlet would also be called "Cherishables" and would comprise of four floors, each representing one brand. The grounds floor would be for Cadbury products including the complete chocolate range. In the initial stages, there would be only four such outlets in the USA, one in France and one in UK. Upon the success, Cherishables will be opened in other geographical markets. The Cherishable Gift Pack would include the logos of all the four partners. This co-branding strategy will not only add value and prestige, but for Cadbury it would provide an opportunity whereby it will be able to market a new brand, and benefit form the positive synergy created by other three brands. It would be able to get over the salmonella harm. It would also be able to launch a new outlet Cherishables, which can later be used exclusively for Cadbury products or rented out to other top of the line brands and the cost of investment, can be shared by the partners. Target Market: Affluent Business Class Fashion& Brand Conscious Love to travel and network. Price: Cherishables is a premium product with a snob appeal. It will be priced very high, as compared to the market, to keep up that image. The higher prices are usually attributed with quality and the co-branding will serve to raise the prestige value of the brands that are being worn. The limited number of outlets would also emphasie opn the exclusibity of the brand cherishables. Place: Cherishables will only be available at Cherishable outlets in limited places for Example in the USA there would be one outlet in Hollywood, one in Hawei , one in Washington DC and one in New York. Likewise, the outlets in France, Italy and UK would be opened in posh areas. Cherishable gift packs will not be available at any other outlet. Promotion: Since Cherishables will in the introduction stage of the product life cycle, the objective of promotion would be to create awareness of the theme and concept of the retail outlet with the branded, customized gift bags. One advantage that Cherishables will have is that the other brands would already have awareness in the market and it would not take much advertising effort due to this affiliation. The Message: The Unique selling proposition of Cherishables is: " Making it Count!" It is the ultimate gift for anyone loved by anyone. The Cherishables gift pack should be the only gift to express exclusivity. The theme is that since love is a priceless emotion, thus expression of love should not have limits or boundaries and only the best should be given to the special one in your life. For the target market defined above of Cherishables, the best mediums to reach them are by using print advertising, hoardings and bill boards, and television and electronic media hype just before the launch. Print Media Advertising Cherishables is recommended to release ads for the top two most widely circulated English language newspapers in all the regions where the outlet is being launched. The advertisements should be quarter pages preferably placed on the front page or the back page and should be placed on every weekend and every Sunday. Other than this, the print media advertising would include having a huge presence in all glossy glamour magazines including Vogue, She, Womens Own etc. Hoardings and Billboards: For Cherishables and other prestige brands co-branding with Cadbury in cherishables, the best medium to reach out to an audience that is on the go all the time, is by strategically placing hoardings and billboards in all the high traffic posh areas and also near the outlet. Television and Electronic Media: The importance of Television and electronic media cannot be underestimated. However, in case of Cherishables, it would not be a highly effective medium since it is not a consumer product. Television and electronic media campaign can be carried out just before the launch in form of a 60 second ad to be aired on the fashion channels and entertainment channels like Star World, AXN etc Celebrity Appeal: The other strategies to be used in creating appeal are that by associating the different brands with the different personalities, the image of Cherishables could be enhanced even more. However, the issue with this is that most of these brands already have a brand ambassador. The choice could either be that one brand ambassador could be selected for Cherishables of separate brand ambassadors can be selected for the assorted brands. It is recommended to opt for one brand ambassador for Cherishables since it would leave a clear make on the customers mind. Having too many celebrities would confuse the customer. Sponsorships Another way to create awareness of the new rand is by sponsoring events for example Cherishables can sponsor fashion shows and fashion festivals to emphasis on its image as the best upbeat product. The Launch The outlets can be launched on "Valentines Day" since that is a day synonymous with the theme of the outlet. In the upcoming years, special deals, new varieties can all be launched on the Valentines Day. It could be projected in such a way that the target market would want to spend their valentines day or the days before the valentine day at the retail outlet due to the ambience, feel and new product varieties and other such activities. Eventually, if "love bites" as a product proves successful, it can be separately launched. REFERENCES I. Philips Kotler, Marketing Management II. www.foodanddrinkeurope.com III. www.leatherheadfood.com IV. http://sev.prnewswire.com V. www.whatsnewiningredients.com VI. http://www.scoop.co.nz VII. http://investing.business.uconn.edu/fall2003 VIII. Attwood K (2007) "Drumming gorilla aids revenues at Cadbury" The Independent Britten N. (2007) "Cadbury's let salmonella get into bars" The Telegraph Cadbury.co.uk IX. Cadbury Trebor Bassett (2003) Confectionary Report X. Data monitor (2007) Cadbury Trebor Bassett XI. Hickman, M. (2007) "Cadbury fined 1million after last summer's salmonella outbreak" The Independent XII. Keynote (2007) Confectionary Market Read More