Cadbury's Marketing Strategy - Case Study Example

Cadburys Marketing Strategy Contents Contents Introduction 3 Analysis of Cadbury’s marketing strategies 4 Application of relevant marketing techniques and tools 5 Marketing practices and activities of Cadbury 7 Market oriented approach 10 Contribution of marketing in organizational success 11 Conclusion 12 References 14 Introduction This study would be centred towards analyzing the concept of marketing management in context of a global firm known as Cadbury. Marketing management can be stated as a discipline that focuses on wide array of marketing techniques. They mainly deal with appropriate management of marketing capabilities and resources of a firm. Globalization has resulted into growth of multinational firms and even enabled companies to market beyond home country. Marketing managers play a significant role in relation to strengthening a firm’s market position. They are even responsible for influencing composition, timing and level of customer’s demand. Marketing forms a tool through which a company can communicate its brand message to target audience. There are wide range of marketing techniques and tools implemented by firms in order to attract majority of customer base. The concept of marketing management can be closely associated with the framework of strategic planning. In this study a thorough analysis shall be conducted on marketing activities undertaken by Cadbury. Cadbury was founded in 1824 and is a British multinational confectionary firm. This firm is basically owned by Mondelez International. The company has its headquarters located in Greater London and its operations are widespread across 50 countries. Over the years the firm is well known for its range of confectionary products. These products comprise of Dairy Milk chocolate, Roses selection box and Crème Egg. Cadbury designs strong advertising campaigns so as to relate their product line with emotions of customers. Marketing management has been at the core of business operations executed by the firm. This study would even highlight certain key theoretical concepts related to marketing. Customers segments are firstly selected by marketing managers since all marketing activities are centred towards these segments. In overall context this study shall reveal the contribution of marketing towards organizational success. Analysis of Cadbury’s marketing strategies Cadbury is currently known as the largest confectionary company across the globe. In UK chocolate market Cadbury is the market leader. It is even stated as the most profitable division of Cadbury Schweppes Plc. The company undertakes set of marketing strategies in order to survive in the industry. Marketing activities implemented by Cadbury are always aligned with business objectives. It enables the firm to secure high profit margins and increase overall sales volume. Survival is another common objective which is major area of concern for the company. There are some competitors of the brand that has greatly affected their market share. Nestle can be stated as one such competitor of Cadbury along with imported brands like Snickers and Mars. Though the firm is market leader but it has to upgrade marketing activities as and when required. Marketing strategy of Cadbury is also focused towards profit maximization. This objective is basically accomplished so as to survive in the market place and strengthen financial arm. The growth factor encompasses the company expanding into overseas market or selling new product line (Joshi, 2005). It has been observed that the firm designs new products for new markets such as chocolate ingredients being offered in UK market are completely different from that of Asian market. This form of strategy is adopted by the company so as to meet specific customer taste or preferences. Apart from sales maximization marketing strategy implemented by Cadbury is also inclined towards enhancing product image. The firm also focuses on development of their products in order to remain competitive in the market place. Their main objectives are to increase market share in snacking sector and initiate market growth for chocolate confectionary. Cadbury also tries to establish a unique point of difference through its products which cannot be easily imitated by any competitor. When the products are developed by the firm, they conduct pilot testing for identifying willingness of customers to purchase the product. The company is inclined towards promoting product by utilizing above the line promotional techniques. Consumer media are generally incorporated for advertising Cadbury’s products such as radio, television, magazines and newspapers. The company has always attempted to associate their product line with emotions of individuals. This is done so as to create a positive brand image in consumer mind. Products being offered by Cadbury do not belong to priority list of customers and hence it is essential to develop a strong bond (Pride and Ferrell, 2014). Firstly Cadbury selects a specific target segment and then designs advertisement campaign aligned with identified target. It enables the firm to offer specific product as per hidden customer demand. Promotions are a key focus area for the company because it provides a platform whereby customers can be associated effectively with customers. However the major objective of the firm is to maximize sales and profit margins. Over the years the firm has retained its position as a market leader and innovative strategies are implemented to stay ahead of competition. Application of relevant marketing techniques and tools Marketing strategies are basically formulated by a company so as to achieve company objectives. It transmits messages to all stakeholders and facilitates development of brand image. There are three questions which are answered through marketing strategies such as- “this is where we intend to go”, “when shall we be there” and “our stance”. Marketing strategies can be classified into three types such as undifferentiated marketing, differentiated marketing and concentrated marketing. Undifferentiated marketing strategy states that unchanged marketing activity is employed for a standard product or service. This strategy helps to reduce costs in terms of production and marketing. However it can outline wastage possibly during distribution or promotional activity. Differentiated marketing is all about company offering specific products for particular market segments across the globe. In this strategy marketing mix elements are also modified so as to suit current market segment characteristics. On the other hand, concentrated marketing deals with marketing effort implemented for one target market. This strategy totally results into exploitation of a significant market area and is basically utilized for specialized products (Tehrani, 2008). Concentrated marketing is also known as niche marketing in certain business context. Many firms even incorporate combination of all these strategies so as to accomplish common objectives. Cadbury encompasses undifferentiated marketing strategy and this facilitates reduction of costs. The company has a common goal that is to sustain its position as a market leader in confectionary industry. This can be achieved through promoting their product line so that customers are aware about any new features incorporated by the firm. Ansoff’s Market/Product matrix highlights different marketing strategies that are undertaken by real world companies. This matrix focuses on four important strategies like product development, market development, market penetration and diversification. Product development is related to innovating additional features within existing product in order to attract more customers. On the other hand, market development is associated with identifying new market segments for maximizing sales and profit margins (Ambler, 2005). Diversification can be defined as expanding into new market segments with new product line. This strategy is usually implemented by companies when the focus is on new products and new markets. Market penetration strategy is linked with offering best products or services at best prices so as to acquire maximum market share. On basis of this theoretical concept it can be stated that Cadbury only deals in confectionary items but currently targets different market segments. For instance, the company is centred towards targeting new market segments in terms of demographic characteristics. In earlier years, Cadbury used to target only young generation people. However in current scenario in order to stay competitive in the market place Cadbury launches confectionary items for all age groups. This marketing strategy has supported the firm to acquire high profit margins and gain desirable customer base. Other common marketing tools implemented by companies are marketing mix and STP. Segmentation, targeting and positioning is an effective marketing technique which forms the basis of marketing strategy. It is a three stage process – first stage is about identifying types of existing customers, second stage is related to selecting the best segment that is fit for a product and finally optimizing services or products for that particular market segment. Communication plays a vital role in this three stage process and can be applied on Cadbury. Their market segment is those who are inclined towards sweet dish and prefer consuming confectionary items (Gelder and Woodcock, 2003). Cadbury is highly responsible for designing memorable advertisement campaigns and bringing out the child within every individual. Their products are not only linked with festive occasions but are even considered now to be an alternative for sweet dish or rather desserts. In current scenario Cadbury is aligned towards attracting millions of customers. They are focused towards low income customers and do not engage into any form of premium pricing strategy. The company plans to reach out to those customers who are located far away from their home. Cadbury uses emotional aspect within all its advertisement campaigns so that customers are able to closely associate with product features. Marketing practices and activities of Cadbury STP marketing technique clearly states that there is no such particular age group which is targeted by the company. It aims towards reaching out to large base of customers who belong to lower or upper income class group. However positioning of Cadbury plays a significant role since it supports the firm to acquire high percentage of revenue margins. Brand positioning is that aspect which needs to be communicated to the target audience. This positioning aspect mainly encompasses values, imagery and competitive advantage. A distinctive image has to be developed of a brand since it plays a vital role in creating perception of customers (Carpenter and Hamilton, 2008). Cadbury has positioned its brand name in the form of a substitute of any sweet dish or confectionary item. The company even describes themselves to be market leader in the industry. Market position of Cadbury highlights that it is an anchor in midst of confectionary products. In present scenario complicated decision making is undertaken by customers before purchasing any form of product. Cadbury is usually associated with certain attributes in relation to prices or benefits (Assael, 2005). This in turn makes the search process for customers simpler. The marketing mix concept comprises of four important elements such as product, price, place and promotion. There are wide array of products being offered by the company so as to exceed expectations of customers. Their products can be broadly classified as chocolate and confectionary, food drinks and beverages. All these products are inclined towards meeting hidden demand of customers (Baker and Hart, 2008). The second aspect of marketing mix is pricing and effective pricing strategies are incorporated to acquire desirable sales margins. Cadbury pays more attention on setting such product prices which appears to be worthwhile for customers. Its different products have different prices since every product of Cadbury has specific customer expectations. Place is another aspect of marketing mix and Cadbury aims at improving its existing quality of distribution network (Keller, 2006). The company has expanded its distributor base from 1990 to 2100. Team of Cadbury believes that confectionary selling is quite similar to soft drink sales. Cadbury distribute its products not only through middle man but even via retailers. The firm even sets up their brand logo and brand colour within store outlets, so as to attract customer attention. In order to gain competitive advantage over Nestle, Cadbury is now inclined towards expansion of distribution channels. Promotion is a tool that is implemented by a company to communicate brand message to target market. Effective advertising is usually incorporated by a firm to promote product features. The firm advertises its product line through traditional and electronic media. Television, magazines, radio, social media, newspapers, etc., are generally used by the firm for advertisement campaign. Events and festivals are a medium through which Cadbury promotes its wide array of products (Cheverton, 2005). Their products are closely linked with occasions so as to drag attention of customers. Advertisement campaigns in UK are inclined towards providing additional features of the brand. Certain promotional campaigns of the brand have been elaborated in figure 1. Figure 1: Ad campaigns of Cadbury (Source: Bradley, 2008) The brand even invests in posters and banners in order to retain customer attention. Advertisement theme is also properly highlighted in the posters. Event sponsorship is another mechanism which has been adopted by the brand. This is done to attract wide number of customers and outline brand name. Different products of the company are advertised differently so that customers are able to distinguish amongst product features and benefits. Media advertising in current context also includes Internet (Ståhlberg and Maila, 2013). This appears to be a medium through which customer segment of age group 17 years to 35 years can be easily reached. In UK market the company has been able to sustain its market share even by product bundling. This approach is centred towards offering Cadbury products along with group of other products such as chocolates with hamburgers, etc. While event hosting Cadbury even keeps exciting gifts for their customer base so that they repeat purchase behaviour. Market oriented approach There are two forms of marketing strategy – profit oriented and customer centric or market oriented strategy. It can be stated that firms usually design strategies in order to remain competitive in the market place and gain high profit margins. In every business it is essential to analyze hidden demand of customers. Product or service differentiation can only be achieved when such features are highlighted that cannot be easily imitated by competitors. Cadbury is often stated as market leader and this is simply because it reflects upon customer demand. The company launched low calorie chocolates for older generation (Onkvisit and Shaw, 2009). It even offers wide range of new products for younger generation. In earlier years the company was only focused towards young generation but growing competition has facilitated the brand to expand on its target market segment. This form of marketing approach can be classified as market oriented approach. It is basically a business philosophy or approach that helps to identify hidden wants or needs of customers. Cadbury incorporates market oriented approach since its business goal is to live up to or exceed expectations of customers. As per market trend the firm brings forth necessary changes in its product line. On the other hand brand logo or image is also altered by the firm as and when required (Keller, 2008). When a company is able to satisfy hidden customer demand or wants it initiates development of a satisfied base of customers. This approach even proves to be beneficial for firms since it eradicates the phenomenon of forecasting or guessing. The company is market oriented because it incorporates changes as per market fluctuations and believes in delivering product quality according to customer’s expectations. Contribution of marketing in organizational success Marketing strategies play a vital role when it comes to achieving success or growth by a company. These strategies are considered to be a major part of business strategies. Marketing managers are solely responsible for communicating brand message and retaining wide base of customers. There are different marketing tools and techniques that are adopted by companies. However there exist a common goal which is to maximize sales and profit margins (Hooley, Piercy and Nicoulaud, 2012). It can be observed that marketing strategies have contributed immensely towards Cadbury’s success and growth. These innovative strategies have enabled the firm to cater hidden customer demand. Cadbury’s products are not high involvement products and so there is greater chance of customers to shift to other brands like Nestle (Batey, 2012). Switching costs in this case is low and this adversely affects brand image and market share. It becomes essential for a firm in such scenario to develop a strong brand image. Cadbury’s success is embedded within formulation of an influential brand image. To be more precise marketing strategies of the firm has provided a platform whereby brand can easily be associated with customer’s emotions. The company was able to capture the best strategy in terms of strong emotional bond between product and customers. Cadbury chocolates are now regarded as a necessary aspect whenever it comes to happiness. This has facilitated the firm to secure high revenue margins and maintain loyal base of customers. Marketing strategies of the firm are inclined towards associating products with festive occasions or events (Franzen and Moriarty, 2008). The company’s success is highly dependent on marketing strategies since it is a medium to attract large base of customers. On the other hand, Cadbury’s success is outlined through its diverse geographical presence and turnover rate. The company’s operations is not only confined to a specific region but is spread across the globe. Conclusion As per this study, marketing management is a widespread concept that is incorporated in all real world firms. This concept enables a firm to manage appropriately its marketing resources and capabilities so as to achieve business objectives. Cadbury over the years has been able to retain its market position by meeting customer demand. Product offerings of the brand are such that it is able to meet or exceed expectations of customers. Cadbury is considered to be the market leader from past many years. In highly competitive market place it is essential to attract as well retain wide base of customers. Cadbury’s marketing strategy is all about highlighting innovative features so as to attract customers. There marketing technique is associated with developing emotional relationship between customers and brand. Emotional aspect forms the major competitive advantage of Cadbury. The main competitor of Cadbury is Nestle and all strategies are aligned towards strengthening market position. It can be stated that market oriented approach of the company has enhanced company’s growth and success. Marketing efforts of the firm are in line with business goals and objectives. In overall context the company has been able to deliver required products to its target market. The firm has even diversified its geographical base so as to remain competitive in the industry. Pricing strategy is implemented well by the firm in order to effectively manage its overall operations. The company also aims at meeting demand of customers belonging to low income group. As per market or product matrix, Cadbury has adopted market development strategy. This strategy has enabled the company not to be confined to a particular market segment but expand on its target market segment. Cadbury in UK market launches its products through innovative advertisement campaigns and utilizes all forms of media channels. References Ambler, T., 2005. Building brand relationships. Financial Times Mastering Management Series, 13(4), pp. 13-56. Assael, H., 2005. Consumer behaviour. New Delhi: Dreamtech Press. Baker, M., and Hart, S., 2008. The marketing book. Great Britain: Routledge. Batey, M., 2012. Brand meaning. USA: Psychology Press. Bradley, J., 2008. Cadburys purple reign: the story behind chocolates best-loved brand. New Jersey: John Wiley and Sons. Carpenter, G. S., and Hamilton, A., 2008. Handbook of marketing strategy. Stamford: Cengage. Cheverton, P., 2005. 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