Segmentation and Targeting Strategy of Cadbury Pty Ltd Australia - Case Study Example

Executive summary This report presents a case study analysis of the turnaround efforts of one Cadbury’s Ltd Pty product; Picnic Chocolate Bar which has been recently on the decline in the Australian market. The report begins with a brief company profile of Cadbury Pty Ltd Australia. In the introduction an overview of the Chocolate industry in Australia is also laid out. In the second section the report discusses the segmentation and targeting approach adopted by Cadbury for its marketing activities in Australia. In this section, the report identifies teenager and adults aged between 12-49 years as the main target segment for Cadbury’s Picnic bar. Thirdly, the report considers the User generated content approach through the internet and social media approach applied by George Patterson Y&R to turn around the waning popularity of the Picnic Chocolate Bar in the Australian market. The report also considers the advertising communication objectives considered by Picnic in launching the advertising campaign and the reason the firm is able to achieve these objectives. The report concludes that Picnic chocolate bar is likely to overtake its competitor and regain its top position in its market segment. Table of Contents 2 1.0 Introduction 3 2.0 Segmentation and Targeting 3 2.1 Consumer Behaviour Segmentation 4 2.2 Demographic Segmentation 4 2.3 Functional Segmentation 4 2.4 Targeting Strategy 5 3.0 Picnic’s advertising approach 5 3.1 Advantages of UGC 5 3.2 Disadvantages 6 3.2.1 Negative content 6 3.2.2 Violation of Advertising codes 6 4.0 Picnics Communication objectives 6 4.1 To build a better image for the Picnic bar in the Australian market 7 4.2 Promoting the Uniqueness of Picnic Chocolate bar 7 4.4 To build loyalty among consumers 7 4.5 Reason for the success of Cadbury’s communication Strategy 7 4.5.1 Choice of Channel 7 4.5.2 Providing Relevant Content 8 4.5.3 Superiority of Visual communication 8 4.5.4 Ease of Sharing Content 8 4.5.5 Maintaining Control over Content 8 4.5.6 Customer Engagement 8 5.0 Conclusion 8 6.0 References 10 1.0 Introduction Cadbury Pty Ltd decided to expand internationally in 1919 after the merger with in England with J.S fry in 1919 (IbisWorld, 2011). Cadbury is well engraved into Australian history as it was the supplier of chocolate rations to the Australian armed forces during the Second World War. The life history of Cadbury in Australia has been marked by multiple mergers and acquisitions and even a spinoff. Currently, Cadbury Pty Ltd operates as a subsidiary of Mondelez International, Inc and operates from South Wharf, Australia. The formation of Cadbury Pty Ltd has enabled focus on the confectionary industry. Cadbury PTY Ltd engages in the business of manufacturing and selling cocoa and chocolate products (Belesina 2012). Its product range includes blocks of chocolate, boxed chocolates, chocolate bars, pre-teen confectionaries, old gold blocks, kosher products, ice creams and showbags. Cadbury also produces special products for festive periods like Easter and Christmas including Easter eggs. Among the Cadbury brands that have been very popular in the Australian market include Cherry Ripe bar, Crunchie Bar, Freddo, Roses boxed Chocolate, Picnic bar, Time out Chocolates, Cadbury dream Block and Boosts bar. One of Cadbury’s unique and most loved chocolate bars in the Picnic chocolate bar which Cadbury refers to as “ Deliciously ugly” due to its messy nature. In the Australian market, Cadbury holds 41 per cent of the confectionary market while it nearest competitor Mars Australia Pty has 18 per cent of the market share (MarketingMag.com 2011). Australians are among the highest consumers of Confectionary with each Australian consuming an average of 6.7 kg of confectionery each year (MarketingMag.com 2011). In Australia the success of the Picnic bar has been phenomenal but in recent years Picnic Market share has been eroding and it has been overtaken by competitors and other Cadbury products. In this paper the Segmentation and targeting strategy of Cadbury Pty Ltd Australia is discussed with focus on Cadbury’s picnic chocolate bar target market. Secondly, the advertising approach adopted by George Patterson Y&R, Cadbury’s advertising agent is analyzed with focus on it advantages and limitations. Thirdly, the report analyzes the marketing objectives Cadbury is aiming to achieve and how they Picnic will achieve its advertising objectives. 2.0 Segmentation and Targeting Cadbury uses various segmentation Criteria to market its range of chocolate products. According to Cadbury’s segmentation is based on the reasons for purchasing chocolate. Cadbury market segmentation is defined by a number of variables including demographic variables. Consumer behavior, values and Lifestyle are among other variables that are used in the segmentation of the Cadbury market (Lane and Sutcliffe 2006). Other variables include the benefits a person would get out of purchasing the Cadbury product. While considering whom to target for the Picnic market all these consideration are put into mind. 2.1 Consumer Behaviour Segmentation Cadbury brands segment their market on the following behaviour variables: The Break Segment: According to Lane and Sutcliffe (2006), the break segment consists of consumers who like to snatch and quickly consume their favourite chocolate during a break at school or at work. Break segment consumers are regular consumers of chocolate and may consume chocolates on a daily basis. This market segment is however not the target of Picnic which cannot be eaten quickly due to its messy and crumbly nature. Impulse Segment: This segment refers to consumers who like to purchase their products and consume them instantly. Cadbury makes sure that products targeted at the impulse segment are available at the most convenient locations for example schools, playgrounds, malls and train stations. According to Marketingmag.com (2011), the case study, the barrier to Picnic bar sales in the segment market has been Cadbury inability to offer it as a Combo with a coke, a strategy adopted by other chocolate manufacturers. The Impulse segment accounts for more than 47 per cent of Chocolate sales forming the largest behavioural segment (Marketingmag.com 2011). Gift and Take Home Segment: This market segment makes purchases when need for them occurs. This segment tends to favour boxed chocolates (Lane and Sutcliffe2006). 2.2 Demographic Segmentation The Cadbury Demographic segmentation approach is heavily biased towards age segmentation. According to Marketingmag.com (2011), half of all chocolate purchases are made by individuals between the ages of 25-49. The whole Cadbury product mix is targeted at individuals between the ages of 5 to 60 years. In the view of IbisWorld (2011) the love for chocolate transcends all age boundaries. Not surprisingly, the highest consumers of chocolates are men aged between 35 and 49 years (MarketingMag.com 2011). On the other hand, women purchase more chocolate, but they are mostly purchasing for their families. 2.3 Functional Segmentation This segment includes those people who purchase chocolates based on the occasion. It may also include people who look at the benefits they will gain by consuming chocolates. The segment is likely to look at the ingredients contained in the Chocolate before making the purchase decision. Cadbury’ Picnic bar targets this market as one of the unique chocolate bars that contains nuts as a core ingredient (Shiu, Dawson and Marshall 2004). Functional based segmentation seeks to offer most health benefits to consumers of a certain chocolate product. Functional segmentation may target obese chocolate lovers with a chocolate containing low level of fat. Cadbury targets kid consumers with Milk chocolate covered with nuts. Another targeting strategy for kids by Cadburys is wrapping their products with the images of superheroes that are hugely popular with kids. For middle aged people Cadbury offers low calorie chocolates, while older people can choose from the range of nut and white chocolates offered by Cadbury. 2.4 Targeting Strategy Cadbury’s Picnic chocolate group is targeted at two age segments: 12 to 18 market and adults who behave like teenagers (MarketingMag.com 2011). The second demographic segmentation is referred to as adolescent. Secondly, the nature of Picnic marketing campaign shows that it is targeted at men as it refers to challenges. Thus, Picnic primary target market can be identified as the 12 to 49 age group. By using the internet and other contemporary communication channels the campaign aims to create awareness of the Picnic brand in the market therefore targeting the impulse buying segment of the chocolate market. The Picnic marketing campaign argues consumers to “try it” meaning they are encouraging impulse buyers to go out there and purchase a Picnic. According to (MarketingMag.com 2011), Picnics advertising campaign borders on encouraging overconsumption among impulse buyer, who are purportedly supposed to consume a picnic every time a commercial runs. Emphasis on the youth market is shown by the initiative to have each of Picnic consumers produce his own ad, while trying to consume the Picnic bar within the time stipulated in the challenge. 3.0 Picnic’s advertising approach Cadbury advertising consultant has decided to use user-generated content (UGC) in their advertising campaign, utilizing social media as the main channel of advertising. According to Krishnamurthy and Dou (2008) this approach to advertising has various benefits and limitation for company like Cadbury. 3.1 Advantages of UGC According to Krishnamurthy and Dou (2008), the largest benefit of an advertiser using the user-generated content is the perception that advertising material is authentic. Cadbury can benefit from these as the user generated ads it will be using to promote Picnic show real people trying out a Picnic. In contrast, the use of professional content in advertising makes the consumption of a product consumption appear staged. The appetite for content on social media is insatiable (Daugherty, Eastin and Bright 2008). Since new content on the picnic will be developed daily by its consumers, interest in the advertising content of Picnic is unlikely to wane. Furthermore, by making sure that the consumers of picnic feel as part of the brand, Cadbury is developing stronger connections between their Picnic brand and consumers. Every day, Cadbury picks the best ad and uses to promote Picnic on TV therefore encouraging other consumers to produce better ads so they can make it to TV. Thirdly, the advertising cost for Picnic is likely to go down. The user-generated content increases the capacity of Cadbury’s to provide advertising content without any significant rise in advertising costs (Krishnamurthy and Dou 2008). With hundreds of Videos produced every day, it is possible that Picnic consumers will produce several viral videos which may attract million of viewers across the world. Also, the user generated content approach to advertising provides Cadbury with an opportunity to learn about the consumers of Picnic (Christodoulides and Jevons 2011). The content can reveal what consumers find most valuable about the Cadbury picnic bars and how they would like it improved. Furthermore, User generated content ensures engagement in the brand with consumers. The ads made by consumers of Picnic will promote discussion and comments on Picnic Chocolates therefore raising the level of engagement of the community in Picnic (Christodoulides and Jevons 2011). Another advantage associated with user generated content, is that producers of contents will promote their own ads (Krishnamurthy and Dou 2008). This way the advertising content of Cadbury Picnic reaches more people especially those who are in the social graph of the person making the ad. When a user makes an ad for picnic he is likely to share it with friends and solicit votes and comments from them about the advert. First, this creates awareness about the Picnic product offering. Secondly, it inspires the group of friends to go out and try a picnic. Thirdly, it challenges them to come up with an ad to compete with their friends. The use of popular forms of communication is another feature and advantage of Picnic’s user generated advertising campaign. According to Berman et al (2009), for a user generated content advertising campaign to succeed it must employ communication technology already popular among the target audience. Video sharing is popular in social media. By entering social media advertising through Video ads Cadbury are likely to benefit from the popularity of video sharing on social media. 3.2 Disadvantages 3.2.1 Negative content According to Scott (2009), one of the biggest risks of user generated content is that consumers may provide content that shows the company’s product in negative light. For example, McDonalds recent twitter campaign backfired when users offered videos of their horrible experience with McDonald products include finding a fingernail in a Burger. 3.2.2 Violation of Advertising codes As shown in the case study the Picnic advertising campaign may lead to overconsumption of the chocolate by some individuals. (MarrketingMag.com 2011) says that the campaign may unable to achieve the objectives of responsible consumption a goal for any advertising campaign. Furthermore, the content provided by consumers does not observe the protocol established for the production of adverts. Users may produce advertising content that mentions the names of competitor products or upload videos that directly compare the products of Picnic with those of competitors. 4.0 Picnics Communication objectives Cadbury’s advertising objectives can be summarized into the following (Clow 2007): 1. To make the attitude of consumers more favourable towards the Picnic Chocolate bar 2. To build a better image for the Picnic bar in the Australian market. 3. To promote the perception that Picnic is a unique Chocolate bar. 4. To build loyalty among consumers. 5. To position Picnic as the brand of choice among the target segment. 6. To show how much real authentic people like the Picnic chocolate bar. 7. To show people that purchasing the Picnic Chocolate bar is value for money. 4.1 To build a better image for the Picnic bar in the Australian market By having many real consumers trying out a picnic and on video, the advertising campaign is contributing to the picnic brand having a better image in the Australian market (Christodoulides and Jevons 2011). 4.2 Promoting the Uniqueness of Picnic Chocolate bar In the Cadbury marketing mix, Picnic is a unique product because it contains nuts. However, it’s competitor, Snickers also contains nuts and was leveraging this to attract more chocolate lovers (Clow 2007). Consumers already agree that Picnic is unique and delicious, a perception that George Patterson Y&R need to reinforce in Australian minds (Christodoulides and Jevons 2011). The new user generated ads are likely to wrestle back Picnic market positions as a unique product that contains nuts as it core ingredient. 4.4 To build loyalty among consumers One of the objectives of engaging users in producing advertising content is that they are likely to remain loyal to the product they help advertise (Clow 2007). Cadbury are likely to make huge consumer loyalty gains by involving their consumers in the advertising campaign. 4.5 Reason for the success of Cadbury’s communication Strategy 4.5.1 Choice of Channel By choosing to advertise on the internet and social media, Cadbury is able to reach it’s target market more easily. There are over 11, 534, 540 user of social media site facebook, while popular Video sharing site YouTube has over 11, 250,000 users in Australia (Boyd 2009). Furthermore, only 5 per cent of Australian youth do not access the internet on a regular basis. This shows the potential number of people that Picnics communication campaign can reach. The usage of devices like Smartphones, ipads and computers is which make access of the internet on the go easier is also high in the youth segment targeted by Cadbury’s advertising campaign. According to Boyd (2009), 81 per cent of Australian households have access to high speed internet As seen earlier Video sharing is already popular among Australian user of social Media meaning the move to ask them to make more Video content to advertise Picnic will be well taken. 4.5.2 Providing Relevant Content The advertising campaign adopted by Cadbury is likely to offer advertising content that is relevant to the social context of the company’s target segment (Clow, 2007). In the case, study it has been show that the old Picnic advertising campaign “Deliciously ugly” has struggled to stay relevant in contemporary society. The more aggressive and modern advertising stance of its competitor has seen Picnic lose market share. 4.5.3 Superiority of Visual communication In advertising, visual communications helps drive home the benefits a consumer can get from using a product (Clow 2007). The Videos showing people trying out a Picnic will present the idea that Picnic is unique product in a visually compelling way. According to (MarrketingMag.com 2011) videos are a narration of the lives of ordinary people tied up with the brand message being advertised. 4.5.4 Ease of Sharing Content The site where the video ads showcasing the Picnic experience was uploaded makes it easy for user to share the content to friends. According to Chitty, Barker and Shimp (2008) sharing of content is key to successful advertising on social media. The site also asks those who upload content to share it among friends increasing the amount of people the communication is able to reach. 4.5.5 Maintaining Control over Content User generated content could backfire on the advertising company if it does not maintain a measure of control over the content (Daugherty, Eastin and Bright 2008). Cadbury and its advertising agent has made sure the ad contents are focused on its communication objectives by providing voiceovers for the commercial which ensure that ads do not divert from Picnics intended purposes. In contrast, if users were allowed to make their own ads and voice over it may result in irrelevant content. This control over the contents ensures part of Cadbury’s brand message is passed on to whoever views the video regardless of the other content. 4.5.6 Customer Engagement By collecting the ad ideas of consumers Cadbury is making sure that consumers remain engaged in their products. Furthermore, the chain of comments that follow each of the uploaded advertising content also engages consumers who were not involved in the original advertisement. 5.0 Conclusion For a number of years Cadbury Pty Australia has watched one of its Flagship brands , the Picnic Chocolate bar lag behind competing products in terms of market share. The brand was also being cannibalized by other Cadbury brands like Cadbury Boost. George Patterson Y&R, Cadbury’s advertising agency devised a plan to arrest and correct the declining popularity of the Picnic bar among the Australian population. The plan adopted by George Patterson Y&R included identifying the target segment for the Picnic bar upon its re-launch. Secondly, George Patterson Y&R identified the communication objective that would return Picnic Chocolate bar to the top of Chocolate popularity charts. Finally, George Patterson Y&R Patterson adopted an advertising strategy that it thought would be effective on Picnics Target market. George Patterson Y&R Patterson segmented the Cadbury market for picnic along behavioural and demographic variables mainly. The main targets identified for picnic advertising campaign were consumers aged between 12 and 49 years, whose purchasing behavior was mainly impulsive. The targeting strategy also identified men as more likely consumers of Picnic bars more than women. In response to these segmentation and targeting parameters, George Patterson Y&R selected user generated content and social media as the most effective advertising communication approach to effectively reach this audience. As seen earlier, Australian youths, especially teenagers are heavy and regular users of the internet and social media therefore justifying George Patterson Y&R selection of these advertising approach. George Patterson Y&R use of user generated content was justified by a number of benefits associated with this approach to advertising. First, User generated content has a more authentic feel as it shows real people engaged in the consumption activity of the products being marketed. Secondly, user generated contents on social media and other internet platforms is likely to reach more audience at the personal level as it leverages the extra incentive of users to advertise their own content. Despite these, user generated content has the potential of backfiring on the advertising company if the user upload negative content. However, George Patterson Y&R and Cadbury show their grasp of user generated content advertising by providing voice-overs that both control and direct the advertising communication in user produced ads. In conclusion, the new approach to advertising adopted by George Patterson Y&R for Cadbury’s Picnic Chocolate bar is likely to see the bar regain its number one position in the market. 6.0 References Belesina, A 2012, Chocolate and confectionary manufacturing in Australia: updated market research report, Accessed 3rd August 2012, http://www.myfen.com.au/news/updated-market-research-report-on-chocolate-and-co Berman, SJ, Battino, B, Shipnuck, L & Neus, A 2009, The end of advertising as we know it. In Television Goes Digital (pp. 29-55), Springer, New York. Boyd, D 2009, Why youth (heart) social network sites: The role of networked publics in teenage social life, Cengage, London. Chitty, W, Barker, N & Shimp, TA 2008, Integrated Marketing Communications, 2nd ed, Cengage Learning Australia Pty Limited, South Melbourne Christodoulides, G & Jevons, C 2011,The voice of the consumer speaks forcefully in brand identity. Journal of Advertising Research, 51(1), 101-108. Clow, KE 2007, Integrated Advertising Promotion, And Marketing Communication, 3/E. Pearson Education India. Daugherty, T, Eastin, MS, & Bright, L 2008, Exploring consumer motivations for creating user-generated content, Journal of Interactive Advertising, 8(2), 1-24. IbisWorld 2011, Organic, fair trade or dark: Chocolate takes on new characteristics to please ethical consumers, Accessed 3rd August 2012, http://rmitintergratedcommunication.wikispaces.com/file/view/C2172+Chocolate+and+Confectionery+Manufacturing+in+Australia+Industry+Report.pdf Krishnamurthy, S, & Dou, W 2008, Note from Special Issue Editors, Advertising with User-Generated Content. A Framework and Research Agenda, Journal of Interactive Advertising, 8(2), 1-4. Lane, D, & Sutcliffe, A 2006, Brand extensions in confectionery; The Mars delight, The Marketing Review, 6 (1), 85-102. 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