Project work on Marketing Mix includes what Marketing mix is all about, how it evolved, the 4 P's of Marketing Mix and various other characteristics. It also includes Company Analysis which shows comparison of two companies of Chocolate Industry: Cadbury and Nestle
B.COM.(HONS.), III YEAR
ROLL NO. : 43094
MRS. PARMINDER KAUR
DEPARTMENT OF COMMERCE
ATMA RAM SANATAN DHARMA COLLEGE
University of Delhi
PARTICULARS PAGE NO.
Objective and Methodology 6
Marketing Mix- Introduction 7
Criticize on Marketing Mix 9
The 7 P’s 11
Features of Marketing Mix 16
Developing a Marketing Mix 17
Key Challenges 19
SWOT Analysis 20
Marketing Mix of Chocolate Industry 22
Cadbury’s India Ltd.- Study 30
Nestle Ltd.- Study 38
Competitive Assessment 45
With an overwhelming sense of gratitude, I acknowledge the valuable guidance
and consistent encouragement extended to me by my project mentor Mrs.
Parminder Kaur. I am thankful to her for her support and suggestions that
enabled me to accomplish this endeavour. Her years of experience have
provided me with crucial inputs at critical stages of the project.
ROLL NO. 43094
MRS. PARMINDER KAUR
I hereby declare that this project entitled “MARKETING MIX” submitted to
Delhi University, is a record of an original and authentic work done by me
under the guidance of Mrs. Parminder Kaur, Department of Commerce, Atma
Ram Sanatan Dharma College, and this project has not previously formed basis
for the award of any degree, diploma or other similar titles for recognition.
B.COM (HONS), 3rd
ROLL NO. 43094
This project on Marketing Mix is to analyse what is the need of marketing mix in a
company and how it works. Marketing is simplistically defined as ‘putting the right
product in the right place, at the right place, at the right time.’ Though this sounds like
an easy enough proposition, a lot of hard work and research needs to go into setting
this simple definition up. And if even one element is off the mark, a promising
product or service can fail completely and end up costing the company substantially.
The use of a marketing mix is an excellent way to help ensure that ‘putting the right
product in the right place’ will happen. The marketing mix is a crucial tool to help
understand what the product or service can offer and how to plan for a successful
product offering. The marketing mix is most commonly executed through the 4 P’s of
marketing: Price, Product, Promotion, and Place. The 4P’s were formalized and
developed over the years by experts to ensure the creation and execution of a
successful marketing strategy. Through the use of this tool, the attempt is to satisfy
both the customer and the seller. When properly understood and utilized, this mix has
proven to a key factor in a product’s success.
When you market, you also have to strategize about who to target with your messages.
Your primary customer group becomes the target customers of your marketing
campaign. Your product and price offer some direction in identifying the right
audience. For instance, cutting-edge mobile technology ads often are targeted to
young consumers. Identifying the media used by these customers is also important,
which brings the "promotion" P into play. Tangibly, the promotion P addresses the
actual process of creating and distributing messages about your brand and products.
Selecting the right media within television, radio, newspapers, magazines,
the Internet, billboards and other support media is another critical part of successful
In a general sense, the marketing mix allows you to understand how to build and sell
value to your customers. Ultimately, customers buy what they perceive is the best
value for their money in a purchase situation. Implementing marketing campaigns that
show off great products at fair prices gives you an opportunity to succeed. Finding
affordable marketing options also helps you get better return on your investment from
The main objective of this study is to review how the present marketing mix
applies particularly to the marketing. This project includes study of 4 P’s and
Competitive Analysis of two Chocolate brands to make the study of Marketing
Mix more conclusive and for getting a better idea of how marketing mix of
companies are like.
For this purpose data was collected through secondary sources like books on
Marketing Management, browsing through the internet and studying about the
brands by reading and taking information from e-articles, magazines and
MARKETING MIX- INTRODUCTION
Marketing mix is originating from the single P (price) of microeconomic theory (Chong,
2003). McCarthy (1964) offered the “marketing mix”, often referred to as the “4Ps”, as a
means of translating marketing planning into practice (Bennett, 1997). Marketing mix is not a
scientific theory, but merely a conceptual framework that identifies three principal decision
making managers make in configuring their offerings to suit consumers’ needs. The tools can
be used to develop both long-term strategies and short-term tactical programmes (Palmer,
2004). The idea of the marketing mix is the same idea as when mixing a cake. A baker will
alter the proportions of ingredients in a cake depending on the type of cake we wishes to
bake. The proportions in the marketing mix can be altered in the same way and differ from
the product to product. The marketing mix management paradigm has dominated marketing
thought, research and practice, and “as a creator of differentiation” since it was introduced in
1940s. Kent (1986) refers to the 4Ps of the marketing mix as “the holy quadruple…of the
marketing faith…written in tablets of stone”. Marketing mix has been extremely influential in
informing the development of both marketing theory and practise (Möller, 2006). The main
reasons the marketing mix is a powerful concept are It makes marketing seem easy to handle,
allows the separation of marketing from other activities of the firm and the delegation of
marketing tasks to specialists; and - The components of the marketing mix can change a
firm’s competitive position (Grönroos, 1994). The marketing mix concept also has two
important benefits. First, it is an important tool used to enable one to see that the marketing
manager’s job is, in a large part, a matter of trading off the benefits of one’s competitive
strengths in the marketing mix against the benefits of others. The second benefit of the
marketing mix is that it helps to reveal another dimension of the marketing manager’s job.
All managers have to allocate available resources among various demands, and the marketing
manager will in turn allocate these available resources among the various competitive devices
of the marketing mix. In doing so, this will help to instil the marketing philosophy in the
organisation (Low and Tan, 1995). However, Möller (2006) highlighted that the
shortcomings of the 4Ps marketing mix framework, as the pillars of the traditional marketing
management have frequently become the target of intense criticism. A number of critics even
go as far as rejecting the 4Ps altogether, proposing alternative frameworks.
Since its introduction, developments on the commercial landscape and changes in consumer
and organisational attitudes over the last few decades (1940s – 2000s) have frequently
prompted marketing thinkers to explore new theoretical approaches and expanding the scope
of the marketing mix concept. Number of researchers (eg. Grönroos, 1994; Constantinides,
2002; Goi, 2005; Möller, 2006) explores more ‘P’s instead of traditional 4Ps only currently
applied in the market. However, the creation of new ‘P’ seem like unstop. New Ps were
introduced into the marketing scene in order to face up into a highly competitively charged
environment (Low and Tan, 1995). Thus, the main objective of this study is to review the
present marketing mix applies particularly to the marketing.
Borden (1965) claims to be the first to have used the term “marketing mix” and that it was
suggested to him by Culliton’s (1948) description of a business executive as “mixer of
ingredients”. An executive is “a mixer of ingredients, who sometimes follows a recipe as he
goes along, sometimes adapts a recipe to the ingredients immediately available, and
sometimes experiments with or invents ingredients no one else has tried” (Culliton, 1948).
The early marketing concept in a similar way to the notion of the marketing mix, based on the
idea of action parameters presented in 1930s by Stackelberg (1939). Rasmussen (1955) then
developed what became known as parameter theory. He proposes that the four determinants
of competition and sales are price, quality, service and advertising. Mickwitz (1959) applies
this theory to the Product Life Cycle Concept. Borden’s original marketing mix had a set of
12 elements namely: product planning; pricing; branding; channels of distribution; personal
selling; advertising; promotions; packaging; display; servicing; physical handling; and fact
finding and analysis. Frey (1961) suggests that marketing variables should be divided into
two parts: the offering (product, packaging, brand, price and service) and the methods and
tools (distribution channels, personal selling, advertising, sales promotion and publicity). On
the other hand, Lazer and Kelly (1962) and Lazer, Culley and Staudt (1973) suggested three
elements of marketing mix: the goods and services mix, the distribution mix and the
communication mix. McCarthy (1964) refined Borden’s (1965) idea further and defined the
marketing mix as a combination of all of the factors at a marketing manger’s command to
satisfy the target market. He regrouped Borden’s 12 elements to four elements or 4Ps, namely
product, price, promotion and place at a marketing manger’s command to satisfy the target
market. Especially in 1980s onward, number of researchers proposes new ‘P’ into the
marketing mix. Judd (1987) proposes a fifth P (people). Booms and Bitner (1980) add 3 Ps
(participants, physical evidence and process) to the original 4 Ps to apply the marketing mix
concept to service. Kotler (1986) adds political power and public opinion formation to the Ps
concept. Baumgartner (1991) suggests the concept of 15 Ps. MaGrath (1986) suggests the
addition of 3 Ps (personnel, physical facilities and process management). Vignalis and Davis
(1994) suggests the addition of S (service) to the marketing mix. Goldsmith (1999) suggests
that there should be 8 Ps (product, price, place, promotion, participants, physical evidence,
process and personalisation). Möller (2006) presents an up-to-date picture of the current
standing in the debate around the Mix as marketing paradigm and predominant marketing
management tool by reviewing academic views from five marketing management sub-
disciplines (consumer marketing, relationship marketing, services marketing, retail marketing
and industrial marketing) and an emerging marketing (E-Commerce). Most of researchers
and writers reviewed in these domains express serious doubts as to the role of the Mix as
marketing management tool in its original form, proposing alternative approaches, which is
adding new parameters to the original Mix or replacing it with alternative frameworks
CRITICISE ON MARKETING MIX
4Ps delimits four distinct, well-defined and independent management processes. Despite the
consistent effort by many physical businesses to deal with the 4P in an integrated manner, the
drafting but mainly the implementation of the policies remains largely the task of various
departments and persons within the organisation. Even more significant thought is the fact
that the customer is typically experiencing the individual effects of each of the 4Ps in diverse
occasions, times and places, even in case that some companies take great pains to fully
integrate their marketing activities internally (Constantinides, 2002; Wang, Wang and Yao,
2005). However, a study by Rafiq and Ahmed (1995) suggested that there is a high degree of
dissatisfaction with the 4Ps framework. Even, Overall these results provide fairly strong
support Booms and Bitner’s (1981) 7P framework should replace McCarthy’s 4Ps framework
as the generic marketing mix. Development of marketing mix has received considerable
academic and industry attention. Numerous modifications to the 4Ps framework have been
proposed, the most concerted criticism has come from the services marketing area (Rafiq and
The introductory marketing texts suggest that all parts of the marketing mix (4Ps) are equally
important, since a deficiency in any one can mean failure (Kellerman, Gordon and Hekmat,
1995). Number of studies of industrial marketers and purchasers indicated that the marketing
mix components differ significantly in importance (Jackson, Burdick and Keith, 1985). Two
surveys focused on determination of key marketing policies and procedures common to
successful manufacturing firms (Jackson, Burdick and Keith, 1985). Udell (1964) determined
that these key policies and procedures included those related to product efforts and sales
efforts. This followed in order by promotion, price, and place. In a replication of this survey,
Robicheaux (1976) found that key marketing policies had changed significantly. Pricing was
considered the most important marketing activity in Robicheaux’s (1976) survey, although it
ranked only sixth in Udell’s (1964) survey. Udell (1968) found that sales efforts were rated as
most important, followed by product efforts, pricing, and distribution. LaLonde (1977) found
product related criteria to be most important, followed by distribution, price, and promotion.
Perreault and Russ (1976) found that product quality was considered most important,
followed by distribution service and price. McDaniel and Hise, (1984) found that chief
executive officers judge two of the 4 Ps, pricing and product to be somewhat more important
than the other two – place (physical distribution) and promotion. Kurtz and Boone (1987)
found that on the average, business persons ranked the 4 Ps to be of most importance in the
following order: price, product, distribution, and promotion.
Thus, it appears from these studies that business executives do not really view the 4 Ps as
being equally important, but consider the price and product components to be the most
important (Kellerman, Gordon and Hekmat, 1995).
The concept of 4Ps has been criticised as being a production-oriented definition of marketing,
and not a customer-oriented (Popovic, 2006). It’s referred to as a marketing management
perspective. Lauterborn (1990) claims that each of these variables should also be seen from a
consumer’s perspective. This transformation is accomplished by converting product into
customer solution, price into cost to the customer, place into convenience, and promotion into
communication, or the 4C’s.
Möller (2006) highlighted 3-4 key criticisms against the Marketing Mix framework:
• The Mix does not consider customer behaviour but is internally oriented.
• The Mix regards customers as passive; it does not allow interaction and cannot
• The Mix is void of theoretical content; it works primarily as a simplistic device
focusing the attention of management.
• The Mix does not offer help for personification of marketing activities.
A review of another article, “Revision: Reviewing the Marketing Mix” (Fakeideas, 2008)
• The mix does not take into consideration the unique elements of services marketing.
• Product is stated in the singular but most companies do not sell a product in
isolation. Marketers sell product lines, or brands, all interconnected in the mind of the
• The mix does not mention relationship building which has become a major marketing
focus, or the experiences that consumers buy.
• The conceptualisation of the mix has implied marketers are the central element. This
is not the case. Marketing is meant to be ‘customer-focused management’.
Even, a study by Rafiq and Ahmed (1995) found that there is a high degree of dissatisfaction
with the 4Ps, however, 4Ps is thought to be most relevant for introductory marketing and
consumer marketing. The result also suggests that the 7Ps framework has already achieved a
high degree of acceptance as a generic marketing mix among our sample of respondents.
Rafiq and Ahmed (1995) also highlighted the strengths and weaknesses of the 4Ps and 7Ps
Strengths • More comprehensive
• More detailed
• More refined
• Broader perspective
• Includes participants/ people
• It is a model
• Signals marketing theory
• Simplicity and ease of
• Easy to memorise
• Good pedagogic tool, especially for
• Useful conceptual framework
• Ability to adapt to various problems
Weaknesses • More complicated
• Extra elements can be
• incorporated in 4Ps
• Controllability of the three
• Too simple, not broad enough
• Lacking people, participants and
• Physical evidence
• Relationship marketing
• Lack of connection/integration
• Static nature of 4Ps
THE 7 P’s
The marketing mix is the tactical or operational part of a marketing plan. The marketing mix
is also called the 4Ps and the 7Ps. The 4Ps are price, place, product and promotion.
The services marketing mix is also called the 7Ps and includes the addition of process, people
and physical evidence.
The marketing mix is the set of controllable tactical marketing tools – product, price, place,
and promotion – that the firm blends to produce the response it wants in the target market.
- Kotler and Armstrong (2010).
Price is the amount the consumer must exchange to receive the offering.
-Solomon et al (2009).
Pricing is one of the most important elements of the marketing mix, as it is the only mix,
which generates a turnover for the organisation. The remaining 3p’s are the variable cost for
the organisation. Price must support these elements of the mix. Pricing is difficult and must
reflect supply and demand relationship. Pricing a product too high or too low could mean a
loss of sales for the organisation.
Pricing should take into account the following factors into account:
1. Fixed and variable costs.
3. Company objectives
4. Proposed positioning strategies.
5. Target group and willingness to pay
An organisation can adopt a number of pricing strategies,
the pricing strategy will usually be based on corporate
Types of Pricing Strategy
Here the organisation sets a low price to
increase sales and market share. Once
market share has been captured the firm
may well then increase their price.
A television satellite company sets a low price to get
subscribers then increases the price as their customer
The organisation sets an initial high price
and then slowly lowers the price to make
the product available to a wider market.
The objective is to skim profits of the
market layer by layer.
A games console company reduces the price of their
console over 5 years, charging a premium at launch
and lowest price near the end of its life cycle.
Setting a price in comparison with
competitors. Really a firm has three options
and these are to price lower, price the same
or price higher
Some firms offer a price matching service to match
what their competitors are offering.
Pricing different products within the same
product range at different price points.
An example would be a DVD manufacturer offering
different DVD recorders with different features at
different prices eg A HD and non HD version.. The
greater the features and the benefit obtained the
greater the consumer will pay. This form of price
discrimination assists the company in maximising
turnover and profits.
The organisation bundles a group of
products at a reduced price. Common
methods are buy one and get one free
promotions or BOGOF's as they are now
known. Within the UK some firms are now
moving into the realms of buy one get two
free can we call this BOGTF I wonder?
This strategy is very popular with supermarkets who
often offer BOGOF strategies.
The seller here will consider the
psychology of price and the positioning of
price within the market place
The seller will therefore charge 99p instead £1 or
$199 instead of $200. The reason why this
methods work, is because buyers will still say they
purchased their product under £200 pounds or
dollars, even thought it was a pound or dollar away.
My favourite pricing strategy.
Premium The price set is high to reflect the An example of products using this strategy would be
Pricing exclusiveness of the product. Harrods, first class airline services, Porsche etc.
The organisation sells optional extras along
with the product to maximise its turnover.
This strategy is used commonly within the car
industry as i found out when purchasing my car.
The firms takes into account the cost of
production and distribution, they then
decide on a mark up which they would like
for profit to come to their final pricing
If a firm operates in a very volatile industry, where
costs are changing regularly no set price can be set,
therefore the firm will decide on their mark up to
confirm their pricing decision.
Here the firm add a percentage to costs as
profit margin to come to their final pricing
For example it may cost £100 to produce a widget
and the firm add 20% as a profit margin so the selling
price would be £120.00
Place includes company activities that make the product available to target consumers.
-Kotler and Armstrong (2010).
Place is also known as channel, distribution or intermediary. It is the mechanism through
which goods and/or services are moved from the manufacturer/ service provider to the user or
consumer. The organisation must distribute the product to the user at the right place at the
right time. Efficient and effective distribution is important if the organisation is to meet its
overall marketing objectives. If an organisation underestimate demand and customers cannot
purchase products because of it, profitability will be affected.
Which Distribution Channel To Use?
Two types of channel of distribution methods are available. Indirect distribution involves
distributing your product by the use of an intermediary for example a manufacturer selling to
a wholesaler and then on to the retailer. Direct distribution involves distributing direct from a
manufacturer to the consumer. For example, Dell Computers providing directly to its target
customers. The advantage of direct distribution is that it gives a manufacturer complete
control over their product.
Above Indirect Distribution (left) and Direct Distribution (right).
Depending on the type of product being distributed there are three common distribution
1. Intensive distribution Used commonly to distribute low priced or impulse purchase
products eg chocolates, soft drinks.
2. Exclusive distribution Involves limiting distribution to a single outlet. The product is
usually highly priced, and requires the intermediary to place much detail in its sell. An
example of would be the sale of vehicles through exclusive dealers.
3. Selective Distribution A small number of retail outlets are chosen to distribute the
product. Selective distribution is common with products such as computers, televisions
household appliances, where consumers are willing to shop around and where manufacturers
want a large geographical spread.
If a manufacturer decides to adopt an exclusive or selective strategy they should select a
intermediary which has experience of handling similar products, credible and is known by the
Product means the goods-and-services combination the company offers to the target
-Kotler and Armstrong (2010).
For many a product is simply the tangible, physical item that we buy or sell. You can also
think of the product as intangible i.e. a service. In order to actively explore the nature of a
product further, let’s consider it as three different products – the CORE product, the
ACTUAL product, and finally the AUGMENTED product.
The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is
planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots
as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and
die out (decline).
The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC).
However, CLC focuses upon the creation and delivery of lifetime value to the customer i.e.
looks at the products or services that customers NEED throughout their lives.
Promotion includes all of the activities marketers undertake to inform consumers about
their products and to encourage potential customers to buy these products.
-Solomon et al (2009).
Promotion includes all of the tools available to the marketer for marketing communication.
As with Neil H. Borden’s marketing mix, marketing communications has its own promotions
mix. Whilst there is no absolute agreement on the specific content of a marketing
communications mix, there are many promotions elements that are often included such as
sales, advertising, sales promotion, public relations, direct marketing, online communications
and personal selling.
Physical evidence is the environment in which the service is delivered, and where the firm
and customer interact, and any tangible components that facilitate performance or
communication of the service.
-Zeithaml et al (2008)
Physical Evidence is the material part of a service. Strictly speaking there are no physical
attributes to a service, so a consumer tends to rely on material cues. There are many examples
of physical evidence, including some of the following buildings, equipment, signs and logos,
annual accounts and business reports, brochures, your website, and even your business cards.
People are all human actors who play a part in service delivery and thus influence the
buyers’ perceptions; namely, the firm’s personnel, the customer, and other customers in
the service environment.
-Zeithaml et al (2008).
People are the most important element of any service or experience. Services tend to be
produced and consumed at the same moment, and aspects of the customer experience are
altered to meet the individual needs of the person consuming it.
Process is the actual procedures, mechanisms, and flow of activities by which the service is
delivered – this service delivery and operating systems.
-Zeithaml et al (2008).
There are a number of perceptions of the concept of process within the business and
marketing literature. Some see processes as a means to achieve an outcome, for example – to
achieve a 30% market share a company implements a marketing planning process. However
in reality it is more about the customer interface between the business and consumer and how
they deal with each other in a series of steps in stages, i.e. throughout the process.
KEY FEATURES OF MARKETING MIX
The marketing mix is made up of four unique variables. These four variables are
interdependent and need to be planned in conjunction with one another to ensure that the
action plans within all four are complimentary and aligned.
Help Achieve Marketing Targets
Through the use of this set of variables, the company can achieve its marketing targets such
as sales, profits, and customer retention and satisfaction.
The marketing mix is a fluid and flexible concept and the focus on any one variable may be
increased or decreased given unique marketing conditions and customer requirements.
It is vital to keep an eye on changing trends and requirements, within the company as well as
in the market to ensure that the elements in marketing mix stays relevant and updated.
Role of Marketing Manager
A mature, intelligent and innovative marketing manager needs to be at the helm of the
marketing mix. This pivotal role means that this manager is responsible for achieving desired
results through the skill manipulation of these variables.
Customer as a focal point
A vital feature of the marketing mix is that the customer is the focal point of the activity. The
value of the product is determined by customer perceptions and the goal is to achieve a
satisfied and loyal customer.
DEVELOPING A MARKETING MIX
Intuition and creative thinking are essential job requirements for a marketing manager. But
relying on just these can lead to inaccurate assumptions that may not end up delivering
results. To ensure a marketing mix that is based in research and combines facts with
innovation, a manager should go through the following systematic process:
The first item on the marketing manager’s agenda should be to define what the product has to
offer or its unique selling proposition (USP). Through customer surveys or focus groups,
there needs to be an identification of how important this USP is to the consumer and whether
they are intrigued by the offering. It needs to be clearly understood what the key features and
benefits of the product are and whether they will help ensure sales.
The second step is to understand the consumer. The product can be focused by identifying
who will purchase it. All other elements of the marketing mix follow from this understanding.
Who is the customer? What do they need? What is the value of the product to them? This
understanding will ensure that the product offering is relevant and targeted.
The next step is to understand the competition. The prices and related benefits such as
discounts, warranties and special offers need to be assessed. An understanding of the
subjective value of the product and a comparison with its actual manufacturing distribution
cost will help set a realistic price point.
At this point the marketing manager needs to evaluate placement options to understand where
the customer is most likely to make a purchase and what are the costs associated with using
this channel. Multiple channels may help target a wider customer base and ensure east of
access. On the other hand, if the product serves a niche market then it may make good
business sense to concentrate distribution to a specific area or channel. The perceived value
of the product is closely tied in with how it is made available.
Based on the audience identified and the price points established, the marketing
communication strategy can now be developed. Whatever promotional methods are finalized
need to appeal to the intended customers and ensure that the key features and benefits of the
product are clearly understood and highlighted.
A step back needs to be taken at this point to see how all the elements identified and planned
for relate to each other. All marketing mix variables are interdependent and rely on each other
for a strong strategy. Do the proposed selling channels reinforce the perceived value of the
product? Is the promotional material in keeping with the distribution channels proposed? The
marketing plan can be finalized once it is ensured that all four elements are in harmony and
there are no conflicting messages, either implicit or explicit.
Over the years, marketing managers have felt that the traditional marketing mix has its
limitations in how it is structured. Several important elements have been grouped within four
larger categories thereby belittling their true importance amid several factors. Two main
criticisms and their solutions:
Lack of Focus on Services
The conventional marketing mix tends to be applicable to tangible goods i.e. the traditional
definition of products. Services or intangible goods are also a vital customer offering and can
be planned for in much the same way as physical products. To cater to the unique challenges
of services, the 4P model has been supplemented with 3 additional categories which are:
Physical Evidence is proof and a reassurance that a service was performed
People are the employees who deliver the service
Processes are the methods through which a service is executed and delivered to the customer
Lack of True Customer Focus
Though a total focus on the customer and what they desire is a vital element of the 4P model,
this truth is often in danger of being overlooked by enthusiastic marketing teams. To counter
this, Robert F. Lauterborn put forward his customer centric four Cs classification in 1990.
This model converts the four P’s into more customer oriented four C’s:
Product to Customer Solution
Price to Customer Cost
Promotion to Customer Communication
Place to Customer Convenience
SWOT analysis is a tool for auditing an organization and its environment. SWOT analysis is
the first stage of planning and helps marketers to focus on key issues. SWOT stands for
strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal
SWOT factors. Opportunities and threats are external SWOT factors. A strength is a positive
internal factor. A weakness is a negative internal factor. An opportunity is a positive external
factor. A threat is a negative external factor. We should aim to turn our weaknesses into
strengths, and our threats into opportunities. Then finally, SWOT will give
managers options to match internal strengths with external opportunities. SWOT is that
simple. The outcome should be an increase in ‘value’ for customers – which hopefully will
improve our competitive advantage.
The main purpose of SWOT analysis has to be to add value to our products and services so
that we can recruit new customers, retain loyal customers, and extend products and services
to customer segments over the long-term. If undertaken successfully, we can then increase
our Return On Investment (ROI).
A SWOT STRENGTH COULD BE:
Your specialist marketing expertise.
A new, innovative product or service.
Location of your business.
Quality processes and procedures.
Any other aspect of your business that adds value to your product or service.
A SWOT WEAKNESS COULD BE:
Lack of marketing expertise.
Undifferentiated products or services (i.e. in relation to your competitors).
Location of your business.
Poor quality goods or services.
A SWOT OPPORTUNITY COULD BE:
A developing market such as the Internet.
Mergers, joint ventures or strategic alliances.
Moving into new market segments that offer improved profits.
A new international market.
A market vacated by an ineffective competitor.
A SWOT THREAT COULD BE:
A new competitor in your home market.
Price wars with competitors.
A competitor has a new, innovative product or service.
Competitors have superior access to channels of distribution.
Taxation is introduced on your product or service.
Marketing Mix of
An Overview of Chocolate Industry in India
The chocolate industry in India as it stands today is dominated by two companies, both
multinationals. The market leader is Cadbury with a lion's share of 70 percent. The
company's brands (Five Star, Gems, Eclairs, Perk, Dairy Milk) are leaders their segments.
Till the early 90s, Cadbury had a market share of over 80 percent, but its party was spoiled
when Nestle appeared on the scene. The latter has introduced its international brands in the
country (Kit Kat, Lions), and now commands approximately 15 percent market share. The
Gujarat Co-operative Milk Marketing Federation (GCMMF) and Central Arecanut and Cocoa
Manufactures and Processors Co-operative (CAMPCO) are the other companies operating in
this segment. Competition in the segment will get keener as overseas chocolate giants
Hershey's and Mars consolidate to grab a bite of the Indian chocolate pie.
Per Capita Chocolate Consumption (in lb) of first 15 countries of the world
1 Switzerland 22.36
2 Austria 20.13
3 Ireland 19.47
4 Germany 18.04
5 Norway 17.93
6 Denmark 17.66
7 United Kingdom 17.49
8 Belgium 13.16
9 Australia 12.99
10 Sweden 12.9
11 United States 11.64
12 France 11.38
13 Netherlands 10.56
14 Finland 10.45
15 Itlay 6.13
INDIA, stands nowhere even near to these countries when compared in terms of Per Capita
Chocolate Consumption. The Indian chocolate industry is extremely fragmented with a
range of products catering to a variety of consumers. We have the bars/slabs, jellies,
lollipops, toffees and sugar candies. Given India's mammoth population, it comes as a
surprise that per capita chocolate consumption in the country is dismally low - a mere 20
gms per Indian. Compare this to over 7 kgs in most developed nations.
However, Indians swallowed 22,000 tonnes of chocolate last year and consumption is
growing at 10-12 percent annually.
The market size of chocolates was estimated to be around 16,000 tonnes, valued around Rs.
4.16 billion in 1998. Volume growth which was over 20% pa in the 3 years preceding 1998,
slowed down thereafter. Both chocolate and sugar confectioneries have abysmally low
penetration levels, in fact, even lower than biscuits, which reach 56 per cent of the
households. Market growth in the chocolate segment has hovered between 10 to 20%. In the
last five years, the category has grown by 14-15% on an average and will expect it to
continue growing at a similar rate in the next five years. The market presently has close to
60mn consumers and they are mainly located in the urban areas. Growth will mainly
come through an increase in penetration as income levels improve.
However, almost all of this consumption is in the cities, and rural India is nearly
‘chocolate-free’. But the fact is that three quarters of Indians live in Rural Areas. “Average
summertime temperatures reach 43 degrees Celsius in India. Chocolate melts at body
temperature of 36 degrees.”
Per capita consumption of chocolates in India is minuscule at 20gms in India as compared to
around 5-8 kgs and 8-10 kgs respectively in most European countries.
7 United Kingdom
11 United States
Rank Countries Per Capita Consumption (in lb)
Awareness about chocolates is very high in urban areas at over 95%. Growth of other
lifestyle foods such as malted beverages and milk food have actually declined by 3.7 per cent
and 11.7 per cent, however the Chocolates continue to grow at the rate of 12.6%. Low priced
unit packs, increased distribution reach and new product launches can be said to have fuelled
this growth. The launch of lower-priced, smaller bars of chocolate in the last two years and
positioning of chocolate as a substitute to traditional sweets during festivals, have boosted
consumption. This is also because chocolate, which was considered to be an elitist food, has
caught the fancy of buyers looking for a lifestyle item at affordable cost.
Till recently, chocolate consumption had been restricted by low purchasing power in the
market. Chocolates and other cocoa-based snack foods were looked upon as food suitable
only for the well-off. After economic liberalization in 1991, major changes have occurred in
food habits, partly on account of rise in gross domestic product (GDP) growth and higher
purchasing power in the hands of the middle-class representing a third of the total population.
Availability of chocolate products has also exploded. A study had projected that sales of the
Indian chocolate industry would rise from $125/$130 million in 1998 to $175/$180 million
by the year 2000 and to $450 million by the year 2005 which actually happened irrespective
of various negative factors.
Per capita chocolate consumption continues to be low at about 200g per person, being
mainly consumed in urban areas. In the middle and higher income groups, 70 per cent of
children, 43 per cent of young adults and 16 per cent of adults consume chocolate.
Chocolate Consumption Structure:
Chocolate Consumption Structure
Types of Chocolates
Depending on what is added to (or removed from) the chocolate liquor, different flavors and
varieties of chocolate are produced. Each has a different chemical make-up, the differences
are not solely in the taste.
1. Unsweetened or Baking chocolate is simply cooled, hardened chocolate liquor. It is used
primarily as an ingredient in recipes, or as a garnish.
2. Semi-sweet chocolate is also used primarily in recipes. It has extra cocoa butter and sugar
added. Sweet cooking chocolate is basically the same, with more sugar for taste.
3. Milk chocolate is chocolate liquor with extra cocoa butter, sugar, milk and vanilla added.
This is the most popular form for chocolate. It is primarily an eating chocolate.
4. Cocoa is chocolate liquor with much of the cocoa butter removed, creating a fine powder.
It can pick up moisture and odors from other products, so you should keep cocoa in a cool,
dry place, tightly covered.
There are several kinds of cocoa:
• Low-fat cocoa has the most fat removed. It typically has less than ten percent cocoa
• Medium-fat cocoa has anywhere from ten to twenty-two percent cocoa butter in it.
• Drinking or Breakfast cocoa has over twenty-two percent left in it. This is the cocoa
used in chocolate milk powders like Nestle's Quik.
• Dutch process cocoa is cocoa which has been specially processed to neutralize the
natural acids in the chocolate. It is slightly darker and has a much different taste than
5. Decorator's chocolate or confectioner's chocolate isn't really chocolate at all, but a sort
of chocolate flavored candy used for things such as covering strawberries. It was created to
melt easily and harden quickly, but it isn't chocolate.
Categories of Chocolates
Commercial Chocolates are available in the following forms:
1. Bars or Moulded Chocolates
3. Panned Chocolates (Gems)
5. Assorted Chocolates
• Bars or moulded chocolates (like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle
Premium, and Nestle Milky Bar) comprise the largest segment, accounting for 37% of
the total chocolate market in volume terms.
• Wafer chocolates such as Kit-Kat and Perk also belong to this segment.
• Panned chocolates accounts for 10% of the total chocolate market. Wafer chocolates
such as Kit-Kat and Perk also belong to this segment.
Chocolate Manufacturing Process
Workers cut the fruit of the cacao tree, or pods open and scoop out the beans. These beans are
allowed to ferment and then dry. Then they are cleaned, roasted and hulled. Once the shells
have been removed they are called nibs. Nibs are blended much like coffee beans, to produce
different colors and flavors. Then they are ground up and the cocoa butter is released. The
heat from the grinding process causes this mixture of cocoa butter and finely ground nibs to
melt and form a free flowing substance known as chocolate liquor. From there, different
varieties of chocolate are produced.
Raw unprocessed chocolate is gritty, grainy and really not suitable for eating. Swiss
chocolate manufacturer Rudolph Lindt discovered a process of rolling and kneading
chocolate that gives it the smoother and richer quality that eating chocolate is known for
today. The name 'conching' comes from the shell-like shape of the rollers used. The longer
chocolate is conched, the more luxurious it will feel on your tongue.
Market Size (by value & by volume)
The Indian chocolate market is valued at Rs. 650 crores (i.e. Rs. 6.50 billion) a year. The
Indian chocolate bazaar is estimated to be in the region of 22,000-24,000 tonnes per annum,
and is valued in excess of US$ 80 million. Chocolate penetration in the country is a little over
4 percent, with India's metros proving to be the big draw clocking penetration in excess of 15
percent. Next, comes the relatively smaller cities/towns where consumption lags at about 8
percent. Chocolates are a luxury in the rural segment, which explains the mere 2 percent
penetration in villages. The market presently has close to 60mn consumers and they are
mainly located in the urban areas.
Major Players & their Market Share
The major players in the Indian Chocolate Industry are:
1. Cadbury’s India Limited
2. Nestle India
3. The Gujarat Co-operative Milk Marketing Federation (GCMMF) – AMUL
4. Cocoa Manufactures and Processors Co-operative (CAMPCO)
• Lines Wafer Panned Premium Cadbury’s Dairy Milk &Variants, 5-Star, Milk
Treat Perk Gems, Tiffins, Temptation & Celebrations
• Nestle Milky Bar, Bar One, Crunch, Kit Kat, Munch Nutties
• Amul Milk Chocolate, Fruit ‘n’ Nut, FUNDOO, Bindaaz, Almond Bar
• Campco Campco Bar, Cream Krust, Turbo Treat
MARKETING - PROMOTION of CHOCOLATES in INDIA
Traditionally, chocolates were always targeted at children. But stagnancy in growth rates
made the companies re-think their strategies. Cadbury was the first chocolate company that
took the market by storm by repositioning brands at adults, as opposed to children.
I BUYING BEHAVIOUR
Chocolates are consumed as indulgence and not as snack food, as prevalent in western
countries. Almost 75% chocolates are impulse purchases. Chocolates are bought
predominantly by adults and gifted to children. On an average the wholesalers sells Rs
50000/month of Chocolates (all brands included). Also the wholesaler usually deals in all
kinds of FMCG goods, Foodstuff in addition to the chocolates. The items like chocolates are
placed near the counter. Chocolates are kept in cardboard boxes and are also delivered in the
same. In a few of the cases the chocolates were kept separately (as per equipment provided
by the manufacturer – e.g. VISI Coolers), In addition to marketing promotions companies
have been focusing extensively on the promotions by the sales staff. Also the companies can
devise there marketing strategies that are catering to specific segments and are thus more
II NATURE OF RETAIL OUTLET
Chocolates are primarily sold through Kirana Stores, Gift stores, Medical Stores, canteens,
Pan-Bidi stores, Bakeries, Sweet Shops etc. This is true for chocolates also. The space
allocated for the chocolates was less when compared to the total area of the shop. Of the
space allocated for chocolates, Cadbury brands occupied more than Nestle brands. The
chocolates category thrives on excitement. It's all about giving the consumer a choice and
taste which they enjoy.
III STOCKING OF THE PRODUCTS
In most of the cases, various brands of chocolates are kept together. In some of the cases the
chocolates are stocked depending on the manufacturer’s provision. The chocolates are kept in
Glass Jars and boxes – These are provided by the respective companies along with the
product. The chocolates are kept there. But in most of the cases chocolates are stocked near
the counter. Ideally the shopkeeper tries to keep chocolates within the reachable (sitting on
the counter) distance. Chocolates are kept at or below the eye level. This is to facilitate
visibility of the chocolates for the customer who is visiting the store. Medium size retailers
sell chocolates of about Rs. 400 – Rs. 800 per week while big retailers sell chocolate worth
Rs1000 or more per week.
Problems & Challenges in Indian Chocolate Industry
A peculiar problem that hinders the distribution to far-off places is the tendency of chocolates
to melt under even moderate heat. The temperatures can reach as high as 48 degrees in
summers, whereas chocolate starts melting at body temperature (about 37-38 degrees).
Manufacturers have to take precautionary measures to ensure the preservation of chocolates
especially in summer.
2. UNAVAILABILITY OF CONTROLLED REFRIGERATION:
India does not have controlled refrigerated distribution. Air-condition supermarkets are rare.
Cadbury loses 1.5 percent of annual sales of Rs. 6.8 billion to heat damage. Companies revise
ingredients to make chocolate withstand heat, and so Indian chocolates are more resilient to
heat than European chocolates by a factor of 2 degrees. Ironically, the chocolate market has
grown recently because smaller retailers have stuffed fridges and coolers supplied by the cola
companies Coke and Pepsi with chocolates.
Nestle and Cadbury have tried to provide loans for retailers to buy fridges, but to hold down
power costs the shopkeepers switch off the fridges at night. As a result the cocoa fat melts
and migrates to the main body of the chocolate bar. When the cooling is switched on in the
morning, the cocoa fat solidifies and turns white, presenting a bizarre, un-sellable white on
black form. Nestle tried to provide fridges with see-through doors, but was appalled to see its
chocolates sandwiched between dead chicken, butter and vegetables.
Small coolers were provided to retailers to keep the chocolate from melting, but that didn't
quite do the trick. Electricity costs money and is not provided in a uniform way, so on and off
the electricity goes and the product may suffer sometimes
3. RAW MATERIALS:
Cocoa is the key raw material and accounts for around 35% of the total material cost
(including packaging) of chocolates. The price of cocoa has been hitting a new high of late.
Cocoa prices are at a near 20-year high at $2358 per ton, up from $900 a year back. India
does not produce cocoa to any noteworthy extent but is a large consumer of chocolates.
Consumption of chocolates and other cocoa-based products, especially among the middle
class, has been growing.
Chocolate needs to be distributed directly, unlike other FMCG products. 90% of our products
are sold directly to retailers. Building such a direct network in rural areas is a daunting task
since the infrastructure is poor in India in rural areas.
5. THREAT FROM IMPORTED BRANDS:
Free availability of imported brands bought through illegal routes pose a threat to the
domestic chocolate industry. Usually, these imported chocolates taste better than domestic
chocolate due to recipe difference. Hence consumers who are willing to spend a little more,
prefer these imported chocolates. However, the premium brands, which come through official
channels, do not pose a threat to the market, as these cater to a small niche market. However
there is a lot of dumping from neighbouring countries like Dubai, Nepal, etc of inferior brand
of imported chocolates. These are not only of low quality, but are brought very near to their
expiry dates. Most of the cheap chocolate brands that are available do not meet Indian Food
External Factors affecting Growth of Chocolate Industry in
• Good monsoon ensures adequate availability of raw materials, which are mainly
agricultural in nature. Raw material prices have significant influence on margins.
• Government policies in terms of licensing, duties, movement of agricultural
commodities etc. also affect the introduction of products, time lag for a product
launches, taxes, excise, etc all influence the business.
• Market growth driven by overall economic growth and urbanization also contributes.
An overall booming economy will consume tonnes of chocolates because consumer
spending increases. Also, the absolute number of consumers in middle class & upper
middle class increases.
Limited – A Study
Cadbury is a British multinational confectionery company owned by Mondelēz
International. It is the second largest confectionery brand in the world
after Wrigley's. Cadbury is headquartered in Uxbridge in Greater London and operates in
more than fifty countries worldwide.Cadbury is best known for its confectionery products
including the Dairy Milk chocolate, the Creme Egg, and the Roses selection box.
Cadbury was established in Birmingham, England in 1824, by John Cadbury who sold tea,
coffee and drinking chocolate. Cadbury developed the business with his brother Benjamin,
followed by his sons Richard and George. George developed the Bournvilleestate, a model
village designed to give the company's workers improved living conditions. Dairy Milk
chocolate, introduced in 1905, used a higher proportion of milk within the recipe compared
with rival products. By 1914, the chocolate was the company's best-selling product.
Cadbury merged with J. S. Fry & Sons in 1919, and Schweppes in 1969. Cadbury was a
constant constituent of the FTSE 100 from the index's 1984 inception until the company was
bought by Kraft Foods in 2010.
CADBURY’S INDIA LIMITED
Mondelez India Foods Private Limited formerly Cadbury India Ltd, is a part of the Mondelēz
International group of companies and is in the business of creating delicious moments of joy
– by producing delectable chocolate confectionaries, gum and candy products, and popular
beverages and foods that include many of India's most popular and trusted food brands.
We strongly believe in delighting our customers by offering the best quality products
possible. Over the years we have wonour customers' hearts, making us the market leaders in
the chocolates category in India. Our flagship brand Cadbury Dairy Milk (CDM) is
considered the "Gold Standard" for chocolates - the pure taste of CDM defines the chocolate
taste for theIndian consumer.
Our other much loved brands include Cadbury Bournvita, CDM Silk, Cadbury Choclairs,
Gems, 5-Star, Perk, Bournville, Celebrations, Halls, Oreo, Tang and Toblerone. Ranked 3rd
amongst India’s Most Admired Companies by Fortune India in 2013, Mondelez India Foods
Private Limited is a part of Mondelēz International (NASDAQ: MDLZ), the global snacking
and food company and a spin-off from Kraft Foods Inc. Mondelēz International is the world's
largest chocolatier, biscuit baker and candy maker, and the second-largest maker of gum.
Mondelez India Foods Private Limited has been in India for over 6 decades, having started in
1948 as an importer of chocolates. Our work ethic, values systems and quality
standards make us an employer of choice in India. Our large community extends into India's
agricultural spaces. Since 1965, Mondelez India Foods Limited has pioneered and enhanced
the development of cocoa cultivation in India. For over two decades, we have worked with
the Kerala Agricultural University to undertake cocoa research and improve cocoa yields.
Our cocoa team works with farmers to improve incomes through best practices in all aspects
of cocoa cultivation - from planting to harvesting. Our efforts have touched the lives of
thousands of farmers.
Headquartered in Mumbai, Mondelez India Foods Private Limited has sales offices in New
Delhi, Mumbai, Kolkata and Chennai and six manufacturing facilities at Thane, Bengaluru,
Hyderabad, Induri (Pune), Malanpur (Gwalior) and Baddi (Himachal Pradesh).
OBJECTIVES AND VALUES
• To make lots of chocolate.
• Improve the quality of their chocolate.
• To Survive in the market.
• Have loads of stores worldwide
• To be an ongoing company.
• Achieve revenue growth of 20% per year
• Increase earnings by 15% annually
• Increase dividends per share by 7% per year
VISION – “Cadbury in every pocket”
Our marketing strategy is aimed at achieving this vision by growing the market, by
appropriate pricing strategy that will create a mass market and to have offerings in every
category to widen the market
"Cadbury’s mission statement says simply: ‘Cadbury means quality’; this is our promise.
Our reputation is built upon quality; our commitment to continuous improvement will ensure
that our promise is delivered.”
Cadbury’s manufacturing operations started in Mumbai in 1946, which was subsequently
transferred to Thane. In 1964, Induri Farm at Talegaon, near Pune was set up with a view to
promote modern methods as well as improve milk yield. In 1981-82, a new chocolate
manufacturing unit was set up at the same location in Talegaon. The company, way back in
1964, pioneered cocoa farming in India to reduce dependence on imported cocoa beans. The
parent company provided cocoa seeds and clonal materials free of cost for the first 8 years of
operations. Cocoa farming is done in Karnataka, Kerala and Tamil Nadu. In 1977, the
company also took steps to promote higher production of milk by setting up a subsidiary
Induri Farms Ltd near Pune. In 1989, the company set up a new plant at Malanpur, MP, to
derive benefits available to the backward area. In 1995, Cadbury expanded Malanpur plant in
a major way. The Malanpur plant has modernized facilities for Gems, Eclairs, Perk etc.
Cadbury also operates third party operations at Phalton, Warana and Nashik in Maharashtra.
These factories churn out close to 8,000 tonnes of chocolate annually.
4 P’S OF CADBURY
• Chocolate Bars
• Count lines
• Panned confectionery
• Wafer chocolates
• Assorted Chocolates & Gift Chocolates
• Sugar Confectionery
• Food Drinks
• Drinking Chocolate
Cadbury's Indian operations are not just the largest in Asia but also the cheapest. In
India,Cadbury has the largest market share anywhere in the world and has been the fastest
growing FMCG Company in the last three years with a compound annual growth rate of 12.5
Category Brand Variants
• Bars Dairy Milk
• Fruit n Nuts
• Double Decker
• Roasted Almond
• 5 Star Chrunchie
• Milk Treat Chocolate
• Wafer Chocolate Perk
• Perk XL
Others Include Chocki Mint, Strawberry & Chocolate, Premium/ Gift Chocolates
Temptation Rum, Cashew, Almond & Orange Celebrations Various Gift Packs
Cadbury’s Dairy Milk (CDM):
Cadbury’s Dairy Milk is the flagship brand of Cadbury’s not only in India but world wide.
CDM is the single largest selling unit in India. It has annual sales to the tune of Rs 200 crore.
CDM not only accounts for 30 per cent of the total chocolate market in value, but commands
nearly 26 per cent in volume terms and close to 30 per cent of Cadbury’s annual turnover.
Moving from a predominantly adult positioning in the days of the legendary dancing girl ad,
to the teens and the tweens, when the Cyrus Broacha ads hit the airwaves, CDM has made a
long sweet journey. In spite of the new categories being explored by Cadbury, its star brand
remains Cadbury Dairy Milk (CDM) which continues to corner almost 30 per cent of the
Cadbury India launched its premium Celebrations range, which contains traditional Indian
dry fruits wrapped in Dairy Milk chocolate. This gifting option combines the pleasure of
giving away dry fruits — which Indians traditionally consider a premium, healthy gift —
with chocolate. Cadbury now has 90 per cent market share in this profitable segment.
Product Revamping & Innovations
Cadbury’s chocolate brands registered double-digit growth in 2002, touching an astounding
19 per cent in the second half of that calendar year. Getting the power brands right was the
first priority, so genuine re-launches of the products were made.
However, the growth rate was declining after that. The growth went down from 19 per cent
in 1999 to 12 per cent in 2000 to single-digits, with seven per cent in 2001. If it staged a
smart recovery to nearly 10 per cent in 2002, it was largely on the back of Chocki and the
revamped power brands.
New Product Launches
Cadbury 5Star Chomp
A new entrant under the Cadbury 5Star umbrella, Cadbury 5Star Chomp promises
to offer consumers an irresistible combination of chocolate, caramel and nougat of Cadbury
5Star, along with the crunchiness of peanuts.
Cadbury Glow is the new luxury gifting brand from Mondelēz International (Cadbury) and is
being introduced first in India With this launch, the company combined its deep consumer
insights, global expertise in chocolate and breakthrough innovation capabilities to develop
luxurious chocolate pralines with an indulgent chocolatey filling that are superior in terms of
taste and packaging. Cadbury Glow represents the ideal expression of love and emotions for
the special people in one’s life.
With quality comes price. As the quality of the products is high, and the beverages and Oreo
requires constant marketing to be on top, the price of Cadbury products is also high in some
cases, whereas in others it is very much reasonable. Products like perk, five star and eclairs
give the taste of Cadbury even at lower price. Dairy milk is considered to be a premium brand
of chocolates due to this positioning, but because of lower priced chocolates, it is also
accepted across various target segments. Cadbury has many varieties of products in the
chocolate segment and the pricing of each chocolate is different based on the type of
customer who is going to buy it. However, in all these, the Dairy milk brand is the clear
winner. Priced in high as well as low variants, the cadbury dairy milk has a position of gifting
and hence is selling high volumes even at higher prices. The cadbury celebrations pack in
fact, sells in millions on any festival or on celebrations.
Chocolate needs to be distributed directly, unlike other FMCG products like soaps and
detergents, which can be sold through a wholesale network. 90% of chocolate products are
sold directly to retailers.
Distribution, in the case of chocolates, is a major deterrent to new entrants as the product has
to be kept cool in summer and also has to be adapted to suit local tropical conditions.
Cadbury's distribution network used to encompasses 2100 distributors and 450,000 retailers.
The company has a total consumer base of over 65 million. Besides use of IT to improve
distribution logistics, Cadbury is also attempting to improve distribution quality. To address
the issues of product stability, it has installed VISI coolers at several outlets. This helps in
maintaining consumption in summer, when sales usually dip due to the fact that the heat
affects product quality and thereby off take.
The distribution of Cadbury is fantastic and widespread. It is present strongly in all urban
areas as well as A,B and C category towns. The rural marketing of Cadbury is known to be
weak but that is because demand there is also weak. Cadbury follows the same mantra of
FMCG marketing which is breaking the bulk. The cadbury chocolate is manufactured in
Bournville, England. Recently there was an advertisement which promoted that Cadbury
buys only the best cocoa beans from Ghana for its chocolates. These chocolates are then
distributed across the world. Cadbury is present in 200 or more countries. Once the chocolate
reaches in bulk, it is broken down as follows.
Company >> C&F agent >> Distributors >> Retailers >> Consumers
As you can see, due to the channel, the distribution costs of Cadbury are high. But based on
the demand in the market, the costs were going to be high anyways. That is something which
has to be taken into consideration during the distribution of products. In the end, Cadbury has
a very strong presence in the market, and you can be rest assured, that if you want to have a
cadbury, it will be within 2 minutes reach from you in any of the local retail shops.
Cadbury was stuck with the controversy when worms were found in one of their
chocolates.The image of the company was shattered.The new packaging was just one part of
the corrective measures the company initiated.The major thrust was on educating its dealer’s
and retailers on the correct procedure for storage of chocolates. The company believed
improper storage conditions resulted in the chocolates becoming vulnerable to infestation by
foreign bodies. The company is continuing its efforts to provide air-conditioned storage units
to its dealers and retailers .Cadbury appointed Amitabh Bachchan as its brand ambassador for
a period of two years.
Indians love sweets. From Bengalis to Punjabis to South Indians, each of us want sweets.
Youngsters love sweet, and old people want a nibble from time to time. Thus it is no surprise,
that a smart marketer like Cadbury has a tag line “Kuch meetha ho jaye” which means that
lets have something sweet. It is no surprise that people always have some cadbury’s stocked
at home. Or they gift a Cadbury dairy milk or celebrations to their loved ones.
The promotions of Cadbury for each of its products is different. For Bournville, Cadbury has
kept the position that you dont buy a bournville, you earn it. So basically, it is not on the
consumer to buy the bournville, Someone has to gift him the same. For Cadbury celebrations,
the positioning is of gifting. Cadbury celebrations has a major commercial customer base,
where the chocolate is brought in bulk and given to employees, clients or vendors. Eclairs has
a low cost position, Bournvita has a strong health positioning, Perk has a youngster position,
so on and so forth. Cadbury uses a combination of ATL as well as BTL marketing. The BTL
marketing of Cadbury is very strong with its hoardings, and standies as well as flex banners
on shops, corners, hotels etc. Thus, due to these activities, the brand recall is very high and
people will always remember a Cadbury whenever they are buying a chocolate.
EARNINGS SENSTIVITY FACTORS
Cocoa bean prices: Domestic as well as international prices of key raw material - cocoa
have significant impact on margins.
Excise duties: Changes in excise levied on malt and chocolate influences end product prices
and thereby volume growth as well as margins.
Changes in custom duties and foreign exchange fluctuation: As 20% of raw material is
imported, changes in custom duties & foreign exchange fluctuations have significant impact
on the final cost of the product.
Competition from MNCs like Nestle as well as imported brands. Increasing competition
puts pressure on advertisement budget and margins. However on the positive side, it helps in
expanding the market.
SUCCESS FACTORS OF CADBURY’S INDIA LTD.
1. Global management processes:
India occupies a high profile position in the global organization, with advocates in regional
and global headquarters. Global management has allowed the local operation a high degree of
flexibility in growing the business, understanding that asset utilization may be lower and
returns slower to arrive, but expecting volume share to compensate for lower margins in the
2. Local management processes:
The Cadbury India team is all-Indian and has a deep understanding of local market dynamics.
The business is set in a way that highlights localization across all facets – driving the belief
that the only way to succeed in India is by developing localized business models. For
example, the company tailored the chocolate formula in India to prevent melting in the
country’s open-air high frequency store environment.
3. Customized business models:
Local management has set up systems to test and develop products from the ground up with
specialized interlinked cells that execute innovation and market testing hand-in-hand.
Cadbury India is known as a key product innovator. Besides Dairy Milk, the entire Cadbury
product portfolio in India has been developed locally to suit Indian consumer tastes.
Packaging, marketing and distribution have all been tailored to local market conditions.
4. Royalty Structure:
Royalty to Cadbury Schweppes Plc. is around 1 per cent of the turnover. But with that, the
company gets unlimited access to latest technology, new products and so on. They can also
introduce new products from the parent, if it is suitable for Indian market.
5. Subtle reengineering of raw material mix led to cost savings:
Cadbury has reduced its dependence on cocoa, thus lowering its exposure to volatile raw
material prices as well as cutting costs. It appears that they have subtly altered its recipe by
using less of costlier cocoa and more of milk and sugar. Cadbury's launch of Perk has also
contributed significantly in reducing the proportion of cocoa in the overall raw material mix.
Consequently, Cadbury saved about Rs.94mn (1.8 percent of net sales) in FY1999.
Nestlé S.A. is a Swiss multinational food and beverage company headquartered in Vevey,
Switzerland. It is the largest food company in the world measured by revenues. Nestlé’s
products include baby food, bottled water, breakfast cereals, coffee and tea,
confectionery, dairy products, ice cream ,frozen food, pet foods, and snacks. Twenty-nine of
Nestlé’s brands have annual sales of over CHF1 billion
(about US$1.1billion), including Nespresso, Nescafé, KitKat, Smarties, Nesquik, Stouffer’s,
Vittel, and Maggi. Nestlé has 447 factories, operates in 194 countries, and employs around
333,000 people. It is one of the main shareholders of L’Oreal, the world’s
largest cosmetics company.
Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company, established in
1866 by brothers George Page and Charles Page, and Farine Lactée Henri Nestlé, founded
in 1866 by Henri Nestlé. The company grew significantly during the First World War and
again following the Second World War, expanding its offerings beyond its early condensed
milk and infant formula products. The company has made a number of corporate acquisitions,
including Crosse & Blackwell in 1950,Findus in 1963, Libby’s in 1971, Rowntree
Mackintosh in 1988, and Gerber in 2007.
Nestlé has a primary listing on the SIX Swiss Exchange and is a constituent of the Swiss
Market Index. It has a secondary listing on Euronext. In 2011, Nestlé was listed No. 1 in
the Fortune Global 500 as the world’s most profitable corporation. With a market
capitalization of US$233 billion, Nestlé ranked No. 9 in the FT Global 500 2013.
Nestlé India is a subsidiary of Nestlé S.A. of Switzerland. With eight factories and a large
number of co-packers, Nestlé India is a vibrant Company that provides consumers in India
with products of global standards and is committed to long-term sustainable growth and
The Company insists on honesty, integrity and fairness in all aspects of its business and
expects the same in its relationships. This has earned it the trust and respect of every strata of
society that it comes in contact with and is acknowledged amongst India's 'Most Respected
Companies' and amongst the 'Top Wealth Creators of India'.
Nestlé India manufactures products of truly international quality under internationally famous
brand names such as NESCAFÉ, MAGGI, MILKYBAR, KIT KAT, BAR-ONE,
MILKMAID and NESTEA and in recent years the Company has also introduced products of
daily consumption and use such as NESTLÉ Milk, NESTLÉ SLIM Milk, NESTLÉ Dahi and
NESTLÉ Jeera Raita.
Nestlé India is a responsible organisation and facilitates initiatives that help to improve the
quality of life in the communities where it operates.
OBJECTIVES AND VALUES
Our objective is to be the leader in Nutrition Health and Wellness, and the industry reference
for financial performance, trusted by all stakeholders.
We believe that leadership is not just about size; it is also about behaviour. Trust, too, is
about behaviour; and we recognise that trust is earned only over a long period of time by
consistently delivering on our promises. These objectives and behaviours are encapsulated in
the simple phrase, “Good Food, Good Life”, a phrase that sums up our corporate ambition.
We are seeking to achieve leadership and earn that trust by satisfying the expectations of
consumers, whose daily choices drive our performance, of shareholders, of the communities
in which we operate and of society as a whole. We believe that it is only possible to create
long- term sustainable value for our shareholders if our behaviour, strategies and operations
are also creating value for the communities where we operate, for our business partners and,
of course, for our consumers. We call this “Creating Shared Value”.
We are investing for the future to ensure the financial and environmental sustainability of our
actions and operations: in capacity, in technologies, in capabilities, in people, in brands, in
R&D. Our aim is to meet today’s needs without compromising the ability of future
generations to meet their needs, and to do so in a way which will ensure profitable growth
year after year and a high level of returns for our shareholders and society at large over the
Nestlé is the world's leading nutrition, health and wellness company. Our mission of "Good
Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in a
wide range of food and beverage categories and eating occasions, from morning to night.
To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved
shareholder value by being a preferred corporate citizen, preferred employer,
preferred supplier selling preferred products.
After more than a century-old association with the country, today, Nestlé India has presence
across India with 8 manufacturing facilities and 4 branch offices.
Nestlé India set up its first manufacturing facility at Moga (Punjab) in 1961 followed by its
manufacturing facilities at Choladi (Tamil Nadu), in 1967; Nanjangud (Karnataka), in 1989;
Samalkha (Haryana), in 1993; Ponda and Bicholim (Goa), in 1995 and 1997, respectively;
and Pantnagar (Uttarakhand), in 2006. In 2012, Nestle India set up its 8th manufacturing
facility at Tahliwal (Himachal Pradesh).
The 4 Branch Offices located at Delhi, Mumbai, Chennai and Kolkata help facilitate the sales
and marketing activities. The Nestlé India’s Head Office is located in Gurgaon, Haryana
4 P’s OF NESTLE
The Marketing mix of Nestle discusses the 4P’s of one of the strong FMCG companies of the
world. The Nestle marketing mix shows Nestle has a strong product line which boosts its
marketing mix. Below are the products, price, placement and promotions of Nestle.
There are 4 different strategic business units within Nestle which are used to manage various
Beverages – One of the most known coffee brands Nescafe, belongs to the house of Nestle
and is one of the cash cows for Nestle. However, it is not the biggest cash cow. Nestle has a
worldwide distribution and has many different variants. Looking at India, Nestle has
also launched Nestea.
Milk and Milk products – Nestle everyday, Nestle slim and Nestle Milk maid are some of
the milk and milk based products from the house of Nestle.
Prepared dishes and cooking aides – Nestle has a third category of products which comes
into prepared dishes and cooking aides. The major cash cow of Nestle lies in this segment,
which is Maggi Noodles. Probably one of the most widely sold ready to cook noodle brands
is Maggi. Maggi has a fantastic taste and quality. Thus, it was not a surprise, that Nestle
expanded the Maggi brand to create an umbrella of different products like Maggi pasta,
Maggi sauce, Maggi cubes etc. The maggi range contributes vastly to the bottom line of
Chocolates – Nestle has some popular chocolate products, most popular being Nestle Kitkat,
Munch, Milky bar, Eclairs and Polo. The newly introduced Alpino is targeting the gifting
segment in response to various chocolates like Dairy milk and Bournville by Cadbury.
The chocolates segment of Nestle is a star, where the competition is high and the expense is
high but at the same time the market size is huge as well.
As we can see, two major brands of Nestle are a very high contributor to its Brand equity –
Nescafe and Maggi. These are two brands sold across India in small as well as big shops and
super markets. There have been many competitors for these products, like Bru for
Nescafe and Top ramen and Sunfeast Yippie against maggi.
The appreciable factor in Nestle is that quality maintenance of products is upto mark and
there are hardly any complaints about Nestles products in the market. This is a major
achievement for a company which relies majorly on food products.
New Product Introduction & Innovations
The Company sustained momentum during the year by driving distribution through
innovative consumer promotions and trade offerings and supporting key price points.
High temperatures are a typical characteristic of Indian subcontinent. Chocolate starts melting
at such high temperatures thus making chocolate unfit for consumption. Hence, Nestle
introduced an innovative the new KITKAT SENSES- a perfect balance of crisp wafer coated
with slow churned chocolate.
This slow churned recipe is made using Cocoa mass from the finest beans, blended with
specially selected ingredients. The blend is then processed with utmost care, including a
churning process lasting 12 hours, to deliver a luxuriously rich and smooth tasting product
that melts in your mouth.
Available in two variants: KITKAT SENSES Milk and KITKAT SENSES Dark.
The price is dependent on the market of each individual products. For example, Nescafe and
Maggi being the clear leaders are priced with higher margins for the company as compared to
competition. This is because the product quality is good enough and a bit of skimming price
will not cause the customer to switch brands.
The strength of pricing for Nestle comes from its packaging or consumption based pricing.
For Nescafe as well as Maggi, Nestle offers a lot of sizes and package options. In
supermarkets, you can even find a 16 packet maggi whereas in small retail shops, you can
find 5 Rs maggi. Thus, with the variety available, customer can make his own choice based
on his consumption. In other products like Kitkat and Munch, due to tough competition from
other companies, Nestle offers competitive pricing. You will find that nestle will be similar
priced to many of Cadbury’s Products in the chocolate segment
Nestle follows the FMCG strategy of distribution which involves breaking the bulk. The
typical distribution strategy of Nestle is as follows.
Manufacturing >> C & F agent >> Distributors >> Retailers >> Consumer
Manufacturing >> Bulk buyers >> Consumer
These are the two different forms of distribution which Nestle has. It is typical of any FMCG
company. However, the Nestle channel is known to be strong with a good marketing and
sales network for channel distribution.
On top of it, Nestle regularly introduces trade discounts and various tactics to keep the
channel motivated. The major challenge is in the distribution of Maggi which is the most in-
demand product along with Nescafe. Due to these two products, Nestle is able to drive
other products in the market as well. Thus, on purchase of one weak product, the distributor
might get a discount on the stronger product or vice versa.
The challenge for Nestle is in the chocolate segment where it faces stiff competition from
Cadbury and hence selling the chocolates becomes difficult. Kitkat might have its own brand
positioning, but it is not better than Dairy milk. Thus, converting retailers to sell Nestle
instead of Cadbury is the toughest task for Nestle. This is converted mainly through
One of the most widely known tunes is the Nescafe tune. It was one of the best advertising
campaigns and was launched at least 2 decades back. However, that campaign brought
Nescafe strongly in the market.
On the other hand, Nestle’s brand was pushed by the excellent product quality of Maggi and
the witty and innovative campaigns of Maggi. Where Nescafe focuses on value and the good
things in life, Maggi focuses on moments you had with your Maggi. The recent campaign
was completely focused on your maggi story, where people had to come out with various
innovative ways that they had their maggi.
Promotions for other products too is done smartly. Kitkat focuses on “Take a break” and has
done some good marketing for the same. Kitkats website too is very innoative and shows
nothing but asks the visitor to take a break and have a Kitkat. The major push expected of a
FMCG company is in sales promotions at the ground level. This is where Nestle really rocks.
Nestle focuses on its strength which is Maggi, Nescafe and Kitkat which are the most
promoted brands in the market on ground level.
Besides this, Nestle regularly uses TVC’s and ATL marketing. It is also present online
through some smart creative. Overall, Nestle is a brand which has strong products as well as
strong marketing, and hence the brand has a very high brand recall value.
KEY FACTORS OF GROWTH OF NESTLE
• Unmatched product
and brand portfolio
• Unmatched R&D
• People, culture,
values and attitude
True competitive advantage comes from a combination of hard-to-copy
advantages throughout the value chain, built up over decades.
There are inherent links between great products and strong R&D,
between the broadest geographic presence and an entrepreneurial spirit,
between great people and strong values.
• Nutrition, Health
• Emerging markets
These four areas provide particularly exciting prospects for growth. They
are applicable across all our categories and around the world.
Everything we do is driven by our Nutrition, Health and Wellness
agenda, Good Food, Good Life, which seeks to offer consumers products
with the best nutritional profile in their categories
• Innovation &
Nestlé must excel at each of these four inter-related core competences.
They drive product development, renewal and quality, operational
performance, interactive relationships with consumers and other
stakeholders and differentiation from our competitors.
If we excel in these areas we will be consumer-centric, we will accelerate
our performance in all key areas and we will achieve excellence in
Analysis of Cadbury
Very strong brand equity in India.
Better market penetration.
Little penetration in the rural sector.
Poor technology in India compared to current international technologies.
Limited Key products, only one central brand (CDM).
Increasing per capita national income resulting in higher disposable income.
Growing middle class and growing urban population.
Increasing gifts cultures.
Substitute to “Mithais”
Rise in the cost of chocolate and dairy products.
Entry of many foreign players in the Indian Confectionary market, which are
giving higher margins to the retailers.
Changing consumer trends.
Strong distribution network.
Raw material supply – volatile prices.
Chocolates - comparatively small business unit
Lack of penetration of chocolates in the rural market.
Low penetration, consumption.
Launch of brands from international portfolio.
Growth in international & emerging markets
There exists no brand loyalty in the chocolate market and consumers frequently shift
Changing consumer trends.
• Cadbury India Limited (CIL) confectionary products include Dairy Milk, 5 Star,
Eclairs, Perk, Halls, Bytes and Gems which are the largest selling brands in their
• Cadbury’s has launched various products which cater to all customer segments.
• So every customer segment has different price expectation from the product.
• Therefore maximizing the returns involves identifying right price level for each
segment, and then progressively moving through them.
• e.g. : Dairy Milk Rs.5, Perk Rs. 10, 5 Star Rs. 5 & Rs. 10, Fruit and Nut Rs. 22,
Gems Rs. 5 & 10, Break Rs. 5, Nutties Rs. 18.
Physical Distribution – “Place”
• Cadbury's distribution network used to encompasses 2100 distributors and 450,000
• Celebrities endorsements.
• The big factor that has pushed up cdm sales is the Amitabh Bachchan campaign.
Cadbury appointed Amitabh Bachchan as its brand ambassador.
• Cadbury product are marketed aggressively in the market.
• Nestle products are Kit-Kat, Munch, Milky-bar, Charge, Classic, Polo. Kit-Kat is their
premium brand in chocolates.
Nestle sets prices of their products according to the market demand as low as possible
because nestle is the trend setter in the market.
• In line with Cadbury’s offerings Incentive schemes – eg. Maha munch give more
value for the same price Priced at key price points like Rs.5
Physical Distribution – “Place”
• General FMCG distribution structure.
• Strong coverage in urban areas, developing in rural.
• New Regional Sales Offices to increase width and penetration and focus in rural
• Brand ambassador- Rani Mukherjee for munch ( targeting youth)
• ADVERTISING - Decreased dependence on children’s TV channels over recent years
33% of total industry spend but near equal spend on each brand with rival offerings
Chocolate market is estimated to be around 1700 to 1900 crores growing at 18-20% per
annum and is dominated mainly by listed players Cadbury India and Nestle India.
Cadbury is the market leader with 72% market share.
Cadbury dominated the market .The company's various brands such as Dairy Milk,
Five Star, Éclairs, Gems and Perk are leaders in their segments.
Until the middle of 90’s, Cadbury had a monopoly among the chocolate
Nestle India's chocolate portfolio commands a total market share of 24%.
Then Nestle made an entry by introducing its famous brands like Kit Kat , Munch and
Milky Bar in the process ending Cadbury’s monopoly.
Competition in this segment is going to increase as big international heavyweights like
Hershey's and Mars are entering the Indian market.
Food feeds keep share markets as well as consumers perennially interested. At first, it
was the cola giants that attacked each other using their ad campaigns as daggers, and
now the battlefield is fast becoming accustomed to the chocolate giants – Cadbury
These are both global brands which have been competing neck and neck over market
share for decades. However, their approach to advertising was never as direct as it has
become in the last three years.
Taking a lesson out of the cola giants’ battlebook, Nestle is waging nothing short of a
public war against Cadbury through its ad campaigns.
Cadbury has, without a doubt, always been seen as the market leader. It leads the pack
in the Rs. 4,000-crore branded chocolate sector in India
Even though several brands such as Amul and Campco tried to break into the market,
none of them succeeded in shaking Cadbury’s grip
Nestle is the only real competition Cadbury has had in its long run as market leader.
SUGGESTIONS AND RECOMENDATIONS
• Due to increasing overall cost in Chocolate Products everywhere, cost format should
be made as such that it is affordable to each and everyone in the society.
• In this we also found that if the demanded brand is not available, so at that time the
customers switch over the brand of the chocolate so, here the company should build
up the healthy distribution channel by which company can attract the customers and
company loose the fear from the market.
• Company should concentrate more on television for advertisement
Overall people like to eat Cadbury brand rather than nestle
The Cadbury Dairy Milk brand has evolved into a Megabrand incorporating arrange
of products each with their own identity.
The strategy involved a packaging and range refreshment strategy which has resulted
in a unified innovative Dairy Milk brand, Having exceeded initial sales targets by a
considerable margin, the strategy can be considered a success!
There is an immense scope for chocolate industry in India.
Indian chocolate industry is unique mix with extreme consumption patterns, attitudes,
beliefs, income level and spending.
Understanding consumer preferences and demands is the key to growth.
Economical distribution using proper supply chain management is necessary.
The Indian Chocolate Industry is destined to grow and will do so in the future.
Most people prefer dairy milk of Cadbury due to its flavor taste quality and image and
due to its hard form some people often like to hear a chocolate with good quality taste