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Project Work Marketing Mix

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

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Project Work Marketing Mix

  2. 2. CONTENTS PARTICULARS PAGE NO. Acknowledgement 3 Declaration 4 Introduction 5 Objective and Methodology 6 Marketing Mix- Introduction 7 History 8 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 Conclusion 50 Bibliography 51 Project W ork
  3. 3. ACKNOWLEDGEMENT 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. SHREYA MUNJAL ROLL NO. 43094 MRS. PARMINDER KAUR Project W ork
  4. 4. DECLARATION 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. SHREYA MUNJAL B.COM (HONS), 3rd Year ROLL NO. 43094 Project W ork
  5. 5. INTRODUCTION 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 promotion. 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 marketing. Project W ork
  6. 6. OBJECTIVE 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. METHODOLOGY 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 newspapers. Project W ork
  7. 7. 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. Project W ork
  8. 8. HISTORY 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 altogether. Project W ork
  9. 9. 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 Ahmed, 1995). 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. Project W ork
  10. 10. • The Mix regards customers as passive; it does not allow interaction and cannot capture relationships. • 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) found that: • 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 consumer. • 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 mixes. 7Ps 4Ps Strengths • More comprehensive • More detailed • More refined • Broader perspective • Includes participants/ people and process • It is a model • Standardisation • Signals marketing theory • Simplicity and ease of understanding • Easy to memorise • Good pedagogic tool, especially for introductory marketing • Parsimony • Useful conceptual framework • Ability to adapt to various problems Weaknesses • More complicated • Extra elements can be • incorporated in 4Ps • Controllability of the three new • elements • Too simple, not broad enough • Lacking people, participants and process • Physical evidence • Relationship marketing • Service • Lack of connection/integration between variables • Static nature of 4Ps Project W ork
  11. 11. 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 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 Factors Pricing should take into account the following factors into account: 1. Fixed and variable costs. 2. Competition 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 objectives Types of Pricing Strategy Project W ork
  12. 12. Pricing Strategy Definition Example Penetration Pricing 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 base increases. Skimming Pricing 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. Competition Pricing 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. Product Line Pricing 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. Bundle Pricing 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. Psychological Pricing 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 Project W ork
  13. 13. Pricing exclusiveness of the product. Harrods, first class airline services, Porsche etc. Optional Pricing 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. Cost Based Pricing 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 decision. 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. Cost Plus Pricing Here the firm add a percentage to costs as profit margin to come to their final pricing decisions. 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 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. Project W ork
  14. 14. Above Indirect Distribution (left) and Direct Distribution (right). Distribution Strategies Depending on the type of product being distributed there are three common distribution strategies available: 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 target audience. PRODUCT Product means the goods-and-services combination the company offers to the target market. -Kotler and Armstrong (2010). Project W ork
  15. 15. 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 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 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 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. Project W ork
  16. 16. -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 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 Interdependent variables 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. Project W ork
  17. 17. Flexible Concept 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. Constant Monitoring 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: Step 1 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. Step 2 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. Project W ork
  18. 18. 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. Step 3 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. Step 4 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. Step 5 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. Step 6 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. Project W ork
  19. 19. KEY CHALLENGES 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 Project W ork
  20. 20. SWOT ANALYSIS 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.  Damaged reputation. 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. Project W ork
  21. 21.  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. Project W ork
  22. 22. Marketing Mix of Chocolate Industry Project W ork
  23. 23. 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 Project W ork
  24. 24. 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. 1 Switzerland 10% 2 Austria 9% 3 Ireland 9% 4 Germany 8% 5 Norway 8% 6 Denmark 8% 7 United Kingdom 8% 8 Belgium 6% 9 Australia 6% 10 Sweden 6% 11 United States 5% 12 France 5% 13 Netherlands 5% 14 Finland 4% 15 Itlay 3% Rank Countries Per Capita Consumption (in lb) Project W ork
  25. 25. 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: Children 55% Adults 12% Young Adults 33% Chocolate Consumption Structure Project W ork
  26. 26. 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 butter remaining. • 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 regular cocoa. 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 2. Counts 3. Panned Chocolates (Gems) 4. Éclairs 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. Project W ork
  27. 27. 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. Conching 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) Bars Count: • 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 Project W ork
  28. 28. 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 effective. 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 1. TEMPERATURE: 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 Project W ork
  29. 29. 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. 4. TRANSPORTATION: 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 Regulations. External Factors affecting Growth of Chocolate Industry in INDIA • 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. Project W ork
  30. 30. Cadbury’s India Limited – A Study Project W ork
  31. 31. CADBURY’S INTERNATIONAL 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. Project W ork
  32. 32. 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 MISSION "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.” LOCATION 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. Project W ork
  33. 33. 4 P’S OF CADBURY PRODUCT Categories/ Brands • Chocolate Bars • Count lines • Panned confectionery • Wafer chocolates • Assorted Chocolates & Gift Chocolates • Sugar Confectionery • Food Drinks • Bournvita, • 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 per cent. CHOCOLATES Category Brand Variants • Bars Dairy Milk • Plain • Fruit n Nuts • Double Decker • Roasted Almond • Chunky • 5-Star • 5 Star Chrunchie • Milk Treat Chocolate • Orange • 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 chocolate market. Project W ork
  34. 34. Cadbury’s Celebration 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 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. PRICE 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. PHYSICAL DISTRIBUTION 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. Project W ork
  35. 35. 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. PROMOTION 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, Project W ork
  36. 36. 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 long run. 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. Project W ork
  37. 37. 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. Project W ork
  38. 38. NESTLE INDIA- A Study Project W ork
  39. 39. NESTLE INTERNATIONAL 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. NESTLE INDIA 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 shareholder satisfaction. 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. Project W ork
  40. 40. 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 long-term. MISSION 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. VISION 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. LOCATION 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 Project W ork
  41. 41. 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. PRODUCT There are 4 different strategic business units within Nestle which are used to manage various food products. 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 Nestle. 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. Project W ork
  42. 42. 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. PRICE 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 PHYSICAL DISTRIBUTION 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. Project W ork
  43. 43. 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 promotions. PROMOTIONS 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. Project W ork
  44. 44. KEY FACTORS OF GROWTH OF NESTLE Competitive advantages • Unmatched product and brand portfolio • Unmatched R&D capability • Unmatched geographic presence • 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. Growth drivers • Nutrition, Health and Wellness • Emerging markets and Popularly Positioned Products • Out-of-home • Premiumisation 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 Operational pillars • Innovation & Renovation • Wherever, whenever, however • Consumer engagement • Operational efficiency 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 execution. Project W ork
  45. 45. Competitive Analysis of Cadbury and Nestle Project W ork
  46. 46. SWOT ANALYSIS CADBURY: STRENGTHS  Distribution Network  Market Share  Aggressive Marketing  Very strong brand equity in India.  Better market penetration. WEAKNESS  Little penetration in the rural sector.  Poor technology in India compared to current international technologies.  Limited Key products, only one central brand (CDM). OPPORTUNITIES  Increasing per capita national income resulting in higher disposable income.  Growing middle class and growing urban population.  Increasing gifts cultures.  Substitute to “Mithais” THREATS  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. NESTLE: STRENGTHS  Strong distribution network.  Strong R&D WEAKNESS  Raw material supply – volatile prices.  Chocolates - comparatively small business unit  Lack of penetration of chocolates in the rural market. Project W ork
  47. 47. OPPORTUNITIES  Low penetration, consumption.  Launch of brands from international portfolio.  Growth in international & emerging markets THREATS  Foreign imports.  There exists no brand loyalty in the chocolate market and consumers frequently shift their brands.  Changing consumer trends. Marketing Mix Cadbury: Product: • 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 segments. Pricing: • 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 retailers. Promotion: • 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. Project W ork
  48. 48. Nestle Product: • Nestle products are Kit-Kat, Munch, Milky-bar, Charge, Classic, Polo. Kit-Kat is their premium brand in chocolates. Pricing: 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 areas. Promotion: • 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 from Cadbury. MARKET SHARE 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:  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 manufacturers. NESTLE:  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. Project W ork
  49. 49. Competition in this segment is going to increase as big international heavyweights like Hershey's and Mars are entering the Indian market. COMPETITIVE ASSESSMENT  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 and Nestle.  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. 72% 24% 3% 1% Market Share Cadbury (72%) Nestle (24%) Amul (3%) Others (1%) Project W ork
  50. 50. 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 CONCLUSION  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 crunch. Project W ork
  51. 51. BIBLIOGRAPHY • y.html • • • • marketing-mix-concept-4ps/ • 97/1552%3Forigin%3Dpublication_detail • • • • • • launchesCadbury5StarChomp.aspx • ryGlow.aspx • development-marketing-strategy-tactics-10502.htmlProject W ork
  52. 52. Project W ork