Nestle Vs Cadbury
Nestle Vs Cadbury
Nestle Vs Cadbury
With the entry of multinationals and home companies sprucing up their act,
the confectionery market is booming. McKinsey & Co. has estimated the
confectionery industry to touch a whopping Rs. 6 500 crore by the year 2008.
Till the eighties, the chocolate market was small and the product category
itself was fuzzy. In the eighties, Cadbury’s - the virtual monopolist - had
decided to focus its efforts on making chocolates a distinct category with an
identity of its own. And the marketer had sharply positioned its product at
children to do that. Hence, chocolates bore an “Only for kids” tag, and kept
adults at bay.
By the end of the eighties, Cadbury’s still ruled the roost with over 80 percent
market share. And though several brands - like Amul and Campco - tried to
break into the market, none of them had succeeded in shaking the leader’s
grip. In fact, Cadbury’s had become a brand virtually generic to chocolates.
Then chocolates were used to reward and reinforce positive behaviour and
hence were categorised as a luxury reserved for special occasions. This was,
a stark contrast to the west where chocolates were snacked on, eaten as mini
meals or just to suppress pangs of hunger.
• With socio-economic changes rapidly taking place, the young and not so
young population will lead a new life style and chocolate eating is definitely
going to be widespread and acceptable.
• In the industry, both population and family incomes as well as urbanisation are
on the increase.
• There has been a significant growth in the middle class, with 5.8 million
people having upgraded to the quoted middle class.
• There is quantified data on FMCG usage having increased (NRS-VI & IRS’98
figures)
Thanks to the above reasons the growth in the chocolate market is estimated
to be at 22% in 2001. But marketers in the industry are looking forward to a
much higher growth rate, as India’s per capita consumption of chocolates is
only 15 Gms. Versus 6 Kg in the west.
2
RESEARCH METHODOLOGY
Primary Sources
Secondary Sources
Company profile
6
History
COMPANY BACKGROUND
In 1930 R Hudson and Company finally joined with Cadbury. This gave the
flourishing local firm a direct link with one of the greatest in international
chocolate manufacturing and marketing. Over the years the company has
been involved with many other long standing brands and entrepreneurs –
names such as Fry – a chocolate brand dating back to 1756, and of course
Schweppes which is still part of the Cadbury group internationally although not
in New Zealand.
In 1969 Cadbury Fry and Schweppes merged internationally with the New
Zealand Company becoming known as Cadbury Schweppes Hudson Limited
in 1973.
PRODUCTION
In 1989, the company began operations in their newest and most modern
plant at malanpur. Equipped with state-of-the-art technology and backed by
constant investment, this unit manufactures Eclairs, Gems, Perk and Picnic.
VISION
• Broadening our consumer appeal and extending their reach to newer markets
• Sustained growth of their market share through aggressive product
development
• Striving for international quality in their products and processes
• Focusing on cost competitiveness and productivity in their operations and
innovative utilisation of their assets
• Investing to develop people
Developing a successful new product which will stand the test of time and
gain a permanent place in a company’s product portfolio is not easy. Much
quoted figures estimate that it takes in the region of 58 new product ideas to
end up with one successful new product and some people put the initial figure
as high as 100. The majority of ideas fail early in the process – well before
they reach the consumer. A further significant proportion fail to move from the
test market into national distribution. With the tremendous investment required
for totally new products, it is essential that the whole project is carefully
researched. In fact, it may take several years for a new product to grow from
concept stage to national distribution. The search for a new product usually
beings with an evaluation of the opportunities or gaps in the market.
Successful new brands are targeted as far as possible to avoid taking market
share from a company’s existing brands. A new sector must be created in the
market or the new product must attack competitors’ brands.
The slogans of advertising are the tools of sales promotion are so important
which couples the customer to purchase the product. Now we are going to
discuss all these things one by one about Cadbury.
Following are a few advertising slogans used by Cadbury for introducing the
product to the customers:-
All these slogans used by Cadbury are beautifully prepared because they can
compel the consumer to buy the product to some extent.
11
Now we will discuss them in details with the help of which we can easily
understand how these slogans can leave these impression on the customer.
This slogan was prepared for the first chocolate introduce by the Cadbury first
time in India. The chocolate was ‘Dairy Milk’. This slogan says that there are
many types of products present in the market, they have different taste but
Dairy Milk is the best and the true taste of the life. This slogan also stands for
the victory. On electronic media, the advertisement shows that a cricketer wins
the match and after that he and his girl friend eats this product. Therefore, this
stands for victory of any body eats this product will definitely win in his life.
When Cadbury introduced its next chocolate named ‘Perk’ this slogan were
used. This explains that if anybody is hungry and he do not have any thing to
eat accept this Perk then he can have this. This shows that Perk is so good
chocolate which can be used as a substitute of food and is a complete food.
Later on Cadbury came out with new slogan on television; the advertisement
shows that few students are on hunger strike. But they had the chocolate. This
shows that nobody can control himself/herself if this product of Cadbury is
lying in front of that person. This means that Cadbury product is so good that
nobody can leave it.
This slogan was used for ‘Bournvita’. Bournvita is full of proteins, vitamins,
minerals and all those necessary things which are useful for our body and
mind. Therefore, this slogan stood best for Bournvita. TAN KI SHAKTI, means
the energy to the body. If anybody here this product, he /she will remain active
for whole day. That person will look healthy, active and will look smart.
When Eclairs toffee came in the market, this slogan was used. Eclairs is a
toffee filled with chocolate. It means that instead of having chocolate you can
have eclairs toffee too. It a person does not want to have 12 pieces of
chocolate, can have one or two eclairs toffee.
Nowadays new chocolate has been introduced by the Cadbury and this
slogans going on creating demand for this new product. In this ad we can see
that one chocolate falls on a car and damages the car. This chocolate is so
12
strong due to lots of nuts, caramel etc. etc. present in this chocolate. This also
shows that this is for adventurous people who love thrills, adventure etc.
Cadbury Schweppes pick the world number 3 soda market has aggfed to sell
most of its soft drinks business outside the US to Coca Co. for $ 1.85 billions
to finance a head on battle with Coke in the No. 1 soda makers home market.
The agreements included the Schwoers Dr. Pepper chanda dry and crush
brands and exude South Africa and France the pact which was dependent on
regulatory approval was likely to be concealed in mid 1999 Cadbury said.
The more will allow Cadbury to expand it Dr. Peeper business in US where it
derives two-thirds of its soft drinks sales and was a 15 per cent market share
at the same time it get Cadbury out of markets where it is growing at a slower
pace. The shares rose as much as 70.5 per cent or 7.5 per cent or 7.5 per
cent 1002.
“This sort out the places where Cadbury’s systems weren’t strong enough to
compete with Coca-Cola,” said Mr. David long an analyst a Henderson
Croshtwaite, “they were fighting with proper for this.
Manufacture
↓
Stockiest/Distributor
↓
Semi-wholesaler
↓
13
Retailer
↓
User
Prices of key brands like Nestle’s Kitkat and Cadbury’s Dairy Milk have rose
by 25 per cent each between November 2001 and November 2002.
Brands such as Cadbury’s Eclairs, where the unit prices is lower, have seen a
sharpener price hike.
A major portion of the price revision occurred in the last part of 2001 and in
the first quarter of 2002.
A sharp rise in cocoa prices and rupee and depreciation escalation in input
costs for chocolate manufacturers in the last leg of fiscal 2001-98.
Whole cocoa, prices have receded from their high after September 2001,
rupee depreciation and the higher incidence depreciation and the higher
incidence of excise duties has kept the price line of chocolates.
The cost of cocoa, the key input, accounts for around 45 per cent of the
manufacturing costs for chocolates production.
Domestic cocoa production (estimated at 4500) to 5000 tonnes for the current
year) has been stagnant and takes are of less than a third of domestic
requirements of chocolate and malted food manufacturers. Manufacturers
such as Cadbury and Nestle India import over half of this cocoa requirements.
International cocoa prices moved up from 140 cents per kg in January 2001 to
peak at 190 cents per kg in September 2001, prompting a round or price
increase in chocolates in the last part of 2001.
Subsequently cocoa prices have receded to around 150-160 cents per kg and
are expected to rule at these levels in the near term. However, rupee
depreciation of around 17 per cent since September 2001 is likely to have
offset the impact of this on production costs.
Maximum Retail Price - based excise duties, which have been introduced on
chocolates in the latest budget could also add to the production cost
especially in the premium categories.
Though cocoa prices have extended to rule relatively soft. The price line for
chocolates appears unlikely to come down in the near future.
15
Internal Factors
External Factors
• Market characteristics.
• Buyer’s behavior in respect of the given product.
• Bargaining power of major customers.
• Competitors pricing policy.
• Government controls regulations on pricing.
• Other relevant legal aspects.
• Societal (or social) considerations.
• Understanding, if any reached with price cartels.
HISTORICAL HIGHLIGHTS
17
• Milk products
• Infant milk formulae
• Weaning cereals
• Culinary products
• Beverages
It is the main manufacturing unit of Nestle India Limited. The second factory at
Choladi, Tamil Nadu to produce beverages i.e. 100% EOU for instant tea was
set up in 1967.
• Instant Coffee
• Health Beverages
• Weaning cereals
• Culinary products
• Health beverages
• Milk products
• Wafers
• Waffles
Nestle India, the largest food company in the country is continuously looking
at new niches in the market place for its various products.
In milk products Nestle has made a considerable mark. For instance, the
company was the first to introduce a Dairy Whitener with its product
'Everyday'. And till today that product is a brand leader despite the presence
of a host of other brands in the field. IN the case of Milkmaid condensed milk,
Nestle relaunched the product as desert maker and has seen the sales graph
climbing since.
In baby foods, Nestle has made its strong hold with Lactogen and Cerelac.
Nestle is also popular in pure ghee segment. Its Everyday pure ghee has
18
gained a quite satisfactory market share, Nestle has also entered into fitness
food products. Nestle today is a household name. Nestle extended the
product line in coffee by bringing in Dolco, and then Sunrise.
According to the chart shown, we can easily known as to which product were
launched in which year:
5 Star
Eclairs
Gems
While Cadbury has successfully relaunched a host of its sub-brand, it has not
been able to pay attention to brands like Mr. Pops lillipop. As you grow and
add more brands, the ability to spend on brands becomes lower. Therefore we
have selected a few critical brands to do a paper job.
POLO
ON TEAMATE
21
a. Sagar
b. Amulya
c. Milkfood
d. Sapan D. Special
• Anikspray
• EDW
• Amul WMP
North
• Sagar
• Amulya
• Sapan D Special
East
• Amulya
• Milkfood
• Sagar
West
• Amulya
• Indana
• EDW
• Amul WMP
South
• Amulya
• Sagar
• Sapan Special
North
• Milkfood
• Amul WMP
• Anikspray
• EDW
East
• Sapan D Special
• Anikspray
• Indana
• EDW
West
• Anikspray
• Span D Special
South
• EDW
Brands Dominant (outlet wise distribution i.e. major % of sales coming from
a particular kind of outlet):
Groceries
• Milkfood
• Indana
• Anikspray
• Span D Special
General Stores
• Amul WMP
• Amulya
• Sagar
Chemist
• Sagar
• Amul WMP
Grocer
a. EDW
b. Sapan D Special
c. Amulya
d. Anikspray
General Stores
• EDW
• Amulya
• Amul WMP
• Anikspray
Chemist
• EDW
• Amulya
• Sapan D Special
• Amul WMP
Rising Brands
Grocers
• Sagar
• Amulya
• Milkfood
General Stores
• Sagar
• Amulya
Chemists
• Sagar
• Amulya
• Sapan D Special
Declining Brands
Grocers
• Anikspray
• EDW
24
General Stores
• Indana
• Anikspray
• EDW
• Amul WMP
Chemists
• Indana
• Anikspray
• East
• South
• North
• West
• South
• West
• East
• North (declining)
equity stake in it. Nil is one of the top players in the processed food and
beverages industry and the largest producer of instant coffee with a 49%
market share. Its market dominance apart from instant coffee is spread over
processed milk products (condensed milk, milk powders and dessert mix),
infant foods and processed and culinary products (instant noodles, sauces,
soups etc.).
Established in 1860, its Swiss parent Nestle, S.A. with ownership and a clutch
of topsellng global brands (Kit-Kat, Polo, Nescafe, Nido, Maggi, Perrier etc.) is
one of the largest and most profitable players in the processed food and
beverage industry. with sales at US$ 47.7 billion, it ranks 39th in the Fortune
500 list towering over its competitors like, Kelloggs, Conagra, Groupe-
Danone, Kraft-General Foods and others.
While its Moga unit produces milk products, infant milkfood, weaning cereals,
culinary products and beverages, the Choladi unit was set up to produce tea
in 1967. The third plant at nanjangud was set up in 1989 to manufacture
instant coffee and health beverages. Its other two plants are located at
Samalkha in Haryana and Ponda in Goa. It is currently setting up another
plant at Bicholim, Goa to manufacture culinary products. The gamut of
operations of NIL could be broadly classified into four categories.
Direct Competition
At present there are three major players Nestle, Cadbury’s and Amul in the
Indian Chocolate market. Campco initially tried to break into market but failed.
Brief profile of the same has been entailed below:
26
Cadbury’s India Ltd, has been in India since 1948. Its brands: Dairy Milk, 5
Star, Gems and Chocolate Eclairs are the households names in India today. In
all the segments i.e. moulded chocolates, count chocolates and panned
chocolates, it is undoubtedly the market leader.
The Company launched Perk, a wafer enrobed chocolate in 1995. This was
reactionary to the launch of Kit Kat and has been able to counter competition.
CDM, the oldest of Cadbury’s brands was launched in 1956. In the early 90s,
a rise in the prices of cocoa, increase in the excise duty and a fall in the
demand inspired the idea of repositioning. Two years in the process after
relaunch Cadbury’s Dairy Milk’s market share stood at 25 percent with sales
rising by an average 40 percent per annum.
The Company has also identified sugar confectionery, as a growth sector. Its
first offering Googly.
Nestle India Ltd. has been in India for more than 35 years now. The world’s
largest marketer of chocolates (became world number one when it acquired
Rowntree Macintosh of the UK) - Nestle, made its foray in the Indian
27
Nestle, in the beginning did not have its own manufacturing facility. It had an
alliance with Campco to manufacture chocolates. Later, in 1995 a state-of-art
manufacturing plant was set up at Ponda, Goa at a cost of Rs. 50 crores. This
unit took care of the entire Kit Kat production. However, the production tie-up
with Campco still continued.
Kit Kat, one of world’s most popular chocolate, was launched in India in 1995.
Within months of its launch, it fulfilled every target Nestle had set. Its launch
was accompanied by the launch of Cadbury’s Perk in order to counter Kit Kat
and safeguard the flagship brand – CDM. Kit Kat has been able to define a
new segment in the industry in the form of the wafer enrobed any time snack.
Kit Kat outsells Perk in the outlets where both are available. In the crucial
markets of Bombay and Delhi both are running neck-and-neck. It has even
said to have threatened the mother brand, Cadbury Dairy Milk.
Brand Launch
(Sugar Candies)
Future Outlook
Amul
28
The only other organized player in the market is Campco, which has an
insignificant share of the market. It is supplying its production to Nestle. Apart
from this Campco did come up with its new brands like Treat. But crunch of
resources grossly effected the pace of the company and is hardly to be heard
of today.
IMPORTED BRANDS
Due the above, Mars Inc.-the US giant, who had decided to set up facilities in
1995(the site for which was also selected), decided to postpone its investment
plans.
• Imports Mars brands every 40 days, after careful demand analysis. Takes 20
to 22 days to reach India.
• Duty Structure
Customs Duty 40 %
Counter-vailing Duty( a form of 2 %
excise)
Special Duty(Surcharge) 3%
• Distribution Logistics
The company has its operations being controlled from Delhi. A typical FMCG
distribution chain is being utilised. This includes-
Distributors
Consumers
In Delhi, the company reaches the retailers and the wholesalers on its own. It
operates about 3 vans, and each retailer is serviced twice a month.
A soft launch has been done in North India. The following States have been
covered in the first phase (including the distribution chain):
Nestle has also recently launched its foreign brands by importing them into
India. These include Lion and After Eights.
INDIRECT COMPETITION
Since the target audience includes, consumers of not only chocolates but also
of biscuits and confectionery, it faces indirect competition from these product
categories. Also, other confectionery products like toffees, candies etc have
proved to be indirect competition (however would be limited since we are
targeting small kids segment).
31
MARKET RESEARCH
In order to recommend and execute an effective strategy for marketing of
goods and services, a systematic market research needs to be undertaken.
The buyer preference research would play a vital role in the assessment of
consumers taste/purchase habits and a better understanding of the
consumers mind. In fact the strategy formulation/recommendations in this
report of the marketing mix relies heavily on these research findings.
OBSERVATIONS
Based on the basis of the questionnaire research, some of the facts that came
to the fore have been listed below. These research findings played a key role
in the development of the recommended marketing strategy.
• Kit Kat and CDM had a high unaided awareness level and also, both these
brands enjoyed a high consumer preference. Amul is perceived for giving
value for money.
• Chocolates are no more a children’s item.
• Most of people buy chocolate by impulse decision. Chocolates are even
considered as a good gift option.
• Consumers preference vis-à-vis place of purchase, size/form/taste of
chocolates, etc
• Most of the respondents had a high ad. Recall level for Cadbury’s Dairy Milk
and Kit Kat.
• When it comes to gifting, usually the receivers are
1. A friend of opposite sex
2. Children
• The idea of making chocolates available at sweet shops, gift shops, ice cream
parlors, fast food joints/restaurants was asked to be rated. The concept of
exclusive chocolate parlors was rated favourably (around 63%).
• The product category does not enjoy high brand loyalty levels.
32
• People are not price sensitive and consider the prices of chocolates available
in India, “reasonably O.K.”. They are ready to pay a premium for good quality.
Suitable price for a 40gm chocolate was felt to be between Rs10/- to Rs15/-.
0
10
20
30
40
50
60
70
80
90
0
10
20
30
40
50
60
70
80
Amul Picnic
CDM
KitKat
Foreign brands
CDM
KitKat
Picnic
Perk
Fruit n' Nut
Amul
Foreign Brands
5 Star
FINDINGS
Perk
Bar One
Purchase preference
Top of Mind Awareness
Crunch
Break
Bar One
Crunch
AWARENESS - PURCHASE PREFERENCE
Cadbury's Cadbury's
Nestle Nestle
33
34
90
80
70
60
50
40
30
20
10
0
Advertising Word of Attractive Dealer Shop Display Family,
Mouth Packaging friends,
relatives
PURCHASE BEHAVIOUR
No
10%
70
60
90
50
80
7040
60
30
50
20
40
Yes
3010
90%
20 0
Occasion led As a gift Casual Purchase Energy Snack
10
0
Spouse Friends Parents Children Relatives
35
IMPULSE DRIVEN
Yes
10%
No
90%
No
24%
Yes
76%
36
Attributes 1 2 3 4 5
Taste CDM KitKat 5 Star Perk Amul
Quality KitKat CDM Perk 5 Star Amul
Packaging KitKat CDM 5 Star Perk Amul
Price Perk 5 Star KitKat Amul CDM
Flavour KitKat CDM Amul Perk 5 Star
Add-ons KitKat Perk CDM 5 Star Amul
Brand image CDM KitKat Perk 5 Star Amul
PRODUCT RELATED
70
60
50
40
30
20
10
0
15/25 gms 35/40 gms 80 gms Super saver - 200 gms
105 gms
37
90
80
70
60
50
40
30
20
10
Cadbury's
CDM
Fruit n' Nut
Crunch
Nestle
5 Star
Bar One
Amul
KitKat
Foreign brands
Perk
Break
Picnic
PRICE RELATED
High Expensive
19%
Cheap
5%
Reasonably OK
76%
39
No
14%
Yes
No 52%
48%
Yes
86%
Price sensitivity. If the favourite brand is few Rs. expensive would you
go for it?
ADVERTISING/PROMOTION RELATED
80
70
60
50
40
30
20
10
0
Perk KitKat CDM Picnic Amul 5 Star
40
250
200
150
Yes
100 43%
50
No
57%
0
Perk KitKat CDM Picnic Amul 5 Star
Try another
brand
52% Go to another
retailer
29%
41
If your want to buy a wafer chocolate, say KitKat and if it is not available,
you would settle for a Bar/Moulded chocolate say 5 Star or CDM
No
33%
Yes
67%
Are you happy with the kind of chocolate brand available in India
No
24%
Yes
76%
42
PLACE RELATED
Outlet Preference
600
500
400
300
200
100
Exclusive
Ice-cream
Road-side
Pan shop
Fast Food
chocolate
Sweet Shops
Stationary
Gift shops
Milk booths
Restaurants
parlours
parlours
Kiosks
shops
joints
Age
Sex
43
Female
43%
Male
57%
Marital Status
Married
33%
Unmarried
67%
Occupation
44
Monthly income
The company may focus on the following factors while laying down the
target market.
1. Geographic Segmentation
In the first phase (after the test launch), Urban parts of the country should be
targeted. The chosen segment is targeted because –
Within Urban India, the cities with 1 million + population i.e. top 23 metros will
be targeted. A soft launch of the brand should be undertaken before taking the
brand to these areas. This (test launch) will be undertaken in Bombay, since it
(Bombay) is a high consumption city for chocolates. (Source: Nestle (I) Ltd –
infect Nestle’s sales peaked out in Bombay, during its initial launch).
2. Demographic Segmentation
off their tuck money. Also, children today already have an array of cheap
domestic and international confectionery (in the form of chewing-gums,
lollipops, rolls, lozenges and toffees).
• Family Life Cycle : In terms of family life cycle it is addressed at all of the
following :
The brand may positioned such that it fits all stages of family life cycle.
3. Psychographic Segmentation
Life Style: In terms of lifestyle, it may be aimed at those who favor buying
convenience products. They are also willing to experiment with alternate
products in place of conventional food items, as the universe of chocolate
consumption is changing from occasion led to more casual consumption.
4. Behavioural Segmentation
5. Learning-Involvement
6. Usage Rate
47
TARGET AUDIENCE
There are 181 million urban individuals in India Our target segment is people
living in the top 23 metros (1 million +population), which implies 63 million
people. Further, SEC A-B in these 23 metros with Cable & Satellite at home
are targeted (94.4 % of SEC A-B have a cable & satellite connection) [All
these are NRS -VI & IRS ’99 figures].
48
The elements of the mix - Product, Price, Place & Promotion have been
entailed below:
Product
As mentioned earlier, the two most important segments of the market are
Moulded and Countline segment (segments have a high share of the market).
Also, it can be seen in the findings, the Indian consumer does not recognise
the difference between Moulded and Countline segment. Further, a key
decision that needs to be taken is to decide whether to have a core brand
focus or have a plethora of brands. Here, it would be advisable to launch a
complete basket of products covering both the count line and the Moulded
chocolate segment (at least if not Panned). A range of brands can help
cushion out risks over the entire offering. Also, it has been that to sustain in
the long term, a complete portfolio of chocolates for every taste is essential.
However, a concentration strategy may be adopted in the first phase, focusing
on one core flagship brand.
⇒ 15 gm ⇒ 35/40 gm ⇒ 80 gm.
⇒ 200 gms
49
The milk and creams in India are different, and workers no way as well trained
as abroad. Hence, the product development must keep this fact in mind.
• The product should also have a high shelf life with a good shelf appeal as
well. This so since, chocolates is an impulse buy and a good distinct product
look can attract a customer.
Product Differentiation
Since, there exists strong competition from heavy weights such as Nestle and
Cadbury’s; the product offering should be well differentiated. Nestle, when it
launched its chocolate brands in India, ensured that each brand was well
differentiated - White chocolate(not conventional brown) with a sugary taste
that appealed to kids, Milky bar marbles differentiated as they had white
chocolate centre instead of the brown chocolate core in Gems.
Pricing
Factors like competition, internal costs, and the positioning and corporate
objective of the company need to be taken into consideration by a company
before pricing a product.
Further, the product category is relatively inelastic i.e. consumers would not
stop buying their favourite brands if the price is increased by a few rupees
(see findings). Consumers feel that even if the price of their favourite brand is
50
reduced, they might not buy more of it. Also, there is a general perception of
chocolates being “Reasonably O.K.”(see findings).
According to Sarura Business, the high priced (relative to other brands in the
market) imported foreign brands have been able to draw a decent response.
Primarily, because of their high foreign brand equity.
As can be seen in the table (on brand comparison –on price, given on the next
page), Nestle and Cadbury’s are pitted against each other and Amul is the
cheapest brand in the market.
It may be noted that the price should be only Rs2/- or Rs 3/- expensive than
Cadbury’s or Nestle’s offering. For instance
While pricing the product, the following duty structure may be considered:
• 18 percent excise
• Other state levied duties (after excise) such as Sales tax, etc. (which vary
from state to state)-within 10 to 20 percent.
Placement:
The first task in hand should be, to effectively map the territory into smaller
more accessible and controllable units. An effective territory mapping needs to
be done not only to provide an efficient coverage of the market but also to
provide growth opportunities to the constituents (stockiest), as the company
grows. The recommended distribution chain would be as follows:
The Company
Stockiest/ Distributors
Whole sellers
Retailers
Retailers
The main problems that new product faces is that of getting experienced and
effective channel members. As existing marketing marketer/manufacturer can
piggy back on the existing channel structure. A new company will have to
provide greater incentives convince channel members to stock the product
offering. Hence, an innovative means of channel handling needs to be
adopted:
Wholesaler: Whole seller’s prime concern is buy in bulk and sell at the fastest
rate. The aim of any distribution chain of mass-market product category like
chocolates would be to expand its reach i.e. the no. of outlets storing its
products. This may not be possible even with a well established stockiest
network. Hence, wholeseller’s play a significant role in supplementing the
stockiest’ effort send in providing a better reach to the product.
A “blitz force” tactic for retail chain enhancement may be followed. A blitz force
is a “commando” unit hired to target specific work. About 5 to 10 salesmen,
recruited from the same locality will be roped in to penetrate a specific area.
Being far more familiar with the area, they are expected to create about 10 to
12 new outlets daily. This task on a later stage may be entrusted to the
distributor’s salesman.
Further, while distributing chocolates, it must be ensured that the brand has a
deep retail coverage not a selective presence.
Finally, while deciding onto the selling outlets, certain unconventional outlets
may be considered. These include –
chocolate
Fruit n Nut Positioned at
Creamy Bar adults as an
Roast Almond impulse anytime
Nut Milk Purchase
Crackle - self expression
Bournville values attached
Consumption. Consumption
Break/Crisp/ “Thodi Si Pet Pooja” “Have a Break,
Gems/Eclairs
Positioned as
Butterscotch variety, gifting
Caramels/ and taste
Overtures preference
Nutties/All Silk
Tiffins
Relish
Advertisement Plan
Advertisement Objectives
• To position the product as a “high quality brand, with a wide range of offering,
providing, fun anytime, anyplace products”.
• To create awareness about new flavours.
• Induce consumer trials.
• Build corporate image
• To undertake competitive advertisement.
The Budget : Considering the fact that the market is dominated by big-wigs
such as Cadbury’s and Nestle, aggressive competitive advertising needs to be
undertaken.
Since both Kit Kat and Perk are allocating 60 to 70 percent of their total ad
budget on chocolates, an allocation of about 20 to 25 percent of the projected
turnover may be sufficient in the first year. After which about 10 to 12 percent
may be used to sustain the brands.
Media
56
Print Media: Will be the major magazines read by the target segment i.e..,
India today, society, famine, stardust etc.
Public Relations:
Trade promotion: The Company will have to offer lucrative trade promotion
schemes, in order to push primary sale. These include incentives to stockiest
for pushing the sale of chocolates. At the retail level, the following trade
promotion measures may be adopted:
POP is of extreme importance, to a product category like this. This is so, since
sales are impulse /casual driven. Hence, heavy point of purchase advertising
in the form of danglers, chocolate dispensers, etc. may be used.
58
1. It would reduce the risk of failure in the market where it goes national,
by validating the marketing mix.
2. Facilitate validation of positioning.
3. Allow corrective action through incorporation of consumer feedback.
1. Test Objectives: To validate the brand names, new outlets, etc and to
measure the sales volume, pricing and promotion policy. Competitor
reaction can also be analysed.
2. The product may be launched in Bombay ( as a soft(test) launch). This
selection was based on :
• Competitor activity is high. Also, Nestle was able to wrest a significant market
share from Cadbury’s when it was launched.
• Bombay is representative of the target segment.
IMPLEMENTATION
CONCLUSION
The growth and expansion of the Indian chocolate market in the past has
been hampered, due to stiff excise duties on chocolates (at 18 percent – while
other agro based products are being charged as low as 8% and a few, even
0% excise) and non-availability of quality cocoa in the country.
Also, import of chocolates has been put in the OGL category, with duties being
reduced (in a phased manner). The industry has made recommendations to
the Indian government to go back to the Special item list category, in order to
safeguard the domestic industry.
APPENDIX
61
QUESTIONNAIRE
Taste
Quality
Packaging
Price
Flavour
Brand Image
Chocolate Brands
Attributes Perk Kit Cadbury’s 5 Star Amul Foreign Any Other
Kat
Dairy Milk Brand Brand
(Pls.Spec.) (Pls.Spec.)
Taste
Quality
Packaging
Price
Flavour
Add-ons
(Wafers,etc.)
Brand Image
Advertising
Word of mouth
Attractive Packaging
Dealer
Shop Display
Family/Friend/Relatives
9. How do you rate the idea of chocolates being made available at the
following outlets? (Please rate on a scale of 1-5, where 1 is most
preferred and 5 is least preferred).
Pan Shops
Sweet Shops
Gift Shops
Stationary Shops
63
Ice-cream Parlors
Milk Booths
Restaurants
Road-side Kiosks
10. If a particular brand is not available with the retailer, you will -
11. State the advertisements of chocolates that you can recollect. In order
l of likeability.
1.
2.
3.
4.
Trendy set-up
As a gift
Casual purchase
64
Energy snack
15. What according to you is the suitable price for a 40 gm. chocolate
which is of good quality and flavour(which will be available for the first
time).
16. If your favourite brand is a few Rs. expensive than it is, you would still
go for it.
YES / NO
17. A sale promotion scheme like Rs. 2/- off, 10 gms extra, a candy free, e
etc. would affect your purchase decision.
YES / NO
18. If you want to buy a wafer chocolate, say KitKat and if it is not available
y you would settle for a Bar/Moulded chocolate, say 5 Star or Cadbury’s
D Dairy Milk.
YES / NO
YES / NO
65
23. Are you happy with the kind of chocolate brands available in India, t
d today?
YES / NO
25. The price of your favourite brand or preferred brand of chocolate is:
Reasonably OK
Cheap
26. If the price of your favourite brand is reduced, you will buy more of it?
YES / NO
66
BIBLIOGRAPHY
Business today
Business World,
Business India,
Economic Times
CMIE reports
www.indiainfoline.com
www.domain_b.com
www.agencyfaqs.com
www.nil.com
www.cadburys.com
www.web-enable.com/industry/enabling-scm.asp
indiainfoline.com
askjeeves.com