industry overvie1
TRANSCRIPT
-
7/31/2019 Industry Overvie1
1/68
Chocolate Overview
History of chocolate:
The origin of chocolate can be traced back to the ancient Maya and Aztec
civilizations in Central America, who first enjoyed chocolaty a much-
prized spicy drink made from roasted cocoa beans.
Throughout its history, whether as cocoa or drinking chocolate beverage or
confectionary treat, chocolate has been a much sought after food.
The Aztec empire
Chocolate(in the form of a luxury drink) was consumed in large quantitiesby the Aztecs: the drink was described as finely ground, soft, foamy,
reddish, bitter with chili water, aromatic flowers, vanilla and wild bee honey.
The dry climate meant the Aztecs were unable to grow cocoa trees, and had
to obtain supplies of cocoa beans from tribute or trade
Don Cortes
The Spanish invaded Mexico in the 16th century, by this time the Aztecs hadcreated a powerful empire, and the Spanish armies conquered Mexico. Don
Cortes was made captain general and governor of Mexico. When he
returned to Spain in1528 he loaded his galleons with cocoa beans and
equipment for making the chocolate drink. Soon chocolate became a
fashionable drink enjoyed by the rich in Spain.
Chocolate across Europe
An Italian traveler, Francesco carletti, was the first to break the Spanish
monopoly. He had visited Central America and seen how the Indians
1
-
7/31/2019 Industry Overvie1
2/68
prepared the cocoa beans and how they made the drink, and by 1606
chocolate was well established in Italy.
Drinking chocolate
The secret of chocolate was taken to France in 1615, when Anne, daughter
of Phillip 2 of Spain married king Louis 13 of France. The French court
enthusiastically adopted this new exotic drink, which was considered to have
medicinal benefits as well as being a nourishing food. Gradually the custom
of drinking chocolate spread across Europe, reaching England in the 1650s
First chocolate for eating
Up until this point all chocolate recipes were based on plain chocolate. It
was an English doctor, Sir Hanss Sloane, who- after traveling in south
America- focused on cocoa and food values, bringing a milk chocolate
recipe back to England.
The original Cadbury milk chocolate was prepared to his recipe.
History:The earliest record of chocolate was over fifteen hundred years ago in the
central America rain forests, where the tropical mix of high rain fall
combined with high year round temperatures and humidity provide the ideal
climate for cultivation of the plant from which chocolate is derived, the
cacao tree.
Chocolate is made from the cocoa bean, found in pods growing from thetrunk and lower branches of the cacao tree, Latin name theobroma cacao
meaning food of the gods Cacao was corrupted into the more familiar
cocoa by the early European explorers. The Maya brewed a spicy,
2
-
7/31/2019 Industry Overvie1
3/68
bittersweet drink by roasting and pounding the seeds of the cacao tree with
maize and capsicum peppers and letting the mixture ferment.
This drink was reserved for use in ceremonies as well as for drinking by the
wealthy and religious elite; they also ate cacao porridge.
The Aztecs, like the Mayans, also enjoyed cacao as a beverage fermented
from the raw beans, which again featured prominently in ritual and as a
luxury available only to the very wealthy. The Aztecs called this drink
chocolat, the Spanish conquistadors found this almost impossible to
pronounce and so corrupted it to the easier chocolat the English further
changed this to chocolate.
The Aztecs regarded chocolate as an aphrodisiac and their emperor,
Montezuma reputedly drank it fifty times a day from a golden goblet and is
quoted as saying of xocolat: the divine drink, which builds up resistance
and fights fatigue. A cup of this precious drink permits a man to walk for a
whole day without food
Chocolate in Europe
Xocolat or chocolat or chocolate as it became known, was brought to Europe
by Cortez, by this time the conquistadors had learned to make the drink
more palatable to European tastes by mixing the ground roasted beans with
sugar and vanilla ( a practice still continued today), thus offsetting the spicy
bitterness of the brew the Aztecs drank.
The first chocolate factories opened in Spain, where the dried fermented
beans brought back from the new world by the Spanish treasure fleets were
roasted and ground, and by the early 17th century chocolate powder from
which the European version of the drink
3
-
7/31/2019 Industry Overvie1
4/68
was made- was being exported to other parts of Europe. The Spanish kept
the source of the drink- the beans- a secret for many years, so successfully in
fact, that when English buccaneers boarded what they thought was a Spanish
treasurer galleon in 1579, only to find it loaded with what appeared to be dried sheeps droppings, they burned the whole ship in frustration. If only
they had known, chocolate was so expensive at that time, that it was worth
its weight in silver (if not gold), chocolate was treasure indeed!
Within a few years, the cocoa beverage made from the powder produced in
Spain had become popular throughout Europe, in the Spanish Netherlands,
Italy, France, and Germany and in about 1520 it arrived in England.
The first chocolate house in England opened in London in 1657 followed
rapidly by many others. Like the already well established coffee houses, they
were used as clubs where the wealthy and business community met to smoke
a clay pipe of tobacco, conduct business and socialize over a cup of
chocolate.
Back to the Americas
Events went full circle when English colonists carried chocolate (and coffee)
with them to Englands colonies in North America. Destined to become the
United States of America and Canada, they are now the worlds largest
consumers by far of both chocolate and coffee, consuming over half of
the words total production of chocolate alone.
The Quakers
The Quakers were, and still are, a pacifist religious sect, an offshoot of the
puritans of English civil war and pilgrim fathers fame and a history of
chocolate would not be complete without mentioning their part in it. Some
4
-
7/31/2019 Industry Overvie1
5/68
of the most famous names in chocolate were Quakers, who for centuries held
a virtual monopoly of chocolate making in the English speaking world fry,
Cadbury and row tree are probably the best known.
Its probably before the time of the English civil war between parliament
and King Charles 1st that the Quakers who evolved from the puritans, first
began their historic association with chocolate. Because of their pacifist
religion, they were prohibited from many normal business activities, so as an
industrious people with a strong belief in the work ethic (like the puritans);
they involved themselves in food related businesses and did very well.
Baking was a common occupation for them because bread was regarded asthe biblical staff of life, and bakers in England were the first to add
chocolate to cakes so it would be a natural progression for them to start
making pure chocolate. They were also heavily involved in breakfast cereals
but thats another story.
What is certain is that the fry, row tree and Cadbury families in England
among others, began chocolate making and in fact Joseph fry of fry &sons(founded 1728 in Bristol, England) is credited with producing and selling the
worlds first chocolate bar. Frys have now all but disappeared (taken over
by Cadbury) and row tree have merged Swiss company nestle, to form the
largest chocolate manufacturer in the world. Cadbury have stayed with
chocolate production and are now, if not quite the largest, probably one of
the best-known chocolate makers in the world.
Chocolate as we know it
The first mention of chocolate being eaten in solid form is when bakers in
England began adding cocoa powder to cakes in the mid 1600s. Then in
1828 a Dutch chemist, Johannes van houten, invented a method of extracting
5
-
7/31/2019 Industry Overvie1
6/68
the bitter tasting fat or cocoa butter from the roasted ground beans, his aim
was to make the drink smoother and more palatable, however he
unknowingly paved the way for solid chocolate as we know it.
Chocolate as we know it today first appeared in 1847 when fry & sons of
Bristol, England mixed sugar with cocoa powder and cocoa butter (made
by the van houten process) to produce the first solid chocolate bar then
in1875 a Swiss manufacturer, Daniel peters, found a way to combine (some
would say improve, some would say ruin) cocoa powder and cocoa butter
with sugar and dried milk powder to produce the first milk chocolate.
How Chocolate is Made ?
The cocoa-bean -- the heart of the sweetest delicacy in the world -- is bitter!
This is why, up to the 18th century some native tribes ate only the sweetish
flesh of the cocoa fruit. They regarded the precious bean as waste or used it,
as was the case among the Aztecs, as a form of currency.
The Varieties
There are two quite different basic classifications of cocoa, under which
practically all varieties can be categorized: Criollo and Forastero cocoas.
The pure variety of the Criollo tree is found mainly in its native Equador and
Venezuela. The seeds are of finer quality than those of the Forastero variety.
They have a particularly fine, mild aroma and are, therefore, used only in theproduction of high-quality chocolate and for blending. However, Criollo
cocoa accounts for only 10% of the world crop. The remaining 90% is
harvested from trees of the Forastero family, with its many hybrids and
6
-
7/31/2019 Industry Overvie1
7/68
varieties. The main growing area is West Africa. The cocoa tree can flourish
only in the hottest regions of the world.
The Harvest
Immediately after harvesting, the fruit is treated to prevent it from rotting.At
fermentation sites either in the plantation or at, collecting points, the fruit is
opened.
Fermentation
The fermentation process is decisive in the production of high quality raw
cocoa. The technique varies depending on the growing region.
Drying
After fermentation, the raw cocoa still contains far too much water; in fact
about 60%. Most of this has to be removed. What could be more natural than
to spread the beans out to dry on the sun-soaked ground or on mats? After a
week or so, all but a small percentage of the water has evaporated.
Cleaning
Before the real processing begins, the raw cocoa is thoroughly cleaned by
passing through sieves, and by brushing. Finally, the last vestiges of wood,
jute fibres, sand and even the finest dust are extracted by powerful vacuum
equipment.
Roasting
The subsequent roasting process is primarily designed to develop the
aroma.The entire roasting process, during which the air in the nearly 10 feet
high furnaces reaches a temperature of 130 C, is carried out automatically.
7
-
7/31/2019 Industry Overvie1
8/68
Crushing and shelling
The roasted beans are now broken into medium sized pieces in the crushing
machine.
Blending
Before grinding, the crushed beans are weighed and blended according to
special recipes.
The secret of every chocolate factory lies in the special mixing ratios, which
it has developed for different types of cocoa.
Grinding
The crushed cocoa beans, which are still fairly coarse are now pre-ground by
special milling equipment and then fed on to rollers where they are ground
into a fine paste. The heat generated by the resulting pressure and friction
causes the cocoa butter (approximately 50% of the bean) contained in the
beans to melt, producing a thick, liquid mixture.
This is dark brown in color with a characteristic, strong odour. Duringcooling it gradually sets: this is the cocoa paste.
At this point the production process divides into two paths, but which soon
join again. A part of the cocoa paste is taken to large presses, which extract
the cocoa butter. The other part passes through various blending and refining
processes, during which some of the cocoa butter is added to it. The two
paths have rejoined.
8
-
7/31/2019 Industry Overvie1
9/68
CocoaButter
The cocoa butter has important functions. It not only forms part of every
recipe, but it also later gives the chocolate its fine structure, beautiful lustre
and delicate, attractive glaze.
Cocoa Powder
After the cocoa butter has left the press; cocoa cakes are left which still
contain a 10 to 20% proportion of fat depending on the intensity of
compression.
These cakes are crushed again, ground to powder and finely sifted in several
stages and we obtain a dark, strongly aromatic powder, which is excellent
for the preparation of delicious drinks - cocoa. Cocoa paste, cocoa butter,
sugar and milk are the four basic ingredients for making chocolate. By
blending them in accordance with specific recipes the three types of
chocolate are obtained which form the basis of ever product assortment,
namely:
Kneading
In the case of milk chocolate for example, the cocoa paste, cocoa butter,
powdered or condensed milk, sugar and flavouring - maybe vanilla - go into
the mixer, where they are pulverized and kneaded.
Rolling
Depending on the design of the rolling mills, three or five vertically mountedteel rollers rotate in opposite directions. Under heavy pressure they pulverise
the tiny particles of cocoa and sugar down to a size of approx. 30 microns.
(One micron is a thousandth part of a millimeter.)
9
-
7/31/2019 Industry Overvie1
10/68
Conching
But still the chocolate paste is not smooth enough to satisfy our palates.But
within two or three days all that will have been put right. For during this
period the chocolate paste will be refined to such an extent in the conches
that it will flatter even the most discriminating palate.
Conches (from the Spanish word "conch a", meaning a shell) is the name
given to the troughs in which 100 to 1000 kilograms of chocolate paste at a
time can be heated up to 80 C and, while being constantly stirred, is given a
velvet smoothness by the addition of certain amounts of cocoa butter. A kind
of aeration of the liquid chocolate paste then takes place in the conches: its
bitter taste gradually disappears and the flavor is fully developed. The
chocolate no longer seems sandy, but dissolves meltingly on the tongue.It
has attained the outstanding purity, which gives it its reputation.
Consumption of Chocolates in India
Chocolate consumption in India is extremely low. Per capita consumption is
round 160 gms in the urban areas, compared to 8-10kg in the developed
countries. In rural areas, it is even lower. Chocolates in India are consumed
as indulgence and not as a snack food. A strong volume growth was
witnessed in the early 90s when Cadbury repositioned chocolates from
children to adult consumption. The biggest opportunity is likely to stem
from increasing the consumer base. Leading players like Cadbury and Nestle
have been attempting to do this by value for money offerings, which are
affordable to the masses.
10
-
7/31/2019 Industry Overvie1
11/68
Cadbury
Process of Manufacturing Cadbury Chocolate:
Milk chocolate for eating was first made by Cadbury in 1897 by adding
milk powder John paste to the dark chocolate recipe of cocoa mass, cocoa
butter and sugar. By today's standards this chocolate was not particularly
good: it was coarse and dry and not sweet or milky enough for public tastes.
There was a great deal of competition from continental manufacturers, not
only the French, but also the Swiss, renowned for their milk chocolate.
Led by George Cadbury Junior, the Bourneville experts set out to meet the
challenge. A considerable amount of time and money was spent on research
and on new plant designed to produce the chocolate in larger quantities.
A recipe was formulated incorporating fresh milk, and production processes
were developed to produce a milk chocolate 'not merely as good as, but
better than' the imported milk chocolate'.
Four years of hard work were invested in the project and in 1905 what wasto be Cadbury's top selling brand was launched.
Three names were considered: Jersey, Highland Milk and Dairy Maid.
Dairy Maid became Dairy Milk, and Cadbury's Dairy Milk,with its unique
flavour and smooth creamy texture, was ready to challenge the Swiss
domination of the milk chocolate market.
By 1913 Dairy Milk had become the company's best selling line and in the
mid twenties Cadbury's Dairy Milk gained its status as the brand leader, a
position it has held ever since.
11
-
7/31/2019 Industry Overvie1
12/68
Cadbury India
Cadbury began its operations in 1948 by importing chocolates and then re-
packing them before distribution in the Indian market. After 59 years of
existence, it today has five company-owned manufacturing facilities at
Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi
(Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and
Chennai). The corporate office is in Mumbai.
Currently Cadbury India operates in three sectors viz. Chocolate
Confectionery, Milk Food Drinks and in the Candy category.In the
Chocolate Confectionery business,Cadbury has maintained its undisputed
leadership over the years. Some of the key brands are Cadbury Dairy Milk ,5
Star , Perk, clairs and Celebrations. Cadbury enjoys a value market share of
over 70% - the highest Cadbury brand share in the world! Their flagship
brand Cadbury Dairy Milk is considered the "gold standard" for chocolates
in India. The pure taste of CDM defines the chocolate taste for the Indian
consumer. In the Milk Food drinks segment their main product is Bournvita- the leading Malted Food Drink (MFD) in the country. Similarly in the
medicated candy category Halls is the undisputed leader.
The Cadbury India Brand Strategy has received consistent support through
simple but imaginative extensions to product categories and distribution. A
good example of this is the development of Bytes Crispy wafers filled with
coca cream in the form of a bagged snack, Bytes is positioned as "The newconcept of sweet snacking". It delivers the taste of chocolate in the form of a
light snack, and thus heralds the entry of Cadbury India into the growing
bagged Snack Market, which has been dominated until now by Salted
Bagged Snack Brands. Byte was first launched in South India in 2003.Since
12
-
7/31/2019 Industry Overvie1
13/68
1965 Cadbury has also pioneered the development of cocoa cultivation in
India.
For over two decades, it has worked with the Kerala Agriculture University
to undertake cocoa research and released clones, hybrids that improve the
cocoa yield.
Today, Cadbury is poised in its leap towards quantum growth and new
categories of business, namely gums, mints, snacking and gifting. It is a part
of the Cadbury Schweppes Group, world's No.1 Confectionery Company.
Cadbury World Wide
Cadbury is the world's largest confectionery company and have a strong
regional presence in beverages in the Americas and Australia.With origins
stretching back over 200 years, today their products - which include brands
such as Cadbury, Schweppes, Halls, Trident, Dr Pepper, Snapple, Trebor,
Dentyne, Bubblicious and Bassett - are enjoyed in almost every country
around the world. We employ around 60,000 people.
Their heritage starts back in 1783 when Jacob Schweppes perfected his
process for manufacturing carbonated mineral water in Geneva, Switzerland.
And in 1824 John Cadbury opened in Birmingham selling cocoa and
chocolate.
These two great household names merged in 1969 to form Cadbury
Schweppes plc. Since then they have expanded their business throughout the
world by a programme of organic and acquisition led growth.
Concentrating on their core brands in beverages and confectionery since the
1980s, they have strengthened their portfolio through almost fifty
acquisitions, including brand icons such as Mott's, Canada Dry, Halls,
13
-
7/31/2019 Industry Overvie1
14/68
Trident, Dentyne, Bubblicious, Trebor, Bassett, Dr Pepper, 7 Up and
Snapple.
- It employs 60,000 people in over 200 countries
- Worlds No 1 Confectionery company
- World's No 2 Gums company
- World's No 3 beverage company
Cadbury Chocolates
Dairy Milk
The story of Cadbury Dairy Milk started way back in 1905 at Bourneville,
U.K., but the journey with chocolate lovers in India began in 1948.
The variants Fruit & Nut, Crackle and Roast Almond, combine the classic
taste of Cadbury Dairy Milk with a variety of ingredients and are very
popular amongst teens & adults.Cadbury Dairy Milk has exciting products on offer - Cadbury Dairy Milk
Wowie, chocolate with Disney characters embossed in it, and Cadbury Dairy
Milk 2 in 1, a delightful combination of milk chocolate and white chocolate.
Giving consumers an exciting reason to keep coming back into the fun filled
world of Cadbury. Today, Cadbury Dairy Milk alone holds 30% value share
of the Indian chocolate market.
5 Star
The second largest after Cadbury Dairy Milk with a market share of 14%,
Cadbury 5 Star moves from strength to strength every year by increasing its
user base.
14
-
7/31/2019 Industry Overvie1
15/68
Launched in 1969 as a bar of chocolate that was hard outside with soft
caramel nougat inside, Cadbury 5 Star has re-invented itself over the years to
keep satisfying the consumers taste for a high quality & different chocolate
eating experience.
One of the key properties that Cadbury 5 Star was associated with was its
classic Gold colour. And through the passage of time, this was one property
that both, the brand and the consumer stuck to as a valuable association.
More recently, to give consumers another reason to come into the Cadbury 5
Star fold, Cadbury 5 Star Crunchy was launched. The same delicious
Cadbury 5 Star was now available with a dash of rice crispies.
Perk
Cadbury launched Perk in 1996. With its light chocolate and wafer
construct, Cadbury Perk targeted the casual snacking space that was
dominated primarily by chips & wafers. With the rise of more value-for-
money brands in the wafer chocolate segment, Cadbury
Perk unveiled two new offerings - Perk XL and XXL. In 2004, with an
added dose of 'Real Cadbury Dairy Milk' and an 'improved wafer', Perk
became even more irresistible
Celebrations
Cadbury Celebrations was aimed at replacing traditional gifting options like
Mithai and dry- fruits during festive seasons.Cadbury Celebrations is available in several assortments: An assortment of
chocolates like 5 Star, Perk, Gems, Dairy Milk and Nutties and rich dry
fruits enrobed in Cadbury dairy milk chocolate in 5 variants, Almond magic,
raisin magic, cashew magic, nut butterscotch and caramels.
15
-
7/31/2019 Industry Overvie1
16/68
-
7/31/2019 Industry Overvie1
17/68
SWOT analysis of Cadbury
Strength
1. Very strong brand equity in India.
2. Due to its 54 years presence in India has deep penetration
2100 distributors; 450,000 retailers, 60 mid urban (22%)
customers.
3. Three sectors; Chocs (70% share), Confec (4%), food drinks
(14% - leader in brown segment).
4. Low cost of production due to economic of scale. That means
higher profits and / or more competitioners. Better market
penetration.
5. Second best manufacturing location throughout Cadbury
Schweppes.
Weakness1. Poor technology in India compared to current international
technologies (Godiva, Mozart, Fazer, Dint, Naushans, etc...)
2. Ltd. Key products, only one central brand (CDM). Pralines range
totally wising in India.
3. Make in India tag once the economy opens up wore and imports
rush in.
17
-
7/31/2019 Industry Overvie1
18/68
Opportunities
1. Tremendous scope for per capita consumption (160 gms of 8 10
kg)
2. Increasing per capita national income resulting in higher
disposable income.
3. Growing middle class and growing urban population.
4. Increasing gifts cultures.
5. Substitute to Mithais with higher calories/cholesterol.
6. Increasing departmental stores concept impulse @ at cash
counters.
7. Globalisation: optimal use of global Cadbury Schweppes.
Threats
a) Major:-
None. Due to low cost and highest brand equity, it is today in India.
b) Minor:-
Globalization will being in better brands for upper end of the market
(Liest, Monarch, Godiva, etc).
18
-
7/31/2019 Industry Overvie1
19/68
Marketing Mix of Cadbury
Product
Satisfaction suffices. But delight dazzles the average company will competefor customer by conforming to her expectation consistently. But the winner
will surpass them by constantly exceeding her expectation, delivering to her
door step additional benefits which she would never have imagined possible.
Cadburys offer such product. The wide variety products offered by the
company include:
I. Chocolate & Confectionary
1) Dairy Milk
2) 5 Star
3) Temptation
4) Perk
5) Gems6) Eclairs
7) Celebrations
II. Beverages
1) Bournvita
2) Drinking chocolate
19
-
7/31/2019 Industry Overvie1
20/68
Pricing
Make no mistake. Second P of marketing is not another name for blindly
lowering prices and relying on this strategy alone to increase sales
dramatically. The strategy used by Cadburys is for matching the value that
customer pays to buy the product with the expectation they have about what
the production is worth to them.
Cadburys 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.
Dairy Milk Rs. 22
Perk Rs. 10
5 Star Rs. 10
Friut and Nut Rs. 28
Gems Rs. 10
Temptation Rs. 55
Bournvita (500 gm) Rs. 104
Drinking chocolate Rs. 50
20
-
7/31/2019 Industry Overvie1
21/68
Physical Distribution Place
BRAND ISNT THE ONLY ANY MORE. Marketers and finance manager
need a new term to evaluate their business:
Distribution Equity. It takes much more time and effort to build, but once
built, distribution equity is much together to erode.
The fundamental axiom of Indian consumer market is this:
You can set up a state-of the-art manufacturing facility, hire the hottest
strategies on the block, swamp prime television with best Ads, but the end of
it all, you would be know of selling your products. The cardinal task beforethe Indian market is managing is to shoe-horn its product on retail shelves.
Buyers are paying for distribution equity not brand equity and market shares.
Why does the company need distribution equity more anything in India?
With technology and competitive pressure slash in it is becoming increasing
difficult for marketers to retain a unique product differentiation for ling
period. In a product and price parity situation, the brand that sells more is theone that reaches the highest number of customers.
India 1 billion people, 155 million household has over 4 million retail
outlets in 5351 urban markets and 552725 villages, spread cross 3.28 million
sq. km. television has already primed and population for consumption, and
the marketer who can get to the to the consumer ahead of competition will
give a hard to overtake lead. But getting their means managing wildlydifferent terrains-climate, language, value system, life style, transport and
communication network.
21
-
7/31/2019 Industry Overvie1
22/68
And your brand equity isnt going to help when it comes to tackling these
issues. Own distribution network consist of clearing and forwarding (C&F)
agents & distribution stockiest. This network of distribution can either
contact wholesalers and which in turn retailers or the distributors can contactto the retailers directly.
Once the stock product reaches retailers, the prospective customers can have
access to the product.
Cadburys distributes the product in the manner stated above.
Cadburys distribution network has expanded from 1990 distributors last
year to 2100 distributors and 4,50,000 retailers. Beside use of TI tom
improves logistics, Cadbury is also attempting to improve the distribution
quality. To address the issue of product stability, it has installed visi colors at
several outlets. This helps in maintaining consumption in summer when
sales usually drops due to the fact that the heal effects product quality and
thereby off takes.
Looking at the low penetration of the chocolate, a distribution expansion
would itself being incremental volume. The other reason is arch rival Nestle
reaches more than a million retailers.
This increase in distribution is going to be accompanied by reduction in
channel costs. Cadburys marketing costs, at 18% of total costs, is much
higher than Nestls 12% or even pure sugar confectionery major Parrys
11%. The company is looking to reduce this parity level. At Cadbury, they
believe that selling confectionery is it like selling soft drinks.
22
-
7/31/2019 Industry Overvie1
23/68
Promotion
If an advertisement is to communicate effectively, the receiver must at least
half want it to, and be prepared too take step toward the sender. Effective
advertising is rarely hectoring or loudly explicit. It often both attracts and
generates arm feelings. More often than not, a successful campaign has a
stronger element of the unexpected a quality that good advertising shares
with much worthwhile literature.
To penetrate into the inner recesses of her memory, communication must
first ensure exposure, grab her attention evoke her comprehension, grab her
acceptance and then extract retention competing with thousands of other
units of communication trying to do the same.
Finding showed that the adults felt too conscious to be seen consuming a
product actually meant for children. The strategic response address the
emotional appeal of the band to the child within the adult. Naturally, that
produced just the value vacuum that Cadbury was looking to fill. Thereafter
it was the job of the advertising to communicate customer the wonderfulfeeling that he could experience by re-discoursing the careful, unself
conscious, pleasure seeking child within himself a graft these feeling
onto the Ad campaign like Khane Walon Ko Khane Ka Bahana Chahiye
for CMD and Thodi Si Pet Pooja Kabhi Bhi Kahin Bhi for Perk have
been sure shot winner with the audience.
Whirl with the new launched temptations with the slogan Too To Sharethe communication resolves around the reluctance of a person whos got
their hand on a bar of temptation to let anyone else to have a bite.
23
-
7/31/2019 Industry Overvie1
24/68
As well as outdoor and radio ads, ad agency contract has created
communication for cinemas and even ATM machines for the brand.
All ICICI s ATM a message flashes on the screen as soon as customer
insert his ATM card. It tells the customer that this would be good time to get
out of her temptation since he/she is bound to be alone. Something familiar
is planned for phone-book as well. In cinemas, Cadbury has a message on-
screen just before the lights are dimmed to give them a chance to get their
temptations. There will also be after dinner sampling in restaurants to
begin with, 30 catteries in Mumbai have been selected.
The next round of activity will include the wafer-chocolate Perk and the
Picnic bar, which has faced problems with its taste, because of the peanut it
contains. Milk treat has also been launched in a module bar form, just in
time of Diwali gifting market. clairs has got potential for much wide
distribution, in a small sweets that airlines, hostels, and up market retail
outlet offer to guest and customers.
Ad spend in 2000 was about 14% of sales and the management said thatplans to maintain as spend at this level in the current year also.
Ad since any discussion today would be incomplete without mention e
word, the management plans to tap this new channel of marketing. Beside
three company website (i.e. www.cadburyindia .com, wwww.bourvita.com,
www.cadburygift.com that the company has launched, it had also entered
into various marketing relationship with other portals, specially targeted
during festivals and events such as Valentines day , etc.
Its a combination of spiffing up its key brand, researching and improving
the newer products that havent taken off, supported with high ad spends
24
-
7/31/2019 Industry Overvie1
25/68
that Cadbury hopes will see it emerges stronger after the current slowdown,
as well as expand the market.
Positioning
In the 1970s consumers were ready to pay more for more, and luxury
goods flourished. In the 1980s, consumers began to demand more for
same, and the discounting era grew strong. Todays consumer demanding
more for less, and the winner will be that super value marketers. Some
of todays most successful companies recognize those customers are more
educated and able to recognize true customer value
Positioning is simply concentrating on an idea or even a word defines
that company in the mind of the consumer. It is more efficient to market one
successful concept to one large group of people than 50 product or service
ideas to 50 separate group repositioning is a must when customer attitude
have changed and product have strayed away from the consumers long
standing perception of them
Cadburys is an anchor in sea of confectionary products. As a variety of
competitive claims assails her senses, today customer uses complicated
decision making process to assess the alternative before making a purchase.
Since Cadburys is more clearly associated with a particular set of attributes
in terms of benefits and prices, the quicker becomes her search process.
Positioning of individual product:
1) CDM: is and always remain flagship brand. The punch by the
company for advertising this product life. Real taste of Life, itself
defines the positioning of the product. The chocolate is meant for all
25
-
7/31/2019 Industry Overvie1
26/68
age groups. It symbolizes fun, enjoyment, good items. It has goodness
of milk, taste and appetite appeal.
2) 5 star: although positioned internationally as an energy bar, 5 star was
positioned on an emotional platform in India during the late 1980s.
Symbolizing togetherness, 5 star was originally targeted at teenagers.
In June 1994, the company reworked the strategy for 5 star to make it
a source of energy. In fact, before the launch of Perk, 5 stars energy
bar positioning made it a snacking chocolate.
3) clairs: competing in the chewable toffees segment. clairs was re-
launched during the mid-nineties with a new name, Dairy Milk
clairs.
4) Gems: broadcasting Gems, though, didnt prove to be feasible
proposition for Cadbury. Targeted at children under 12 years with
Gems Bond advertising. Cadbury decided to too teenagers with the
Smart Very Smart campaign. But now, the company is retargeting
children with its animated commercial. Gems are the best brand tospeak to children. Colorful chocolate buttons appeal most to children
and that is why Cadbury is re-targeting children.
5) Crackle: it was the first Cadburys chocolate to have crunch in it. It
was targeted as a funky chocolate to add spark to life.26
6) Perk: in September, 1995, Cadbury preempted the launch of Nestls
Kit-Kat by rushing a new brand, Perk into the market. Positioned
much further on the functional scale than 5 star, Perk was meant to be
light snack-product for subduing the first pangs of hunger.
26
-
7/31/2019 Industry Overvie1
27/68
7) Bournvita: positioned as tasty health drink. While its competitors
concentrated only on health aspect, Bournvita combined the nutritious
value with taste.
Segmentation
Market place for any product is comprised of many different segments of
consumers, each with different needs and wants. Markets segmentation can
be defined in a number of ways such as:
Demographic variables (e.g. Consumers are groups, gender, material
states income etc)
The lifestyle of consumers (i.e. their interests and activities) the
benefits which consumers look for in a product or on the occasions
when the product might be consumed.
Cadbury takes into account all these factors when producing a range
of products. It targets different segments within the market, such as
the.
Break segment products which are normally consume as a snatched
break and often with tea and coffee, for example Cadburys Perk and
snack range.
Impulse segment these products are often purchase on impulse,
eating these and then. They include product such as Cadburys Dairy
Milk.
Take home segment this describes product that are normally
purchased in supermarkets, taken home consumed at a later stage.
27
-
7/31/2019 Industry Overvie1
28/68
Cadbury New Launch
Cadbury Bournville Fine Dark Chocolate now in India
Globally, dark chocolate is the fastest growing segment within theconfectionary category. It is loved by millions of consumers because of the
rich taste and intrinsic health and well-being benefits . The launch of
Cadbury Bournville Fine Dark Chocolatein India is timely, as it will cater to
the evolving consumer preferences and serve as a treat for consumers
looking for a moment of sheer indulgence.
Made from the finest ingredients, each individually presented CadburyBournville Fine Dark Chocolate is an irresistible in-the-mouth delight
specially created to savour the Indian palate. And with 44% cocoa from the
worlds finest Ghana beans and an ever so smooth texture, each little chunk
is dark and undeniably good.
A natural source of anti-oxidants,Cadbury Bournville Fine Dark Chocolate
just makes you feel good about giving in to your chocolate cravings. DarkChocolate acts as a mood-booster; by boosting serotonin and endorphin
levels that generate the feel-good factor. This more than a perfect bar of dark
chocolate turns the simple act of eating it into a form of art. It demands a
certain ritual, where, in a way, each of its steps offers a tribute to every stage
of your journey.
Speaking on the launch, Anand Kripalu, Managing Director Indian Sub-Continent, Cadbury Ltd. said This launch is our commitment to innovation
and to meet the ever-changing consumer needs in our market. The dark
chocolate category will grow strongly in the coming years because of its
28
-
7/31/2019 Industry Overvie1
29/68
sophisticated taste and health benefits, and Bournville is our special offering
to capture this opportunity.
The Cadbury Bournville Fine Dark Chocolate will appear on shelves in
modern retail outlets across major cities in the country. Cadbury Bournville
Fine Dark Chocolate will be available in four different variants Rich Cocoa
(80g), Almond, Hazelnut and Raisin & Nut (90g each) and will retail at Rs.
75.
Cadbury launches 'CADBURY LITE'
Cadbury India Limited, India's leading confectionery company today
announced the launch of a new offering ' Cadbury Lite ' to satiate the craving
for 'Something Meetha'. This special offering from Cadbury is sure to bring
joy to millions of people, who can now enjoy the authentic taste of milk
chocolate with `No added sugar'.
Cadbury Lite is the first 'No added sugar' product in the Cadbury India
portfolio and will mark the company's foray in catering to specific dietary
needs of consumers.Cadbury Lite contains a sugar substitute called Maltitol, which ensures the
product has a low glycemic index.
Commenting on the launch, Anand Kripalu, Managing Director Cadbury
India, said, "As India's most loved confectionery brand, Cadbury has
touched the heart of every Indian for over 59 years. We are now delighted to
offer this special addition that delivers the great Cadbury chocolate taste,while caring for the special dietary needs of people"
Cadbury Lite is currently being launched in Tamil Nadu and Andhra Pradesh
markets and will roll out to the other states in a phased manner. The 40g bar
is priced at Rs. 28.
29
-
7/31/2019 Industry Overvie1
30/68
Cadbury's Brand Management Strategies
"Typically, we always talk about chocolates being eaten when everyone is
happy. And this is something advertising has always mirrored. But we found
that chocolates are eaten under diverse conditions and moods - when people
are anxious, when they are sad, when happy - a whole range of emotions.
Now if you take a distillation of this thought, chocolate is a true soulmate.
Someone who is with you through the ups and downs of life, helping you
bounce back. And that's what Cadbury's Dairy Milk (CDM) is - a special
friend. This is the thought that we have captured through different human-
relationship plots. We are just showing the way CDM features in theconsumer's life."
In March 2002, India's number one chocolate company Cadbury India Ltd.
(CIL), launched a new advertisement campaign for its flagship chocolate
brand, Cadbury's Dairy Milk (CDM). The campaign featured a television
(TV) commercial that was significantly different from the company's earlier
commercials for the brand. It featured Cyrus Broacha1 interviewing collegestudents and asking why they liked to eat CDM. This was followed by
college students 'singing' their excuses for eating CDM. Just as the
commercial seems all set to end with the students and Cyrus singing the
famous CDM theme, 'Khane Walon Ko Khane Ka Bahaana Chaahiye' (those
who want to eat, will find excuses), a student comes up and questions Cyrus,
'Kyon Chaahiye?'
(Why does one need an excuse to eat CDM)? The advertisement aimed at
conveying the idea that no specific occasion is required for consuming
CDM. This was a significant departure from CIL's strategy of appealing to
30
http://www.icmrindia.org/CaseStudies/catalogue/Marketing/Reinventing%20Cadbury.htm#bot1]http://www.icmrindia.org/CaseStudies/catalogue/Marketing/Reinventing%20Cadbury.htm#bot1] -
7/31/2019 Industry Overvie1
31/68
adults in India, who sought a rational justification for indulging in chocolate
consumption.
A source at CIL's advertising agency, O&M, explained, "The format
(excuses campaign) was not giving the brand a chance to explore. And the
formatting was having a marginal negative impact, especially among the
youth, who still form some 70-80% of CDM's audience.
Today, CDM is competing with colas, snacks and burgers. And there is a
feeling that perhaps these products are speaking a lingo that is closer to the
youth, and that CDM might not be connecting with the youth as well. Hence
the change in format." Even as company watchers were analyzing this shift,CIL launched another campaign for CDM, which completely did away with
the 'Khaanewaalon Ko...' campaign.
The TV commercials that were a part of this campaign featured the tagline,
'Saath Rahe Har Pal' (accompany you every moment). Many people in
corporate circles wondered why CIL had abandoned its carefully built up
and highly successful four-year-old "excuses" campaign. Few analysts feltthat the company had been forced to reposition the CDM brand due to the
severe competition from posed by archival Nestle India.
Others were commented that CIL was only trying to infuse fresh life into
CDM and give it a contemporary image. However, this radical shift was
necessitated not by external circumstances but by series of changes that had
taken place within the company.Background Note
CIL and the Cadbury's brand are synonymous with chocolate in the minds of
Indian consumers. A part of the leading US-based global confectionery and
31
-
7/31/2019 Industry Overvie1
32/68
beverages major, the Cadbury Schweppes group, CIL has been the leader in
the Indian chocolate market for many decades.
The company began manufacturing operations in Mumbai in 1946. CIL was
initially incorporated as a wholly owned subsidiary of Cadbury Schweppes
in 1948 and was called Cadbury Fry (India) Ltd. The first product to be
launched in the country was the globally successful brand, CDM.
In the early 1960s, CIL shifted its manufacturing base to a plant in Thane,
Maharashtra. The plant, which expanded substantially over the years,
manufactured a range of CIL products.
The company's R&D and engineering development divisions were also
located in Thane. In the 1960s, CIL launched a range of products such as
Crackle, 5 Star, Gems, Tiffins, Nutties, Butterscotch and Caramels.
Most of these products became instant successes and led to rapid growth in
chocolate consumption in India. Following this, the company launched
Cadbury's Eclairs in 1972, priced at 25 paise.
Eclairs, Cadbury chocolate, was a runaway success, despite being pricedhigher than the available sugar confectioneries in the market at that time. In
1978, Cadbury Schweppes had to dilute 60% of its equity in Cadbury Fry to
comply with FERA guidelines.4 Cadbury Schweppes's stake in CIL was
further diluted to 40% in 1999...
Reinventing The Brands Ceaselessly
CIL launched a number of new products in 1998, such as Picnic (a chocolate
bar with wafer, peanuts, raisins and caramel), Byte (a strawberry flavoured
candy), English Toffee (a chewy toffee) and Cadbury Gold (a CDM with a
soft center). While Picnic was promoted as a 'solid, filling and ingredient-
32
http://www.icmrindia.org/CaseStudies/catalogue/Marketing/Reinventing%20Cadbury%20-%20Marketing.htm#bot4]http://www.icmrindia.org/CaseStudies/catalogue/Marketing/Reinventing%20Cadbury%20-%20Marketing.htm#bot4] -
7/31/2019 Industry Overvie1
33/68
packed' chocolate, Cadbury Gold was promoted through an 'emotional'
appeal.
The advertisement featured a woman by a poolside eating a bar of Cadbury
Gold and fantasizing about being in the men's changing room, with the men
running desperately to cover themselves. The commercial ended with the
woman smiled in a self-chiding but mischievous manner.
This advertisement aimed at changing the existing brand image in the
consumer's mind (of family values and wholesomeness), by emphasizing
self-indulgence and mood-upliftment. Cadbury Gold thus tried to add a new
dimension to traditional CIL brand values of family values andwholesomeness.
Much to the company's dismay, these new products failed to click with the
consumers, largely because of their taste. During that same period (the late
1990s) Nestle's range of snack-substituting chocolates such as Charge, Nuts,
KitKat orange and Crunch, ate into the share of most of CIL's new launches
(Picnic and Cadbury Gold were eventually discontinued)...A Change in Focus
Puri changed CIL's vision statement from 'A Cadbury in every pocket' to
'Life full of Cadbury and Cadbury full of life.' As a result, the company
shifted its focus from launching new brands to rejuvenating and
strengthening the existing brands (CDM, 5-Star, Perk, Gems and Eclairs). In
addition, CIL planned to extend its reach to semi-urban and rural markets.Puri said, "Small towns present tremendous opportunities." CIL also decided
to sell its products through 'non-traditional' outlets like music stores (such as
MusicWorld), malls, renowned bookstores and popular apparel outlets (such
as Pantaloons and Wills Sport boutiques)...
33
-
7/31/2019 Industry Overvie1
34/68
Nestle
Nestle India
Nestle India is a subsidiary of Nestle S.A. of Switzerland. The companyinsists on honesty, integrity and fairness in all aspects of its business and
expects the same in its relationships.
Nestle India- Presence across India
Beginning with its first investment in Moga in 1961, Nestls regular and
substantial investments established that it was here to stay. In 1967, Nestl
set up its next factory at Choladi (Tamil Nadu) as a pilot plant to process the
tea grown in the area into soluble tea.
The Nanjangud factory (Karnataka), became operational in 1989, the
Samalkha factory (Haryana), in 1993 and in 1995 and 1997, Nestl
commissioned two factories in Goa at Ponda and Bicholim respectively.
Nestl India is now putting up the 7th factory at Pant Nagar in Uttaranchal.
Nestles Story
Nestl was founded in 1867 on the shores of Lake Geneva in Vevey,
Switzerland and its first product was Farine Lacte Nestl, an infant cereal
specially formulated by Henri Nestl to provide and improve infant
nutrition. From its first historic merger with the Anglo-Swiss Condensed
Milk Company in 1905, Nestl has grown to become the worlds largest and
most diversified food Company, and is about twice the size of its nearest
competitor in the food and beverage sector.
Nestls trademark of birds in a nest, derived from Henri Nestls personal
coat of arms, evokes the values upon which he founded his Company.
34
-
7/31/2019 Industry Overvie1
35/68
Namely, the values of security, maternity and affection, nature and
nourishment, family and tradition. Today, it is not only the central element
of Nestls corporate identity but serves to define the Companys products,
responsibilities, business practices, ethics and goals.
In 2004, Nestl had around 247,000 employees worldwide, operated 500
factories in approx. 100 countries and offered over 8,000 products to
millions of consumers universally. The Companys transparent business
practices, pioneering environment policy and respect for the fundamental
values of different cultures have earned it an enviable place in the countries
it operates in. Nestls activities contribute to and nurture the sustainableeconomic development of people, communities and nations. Above all,
Nestl is dedicated to bringing the joy of Good Food, Good Life to people
throughout their lives, throughout the world.
Nestle Chocolates
Nestle Kit Kat
Are crisp wafer fingers covered with choco layer. Nestle Kit Kat has a
unique finger format with a breaking' ritual attached to it.
Nestle Kit Kat is one of the most successful brands in the world and every
year over 12 billion Nestle Kit Kat fingers are consumed around the globe.
Nestle Munch
Nestle Munch is wafer layer covered with delicious choco layer. NestleMunch is so crisp, light and irresistible that you just can't stop Munching.'
Nestle Munch is the largest selling SKU in the category!
35
-
7/31/2019 Industry Overvie1
36/68
Nestle MilkyBar
Nestle MilkyBar is a delicious milky treat, which kids love. Relaunched in
January 2006 with a Calcium Rich recipe, Nestle MilkyBar is a favorite with
parents to treat their kids with.
Nestle Bar-One
Is a luscious nougat and caramel with delicious choco layer. Nestle Bar-One
constantly reminds you that it is Time for Action'.
Nestle Milk Chocolate
Nestle Milk Chocolate is a milk chocolate with a delicious taste. Kids justlove it!
36
-
7/31/2019 Industry Overvie1
37/68
SWOT Analysis of Nestle
Strengths
1) Parent support - Nestle India has a strong support from its parent
company, which is the worlds largest processed food and beverage
company, with a presence in almost every country. The company has
access to the parents hugely successful global folio of products and
brands.
2) Brand strength - In India, Nestle has some very strong brands like
Nescafe, Maggi and Cerelac. These brands are almost generic to their
product categories.
3) Product innovation - The Company has been continuously introducing
new products for its Indian patrons on a frequent basis, thus
expanding its product offerings.
4) Operated factories in 77 countries (all six continents), a truly global
company.5) Considered the innovation leader in the global food and nutrition
sector(3500 scientist in company R&D network)
6) Low cost operators (beat the competition by producing low cost
products, edging ahead with low operating costs)
Weaknesses
1) Exports The companys exports stood at Rs 2,571 m at the end of
2003 (11% of revenues) and continue to grow at a decent pace. But a
major portion of this comprises of Coffee (around 67% of the exports
were that of Nescafe instant to Russia). This constitutes a big chunk of
37
-
7/31/2019 Industry Overvie1
38/68
the total exports to a single location. Historically, Russia has been a
very volatile market for Nestle, and its overall performance takes a hit
often due to this factor.
2) Supply chain -The Company has a complex supply chain management
and the main issue for Nestle India is traceability. The food industry
requires high standards of hygiene, quality of edible inputs and
personnel. The fragmented nature of the Indian market place
complicates things more.
3) Some of their product were positioned as too scientific, and
consumers didnt quite understand (i.e. LC-1 was a food and not a
drug)
Opportunities
1) Expansion - The Company has the potential to expand to smaller
towns and other geographies. Existing markets are not fully tapped
and the company can increase presence by penetrating further. With
India's demographic profile changing in favor of the consuming class,
the per capita consumption of most FMCG products is likely to grow.
Nestle will have the inherent advantage of this trend.
2) Product offerings - The Company has the option to expand its product
folio by introducing more brands which its parents are famed for like
breakfast cereals, Smarties Chocolates, Carnation, etc.
3) Global hub - Since manufacturing of some products is cheaper in
India than in other South East Asian countries, Nestle India could
become an export hub for the parent in certain product categories.
38
-
7/31/2019 Industry Overvie1
39/68
4) Health-based products are becoming more popular in the world,
including in the United States
5) Unaffected by current economic conditions (its share of the UK
confectionery market rise to 15.6 per cent with a 0.5 per cent growth
this year)
Threats
1) Competition - The Company faces immense competition from the
organized as well as the unorganized sectors. Off late, to liberalize its
trade and investment policies to enable the country to better function
in the globalised economy, the Indian Government has reduced the
import duty of food segments thus intensifying the battle.
2) Changing consumer trends - Trend of increased consumer spends on
consumer durables resulting in lower spending on FMCG products. In
the past 2-3 years, the performance of the FMCG sector has been
lackluster, despite the economy growing at a decent pace. Although,
off late the situation has been improving, the dependence on monsoon
is very high.
3) Sectoral woes - Rising prices of raw materials and fuels, and inturn,
increasing packaging and manufacturing costs. But the companies
may not be able to pass on the full burden of these onto the customers.
4) Some markets they are entering are already mature.
39
-
7/31/2019 Industry Overvie1
40/68
Marketing Mix Of Nestle
Product
Nestl is a famous group of companies. It is well known for its rendered
services in food sector.
Good nutrition is essential from the very beginning. That's why Nestl
strives to provide the best for everyone. Nestl has recognized the special
nutritional requirements which start from infants and covers the range to all
age groups.
They add specific nutrients to milk and encourage children to consumenutritious products with different flavors, colors and shapes. For small
children, and families Nestl offers smaller sizes and portion able packs.
Teens like lots of affordable enjoyment, with big portions and a succession
of tastes and textures, particularly when they are buying the products
themselves. They also favor ready-to-drink beverages, and here they can
offer them a choice of refreshing teas or milk-based drinksGood tasting lighter meals and healthier milks formulated specifically for
adults are examples of how Nestl caters to these needs. Nestl Clinical
Nutrition has a range of good tasting products to help them do it. Nestl milk
and dairy products are recognized throughout the world.
Pricing
Nestl has its own set of techniques for setting the prices of the product. It
does not primarily focus on the competitors pricing strategies. It emphasizes
on the market demand of the product. Nowadays market is going through
tough recession, so they set their prices keeping in view the purchasing
power of the customers.Moreover the prices of the products are also
40
-
7/31/2019 Industry Overvie1
41/68
subjected to the type of consumer product. If the product is a daily use then
it can have a minimum price to attract the customer towards your product.
Thus the company cannot influence much on the prices.
Price Structure
General: The prices of Nestls products are within the customers buying
power. Nestl also give discounts to their regular customers. Nestl has set
prices in such a way that it offers the most quality products with acceptable
prices. Its prices are very much comparable with its competitors. It also
considers the fact that Indian market is not as much economically viable as
the other foreign markets. So it keeps in mind all the below line factors
while setting the prices of the products.
Place
Selection of place is also a very pivotal step in the success of the
organization. The place must be right where the customer wants to be, it
must be easy assessable and approachable to the customer. Nestl makes it
sure that its product is available at every corner of the country regardless of
rural or urban areas. Nestls main focus is to make the product within the
access of every consumer so that the consumer should have no difficulty in
getting the product. It also helps Nestl to compete with the competitors
more effectively as by this it can make the product available to maximums
number of target customers. Nestle is catering the market of Gujrat in very
effective manner by providing its products in each and every corner whichstarts from the city and covers the rural areas specially its product.
41
-
7/31/2019 Industry Overvie1
42/68
Middlemen and distribution channels
In Nestl the distributions role within its marketing mix is to take the
product to its target market.Today executives have come to realize their
customers' satisfaction - or dissatisfaction - was linked to the performance of
their supply chain. Bernard Teiling, assistant vice president of business
process integration for Nestl S.A., which is based in Vevey, Switzerland,
says supply chain management (SCM) is "both a source of competitive
advantage and a lever for profit margin." Even though the complexity and
the cost of SCM have continually increased over the last two decades,
companies must be proficient in this process. "If you are not good at SCM,someone else will be," says Teiling.Nestl defines SCM as the two-way
management of the flow of goods, services and information from suppliers
to manufacturers, wholesalers, distributors, stores -- to the end user. SCM is
especially critical for the food industry because of the ease of
spoilage.Teiling feels a consumer products company remains profitable only
if it has the right product at the right price in the right place at the right time.
However, getting these stars to line up only happens when "the entire supply
chain works as one."
Seen that way, SCM becomes a branding issue. When Nestl places its logo
on a product, the logo represents "a seal of quality." Protecting that quality
makes Nestl responsible for its entire supply chain. Teiling says consumers
don't care if a supplier or distributor had a problem. "If something goes
wrong in the supply chain, it ruins things for the consumer," says the Nestl
executive.Even though Nestl feels responsible for every link in the supply
chain, it outsources many of those activities. "No one company can claim to
do everything from A to Z in the food industry. Today that's impossible,"
42
-
7/31/2019 Industry Overvie1
43/68
says Teiling. For example, Nestl does no farming. And the world's largest
food company sells almost nothing directly to consumers.With the arrival of
the Internet, companies today want to manage their supply chains through
"an efficient interface with an eMarketplace." Many different exchanges aredeveloping. Teiling describes them "as a tremendous opportunity for Nestl
to work effectively to create new levels of performance."
Nestl is using all the three levels of channel to ensure that its product
should readily available to all its users throughout the country. Like it is
using a zero level channel for distributing its product to its customers. It uses
mostly the 3-level channel. For example in case of milk products, it uses 3-level channel to penetrate into the as there is enough competition. On other
hand, in case of mineral water such as Ava is uses zero level channel as it
supplies the jumbo bottles of Ava directly to hotels.
Promotion
Nestl sets its promotional budget on annually basis. Nestl is well aware of
the importance of the effectiveness of the promotional program. It designsits promotional program using all the available promotional tools.
Advertisements
Advertisement plays very important role in promoting the image and name
of the company. Because you can give your massage and persuade the
person (person may be Customer, client etc) to buy your product, therefore
effective advertisement plays important role in the success of product.They
give full-page coverage in newspaper and also made advertisement in the
television. Also providing advertisements on online facility through creating
Web Page of their Nestl, giving all required information about the products.
43
-
7/31/2019 Industry Overvie1
44/68
They also advertise in weekly newspapers and magazinesThe budgets for
various consumer products vary depending on the sale and demand of the
product. Like on milk Nestl has 75% of sales out of the total sales. So
similarly it spends more on promotional activities of milk.
Promotional themes
Nowadays a lot of companies are using certain promotional themes to
promote their product better than their competitors. For example, in case of
milk is uses the theme of Khalis creating a view that its milk is closest to
pureness. Similarly is uses the promotional theme for Nestl Pure life for
mineral waterIt also uses other below line activities to promote its product
like by using the following techniques:
Prizes
Door to selling
Free sampling
Positioning
Nestle will position their product as a high quality product consumer
focused. Messages like They knows your taste better than us, Nestle
chocolates now at your door step; Add additional flavors to your life
will help us portray our picture clearly and distinctly. Nestle will position
their product against the competitors and gain competitive advantage
through our efficient promotional methods, using innovations, and by
reaching closer to our target market through the arrangement of events like
BASANT, VALENTINE DAY and etc. In short consumers will view us as a
44
-
7/31/2019 Industry Overvie1
45/68
product providing highly quality, in terms of taste, customer focused and, at
the same time reasonably priced as compared to others.
Market segmentation
It is really a big market and it is always difficult to segment the big market.
There are many uses for segmentation. Nestls strategies about their
marketing are in the form of marketing segmentation. They have
implemented their strategies by doing segmentation. Secondly they have
made their distribution plans, network and methods very strong. Marketing
channels and strategies about pricing and positioning are also in main focus.
Needs Based Segmentation
Milk Pack has made different sizes of tetra packs which can match the needs
of buyers, ranging from 0.25 liters to 1.5 liter. Buyers can buy according to
there need between these quantities.
Product Segmentation
Manufacturers diversify products within each needs base to appeal to buyerswith different tastes and wealth.
Customer Segmentation
Customers are segmented based on their needs and product preferences.
Segments grow or shrink over time as a product improve, become outdated
or tastes changes.
Global Segmentation
Insurance firms and medical and legal practices also use product
segmentation, and sometimes attempt to cover all the product space.
45
-
7/31/2019 Industry Overvie1
46/68
In-store Display Segmentation
Nestle have also segmented Milk Pack on the bases of In- Store display
segmentation. In this type of segmentation the company have given different
shelves in bib stores and also given the chillers to some of the agent having
the Milk Pack sticker upon them but in Pakistan unfortunately the shop
keepers are not using the shelves properly and they have put other brand
products on those shelves. Drug stores, grocery stores, book stores, and other
retail outlets use segmentation in order to keep like products close to each
other within the store, making shopping convenient and cross selling more
profitable.
Nestle New Launch
Nestle Kit Kat Chunky
Kit Kat Chunky, a favorite around the world, is now in India. It comes in
two delicious variants - Kit Kat Chunky Choko and Kit Kat Chunky
Hazelnut made from cocoa beans from Africa and real hazelnut paste from
Turkey.
Its easy to open tear away packaging has been launched for the first time
in the Indian market. Each bar has three portions for you to enjoy one
delicious chunk at a time.
Have a Break, Have a Kit Kat Chunky
Nestle's Munch Pop Choc
New Nestl Munch Pop Choc consists of little wafer cubes covered in
delicious chocolate. The perfect combination of crunchy wafer and a
delicious chocolate coating in bite sized cubes makes it a delightful treat and
is targeted at the chocolate nibbling space. Munch Pop Choc offers great
46
-
7/31/2019 Industry Overvie1
47/68
value-for-money. Priced at an affordable Rs 10, it is available in major
towns cities including Delhi, Mumbai, Kolkata, Bangalore, Chennai and
Hyderabad.
Nestle Milkybar Choo
Milkybar Choo- the tasty chewy MILKYBAR - now has power of
Calcium! Outdoor champions, grab one now. Also available in yummy
Strawberry and Choko flavours!!
mm, mm, mmmmmmmmm...................
Nestle's Brand Management Strategies
"Nestle is a brand in its own right. For consumers, relevance of Nestle as a
company comes first of all through contact with products that are branded
Nestle. If we want to be perceived as the world's leading food company, we
have to offer consumers an increasing amount of products that they can
identify as Nestle's."
In mid-1988, Nestle SA (Nestle), the world's largest consumer packagedfoods company based in Switzerland, acquired Rowntree Mackintosh PLC
(Rowntree), in the largest ever acquisition deal of a British company during
that time.
Rowntree was the world's fourth largest manufacturer of chocolates and
confectionery products, with well-known brands like Kit Kat, After Eight,
Smarties and Rolo.
The deal attracted considerable attention all over the world since several bids
to acquire Rowntree were rejected. Rowntree claimed that the bids were too
low for its valuable, well-recognized brands.
47
-
7/31/2019 Industry Overvie1
48/68
In the end, Rowntree was acquired by Nestle for 2.5 billion, two and a half
times the pre-bid price and eight times the net asset value of the company.
This acquisition made Nestle the largest chocolate manufacturer in the
world.
Analysts felt that Nestle had paid 2.5 billion because of Rowntree's brands,
not its past financial performance. Industry observers wondered how Nestle
would manage Rowntree's brands.
Rowntree followed a "one product, one brand" policy. The brands were
simply Kit Kat, After Eight, Smarties and Rolo, Rowntree was never
mentioned.Moreover, Rowntree's brands were not strongly managed European brands.
In fact, according to an analyst, Kit Kat was one of the worst cases of an
over-localized brand of a company across Europe.
Background Note
In the mid-1860s, Henri Nestle (Henri), a merchant, chemist, and innovator
experimented with various combinations of cow's milk, wheat flour andsugar. The resulting product was meant to be a source of infant nutrition for
mothers who were unable to breast-feed their children.
In 1867, his formula saved the life of a prematurely born infant. Later that
year, production of the formula, named Farine Lactee Nestle, began in
Vevey, and the Nestle Company was formed. Henri wanted to develop his
own brands and decided to avoid the easier route of becoming a privatelabel. He also wanted to make his company a global company.
Within a few months of establishing his company, Henri began to sell his
products in many European countries. In the initial years, Henri restructured
the organization to facilitate research, improve product quality, and develop
48
-
7/31/2019 Industry Overvie1
49/68
new products. In 1875, Daniel Peter, Henri's friend and neighbor, developed
milk chocolate.
He soon became the world's leading chocolate maker. Later, his company
was acquired by Nestle. In 1905, Nestle merged with Anglo-Swiss
Condensed Milk Company, a manufacturer of milk-based infant food.
During World War I, there was a huge demand for dairy products and Nestle
capitalized on this opportunity by executing military contracts of various
countries involved in the war.
In 1938, after eight years of research, Nestle discovered a soluble powderthat revolutionized coffee drinking around the world. The product was
launched under the brand name Nescafe and became an instant success.
The end of the World War II marked the beginning of a new phase of growth
for Nestle. The company added many new products. In its effort to expand
its operations further, Nestle merged or acquired several companies. In 1947,
Nestle expanded into culinary products by merging with Alimentana, aSwiss company that produced and sold Maggi soups, spices and other food
products in many countries...
Nestle's Branding Strategy
The Nestle brand itself had played a key role in the company's globalization
efforts. In 1996, about 40% of the total revenues were generated from
products covered by the Nestle corporate brand. Nestle's logo was animportant part of the company's corporate identity. The 'nest' was a graphic
translation of Henri Nestle's name, which meant "little nest."...
49
-
7/31/2019 Industry Overvie1
50/68
Internationalizing the "Kit Kat" Brand
When Nestle acquired Rowntree's brands in 1988, the major challenge
before the company was managing them. Rowntree had a "one product, one
brand" policy. The brands Kit Kat, After Eights, Smarties and Rolo were
marketed with no mention of Rowntree. Rowntree's brands were not
strongly managed European brands. Before the 1980s, 'country managers'
outside the UK in several European countries managed Rowntree's business.
They were free to run their units provided business objectives were met. The
orientation at Rowntree was short-term just to meet annual business
objectives and country managers added nothing to the overall organization.
Even though Kit Kat was a leading brand in UK, it was ignored outside the
country. In the early 1980s, Rowntree established Rowntree Continental
Europe, which handled business responsibilities outside the UK in Europe.
However, this did not benefit Kit Kat, which was launched in Europe by
Rowntree Continental Europe as a multi-local brand...
Divesting Non-Strategic Brands
The success of the Kit Kat brand inspired Nestle to think and act 'glocally'
i.e. establishing global as well as local brand identity. Nestle had taken a
similar approach to several other acquired sub-brands.
Moreover, Nestle introduced the Kit Kat brand in several other countries
across the globe. Nestle's brand management strategy included the
divestment of non-strategic brands. In February 1999, Nestle negotiated thesale of its Findus brand of frozen food to EQT Scandinavia BV..
50
-
7/31/2019 Industry Overvie1
51/68
Growing Market.. Falling Margin
Incorporated in 1959 as Food Specialities Ltd., Nestle India Ltd. (NIL) is
promoted by Nestle Alimentana-Switzerland, which presently owns 51%
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.
Increasing market dominance: NIL's portfolio comprising over 65 products,
marketed through a representative-network in 3000 towns and 570000outlets, is manufactured at five state-of-the-art manufacturing plants in
India.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.
51
-
7/31/2019 Industry Overvie1
52/68
Direct Competition
At present there are two major players Nestle and Cadbury in the Indian
Chocolate market. Campco initially tried to break into market but failed.
Brief profile of the same has been entailed below:
Cadburys India Ltd.
Cadburys 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. Cadburys has its
manufacturing units at Thane (Mumbai), Malanpur, Indori (near Pune),
Mithuri and Kolapur. It has a strong distribution network with about 500
distributors in North India and more than 3 lac retail outlets being serviced
all over India.In 1997, Cadbury planned to pump in Rs.80-crore to up
production capacity at a couple of Cadburys factories. This cash is exactly
double of whats been invested in 1996.The Company launched Perk, a
wafer enrobed chocolate in 1995. This was reactionary to the launch of KitKat and has been able to counter competition.
Cadburys Dairy Milk (CDM) - The Flagship brand
CDM, the oldest of Cadburys 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 Cadburys Dairy Milks market
share stood at 25 percent with sales rising by an average 40 percent per
annum. Besides CDM Cadburys has a number of endorser brands such as
FruitnNut, Nut Milk etc. Even though contribution of these brands to the
52
-
7/31/2019 Industry Overvie1
53/68
companys bottom-line is very small, they are required in order to make a
complete portfolio of offering.The Company developed a concentration
strategy on CDM, Five Star, Cadbury Gems, Cadburys Eclairs, Perk and
the latest of its offering Picnic (which has drawn a good response in themarket).The Company has also identified sugar confectionery, as a growth
sector. Its first offering Googly.
Nestle India Ltd.
Nestle India Ltd. has been in India for more than 35 years now. The worlds
largest marketer of chocolates (became world number one when it acquired
Rowntree Macintosh of the UK) - Nestle, made its foray in the Indian
chocolate Industry in November 1990. It launched three products - the milk
chocolate, the bitter chocolate and Crackle (a crunchy chocolate) - in the
slabs category and Bar One in count lines. Cadburys was quick to react, and
launched a whole host of products in succession: All Silk milk chocolate,
Creamy Bar, and a new version of 5 Star.Nestle, in the beginning did not
have its own manufacturing facility. It had an alliance with Campco tomanufacture 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.
53
-
7/31/2019 Industry Overvie1
54/68
Data Collection
a) Sampling Design
It is true that it is very difficult to do research with whole universe. As we
know that it is not feasible to go with population survey because of the
numerous Doctors and their scattered location. So for this purpose sample
size has to be determined well in advanced and selection of the sample also
has to be scientific so that it represents the whole universe.
So far as this research is concerned, the sample size is 100.
b) Instrument
Taking into consideration research instrument selected by us is questionnaire
because it gives more flexibility in terms of data and it has been asked to the
responder personally and has an idea of getting an important unknown data
that can be collected through their behavior.
c) Mode Of Data Collection
Data collection mode is personal visit and filling up of the questionnaire.
54
-
7/31/2019 Industry Overvie1
55/68
Data Analysis
Que1. Do you eat chocolate?
Analysis & interpretation:
Chocolate is a product which is like by the all age group of people.
According to the survey 74% of people says yes they eat chocolate and 26%
say no they are not eatingchocolate. May be the reason behind that is they
are not eating chocolate on daily or weakly basis or may be they are eating
any other brand of chocolate.
55
No
26%
Yes
74%
-
7/31/2019 Industry Overvie1
56/68
Que2. Which brand of chocolate do you prefer?
PREFERENCE OF DATA
Cadbury
64%
Nestle
36%Cadbury
Nestle
Analysis & Interpretation:
There are many brands available in the market. But the market leaders in
India are basically two brands like Cadbury & Nestle. According to survey
64% of the market is captured by the Cadbury and only 36% of the market is
covered by the Nestle. To capture the market the company should do more
advertising and sales distribution. And also should maintain quality of the
product compare to the competitors.
56
-
7/31/2019 Industry Overvie1
57/68
Que3. Which sub-brand you have purchased?
NESTLE
3%3%
5%
33%
56%
KITKAT
MUNCH
MILKY BAR
BAR ONE
MILK CHOCOLATE
CADBURY
14%
5%2%
62%17%
DAIRY MILK
5 STAR
PERK
CELEBRATIONS
TEMPTATIONS
Analysis & Interpretation:
In this survey nestle is having five sub-brands like kitkat, Munch, Milkybar,
Barone,milk chocolates and their consumption are like kitkat 33% ,munch
56 ,milky bar 3% ,bare one 5% ,and milk chocolate 3%. And if we talk aboutCadbury the sub-brand of the Cadbury is dairymilk, 5 star, perk, celebration
and Temptation and their consumption are like dairy milk 62%, 5 star 17%,
perk 14%, celebration 2% and Temptation 5%. According to the survey the
highest selling product is Cadbury.
57
-
7/31/2019 Industry Overvie1
58/68
Que4. Rank the sub-brands of chocolates according to your preference?
(1 for most preferred)
NESTLE
RANKING SUB BRAND
3%
3%
50%
11%
33%
KIT KAT
MUNCH
MILKY BAR
BAR ONE
MILKY CHOCOLATE
CADBURY
RANKING SUB BRAND
33%
3%
11%
6%
47%
DAIRY MILK
5 STAR
PERK
CELEBRATIONS
TEMPTATIONS
Analysis & Interpretation
In this survey I found that the most selling product is Munch the sub-brand
of Nestle the Munch has capture the 50% of the market as compared to the
Cadbury product the highest selling product of Cadbury is Dairy milk which
58
-
7/31/2019 Industry Overvie1
59/68
captured the market stake of 47% which is as compared to Much 20%less
which is a good sigh for Nestle and the less consumption of the Nestle
product is Milk bar & Milk Chocolate the market share is only 3% and in
Cadbury less selling product are Celebration and Temptation the reasonbehind this is they are too Costly to consume. And it can only use
occasionally.
Que5. How much importance do you give to the following factors when
you purchase a chocolate? (Tick in the desired column)
IMPORTANCE
0
20
40
60
80
100
120
Very
Important
Important Normal Least
Important
Taste/ Flavour
Price
Packaging
Quantity
Analysis & Interpretation:
Whenever we are consuming any food product our main focus in on the
quality and price in India there is more concentrating on the quality of
59
Taste/ Flavour Price Packaging Quantity
Very Important 88 1 12 81
Important 9 3 6 12
Normal 2 96 4 6
Least Important 1 0 78 1
-
7/31/2019 Industry Overvie1
60/68
product rather than other parameters of the product in this survey I found
that the basic concentration of the consumer is on taste 88% says that they
purchase if they like the taste of the product. 96% says if normal price would
be there a taste is good than price dose not matter.78% of the consumer saysthat if they are getting best quality product at nominal price than the
Packaging is least important.78% says that they are mainly seeing the
quality of the product if the product is qualitative than they are ready to pay
any price for that product.
Que6. Which form of a chocolate do you like?
FORM OF CHOCOLATES
6%
18%
29%
47%
HARD
CRUNCHY
NUTTIES
CHEW
Analysis & interpretation:
Every person have there own taste and preferences towards the eatable
product in chocolates there are four varieties available in the ma