nips college of it and management - copy

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NIPS COLLEGE OF IT AND MANAGEMENT

ALLAHABAD

A MARKETING PROJECT REPORT ON

NESTLE VS CADBURY

Submitted to Submitted by

Mr. JITENDRA KESWANI ANIL MOHIT

BBA 6TH

Sem

Roll No.9206490005


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DECLARATION

I ANIL MOHIT a student of NIPS COLLEGE OF IT &

MANAGEMENT ALLAHABAD BBA-6THsemester, herebydeclares that the final year research report entitled A

MARKETING PROJECT REPORT ON NESTLE VS CADBURY

is my original work and the same has not been submitted

for the award of any other diploma or degree.

(ANIL MOHIT)

BBA 6TH SEMESTER

Roll No 9206490005


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ACKNOWLEDGEMENT

I take this opportunity project to place on record my grateful thanks

and sincere gratitude to all those who gave valuable advice and inputs

for my study. My study could not have been completed if I had not

been able to get the reference materials from the company.

I am immensely grateful to my esteemed guide Mr. JITENDRA

KESWANI whose continued and invaluable guidance can never be

forgotten by me but without whom this study could not have got

present shape.

The success of this report is because of the cooperation of all. I take no

credit for this achievement but take responsibility for any mistakes and

inaccuracies & finally as well I want thanks to GOD, for being so kind to

me and blessing me with you all.

(ANIL MOHIT)

BBA 6TH

SEMESTER

Roll No 9206490005


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TABLES OF CONTENT


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NESTLE VS CADBURY


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THE INDUSTRY SCENARIOWith the entry of multinationals and home companies sprucing up theiract , the confect ionery market is booming. McKinsey & Co. hasestimated the confectionery industry to touch a whopping Rs. 6500 crore bythe year 2008.

Till the eighties, the chocolate market was small and the productcategory itself was fuzzy . In the e ight ies , Cadbury s - the v i r tua lmonopolist - had decided to focus its efforts on making chocolates adist inct category with an identity of its own. And the marketer hadsharply 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, Cadburys still ruled the roost with over 80 percentmarket share. And though several brands - like Amul and Camp co - triedto break into the market, none of them had succeeded in shaking theleaders grip. In fact, Cadburys had become a brand virtually generic tochocolates. Then chocolates were used to reward and reinforce positivebehavior and hence were categorized as a luxury reserved for special occasions.This was, a stark contrast to the west where chocolates were snacked on, eatenas mini meals or just to suppress pangs of hunger.

But constant working by players like Cadburys (re-launch of Cadburys DairyMi lk target ing adul ts and as a casua l any- t ime buy) and Nest letowards exploding the myth that chocolates are meant for children only, hasresulted inthe segment booming.

Trends in the Industry

With soc io-economic changes rapid ly tak ing p lace , the youngand not so young population will lead a new life style and chocolateeating is definitely going to be widespread and acceptable.


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In the industry, both population and family incomes as well as urbanization areon the increase.

There has been a s igni f i cant growth in the middle c lass , wi th

5 .8 mi l l ion people having upgraded to the quoted middle class.

There is quantified data on FMCG usage having increased (NRS-VI &IRS98figures)

Thanks to the above reasons the growth in the chocolate market is estimated tobe at22% in 2001. But marketers in the industry are looking forward to amuch higher growth rate, as Indias per capita consumption of

chocolates is only 15 Gms. Versus 6 Kg in the west

The Indian Chocolate market can be sliced into four parts.

1. Moulded Chocolate Segment -Comprising slab chocolates like Dairy milk chocolates, etc. These are madeby pouring the ingredients into moulds.

2. Countline Segment -

Comprising bars like 5 star, Bar One, Perk, Kit Kat, etc. These haveingredients other then chocolate and are usually Bar shaped, making forchunky bites.

3. C h o c o - P a n n e d S e g m e n t -

C o m p r i s i n g c h o c o l a t e f o r m s l i k e B u t t e r s c ot c h , N u t t i e s ,

T i f f i n s , e t c . Pa n n e d v a r i e ty h as d i f f e r e n t cores/centers which arecovered with a layer of chocolate.

4. Sugar-Panned Segment -

Comprising chocolate forms such as Gems, Chocolate clairs, etc. Thesegenerally have a sugar coating on the outside.


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RESEARCH

METHODOLOGY


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RESEARCH METHODOLOGY

As mentioned earlier, the objective of the study is to formulate aM a r k e t i n g S t r a t e g y f o r a n y n e w e n t r a n t i n t h e I n d i a n

C h o c o l a t e I n d u s t r y . W h i l e r e c o m m e n d i n g t h e s a i d s t r a t e g ydetailed information from both primary and secondary sources wascollected and analyzed. This included:

Primary Sources

Four level primary information collections were undertaken.1. To ana lyze buy ing behav ior and in order to ga in an ins ight intothe buyer need-sat i s fact ion leve l , a quest ionna i re was

formulated and administered among 80 people. The profile of therespondents was as follows:

1. Consumers of chocolates 12 years + in LUDHIANA. This was since; chocolateconsumption was witnessed amongst all age groups.

2. A dis t r ibutor was a l so interv iewed so as to get pert inenti nf or ma ti o n regarding the most important P of FMCG marketing Place.

3. Extensive interviews were conducted with retailers in the LUDHIANAa r e a . T h e s e i n c l u d e d p a n s h o p s , g r o c e r y s h o p s ,b a k e r i e s , departmental stores, etc. They provided information on variousfacts of chocolate distribution such as Point-ofpurchase material (dispensersetc . ) , inf rast ructure problems, c r i t i ca l informat iona l regardingthe policies of the present players in the market, etc.

Secondary Sources

A number of secondary sources of information were used. These were:

Information: Industry statistics, problems facing the industry, futureoutlook, etc. Also measures being adopted for cocoa production development.


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Internet websites Of Cadburys, Nestle and indiainfoline.com, askjeeves.com

Extensive use of secondary information in the form ofmagazines/journals/newspapers clippings, such as Business World, Business Today,

Business India, A&M, Brand Equity, Economic Times, etc.

The methodology adopted was as follows:

Industry Scenario Sketch (utilizing secondary information)

Extensive Interviews held with Primary/Secondary Sources (Companies/Chocolatemanufacturers Association).

Extensive retailer interviews in LUDHIANA Area

Formulation and administration of a questionnaire

Formulation of the Recommended Strategy on the basis of the abovementionedPrimary and Secondary Information


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OBJECTIVES OF THE STUDY

1. To get familiar with their marketing strategies separately.2. To view the segments being targeted by these brands in the market.3. Up to what extent do the public respond to their products?4. To prepare a marketing plan for any brand that is planning to enter the

India chocolate market.

5. To be a relevant guide for any brand launch in India.


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COMPANY PROFILE

History

Started business in 1948 in India. The company was incorporated asCadbury-Fry (India) Pvt. Ltd.

Founder: John Cadbury in Birmingham, UK in 1824

Current MD: Mr. Rajiv Bakshi

Turnover: 450 Cr.

No. of offices: 4 Staff Strength 2000 approx.

1. Branch Manager is responsible for the entire Branch Function

2 . P r o m o t i o n a l M a t e r i a l s N e t w o r k a d , M e d i a , P O SM a t e r i a l s l i k e posters, danglers, dispensers etc.

3. Target Al l age groups


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4. Distribution : Through C&F Agents Re-distributors Retailersconsumers Godown: 1 in Delhi Office: 1 in DelhiAvg. No. of calls per day by S.O.:35Sales Reporting weekly basis

5. Sales Kit: Daily call report, product folder, price list, calculator, etc.

6. Organisat iona l S t ructure :

7. Key products: Cadburys Dairy Milk, 5 Star, Fruit & Nut, Bourn vita,Perk etc.

COMPANY BACKGROUND

In 1930 R Hudson and Company finally joined with Cadbury. This gavethe f lour i sh ing loca l f i rm a d i rect l ink wi th one of the greatest ininternational chocolate manufacturing and marketing. Over the yearsthe company has been involved with many other long standing brandsand e ntrepreneurs names such as Fry a chocolate brand dating backto 1756, and of course Schweppes which is still part of the Cadbury groupinternationally although no tin New Zealand.

In 1969 Cadbury Fry and Schweppes merged internationally with theNew Zealand Company becoming known as Cadbury Schweppes Hudson Limitedin 1973.

In 1986 Cadbury Schweppes Hudson merged wi th CadburySchweppes Australia. The result was a truly international operationwith both the New Zealand and Australian companies supplying each other.Cadbury Schweppes

Australia is a fully owned subsidiary of Cadbury Schweppes plc, theUnited Kingdom based parent company.Most recently, in 1990 Cadbury required the Griffins confectionery business, andsold the Hudson biscuit operation in a reciprocal agreement. The Griffinsb u s i n e s s d a t e s b a c k t o b e f o r e t h e t u r n o f t h e c e n t u r y .


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George Griffin established the company when he opened a smallconfectionery business at Nelson.

Finally, in 1991 we became known as Cadbury Confectionery Ltd, and

can now boast dominance in New Zealands chocolate and sugarconfectionery markets. With manufacturing bases in both Dunedin andAuckland, as well as sales offices in Wellington and Christchurch, theCompany employs nearly1,000 in total.

The Cadbury group has also flourished internationally. CadburySchweppes the parent company has manufacturing facilities in 20 countriesand its famous brands are bought and enjoyed in more than 110 countries aroundthe world. Cadbury is one of the worlds leading chocolate makers and is

number one in England and Australia as well as in New Zealand.

PRODUCTION

Cadbury Indias first manufacturing facility was set up at Thane

(Mumbai) in1966. Today, the factory has grown manifold andmanufactures a range of p r o d u c t s t h a t i n c l u d e C a d b u r yD a i r y M i l k , 5 S t a r , N u t t i e s , G e m s a n d Bourn vita. Thefactory employs about 750 people and houses the R&D and engineering

development facilities of the company.

In a move towards backward integration, Cadbury bought Induri Diary farm inP u n e i n 1 9 6 4 . R e c e n t l y , a m a j o r i n v e s t m e n t p r o g r a mr e s u l t e d i n t h e installation of modern molding, crumb and chocolatemaking facilities. Today, the Induri Factory manufactures intermediate productslike milk crumb and arrange finished chocolates.

In 1989, the company began operations in their newest and most

modern plant at malanpur. Equipped with state-of-the-art technologyand backed by constant investment, this unit manufactures clairs, Gems, Perkand Picnic.


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V I S I O N

The governing objective for Cadbury India is to deliver:

Superior Shareholder Value

Cadbury in every pocket

ADVERTISING & SALES PROMOTION

As we have discussed the importance of Advertising and Sales promotion in

introduct ion, so we know how much advert i s ing a im sa lespro mo ti on ar e important.

The slogans of advertising are the tools of sales promotion are soimportant which couples the customer to purchase the product. Now weare going to discuss all these things one by one about Cadbury.

Following are a few advertising slogans used by Cadbury for introducing theproduct to the customers:-

THE REAL TASTE OF LIFE (DAIRY MILK)

THODI SI PET POOJA KABHI BHI KAHI BHI (PERK)

WHEN EVER ON HUNGER STRIKE (PERK)

TAN KI SHAKTI, MAN KI SHAKTI (BOURNVITA)

KUCH ZADA HI SOLID (PICNIC)

YEH CHOCOLATE KHAE AAP INHE KHAE (ECLAIRS)

All these slogans used by Cadbury are beautifully prepared because they cancompel the consumer to buy the product to some extent.


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Now we wi l l d i scuss them in deta i l s wi th the he lp of which wecan easily understand how these slogans can leave these impression on thecustomer.

The Real Taste of Life

This slogan was prepared for the first chocolate introduce by the Cadbury firsttime in India. The chocolate was Dairy Milk. This slogan says that thereare many types of products present in the market, they have differenttaste but Dairy Milk is the best and the true taste of the life. This slogan alsostands for the victory. On electronic media, the advertisement shows that acricketer 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.

Thodi Si Pet Pooja Kabhi Bhi Kahi Bhi

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 thingto eat accept this Perk then he can have this. This shows that Perk is sogood chocolate which can be used as a substitute of food and is a complete food.

Whenever on Hunger Strike

Later on Cadbury came out with new slogan on television; the advertisementshows that few students are on hunger strike. But they had the chocolate. Thisshows that nobody can control himself/herself if this product of Cadburyis lying in front of that person. This means that Cadbury product is so good thatnobody can leave it.

Tan Ki Shakti, Man Ki ShaktiThis slogan was used for Bourn vita. Bourn vita is full of proteins,vitamins, minerals and all those necessary things which are useful forour body and mind. Therefore, this slogan stood best for Bourn vita. TAN KI


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SHAKTI, means the energy to the body. If anybody here this product, he /she willremain active for whole day. That person will look healthy, active and will looksmart.

YEH CHOCOLATE KHAIN, AAP INHE KHAINWhen clairs toffee came in the market, this slogan was used. clairs isa toffee filled with chocolate. It means that instead of having chocolate you canh a v e c l a i r s t o f f e e t o o . I t a p e r s o n d o e s n o t w a n t t o h a v e1 2 p i e c e s o f chocolate, can have one or two clairs toffee.

KUCH ZADA HI SOLID

Nowadays new choco late has been int roduced by the Cadburyand 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. Thischocolate is sostrong due to lots of nuts, caramel etc. etc. present in this chocolate. This alsoshows that this is for adventurous people who love thrills, adventure etc.

DISTRIBUTION SYSTEM ADOPTED BY CADBURY

Cadbury Schweppes pick the world number 3 soda market has egged to sell most

of its soft drinks business outside the US to Coca Co. for $ 1.85 billions to financea head on battle with Coke in the No. 1 soda makers home market. Theagreements included the Showers Dr. Pepper chanda dry and crushbrands and exude South Africa and France the pact which was dependent onregulatory approval was likely to be concealed in mid 1999 Cadbury said. Themore will allow Cadbury to expand it Dr. Peeper business in US where it derivestwo-thirds of its soft drinks sales and was a 15 per cent market share at the sametime it get Cadbury out of markets where it is growing at a slower pace. Theshares 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 Cadburys systems werent strong enoughtoc o m p e t e w i t h C o c a - C o l a , s a i d M r . D a v i d l o n g a n a n a l y s t aHenderson Crosthwaite, they were fighting with proper for this.


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P a t t e r n s o f d i s t r i b u t i o n c h a n n e l s a n d

t y p e s o f d i s t r i b u t i o n intermediaries

ManufactureStockiest/DistributorSemi-wholesalerRetailer

User

FACTORS INFLUENCING PRICING OF CADBURY

Internal Factors

Corporate and marketing objectives of the firm.The image sought by the firm through pricing.The characteristics of the product.Price elasticity of demand of the product.The stage of the product on the product life cycle.Use pattern and turn around rate of the product.Cost of manufacturing and marketing.Extent of distinctiveness of the product and extent of production differentiationpracticed by the firm.Other e lements o f the market ing mix o f the f i rm and the i rinteraction with pricing.Composition of the product line of the firm.


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External Factors

Market characteristics.Buyers 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.

Cadbury objective of pricing

Profit maximization in the short-term.Profit optimization in the long-term.A minimum return (or target return) on investment.A minimum return on sales turnover.Targets sales volume.Target market share.

Deeper penetration of the market.Entering new markets.Target profit on the entire product line irrespective of profit level inindividualproducts.Keeping competition out, or keeping it under check.Fast turn around and early cash recovery.Stabilizing prices and margins in the market.


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NESTLE INDIA LIMITED

HISTORICAL HIGHLIGHTS

Incorporated in 1959 as Food specialties, Nest India (NIL) was promotedby Nestle Alimantana, Switzerland, which presently holds 51% equity stake in thecompany. Manufacturing in India began with the start up of the Moga Factory in1962. Nestls first unit at Moga, Punjab is manufacturing:

Milk productsInfant milk formulaeWeaning cerealsCulinary productsBeverages

It is the main manufacturing unit of Nestle India Limited. The second factory atCholadi, Tamil Nadu to produce beverages i.e. 100% EOU for instant tea wassetup in 1967.

The third plant in Nanjangud, Karnataka was set up in 1989 to produce

Instant CoffeeHealth Beverages

The fourth plant at Samalkha, Haryana, was set u in 1993, to produce


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Weaning cerealsCulinary productsHealth beveragesMilk products

The fifth plant at Ponda, Goa was set up in 1994 to produce:

WafersWaffles

The sixth plant at Bicholine, Goa commenced construction for manufacture of arange of culinary products and this was expected to be commissioned in the latterpart of 1996.

Nestle India, the largest food company in the country is continuouslylooking at new niches in the market place for its various products.

In mi lk products Nest le has made a cons iderable mark . Fori nstance , the c o m p a n y w a s t h e f i r s t t o i n t r o d u c e a D a i r yW h i t e n e r w i t h i t s p r o d u c t Everyday'. And till today thatproduct is a brand leader despite the presence of a host of other brands inthe 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 andCerelac. Nest le is a lso popular in pure ghee segment. I ts Everydaypure ghee has gained a quite satisfactory market share, Nestle has alsoentered into fitness f oo d pr o du ct s . N e st l e to da y i s a h ou s e ho ldname. Nestle extended the product line in coffee by bringing in Dolco,and then Sunrise.

In 1990, NIL entered the choco late bus iness int roduc ing Nest lePremium chocolate. Nestls products are sold under brand names such as aMilkmaid, Everyday, Cerelac, Nescafe, Maggi, Lactogen, clairs etc. Itlaunched the world famous Kitkat chocolates in 1995. During the year 1996 Milothe worlds largest selling chocolate energy food drink was launched.


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MORE THAN A MOUTHFUL - CHOCOLATE INDUSTRY

The Indian chocolate market is getting bigger and better. While on one hand, thepremium segment (comprising imported varieties) is opening up, on the

other, companies like Cadbury India are launching indigenous products made tointernational standards. Of the 20,000-tonne chocolates market worth about Rs.400 crores, Cadbury accounts for about 70 percent, followed by Nestle,with a share of around 20 percent. Amul has five per cent of the market, withminor players taking the rest. The battle, though, is between Cadburyand Nestle. Though much smaller portfolios, Nestle is putting up a touch fight.

5 Star

Although positioned internationally as energy bar, 5 Star was positioned on anemotional platform in India during the late 1980s. Symbolizing togetherness,5 S t a r w a s o r i g i n a l l y t a r g e t e d a t t e e n a g e r s . I n J u n e 1 9 9 4 ,t h e c o m p a n y reworked the strategy for 5 Star to make it a source of energy.In fact, before th e la u n ch of Pe r k , 5 S t ar ' s e n e rg y ba rp o s i t i o n i n g m a d e i t a s n a c k i n g chocolate, with Nestle pitching Bar One(launched in 1993) against it with the punch line 'for those in betweentime s'. Cadb ury wil l be lau nchi ng a new campaign for 5 Star shortly.They would like to further 5 Star's equity in the functional or snacking

direction. It is very nebulous one though.

Eclairs

Competing in the chewable toffees segment, Eclairs was relaunchedduring the mid-ninet ies with a new name, Dairy Mi lk Ec la irs .According to Ra j iv Bakshi , Manag ing D i rector (des ignate) ,C a d b u r y I n d i a L t d , g r o w t h i n t h i s s e g m e n t i s v e r y h i g h . I t i swo r th ov er 40 00 to ne s n ow . N e st l e a l so a presence here with

Nestle's Eclairs.

Gems

Broadcasting Gems, though, did not prove to be a feasible propositionfor C a d b u r y . T a r g e t e d a t c h i l d r e n u n d e r 1 2 y e a r s w i t h


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t h e ' G e m s B o n d advertising, Cadbury decided to woo teenagerswith the 'Smart'. Very smart campaign. But now, the company is re-targeting children with its animated commercial. Gems is the best brandto speak to chi ldren. Colorful chocolate buttons appeal most to children and

that is why we are re-targeting children. While Cadbury has successfullyrelaunched a host of its sub-brand, it has not been able to pay attention tobrands like Mr. Pops lillipop. As you grow and add more brands, the abilityto spend on brands becomes lower. Therefore we have selected a few criticalbrands to do a paper job.

POLO

POLO is one of Nestle's key strategic confectionery brands worldwide,

and represents Nest le 's f i rst entry into the large 50,000 tonnep.a. (organi ze d sector) Indian Sugar confectionery market

GROWING MARKETS ............FALLING MARGINS

Incorporated in 1959 as Food Spec ia l t ies L td. , Nest le India L td.(NIL ) i s promoted by Nest le A l imentana-Switzer land, which

present ly owns 51% equi ty s take in i t . N i l i s one of the topplayers in the processed food and beverages industry and thelargest producer of instant coffee with a 49%market share. Itsmarket dominance apart from instant coffee is spread over processedmilk products (condensed milk, milk powders and dessert mix), infantfoods 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

top selling global brands (Kit-Kat, Polo, Nescafe, Nido, Maggi, Perrier etc.) is oneof the largest and most prof i table p layers in the processed foodan d beverage industry. with sales at US$ 47.7 billion, it ranks 39th in theF o r t u n e 5 0 0 l i s t t o w e r i n g o v e r i t s c o m p e t i t o r s l i k e ,K e l l o g g s , C o n a g r a , G r o u p e - Danone, Kraft-General Foods and others.


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Increasing market dominance: NIL's portfolio comprising over 65products, marketed through a representative-network in 3000 towns and570000 outlets, is manufactured at five state-of-the-art manufacturing plants inIndia.

While its Moga unit produces milk products, infant milk food, weaning cereals,culinary products and beverages, the Choladi unit was set up to produce tea in1967. The th i rd p lant at nanjangud was set up in 1989 tomanufacture instant cof fee and hea l th beverages . I t s other twoplants are located at Samalkha in Haryana and Ponda in Goa. It iscurrently setting up another p l a n t a t B i c h ol i m, G o a tom a nu f a c t ur e c u l i na r y pr o d uc t s . Th e g a m u t o f operations of NILcould be broadly classified into four categories.

Direct Competition

At present there are three major players Nestle, Cadburys and Amul in

the Indian Chocolate market. Campco initially tried to break into market butfailed. 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,

5Star, Gems and Chocolate Eclairs are the households names in India today. In allthe segments i .e . molded choco lates , count choco lates andpanned 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 distributionnetwork with about 500 distributors in North India and more than 3 lacretail outlets beingserviced all over India.

In 1997, Cadbury planned to pump in Rs.80-crore to up production capacity at acouple of Cadburys factories. This cash is exactly double of whats beeninvested in 1996.


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The Company launched Perk, a wafer enrobed chocolate in 1995. Thiswas reactionary to the launch of Kit Kat and has been able to countercompetition.

Cadburys Dairy Milk (CDM) - The Flagship brand

CDM, the oldest of Cadburys brands was launched in 1956. In the early 90s,ar i se in the pr ices o f cocoa , increase in the exc i se duty and a fa l lin the demand inspired the idea of repositioning. Two years in theprocess a f ter relaunch Cadburys Dairy Milks market share stood at 25percent with sales rising by an average 40 percent per annum.

B e s i d e s C D M C a d b u r y s h a s a n u m b e r o f e n d o r s e r

b r a n d s s u c h a s Fru i t n Nut , Nut Mi lk e tc . Even thoughcontr ibut ion of these brands to the companys bottom- l ine i svery small, they are required in order to make a complete portfolio ofoffering.T h e C o m p a n y d e v e l o p e d a c o n c e n t r a t i o n s t r a t e g y o n C D M ,F i v e S t a r , C a dbur y Gems, Cadburys Eclairs, Perk and the latest of itsoffering Picnic(which has drawn a good response in the market).

The Company has also identified sugar confectionery, as a growth sector. Itsfirst

offeringGoogly.

Nestle India Ltd.

Nestle India Ltd. has been in India for more than 35 years now. Theworlds largest marketer of chocolates (became world number one whenit acquired R o w n t r e e M a c i n t o s h o f t h e U K ) - N e s t l e , m a d e i t sforay in the Indian chocolate Industry in November 1990. It

launched three products - the milk chocolate, the bitter chocolateand Crackle (a crunchy chocolate) - in the slabs category and Bar Onein count lines.


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Cadbury s was qu ick to react , and launched a whole host o f

pro ducts in succession: All Silk milk chocolate, Creamy Bar, and a new versionof 5 Star.

Nestle, in the beginning did not have its own manufacturing facility. It had analliance with Camp co to manufacture chocolates. Later, in 1995 a state-of-artmanufacturing plant was set up at Ponda, Goa at a cost of Rs. 50 crores. This unittook care of the entire Kit Kat production. However, the production tie-up withCamp co still continued.

Launch of Kit Kat

Kit Kat, one of worlds most popular chocolate, was launched in India in1995.Within months of its launch, it fulfilled every target Nestle had set.Its launch was accompanied by the launch of Cadburys Perk in order to counterKit Kat and safeguard the flagship brand CDM. Kit Kat has been able todefine anew segment in the industry in the form of the wafer enrobed any timesnack.

Kit Kat outsells Perk in the outlets where both are available. In thecrucial markets of Bombay and Delhi both are running neck-and-neck. It

has even said to have threatened the mother brand, Cadbury Dairy Milk.

NESTLEs New Launches

Brand Launch

Allen Splash Selected Cities(Sugar Candies)

After Eight Mints Delhi & Mumbai

Lion Wafer Bars Delhi & Mumbai


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INDIRECT COMPETITION

Since the target audience includes, consumers of not only chocolates but also of

biscuits and confectionery, it faces indirect competition from these productcategories. Also, other confectionery products like toffees, candies etchave proved to be indirect competit ion (however would belimited since we are targeting small kids segment).

MARKET RESEARCH

In order to recommend and execute an e f fect ive s t rategy formarketing of goods and services, a systematic market research needsto be undertaken. The buyer preference research would play a vital rolein the assessment of c o n s u m e r s t a s t e / p u r c h a s e h a b i t s a n da b e t t e r u n d e r s t a n d i n g o f t h e consumers mind. In fact thestrategy formulation/recommendations in this report of the marketing mixrelies heavily on these research findings.

A q u e s t i o n n a i r e w a s a d m i n i s t e r e d ( a s m e n t i o n e d i n t h e

Methodology)amongst people of different age groups andprofessions. Results from this research provided interesting cues, whichwere extremely beneficial in the formulation of the recommended marketingmix.

The main object of this research/questionnaire was as follows:

To find out the current the current taste/chocolate eating habits.To find out the extent of brand loyalty.

To get feed back of consumers perception about flavors andconventional outlets.To find out extent of price sensitivityRetail outlet preference.Brand preference etc.


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OBSERVATIONS&

FINDING


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OBSERVATIONS

Based on the basis of the questionnaire research, some of the facts that came tothe fore have been listed below. These research findings played a key role in thedevelopment of the recommended marketing strategy.

Kit Kat and CDM had a high unaided awareness level and also, boththese brands enjoyed a high consumer preference. Amul isperce ive d for g iv ing value for money.

Chocolates are no more a childrens item.

Most of people buy choco late by impulse dec is ion. Choco latesare even considered as a good gift option.

C o n s u m e r s p r e f e r e n c e v i s - - v i s p l a c e o f p u r c h a s e ,s i z e / f o r m / t a s t e o f chocolates, etc

Most of the respondents had a high ad. Recall level for Cadburys Dairy Milk andKit Kat.

When it comes to gifting, usually the receivers are1 . A f r iend of oppos i te sex2 . C h i l d r e n

The idea of making chocolates available at sweet shops, gift shops, ice creamparlors, fast food joints/restaurants was asked to be rated. The conceptof exclusive chocolate parlors was rated favorably (around 63%).

The product category does not enjoy high brand loyalty levels.

People are not price sensitive and consider the prices of chocolates available inIndia, 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/-.


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Data analysis

&

Interpretation


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1. Do you consume chocolate?

OPTIONS No OF RESPONDENTSYES 70

NO 30

INTERPRETATION:

This chart shows that 30% of respondents does not consume chocolate

While 70% of respondents

YES

NO


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2. How often do you buy chocolate.

OPTIONS NO OF RESPONDENTSPer day 40

Week 30Month 20

No 10

INTERPRETATION:

This chart shows that 40% of respondents buy chocolate per day, 30% on

Weekly basis, 20% on monthly and 10% respondents does not buy chocolate.

0

5

10

15

20

25

30

35

40

Per dayWeek

MonthNo


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3. What brand of chocolate are you aware of?

OPTIONS NO OF RESPONDENTSCadbury 45

Nestle 25Amul 20

Other 10

INTERPRETATION:

This chart shows that 45% of respondents are aware of Cadbury brand,20% of

respondents are aware of amul,25% of nestle and 10% awareness of other brand.

0

5

10

15

20

25

30

35

40

45

50

Cadbury Nestle Amul Other


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4. What influenced you to buy the above stated brand?

OPTIONS NO OF RESPONDENTS

Advertising 60

Dealer 10

Attractive packing 10Shop display 20

INTERPRETATION:

This chart shows that 60% of respondents are influenced by advertising, 10% by

dealer, 10% by attractive packing, and the rest 20% by shop display.

0

10

20

30

40

50

60

Advertising Dealer Attractive packing Shop display


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5. If a particular brand is not available with retailer. You will?


Drop the idea 30

Buy another brand 70

INTERPRETATION:

This chart shows that 30% of respondents drop the idea if the particular brand

Is not available with retailer, and the rest 70% go with the another brand.

Drop the idea

Buy another brand


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6. You purchase of chocolate?


Occasion led (birthday etc.) 30As a gift 30

Casual purchase 20Any other 20

INTERPRETATION:

This chart shows that 30% respondents purchase chocolate on occasion

Led, 30% as a gift ,20% on casual purchase, and 20% on any other occasion.

0

5

10

15

20

25

30

Occasion led(birthday etc.)

As a gift Casual purchase Any other


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7. If you buy chocolate?


A gift 20

Spouse 10Children 30

Friends 40

INTERPRETATION:

This chart shows that 20% respondent buy chocolate for a gift purpose,

10% for their spouse, 30% respondents buy chocolate for children, and 40% for

their friends.

A gift Spouse Children Friend

0

5

10

15

20

25

30

35

40

45


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8. What according to you is the suitable price for 40 gm chocolate?


20 20

INTERPRETATION:

This chart shows that 15% respondents prefer less than 10rs for 40 gm

Chocolate, 25% respondent prefers 10 to 14rs, 40% prefer 14 to 20rs, 20 % prefer

More than 20rs.

20


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9. Ideal chocolate would taste as follow?


Bitter 30Wafer enrobed 40Caramels nuts inside 20

Any other 10

INTERPRETATION:

This chart shows that 30% respondents prefer bitter taste, 40% prefer wafer

Enrobed, 20% prefer caramels nuts inside, 10% prefer any taste chocolates.

0

5

10

15

20

25

30

35

40

45

Bitter Wafer enrobed Caramels nuts inside Any other


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10. One an occasion I would like to a gift a chocolate to loved one?


Yes 70

No 30

INTERPRETATION:

This chart shows that 70% respondents say yes that they would like to gift a

Chocolate to a loved one, and30% say no.

Yes

No


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11. Are you happy with the kind of chocolate brands available in IndiaToday?


Yes 76

No 24

INTERPRETATION:

This chart shows that 76% respondents say yes that they happy with the

Chocolate brands in India, and 24% respondents are not happy.

Yes

No


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12. If you 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.


Yes 67

No 33

INTERPRETATION:

This chart shows that 67% respondents say yes, and 33% respondents are says no.

Yes

No


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Strategies of the Dominant Brands

It is important to understand the strategies of dominant brands in the marketbefore we go on to analyze the brand communication. Cadbury is the biggestplayer followed by Nestle, and they cover amongst themselves over 95% of themarket share1. The perception map in Exhibit 1 shows the positioning of popularbrands graphically.

Exhi bit 1 Positioning of Dominant Chocolate brands in the Indian Market

Cadbury

Cadbury is the market leader with around 60% of the value sales. It boasts ofseveral strong brands in the category covering almost the entire spectrum ofconsumer needs.


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Dairy Milk

Dairy milk is the megabrand of the Cadbury Family focusing on consumers of allages. The core proposition is 'something to celebrate all the good occasions in life

with'. The communication proposes that no matter what the occasion of yourhappiness, Dairy Milk is the perfect way to celebrate.

Silk

Silk is a premium variant of dairy milk and aims to give an up market stretch tothe core brand. The positioning of Silk is 'Smoother, Creamier and Chunkier'. Thecommunication focuses on the experience of eating chocolate with childlikeinnocence and unabashed joy. The tagline 'Have you felt Silk lately?' tries to give arefreshing feel to the entire experience of chocolate eating.

Perk

Perks target market segment in India is the causal snack space that has primarilybeen dominated by chips and wafers. The target consumers are teenagers andthe advertising just highlights its role as a mini snack. 'Thodi-Si-Pet-Pooja'campaign, featuring mischievous teenagers, defined its brand personality.

Celebrations

Celebrations target market was to replace the traditional gift options liketraditional sweets and dry-fruits during festivals. The communication focused onthe emotions related to gifting.

5 Star

The target segment for this brand has been the youth and children. The brand hascontinuously focused on variants to add an element of surprise in the chocolate-eating experience.

Nestle

Nestle ranks second with 31% of the value sales. A large product portfolio and astrong distribution network have helped the company in maintaining itsleadership along with Cadbury.


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Kit Kat

The brand's commercial focuses on 'Have a break, have a Kitkat'. Nestle Kit Katwas well received by consumers in early years owing to both the novel 'finger

format' of the chocolate as well as the way its advertising celebrated the'consumption ritual'.

Munch

Munch is the largest distributed brand in its category. It is a wafer chocolate. Thecampaigns of Munch focus on its crunchy taste. Priced at Rs. 5 it targets themiddle class in metros and smaller towns.

Personality Traits

Consider how you would describe the personality of a close friend. Chances arethat you would list a number of traits, such as outgoing, kind or even-tempered. Atrait is a relatively stable characteristic that causes individuals to behave in certainways. The Trait theory suggests that individual personalities are composed ofbroad dispositions called traits. Cattle came up with 16 key personality traits thathe uses to describe most aspects of human personality4.

We tried to map the personality traits targeted or represented through various

commercials. Simultaneously, we tried to match the overall personality of a brandas reflected by overall marketing communication and consumer perception onthese personality traits.

An interesting finding was the difference in traits observed for Nestle Munchs

recent commercial featuring the boxer Vijendra Singh from their overall brandimage. For traits like 'openness to change' and 'privateness', not only was the adin-consistent but also conveyed a brand personality significantly different fromthe overall brand personality built over the years.

Munchs projected brand personality has shifted in six of seven relevant traits

from the last ad campaign to the current one. These inconsistent brandpersonality projections may lead to confusion in the minds of consumers who willrather shift to another related brand with a more consistent personality. Exhibit 2shows the differences in positioning of Nestle Munch from old to new ads withtwo of these traits as dimensions.


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Exhibit 2 Differences in Nestle Munch's newly communicated and existing personality traits

Impulsive Buying Behavior and Pricing

Impulsive behavior occurs when the consumer is looking for immediate hedonicbenefits. It is commonly associated with urges to smoke, drink, overspend or

overeat. 'Impulsive behavior' is defined by 'Consumers experiencing an irresistibleurge to consume', which they might even regret later.

Whether an individual focuses on cost or the benefit of impulsiveness depends onthe chronic values of the consumer, which forms the core of its personality.Hedonic personalities will focus selectively on the benefits than the cost ofimpulsiveness and are considerable uninfluenced by the costs. Hence, suchindividuals become insensitive to price aspect when their hedonic urge is drivingthe purchase decision.

Let us explain the growth of the market at the higher end of the spectrum inrecent years in chocolate category with this argument. The product offerings onthe higher end are of rich chocolate (e.g. silk) based products (associated withtaste and pleasure) instead of wafer-based offerings (which serve as a snack). Thisshows that brands command a better premium when an impulsive urge ratherthan functional benefits are the prime motivators for purchase.


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Even though chocolate buying behavior is impulsive, research suggests that therelative accessibility of inputs such as costs versus the benefits of impulsivenessinfluences impulsive behaviour5. Impulsiveness is unaffected by cost highlightingarguments which explains the ineffectiveness of advertisements discouraging

cigarettes, alcohol, etc.

When the benefit of impulsiveness was the pleasure of yielding to temptation, theadvertisements, that 'triggered the desire' or 'highlighted the benefits of giving into the temptation' appealed most to the hedonic individuals. However, theprudent personalities give more value to the cost than the benefits. Thus, thebenefits are relatively non-influential in judgment. Thus, advertisements thatjustify the cost of impulsiveness can help provoke impulsiveness in suchconsumers.

RECOMMENDED MARKETING STRATEGY DESIGN

The market s t rategy of the f i rm i s a complete and unbeatablep l a n o r a n i n s t r u m e n t d e s i g n e d s p e c i a l l y f o r a t t a i n i n g t h em a r k e t i n g o b j e c t i v e o f company. The formulation of the marketingstrategy consists of two steps:-

1 . Segmentat ion & target market se lect ion.2 . Assembl ing the market ing mix .

Market Segmentation and Target Market Selection

M a r k e t s e g m e n t a t i o n a n d t a r g e t m a r k e t s e l e c t i o nh a v e a n i n t i m a t e relationship with market strategy formulation.

T h e c o m p a n y m a y f o c u s o n t h e f o l l o w i n g f a c t o r s w h i l e

l a y i n g d o w n t h e target market.

1. Geographic Segmentation

Geographica l ly the country can be broadly d iv ided into 3 subsegments -Rural, Suburban and Urban.


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In the first phase (after the test launch), Urban parts of the country should betargeted. The chosen segment is targeted because

Lack of infrastructure, like refrigeration-not to venture rural markets.

The consumpt ion pattern & behav ior in Rura l India does not f i twi th the product attributes and perceived benefits.The limitation of disposable income is another factor that hampersentry in rural areas.S e m i - U r b a n m a y b e c o n s i d e r e d i n t h e s e c o n d p h a s e . A ny e ar a f te r th e launch.

Within Urban India, the cities with 1 million + population i.e. top 23 metros will betargeted. A soft launch of the brand should be undertaken before taking the

brand to these areas. This (test launch) will be undertaken in Bombay, sinceit(Bombay) is a high consumption city for chocolates. (Source: Nestle (I)Ltd infect Nestls sales peaked out in Bombay, during its initial launch).

2. Demographic Segmentation

The demographic variables have been separately addressed to arrive atthe target audience.

Age:12 years + segment of the population is recommended to betargeted. Smal l k ids may not be targeted, because of the natureof th e pe rc ei ve d product benefit by consumers in that age group, whoare inclined towards sweeter and creamier snacks. Further, it may notbe easy to get youngsters off thei r tuc k mone y. Also , chi ldre n todaya l ready have an array of cheap domest ic and internat iona lconfectionery (in the form of chewing-gums, lollipops, rolls, lozengesand toffees).

Family Life Cycle: In terms of family life cycle it is addressed at all ofthe following:1. Young/Single or Married (with/without Kids)2 . Matr icu lates and Co l lege goers3. Marr ied wi th no chi ldren under 18 .4 . Marr ied o ld couple/o ld s ing le .


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5 . E m p t y n e s t c o u p l e s .

The brand may positioned such that it fits all stages of family life cycle.

Income: The income segmentation may be all households with anannual income exceeding Rs. one lakh. Targeted audience may be allhouseholds that can afford a television or have access to satellite television.

3. PsychographicSegmentation

Social Class: In terms of psychograph the soc ia l c lass targeted i sthe educated upwardly mobile urban middle and upper class.Personality Traits:

This segment essent ia l ly cons ists of emulators i .e . , upwardlymobile, pioneers, freaky, fun loving type of people. These are the peoplewho like to enjoy life and believe in traveling and adventure.

Life Style: In terms of lifestyle, it may be aimed at those who favor buyingconvenience products . They are a l so wi l l ing to exper iment wi thalternate products in place of conventional food items, as the universeof chocolate consumption is changing from occasion led to more casualconsumption.

4. Behavioural Segmentation

The moulded segment of the market is perceived to be the growthengine of the market. Hence, this segment is quite lucrative for a newbrand launch. Also, chocolate purchases have moved from beingoccasion-led to a casual snack. Hence, anytime anyplace snack aspect needs tobe established. This segment comprises of people who like to have chancesand want to try new things.

5. Learning-Involvement

The purchase of a choco late i s o f a low- invo lvement category . I ti s an impulse purchase and decision to buy is not pre-planned.


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6. Usage Rate

T h e m a r k e t m a y b e f u r t h e r s e g m e n t e d o n u s a g e r a t h e r

than attitude-Anytime Anyplace Snack. This is a group of consumersthat find traditional snacks too heavy. Even though a range of chocolates maybe offered, a core brand (concentrated strategy mentioned later) may belaunched in the count l ine segment. S ince this segment is t ipped tobe the growth engine of the industry (according to industry sources Mr.Sanjay Verkey, Cadburys India and Mr. Bohidar) and this segment has asub stan tial shar e of the mar ket (33%).

TARGET AUDIENCE

Following from the above, it is recommended to target consumers who foundtraditional snacks too heavy. Usage rather attitude is being used to segment. Thisis the segment that tended to pick up biscuits instead-something theycould munch while continuing with their schedule.

There are 181 million urban individuals in India Our target segment is peopleliving in the top 23 metros (1 million +population), which implies 63

million people. Further, SEC A-B in these 23 metros with Cable &Satel l i te at home are targeted (94.4 % of SEC A-B have a cable &sate l l i te connect ion) .

SUGGESTIVE MARKETING MIX FOR INTRODUCING A NEW

PRODUCT:The objective of the marketing mix developed is:

To develop a product that is available, affordable, based on local raw

m a t e r i a l , a n d a d a p t e d t o t h e t a s t e a n d t h e n u t r i t i o n a l

h a b i t s o f t h e population.


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The e lements o f the mix - Product , Pr ice , P lace & Promot ion havebee n entailed below:

Product

As ment ioned ear l ie r , the two most important segments o f themarket are Moulded and Count line segment (segments have a high share ofthe market).Also, it can be seen in the findings, the Indian consumer doesnot recognize the di f ference between Moulded and Count l inesegment. Further, a key decision that needs to be taken is to decidewhether 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 l ine and the Moulded chocolate segment (at least if not Panned). A range of brands can help cushion out r isks over theentire offering.Also, it has been that to sustain in the long term, a complete portfolioof chocolates for every taste is essential. However, a concentration strategymay be adopted in the first phase, focusing on one core flagship brand.

The various product attributes have been mentioned below:

Stipulations regarding the use of Hydrogenated Vegetable Oil-HVO(since it contains nickel) may be adhered to. Nickel in chocolates cancause cancer. However, research is still on to prove this. Productformulation should keep this aspect in mind.

Packaging:

The packages or the cover packs, of the brands can be in Blue, Green andRed color which represents a fun element. The packaging should keep the productcrisp, fresh and protected from the harsh climatic conditions in the country, and

hence provide a longer shelf life.

Sizes:

A s c a n b e s e e n i n t h e f i n d i n g s t h e m o s t p o p u l a r s i z e i s 4 0g m s . However, in order to provide a good assortment of offering, the followingsizes may be introduced:


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15 gm 35/40 gm 80 gm.

Super Saver (105 gms.)

200 gms

Gift packages: since, chocolates is a very popular gifting option, attractive giftpacks may be introduced. The offering is also planned to be distributedthrough gift shops, hence, attractive packs on the Swiss Coats (smalllocal player) concept be developed.

Any foreign brand formulation needs to be tropicalised and hence,adapted tothe Indian conditions. Dropping of the international formula (Nestle

had faced problems because of this as product could not take the Indianheat)may be considered.

Taste:

Since, Indians have a preference for soft chocolates with caramels,wafers etc inside (see findings), and the product should appeal to theIndian palate by incorporat ing these in the offer ing. In this

segment there wi l l be d i rect compet i t ion only f rom Truf f le . Apanel of target consumers may be called in to sample any freshbatch of chocolates, so as to ensure that the product developed appeals tothe Indian palate.

The milk and creams in India are different, and workers no way as well trained asabroad. 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 productlook can attract a customer.


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Product Differentiation

Since, there exists strong competition from heavy weights such as Nestle andCadburys; the product offering should be well differentiated. Nestle,

when i t launched i ts chocolate brands in India , ensured that eachbrand was well differentiated - White chocolate(not conventionalbrown) with a sugary taste th at appe ale d to kids , Milk y bar mar blesdifferentiated as they had white chocolate centre instead of the brownchocolate core in Gems.

Pricing

Factors like competition, internal costs, and the positioning andcorporate objective of the company need to be taken into considerationby a company before pricing a product.

Premium pricing (relative to the competing brands not designer chocolates),wi th spec ia l emphas is on taste and qua l i ty (most importantattributes-see findings) is recommended. The premium pricing doesnot suggest that the offering is made unaffordable to the targetco ns ume r. A hig h pr ic e wou ld accompany a promise for a better taste

and quality. Therefore, the brand(s)taste & quality needs to justify the highprice.

Further, the product category is relatively inelastic i.e. consumers wouldnot stop buying their favorite brands if the price is increased by a fewrupees(see findings). Consumers feel that even if the price of their favorite brandis reduced, they might not buy more of it. Also, there is a generalperception o fchocolates being Reasonably O.K.(See findings).

According to Sarura Business, the high priced (relative to other brands in themarket) imported foreign brands have been able to draw a decent response.Primarily, because of their high foreign brand equity.


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As can be seen in the table (on brand comparison on price, given on the nextpage), Nestle and Cadburys are pitted against each other and Amul isthe cheapest brand in the market.

Considering the above, a premium pricing strategy, with the assuranceof good quality and better taste, in a market that is not high on pricesensitivity may prove to be a success.

It may be noted that the price should be only Rs2/- or Rs 3/- expensivethan Cadburysor Nestles offering. For instance

CDM is priced at Rs 15/- for 40 gms

Nestles Milk Chocolate at Rs 13/- for 40 gms

Amul is priced at Rs 10/- for 40 gms

The offering in this segment may, therefore, be around Rs 16/-

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. (whichvary from state to state)-within 10 to 20 percent.

Placement:

T h e s u c c e s s o f a n y F M C G p r o d u c t t h r i v e s o n d i s t r i b u t i o n .F a c t o r s l i k e f i na nc i a l c o s t e f f e c t i v e ne s s ) pe r i s h a b i l i t y o f t hep r o d u c t ; r e p e a t o r d e r s ; m a n a g e r i a l c a p a c i t y a n d u n i t v a l u e

o f t he pr o duc t ne e d t o be c a r e f u l l y a na l y z e d w hi l e s e t t i ng upthe distribution framework of the company. The product category ise s s e n t i a l l y a p u l l m a r k e t . H o w e v e r , t h e channel membersprovide greater visibility to the product. This is extremely important s i n c ec h o c o l a t e s i s a l o w i n v o l v e m e n t i m p u l s e p u r c h a s e p r o d u c t .T h e recommended distribution framework has been entailed below:


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Recommended Distribution Logistics

The first task in hand should be, to effectively map the territory intosmaller more accessible and controllable units. An effective territory mapping

needs tobe done not only to provide an efficient coverage of the marketbut also to provide growth opportunities to the constituents (stockiest),as the company grows. The recommended distribution chain would be asfollows:

The Company

Carrying & Forwarding Agents

Stockiest/ Distributors

Whole sellers

Retailers

Carrying & Forwarding Agents:

These may be appointed at two or more State(s) of operation of the

company. Carrying & Forwarding agents work on a c o m m i s s i o n b a s i s 3 % ( i n d u s t r y n o r m s ) o f t h e g o o d s h a n d l e d . I t i srecommended that the country keeps about 4 to 6 weeks of inventory atthe C&F level and a commission structure which is in keeping with thei n d u s t r y n o r m . T h e r e f o r e a 3 p e r c e n t c o m m i s s i o n o n t h ei n v o i c e v a l u e m a y b e provided to the agents.

Stockiest:

A s t o c k i e s t p r o v i d e s a l o c a l d e l i v e r yp o i n t f o r t h e manufacturer/marketer. They store the products,break bulk, and distribute to the retailers. With greater no. of retailers nowseeking credit from the retailer, efficient management of collection hasbecome a vital part of the stockiest job.


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The main problems that new product faces is that of getting experienced andeffective channel members. As existing marketing marketer/manufacturer canpiggy back on the ex i s t ing channe l s t ructure . A new company wi l l

have to provide greater incentives convince channel members to stockthe product o f f e r i n g . H e n c e , a n i n n o v a t i v e m e a n s o f c h a n n e lha nd l i ng ne e d s t o be adopted:

C o m p e t i t i v e c o m m i s s i o n t o t h e s t o c k i e s t - a r o u n d 5 . 6 6 % o nt h e i n v o i c e (industry standards 5.66%)

The efforts of the sale representatives employed by the stockiest to get ordersmay be supplemented by the manufacturers sales force.

Retail outlets to be serviced at least four times in a month (at leastonce a week)Distributors (stockiest) to maintain stock of not more than 15 to 20 daysSince, distributors are to maintain air-conditioned go downs, insummers the A/C expenses may be borne by the Co.

The Merchandiser concept: Merchandisers may be appointed by thecompany(salary to be borne by the Co.) in order to keep a constant touch, and tofeel t h e p u l s e o f t h e m a r k e t . T h e s e m e r c h a n d i s e r s

w o u l d a l s o f a c i l i t a t e implementation of various schemes of the co.Regular job would include:

To check if products have reached expiry, Proper setting of shelf space

POP material displays, etc.

More transparent and clearer claims handling policy


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Wholesaler:

Whole sellers prime concern is buy in bulk and sell at the fastest rate. The aimof any distribution chain of mass-market product category like

choco lates would be to expand i t s reach i .e . the no. o f out letss tor ing i t s products . This may not be poss ib le even wi th a we l lestablished stockiest network. Hence, wholesalers play a significantrole in supplementing the stockiest effort send in providing a better reach tothe product.

Retail Outlets:

It is extremely important for any chocolate brand to have a well

entrenched reta i l presence . Reach I the key . Cons ider , Genera lDeConfetaria (marketer of Boomer Bubble gum) having its products availablein400000 outlets around the country, and Perfetti with 250,000 outlets. The aimwould be to expand the retail network as wide and deep as possible.

A blitz force tactic for retail chain enhancement may be followed. A blitz forceis a commando unit hired to target specific work. About 5 to 10salesmen, recruited from the same locality will be roped in to penetratea specific area. Being far more familiar with the area, they are expected to

create about 10 to12 new outlets daily. This task on a later stagemay be entrusted to the distributors salesman.

The biggest problem in distributing a product category like chocolates is lack ofinfrastructure. The product needs to be kept in refrigeration (more so,in summers)-limiting the points at which it is available (ideal temperature neededfor chocolates is 18 to 25 degrees). Hence, summer see sales suffer. Demand fallsby almost two-thirds in the summer months. To counter this, the Co. can

Cool/chilled vans may be operated in summers (for C&F to Stockiest transitof goods). Because of only a seasonal requirement, these may be out sourced.Insulated boxes, Ice/chilled pads and packs, Ice surrounded Sintextanks, towels etc may be used to ensure that the product reachesthe r eta i le rs without losing its form.


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Considering the importance of refrigeration (specifically in summers),Vizzy coolers may be installed. These coolers not only provide refrigeration butalso a good POP value. Further, while distributing chocolates, it must be ensuredthat the brand has a deep retail coverage not a selective presence. Finally, while

deciding onto the selling outlets, certain unconventional outlets may beconsidered. These include

a. Sweet Shops:

The product may be kept at traditional Sweet Shops. More so, duringfestival times.

b. Gift Shops:

As the idea of gifting chocolate is becoming more popular amo ng the

targeted segment, i t would be profitable to ensure the avai labi l i tyof chocolate chocolates at various gift shops.

c. Stationary/Book Shops:

Teenagers, is a lucrative segment with a high consumption rate. Theyfrequent book shops and magazine stores quite often. Hence, makingchocolate available at these outlets may be considered.

d. Ice Cream Parlors :

In India, ice cream is treated as a fun product and a sweet dish or a desertafter meals. Both these attributes match with chocolate consumptionhabits. Hence, ice cream parlors may prove to be beneficial in providinggreater reach to the product . Here aga in, cha ins l i ke Do l lops ,etc . ma y be use d in orde r to faci l i ta te g rea ter reach. A strategicdistribution tie-up may be reached with ice cream companies such asKwal i ty Wal l s , Vad i la l s e tc for d i s t r ibut ion of c h o c o l a t e s a l o n gw i t h t he d is t r i bu t i o n o f i c e c r e a m s t hr o ug h t h e Vending Trolleys.

e. Fast-food Joints/Restaurants:A s a d i s c u s s e d a b o v e t h a t o n o u r country the chocolates canbe served as a sweet after meals, hence separate counters may beinstalled at various fast food joints such as Mac Donald s , N i ru la setc. This would provide the brand, not just greater vis ibi l i ty but


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also valuable sales. Also, these outlets possessadequate infrastructure tostore chocolates.

f. Jewellery Shops:

The leading jewellery shops in the city entertain their customers with cold drinksand or tea. These are not suited to all. The complimentary chocolate treat at theparticular shop would only status of treating his clients differently and thechi ldren fo lk would a l so enjoy th i s spec ia l t reatment and leavef i d d l i n g w i t h t h e p r e c i o u s g o l d garments.

g. Exclusive Chocolate Parlors :

As can be seen in the findings, there has been an overwhelmingresponse to the idea of buying chocolates from exclusive chocolate

outlets. Hence, development of exclusive chocolate parlors may beconsidered.

Promotion:

This involves communicating persuasively to the consumers, in ordert o a r o u s e t h e i r i n t e r e s t i n t h e p r o d u c t . A d e t a i l e dp r o m o t i o n p l a n involving advertisement, sales promotion and publicrelations is proposed.

Positioning:

The pos i t ioning of the var ious brands in the market has beenlisted below:

Cadburys Brands Positioning Nestles brand Positioning

CadburysDairy milk

The Real Taste ofLife

Classic Milkchocolate

Positioned as anaffordable,enriched milkchocolate

Fruit n Nut Positioned at

Creamy Bar Adults as an


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Roast Almond Impulse anytime

Nut Milk purchaseCrackle Self expression

Boonville Values attached

5 Star / Perk Perk-Positionesedas a snackingconsumption.

Kit Kat Positiond as asnackingconsumption

Break/Crisp/DoubleDecker

Thodi Si Pet

Pooja5Star-Energy Bar

Have a Break,Have a Kit Kat

Reach for the Stars Bar One Positioned as atrendy,cool

anytime snack

Gems/Eclairs

Positioned as

Butterscotch Variety, gifting

Caramels/Overtures and tastepreference

Nutties/All Silk

TiffinsRelish

The flagship brand may be positioned as a premium (see pricing)anyplace, anyt ime snack. S ince, snacking proposit ion is thegrowth eng ine for the industry , pos i t ioning should hence , befocused on that . The two dr ivers - impulse purchase and need tosnack.

Advertisement Plan

The Advertisement plan could be as under:

Corporate objective: The corporate image should be built over a periodof time, so as to reinforce consumer confidence in the brands of the


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company. This i s a lso esse nt ia l to c ounter competit io n, s ince overa period of time, names such as Cadburys, Nestle have attained high levels ofrecognition and assurance.

Advertisement Objectives

To position the product as a high quality brand, with a wide range ofoffering,providing, fun anytime, anyplace products.To create awareness about new flavors.Induce consumer trials.Build corporate imageTo undertake competitive advertisement.

The Budget:

Considering the fact that the market is dominated by big-wigs such asCadburys and Nestle, aggressive competitive advertising needs tobe undertaken.

Since both Kit Kat and Perk are allocating 60 to 70 percent of their totalad budget on chocolates, an allocation of about 20 to 25 percent of the projectedturnover may be sufficient in the first year. After which about 10 to 12 percentmay be used to sustain the brands.

Message: The message design will be consist of following;

Appeal: Chocolate is basically a fun product and exchange chocolate as gifts isgett ing popular these days . An EMOTIONAL appea l o f Love can

be designed. Apart from it chocolate can be highlighted by fun elementsin life can be positioned as MOOD ELEVATORS. An ASPIRATION appealwould also be helpful.Presentation: The design of advertisement will be the setup of fun scene

like picnic, college, campus, sports. Ground, partly time can be suitableso that people can Associate the chocolate with fun.Message Source: For print media the message source will be the copypart and creative advertisement design. For electronic media, the sourcewill be whole family unit, younger enjoying exchanging and eating chocolate.


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Media:

Print Media: Will be the major magazines read by the target segmenti.e.., India today, society, famine, stardust etc.

P.O.P.Material induce impulse purchase.

Electronic Media: Since the whole of target segment watch Satellite TV duringpr ime t ime and advert i sement wi l l be featur ing share for 3 ormore t ime to leave an impact . Apart f rom i t company wi l l bespons or ing the fun re lat e d programmes on DD and Satellite TV.

Public Relations:

I . T h e c o m p a n y w i l l h o l d a p r e s s c o n f e r e n c ea n n o u n c i n g i t s a r r i v a l i n India and will highlight its globalachievements.I I . C o m p a n y h a s p l a n t o s p o n s o r e v e n t s l i k e 2 v i z . ,s k i i n g r i v e r r a f t i n g , yachting etc.I I I . C o m p a n y w i l l a l s o s p o n s o r f u n b a s e d T V p r o g r a m s .

Sales promotion Activities:

To induce consumers to try the new chocolate and to get the productpushed in the market the sales promotion plan should include the following:

Trade promotion:

The Company will have to offer lucrative trade promotion schemes, inorder to push primary sale. These include incentives to stockiest for pushingthe sa le o f choco lates . At the reta i l leve l , the fo l lowing t radepromotion measures may be adopted:

Schemes such as, a certain percent off on the purchase of Rs 5000 orRs10,000 worth of chocolates.A box of chocolates free with every dozen purchased.Shop Displays/Vizzy Coolers linking them to sales

Apart from these, Window Shelf space may be purchased outright.


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Consumer Promotion:

Some of the consumer offers that could be introduced are:1. Free gifts like pen, comics etc., on return chocolate wrapper.2 . M o n e y S a v e r s

3. Chocolates in a toy t ruck e tc .4 . T h e C o m p a n y c a n a n n o u n c e c o n s u m e r c o n t e s t s ( w i t h p r o o f o f purchase) with attractive prizes, supplemented byan advertisement campaign.

Point Of Purchase Material:

POP is of extreme importance, to a product category like this. This is so, sincesales are impulse /casual driven. Hence, heavy point of purchase advertising in

the form of danglers, chocolate dispensers, etc. may be used.

Market Testing Plan

The company should test the product before it goes national (23 metroswithmillion + population). This is so because:1. It would reduce the risk of failure in the market where it goesnational,by validating the marketing mix.2.Fac i l i ta te va l idat ion of pos i t ioning .

3.Allow corrective action through incorporation of consumer feedback.

For test marketing the chocolates, the plan may be as follows:

1.Test Objectives: To validate the brand names, new outlets, etc and tomeasurethe sales volume, pricing and promotion policy. Competitor reaction canalso be analysed.2.The product may be launched in Bombay ( as a soft(test) launch).Thisselection was based on :

Bombay is uniformally represented by the target segment

Competitor activity is high. Also, Nestle was able to wrest a significant

marketshare from Cadburys when it was launched.Bombay is representative of the target segment.


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IMPLEMENTATION

A w e l l d e s i g n e d m a r k e t i n g p l a n c o u n t s f o r n o t h i n g , i f n o ti m pl e m e nt e d pr o pe r l y . S uc c e s s i n t he m a r k e t p l a c e de pe ndsu pon the w ay the p lan is i m p l e m e n t e d . T h e l a u n c h i sr e c o m m e n d e d t o b e b e f o r e w i n t e r s - s a y September orOctober, since

That period would facilitate high Diwali sales, and

D u r i n g w i n t e r s t h e r e w o u l d n o t b e m u c h n e e d f o rr e f r i g e r a t i o n . H e n c e company would get valuable time its infra in place.

The success of the brand would largely depend on the following:

Sales Distribution Network

Quality standards

Research and Development-continuous innovative products

Technology support


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CONCLUSION

The growth and expans ion of the Indian choco late market in thepast 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 afew, even0% excise) and non-availability of quality cocoa in the country.

Also, import of chocolates has been put in the OGL category, with duties beingreduced (in a phased manner). The industry has made recommendationsto the Indian government to go back to the Special item list category, in order to

safeguard the domestic industry.

However , cont inuous market ing focus by the p layers in themarket has resulted in the industry looking up like never before. Thesecompanies/brands have become much more market savvy. TheIndian chocolate market is transforming and new players (Sara Lee isplanning to set up base in India)are entering the market. Hence, consideringthe low per capita consumption of chocolates, the future of the industry seems toupbeat.


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ANNEXURE


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1. Please rank the following attributes in a chocolate on a scale of 1-7According to their importance to you? (1-most important, 7-least

Important)

a. Taste

b. Quality

c. Packaging

d. Price

e. Flavour

f. Add-ons (wafer, nuts, etc)

g. Brand image

2. If particular brand is not available with the retailer, you wil-a. Drop the idea of buying a chocolate

b. Go to another retail outlet

c. Try another (competitors) brand

3. You purchase (of a chocolate) isa. Occasion-led (say on a birthday, etc.)b. As a giftc. Casual purchase


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4. If you favourite brand is a few Rs expensive than it is, you would stillGo for it.

a. Yesb. No

5. A sale promotion scheme like Rs 2/ off, 10gms extra, a candy free, etc.Would affect your purchase decision.

a. Yesb. No

6. An ideal chocolate would taste as follows-a. Bitterc. Wafer enrobedd. Caramels, nuts insidee. High on sweetf. Any other (please specify)


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7. Most of my chocolate purchases are pre-planned.a. Yesb. No

8. What size of a chocolate do you normally buy?a. 15gmsb. 25gms/30gmsc. 80gmsd. Super saver packs(105gms)e. 200gms

9. The price of your favourite brand or preferred brand of chocolate isa. High & expensive 77b. Reasonably okc. cheep


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10. Are you happy with the kind of chocolate brands in India, today?

a. Yesb. No

11. If the price of your favourite brand is reduced, you will buy more of it?a. Yesb. No

12. If you want to buy a wafer chocolate, say kitkat and if it is not availableyou would settle for Bar/Mouldedchocolate, say 5star or Cadburys dairy

milk.

a. Yesb. No

13. On an occasion I would like to gift a chocolate to a loved one.a. Yesb. No


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14. What according to you is the suitable price for a 40 gm. Chocolate which is

Of good quality and flavor(which will be available for the first time).

a. Below Rs.10/-b. Between Rs.10/-to14/c. Rs. 14/-toRs20/-d. More than Rs.20/-

15. Do you consume chocolatea. Yesb. No

16. How often do you buy chocolatea. Per dayb. Weekc. Monthd. No


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17. What brand of chocolate are u aware ofa. Cadburyb. Amulc. Nestled. Other

18. What influenced you to buy the above stated brands?a. Advertisingb. Dealer

c. Attracting packingd. Shop display

19. If a particular brand is not available with retailer. You will?a. Drop the ideab. Buy another brand


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20. Ideal chocolate would taste as followa. Bitterb. Wafer enrobedc. Caramels nuts insided. Any other

21. If you buy chocolate?a. A giftb. Spouse

c. Childrend. Friends


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BIBLIOGRAPHY

Kotler Phillip, Marketing Management, Millennium edition. (Prentice hallof India).

Business today

Business World,

Business India,

Economic Times

CMIE reports

indiainfoline.com

Internet sources

www.indiainfoline.com

www.domain_b.com

www.agencyfaqs.com

www.nil.comwww.cadburys.com

www.web-enable.com/industry/enabling-scm.asp

www.cadbury.co.in

www.financialexpress.com

www.business-shandard.com
http://www.indiainfoline.com/http://www.indiainfoline.com/http://www.domain_b.com/http://www.domain_b.com/http://www.agencyfaqs.com/http://www.agencyfaqs.com/http://www.nil.comwww.cadburys.com/http://www.nil.comwww.cadburys.com/http://www.web-enable.com/industry/enabling-scm.asphttp://www.web-enable.com/industry/enabling-scm.asphttp://www.cadbury.co.in/http://www.cadbury.co.in/http://www.financialexpress.com/http://www.financialexpress.com/http://www.business-shandard.com/http://www.business-shandard.com/http://www.business-shandard.com/http://www.financialexpress.com/http://www.cadbury.co.in/http://www.web-enable.com/industry/enabling-scm.asphttp://www.nil.comwww.cadburys.com/http://www.agencyfaqs.com/http://www.domain_b.com/http://www.indiainfoline.com/


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