Cadbury: Marketing Strategies - Case Study Example

Strategic Marketing TABLE OF CONTENTS Content………………………………………………………………………………………Page 1. Executive Summary…………………………......................................................3 2. Product Life Cycle………………………………………………………………3 3. New Market Entry………………………………………………………………5 4. Growth Stage……………………………………………………………………7 5. Shake-Out Stage..……………………………………………………………….8 6. Mature Stage…………………………………………………………………….8 7. Declining Stage………………………………………………………………….8 8. New economy markets………………………………………………………….9 9. Organizational Structure………………………………………………………..10 10. Marketing Plans…………………………………………………………………11 11. Marketing Metrics……………………………………………………………….13 12. Marketing Audit…………………………………………………………………14 13. Conclusion………………………………………………………………………15 14. References………………………………………………………………………17 Strategic Marketing: 1. Executive Summary This report is marketing strategies that will highlight the marketing strategic plan that will allow Cadbury develop to a plan on how they will concentrate its resources in order to optimize the existing opportunities to achieve its intended goals of sales increase and sustain its competitive advantage. This marketing plan offers a hands-on experience in implementing, formulating and evaluating marketing strategies. It enhances deeper understanding of a number of strategies for declining markets, mature, growth and introduction markets and new market entries as well as new economy markets to sustain a competitive leverage over product. 2. Product Life Cycle Product refers to the combination of services and goods offered to consumers to satisfy their wants or need (Westwood, 2010). A new product or services goes through a series of stages starting from the introduction stage, to growth, to maturity and finally decline stage. This progression is termed as the product life cycle and is related to marketing situation changes, hence influences the marketing mix and the marketing strategy. Introduction Stage: This is when Cadbury launches a new product into the market. There are low sales and actually the company loses money from the marketing and set-up cost of the product catch on with customer needs and demands. In this regard, Cadbury has had the product for some time, and they have not promoted it until the last couple of months. Growth Stage; the product sales begin to grow since consumers become more aware of the offering. The company has really started to apply it more often and developing more buzz within the city. Maturity phase, which Cadbury Chocolate Fruit Nut is in, there is slow sales growth because a number of competitors are offering this product and also a number of customers have already acquired this product. Fruit Nut chocolate Therefore, for Cadbury to succeed, sales expenses and heavy advertisement would be required to maintain profits and sales from dropping off. Decline phase; sales begin to decline. Only a few companies provide the product. A better and newer product is provided, which satisfies the needs of the customers instead of the current offering. The product promotions slow down and eventually the product dies off. 3. New Market Entry Direct Investments: In this path of new market entry, the business invests in the setting up of its operational and production facilities within the new geographical market. This market entry mode requires serious commitment and investments on the part of the business. The direct investment mode at times can be very risky investment, and on the other hand if the marketing strategy of the company becomes successful, then this mode can reap huge reward (Adam, Armstrong, Brown & Kotler, 2008). The company also enjoys full control of its brands and products when adopts this route. Franchising and Licensing: This mode of market entry is normally deployed by manufacturing and confectionery companies. License for production of the product of the organization is issued to a local company in another country (Sally & Robin, 2002). This local company can then sell the products under that company’s brand name. The licensee company pays an annual royalty fee to the licensor company for using its brand name and production technology. A number of companies such as McDonald’s have used the licensing method enter into new markets. The benefit of licensing method for entering into a new market is that it reduces the direct investments incurred by the organization in the new market as a number of investments are incurred by the licensee company. This reduces the financial risk of the organization while it ventures into a new market (Sally & Robin, 2002). Licensing mode on the other hand makes the company’s potential profit to be considerably reduced as the company normally gets royalty (that is normally calculated as sales percentage) from the licensee. The other disadvantage of this strategy is that the licensor firm might end up not being able to control the quality of its service and products. If the service and product quality of the licensee is reduced below the customers’ expectations, then the licensor firm’s brand image gets beating. The other form of licensing is franchising. The franchiser or the mother company accords the franchisee the right to manage the operations and use its brand name under company’s brand name. Cadbury’s entry mode has been both licensing and direct investment (Cadbury, 2013). Strategic Marketing programs for Pioneer Niche Penetration: Corporations can compete by becoming innovative within the marketplace and the innovation processes can be incremental or radical. Incremental innovation can be achieved through improving the version of the already existing chocolate. The improved product can then directly compete within the existing offering, or it can be positioned to in such a way that it attracts a minor segment of the existing market. Establishing new distribution channels: The Company can establish new distribution channels to effectively penetrate existing markets or access new ones. Going international cannot be the sole solution. In some instances the investment needed and the risk involved to penetrate the global markets may not have good return of investment. Concentrating on the existing markets where the company has proper understanding of the market environment, can bring rapid successes and may prove to be less risky. The company has achieved this through repositioning of its services and products through advertising and marketing. Apart from choosing the best marketing program, it is important to establish the timing of the introduction of the new product. This is particularly true for the chocolate and confectionery companies, whose product life cycles are relatively short and it is hard for the followers to match them or draw reasonable returns. In a number of instances, when one is entering later or second in such a market, it is important to act so right away after the pioneer (Callaghan, Mc Coll, Palmer, 2008) Growth Stage Market Leader: In most instances the strategic objective of the leading firm is to uphold its lead share position even as it faces growing competition with the expansion of the market. The marketing objective of the company who is share leader is to maintain its current customers, excite selective demand among afterward consumers. Mainly, there are five consistent internal strategies that the company can adopt to ensure it has a leading share position and they include; position or fortress Defense strategy, confrontation strategy, flanker strategy, strategic withdrawal or contraction strategy, and market expansion strategy. The best strategy combination or most apt strategy is based on; the characteristic of customers and the size of the market, relative strength and number of competitors, and the leader’s competencies and resources (Bartol and Margaret, 2011). a) Position or Fortress Defense Strategy The company continually makes stronger its already strongly seized current position. The company continues to improve the satisfaction of the existing clientele and enhances the attractiveness of its products. In improving customer loyalty and satisfaction, the company particularly pays focuses on quality control. It continues to improve and modify its offering, and this is not just the physical product but also the perception of customers regarding the company as well. This entails shifting of promotion focus from rousing primary demand to establishing selective demand, as this promotes repeat purchases among the current consumers and provide improved focus to post-sale services. Some of the actions that the company uses to simplify and encourage repeat customers include, reducing stock-outs within the store shelves. The more proactive processes comprise properly integrated supply-chain relations. b) Flanker Strategy This strategy involves developing another brand that will compete against the rival’s offering or products and defend against an attack that would be aimed at weaknesses in its present offering. The company does this through trading up, for instance developing high quality product that is offered at premium price. In some cases, it entails a low quality brand to protect the primary brand of the leader from direct price wars and normally used in combination with position defense approach. This strategy is more effective when a company has enough resources to support and develop multiple entries. 4. Shakeout Markets: This stage is characterized by decline in the overall rate of growth and manifested by price reductions. There are also significant changes regarding competitive structure of the industry. The company should rationalize its offering line by getting rid of weaker items, improve channel relationships and focus on ingenious promotional pricing. 5. Mature Stage: In mature stage, there is stability in respect to competition, technology and demand. Any considerable breakthrough in engineering or Research and Development, which can assist in differentiating the product or reducing its costs would have a significant payout. In this regard the company’s unique services become a means of differentiation from its competitors. In overall, the prices and promotional expenditure seem to remain stable. 6. Decline Phase: A company or a product can get into this phase because of shifts in consumer beliefs, values and tastes or due to technologically advanced substitutes. As sales decrease and expenses raises, efforts are required to lower costs and asset base. In this stage, prices can stay stable when the decline rate is slow, however when the rate of decline is erratic and fast, aggressive pricing should be considered. For companies that offer chocolate brands and confectionery as in my case, marketing activities should focus on distribution. 7. New-Economy Markets: New-economy markets refer to those industries which significantly participate in the Internet or electronic commerce. Increasing market acceptance of electronic commerce as well as other new-economy processes and the inherent leverage that they create imply that the company needs to assess how it will have impact on their business and take advantage of such new technologies. The results of such assessment should be the establishment of individual’s new-economy process. Opportunities of New Economy for business: The possible attractive features which characterize a number of new-economy strategies include: Information syndication: This entails selling the same product to several customers, who then may mix it with information from other areas and distribute it. Information syndication is relevant because it supplies informational products as opposed to tangibles. The company can syndicate the same informational services or goods to unlimited number of consumers with least incremental cost. The technique can be digitized or automated, allowing the creation and expansion of the syndication networks, and the flexibly is quickly adapted than could possibly be in the physical world. The network externality or positive network effect implies that a product increasingly gets more valuable as its users increase in numbers. Firms which can exploit and identify opportunities where they can take advantage of the increasing returns to scale, which comes as a result of positive network effects sometimes, can quickly grow on reserved capital investment. It has the ability to efficiently customize and personalize market products: New-economy markets allow comparing purchases, tracking purchases, and collaborative filtering with others for product recommendation and companies that does this satisfactorily record increase in customer purchases. Users can also specify the nature of what is provided to them through customization techniques and helps establish customer loyalty and renders less possible that customers will switch to another provider. New-economy markets allows instantaneous delivery, 24/7 access and global reach. Service and access of this nature is ideally a massive value to customers. It enables the restructuring and disintermediation of channels of distribution. In terms of disintermediation, the internet renders it possible for business to directly reach their customers without the complication or expense of the distribution channel/s. However, it is important for the company to establish how the functions performed normally by the channels would be performed and has to determine whether doing so would be more efficient and effective as opposed to using intermediaries. 8. Organizational structures: Within chocolate and confectionary industry, standardization and quality control are very critical. However, as the company expanded, it deployed extensive use of behavior control and output control to standardize both employee behaviors and outputs at the company’s outlets. It also developed a comprehensive system of procedures and rules, and then trained the management how to use them. Strategy implementation can be defined as the form in which a company should utilize, develop and integrate control systems, organizational culture and structure to follow plans, which lead to better performance and competitive advantage (Fifield, 2006). Organizational structure apportions special value establishing roles and tasks to the workers and outlines how these roles and tasks can be interconnected in order to maximize customer satisfaction, quality and efficiency, (which are the competitive advantage pillars). Nonetheless, organizational structure in itself is not enough to motivate the workers, and therefore organizational control system would be needed. The organizational control system furnishes managers with motivational inducements for workers, and also feedback on organizational performance and employees. Strategy changes often result in organizational structure changes. Organizational structures should be established in a way that they enable the strategic pursuit of the company and, thus follow a strategy. When a strategy or mission is lacking, firms find it challenging to create an effective structure (Weiber and Tobias, 1998). There is no single optimal organizational structure of design for a type of organization or a given strategy. What is effective to a given firm may not be suitable for a similar company; however successful companies within a given sector seem to organize themselves in the same way. For instance, chocolate and confectionery companies such as Cadbury appear to adopt the divisional structure-by-product type of organization. Small companies within this industry seem to be centrally or functionally structured whereas medium-sized companies seem to be decentralized or divisionally structured. As companies grow and expand, generally their structures shift from simple to multifaceted due to concentration or combination of various basic strategies. 9. Marketing Plan Due to the fact the strategic planning integrates all business functions; it incorporates marketing functions as well. The contribution of marketing is critical given the essential market orientation that the contemporary business need to have, and due to the marketing decisions that tackle product-market combination selections. Marketing plans have moved from sales and production orientation and are now oriented toward the competitors and customers (Adam, Armstrong, Brown, and Kotler, 1998). Marketing planning is relevant to strategic competition is a number of ways. It is externally oriented process and the future of businesses because it emphasizes on attaining differential competitive edges. Marketing plan also handles decision concerning organizational resource allocation. Lastly, it is an integrative and synthetic process and a therefore, it provides invaluable assistance to the competitive strategies approaches of the whole organization. Concerning the company, the specific contributions comprise the following (Kate, 2005). Assessing the competitive position of the company The definition of corporate mission Determination of alternative opportunities for investments It helps in the establishment of the emphasis that need to be put on new products and on market expansion regarding its existing offering Product mix decisions and diversification and External resources acquisition and internal development Marketing planning process consists of three discrete stages and they include 1) marketing mission statement, 2) marketing objectives drawn from the established mission, and 3) array of strategies to accomplish the objectives. First, the strategies relate to a particular market target, and then the marketing mix programs are established to meet the needs of the target market, such as promotion, service levels and price among others. A number of strategy options can be used by companies, for instance merchandise development (for instance sales through the inclusion of a new product), penetration strategy (for instance market share increase), selectivity strategy, diversification strategy, vertical integration that empathizes on serving identified market segments, market development that deals with appealing to new customers, and merchandise strategy that makes decisions regarding which products to offer and finally pricing strategy. 10. Marketing Metrics Over the last couple of years, there has been a considerable growth in the type and number of marketing metrics which managers can deploy to assess the effectiveness of marketing and create marketing strategies with the objective of improving organizational performance. The role of such marketing metrics is in two aspects. One aspect is that marketing metrics function to enhance accountability of marketing within the company and to rationalize spending valuable company resources on marketing programs to the executive management. Two, marketing metrics assists retailers and managers to determine future customer drivers and company value and establish linkages between financial outcomes and marketing strategy. When retailers are able to determine store value and customer drivers, their managers would be able to maximize store profits and customer (Callaghan, Mc Coll & Palmer, 2008). The rise in the different marketing metrics had been due to various factors. To start with, the rise in database technology has enabled companies to gather more information regarding their customers and to some extent information regarding their competitors as well as their customers. Second, the introduction of new distribution channels, for instance the Internet has considerably increased the complexity and availability of marketing metrics for companies. Lastly, the identification of new firm value and customer drivers, for instance referral and word of mouth behavior has resulted to increase in the number of various marketing metrics beyond measurement of simply return on investment and customer value. 11. Marketing Audit: Marketing audit is a methodical evaluation of a firm’s marketing environment, activities, strategies and objectives with the aim of establishing core strategic opportunities, problems and issues (Leslie De Chernatony, 2010). Therefore, marketing audit is the foundation upon which course of action to enhance marketing performance is established. Marketing audit gives solutions to the following issues: Where are we currently? How did the company get here? And where is the company headed? Appropriate responses to these questions rely on the analysis of the external and internal environment of the company. The function of marketing audit is thus, to establish areas where marketing function is shinning and areas where there could be improvement opportunities. After carrying out marketing audit, the firm will have a better understanding of its marketing contributions, capabilities and the overall strength and health. To increase effectiveness, attain greater performance levels and increase return on investment, the company might require new systems and training programs, reengineer or re-define process or even change the talent mix (Wortzel, 1987). As course of action and areas for improvements are determined, the resources required to impact the improvement can be resourced appropriately. Hence, the annual planning and budgeting cycle provides an ideal time to carry out a marketing audit. The internal audit centers on those aspects within the control of the marketing management, while external audit looks at those elements that the management does not control. The findings of the marketing audit are fundamental determinant of the future direction of the company and result to a redefined company mission statement (Bateson & Hoffman, 2008). A long with marketing audit, a company can carry out audits of other functional units such as personnel, finance and production. The integration and coordination of these audits generates a compound business plan whereby marketing issues play a major function because they concern decisions regarding which products to product and for which markets. Clearly these decisions have personnel, financial and production implications and successful implementation relies on each functional unit working as one. 12. Conclusion: In a number of markets both pioneers and followers function with incomplete information. Early entrants can take this advantage by implementing appropriate signaling techniques as a deterrent. For instance, early entrants can reduce price, hinting to potential followers that it is a low-cost business and it would be hard for them to succeed. In most nations, it is however illegal to price below the variable cost. Conversely, followers usually concentrate on a few core market segments classically the ones which subsidize the cost to provide to pioneer’s market segment. Therefore, it is critical for early entrants to understand segments of their consumers and implement a differential pricing strategy to draw maximum return from each of the segments. For Cadbury to enhance its market share and corporate performance level, the company should consider the below suggestions. Cadbury needs to implement strategies which will advance the differentiation of its offering within the continually growing market trends. The firm should improve the value of its offering though branding and improve on some of its lowly performing fast foods in the market. This would boost the company sales, thus translating to more profits. Since Cadbury is well known to maintain confectionery uniformity and quality across the globe, maintaining such a strategy in new and existing markets will enable the company to maintain and increase its current market share. Drawing from the public critics that most products from fast food companies fuel obesity, it is critical for company’s management to make sure that they satisfy all the food and health regulations so as to comply with safety regulations. This would motivate more customers to consume its products. As a matter of reducing operational costs, it would be advisable for the company to continue with franchising strategy in new and existing markets. In respect to marketing strategies, it is essential for Cadbury to maintain its current marketing initiatives but enhance some. The company also needs to improve on its media advertisement. Conduction regular market audit is critical for the company to determine its market share extensiveness. Marketing audit needs to be a continuous activity, not a desperate effort to change an ailing organization. 13. References: Aaker, David A. (1998), Strategic Market Management, 5th edition, New York, John Wiley & Sons, Inc. Adam, S., Armstrong, G., Brown, L., Kotler, P., (2008), Marketing, (4th edn.), Prentice Hall, Australia. Barnhart, C. L., Barnhart, R. K., The World Book Dictionary: A-K, (2007), World Book Inc., Sydney. Bateson, J. E. G., Hoffman, K. D.(2008). Managing Services Marketing, (4th edn.), The Dryden Press, London. 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