The Success of Cadburys Dairy Milk Silk as a Product - Case Study Example

Executive Summary Cadburys is one of the leaders in the confectionery industry. The company faces strong competition from Nestle. The company has been successful as it has innovated and developed its product line by launching new variants. The company has launched Dairy Milk Silk eyeing the premium segment and has more cocoa and butter to attract those customers who prefer those. The analysis highlights very important facts. The analysis helps to evaluate the target market. It helps to identify the marketing strategy and positioning of its product and also have a comparison with Nestle its main competitor. The SWOT analysis shows the different areas which will help the Cadburys to grow. The 4P’s also help to find the features the new product Cadburys Dairy Milk Silk has. The packaging looks into aspect of marketing and customer appeal. Based on the above a customer survey is provided which highlight the customer preference for different products, the pricing pattern, and how important packaging holds. The above analysis thus helps to find important areas where the company can work on. Based on those a recommendation has been provided and will help Cadburys to succeed with the new product i.e. Dairy Milk Silk. The report thus, highlights that Cadburys Dairy Milk Silk will succeed as a product. Contents Introduction 4 Purpose of the Report 4 Company’s Background 4 Brand under Cadburys umbrella 5 New Product objective and characteristics 6 Target Market 6 Competitors 7 SWOT Analysis 8 Positioning & Marketing Strategy 10 4 P’s of Marketing 11 Packaging 12 Customer response to the product 13 Findings 16 Conclusion 16 Recommendations 17 References 18 Appendix 19 Introduction Cadburys has been in existence and has become a leader in confectionery. The company has been able to develop their product line and launch various variant. The recent launch of Cadburys Dairy Milk Silk which has more butter and cocoa for the premium segment is being looked at. The analysis of the marketing strategy and the customer feedback helps to see that the brand will work and find acceptability. Purpose of the Report To identify whether the new product Cadburys Dairy Milk Silk will go well with the customer To identify the target market and marketing strategies for the product To identify what influences customer purchasing and what plays an important part in the customer deciding a particular product Company Background Cadbury as a brand has been performing for decades. Cadbury “is a confectionery company ranking second among the world in that line of business”. (Cadbury Company Website, 2010) The company started in 1824 and since has increased its business by launching different products with different variant in different countries. The growth can be attributed to “organic and acquisitions and being a market leader by launching products”. (Cadbury Company Website, 2010) Cadburys overall growth has been phenomenon and has its presence in over 60 countries, employing 50,000 people and having around 35,000 suppliers. The mantra for the company has been “creating brands people love” (Cadbury Company Website, 2010) and this has influenced the customers all around. Brand under Cadburys Umbrella Cadburys has launched many variants and different brands looking into different aspect and attracting people of all age. The brand under Cadburys looks as follows The above chart shows the brand Cadburys has and in addition to it a large number of variants are available for each. Even the company has ensured that it launches this product in different sizes and packs so that all segments can be eyed. New Product Objective and Characteristics Cadburys has launched a new product named “Cadburys Dairy Milk Silk available in different variants like Milk Chocolate, Roast Almond and Fruit and Nut”. (Iyer, 2010) The company intends to position it in the premium segment and slowly move into other areas. The characteristics of this product is “Contains more cocoa butter compared to milk butter” (Iyer, 2010) to tap those who prefer cocoa. “More creamier compared to the normal dairy milk” (Iyer, 2010) looking towards those who have a love for cream This new product since involves more of cocoa and cream so the inherent characretistics remain the same but it brings a change in taste. Target Market Cadburys is aimed at everyone who loves chocolates. The company looks for people in the age group 5-60 years. The company has developed its target market based on two strategies. One the company looks at age demographics and the other is geographic segmentation. On the demographic front “the company has divided it into age groups of 5-10, 11-20 and 21-60”. (Target Market, 2010) On the basis of geographic “it is urban, semi urban and rural”. (Target Market, 2010) The company based on this launches the product. Cadburys Dairy Milk Silk has been launched for “the premium segment customers as the product has been priced accordingly and is mainly for rural regions where there is availability of refrigerators so that the chocolate doesn’t melt”. (Iyer, 2010) “Based on this target audience the new product has been launched and is aimed for all customers from age group 5-60”. (Iyer, 2010) Thus, the target market for Cadburys Dairy Milk Silk is defined. Competitors Cadburys faces competition from many quarters. There are many companies who are in similar line of business thereby exerting extra pressure on the brand. Some of the competitors for Cadburys are Nestle, Amul, Hershey, Lindor and many more. The stiffest competition comes from Nestle. Nestle is a leader in “food and nutrition items and has its presence from 1905”. (Nestle Company Website, 2010) The company operates in 86 countries and has thousands of workers and suppliers working in tandem. Product Range: Nestle offers variety of products ranging from “coffee, bottled water, beverage, chocolate, ice-cream, confectionery, infant foods, seasoning, frozen and pet food”. (Nestle Company Website, 2010) The company is the chocolate and confectionery items have all products similar to Cadburys. This has intensified competition Pricing: Nestle has priced its product “keeping in view the demographic and earning of individuals and the price has been such that all segments of the population get attracted”. (Nestle Company Website, 2010) Nestle to ensure that “have packed their product into small packages to reduce the price and target the lower income group”. (Nestle Company Website, 2010) The company has followed a policy of pricing depending on the product and the category it falls under. Marketing Strategy and Distribution: Nestle has ensured a “strong network of dealers and suppliers to ensure ready availability and have also tied up with super markets and hyper markets to ensure that the product is displayed”. (Nestle Company Website, 2010) The company to ensure longevity of the product has distributed refrigerators. Nestle has market its product using television commercials and all other forms of media and also having a famous personality as their brand ambassador. The overall strategy has given rich dividends and Nestle is giving tough competition to Cadburys. The company has worked in similar way as Cadburys and this has made it tough for both the companies as an idea gets replicated very early. SWOT Analysis The SWOT analysis will help to identify areas where Cadburys can work on and also demonstrates the opportunities they have. Strengths Cadburys has a “strong brand name due to the number of years the company has been operating”. (Ferrell, 2002) Cadburys have many products aiming at different customers according to their wants Cadburys has “a strong distribution network which has reduced its reliance on any way and ensured that the products are readily available”. (Ferrell, 2002) Sound manufacturing owing to “the innovation in new product which has helped to ensure that they keep up with the requirements”. (Ferrell, 2002) Weakness “Huge dependence on confectionery and beverages” (Ferrell, 2002) has limited the scope for growth and ensuring stiff competition from Nestle Cadburys have “a limited product portfolio compared to Nestle which has reduced the probability of diversifying” (Ferrell, 2002) with new products and changing a variant is an option for them “Limited storage time for milk chocolates” (Ferrell, 2002) is making the company to ensure that it is sold within that interval Opportunities “Merging and acquiring the small confectionery manufacturers so that they get access to already a created market”. (Ferrell, 2002) Developing new products “which improves there product range” (Ferrell, 2002) and gives them a scope to grow Innovating and coming with new supplies techniques and moving into new markets Threats “Increasing transportation cost, storage cost and increase in price of sugar” (Ferrell, 2002) is a worry and steps needs to be taken to reduce those Threats from other brands like “Nestle, Amul that has increased there market share and have products matching Cadburys”. (Ferrell, 2002) Positioning & Marketing Strategies Cadburys have positioned their product for “all category of customers starting from the tender age of 5 to 60”. (Chandran, 2007) The product has been positioned to ensure that “every customer who wants the product can have it”. (Chandran, 2007) For this the company has kept the prices low and also have small packages so that it can eye all customers. Cadburys Dairy Milk Silk has been positioned “for the premium segment customers who want more cocoa and butter and different variants of the same has been launched so that it satisfies the entire customer”. (Iyer, 2010) Cadburys have marketed this product by using technology. Cadburys have ensured that “they come up with television commercial and have a brand ambassador”. (Chandran, 2007) The company to market has also ensured that the packaging is given priority. This has given them recognition and also longevity to there product. Cadburys have developed a strong network of suppliers and ensure that their marketing is backed by availability of stock. Measures are also taken to see that in store promotions are done. This has attributed to the success of Cadburys and following similar strategy will help Cadburys Dairy Milk Silk to succeed. 4P’s of Marketing The 4P’s of marketing will help to understand about Cadburys Dairy Milk Silk and help to develop an understanding of customer needs towards that product Product Cadburys Dairy Milk Silk is “a chocolate which has more cocoa and butter to make it smoother and make people get a feel it is as smooth as silk”. (Iyer, 2010) It is a “milk chocolate which is made from fresh milk being bought from diary”. (Iyer, 2010) Price The price being charged plays an important role in demand. Cadburys Dairy Milk Silk has been priced “keeping in mind the premium customers and has been priced as Rs 49 for 66 grams and Rs 99 for 160 grams”. (Iyer, 2010) The rate charged has been done after a market survey and customer preference for the product. Place Cadburys Dairy Milk Silk has been decided to “sell this product where the per capita income is high and the company looks to sell the product in 35 cities and in around 30,000 outlets”. (Iyer, 2010) This will ensure that the product is considered in the premium category. Promotion Cadburys Dairy Milk Silk is being promoted by “having television commercial and their packaging stands as a big force in marketing”. (Iyer, 2010) Cadburys is also ensuring that in store promotions help to make consumer are about it. The company has also looked in marketing by endorsing it through a known face. Thus we see that the marketing strategy for Cadburys take care of the 4P’s for Cadburys Dairy Milk Silk. This will ensure that Cadburys is able to gather momentum and sell their product easily and make it a favoured product. Packaging The packaging for the product Cadburys Dairy Milk Silk has been done on similar lines as the Cadburys Dairy Milk brand. The company has done so because “Cadburys has been successful in the packaging variant it has and people find it easy to associate with the same brand as packaging which is similar is helping them to associate with the product easily”. (Iyer, 2010) The packaging for Cadburys Dairy Milk Silk is as follows Cadburys Dairy Milk Silk packaging has been such that people find it easy to recognise. The packaging has already been tested. This is ensuring longevity and easy association. It is also helping Cadburys to differentiate it from Nestle. Customer Response to the Product The customer response towards the products shows that people want a variant which has more of cocoa and butter. A survey was conducted and the questionnaire for the same is attached in the appendix. The findings of the survey and customer response to the questionnaire is provided below The above graph shows the consumer preference for different brands. It shows Cadburys is more preferred compared to Nestle. The following chart shows consumer preference due to different mediums being used by the companies. It is as follows The survey shows that customer prefer brands which are advertised as it helps them to remember the product easily and influences their purchase behaviour. The further customer response shows whether they purchase the chocolate to give as a gift or not It shows that customer purchase is driven by the desire to gift it to someone. This will help Cadburys Dairy Milk Silk to succeed as it is a premium product and will go well as a gift. The response for impulse purchase highlights the following It shows that customer purchase the product impulsively. This will help Silk as they need to market the product well to ensure that customers purchase the product. The perception of the price charged also highlights important fact It shows that the customers prefer chocolates range between Rs 10-14 and this is for the smallest packaging. The details also highlight for a premium product the customers are willing to spend extra. This is a positive for Dairy Milk Silk as it will help to tap the premium sector. The following is the demographic representation of the respondents It shows that Cadburys and chocolates is preferred among all age groups and proper marketing tactics will help Cadburys to establish Silk as a product preferred by customer. It will also help to show that customers purchase this product and will build a good image. Findings Cadburys Dairy Milk Silk brand “will be successful as customer have a preference for new product” (Iyer, 2010) Advertisement play a key role in defining the sales of the product Chocolates are preferred among all ages Cadburys need to increase its line of business by launching more product There is intensifying competition and with customer having a preference so marketing is the key Packaging plays a key as customer associated themselves with the brand Customers are loyal and have a preference for a product Conclusion Cadburys has been a successful brand. Despite stiff competition from Nestle, Cadburys has been able to grow due to innovation. Their recent launch of Dairy Milk Silk which has more butter and cocoa has the potential to succeed. Customers in the confectionery industry are willing to pay extra for additional benefits they get. Cadburys need to market Silk and have proper advertisement. The packaging of Cadburys Silk will help the product to succeed as people can associate with the product easily. This will help Cadburys Silk to succeed as there is a market for it. There are certain customers who prefer more butter so Cadburys Silk will succeed as it has the necessary ingredient in it. Recommendations Cadburys need to market the product Dairy Milk Silk extensively. Cadburys needs to look towards launching small packs so that all income levels are tapped. Cadburys need to carry on with the same advertisements campaign and ensure that people remember it as association becomes easy Cadburys need to see that the packaging is similar to its previous products so that acceptability is easy References Cadbury Company Website, (2010), “Cadburys Worldwide”, retrieved on April 10, 2010 from http://www.cadbury.com/Pages/Home.aspx Ferrell G, (2002), “SWOT Analysis for Cadburys”, Orland, Dryden Press Iyer B, (2010), “Cadburys Silk Route”, Business Standard, retrieved on April 10, 2010 from http://www.business-standard.com/india/news/cadbury%5Cs-silk-route/384906/ Nestle Company Website, (2010), “Nestle Website”, retrieved on April 10, 2010 from Target Market, (2010), “Cadburys Target Market”, Marketing Communications, Campaign India.com Appendix QUESTIONNAIRE 1. Do you eat chocolates?    YES / NO 2. If yes, what brands do you like?        3. How many times do you buy?              (No.) chocolates per day / week / month (please tick) 4. Please rank the following qualities on a scale of 1-7? (1-most important, 7-least important)        Taste           Quality            Packaging          Price          Flavor           Add-ons (Wafers, nuts, etc.)        Brand Image  5.  Do you purchase chocolates impulsively?    YES / NO 6. What influences you to buy chocolates?        Advertising           Word of mouth        Attractive Packaging        Dealer        Shop Display        Family/Friend/Relatives        Any Other (Pls. Specify) 7. Do you prefer purchasing a new variant of Cadburys i.e. Cadburys Dairy Milk Silk? YES/NO 8. Did you like the packaging for Cadburys Dairy Milk Silk? YES/NO 9. If a particular chocolate is out of stock what will you do -              Drop the idea of buying a chocolate              Go to another retail outlet              Try another (competitor’s) brand 10. The advertisements of Cadburys you remember. 1 2. 3. 4. 11. You liked the advertisement because: Brand Ambassador Good theme Mood elevator Any other (Please specify) 12. If you buy chocolates, as a gift, it is for: Spouse   Friends    Parents              Children   Relatives   any others (Please Specify) 13. What according to you should be the price for Cadburys Dairy Milk Silk which is rich in cocoa and butter (a new product?)              Below Rs. 10/-    Between Rs. 10/- to 14/-              Rs. 14/- to Rs. 20/-    More than Rs. 20/-  14. If your get Cadburys Silk a few Rs. expensive, will you purchase it? YES / NO 15. What size of a chocolate do you normally buy? 15 gms.   25 gms./30gms.   80 gms.              Super Saver Packs (105 gms.)    200 gms. Read More