Project Title A study on Marketing Effectiveness and promotion strategies of Cadbury India Ltd based on their selection of distribution

channels and competitors.

Submitted By
Name Course : Shiju A Wahid : MBA ( Marketing )

Roll No : 530840222 Semester : 3rd Semester / 4th Semester.

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Synopsis

1. Introduction. 2. Aim and objective.

3. Findings.

4. Conclusion.

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1.

Introduction

Marketing- Promotion of chocolates in India. Traditionally, chocolates were always targeted at children. But stagnancy in growth rates made the companies re-think their strategies. Cadbury was the first chocolate company that took the market by storm by repositioning brands at adults, as opposed to children. Buying Behavior Chocolates are consumed as indulgence and not as snack food, as prevalent in western countries. Almost 75% chocolates are impulse purchases. Chocolates are bought predominantly by adults and gifted to children. On an average the wholesalers sells Rs50000/month of Chocolates (all brands included). Also the wholesaler usually deals in all kinds of FMCG goods, Foodstuff in addition to the chocolates. The items like chocolates are placed near the counter. Chocolates are kept in cardboard boxes and are also delivered in the same. ... In a few of the cases the chocolates were kept separately (as per equipment provided by the manufacturer e.g. VISI Coolers, In addition to marketing promotions companies have been focusing extensively on the promotions by the sales staff. Also the companies can devise there marketing strategies that are catering to specific segments and are thus more effective. Nature of retail outlets. Chocolates are primarily sold through Kirana Stores, Gift stores, Medical Stores, canteens, PanBidi stores, Bakeries, Sweet Shops etc. This is true for chocolates also. The space allocated for the chocolates was less when compared to the total area of the shop. Of the space allocated for chocolates, Cadbury brands occupied more than Nestle brands. The chocolates category thrives on excitement. It's all about giving the consumer a choice and taste which they enjoy.

Stocking of the product.

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In most of the cases, various brands of chocolates are kept together. In some of the cases the chocolates are stocked depending on the manufacturers provision. The chocolates are kept in Glass Jars and boxes These are provided by the respective companies along with the product. The chocolates are kept there. But in most of the cases chocolates are stocked near the counter. Ideally the shopkeeper tries to keep chocolates within the reachable (sitting on the counter) distance. Chocolates are kept at or below the eye level. This is to facilitate visibility of the chocolates for the customer who is visiting the store. Medium size retailers sell chocolates of about Rs. 400 Rs. 800 per week while big retailers sell chocolate worth Rs1000 or more per week. Chocolate advertising in India. Growth of Chocolate Advertising on Television: Year 2003 - 2004 Company-wise Ad Spending: Cadbury's India Ltd. tops with 52% share of the advertising pie on television. Nestle India Limited grabs the 2nd position with 34% share, whereas, Parle Products gets the 3rd position with 8% of the advertising share. Chocolate Ads shift focus from KIDS to YOUTH Indian chocolate market is almost totally depended on purchases of kids. In recent times, the chocolate majors, Cadburys and Nestle took major initiatives to bring in grown-ups into this market. While Cadbury is trying to sell indulgence to adults, Kit Kat is selling 'ritualistic' break to teenagers/ young adults. This is reflected in the changing advertising patterns across different channels. Out of 100 channels, eight channels account for 40 per cent of chocolate advertising. This pack of eight is headed by Cartoon Network, which is obvious, since the main buyers of this product category are children. But heavy advertising on channels like MTV, MAX, Star Plus, Zee, Zee Cinema, Discovery and Channel [V] proves the changing profile of the potential consumer for the advertisers, in this category, from children to teenagers/young adults as well as adults.

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Threat from imported brands Free availability of imported brands bought through illegal routes pose a threat to the domestic chocolate industry. Usually, these imported chocolates taste better than domestic chocolate due to recipe difference. Hence consumers who are willing to spend a little more, prefer these imported chocolates. However, the premium brands, which come through official channels, do not pose a threat to the market, as these cater to a small niche market. However there is a lot of dumping from neighboring countries like Dubai, Nepal, etc of inferior brand of imported chocolates. These are not only of low quality, but are brought very near to their expiry dates. Most of the cheap chocolate brands that are available do not meet Indian Food Regulations. External Factors affecting Growth of Chocolate Industry in INDIA Good monsoon ensures adequate availability of raw materials, which are mainly agricultural in nature. Raw material prices have significant influence on margins. Government policies in terms of licensing, duties, movement of agricultural commodities etc. also affect the introduction of products, time lag for a product launches, taxes, excise, etc all influence the business. Market growth driven by overall economic growth and urbanization also contributes. An overall booming economy will consume tonnes of chocolates because consumer spending increases.Also, the absolute number of consumers in middle class & upper middle class increases. Rupee depreciation improves export realizations; however it also makes import of raw material (esp. cocoa) expensive. Growth Opportunities in Indian Chocolate Industry Untapped Market & Limited Consumption: The fact that chocolate is not a traditional food, high prices and domestic production problems will provide the main problems to market growth. As these markets develop, prices will fall making these products more accessible to the wider population. However the Indian market is still untapped and provides immense scope for growth, both geographically as well as product basket wise. Chocolates right now reaches about 70mn to 75mn consumers. It is estimated that chocolates have a potential consumption is around 160gms in the urban areas, compared to 8-10kg in the developed countries. The market of about 116mn consumers. Chocolate consumption in India is extremely low. Per capita

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per capita chocolate consumption in India is still much below the East Asian standards. Hence per capita consumption has a immense scope for improvement. In rural areas, it is even lower. Chocolates in India are consumed as indulgence and not as a snack food. A strong volume growth was witnessed in the early 90's when Cadbury repositioned chocolates from children to adult consumption. The biggest opportunity is likely to stem from increasing the consumer base. Leading players like Cadbury and Nestle have been attempting to do this by value for money offerings, which are affordable to the masses. We also believe that the near term opportunity lies in increasing penetration rather than increasing intensity of consumption. In the past five years, the chocolate business grown by 14-15% on an average and is expected to grow further for at least next five years. Changing Attitudes & Consumption pattern: In the past, chocolate consumption had been restricted by low purchasing power in the market. Chocolates and other cocoa-based snack foods were looked upon as food suitable only for elitist consumption till recently. But with the launch of lower-priced, smaller bars of chocolate in the last two years and positioning of chocolate as a substitute to traditional sweets during festivals, have boosted consumption. Chocolates which were considered to be an elitist food hit the fancy of masses looking for a change in life style at affordable cost. Rural expansion: Rural market and small town markets are seen as the key to spurring double-digit growth. Products such as liquid chocolate packs from the existing portfolio are expected to enable rapid acceptance. Leverage India for off shoring: India is being leveraged for export of finished goods, as a superior destination for manufacturing best practices, and for BPO opportunities. All the above points bring us to a conclusion that theres an immense scope for growth of chocolate industry in India not only in its offering pattern but also for increment in its total consumption value and size.

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Strategies for Growth & Success in India 1. Revamp the product to keep the excitement alive. 2. Companies should look at new avenues, while expanding the reach of its products. Distribution will hold the key. Companies need to reach out to smaller towns, where three-fourths of the population does not even know the product. 3. Merger & Acquisitions: Mergers & Acquisitions with companies that match the product portfolio & overall growth strategy should be considered which will not only strengthen the company to establish a stronger hold in the country but also ward off possible competition in the select category. Such collaborations will also facilitate companies to use each others distribution networks. Observations. The Indian Chocolate Industry is a unique mix with extreme consumption patterns, attitudes, beliefs, income level and spending. At one hand, we have designer chocolates that are consumed when priced at even Rs 2500/kg while there are places in India where people have never even tasted chocolates once. Understanding the consumer demands and maintaining the quality will be essential. Companies will have to keep themselves abreast with the developments in other parts of the world. PRICING is the key for companies to make their product reach consumers pockets. Right pricing will make or break the product SUCCESS. Economical distribution of the products will also be equally important. The companies strategies should focus on driving sales through a right product mix, efficient materials procurement, reduced wastages, increased factory efficiencies and improved supply chain management. Theres an immense scope for growth of chocolate industry in India - geographically as well as in the product offering. The Indian Chocolate Industry is destined to grow and will do so in the future.

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2. Aim and Objective.

Most of the Companies are set with certain vision and mission. Cadbury India is set with a vision of spearheading the chocolate industry. The researcher tries to study on the effectiveness of the marketing and promotion stratergies adopted by the Cadbury and its Effectiveness. With this in mind the researcher had put a birds-eye view towards the different marketing strategies. Where an organization like Cadbury, different marketing strategies adopted by the company can increase the sales and thereby increase the profit of the company. By keeping this in mind the researcher has put his effort to study on the different distribution system adopted by Cadbury and also to analyze the new strategies adopted by Cadbury. The researcher also spends his valuable time to understand the impact of distribution channel adopted by Cadbury.. Objectives of the Study General Objectives To study on the marketing effectiveness and promotion strategies of Cadbury India Ltd based on their selection of distribution channels and competitors. Specific Objectives.

To find the marketing of Cadbury products with respect to the competitors To find the marketing effectiveness of distribution of Cadbury with respect to Nestle based on the present market.

Scope & Significance of the Study Most of the Companies are set with certain vision and mission. Cadbury India Ltd are set with a vision of spearheading Cadbury India Ltd in Indian market. The Company aims at Different marketing and promotion strategies adopted by the Cadbury India Ltd and its creating good quality products to all the customers. The researcher tries to study on the

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Effectiveness. The researcher also tries to put an extra effect to analyze new strategies developed and also to understand the impact of marketing strategies adopted by Cadbury India Ltd on Chocolates for effectiveness. The researcher has put a birds eye view on the core competence of Cadbury India Ltd and gives recommendations and suggestions for improving the Effectiveness. Hypothesis of the Study 1. Better the Marketing Strategy greater will be the effectiveness. 2. Better the Marketing Strategy greater will be the sales volume. 3. Better the Marketing Strategy greater will be the profit. 4. Better the Marketing Strategy higher will be the core competency of the company 5. Better the Marketing Strategy greater will be image of the company. Universe of the Study Cadbury India Ltd will be taken as the Universe of the study. Unit of the Study Customers, Dealers, shop man were taken as the unit of the study. Methodology (i) Literature Study A Study on the literature on the subject helped the researcher to get a clear cut idea about the topic and the subject matter connected with it. The researcher collected information pertaining to this topic from articles, magazines, research results, books and journals written by various authors. (ii) Pilot Study A Pilot study is conducted with the following Objectives To find the Universe of the study

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To ascertain the cooperation of the respondents in getting the detailed information pertaining to the report. To find out and fix the sample size and the respondents in order to gather information. To fix which method of data collection would be effective for investigation.

(iii) Construction of Tool/Instrument The investigator has used the instrument of questionnaire for data collection. The questionnaire has been prepared by the investigator on consultation with the supervisor. The questionnaire has two variables like independent and dependent variables including the area of study. (iv) Pre Test The investigator has conducted pretest of questionnaires to test the validity of the same. After drafting the questionnaire it is administered to the respondents with a view to list the effectiveness, relevance, applicability of the questions of the questionnaire. Questionnaire is finalized after the result of the pretest and also removing irrelevant unstructured and ambiguous questions and adding relevant questions. Limitation of the Study In spite of the precautions, vigilance, scrupulousness taken by the investigator to make the study objective, it cannot be denied that there are certain limitations. The respondents are reluctant to give correct information. Respondents at times were hostile. Even though the respondents give correct information during unstructured interview conducted, they gave negative answer while filling the questionnaire. Heterogeneity among the respondents. Inability to respond to the questionnaire due to fear of authority

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The investigator intended to cover only few areas of the topic relevant to the proposed study.

3. Findings
Nestle clairs dominates the market followed by Halls. Nestle Munch dominates the market in 5 rupee chocolate category followed by Cadbury Dairy Milk. In the family pack market Nestle dominates Cadbury in availability. In the snacks market Bytes and Lays have almost similar presence, Cadbury Bytes dominates the market in availability. Based on the six point analysis it can be inferred that Nestles distribution service is much better than that of Cadbury. SKUs of Cadbury chocolates (Rs 10 and above) has a higher presence in the shops visited. Frequency of visits of people from Nestle is more in the retail outlets compared to Cadbury. In the Malted Food Drinks category SB dominates Cadbury in availability. Shops having direct distribution from the company are less in Cadbury when compared with Nestle. Suggestions Distribution service of Cadbury has to be improved. Separate distributors for chocolates and confectioneries have to be made. Frequency of visits of people from company to retail outlets has to be increased. Services of merchandisers have to be improved. Order taking should be centralized. Credit period has to be increased.

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Order taking has to be made frequent.

4.

Conclusion

The Study reveals that Cadbury India Ltd should take aggressive measures to be the leaders in the market. There are plenty of suggestions & recommendations given by the researcher like the promotional activity, credit facility, the price of the product, product availability, distribution coverage etc. But almost every one demands better pricing, better merchandizing & availability of the product. Cheap products are available in the market. So to become the leader in the confectionaries, proper promotional activities should be provided for the products. This study helps to get a clear cut idea about the market potential of Cadbury India Ltd. The researcher also reveals the possible ways by which the product availability and distribution coverage can be improved by Cadbury India Ltd for attaining high sales revenue and brand image.

Synopsis created under the guidelines of Mr.Pilu Kurian, MBA in Human Resource Management and Marketing from Bharathiyar University, Passed out in 2003.

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