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Submitted To: Mr. S. Suresh
10609043-Radha Shekhar 10609053- Shivam Sinha 10609015- Aziz Lakhani 10609004- Abhishek Sood 10609007- Akshay Misra
10609057- Sumit Saini
TABLE OF CONTENTS
S. NO 1. 2 3 4 5 6 7 8 9 10 11 12 TOPIC EXECUTIVE SUMMARY CADBURY PROFILE INDUSTRY STRUCTURE ENVIRONMENT PRODUCT PRICE PHYSICAL DISTRIBUTION PROMOTION FINANCIAL ANALYSIS CUSTOMER SURVEY ANALYSIS SUGGESTIONS APPENDIX (A) SAMPLE CUSTOMER QUESTIONNAIRE (B) SAMPLE DEALER QUESTIONNAIRE (C) FINANCIAL STATEMENTS 13 BIBLIOGRAPHY 35 36 37 39 PAGE NO. 3 4 5 6 10 14 17 19 21 26 34
It is the primary project on Cadbury Chocolates. The main objective of this project is to acquire knowledge of understanding, analyzing and prepare report on companies marketing strategies. In order to prepare this report we divided the report in two parts ± data collection and analyzing of data. We have collected data from various sources like company website to collect information on company history and industry structure, website of Nestle and Amul who are the major competitors of Cadbury in India, we did a small survey company dealers and customer survey in order to know more about the decision making process of the company, annual report of the company was to analysis the financial status and growth of the company in last four years i.e 2005-2008. All this data was collected in order to conclude the company¶s performance and decision marketing strategies from time to time to sustain its market share from time to time. Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination of Kraft Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick meals. With annual revenues of approximately $50 billion, the combined company is the world's second largest food company, making delicious products for billions of consumers in more than 160 countries. We employ approximately 140,000 people and have operations in more than 70 countries. Cadbury Dairy Milk has exciting products on offer - Cadbury Dairy Milk Wowie, chocolate with Disney characters embossed in it, and Cadbury Dairy Milk 2 in 1, a delightful combination of milk chocolate and white chocolate. Giving consumers an exciting reason to keep coming back into the fun filled world of Cadbury. Cadbury Dairy Milk has been the market leader in the chocolate category for years. And has participated and been a part of every Indian's moments of happiness, joy and celebration. Today, Cadbury Dairy Milk alone holds 30% value share of the Indian chocolate market. In the early 90's, chocolates were seen as 'meant for kids', usually a reward or a bribe for children. In the Mid 90's the category was re-defined by the very popular `Real Taste of Life' campaign, shifting the focus from `just for kids' to the `kid in all of us'. It appealed to the child in every adult. And Cadbury Dairy Milk became the perfect expression of 'spontaneity' and 'shared good feelings'. Currently there are number of competitors in chocolate industry Cadbury in order to increase and sustain its market share needs to innovate some new products company should use more marketing tools to advertise its products and improve on it distribution network so as to make all its products available across the country. At the same time Cadbury should come out with more attractive gift packs more during the festive when people buy chocolates to give as gift to family and relatives. At the end we have come up with some suggestions that Cadbury to take up sales promotions techniques, provide good commission to the dealers, improve distribution network and makes all Cadbury products available for the consumers and innovate and maintain the quality of Cadbury chocolates so to sustain their market share in chocolate market.
. Today. which bought a whopping 71% of its shares before sealing the deal in February 2010. distribution and marketing. It was converted into a public limited company on 11th June. Cadbury s reaches 0. Ltd. Perk. It s one of the oldest and strongest players in the Indian confectionary industry with an estimated 68 per cent value share and 62 per cent volume share of the total chocolate market. It was founded by John Cadbury back in 1824.. Cadbury India has the biggest market share at 70 per cent while Nestle is the second largest at 20 per cent.A Brief History In India Cadbury has set gold standards in the chocolate industry. Delite and Temptations.000 tonnes and is valued at Rupees 6500 million (US$ 130 million). there is a Cadbury offering to suit all occasions and moods.000 employees and has been accounting for 12% growth rate over 5 years and accounts for 11% of the market share in the global market. 4 . Bournvita. to Cadbury India Pvt. Cadbury India was incorporated on 19th July.A Brief Company Overview Cadbury is a British confectionary company. CADBURY INDIA. John Cadbury and his brother Benjamin after realizing the potential of the business formed a company and in 1853 they received the Royal Warrant as manufacturers to Queen Victoria.CADBURY. and it is the industry's second-largest company after the combined Mars-Wrigley. 1948 as a private limited company under the name of Cadbury-Fry (India) Private Limited and commenced business soon thereafter. (COL) U. In 1977 the name of the Company was changed from Cadbury-Fry (India) Pvt. Cadbury has approximately 70% of the market share in the chocolate industry in India and is still growing. Cadbury is today a global brand making its presence felt in all parts of the world. Gems.6 million retail outlets. With brands like Dairy Milk. It has exhibited continuously strong revenue growth of 34 per cent and net profit growth of 24 per cent throughout the 1990 s. The size of the chocolate market in India is about 4. Manufacturing facilities were set up gradually. Chocki. Cadbury introduced the `Five Star and Gems' chocolates in 1967 and 1968 respectively. Cadbury is known for its exceptional capabilities in product innovation. 5 Star.K. Celebrations. Cadbury India's four factories in India churn out close to 8. for technical services concerning new products and processes. Ltd. The company today employs nearly 2000 people across India. Cadbury has been acquired by Kraft Foods.000 tonnes of chocolate and the company sells a million bars every day.. Cadbury employs over 45. Bytes. An agreement was entered into with Cadbury Overseas Ltd.
with India's metros proving to be the big draw clocking penetration in excess of 15 percent. The chocolate industry which was earlier targeted only towards the youth has changed its approach and is also targeting young adults and adults.G. come the relatively smaller cities/towns where consumption lags at about 8 percent. Chocolates are a luxury in the rural segment.V. Strydom Executive Director. Iyer Director.Y. Chhaya Executive Director. The chocolate wafer market (Ulta Perk etc) is around 35 % of the total chocolate market and has been growing at around 13% annually.50 billion) a year.Matthew Cadbury Vice-Chairman.David Kappler Executive Director. Shridhar Executive Director. According to AC Nielsen Chocolate market is estimated to be around 1500 crores and is growing at 18-20% per annum The global chocolate market is worth $75 billion annually.B. Bhat INDUSTRY STRUCTURE Chocolates which use to be considered unaffordable till the 80¶s. Rs. 6.J.N.C.Jaithirth Rao Director.e.P.000 tonnes per annum.Rajeev Bakshi Director.S.Harsh Mariwala Director.Rajiv Wahi Director. are now considered mid-priced. The Indian chocolate bazaar is estimated to be in the region of 22. the middle class and rich Indians opt for chocolates.Board of Directors at Cadbury India Chairman.M. That is approximately 70% of total consumption of chocolate. Pal Managing Director. 5 .G. Puri Executive Director.000-24. Next. 650 crores (i.N. The market presently has close to 60mn consumers and they are mainly located in the urban areas. The Indian chocolate market alone is valued at Rs. which explains the mere 2 percent penetration in villages. Due to the convenience over Mithai in terms of packaging and shelf life. Chocolate penetration in the country is a little over 4 percent. Talwar Director.
making for chunky bites. Bar One.9 kilograms in developed markets such as that of UK and US. Moulded Chocolate Segment .comprising chocolate forms such as Gems. There has been a significant growth in the middle class. Kit Kat. In the industry. Surprisingly Cadbury Celebrations range alone accounts for a market share of 6. etc. CAMPCO and smaller companies operating in the unorganized sector. Nutties. These have ingredients other then chocolate and are usually Bar shaped. Major Players & their Market Share The major players in the Indian Chocolate Industry are: 1.5% in the Indian market. Next close comes Nestle with 20% of the market share and the remaining is shared by the Amul.The Indian Chocolate market can be sliced into four parts. etc. both population and family incomes as well as urbanisation are on the increase.comprising bars like 5 star. The per-capita consumption of chocolate in India is 300 gm as compared to 1. etc. Tiffins.comprising slab chocolates like Dairy milk chocolates. These are made by pouring the ingredients into moulds. Choco-Panned Segment . etc. Countline Segment . Chocolate eclairs.8 million people having upgraded to the quoted middle class. Perk. the young and not so young population will lead a new life style and chocolate eating is definitely going to be widespread and acceptable. The Gujarat Co-operative Milk Marketing Federation (GCMMF) AMUL 4. Sugar-Panned Segment .comprising chocolate forms like Butterscotch. Cadbury s India Limited 2. Cocoa Manufactures and Processors Co-operative (CAMPCO) Cadbury dominates the Indian chocolate market with above 65 70 % market share. with 5. These generally have a sugar coating on the outside. Nestle India 3. 6 . Panned variety has different cores/centers which are covered with a layer of chocolate. Trends in the Industry With socio-economic changes rapidly taking place.
a wafer enrobed chocolate in 1995. Its first offering Googly. This cash is exactly double of what s been invested in 1996. Besides CDM Cadbury s has a number of endorser brands such as Fruit n Nut. Cadbury planned to pump in Rs. Cadbury Gems. Perk and the latest of its offering Picnic (which has drawn a good response in the market). In 1997.There is quantified data on FMCG usage having increased (NRS-VI & IRS 98 figures) ENVIRONMENT At present there are three major players Nestle. The Company has also identified sugar confectionery. they are required in order to make a complete portfolio of offering. Campco initially tried to break into market but failed. has been in India since 1948. it is undoubtedly the market leader.80-crore to up production capacity at a couple of Cadbury s factories. Indori (near Pune). as a growth sector. In all the segments i. the oldest of Cadbury s brands was launched in 1956. a rise in the prices of cocoa. Cadbury s Dairy Milk (CDM) . Cadbury s Eclairs. Two years in the process after relaunch Cadbury s Dairy Milk s market share stood at 25 percent with sales rising by an average 40 percent per annum. Even though contribution of these brands to the company s bottom-line is very small. molded chocolates. Malanpur.e. Gems and Chocolate Eclairs are the households names in India today. Five Star. Cadbury s has its manufacturing units at Thane (Mumbai). It has a strong distribution network with about 500 distributors in North India and more than 3 lac retail outlets being serviced all over India. increase in the excise duty and a fall in the demand inspired the idea of repositioning. This was reactionary to the launch of Kit Kat and has been able to counter competition. Nut Milk etc.The Flagship brand CDM. 5 Star. In the early 90s. 7 . count chocolates and panned chocolates. Cadbury s and Amul in the Indian Chocolate market. Its brands: Dairy Milk. The Company launched Perk. Mithuri and Kolapur. Cadbury India Ltd. The Company developed a concentration strategy on CDM. Brief profile of the same has been entailed below: Cadbury India Ltd.
This unit took care of the entire Kit Kat production. Goa at a cost of Rs. Its launch was accompanied by the launch of Cadbury s Perk in order to counter Kit Kat and safeguard the flagship brand CDM. Crunch and Fruit n Nut has a market share of about 5 %. the production tie-up with Campco still continued. Creamy Bar. Kit Kat outsells Perk in the outlets where both are available. Nestle India Ltd. it fulfilled every target Nestle had set. In the crucial markets of Bombay and Delhi both are running neck-and-neck. Cadbury Dairy Milk. the bitter chocolate and Crackle (a crunchy chocolate) . 8 . Within months of its launch. one of world s most popular chocolate. and a new version of 5 Star.the milk chocolate. It had an alliance with Campco to manufacture chocolates. Amul Chocolates Gujarat Cooperative Milk Marketing Federation (GCMMF) launched the Amul Chocolate way back in 1974. in 1995 a state-of-art manufacturing plant was set up at Ponda. Nestle. With its milk chocolates. It has even said to have threatened the mother brand. made its foray in the Indian chocolate Industry in November 1990. has been in India for more than 35 years now. 50 crores. was launched in India in 1995. However. Due to lack of focus and with multinationals spending huge amounts on advertisements its market share has been falling. Kit Kat has been able to define a new segment in the industry in the form of the wafer enrobed any time snack.Nestle.Nestle India Ltd. and launched a whole host of products in succession: All Silk milk chocolate.in the slabs category and Bar One in count lines. Cadbury s was quick to react. The world s largest marketer of chocolates (became world number one when it acquired Rowntree Macintosh of the UK) . Later. in the beginning did not have its own manufacturing facility. Badam Bar. Launch of Kit Kat Kit Kat. It launched three products .
Limited capacity is also a reason for the share it has. It is supplying its production to Nestle.is selling whatever it produces. Interestingly. Ever since. But crunch of resources grossly effected the pace of the company and is hardly to be heard of today. Amul s memorable advertising campaign positioning it as a A Gift for Someone You Love . saw the sales graph rising. 9 . Amul chocolates are not on company s focus. (KDCMPL) . Kaira District Cooperative Milk Producers Ltd. Other Domestic Players The only other organized player in the market is Campco. The company is not concentrating much on its chocolate business.GCMMF is involved in a large number of products. However.the manufacturer of Amul chocolate . of which chocolates constitutes just 1-2 %. As of now. Amul s sales grew by 39% then. Amul has maintained a low profile. Apart from this Campco did come up with its new brands like Treat. which has an insignificant share of the market.
Companies had to respond to these changes. Moving from a predominantly adult positioning in the days of the legendary dancing girl ad. food elements and texture. There are many examples of products that have been launched and which have been withdrawn because they could not sustain long term sales success. but commands nearly 26 per cent in volume terms and close to 30 per cent of Cadbury¶s annual turnover. Not all products successfully emerge from the product development phase. Rowntree (now owned by Nestlé) changed the shape of their Munch bar and Cadbury brought out a rival bar called Bonbon. A research and development team was then asked to develop a number of product recipes which addressed the needs expressed by consumers. Cadbury came up with the 'Dairy Milk' concept which was developed after market research identified the growth of snacking and a definite gap in the market for a more chocolaty snack. to the teens and the 10 . More than 250 ingredients were tried and tested in various combinations before the recipe was finalized. There are a small number of large firms in the industry . Many of the brands in the market have been in existence for a long time and have a high amount of brand loyalty. Openings for new products therefore are limited. CDM not only accounts for 30 per cent of the total chocolate market in value. Today Cadbury has four major products at this price point which are as follows: Cadbury¶s Dairy Milk (CDM): Cadbury¶s Dairy Milk is the flagship brand of Cadbury¶s not only in India but world wide. The market is still changing but using chocolate as a snack as opposed to sharing a bar amongst a family or giving chocolate as a gift is still a growing part of market.PRODUCT The development of strong brands has always been a feature of the confectionery market. Nestlé and Amul being the most well known. Both of these were designed to exploit this growing market. The market for chocolate bars is highly competitive.Cadbury. The growth of the Dairy Milk chocolate became popular as people ate chocolate on the go as opposed to sitting down in a room with a traditional bar of chocolate. Research and development involves combining various ingredients to develop potential new products. CDM is the single largest selling unit in India. A number of ingredients were devised and tested following a survey which questioned consumers about their snacking habits and preferences. It has annual sales to the tune of Rs 200 crore. Considerable development time was spent on Dairy Milk. The market for certain types of chocolate bar has changed in recent years. carefully engineering the ingredients in order to deliver the right balance of chocolate.
made it even more alluring to the TG. Wherever you buy a bar of Cadbury Dairy Milk the pack design will be exactly the same. Cadbury Dairy Milk carries the same distinctive image all over the world. It is renowned to have been the first wafer chocolate brand in India. you'd hate to share it'. its star brand remains Cadbury Dairy Milk (CDM) which continues to corner almost 30 per cent of the chocolate market. to the 'lingering taste of togetherness' & 'Soft and Chewy 5 Star'. 5 Star Crunchy has the same delicious Cadbury 5 Star with a dash of rice crispies. From 'deliciously rich. is one of the all-time greats of British advertising. The 11 . In spite of the new categories being explored by Cadbury.tweens. The famous slogan "glass and a half of fresh liquid milk in every half pound" with the picture of milk pouring into the chocolate bar. the communication always paid homage to the product format Cadbury launched 5 Star Crunchy in 2005 to give the chocolate lovers one more reason to join the 5 Star fold. only the language will be different. Cadbury 5star (Crunchy): Cadbury 5 Star is unique because of its format and any communication highlighting this uniqueness. This different and delightfully tasty chocolate is well poised to rule the Indian market as an extremely successful brand. The variant was such a run away success that 5 Star¶s market share jumped by almost 50% post it¶s launch! Cadbury now aims to continue the upward trend for 5 Star. Cadbury dairy Milk bar is the single largest selling SKU of Cadbury. Cadbury Perk: Cadbury Perk began its journey in 1996 as the Indian market started to get global competition in the chocolate market. CDM has made a long sweet journey. when the Cyrus Broacha ads hit the airwaves. As an international brand. One of the unique features for 5 Star¶s popularity is the delicious dual (5 Star is an exemplary combination of Chocolate & Caramel) eat experience that it provides to the consumer.
PRODUCT REVAMPING & INNOVATIONS Cadbury¶s chocolate brands registered double-digit growth in 2002. it was largely on the back of Chocki and the revamped power brands. The growth went down from 19 per cent in 1999 to 12 per cent in 2000 to single-digits. If it staged a smart recovery to nearly 10 per cent in 2002. It was a quick light snack. This gifting option combines the pleasure of giving away dry fruits ² which Indians traditionally consider a premium. Rum. crisp wafer and chocolate construct targeted the casual snacking space. Cadbury Perk stepped up with these changing times and consumers saw the dawn of Perk XL . Its unique brand of advertising that features bubbly. which contains traditional Indian dry fruits wrapped in Dairy Milk chocolate. Perk is poised for growth with it¶s capability to expand the chocolate market and strong franchise of loyal consumers. anywhere¶ light snack. Various variants available are Almond. Cashew & Orange. Perk XXL .light. the growth rate was declining after that. traditionally the domain of chips and salty wafers. 12 . 40 Cadbury¶s Celebration Cadbury India launched its premium Celebrations range. Getting the power brands right was the first priority. Perk Slims and Perk Minis. so genuine re-launches of the products were made. Cadbury Perk has kept pace with the evolving market with the launch of a lower pricepoint offering. On the back of popular advertising. as the messaging progressed the offerings became varied. the youth. It was a quick light snack. Cadbury¶s temptation is priced at Rs. mischievous teenagers who get out of µstuck¶ situations with a Perk ensured its popularity among its prime consumers. Perk became the delicious µanytime. healthy gift ² with chocolate. Cadbury now has 90 per cent market share in this profitable segment. with seven per cent in 2001. However. touching an astounding 19 per cent in the second half of that calendar year. Cadbury¶s Temptation: Cadbury¶s Temptation is premium chocolate brand aimed for high value consumption. In time. Value for money brands increased the competition in the wafer chocolate segment. One of the key players in the Indian chocolate market and Cadbury¶s representative in the chocolate wafer biscuit category.
and people complained of it sticking to their teeth.PRODUCT INNOVATIONS: 5 STAR: Consumer feedback suggested that the old 5 Star was too chewy. And. HEROES: Packaging innovation has played a vital role in revamping of various Cadbury¶s brands. It was made softer and melted easily in the mouth & introduced as 5 Star Crunchy PERK: Perk was made much lighter and the size of the bar increased to match Nestle¶s Munch. Heroes brand is simply a multi-pack with miniatures of all its most popular brands in a single outer case. 13 . its marketshare is two per cent more than KitKat¶s. the five-year-old brand is now almost as big as the decades-old 5 Star in size. but after the relaunch. both in the region of Rs 50-55 crore. Perk had been under fire from Nestle¶s deadly duo of KitKat and Munch.
Cadbury¶s empire struck back hard. The Rs 5 price point accounts for more than half of all chocolate sales. expanding the concept of sachetisation to new frontiers. Cadbury has four products at this price point: CDM. meaning that few will be sold. choosing the correct price is vital. the company seems to have astutely juggled with the larger pack sizes and raised prices to a degree higher than what appears at face. it constituted nearly 10 per cent of the total chocolate market.´ is what industry analyst have to say. more expensive than similar products sold by other companies. Chocki has been the single biggest growth driver for Cadbury as well as the entire chocolate category. Simultaneously. now a roaring success (and the largest selling product at that price point). seem exclusive and special. There are many different pricing strategies. This means they take the average cost of making each product and add on a percentage of the price as profit. The novelty of the format endeared itself to the existing customer. and some companies use mark-up pricing to decide the price of their product. In less than one year. if it is set too low. with its launch of Munch. for example how much other companies charge for similar products and the image of the product. priced at Rs 2. the company will make less profit and customers may think that the product is inferior to similar products at a higher price. Perk. Volume led growth strategy Cadbury has followed a well-planned strategy of fuelling volume growth by introducing smaller unit packs at lower price points. If a business has developed a product that they want to have a luxurious feel. However. If the price is set too high it may be more than the product¶s target customer can afford. because the average purchasing power is abysmally low. 5 star and Gems ² and the five-rupee CDM bar is its single largest-selling SKU. Today. it is likely to have a higher price. 14 . Nestle kicked off one of the biggest success ² the liquid chocolate category with its brand Chocostick priced at Rs.PRICE If a company is to sell a new product it has developed. After the roaring success of Nestle¶s Munch and Chocostick. The percentage added will depend on several factors.2 ² three months ahead of competition. ³This is a potent price point in India. Cadbury did react with Chocki. Nestle had seized the initiative at this price point. The strategy has driven volumes in the last two years and we expect the volume growth to continue in the next two years. split equally between Cadbury and Nestle.
Price is below the true cost of the product to encourage consumers to buy product. The firms will then in turn use flow production and benefit from economies of scale. Psychological price . They did this because if they priced it too high then no one would buy it since they could purchase other chocolate bars for less. Some people prefer to buy without caring about the fact that they could get a better deal and some other always want to land up with the best deal. The Pricing Strategy Cadbury has followed a well. for example 20p they would be selling at a price less than the rest but then the other companies would also have to lower their prices because of which the overall the prices of chocolates would fall and the profits of all the companies would go down. From 15 . Simultaneously.R.P. This means that large quantities of Dairy Milk should be sold for the company to break even. the company seems to have astutely juggled with the larger pack size and raised price to a degree higher than what appears at face. at 33p.g. Later the price is raised Cost plus price .This is a price that is nearly the same as the competition has charged. so they set the R.This is when a price is set at e. if they priced it too low. An impulse buy is just when you walk in a shop and buy something quickly without much thought before the purchase.99 rather than INR 7. Penetration or destruction price . Hence.Generally used pricing strategies: Based price. They couldn¶t set it too low because they have an oligopolistic market. So Cadbury priced the chocolate bar appropriately but not too low so Cadbury still earns a fair bit of profit.Cost of product plus a markup of profit. The price would never really change throughout the life cycle of the product since there are lots of other brands which are also selling their products of the same category at similar prices.This is a low price to encourage loyalty and to gain market share. Loss leader . This logic applies to Cadbury Dairy Milk just a tiny bit because people don't look for the best buy on a chocolate bar because it is an impulse buy.planned strategy of fuelling volume growth by introducing small unit packs at lower price points. Cadbury went for base pricing since it was also being used by their competitors. INR 6.00 so it encourages people to think it is cheaper. Different people have different level of sensitivities when it comes to prices. This will help them by saving money and time because they will be buying and making in bulk. It was a market oriented strategy.
16 . So a slight increase in price could have been more beneficial since Dairy Milk has to sell a lot to breakeven. Dairy Milk could have increased the price and still got the same amount of sales because not many people care how much their chocolate bar costs since most of these purchases are impulse purchases.my findings I have seen that Dairy Milk has under charged people for their chocolate bars. even though Cadbury have very good economies of scale.
Physical Distribution Cadbury has 5 company owned manufacturing units along with 4 sales offices located in India with its Head office located in Mumbai. Cadbury is setting up two separate distribution channels ± one for CORE business & other for MASS markets. Besides use of IT to improve distribution logistics. when sales usually dip due to the fact that the heat affects product quality and thereby off take. with different stockists. garages Vending machines ±train stations Restaurants and cafés 17 . in the case of chocolates. To address the issues of product stability. wholesalers and retailers. One set will be dedicated to Cadbury¶s high-end products and traditional chocolates. Halls. This helps in maintaining consumption in summer. total reaching12 lakh outlets). Eclairs etc ² all products priced below Rs 3. is a major deterrent to new entrants as the product has to be kept cool in summer and also has to be adapted to suit local tropical conditions. The manufacturing units are located at: y y y y y Thane Induri (Pune) Malanpur (Gwalior) Bangalore Baddi (HP) These factories churn out close to 8. The company has a total consumer base of over 65 million. Cadbury's distribution network reaches out to six lakh outlets each for its chocolate & confectionery brands (i. The sales offices are at: y New Delhi y Mumbai y Kolkata y Chennai Distribution. Today.000 retailers. Cadbury's distribution network used to encompasses 2100 distributors and 450.e. supermarkets. Cadbury is also attempting to improve distribution quality. To avoid cannibalization of its higher priced products from lower priced ones.000 tonnes of chocolate annually. it has installed VISI coolers at several outlets. The other will cater to the mass market brands namely Bytes. Places where Cadbury products are sold y y y Retail outlets ± shops.
90% of the chocolates are sold by Cadbury directly to the retailer due to the problem of melting and the rest 10% of the produce follows the conventional distribution channel. Cadbury India employees the bottom 2 distribution channels or networks. Gift Gallerires. on board airlines. Qualities that Cadbury looks for while selecting dealers: y y y y y y Business capacity and salesmanship Experience and previous expertise in the line Credit worthiness Financial capacity and willingness to invest in the line Social status Good relation with the customers.y y Cinemas. Chemists. When you go to a store the chocolate counter is easily identifiable and is usually located near the cash counter. 18 . Canteens. motorway service stations Chocolates are easily available at all types of stores ranging from Kirana Stores. especially bulk consumers and and sub-dealers. Chocolates are products that are bought mainly on impulse and hence they are strategically placed at positions where they would be able to gather maximum attention. theatres. Supermarkets etc. theme parks Travel ± buffet cars.
The ads under the campaign were made so as to make chocolate acceptable in the society for adults and masses. 19 . It is also clearly evident that the number of advertisements goes up during festival season which is from September till midNovember. The campaign was µ Khane Walon ko Khane ka Bahana Chahiye¶. After this the µPappu Paas Ho Gaya¶ campaign was taken and the CDM was being showcased as a product that one eats while celebrating any occasion. Genelia D¶souza to the living legend Amitabh Bachan. 70-75% of the advertisements of chocolates on television are of Cadbury chocolates as a whole and 30% out of these are of CDM alone. To create awareness about new flavors Induce consumer trails. The basic purpose behind advertising is: To position the product as a ³high quality brand´ with a wide range of offering providing at anytime. It rules chocolate advertising on television. Today the brand Cadbury has become synonymous with chocolate. From Preity Zinta. The company has moved its focus from targeting the youth to the adults and young adults. Approx. The brand has also been successful in roping in some of the biggest celebrities. Through this campaign the CDM became the perfect expression of good feelings and spontaneity. After this campaign the horizon was further widened and the focus of the product was being shifted to the masses at large. The ad that is best etched out in the minds of the people under this campaign is the girl dancing on the cricket field celebrating the victory of her lover. the brand has tried to put its best foot forward.PROMOTION Companies have to plan effectively for their advertising and promotions because a slight misunderstanding or misinterpretation of company views can compel consumer to have a different perception so in order to remove this communication barrier a lot has to be planned. The CDM advertisements: In early 90¶s the advertisement µ Real Taste of life¶ was used wherein the ad tried to shift the focus of CDM which was earlier just for kids to adults and young adults. build corporate image To undertake competitive advertisement Cadbury India has very well captured the Indian advertising scenario as far as the chocolate Industry is concerned. So under this section we will try to understand.
The latest advertisement are those which maintain the slogan µ Meetha hai Khana¶. 20 . These ads have been made once again to celebrate pay day and try to show that a CDM is a must for every occasion.
deals with variety of products but they are leader in chocolates. marketing and distribution channel. This sector has seen strong gains from 3000 in 2003 to 21000 in 2008. More the working capital less financial strain company experiences. Companies current liabilities have increased which means they have creditors standing at their doorstep . As we analyse the financial statement of the company over the last few years Cadburys share capital has increased by issuing shares to public in lieu of fund. Here Secured loan must have been taken to secure the creditor. CADBURY INDIA Ltd.28 Cr in FY07 to 32. Asset is kept as collateral security. the one sector which completely outperformed the market was FMCG.FINANCIAL ANALYSIS The Indian FMCG sector has been the outperformer for some last years. almost making it five times of its previous year. which may be a reason for increase in working capital. In 2008 when almost all the stocks were tumbling on Dalal Street. Companies current assets have decreased . Cadburys total debt has increased which indicates firm owes to outsiders. From 25 cr in FY07 to 125 cr in FY08.70% IN FY 08.76 % in FY07 to 41. It infact shows best position of a company. Cash has also increased a great amount . which shows management has the ability to pay dividend and even repurchase share. Secured loan is issued against some asset. Capital work in progress has also increased a great amount. Hence we believe FMCG is strong and defensive sector and one should consider this sector for his/her portfolio and invest some amount of it seeing the euro crisis at present. It has increased from 8. Cadbury is the largest confectioner in the country with turnover of around Rs 2000 crore and annual sales growth being 20 percent. It reveals more of financial condition of a company. 21 . The Indian chocolate market is growing at an rate of nearly 20 percent and Cadbury india enjoys the lions share of 71 percent . It tells us what would be left if a company raises all its short term resources and used to pay its short term liabilities.86/12 months stock with it. It can also provide extra room for expanding. This can be seen from inventory turnover ratio also . It can be seen from liabilities side in balance sheet that secured loans have increased from 1. Despite sensex almost lost 50 percent but FMCG only lost around 10 percent. If we go to assets side inventories have increased from 98 in FY04 to 222 in FY 08 with 151 in FY 07.02 Cr IN FY08. But if Cadbury is ahead of these companies then its mainly due to huge amount it spends on advertising. And yes It¶s also the oldest in the market. NESTLE and AMUL are its biggest competitor but they are lagging behind. it has 7. Company has followed huge disinvestment policy as its investment have came down. Which mean an inventory of 45 days which is great.
02 DEC 05 0.20 0. 1:1 ratio is considered good.33:1 ratio as minimum acceptable level for providing working capital finance.2 0.3 0.85 DEC 06 0. So here this ratio is not a healthy one. Here quick ratio is 0. QUICK RATIO current assets . 22 .22 0.9 0.79 DEC 04 1. Ratio of 2:1 is considered ideal. It shows company is paying Its current obligations quite well.2 0.12 almost making it 2 times of it.61 DEC 08 1.FINANCIAL RATIOS Ratio analysis is used to interpret the financial statement so that strength and weakness of a firm can be known and its current financial condition can be assessed and determined. loans and advances ² inventories /current liabilities and provisions ² bank overdraft This ratio tries to develop a relationship liquid assets and Current Liabilities.61 DEC 07 0. This ratio also helps in cross checking inventories.2 0. Banks consider 1.38 0.12 CURRENT RATIO This ratio is a major test of liquidity.45 0.79. It has improved over the years from 0.61 to 1. This ratio measures the surplus or deficit of current assets over the amount due. LIQUIDITY RATIOS RATIO CURRENT RATIO QUICK RATIO DEBT EQUITY RATIO 0. 1.
36 DEC 05 48.83 12.9 ratio indicates that equity is used for finance with some part of debt also in use.78 11.97 105.36 8.33 14.80 49. It also gives indication of sound financial position of Cadbury India. 7.5 months or 45 days.73 DEC 06 77. The firm should make efforts to improve the operating efficiency. It shows excessive use of debts .60 DEC 07 106.DEBT EQUITY RATIO Debt /Equity This ratio indicates what proportion of equity and debt that the company is using to finance its company. 0.45 12.96 TURNOVER RATIO DEBTORS TURNOVER RATIO GROSS PROFIT MARGIN 31.11 10.45 INTEREST COVER It has very steep fall from 106 to 39.89 95. 23 .77 8.62 11. High rate shows firm is conservative in using debt and low rate indicates excessive use of debt.72 DEC 08 39.04 7. It measures the relative claim of creditors and owners in a business organization.86 DEC 04 27. INVENTORY TURNOVER RATIO Here it can be said Cadbury is turning its inventory of finished goods into sales quite well. OTHER RATIOS RATIO INTEREST COVER INVENTORY 7.54 96.9 times a year means it holds an average inventory of 1.
GROSS PROFIT MARGIN Gross profit × 100 / sales ]×100 /sales [ sales²cost of goods sold This ratio shows gap between revenue and expenses at a point after which an enterprise has to meet the expenses related to the non-manufacturing activities like advertising. Higher the rate more beneficial it is .45 percent indicates the capability of the company has decreased to cover its overheads. 16 14 12 10 8 6 4 2 0 de o4 De -05 De -06 De -07 De -08 24 . Cadbury India spends huge amount on advertisements and marketing. marketing. Here ratio is 96 percent which means management of credit is good. Profit has declined over the years since there are more competitors in the market which has lowered the profit margin.DEBTORS TURNOVER RATIO Credit sales / Average debtors It indicates the number of times debtors turnover each year. Leaving less profit for shareholders. 11.
It shows good track of profitability. 25 . RETURN OF CAPITAL EMPLOYED Net profit / capital employed 40 percent is a good amount. EARNING PER SHARE This ratio shows the amount earned in a year on each ordinary share in issue. Note: X-axis denotes Years and Y-axis depicts percentage change in gross profit. 05 and 06. EPS shows what shareholders earned by way of profit for a period whereas DPS shows how much the shareholders were actually paid by way of dividends. Cadbury India has paid regular dividend to its shareholders. It means investors have earned a good profit. This ratio tells us how much profit we earn from the investment. But chocolate industry operates with low margin. Higher means better capital productivity. 51 percent from 35 percent shows managerial efficiency as it has increased over the years. Rs 2 is distributed per share as dividend by Cadbury India.The above graph states that the Gross Profit of the company had an upward trend for the year 2004. This can be improved if profit margin is increased and investment is increased. DIVIDEND PER SHARE Dividends paid to equity shareholders / Average number of issued equity shares This ratio is very similar to EARNING PER SHARE. For the year 2007 Gross Profit of the company declined and again in 2008 saw it regained its momentum. It also measures economic performance of the company.
Q 2.CUSTOMER SURVEY ANALYSIS Q 1. Do you buy chocolates? From the above graph we see that a good number of people consume chocolate. Which brand do you prefer most? From the graph we study that maximum number of chocolate consumers prefers to buy Cadbury chocolates compared to Nestle and Amul. 26 .
gems or any other Cadbury product available in the market. 27 © © ¦ ¨ § ¢ ¢¤¢ ¤ ¦ ¢ ¥ ¥ ¡ £ ¡ ¢¤ ¢ ¡¡ . Q 4)Which product do you buy most? It is clear from the graph that Dairy Milk is the highest selling product of Cadbury it has a huge sale compared to 5 star.Q 3. How have you come to know about the Brand? S ri s 20 15 10 5 0 £ £ S ri s 1 t l visi ra i ws a r ar i gs w r f t The above graph shows that Cadbury use a medium of television to advertise its brands in the market television reaches to the mass thus orienting a all sort of age group people.
28 . Q 6) What makes you buy the product? 20 15 10 5 0 Series 1 Series 2 Series 3 The above graph shows that consumers intent to buy Cadbury products again n again because of the taste of the products.Q 5) Do you think that the price is reasonable? This graphical representation states that all Cadbury products are prices reasonable and can be easily affordable by the consumers.
29 . Q 8.) Do you receive any complain about the products from the customer? From the graph above we see a very less number of complaints are received by the consumers of Cadbury products.Q7) Are you satisfied with the product? From the graph above we can study that maximum number of consumers of Cadbury products are satisfied.
) Which of the following brand is available in your store ? The graph above shows that dealers sell more of Cadbury products compared to Nestle or Amul.) Do you sell chocolates? The graphical representation states that almost all dealer sell Cadbury chocolates. Q 2. 30 .DEALER SURVEY ANALYSIS Q 1.
Q 4.) Which brand sells most? The above graph explains that Cadbury chocolate has the maximum market share with maximum sale of chocolates compared to its competitors like Nestle and Amul. 31 .) Which product of Cadbury has the highest sale in a day? It is studied from the above graph that Cadbury Éclairs which is very popular among kids has the maximum sale of all Cadbury products available in the market.Q 3.
) Are you satisfied with the commission you earn on selling Cadbury products? It is studied from the above graph that most of the Cadbury dealers are not satisfied with the commission they earn on selling Cadbury products. 32 .Q 5) Which age group buy¶s most ? The graph shows that Cadbury Chocolates are mostly consumed by people of age group between 11yrs to 20yrs and minimum consumption by age group of 21yrs to 40yrs Q7.
Q 8) How do you find the packaging of the product? The above graph shows that maximum dealers of Cadbury Chocolate find packing of Cadbury Chocolates good Q 9) Which product give you the highest margin? The above graph shows that a Cadbury Chocolate dealer earns maximum margin of profit on sale of Cadbury Dairy Milk compared to Celebrations which also has a good profit margin. 33 .
In the end. Cadbury as a brand had its product most sought after followed by Nestle. and Amul. others. Amul . This clearly indicates that the distribution channel of Cadbury is well established . Packaging too in case of introducing a new or differentiated product into the market plays an important role in escalating the product to customer as suggested by dealer. the response given by them easily synchronizes with responses of the consumer. Others due to stiff competition in the fast moving consumer goods segment. 34 . Coming to the dealer point of view. but they are not satisfied with the commission they are earning on the selling the products in case of any of the brand be it Nestle. Almost every dealer sells Cadbury products. Cadbury should come out with some high end range of products in order to compete with other imported chocolate which are sold in Indian market these days. Price has again been significantly important factor in determining customer choice as customer invariably look for a Rs. Dairy milk has once against emerged as the most sought after product in the product width of Cadbury. Moreover factors affecting customer choice can easily be understood.SUGGESTIONS After conducting the customer and dealer survey analysis a clear understanding about Cadbury market standing can be evaluated . During customer survey analysis it was clearly evident that chocolates as a product has got a potential market as only one of the respondent answered that he does not buy chocolate which could be even regarded as exception . In order to pump up the sale of other Cadbury products with comparatively low sales volume Cadbury should come out with some festive offers from time to time to attract more and more potential customers of chocolates in the market thus increasing its market share. 10 chocolate such as Dairy milk even today as it was five year earlier.Customers on the other hand are also satisfied with the product as eighteen of the twenty respondent replied yes. Cadbury has an advantage being manufactured in India itself it can compete with them not only in case of quality but also the price. One of the primary reasons is due to easy availability and high advertising. I would like to suggest that though Cadbury has a good market positioning it must provide its dealers with more sales commission this will directly motivate the dealers to sell more of Cadbury products.
APPENDIX SAMPLE CUSTOMER QUESTIONNAIRE Q 1. Please specify? a)Yes b) No ««««««««««««««««««««««««««««««««« Q 7) What makes you buy the product? a) Taste b) Packet c)Price d)Availability Q 8) What would you substitute chocolate for? ««««««««««««««««««««««««««««««««««««.. How have you come to know about the Brand? a)Television b)Radio c)Newspaper d)Hoardings E)Word of Mouth Q 4) Which product do you buy most? a)Dairy milk b)Fruit and nut c)5 star d) Cleberation e)Temptation f)Eclairs g)Bournville h) Gems Q 5) Do you think that the price is reasonable? a)Yes b) No Q6) Do you have any complain about the product? If yes. 35 . Which brand do you prefer most? a)Cadbury b)Nestle c)Amul d) Any other Q 3. Do you buy chocolates? a)Yes b) No Q 2. Q9) Are you satisfied with the product? a) Yes b) No Q10) Any Suggestions? «««««««««««««««««««.
) Which brand sells most? a) Cadbury b) Nestle c) Amul d)others Q 4.) Do you sell chocolates? a) Yes b) No Q 2.) Which of the following brand is available in your store? a) Cadbury b) Nestle c) Amul d) others Q 3.) Are you satisfied with the commission you earn on selling Cadbury products? a)Yes b) No Q 8) How do you find the packaging of the product? a)Good b) Average C)Poor Q 9) Which product gives you the highest margin? a) Dairy milk b) Fruit & nut c) 5 star d) Temptation e) Bourneville f) Éclairs g) Gems Q10.. Q 1.) Do you receive any complain about the products from the customer? a)Yes b)No Q7.) Which product of Cadbury has the highest sale in a day? a) Dairy milk b) Fruit & nut c) 5 star d) Temptation e) Bourneville f) Éclairs g) Gems Q 5) Which age group buy¶s most? a)4-10 b)11-20 c)21-40 d)40-60 e)60-80 Q 6.) Any suggestions? «««««««««««««««««««««««« 36 ..SAMPLE DEALER QUESTIONNAIRE Name of dealer«««««««««««««« Address/contact n0««««««««««««««««.
29 1.07 2.98 732.14 0.064.56 33.59 25.54 243.62 94.751.00 6. ------------------Dec '05 12 mths Dec '06 12 mths Dec '07 12 mths Dec '08 12 mths 885.61 5.00 1.83 93.96 0.139.95 544.28 121.00 256.52 0.44 563.92 148.44 13.441.34 Dec '06 12 mths 139.00 112.53 94.54 1.76 179.00 Dec '04 12 mths 1.19 45.54 35.65 575.318.87 1.32 1.18 Dec '05 12 mths 99.17 76.00 143.22 96.64 1.93 57.61 323.41 92.63 266.421.09 246.46 0.48 790.00 81.67 117.03 177.85 33.93 0.00 201.45 1.006.97 91.11 0.00 6.87 10.78 17.62 68.20 238.49 124.00 58.83 0.41 36.00 6.32 0.44 0.07 0.85 0. Cr.47 7.24 8.91 1.22 145.54 43.97 2.00 791.07 51.02 126.81 474.61 22.00 112.65 1.71 -2.23 162.00 81.38 138.52 0.588.37 Dec '08 12 mths 218.70 130.293.68 17.664.00 58.36 148.13 0.95 0.33 0.97 222.00 916.14 1.44 908.23 764.41 441.45 430.149.00 292.41 0.05 13.70 115.14 37 .24 162.24 41.22 19.Profit & Loss account of Cadbury India Dec '04 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses ------------------.44 2.53 29.80 0.88 0.44 43.11 165.09 19.00 201.89 36.21 34.00 696.00 7.44 Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend 81.61 0.78 688.00 1.53 20.in Rs.06 25.24 879.14 35.01 2.058.73 1.30 107.49 16.36 76.41 34.00 Dec '07 12 mths 171.04 116.32 44.51 0.00 7.29 473.89 0.
83 51.87 20.48 0.10 11.03 20.00 357.56 20.00 357.00 122.00 110.13 332.12 1.96 343.10 12.30 38 .00 114.89 1.09 321.04 35.43 20.00 144.57 20.32 1.Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Source : Religare Technova 1.51 20.00 121.
Marketing Research by C.R.moneycontrol.Bibiliography 1. Google 3.Official Website 4. www.investopedia. www. Financial Management by I.com 8. Kothari 39 . Religare Technova 5. Wikipedia 2.M.com 7. Cadbury. Pandey 6.
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