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Project Report On

Consumption pattern of Cadbury India Ltds Dairy Milk in Mumbai, India


Project Guide

Submitted By MMS Marketing 2008-2010 UNIVERSITY OF MUMBAI

TABLE OF CONTENT

Table of Contents
Table of Content ............................................................................................................................................................2 Certificate ......................................................................................................................................................................4 Acknowledgment ...........................................................................................................................................................5 executive summary........................................................................................................................................................6 Objectives of the Study..................................................................................................................................................7 1. Chocolate Confectionary Industry in india ............................................................................................................8 Industry trends ..........................................................................................................................................................9 Growth .....................................................................................................................................................................10 Prospects .................................................................................................................................................................11 2. Cadbury India Ltd. ................................................................................................................................................12 Company History .....................................................................................................................................................12 company values and strategy ..................................................................................................................................13 Corporate Social Responsibility ...............................................................................................................................14 Corporate governance .............................................................................................................................................14 Product Portfolio .....................................................................................................................................................16 Chocolates ...........................................................................................................................................................16 Snacks ..................................................................................................................................................................18 Beverages ............................................................................................................................................................18 Candies ................................................................................................................................................................19 Gums ....................................................................................................................................................................19 3. Environment Analysis ..........................................................................................................................................20 Porters five forces model........................................................................................................................................20 SWOT ANALYSIS .......................................................................................................................................................22 2

4.

Internal Analysis ..................................................................................................................................................25 Financial Analysis .....................................................................................................................................................25 Cadburys Top and Bottom Line Over the years ..................................................................................................25 Comparison with Industry Average .....................................................................................................................26 Current Status of the industry .............................................................................................................................28 Key points addressed in Directors Report ..........................................................................................................28

5.

Competitor Analysis .............................................................................................................................................30 Market Share Analysis .............................................................................................................................................30 Nestle .......................................................................................................................................................................32 Gujarat Cooperative Milk Marketing Federation (AMUL) .......................................................................................33

6.

Cadbury Dairy Milk ..............................................................................................................................................34 Marketing Mix .........................................................................................................................................................34 Repositioning ...........................................................................................................................................................40

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Customer Analysis ...............................................................................................................................................44 Methodology ...........................................................................................................................................................44 Analysis ....................................................................................................................................................................45 Preliminary Analysis .............................................................................................................................................45 Final Analysis .......................................................................................................................................................52 FISHBEIN Analysis ................................................................................................................................................55 Limitation of the Study ............................................................................................................................................59

8.

Action Plan ...........................................................................................................................................................60

Appendix ......................................................................................................................................................................61 Questionnaire Used .................................................................................................................................................61 Bibliography .................................................................................................................................................................66

CERTIFICATE

Director

Project Guide

ACKNOWLEDGMENT

EXECUTIVE SUMMARY Traditionally seen as a being only for kids, chocolates are now being purchased and consumed by all sections of the society. The chocolate market is the second largest in the confectionary market contributing to 43.9% of the total confectionary market. Cadbury India was established in 1948 and is Indias leading chocolate confectionary manufacturer. Cadbury India is a wholly owned subsidiary of Cadbury Schweppes a global confectionary and Beverage Company. The company enjoys a market share of close to 60% in India in terms of value of which close to half is contributed by the companys leading brand Dairy Milk. The objective of our study was to understand Cadbury Indias current position in the Indian market. The study specifically aimed at understanding the marketing mix of Cadbury Dairy Milk and went on to analyze the current attitudes, perceptions and behavior of buyers towards Cadbury Dairy Milk. The study discusses the marketing mix adopted by Cadbury India for Dairy Milk and also discusses in detail the various repositioning strategies the company has adopted to over the years in order to develop the market for not only Dairy Milk but chocolates in general. In order to understand the attitude and perceptions of the consumer towards Dairy Milk a questionnaire was prepared. The developed questionnaire was administered to 89 people from diverse demographic profiles. The first phase of the survey identified Brand, Taste, Advertising, Packaging, Availability and Price as the key attributes which buyers consider while purchasing chocolates. The study also concluded that purchase of chocolates was still largely based on impulse. The study was able to show that the acceptability of chocolates in the Indian society is still low with a large proportion of the respondents feeling that chocolates are a way of spoiling children. Low acceptability was also reflected in the fact that only 8% of the respondents used chocolates for gifting purposes on occasions like Diwali with the others still preferring to stick to traditional sweets. The survey was able to reinforce Dairy Milks position as Indias leading chocolate brand with 65% respondents having the brand at the top of their mind when talking of chocolates. A Fish Bein analysis also showed that Cadbury Dairy Milk was the most preferred brand amongst the consumers for both gifting and self-consumption purposes. From the results obtained from the study we were able to recommend a course of action that would help the company consolidate its leadership position in the country. Since the nature of the purchase is still largely impulse based the company must focus on effective in-store promotion and must also have attractive packaging to attract children. Looking at the indifference of the consumers to calorie content we think that the company does not need to launch a low calorie product immediately to counter Kitkat Lite. However, we recommend launching additional variants to cater to different tastes of the consumer. In order to protect its brand image as a high quality chocolate manufacturer the company should introduce its premium range of chocolates so that it can maintain its brand image in the face of foreign competition especially for gifting purposes.
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OBJECTIVES OF THE ST UDY

The primary objective of the survey was to understand the purchase behavior of buyers towards Cadbury Dairy Milk in India. The study also aimed to identify the current attitudes, beliefs and expectations of consumers towards Dairy Milk. It was also aimed at understanding the barriers and motivations to the purchase of Cadbury Dairy Milk and the opinion of the customers regarding the brand and product. Through this study we also aimed to benchmark Cadbury Dairy Milk against its competitors on certain key parameters. The customer analysis also aimed to profile buyers of Cadbury Dairy Milk and those who do not buy it. The study also was aimed to help get a better understanding of the marketing mix used by Cadbury India for Dairy Milk. Finally, the project also aimed to understand the financial strength and capabilities of Cadbury India vis--vis its competitors.

1. CHOCOLATE CONFECTIONARY INDUSTRY IN INDIA Traditionally seen as an indulgence, chocolates are now being increasingly accepted in the Indian society. Of the total confectionary market of 176.9 thousand tons in 2009, 46.8 thousand tons came from chocolate confectionary. This number was much higher in terms of value with chocolates contributing Rs. 1790 crores of the total industry sales value of Rs. 4081 crores in 2009 (Euromonitor, 2009). The table below gives the breakup of the confectionary market in India by sales volume and sales value.
Table 1: Indian Confectionary Industry

Retail Volume ('000 tonnes) Chocolate Confectionary Sugar Confectionary Gums Confectionary 46.8 111.8 18.3 176.9

Volume %

Retail Value RSP (Rs mn) 26.5% 63.2% 10.3% 17904.6 18083.5 4830.4 40818.5

Value %

43.9% 44.3% 11.8% 100.0%

100.0%

Indian Confectionary Industry (Share by Volume)


10.3% 26.5% Chocolate Confectionary Sugar Confectionary Gums

Indian Confectionary Industry (Share by Value)


11.8% 43.9% 44.3% Chocolate Confectionary Sugar Confectionary Gums

63.2%

INDUSTRY TRENDS CONSUMPTION AND PENETRATION The per capita consumption of chocolates and confectionery in India is a minuscule 20gms as compared to around 8-10 kgs respectively in European countries. Apart from this the penetration of chocolates in the Indian market is low standing at a meager 4.2%. Moreover, chocolate consumption is concentrated in large metros with population of over 1mn, where penetration is comparatively higher at 15.4%. Such a scenario has encouraged entry of new players into the market. Among the major multinationals eager to participate in this success story are Godrej Group and The Hershey Co. Hershey formed a joint venture with Godrej in April 2009. Godrej acquired Nutrine Confectionery Co Pvt Ltd in August 2006, signaling its interest in becoming a major player in packaged food. Other multinationals such as Mars Inc and ITC Ltd are also said to be firming up plans to enter chocolate confectionery in India. CONSUMER HABITS AND ATTITUDE Chocolate confectionery, which is traditionally consumed by children in India, is slowly acquiring a more adult consumer base. This development is tied to the increased acceptance of gifting standard boxed assortments such as Cadburys Celebrations during the festive season in urban areas. In line with rising health awareness among consumers, new product launches such as KitKat Lite, which offers lower sugar content than the regular KitKat product, gained acceptance among health conscious adults. At the same time, snacking is an increasingly popular habit in cities and towns and urban consumers are spending more on indulgence packaged food products. Standard boxed assortments registered the fastest retail volume and value growth rates in 2007, helped by the growing popularity of offering chocolates rather than traditional Indian sweets as gifts in urban areas. Manufacturers have invested heavily in promoting chocolates as gifts through advertising campaigns such as Cadburys Kuch Meetha Ho Jaye or Lets Have Something Sweet starring the Indian film star, Amitabh Bachchan. This campaign helped to promote the culture of gifting chocolate confectionery during the festive season, especially Diwali, and other special occasions such as St Valentines Day and Mothers Day.

NEW PRODUCTS Manufacturers are increasingly launching premium chocolate confectionery. Nestl introduced KitKat Lite, which is priced at Rs. 7.00 per unit, while regular KitKat retails at Rs5.00 per unit. Moreover, manufacturers are paying more attention to packaging, by launching more attractive and colourful packs to stimulate consumer interest. Cadburys Dairy Milk Wowie offers chocolate shaped Disney cartoon characters to increase its appeal to children. Moreover, the packaging prominently displays these cartoon characters. Economy packs of chocolate have also experienced packaging developments.

GROWTH The chocolate confectionary industry in India is a rapidly growing industry having seen a CAGR of 9.1% in terms of volume and of 10.3% in terms of value from 2004 to 2009 (Euromonitor, 2009).
Table 2: Sales of Chocolate Confectionary by Subsector

(Rs. Million) Tablets Countlines Bagged selflines/softlines Boxed assortments - Standard boxed assortments - Twist wrapped miniatures Other chocolate confectionery Chocolate confectionery -

2004 4,650.60 4,770.35 696.88 736.73 736.73

2005 4,897.17 4,574.34 746.51 774.23 720.04 54.19

2006 5,250.71 4,744.98 795.19 825.1 767.59 57.51 61.83 11,677.81

2007 5,778.41 5,140.27 844.89 895.85 834.48 61.37 53.91 12,713.33

2008 6,836.17 6,108.81 978.08 1,054.82 982.89 71.93 50.23 15,028.11

2009 8,156.47 7,286.92 1,146.25 1,266.34 1,181.67 84.68 48.57 17,904.55

89.41 10,943.96

63.06 11,055.31

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Table 3: Percentage Value Growth by Subsector

2008/09 Tablets Countlines Bagged selflines/softlines Boxed assortments - Standard boxed assortments - Twist wrapped miniatures Other chocolate confectionery Chocolate confectionery 19.31 19.29 17.19 20.05 20.22 17.72 -3.3 19.14

2004-09 CAGR 11.89 8.84 10.46 11.44 9.91 -11.49 10.35

2004/09 TOTAL 75.39 52.75 64.48 71.89 60.39 -45.68 63.6

PROSPECTS Chocolate confectionery in India is expected to grow by a 20% constant value CAGR, as new players enter with innovative products and greater investment. Thus, new product launches, increased advertising, and greater availability of chocolate confectionery in rapidly expanding modern retail channels, especially supermarkets/hypermarkets and convenience stores, are expected to encourage more impulse purchases. Growth, in retail volume and constant value terms is expected to be faster, as per capita consumption of chocolate confectionery in India is still very low. New product launches and good economic conditions, combined with increased advertising support and a wider presence in more modern retail formats, are the main drivers of growth. The main challenge to chocolate confectionery is expected to come from traditional Indian sweets. Though younger consumers are more likely to favour chocolate confectionery over traditional Indian sweets, manufacturers will find it a more difficult to wean older generations from these products.

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2. CADBURY INDIA LTD. Incorporated in 1948, Cadbury India (formerly Hindustan Cocoa Products) is the wholly owned Indian subsidiary of the UK based Cadbury Schweppes Plc. which is a global confectionary & beverages company. In India the company has interests in Chocolate Confectionery, Milk Food Drinks, Snacks, and Candy and is the market leader in Chocolate Confectionery business with a market share of over 70%. COMPANY HISTORY Cadbury India is a subsidiary of Cadbury Schweppes which is the world's largest confectionery company. The companys origins can be traced back to 1783 when Jacob Schweppe perfected his process for manufacturing carbonated mineral water in Geneva, Switzerland. In 1824, John Cadbury opened in Birmingham selling cocoa and chocolate. Cadbury and Schweppe merged in 1969 to form Cadbury Schweppes plc. Milk chocolate for eating was first made by Cadbury in 1897 by adding milk powder paste to the dark chocolate recipe of cocoa mass, cocoa butter and sugar. In 1905, Cadbury's top selling brand, Cadbury Dairy Milk, was launched. By 1913 Dairy Milk had become Cadbury's best selling line and in the mid twenties Cadbury's Dairy Milk gained its status as the brand leader. The company currently enjoys world leadership in confectionary. It stands at second place in the gums segment and is the third largest beverage manufacturer in the world. Worldwide Cadbury Schweppes employs more than 60,000 people and has a presence in over 200 countries. Cadbury began its operations in 1948 by importing chocolates and then re-packing them before distribution in the Indian market. After 59 years of existence, it today has five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The corporate office is in Mumbai. Induri Farm is a wholly-owned subsidiary of the company which exports malted foods and chocolates to the Gulf and the Asian countries like Sri Lanka and Bangladesh. Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over two decades, it has worked with the Kerala Agriculture University to undertake cocoa research and released clones, hybrids that improve the cocoa yield. The companys cocoa team visits farmers and advises them on the cultivation aspects from planting to harvesting. It also conducts farmers meetings & seminars to educate the farmers on Cocoa cultivation aspects. This has led to increased cocoa productivity and has touched the lives of thousands of farmers.
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The company has enjoyed a market leadership position in India since the very beginning but found itself in the midst of a crisis in October 2003 when, just a month before Diwali, customers in Mumbai complained about finding worms in Cadbury Dairy Milk chocolates. As a result of this, the Maharashtra Food and Drug Administration seized the chocolate stocks manufactured at Cadbury's Pune plant. The blame was placed on the packaging for the chocolates and the controversy resulted in a 30% reduction in the sales of the company. As a brand under fire, in October itself, Cadbury's launched project 'Vishwas' - a education initiative covering 190,000 retailers in key states. But what the company did in January 2004 is what really helped de-worm the brand. By investing up to Rs 15 crore (Rs 150 million) on imported machinery, Cadbury's revamped the packaging of Dairy Milk. The metallic poly-flow, was costlier by 10-15 per cent, but Cadbury didn't hike the pack price. Simultaneously, Cadbury's roped in brand ambassador Amitabh Bachchan to do some heavy duty endorsement putting his personal equity on the line for the brand. The company upped ad spends for the Jan-March quarter by over 15 per cent. The recovery began in May 2004, and by June, Cadbury's was able to regain customer confidence.

COMPANY VALUES AND STRATEGY The core purpose of Cadbury Schweppes, the parent company of Cadbury India, is defined as Working together to create brands people love. This purpose captures the spirit of the business and also acts as a guiding light helping employees collaborate and work as teams to convert products into brands. To align with the core purpose, Cadbury India has defined its vision as Life Full of Cadbury and Cadbury Full of Life. This vision statement has helped the company structure its business. The essence of this vision can be seen in the Chairmans speech in the 2006 Annual Report where he considers great brands and great people as the most valuable assets of the company. The company wants to ensure that there is a Cadbury product in every pocket in the country and is looking at the twin proposition of affordability and availability to drive future growth. The organization is also informal and focuses on employee satisfaction by ensuring that the employees have fun at work. In line with its strategy the company has launched small affordable packs which have helped improve penetration. It has also expanded its product line having entered the chewing gum segment as well. However, the primary impact has come from the companys advertising campaign which has helped
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change consumer perception and habits about chocolates over the years by giving the consumer more reasons for consuming their products. The company has been repeatedly recognized for its advertising and has won several awards like the Effie for its campaigns like the Pappu Pass ho Gaya campaign. The companys strategy has helped it obtain a market leader ship position in the country with a market share of 58.5% in 2008. CORPORATE SOCIAL RESPONSIBILITY Cadbury India has always believed that good values and good business go hand in hand. The company has an active Corporate Social Responsibility program that is considered to be an important part of the company. Cadbury Indias CSR program focuses on 2 main aspects Commitment to the Environment and Growing Community Value. Working in partnership with the Sri Aurobindo Society, on a five-year project, it is contributing to the redevelopment of two villages in the coastal region of Pondicherry. The project addresses education, health, economic development, vocational training, organic farming, water harvesting and attitude changes including the empowerment of women. The Company has also partnered with Vatsalya Foundation, an NGO working with underprivileged street children in Mumbai. Vatsalya's motto is to give the child a supportive environment to live and study in and gain skills so that they become contributing members of society. The Company supports the educational needs of 100 street children by providing them with their school fees and also other requirements like books, stationery, uniforms, etc. CORPORATE GOVERNANCE BOARD OF DIRECTORS The current composition of the Board of Directors of the company is as follows: Mr. C Y Pal Chairman, Non-Executive Mr. Rajiv Wahi - Vice Chairman, Non-Executive Mr. Anand Kripalu Managing Director Mr. Atul Bhatia Executive Director, Science and Techonology Mr. G. M. Bhat -Executive Director, Finance and Commercial Mr. Jaiboy Phillips - Executive Director, Supply Chain
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Mr. Sanjay Purohit - Executive Director, Marketing and International Business Mr. Sunil Sethi - Executive Director, Sales and Customer Development Mr. V. Chandramouli - Executive Director, HR and Strategy Mr. S. N. Talwar - Non Executive Director Mr. Harsh Mariwala - Non Executive Director Mr. Amit Banati - Non Executive Director Mr. Radhakrishnan Menon Non Executive Director

SHAREHOLDING PATTERN Cadbury India is a subsidiary of Cadbury Schweppes plc. The parent company had a 51% equity stake in the company but announced an open offer to purchase shares in February 2002 which led to it increasing its holding in Cadbury India to greater than 90%. The shareholding pattern of the company as on August 30, 2002 was as below.

No of Shares Foreign (Promoter & Group) Indian (Promoter & Group) Total of Promoter Non Promoter (Institution) Non Promoter (Non-Institution) Total Non Promoter Total Promoter & Non Promoter Custodians(Against Depository Receipts) Grand Total 33382414 0 33382414 9303 2320283 2329586 35712000 0 35712000

% Share Holding 93.477 0 93.477 0.027 6.498 6.525 100.00 0 100

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% Share Holding
0.027 6.498 Foreign (Promoter & Group) Non Promoter (Institution) 93.477 Non Promoter (Non-Institution)

PRODUCT PORTFOLIO Cadburys entered the Indian market in 1948. Since then it has been continuously introducing new products in the Indian market. It has one of the most extensive portfolios of chocolates and is the market leader in most of the segments it is in. Cadbury is considered to be synonymous with chocolate in India. Cadbury enjoys a value market share of over 70% - the highest Cadbury brand share in the world. The product portfolio of Cadburys India can be broadly classified into 5 categories. They are: 1. 2. 3. 4. 5. Chocolates Snacks Beverages Candies Gums

CHOCOLATES This is the most important product line in Cadburys portfolio. Cadburys enjoys market leadership in this segment since many years. With the big brands like Dairy Milk, 5 Star, Perk, Celebrations, Temptations, Eclairs and Gems, Cadbury has more than one offering for every kind of customer.

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Dairy Milk This is the flagship brand of Cadbury and is by far the most important chocolate in its portfolio. It is a milk chocolate and over the years is considered synonymous with milk chocolate. Cadbury Dairy Milk alone holds 30% of the market share in India.

5 Star Launched in 1969 as a bar of chocolate that was hard outside with soft caramel nougat inside, Cadbury 5 Star has been reinvented over the years to keep satisfying the consumers taste. It is a leading knight in Cadburys portfolio and is the second largest after Cadbury Dairy Milk with a market share of 14%. One of the key properties that Cadbury 5 Star was associated with was its classic Gold colour.

Perk With its light chocolate and wafer construct, Cadbury Perk targeted the casual snacking space that was dominated primarily by chips & wafers. Cadbury Perk is one of the chocolate in its portfolio which provides a blend of chocolate and wafers. It was initially positioned against Nestle Kitkat and later on Munch also come into this segment.

Temptations Cadbury Temptations is a range of premium chocolates in 5 different flavours. It is targeted to customers who want premium foreign chocolates. It is available in 5 flavours namely Roast Almond Coffee, Honey Apricot, Mint Crunch, Black Forest and Old Jamai

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clairs Cadbury Dairy Milk clairs was launched to cater to the toffee market. It is one of the major players in the toffee market and it combines dairy milk with toffee.

Gems Cadburys Gems is a colourful chocolate which comes in the form of chocolate tablets and is mainly targeted at kids.

SNACKS Bytes Cadbury Bytes was launched in 2004-05 as Cadbury's foray into the rapidly growing packaged snack market. There are three variants of Bytes available in the market Regular, Coffee and Strawberry, at two price points- Rs 5 and Rs 10. The proposition we have arrived at is "Snacking ka meetha funda", where we take a pot-shot at other snacks, by saying `Har snack namkeen nahi hota'. BEVERAGES Bourn vita Cadbury Bournvita was the first product introduced by Cadburys in India. Given its market share of 17%, it is among the highest selling chocolate drinks in India. Cadbury Bourn vita reaches across hundreds of cities, towns and villages through 350,000 outlets in India. It is available in two options: Cadbury Bourn vita, with its popular chocolate taste, and its latest offering, Cadbury Bourn vita 5 Star Magic.

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CANDIES Halls Halls was first launched in India in 1968 & was positioned as a therapeutic candy competing in the cough lozenge market. Halls was sold in India as part of the Pfizer & Warner Lambert network before it came into Cadburys fold in 2003. Halls was one of the earliest brands to advertise on television in India. In the 1980s.Over the years Halls has been strongly positioned on the` soothes sore throat benefit in the consumers mind. Currently, Halls occupies accounts for 50% of the international cough drop sales. GUMS Bubbaloo This is the latest addition to Cadburys portfolio in India. It was added in 2007. The Bubbaloo Bubblegum has been a very successful brand internationally but the results of its Indian launch are still to be verified. Bubbaloo is being sold in 25 countries and is particularly popular in Latin America. The record for the largest bubblegum bubble ever blown is 58.4cm. The bubble was blown by Susan Montgomery Williams of Fresno, California, USA at the ABC-TV studios in New York City, in 1994.

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3. ENVIRONMENT ANALYSIS

PORTERS FIVE FORCES MODEL SUPPLIERS The company gets the cocoa beans and cocoa butter from West Africa, Ecuador and Venezuela. The parent company has deals with around 40000 suppliers around the world. No single supplier accounts for more than 10% of the raw material purchases. Hence the suppliers have very little influence on the company. To further minimize the price fluctuations and to ensure security of the supply, the company enters into forward agreements and long-term contracts. Most of the sugar is purchased at prices set by the European Union or by other companies through quotas. A very small potion is bought at fluctuating prices. On the whole the suppliers have very low or no power on the company. BUYERS The products are mostly impulse goods and they are sold to consumers through many different outlets, ranging from grocery stores to food and entertainment venues. In many markets, sales to the large multiple grocery trade accounts for less than 50% of the sales and the buyers are so huge in number that no single customer has any influence on the industry. But it is when controversies like worm controversy crop up that the customer power increases. Due to the rising health awareness among the customers, the preferences of the customers are changing to lower sugar content brands and it is important for the companies to understand the customer needs and to develop the products with these preferences in mind. COMPETITORS The industry is very competitive and the company competes with many other multi-national, national and regional companies. The group competes actively in terms of quality, taste and price of products and seeks to develop and enhance brand recognition by introduction of new products, new packaging, extensive advertising and promotional programmes.

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NEW ENTRANTS The confectionery market is growing and the main drivers are population growth and increased consumer wealth. The total confectionery market is valued at Rs 41 billion with a volume turnover of about 223500 tonnes per annum. The category is largely consumed in urban areas with a 73% skew to urban markets and a 27% to rural markets. The industry is expected to grow at 23% in chocolates segment and sugar confectionery segment has declined by 19%. The chocolate confectionery experienced the entry of new players in 2007. The low per capita consumption of chocolate products in India, coupled with a booming Indian economy and rising consumer affluence, has seen consumers upgrade from sugar confectionery to chocolate confectionery. To capture the new growth, there are new entrants which are foreign brands that are invading the market. Many customers are shifting from the domestic brands to the foreign brands. The Hershey Co. Hershey formed a joint venture with Godrej in April 2007. Other multinationals such as Mars Inc and ITC Ltd. are also said to be forming plans to enter the confectionery market. The opportunities for new entrants are high but it is difficult for a complete new brand to come and take over the market. The name Cadbury is so synonymously used for chocolates that it is difficult for any new entrant to compete with it. SUBSTITUTES As Cadbury has repositioned the image of chocolates as a sweet dish for any happy occasion, it faces lot of competition from the home made and purchased Indian sweets, Mithai. Though they are not the same, the sweet preparations also serve the same purpose of Kuch Meetha Ho jaye. Hence the substitutes are many and may act as a strong force.

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SWOT ANALYSIS
The following is the strengths, weakness, opportunities and threats analysis of the company.

STRENGTHS Cadburys India is a famous brand well known to people and has a good product mix. It being a subsidiary of Cadbury Schweppes plc is a profitable organization and it has a strong sales and distribution set up for a back up. Most of the products like Dairy Milk, clairs, Halls have a well developed market of their own. The company has very less risk due to its diversification into many related businesses like health drinks, snacks etc. The company is well known for new product development and creativity and has products for almost all the occasions. The company was among the first to target the adult customers and to develop a new use of the product in the form of gifts at several occasions. It changed the image of chocolates from a kids consumable to a sweet that can be eaten by anyone at happy occasions. The company creates products that can fill up the gaps in the market. For example, to fill up the gap left by Chiclets as it went out of market, the company created Clorets Bilkul. The company has expertise in branding and repositioning its products. It launched white Halls and repositioned the product as a Cadburys product after the buy out. The company uses its effective advertising to create an increase in the market share. Its Real taste for life campaign was a huge success among the cricket viewers. Their choice of Amitabh Bachan as their brand ambassador works to their advantage in the Indian market.

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WEAKNESSES

They have faced controversies like the worm controversy which has affected the trust of the quality conscious customers.

The company does not have too many launches of new products in the recent past. In spite of the constant efforts by the company, there is reluctance in the adult Indian consumers to consume chocolates.

As the consumers are not very health conscious, the details like calorie content etc do not make much sense to the customers.

OPPORTUNITIES

The company may co-brand its products with other manufacturers of food and drink. Information technology can be used to improve the supply chain and distribution efficiency for the company.

The products in Low calorie and Sugar Free product lines can be launched in the Indian market also and they can get the first mover advantage to target the customers.

The company has identified products like Bournvita, Cadbury Delite which have a high growth rate and it would better if the company focuses on these brands.

Expansion in chocolate based hot drinks can be achieved by targeting kids. As the per capita consumption of chocolate confectionery is very low, growth in the future is expected to be faster than in the past. Hence, the company should focus on new product launches, good economic conditions, increased advertisement support and a wider presence in more modern retail formats.

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THREATS

The company has too many products and hence there is a chance of cannibalization. The customers may shift from one brand of the company to another.

The company faces a lot of competition from other famous brands like Amul, Nestle etc. Due to the advent of foreign brands into the country, the market share of Cadburys may drop. The company is exposed to foreign exchange rate risk due to the imported cocoa beans and cocoa butter as raw materials.

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4. INTERNAL ANALYSIS

FINANCIAL ANALYSIS Cadbury India has grown over the years and it has now become a household name for the chocolate category. In this section we would analyze the Cadburys business model financially. Financial analysis plays a very important part in analyzing the business model or the success of the company. CADBURYS TOP AND BOTTOM LINE OVER THE YEARS

(Rs Crores) Net Sales Growth Rate in Sales Net Profit Net Profit Percentage

2001 509.8 20% 38.3 8%

2002 565.1 11% 52.3 9%

2003 624.4 11% 59.7 10%

2004 687.3 10% 72.7 11%

2005 714.2 4% 45.7 6%

2006 764.1 7% 46.2 6%

2007 879.8 15% 46.0 5%

2008 1058.2 20% 68.8 7%

TOP LINE GROWTH The above table shows that the growth rate of sales was decreasing in the 2002-2005 period. This was mainly due to competition that it faced because of foreign brands entering into India. But in recent past Cadbury has been successful in increasing its growth rate. This is mainly due to increase in market size. BOTTOM LINE GROWTH The above table shows the net profit percentage over the years. Cadburys profit percentage peaked in 2002 but after that it had decreased to very low levels of around 6%. This is to a certain extent because of huge marketing cost incurred by the company.

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COMPARISON WITH INDUSTRY AVERAGE Till now I have analyzed Cadburys financial performance in isolation but now we would compare it with the industry performance to get a better picture. For the calculation of industry, we have taken aggregate of 5 companies in food and confectionary segment. KEY FINANCIAL RATIOS

2008 Key Ratios Debt-Equity Ratio Long Term DebtEquity Ratio Current Ratio Turnover Ratios Fixed Assets Inventory Debtors Interest Cover Ratio PBIDTM (%) PBITM (%) PBDTM (%) CPM (%) 2.78 10.25 104.31 51.65 12.88 9.97 12.68 8.89 3.23 10.6 62.75 88.26 16.21 13.92 16.06 11.49 2.7 Cadbury 0.02 0.01 Industry 0.02 0.01

2007 Cadbury 0.02 0.01 Industry 0.02 0

2006 Cadbury 0.03 0.01 Industry 0.07 0.02

2005 Cadbury 0.04 0.03 Industry 0.14 0.04

0.71

0.89

0.91

0.94

1.24

0.99

1.73

1.02

3.14 11.16 61.86 83.8 17.19 14.81 17.01 11.98

2.61 9.17 36.35 27.36 11.28 7.45 11.01 9.05

2.98 11.34 57.52 52.77 15.91 13.34 15.66 11.12

2.69 10.27 32.91 46.25 14.08 10.34 13.85 10.05

2.91 11.56 48.54 37.22 16.47 13.71 16.1 11.76

10.03 57.06 55.53 12.72 9.33 12.55 8.58

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APATM (%) ROCE (%) RONW (%)

5.98 28.55 16.66

9.19 56.02 36.71

5.19 22.95 12.59

9.6 56.23 36.17

5.22 17.05 12.26

8.55 44.95 30.13

6.31 24.28 15.4

8.99 43.27 31.85

When we see the picture of the industry as a whole, we can see that Cadburys performance over the years has been below the industry average. The key points I observed from the above table are: Role of debt in the industry is very less as we can see that there is just 1% debt in the industry. Going forward we can see more debt being used depending upon the other factors affecting the industry. In 2005-06 Current ratio for Cadbury was greater than the industry but in 2007-08, it has decreased and now come below 1. This will be a concern for the company as it increases the short term liquidity risk for the company. Fixed asset turnover ratio has increased for Cadbury which is good for the company. But industry average is still more than the Cadburys which shows that there is still a lot of room for improvement in this regard. Inventory turnover ratio is good for Cadbury and it has been increasing in the recent past. This shows that there is improvement in inventory management and this is also one of the reasons for the increase in growth rate of sales for the company. Debtor Turnover ratio is very high as compared to the industry. This depicts that there is very less credit offered by the company and efficiency in debt collection. Interest coverage ratio is very high mainly because there is marginal debt used in the capital structure. Return on capital employed and return on net worth are high. It shows that good amount of return is generated for the shareholders. But comparing it with the industry shows that this return is below average in the industry. Hence we can say that there is a lot of space for Cadburys to improve on this front.

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CURRENT STATUS OF THE INDUSTRY The food-processing sector establishes a vital linkage and synergy between agriculture and the industry. India is the worlds second largest producer of food next to China. However, India is nowhere on the world map in terms of food processing when compared with other countries like Brazil, Philippines, Thailand and Malaysia. In fact, in India less than 2% of the fruits and vegetables are processed and a significant percentage of the balance quantity is wasted or inefficiently used. The growth of the processed food sector is dependent on the growth in affordability and effective demand. Supply chain bottlenecks due to disintegrated and uncontrollable value chains continue to be one of the most important challenges of the food-processing sector. In order to give push to this sector, Government has already reduced excise duty on some of processed food products either to NIL or 8%. The reduction of excise duty on chocolates in the budget is a very good indicator for Cadbury and we can hope to see better results in future.

KEY POINTS ADDRESSED IN DIRECTORS REPORT

Directors Report highlighted the turnaround of key financial performance indicators in favour of the company. It laid special emphasis on the increase in sales, profit margins and return on capital. These factors are already discussed in detail in previous sections.

Year 2008 saw crossing of Rs.1000 Crore in sales. This was a huge milestone for Cadbury. Over the years product innovation has been the key to growth for Cadburys and keeping in line with this, the company launched successful offerings like Cadbury Fruity Gems, Cadbury Dairy Milk Eclairs Crunch and Bourn vita 5Star Magic. During the year, brands gained market share backed by powerful advertisement campaigns. In the last year there was greater emphasis on product quality and environment safety. It implemented various changes at 6 manufacturing sites to increase the standards of environment safety.

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KEY RESULTS OF 2008

Research & Development: Activities at the Science & Technology centre in the specific areas of innovation in product packaging & process yielded the following results for the company. o o o Bournvita 5 Star Magic - A caramel variant of Bournvita CDME Crunch - A hard shell eclair with Dairy Milk centre. Fruity Gems - A fruit flavoured range.

All the brand extensions helped generate new consumers & had a positive rub-off on the existing power brands. Most of the packaging initiatives were well accepted & exceeded expected sales volumes. Several value optimisation projects with the Supply Chain Team yielded improved costs.

FUTURE PLANS

Future activities will cover further improvisation of product & packaging to deliver superior value to the consumers. Greater innovation in packaging & product presentation across various power brands. Product introduction to provide new texture & taste experience to consumers. Efforts continue to assimilate group technology for improving product quality.

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5. COMPETITOR ANALYSIS MARKET SHARE ANALYSIS Cadbury is the market leader in all categories with over 58% market share. Its main competitor is Nestle India. Nestle has identified chocolate and confectionery as one of the thrust areas for growth. It has launched some of its international brands like Quality Street, After Eight, and Lions in India. In 1998, Cadbury launched a new count bar Picnic. Nestle immediately followed it with the launch of Charge. Gujarat Co-operative Milk Marketing Federation (GCMMF), which is normally known as Amul is another significant player. It is a local manufacturer. Distribution, in the case of chocolates, 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. With removal of QRs all the major international chocolate brands especially Swiss brands have become freely available in the market. Chocolate Confectionery Company Shares 2004-2008 (% retail value rsp)

Company Cadbury India Nestl India GCMMF Chalet Suisse Ferrero SpA Others Total

2004 56.1 33.9 3.4 0.5 0.3 5.8 100

2005 54.9 33.5 4.4 0.5 0.4 6.4 100

2006 57.8 31.5 4.5 0.5 0.4 5.3 100

2007 58.2 31.7 4.4 0.4 0.3 4.9 100

2008 58.5 32.2 4.2 0.4 0.3 4.3 100

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Chocolate Confectionery Brand Shares 2005-2008 (% retail value rsp)

Brand Cadbury's Dairy Milk Munch KitKat Cadbury's Perk Cadbury's Gems Nestl Premium Chocolate Cadbury's 5 Star Cadbury's Celebrations Amul Milky bar Bar One Cadbury's Miniature Heroes Choco Swiss Ferrero Rocher Cadbury's Mr Pops After Eight Chocki Choco Stick Others Total

Company Cadbury India Nestl India Nestle India Cadbury India Cadbury India Nestle India Cadbury India Cadbury India GCMMF Nestle India Nestle India Cadbury India Chalet Suisse Ferrero SpA Cadbury India Nestle India Cadbury India Nestle India

2005 25.2 13.6 9.5 9.5 6.4 6.2 5.1 3.9 4.2 1.8 1 0.5 0.5 0.4 0.2 0.3 0.1 0.2 11.5 100

2006 27.4 13.7 8.6 9.2 6.5 5.4 5.1 4.3 4.3 1.8 0.9 0.5 0.5 0.4 0.2 0.2 0.2 0.1 10.9 100 -

2007 28.6 14.1 8.7 8.8 6.3 5 5.1 4.3 4.2 2.3 0.7 0.5 0.4 0.3 0.2 0.2 0.2 10.1 100

2008 29.1 14.2 8.9 8.9 6.2 5.1 5.1 4.3 4 2.3 0.7 0.5 0.4 0.3 0.2 0.2 0.1

9.5 100

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NESTLE Nestl S.A., worlds largest food company and Switzerlands largest industrial company. Nestl makes and markets a wide variety of foods and beverages, including chocolate, confectionery, instant and roasted coffee, powdered milk, infant and baby food, mineral water, pet food, breakfast cereals, ice cream and frozen desserts, frozen meals, condiments, sauces, soups, and pasta.

NESTLE IN INDIA Nestle India Ltd, 51% subsidiary of Nestle SA, is among the leading branded food player in the country. It has a broad based presence in the foods sector with leading market shares in instant coffee, infant foods, milk products and noodles. It has also strengthened its presence in chocolates, confectioneries and other semi processed food products during the last few years. The company has launched Dairy Products like UHT Milk, Butter and Curd and also ventured into the mineral water segment in 2001. Nestls leading brands include Cerelac, Nestum, Nescafe, Maggie, Kit Kat, Munch and Pure Life. Nestle has a presence in the following categories - Baby Food, Milk products, Beverages (Coffee, malted beverage), Chocolates & confectionery and other processed food products. CHOCOLATES & CONFECTIONERY Nestle forayed into chocolates & confectionery in 1990 and has cornered a fourth share of the chocolate market in the country. The category contributes 14% to Nestles turnover. It has expanded its products range to all segments of the market The Kit Kat brand is the largest selling chocolate brand in the world. Other brands include Milky Bar, Marbles, Crunch, Nestle Rich Dark, Bar-One, Munch etc. The sugar confectionery portfolio consists of Polo, Soothers, Frootos and Milky bar Eclairs. All sugar confectionery products are sold under the umbrella brand Allen's. Nestle has also markets some of its imported brands like Quality Street, Lions and After Eight new launches such as Nestle Choco Stick and Milky Bar Choo at attractive price points to woo new consumers. Nestle registered a biggest increase in retail value share in 2006 aided by good volume growth in Munch, Kit Kat and Classic sales.

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GUJARAT COOPERATIVE MILK MARKETING FEDERATION (AMUL) Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organisation. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. Amul products was launched in market by Kaira District Co-operative Producers Union ltd. the union choose Amul as brand name a variant of Amulya. AMUL means "priceless" in Sanskrit. A quality control expert Anand suggested the brand name Amul, from the Sanskrit Amoolya. Variants, all meaning "priceless", are found in several Indian languages. Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India. The product was initially advertised on hoardings as main medium. The Utterly Butterly ad campaign soon became popular. In 1973 an apex organisation was formed GCMMF ltd., which integrated activities of district unions to oversee the marketing of their product. Today Amul is a symbol of many things, of high-quality products sold at reasonable prices, of the genesis of a vast co-operative network, of the triumph of indigenous technology, of the marketing savvy of a farmers' organization and have a proven model for dairy development. In chocolates Amul offers Amul Milk chocolate which comes in various flavours like orange, fruit and nut etc. and claims to have made from Sugar, Cocoa Butter, Milk Solids and Chocolate mass. Amul chocolates do not seem to have a very high perceived quality in the minds of Indian consumers as compared to products from Cadbury and Nestle.

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6. CADBURY DAIRY MILK Cadbury Dairy Milk as a brand promises to be the best and most delicious chocolate. It promises a moment of pure magic, a moment of joy, a moment of sharing and togetherness, a moment of love and caring, a moment of warmth and feelings. It stands for goodness, stands for the values of a family, for the bonding called life and for the celebration of life. It is supposed to bring out the fun element in all of us, a brand which is both wholesome and reliable. Cadbury Dairy Milk encapsulates an enormous breath of emotions, from shared values such as family togetherness (fun, wholesome, reliable), to the personal values of individual enjoyment. It stands for goodness. For consumers across India, the word Cadbury is synonymous with chocolates. Its a classic example of a brand coming to symbolize a product category. But even this doesnt quite capture the warmth with which people immediately think of CDM at the very mention of the word chocolate. MARKETING MIX PRODUCT Cadbury Dairy Milk is the flagship brand of the company. It originally was available only as one variant which was a plain milk chocolate. The company has now introduced several variants. The variants Fruit & Nut, Crackle and Roast Almond, combine the classic taste of Cadbury Dairy Milk with a variety of ingredients and are very popular amongst teens & adults. Recently, Cadbury Dairy Milk Desserts was launched, specifically to cater to the urge for 'something sweet' after meals. Cadbury Dairy Milk Desserts were introduced in exotic & traditional flavours of Tiramisu and Kalakand. The company has also launched variants targeted only at children - Cadbury Dairy Milk Wowie, chocolate with Disney characters embossed in it, and Cadbury Dairy Milk 2 in 1 is a combination of milk chocolate and white chocolate.

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SKU Sizes Cadbury Dairy Milk comes in a variety of sizes to serve all age groups, income segments and also for different eating occasions. Large bars/Gift Packs - 200g, 400g, and 600g, even larger for special occasions, bought for sharing or as a gift. Smaller bars - 100g and chunky bars to share or enjoy as a 'big eat'. Snack size 45gm bars for the lunch box Treat size - Small individual bars of 20gm to enjoy as a small treat.

Packaging Cadbury has used a consistent packing for Dairy Milk over the years with color, label and title undergoing little or no changes. Cadburys world famous packaging is comprised of four key elements: distinctive packaging design the Cadbury corporate purple colour the glass and a half of full cream milk logo - the Cadbury script logo.

These elements are designed to convey to consumers the memorability, distinctiveness and high quality of Cadbury products. They are communicated on the product itself, and on its promotional campaigns and at the products point of sale. As such they represent an integral part of the Cadbury brand identity. The style in which these elements are presented has evolved over the years in line with market tastes and requirements. The blue and white packaging has come to be associated with quality and reliability. This is one of the reasons that the brand enjoys high degree of recognition amongst the consumers. This also helps in launching new variants since they can ride on the brand image of Dairy Milk. The company faced a major crisis in October 2003 when consumers complained of finding worms in Dairy Milk bars. In order to rebuild customer confidence the company imported machinery worth Rs. 150 million and launched the metallic poly-flow packs. These packs have a 2 layer protection so as to ensure that there is no problem of adulteration or product degradation. Though these packs are costlier by 10-15%, the company did not hike its prices.
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Labeling and Marking The label is the printed material that appears on the package. A products label can be strong selling tool. The labels illustration and copy should indicate clearly the contents of the product, and the directions for use. The label contains the brand name and as such it assists in identifying the brand. The label of Cadburys Dairy Milk has the following information: PRICE Cadbury India has spent time in understanding the Indian consumers. Leveraging its 55 years of experience in India, the company has customized its products to the Indian markets. It offers products at affordable price points so as to increase its market penetration. Cadburys dairy milk has the strategic vision of One Cadbury in every pocket. The whole pricing strategy of Dairy Milk is based on this vision. The company aims at providing the chocolate at low and affordable price to ensure high market share. Also most of the brands are priced in the same range and thus it can be inferred that the company follows the competitors closely in terms of the pricing strategies. The other products in the Dairy Milk category like Fruit and Nut, Crackle are premium priced because of their superior differentiation. Also the pricing strategy of Dairy Milk ensures that they have a particular type of chocolate available for almost every price range. Dairy Milk is available in the price range of Rs.5 to Rs.60 and the price varies with the pack size. However, as the pack sizes increase, the price to weight ratio reduces. The different packets of Dairy Milk that are available at different prices are Rs.5, Rs.10, Rs.16, Rs.30, Rs.40 and Rs.60. Besides the Dairy Milk desserts were also available at prices in the range of Rs.10 to 15.
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Type of the product Producers or processors Name and Location. Net quantity Production Batch Number and Date. Price Expiry Date

On the other hand, the other product lines in Dairy Milk namely Crackle and Fruit & Nut are available at prices above Rs.20. PLACE Plant Locations Cadburys manufacturing operations started in Mumbai in 1946, which was subsequently transferred to Thane. In 1964, Induri Farm at Talegaon, near Pune was set up with a view to promote modern methods as well as improve milk yield. In 1981-82, a new chocolate manufacturing unit was set up at the same location in Talegaon. The company, way back in 1964, pioneered cocoa farming in India to reduce dependence on imported cocoa beans. Cocoa farming is done in Karnataka, Kerala and Tamil Nadu. In 1977, the company also took steps to promote higher production of milk by setting up a subsidiary Induri Farms Ltd near Pune. In 1989, the company set up a new plant at Malanpur, MP, to derive benefits available to the backward area. In 1995, the Malanpur plant was modernized. Cadbury also operates third party operations at Phalton, Warana and Nashik in Maharashtra.

Distribution Cadburys brands are available in over a million outlets across the country. The distribution network directly covers almost the entire urban population. The company has invested significantly in building an extensive network. The company uses Information Technology to improve its logistics and distribution competitiveness. Cadbury's distribution network encompasses 2100 distributors and 450,000 retailers. The company has a total consumer base of over 65mn. Besides use of IT to improve distribution logistics, Cadbury is also attempting to improve distribution quality. To address the issues of product stability, it has installed Visi coolers at several outlets. This helps in maintaining consumption in summer, when sales usually dip due to the fact that the heat affects product quality.
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Use of Information technology A Wide Area Network comprising of 31 VSATs across the country connect the branch offices, factories, depots and the corporate office. This is used for e-mail and accessing SAP/R3, which is the application package, used across the Cadbury Group. The implementation of SAP gives them up-to-date information in terms of stocks at factories and depots, sales across the country, and the financial impact of all the above transactions at any given moment of time.

Innovations Chocolate and Confectionery purchase being impulse led, demands eye catching, on-the-cash-counter visibility in as many of these outlets as possible. In order to best meet their dealer's display and vending needs, Cadburys have invested in an array of inputs to the trade like the following: The Sheet Metal Dispenser: This ubiquitous, purple salesperson for Cadbury is found in almost any shop stocking their chocolates. While being on the cash counter, it's unique design offers visibility, ease of vending and protection from the elements. Available in various sizes, it can meet the needs of any outlet. This 'first' from Cadbury, has become so popular, today it is the standard dispenser design for all chocolate manufacturers. Visicoolers & Refrigerators: Come summer, visibility for chocolates drop as they disappear into the refrigerator. In high throughput outlets, the visicooler with a glass front not only maintains eye contact with the consumer, but offers perfect chocolates throughout summer as well. Vending machines: First introduced in the country by Cadbury, these impressive coin operated machines can be seen dispensing chocolates in high traffic areas from the World Trade Centre at Mumbai to New Delhi railway station. Vending machines have formed a part of selling products saving on sales person and opening shops. Amusement Parks & Tourist places: Cadbury's presence in the premier amusement parks such as Esselworld and Appu Ghar adds to the magic of chocolates by 'coming alive' for the consumer. Even Amul can be seen in nearly all the places all over India. Cadbury has come up with wrapper collection contest. The wrapper of any Cadbury product had a specific point based on the cost of

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the product. Consumer who submitted the wrapper within a specific period of the tome would get prices on the basis of points received by them for collecting the wrappers. Cadbury has improved the distribution quality of its products with the installation of refrigerators at several outlets. This helps in maintaining product quality in summer, when sales usually dip due to the fact that the heat affects product quality and thereby consumption.

PROMOTION Since its inception, Cadbury in India has stayed ahead thanks to their constant marketing initiatives that have at all points in time understood the needs of and opportunities in a changing nation. Advertising forms an integral part of the promotion methodology used by Cadburys to promote Dairy Milk. Cadbury has also successfully used other forms of personal communication. The role of advertising in case of Cadburys Dairy Milk is as follows: Product Awareness: It is to make the potential customers to know about new products like CDM deserts being launched in the market. It is not enough to create awareness, but it is more important to create top of mind (TOM) awareness, so that the customers whenever think of buying a product, the brand name of CDM should be at the top of the mind of the customers. Persuasion: The buyer needs to be persuaded to buy the products which are done by the temptation effect created by showing the chocolate in the promotional programmes. Reputation: It was of particular importance when the issue of worms had surfaced. Media statements, website and other forms of communication were used to regain the reputation. Developing Brand Image: Proper advertising communication has also helped CDM to develop good brand image in the market. Brand image refers to perception of the brand in the mind of customers. Expansion of Markets: Effective advertising is required to stimulate more and more demand from the buyers and also bring in new buyers. CDM effectively expanded the target market from kids to adults using proper promotion techniques.

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Current Advertisement Campaign

In line with its efforts to position Dairy Milk as a product which can be used as a substitute for the traditional mithai and for increasing usage occasions the company is currently pursuing the 'Kuch Meetha Ho Jaaye' campaign. This campaign has been extremely successful with the phrase "Pappu Pass Ho Gaya" becoming a part of street language. The details of the repositioning of Cadbury Dairy Milk have been discussed in detail in the next section. The company has roped in superstar Amitabh Bacchan as its brand ambassador because of his ability to influence the adults. REPOSITIONING THE PERFECT EXPRESSION OF PARENTAL LOVE In the 80s, Chocolates were perceived as a western concept, more on the indulgent side. It was seen as a manifestation of parental affection for their children. So from this background came the earlier ad campaigns in which the parental love angle was used to good effect to break early ground for the brand to make its presence felt in a rather non-responsive market. Positioning: CDM positioned itself as The perfect expression of parental love Marketing Communication: Sometimes a Cadbury can say it better than words. But, Cadbury got stuck in a mindset trap, where it was perceived as something meant for the kids, something which was seen as an indulgent product and something which wasnt meant for the adults. With communication consciously addressing kids, consumption also got restricted within the same segment resulting in brand stagnation.

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At this stage, what was required was to break free of this trend and establish itself as something which could be enjoyed by people across age barriers. Marketing Challenge: To expand the consumer base by making CDM aspirational and desirable to the adult segment. KUCH KHAAS HAI ZINDAGI MEIN, KYA SWAAD HAI ZINDAGI KA Various Surveys conducted at that time revealed that chocolate and especially Cadbury was associated with joyous and carefree moments, and what was required was to blend these moments with those in the real life. It is in this background that in the early 90s, the real taste of India ads were created for Cadbury. The ad showed a cricket match in action with a boundary required of the last ball to win the match and for the batsman to get his century. The batsman hits the last ball in the air as the crowd watches with bated breath, the fielder gets underneath the ball, a young lady in the galleries prays frantically for him to miss the ball. Much to the delight of the fans and the lady the balls sails over the boundary rope. As soon as that happens she jumps out on the ground and starts jiving to the tune kuch khaas hai zindagi mein, kya swaad hai zindagi ka. The ad launched CDM as a brand for both the kids and the adults, something that could be savored by people across age barriers. This campaign went on to be awarded 'The Campaign of the Century', in India at the Abby (Ad Club, Mumbai) awards. KHANEWALON KO KHANE KA BAHANA CHAHIYE In 1997, need was to further expand the category. Also with the launch of Kit Kat which was considered as young, trendy, future, exciting and smart, it had to overcome hurdles at a competitive level. So the focus shifted towards widening chocolate consumption amongst the masses. In this stage of growth the brand dealt with popularizing consumption in a social context, especially in more traditional settings like weddings. Through the 'Khanewalon Ko Khane Ka Bahana Chahiye' & with the award winning Kuchh khaas hai campaign, Cadbury built social acceptance for chocolate consumption amongst adults, by showcasing collective and shared moments. These ads were a major hit with the urban suave crowd but the middle and the rural masses still remained out of the radar and hence the subsequent indianisation of the brand.

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Marketing Challenge Indianisation of the Brand and to increase width of consumption by entering the Indian mind-space; Make CDM part of Indian customs and mores; CDM to be the Real Taste of Everyone's Life. So, this resulted in the categorization of the consumer into the regular and non-regular which actually meant two ideas. For the former the message was I will do anything for my CDM while for the latter the message was you dont need a special reason to eat one. The former was targeted with ads, which showed a young man running to the stall while the train is about to leave, to grab his chocolate. While for the latter it was the fun filled boisterous Cyrus egging them on to have one with his fun filled dancing moments of charm and verve. These ads helped in establishing CDM as a popular household name as people started associating with it, across the big town-small town divide, across age barriers, across income anomalies and across barriers of cultures. PAPPU PASS HO GAYA In India joyous occasions are always celebrated and commemorated with the sharing of sweets. Cadburys experience in India had shown that in order to deepen chocolate penetration in the Indian market it must multiply the occasions for consumption in order to compete with local sweets. That marketing vision was what prompted the company to engage megastar Amitabh Bachchan for the hugely successful commercial Jab Pappu pass ho jaye kuchh meetha ho jaye - the addition of another joyous occasion to be celebrated with CDM. Pappu pas ho gaya actually became a part of street language and contributed in strengthening consumer affinity with the brand proposition of celebrating joyous occasions with CDM. The interactive campaign a tie-up with Reliance India Mobile service that allowed students to check their exam results using their mobile service and encouraged those who passed their examinations to celebrate with CDM also bagged a bronze Lion at the prestigious Cannes Advertising Festival 2006 for best use of internet and new media. The 'Pappu Pass Ho Gaya' campaign also went on to win Silver for The Best Integrated Marketing Campaign and Gold in the Consumer Products category at the EFFIES 2006 (global benchmark for effective advertising campaigns) awards. In 2005 Cadbury Dairy Milk celebrated 100 years of its existence. To commemorate the occasion, limited edition vintage packs of CDM were launched in India.

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KUCH MEETHA HO JAYE Recently, Cadbury Dairy Milk Desserts was launched, specifically to cater to the urge for 'something sweet' after meals. This endeavour gained momentum with the advent of the Kuch meetha ho jaye platform. This helped the brand become more attractive, interesting and desirable during those special moments when the sweet tooth breaks out into a craving for satisfaction. CDM today, has variety of differentiated offerings under its umbrella for children as well. This was supported by launching novel offerings CDM 2-in-1 (brown and white chocolate in one bar); and CDM Poppers (with popping candy). In July 2006, Cadbury launched CDM Wowie, a product offering that featured Disney characters embossed in white chocolate on the traditional Dairy Milk bar. AAJ PEHLI TARIKH HAI Advertising is turning more towards humaneness with an emotional appeal today. While people have turned a deaf ear to the advertising mantra of hooking consumers with false promises at this time of recession, Cadburys has come up with this bold concept with the commercial Aaj Pehli Tarikh Hai. Never mind the slowdown and the salary cuts; the payday is always a reason to celebrate. This new commercial highlights the celebratory occasion of payday. Though it comes 12 times in a year, it is definitely an important event in the life of every middle-class Indian. In fact most of us look forward to this day though we may not be really happy with the package. Its a brilliant idea of associating Cadburys Dairy Milk Chocolate with the payday celebration. The ad conceptualised by Ogilvy India has reached far and wide though its universal appeal and also by quoting the famous song Aaj Pehli Tarikh Hai, sung by Kishore Kumar for a movie called Pehli Tarikh

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7. CUSTOMER ANALYSIS METHODOLOGY The survey was carried out in 2 phases. The survey questionnaire sought to achieve the following things: Understand the demography of the respondent. Understanding the buying pattern of the consumer. Understanding behaviour of the consumer which governs his purchase decisions. Understanding the attributes which a consumer looks for when he buys a chocolate, both for self consumption and gifting. Understanding the Top of the mind awareness of the consumer. Understanding the external influences on the consumer buying decision. Comparison of various chocolates in terms of different attributes.

A set of 11 potential attributes were identified which can explain the consumer buying behaviour. Also, the top 6 chocolate players in India were recognised and questions on them were administered to understand not just the absolute performance of Cadbury Dairy Milk but also its performance relative to its competitors. The main objective of the first phase was to understand the factors underlying the buying behaviour of chocolate consumers and also reducing the number of attributes which the consumer looks for while buying a chocolate. The analysis of the results from the first phase enabled to short list 6 attributes out of 11. The first phase of the survey was carried out at Inorbit mall, Mumbai by asking questions personally to chocolate consumers. A proper distribution of the demography was ensured to get a holistic view of the consumer preferences. Also majority of respondents were selected in the age group of 20-30 as they are the major chocolate consumers followed by consumers in the age group of 10 to 20 and 30 to 40. In the second phase, only the short listed attributes were selected while administering this questionnaire. This phase of the survey was administered online where responses of 43 consumers of chocolates were obtained. www.zoomerang.com was used to conduct the survey. All of 89 set of responses were analysed to arrive at the final results.

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ANALYSIS

PRELIMINARY ANALYSIS An initial survey was conducted at Inorbit mall, Mumbai. A total of 89 respondents could be obtained. Before the questionnaire was prepared, an extensive list of attributes was listed based on interactions with residents of Andheri. They were all listed in the questionnaire. While surveying and during interaction with respondents, it was observed that the respondents did not consider some attributes as important factors for consuming chocolates. Hence, a preliminary analysis was performed based on the observations and the data collected from initial survey. Descriptive Statistics By studying the responses on the attributes of the products and comparing them for self consumption and gifting purposes, the following results were obtained. Under the category of self consumption, the rating of the attributes as a percentage of customers is given in the following table.

Self consumption Not at all important Brand Taste Novelty Ad Packaging Price Quality Availability Scheme Type Calorie 4.8 0 2.4 16.7 16.7 16.7 2.4 9.5 31.7 14.3 59.5 Not very important 7.1 2.4 16.7 26.2 21.4 23.8 0 7.1 26.8 4.8 19
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Somewhat important 16.7 2.4 40.5 33.3 31 26.2 4.8 23.8 14.6 26.2 7.1

Very important 26.2 26.2 21.4 9.5 16.7 19 19 35.7 7.3 28.6 4.8

Extremely important 45.2 69 19 14.3 14.3 14.3 73.8 23.8 19.5 26.2 9.5

For example, 4.8% of the customers think that brand is not at all an important attribute while buying a chocolate for self consumption. Similar analysis was performed for purchase of chocolates for gifting purposes and the results are as follows.

Gifting purposes Not at all important Brand Taste Novelty Ad Packaging Price Quality Availability Scheme Type Calorie 2.8 2.9 11.8 27.3 8.8 11.8 2.9 6.1 30.3 15.2 67.6 Not very important 2.8 5.9 17.6 27.3 11.8 26.5 0 18.2 36.4 12.1 26.5 Somewhat important 8.3 11.8 41.2 12.1 8.8 20.6 5.9 21.2 12.1 24.2 5.9 Very important 19.4 17.6 8.8 21.2 26.5 5.9 11.8 33.3 9.1 27.3 0 Extremely important 66.7 61.8 20.6 12.1 44.1 35.3 79.4 21.2 12.1 21.2 0

To understand the relevance of attributes, a detailed analysis is done on what percentages of customers consider the attributes as not at all important.
80 70 60 50 40 30 20 10 0

self consumption gifting purposes

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It can be seen from the graph that the calorie content is considered not very important as an attribute. This was also observed while surveying when most of the respondents raised questions like Who cares about calorie content? and gave opinions like I have never checked calorie content. Looking at what customers view as extremely important, the following results were obtained.
100 80 60 40 20 0 Self consumption Gifting purposes

Brand, taste, packaging, quality were among the parameters that were highly valued by customers. To understand the correlation between the parameters, correlation analysis and factor analysis were also performed on these attributes.

Correlation Analysis The correlation matrix obtained was as follows.

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For Self consumption

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For gifting purposes:

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From the above tables it can be seen that Brand is highly related to Quality in the case of both self consumption and for gifting. Taste and type of chocolate are highly correlated in the case of both self consumption and for gifting. Novelty is highly related to packaging and type in the case of self consumption. Advertising is also related to packaging in the case of self consumption. Availability and schemes are highly correlated.

Factor analysis results For Self consumption

Component 1 sc_brand sc_taste sc_novelty sc_ad sc_packagin g sc_price sc_quality sc_availabili ty sc_schemes sc_type sc_calorie .236 .859 -.056 -.206 -.136 -.143 .446 .205 -.012 .797 .049 2 .413 -.184 .112 .789 .731 .078 .530 -.126 .049 -.003 -.003 3 -.249 .135 .025 -.069 .194 .175 -.300 .794 .830 .085 .049 4 .088 .222 .932 .024 .380 .103 -.196 .233 -.174 -.401 .095 5 -.496 -.052 .061 -.053 .067 .166 -.272 -.107 .301 .042 .888 6 .142 -.127 .092 .287 -.384 .880 -.082 .140 .047 -.032 .204

It can be observed that Taste and type are highly correlated to the first component Advertisement and packaging are highly correlated to the second component Availability and schemes are highly correlated in the third component

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For gifting purposes Component 1 g_brand g_taste g_novelty g_ad g_packagin g g_price g_quality g_availabilit y g_schemes g_type g_calorie .456 .807 .182 -.021 -.132 .006 .807 -.130 .193 .843 -.059 2 .140 .036 .074 -.281 .176 .168 -.223 .844 .733 .089 .208 3 .523 .134 .165 .512 -.056 .869 .217 .038 .202 -.186 -.146 4 .046 -.027 .034 .645 -.017 -.070 .052 -.008 .164 -.115 .911 5 .154 .305 .907 -.179 .108 .170 .328 .075 -.018 -.259 .106 6 -.305 -.155 .109 .288 .904 -.011 -.071 -.011 .311 .046 -.106

It can be observed that, for gifting purposes Taste, type and quality are highly correlated to the first component. Availability and schemes are highly correlated to the second component.

In addition to the above factors, during the survey it was observed that the respondents had difficulty in understanding the variables like novelty. Hence they were dropped for the final analysis. Considering all these facts, the number of attributes has been reduced to six and the ones chosen are Brand Taste Advertisement Packaging Price Availability

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FINAL ANALYSIS

Age group
11% 4% 27% Below 10 10 to 20 20 to 30 58% 30 to 40

Gender
59.1 40.9 26%

Monthly income
21% 31% Below 15000 15000-25000 22% 25000-35000 above 35000

Male

Female

CUSTOMER PROFILE

It can be observed from the graphs that the survey involved people of all age groups, both male and female in all the income groups. Hence the results can be assumed to represent the opinions of all the segments equally.
21%

Frequency
3% 5% 12% 14% 45% Never Yearly Monthly Fornightly Weekly

CONSUMER BUYING PATTERN To understand the consumer buying pattern, the frequency of purchase was determined in the questionnaire. It can be observed that most of the purchase happens weekly or daily. It was found that the consumption frequency of the customers was highly correlated with monthly expenditure of the customers, planned behavior and brand loyalty. It was also observed that more than 80% of the consumers spend less than Rs. 200 per month on chocolates. Though it is generally expected that
Kirana Department stores Malls

Place of Purchase
55 53 30

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the income levels are correlated with the monthly expenditure on chocolates, it was observed from the survey that the consumption of the chocolates is independent of the income of the customers. It was observed that most of the purchase happens for the customers themselves and the most of the purchase occurred for everyday consumption and for birthdays, etc. PESTER POWER It is observed that more than 50% of the customers consider chocolates as a way of pampering kids but more than 50% avoid buying chocolates due to the pester power.

40 35 30 25 20 15 10 5 0 Strongly disagree Disagree Indifferent Agree Strongly disagree

chocolates a way of Pampering Purchase due to nagging

IMPULSE AND PLANNED BEHAVIOR

50 40 30 20 10 0 Strongly disagree Disagree Indifferent Agree Strongly disagree Planned Behavior Impulse Behavior

It can be seen clearly from the graph that chocolates are impulse goods as most of the customers do not plan the purchase of the goods and buy the goods mostly on impulse.

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OCCASION OF PURCHASE

8% 49%

7%

Ocassion

Festivals Parties Birthdays etc

36%

It can be noticed that most of the consumption occurs for everyday consumption and birthdays. A small proportion of the consumption occurs during festivals. TOMA
Frequency Valid Percent 2.2 2.2 1.1 1.1 1.1 2.2 65.2 1.1 2.2 1.1 9 2.2 1.1 1.1 1.1 100

5star amul barone bounty celebration crackle dairymilk eclairs ferrero foxes kitkat parle perk temptation wrigleys Total

2 2 1 1 1 2 58 1 2 1 8 2 1 1 1 89

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It can be seen from the table that Dairy milk has Top of mind awareness advantage among customers. FISHBEIN ANALYSIS The ratings obtained from the survey were analyzed and the summary of the results generated is as follows: WEIGHTS FOR DIFFERENT ATTRIBUTES For Self Consumption This basically shows the rating given by the respondents to the different important attributes which are considered by them while buying a chocolate for personal consumption.

Attributes Brand Taste Advertisement Packaging Price Availability Brand

Ideal Store Average 3.674157303

4.348314607

2.528089888

2.741573034

2.95505618

3.550561798

3.674157303

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The graphical representation for the same is as follows:

5 4 3 2 1 0

This reveals that the Taste is by far the most important parameter that the consumer looks for while purchasing a chocolate. The next most important is Brand followed by Availability. The least important parameter is Advertisement. A chocolate company should align its product with these parameters according to their importance. For Gifting This basically shows the rating given by the respondents to the different important attributes which are considered by them while buying a chocolate for gifting purposes.

Brand Taste Advertisement Packaging Price Availability

3.898876404

3.741573034

2.595505618

3.483146067

3.011235955

3.078651685

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The graphical representation for the same is as follows:

4 3 2 1 0

The above data reveals that Brand replaces Taste as the most important parameter when a customer is looking to buy a chocolate for gifting purposes. Taste and Packaging are the next 2 most important parameters that a customer looks for while buying a chocolate for gifting. Advertisement again scores the least in this aspect also. AVERAGE SCORES OF THE CHOCOLATES This shows the overall standing of all the 6 Brands for in terms of the 6 parameters. It can be seen that Dairy Milk is ranked 1st in 5 out of 6 parameters except price. Kitkat is ranked marginally above Dairy Milk in terms of price parameter.
Brand 5 4 Availability 3 2 1 0 Taste Amul DairyMilk Kitkat Perk 5 Star Price Advertisement Munch

Packaging

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RESULTS In the Fishbein Analysis, scores of attributes for each chocolate is weighted based upon the importance of that attribute for the customer. It is a measure of the behavior intention of the customer. A look at the weighted score across all attributes indicates that Dairy Milk is the most preferred chocolate. Self Consumption

80 60 40 20 0

The nearest competitors for CDM are Cadburys 5 Star and Nestle Kitkat in terms of the 6 attributes. But there is quite a lot of lead that Cadburys Dairy Milk enjoys over its nearest competitors. Gifting

80 70 60 50 40 30 20 10 0

In the gifting segment also, the picture is not very different. With Cadburys Dairy Milk enjoying rank 1, the next 2 competitors are Kitkat and 5 star.

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LIMITATION OF THE STUDY

The physical survey was limited to the city of Mumbai. Therefore, the results of the study pertain to the city of Mumbai only and may not be representative of the country.

The study was conducted using the inputs received from 89 respondents. The results drawn from this small sample may not be accurate and representative of the countrys more than 100 crore citizens.

The demographic profile of the respondents is not representative of the target market and hence the results may be skewed towards a particular section of the market.

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8. ACTION PLAN Based on our findings from the study I recommend the following measures be taken by Cadbury India to further strengthen the position of the Dairy Milk brand and the company as a whole. In Store Advertising: Since chocolate purchase is still largely impulse based the company must increase the amount of in-store advertising. It must ensure that its chocolates are prominently displayed in both neighborhood Kiranas and departmental stores. Packaging to Attract Children: Even though the company is looking to develop the market and change perception that chocolate is meant for children, it must not underestimate the pestering power that children hold. In order to attract children at stores Cadbury must ensure that its chocolates having an attractive packing. The company could extend its Dairy Milk Wowie range, which has chocolate in the form of cartoon characters, in order to attract children at stores. Low-Calorie Chocolate: The Indian consumer is still not calorie conscious and hence the company does not need to launch a low calorie variant of Dairy Milk or any other brand to counter Kitkat Lite. However, with increasing health consciousness this trend is expected to change, especially in the metros, hence the company must keep a careful track of this mindset. New Variants: Since taste and the type of products are an important factor when making a purchase decision, Cadbury India must ensure that it has Dairy Milk variants or different brands itself to cater to the different tastes of the people. A variant which could be successful in India is mint-chocolate since such chocolates enjoy high popularity abroad. Premium Chocolates: The study showed that brand image is the most important factor a consumer considers when purchasing chocolates for gifting purposes. With the liberalization of the economy more and more imported premium chocolates like Ferrero Rocher are flooding the Indian market. Cadbury India must launch some of its premium chocolates in India in order to ensure that it does not lose its brand image and does not start being considered as a low esteem brand. In a price-sensitive market like India such a move would also help in improving profit margins since a significant premium can be charged on such products. Traditional Packaging for Festivals: As was revealed by the study less than 10% of the people use chocolates as gifts during festivals. In order to increase the acceptance of chocolates on festive occasions Cadbury must have traditional packaging of its gift boxes so as to give the seem feel as that of traditional sweets. Meanwhile it must also continue its focus on developing the market through advertising.
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APPENDIX QUESTIONNAIRE USED

Survey on Chocolate Consumption

Welcome. I, student of N. L. Dalmia Institute of Management Studies and Research, am conducting a


study on chocolate consumption patterns in India and would really appreciate if you can share your experiences about the same. 1. Age in years Below 10 10-20 20- 30 Above 30

2. Gender Male Female

3. Monthly household income level Below 15,000 15,000 25000 25,000 50,000 Above 50,000

4. No. of children in your home 1 2 3 4 and above

5. Do you buy chocolates? Yes No

6. How often do you buy chocolates? Daily Monthly Weekly Yearly Fortnightly Never

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7. Where do you buy it from? Malls Local Kirana Shops Departmental Stores Others, please specify ____________

8. Approximately how much is your average monthly expenditure on chocolates? Less than 100 Rs 500 -1000 100-200 200 -500 Above 1000

9. For whom do you buy chocolates? For yourself For your spouse For kids at home For friends and other family members

10. Please mark your level of agreement and disagreement with the following statements. Use the scale given below while marking your choice. Strongly Agree Agree Indifferent Disagree Strongly Disagree

I mostly plan to buy chocolates before visiting the shop I never visit a shop for only purchasing chocolates I prefer a particular chocolate and am willing to visit more than one shop to buy it I often buy any chocolate that is available in the shop Chocolates are the way of pampering kids I compare the prices of different

chocolates
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I buy any chocolate which looks appealing to me in the shop I buy any chocolate which has the most attractive scheme I mostly buy chocolates due to nagging of kids at the shop I look at the expiry date before buying the chocolates

11. Why do you buy chocolates? Feel like eating one Demand of kids For gifting purposes Others, please specify_________________

12. On what occasion is your chocolate purchase maximum? During Festival season Special Occasions like birthdays, etc Time of Parties Everyday consumption

13. Please rate the following factors which you consider while buying chocolates for self consumption and for gifting purposes. Note: You can use both columns in case your level of importance for factors differ in both cases, otherwise you may fill only first column. Extremely important Somewhat important Not at all important 5 3 1 Very Important Not very important 4 2

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Self-Consumption

Gifting

Brand Taste Novelty Advertising Attractive Packaging Price Quality Availability Promotional schemes Type of chocolate (crackle, milk) Calorie Content 14. Name a brand of chocolate that you are aware of _____________ 15. Which brand of chocolate do you eat the most __________________

16. Will you buy the same chocolate again? Definitely Preferably not Most probably Never May be

17. Who influences your choice of chocolate? Parents Spouse Children No one Friends

18. How often is your decision influenced by others? Always Sometimes Very Often Never
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Often

19. Please rate the following 6 brands of chocolate on the basis of each factor given below. Use the following symbol to indicate the brands in the rank column. Amul Milk Chocolate Dairy Milk Kit Kat Perk Munch Five Star

Brand Taste Novelty Advertising Attractive Packaging Price Quality Availability Promotional schemes Type of chocolate

(crackle, milk) Calorie Content Overall ranking of the brand

Thank you for sparing your valuable time for completing our survey!

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BIBLIOGRAPHY

Sr. NO

Name of the Author

Year

Title of the book

Name of Publisher

John Bradley

2008

Cadbury's Purple Reign: The Story behind Chocolate's Best-Loved Brand

Philip Kotler

2008

Marketing Management 13 Edition

th

Person Prentice hall

Adrian Cadbury

2008

The Cadbury Story: A Short History (Midlands Interest)

Websites: www.cadburyindia.com http://en.wikipedia.org/wiki/Cadbury_plc http://www.cadburyinvestors.com/ http://www.englishteastore.com/cadbury-history.html http://www.ipfrontline.com/depts/article.asp?id=18568&deptid=7

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