Chocolate Industry Is Becoming A Global Phenomenon Marketing Essay

coffee tree Industry Is Becoming A Global Phenomenon trade test gateChocolate Industry is becoming a global phenomenon. glob entirelyy appetite for drinking coffee trees shows no signs of waning but a shift in consumption pattern is increasingly evident. In the twelvemonth 2009 global confectionary grocery store was estimated to be 88,740.2US $ million industry .From the year 2004-2009 it has grown by 33.2 % in terminals of retail economic value .In terms of value coffee confectionary trade is the largest category accounting for close 60% of the total sales. The giants of coffee berry job fork over all dominated their respective regions for decades eg -Kraft in Us,Cadbury In Britain.Cadbury Schweppes was formed by a merger in 1969 between Cadbury and Schweppes. Since 1842 Cadbury has kaput(p) from strength to strength. The most young step to the success ladder for Cadbury is the coup detat of the friendship by US food attach to Kraft which makes the bon ton global confectionary attractor. It has an extinctstanding portfolio of chocolate, gum, arseholedy saloon .Since then the business has expanded into a leading international footdy store and beverages company. Through an active programme of two acquisitions and disposals the company has created a grueling portfolio of blots which atomic tot 18 sold in almost e rattling country in the world.This report aims to throw light on Chocolate confectionery industry leader Cadbury with target martplace in India .A rapidly fuck offing economy much(prenominal) as India would further gives me a chance for a much deeper analysis of the industry and overall trade surroundings.Cadbury in IndiaCadbury began its Indian operations as a trading company in 1947 with dissimilariatemarks such as dairy milk, gems, 5 title-holder Bournvita and perk etc. Cadbury India Ltd is a local subsidiary of Cadbury Schweppes which holds in excess of 90 % allots in it. Cadbury in the last six decades has beco me synonymous with the word chocolate in India .It is one of the Classic examples of the notice coming to symbolise a harvest- condemnation category. Innovation is to a fault essential for ongoing success despite chocolate market being dominated by consistent performers .Cadbury India Ltd dominates the chocolate market in India with over 70%.It operates in four categories viz. Chocolate candy store, Milk Food Drinks, Candy and Gum category. Some of the let on brands be Cadbury Dairy Milk, 5 star,Perk,clairsandCelebrations.Market sizeThe FMCG market in India is estimated to get ahead 27 billion in 2009. It is real spunkyly fragmented market .In India the Chocolate confectionery market grew almost 22% in live value terms to reach Rs27 billion in 2009.Cadbury India Ltd is the leader in confectionary market in IndiaLeading Brands in the marketNestle is the second market leader with a sh ar of 33% followed by Amul at 3.63%. some other competing wargons in the market are KIT KA T, NESTL Eclairs ,Polo, Nestle Milky bar Nestle Bar one is one of the biggest competitor of 5 star ,Amuls Chocozoo crossing ,Amuls Milky Bar etcBrand PositioningA brand agency is the market place a brand is perceived to remove or what the brand stands for in a world of brands .This position includes the associations it has in the mind of the tucker outr .It includes the associations it has in the mind of the consumer .It includes all aspects of a brand the product attributes, benefits and determine. (MooijiMariekede, 2005). In a survey conducted by the Business world time in 2007 Cadbury had been graded 5th in the FMCG sector in a survey on Indias most respected companies.PORTERS ANALYSISNew Entrants challengerBuyersSubstitutesSuppliersPorter (1980) suggested that five main forces shape competition at the aim of strategic business units and that a systematic analysis of each in turn can help managers divulge the keys to militantness in their exceptional industry (Hooley, 2 003)Rivalry among existing companies- compriseCadbury is undoubtedly the market leader in the Indian chocolate confectionery market .The main players in the chocolate confectionary market is Cadbury followed at 58.3% by Nestle at 33% and municipal brand Amul (Gujarat Co-operative Ltd) at a very small share of 3.63%.Private labels buzz off not made an entry in chocolate confectionary .With Brands such as Cadbury and Nestle enjoying a strong brand equity as nearly as market dominance retailers have not ventured into the category as of 2009 .Since 2004-2009 the market shares by the companies have not seen a major turn .Nestle is the only competitor with diverse range of product portfolio where as Amul summation activity is in dairy products and it has a much smaller product portfolio than the leading players in India. Amul Chocozoo is the companys key innovative brand which does not have any parallels in the market. In India Cadbury enjoys very strong brand homage a classic examp le is the Worm Controversy in the year 2003 during the festival period in Diwali but a year ulterior company was able to gain back the consumer confidence .Cadburys value share melted from 73 per cent in to 69.4 per cent during the year 2003.The retrieval began in May 2004 when Cadburys value share went up to 71 per cent. This prompt recovery was possible cod the trust and dedication of the consumers with the brand. Also due to strong brand loyalty Cadbury enjoys price elasticity and product specialty plays a very small in competitive rivalry of the confectionery market.Threat of New entrants- LowIn addition to considering existing rivals an make-up should in any case consider the potential for tonic entrants to emerge. Threat of new entrants in an industry depends upon the height of a number of entry barriers .In the chocolate confectionery market the corking cost of entry would be very racy since Cadbury and Nestle being the only two companies with to a greater extent th an 70 pct share in the market. To compete with such well established MNCs it requires gritty investment making the threat of new entrants very low. Cadbury as a brand enjoys strong brand loyalty and emotional attachment by the consumers any potential new entrant will encounter foeman in trying to enter the industry .Brand loyalty will also be a significant factor in increasing the be for consumers of reverse to the products of new competitors.Threat of Substitutes-LowA renewal can be regarded as something that meets the same needs as the product of the industry .The effect of threat from a particular substitute will depend upon factors such as extent to which the price and performance of the industries product and performance of the substitute can match the industries product and the willingness of the flipees to switch to the substitute .In case of Cadbury the switching costs for the consumers is very low .Also consumers are very loyal to the brand making the threat of subs titutes very lowBargaining power of suppliers- ModerateCadbury Schweppes has around 40000 suppliers worldwide.1Parent company provided cocoa seeds and clonal materials for 8 historic period of operations to Cadbury India Ltd .It started cocoa farming in India to reduce dependence on imported cocoa beans. Cadbury India imports about 50 percent of the cocoa fate .List of Key ingredients and their approximate percentage requirement is shown the below chartOtherDry Fruits-3%Edible Oil-5%Malt Extract-9%Sugar mobile Glucose-17%Milk (Powder/Liquid/Condensed)-20%Cocoa Beans/butter/powder -46%Like stated above key ingredients Sugar and Cocoa are bought from the commodity markets. Milk is bought regularly from farmers in the area near the factory to complement the offer coming from the authoritative directly operated farm. Barley for malt is bought from four to five wholesalers. Manufactures have very little control over the prices of Sugar and Cocoa since they are for the most part se t by the government. Rest of the ingredients have little proportion as compared to cocoa and sugar hence their bargaining power is low. Over the recent years there has been gro furtherg concern of the trade policies and child force back issues in the cocoa industry Cadbury product Dairy Milk has been blank trade certified .Bargaining power of buyer- ModerateThe extent to which buyer of a product exert power over an industry depends upon number of factors. To identify the bargaining power of the buyer for Cadbury its very important to identify who are the customers and consumers for the company .Customers are the people who sell the products to the people who consume them, for Cadbury they are the retailers and the distributors and consumers are the direct end people who consume. In the supply chain for Cadbury buyers include consumers, wholesalers, and supermarket chains. Market for the chocolate industry is highly fragmented. real brands such as Cadbury and Nestle have a strong movement of eminence and brand loyalty leading to weakening of the buyer power. major purchase in terms of volume is by the retailers giving them a better bargaining power but Cadbury enjoys good brand loyalty hence making it proportionally weak.Consumers have become accustomed to the brand and generally seem reluctant to shift loyalties to newer brands.Porters Generic strategyCADBURY microbe free-enterprise(a) reinforcementAs a competitive strategy, differentiation refers to a product or service that is different or somehow eccentric as perceived by the customer. (Grigsby Stahl, 1997)A household can achieve differentiation for its products or services in a number of different ship canal .Cadbury India adopts the differentiation strategy to set itself in a unique air in the competitive envoirnment.Cadbury has over the decades build a brand pattern for the company through extensive advertising people have started associating with the brand emotionally and are very loyal. Cadbury has always tried to connect emotionally through its advertisement with the consumers .Company also regularly uses customer surveys as a means to align the advertisements with evolving consideration sets of customers and uses packaging as a mechanism to communicate quality. For example adds such as Kuch Meetha Ho Jaaye Is Diwali Ap Kisse Khush Karenge which means something concoction for the Diwali festival clearly shows the bond the company is trying to connect with the consumers. It also tries to add extra features into the product. Cadbury India invests heavily in advertisement for its products .This plays a very important role in differentiating strategies because the customer gets convinced that there is something different about the product. Differentiating firms usually employ substantial consumer research efforts to identify ever-changing consumer tastes. Cadbury regularly invests in consumer research and research and emergence for its products .It regularly tries to infix with the products. Company goes by the value it sets for itself i.e. performance driven, values led.Resource hind end ViewA imaging based view inside out perspective is fundamentally different from Porters outside in perspective. A resource based view of the firm draws an important distinction between comparative parity and competitive emolument (Barney ,1991).Parity is achieved by choosing and executing a business strategy comparable to that of competition firms .Generic strategy models are seen as leader to parity with the competition .By contrast ,competitive advantage requires that firms be unique by developing and deploying resources in unique ways that add value and are difficult to imitate (Gerhart Rynes, 2003).Resource based view says that a fundamental law induce resources that are inputs into its production process .There are three such capital inputs Physical, human and organizational .The use of these resources is determined by characteristics inside th e company .When these characteristics are appropriate and an organization can achieve both competitive and a keepable superior performance-usually expressed by relatively high levels of return on investment .The organization acts a collection of assets and capabilities providing a capacity for a sets of resources to effectively perform activity tasks. A firm can sustain a competitive advantage by the organization responsive to rapidly changing market conditions by both maintaining the development of existing resources and capabilities and creating new ones.An organization needs to identify these capabilities which provide it with a competitive advantage. Resources are of two types tangible and intangible .These resources for the company can be intensified using the VRIN model.ValuableRareImperfectly ImitableNon commutableWith the Cadburys analysis of the external as well as internal environment of the firm i found below resources which can help to sustain competitive advantage in t he market.Tangible assetsRanking from level 1-5(Where 1 is the highest)Financial capital1Human resource2intangible assetsBrand reputation3Loyalty of customers1Goodwill2Research and development5Distribution network4 characteristic CapabilitiesCulture and values1Cadbury India has been decades in the Indian market and in a flash enjoys a strong reputation and has maintained its market leader position for many years it has the largest market share in the Indian chocolate industry of more than 70 percent. consequently I would rank financial capital as no 1 tangible asset of Cadbury India. Cadbury India has been ranked as the 7th Great Place to bet and the No. 1 FMCG company in India in 2008, by the Great Place to Work Institute.It is the fourth time that they have featured amongst the Great Places to Work in India. Cadbury India has also been awarded the Bronze Award for Excellence in People commission in the Great Place to Work 2007 survey conducted by assume Talent Company Limite d and Business world. The award recognizes Cadbury India as a national leader in the area of Human Resource Management. Thus making it very useful tangible asset for the company.2Cadbury India is a strengthened upon reputation for fine products and services.Capabilities are more difficult to de business organizationate and are often described as invisible assets .For Cadbury India undoubtedly it is the culture and value of the organization which it has carried on decades .It is a value driven companyTo add up the essential elements of the resource based view from Cadbury Indias point of view are the resources stated as above which give the firm its distinct advantage and sets its apart. Also the role of management in converting these resources into positions of sustainable competitive advantage leading to a superior performance in the marketplace.Cadbury Indias Business Relationships with S tearholdersStakeholders are the customers, shareholders employees, suppliers, communities. I would be aiming to analyse the business relationships Cadbury has with its stakeholders, how it builds up long term relationship which is mutually beneficial and a collaborative effort brassCommunitiesEmployeesCustomersStockholdersCadbury IndiaEducational institutes, Future generations, PoorMedia, Competitors, SuppliersTrade associations, Public Interest conferenceUnions, Political parties, CreditorsEnvironment,Religious GroupsA firm must satisfy the interests of all its participants since this will promote the interest of the shareholders. A Firm should try to provoke the interest of all the stakeholders. It should have a stakeholding approach to business behaviour.Cadbury India take part in various programs and activities for the overall community its shareholders etc.As part of its bodily social responsibility programme they promote physical activity and command that helps improve consumer health and prevent obesity.They are also serving to build understanding of the energ y equation particularly amongst children. Cadbury India does not vend its confectionery or carbonated soft drink products in primary coil schools and only vend these products in secondary schools by invitation and in line with nutritional guidelines set by the school. Company regularly invests in new science and increasing our scientific resources within our business. Were working with others (including government, campaigners, shareholders and customers) to help envision solutions. weve withdrawn from advertising directed specifically at children aged less than eight years where theyre the majority of the audience and weve introduced a global Marketing Code of Practice, which includes specific reference to children. Cadburys Marketing code Supporting levelheaded consumption and balanced life style also signifies the company values towards the consumers3Good relationships with supplier and other stakeholders can also provide an increase repertoire of insights and responses, greate r efficiencies and more opportunities for creating problem solving. This is especially important for Cadbury eer tries to innovate its products and services to maintain their market share .Since Cadbury has a strong stakeholder relationship it also provides the company with a measure of st office in a turbulent environment. During the Worm infest crisis of 2003 it was very difficult time for the company but due to the solid relation it has with its customers, stakeholder it was able to win back their trust and gain the largest market share by 2004. analytic thinking and ConclusionsCadburys competitive advantage comes from highly related and producing similar products lines based on existing technologies .For example Cadbury dairy milk, Dairy milk shots. I notion since Cadbury targets similar product market some of the customer bases Moreover it has the ability to offer big portfolio to meet customer needs .Since Cadbury is already the market leader in the chocolate confectionery i n India it can nidus on the current portfolio effectively using this as a base to venture into new products or entering into similar industry. Also it can be noted that the markets that it has already captured are in to the maturity stand for and product needs constant innovation and development to sustain in the long run. India has a vast population though Cadbury has a very large and diverse distribution network still there would be lot of untapped market potential it should concentrate on get the best distribution system. Also as the market develops consumers become more experienced and discerning and look for more benefits from the products they choose. Cadbury should regularly try to re-work exiting brands and develop new ones to meet consumer demands.BibliographyAbbott, bath C..Agricultural Marketing Enterprises for the Developing existence With Case Studies of Indigenous Private, Transnational Co-operative and Parastatal Enterprise. New York Cambridge University Press, 1 990.Barney, J.B., (1991), Firm Resources and Sustained Competitive Advantage. Journal of Management 17, (1), pp.99-120Campbell, David J., amount Houston, and George Stonehouse.Business Strategy An Introduction. Manual ed. 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