The 2003 Cadbury 2018

India worm Infestation

GROUP 1
Arushi Verma(PGPJ02011)
Giftin V(PGPJ02024)
Ankit Choudhary(PGPJ01009)
Prabhakar Gautam(PGPJ02040)
Vasundhara Gupta(PGPJ02061)
Yachana Sharma(PGPJ02064)
 TABLE OF CONTENTS
1. INTRODUCTION & PROBLEM STATEMENT...................................................................................... 2
2. COMPANY BACKGROUND ............................................................................................................... 2
3. MARKETING COMMUNICATION ..................................................................................................... 3
3.1 Target Audience ............................................................................................................................ 3
3.2 Communication Strategy .............................................................................................................. 4
3.3 Value Proposition .......................................................................................................................... 5
3.3.1 Accepted Consumer Belief ..................................................................................................... 5
3.3.2 Benefit .................................................................................................................................... 6
3.3.3 Reasons to Believe ................................................................................................................. 7
3.4 Brand Personality .......................................................................................................................... 8
3.5 Brand Positioning .......................................................................................................................... 8
3.6 Creativity /Tone of advertisement ................................................................................................ 9
4. PRICING ........................................................................................................................................... 9
5. DISTRIBUTION CHANNEL............................................................................................................... 10
5.1 CHANNEL OF DISTRIBUTION ....................................................................................................... 10
5.2 DISTRIBUTION EFFECTIVE MATRIX .............................................................................................. 10
5.3 RETAIL ENVIRONMENT................................................................................................................ 10
5.3.1 TRADITIONAL TRADE ............................................................................................................ 10
5.3.2 MODERN TRADE................................................................................................................... 11
5.3.3 WHOLESALE ......................................................................................................................... 11
5.3.4 NEW CHANNEL DEVELOPMENT AND INSTITUTIONAL ......................................................... 11
5.4 THE VOICE OF DISTRIBUTOR ....................................................................................................... 11
5.5 THE VOICE OF RETAILER .............................................................................................................. 11
5.6 END TO END COLD CHAIN DEPLOYMENT.................................................................................... 12
5.7 VISIBILITY COOLERS ..................................................................................................................... 12
5.8 NON MONETARY BENEFITS ......................................................................................................... 12
 1. INTRODUCTION & PROBLEM STATEMENT
Cadbury (Mondelez) is the leading brand in chocolates under confectionery in India. It has got many
variants which are popular among kids as well as adults due to its successful marketing strategy.
However, the success of any industry lies in the effective distribution of its products. The most
challenging part in distribution of FMCG product especially in food industry is maintaining the quality
of the product. The transportation and tropical climate in India is a source of major concern for
authorities in Cadbury. Though, the expired and melted chocolates are returned back to the
company by the retailers but it is ultimately a loss for the company. This problem gets further
enhanced because of absence of proper storage facilities and transportation system within the
distribution network. The distributors as well as retailers need to invest in maintaining proper
storage facilities and effective transport system. How can a company regain consumer confidence
when disaster strikes its product? In 2003, Cadbury India faced a media onslaught and plummeting
sales brought on by reports of worms in some of its chocolate bars. Even though the problem was
isolated to storage at the retail level, the company needed to respond to the crisis, and fast.
Cadbury’s greatest challenge was lack of experience in dealing with a public opinion crisis. The first
response was to identify core principles that would guide their actions moving forward place the
consumer first, always tell the truth; and dare greatly, act quickly. To help rebuild consumer
confidence in product quality, Cadbury took the voluntary step to enhance their packaging to help
prevent any further infestation. Cadbury also rolled out a comprehensive media campaign that
promoted transparency and trust. Behind each of these actions was a committed and empowered
local management team. Within 8 months, Cadbury’s sales returned to pre-crisis level.

PROBLEM STATEMENT: In October 2003 worms were reported to be in a few Cadbury dairy milk
chocolate bars in the western suburbs in Andheri. This is just a week after live worms were found in
chocolates of the same brand in a cooperative store in Akurdi, Pune.

2. COMPANY BACKGROUND
Cadbury has a long history dating back over 200 years to its roots in 1824, to a world leader of
confectionary. Cadbury is recognisable as a strong brand and market leader in chocolate. The company
was started in 1824 by a young Quaker, John Cadbury who started the business as tea and coffee
purveyor. As in the Quaker tradition, Cadbury was founded on strong values and a powerful virtue of
social responsibility which can be still found in operation and are deeply ingrained in the company's
ethos to this day. John Cadbury started the process in the back room of his shop with cocoa which he
hand ground with a mortar and pestle, which has progressed in the company it is today with the belief
that 'doing good is good for business.'

Cadbury has three kinds of confectionary, gum, candy and more famously chocolate. The company
now operates in over 60 countries with a workforce of over 50,000 people. The organisation works
with around about 35,000 suppliers both directly and indirectly. Everyday millions of people enjoy
the Cadbury brand. Cadbury has established itself in all sectors of its primary market – chocolate.
With a product portfolio ranging from luxury items such as Éclairs, Dairy Milk and Flake to seasonal
products such as Crème Eggs to household children's brands Milk Chocolate Buttons and Fudge to
the return of classics such as the Wispa bar as well as variations of old classics such as Flake Dipped
and Heroes selection tins.
 3. MARKETING COMMUNICATION
3.1 Target Audience
Target audience is the intended group of customers (or stakeholders) of a message. The audience
can change according to the situation and message. In this case, during the crisis Cadbury had
strained relations with the major stakeholders, including the buyers, the media, FDA and the
employees. These groups were the target audience of the next Cadbury campaign to recover from
the situation.

Disgruntled Customers
• Loyalists - staunch supporters inspite of the incident
• Fence-sitters - had basic trust in the brand but some doubts had risen
• Pseudo rejectors - not sure, sometime supported, sometimes rejected
• Rabid rejectors - had pre-conceived notions, judged and condemned
the brand

Discouraged Employees

• Low morale among the employees because of the incident

Media

• Furious media covering and condeming Cadbury

Figure 1: Target Audience of Project Vishwas

1. Customers - The customers were disgruntled and felt betrayed because they had a huge
trust on Cadbury. The sense of Anti-MNC was rising in the society due to external factors
such as allegations on PepsiCo and Coca Cola. Customers had become sceptical and vigilant
in their purchases.
As a result of market survey and customer opinion, Cadbury identified 4 sets of customers,
as defined in the figure:
a. Loyalists - staunch supporters inspite of the incident
b. Fence-sitters - had basic trust in the brand but some doubts had risen
c. Pseudo rejectors - not sure, sometime supported, sometimes rejected
d. Rabid rejectors - had pre-conceived notions, judged and condemned the brand

2. Emloyees – The employee had lost morale as the sales were suddenly dropping. The
salesperson were doubting the product they were selling. Overall, the company was in a
perplexed state because of the sudden incident.
3. Media – The media was suddenly interested because it was big news. Also, one after the
other, the MNCs were defaulting in product quality. It had toppled the reputation of the
company over night.
4. FDA (Food & Drug Administration) – Cadbury’s relations with FDA were strained for
sometime as they had lodged a complaint against Cadbury and were investigating the case.
FDA was NOT the target audience as it could not be influenced through campaign or
 advertisement. Rather they were satisfied after conducting factory audit and product test;
and the lab reports were satisfactory.

To overcome the situation, Cadbury started the Project Vishwas campaign. The objective of the
campaign was to reposition Cadbury’s brand image by winning confidence of the customers and
stakeholders. The communication during the campaign was based on three pillars:

1. Customer first
2. Truth always
3. Dare greatly, Act quickly

In the case of Cadbury, the target audience after the crisis were the disgruntled customers, the
media and the employees.

3.2 Communication Strategy

Cadbury, as a reaction to the situation, identified the audience of the campaign which had to be won
back. Different communication strategies were adopted for different target groups.

Disgruntled Customers

• Advertisements
• Endorsement by a sincere celebrity

Discouraged Employees

• Letters from the Managing Director

• Townhall meetings
• Frequent communication

Media

• Press and Media conferences

• Endorsement by a sincere celebrity
• Video release of the factory and imroved pachaging
 Figure 2: Mass advertisement by Cadbury Figure 3: Video Release of Testimonial by Amitabh
Bachchan

1. Customers – Advertisements are most commonly used effective approach to reach mass
customers. Cadbury had come up with improved packaging and sealing and the message
was extended to customers through advertisements and endorsement by Amitabh
Bachchan, who was looked upon as a sincere and truthful celebrity. Among the customers,
different strategies were adopted for different segments also:
a. Loyalists – not much effort since they were still supporting Cadbury
b. Fence-sitters – reassurance by accepting the mistake and taking corrective actions
c. Pseudo rejectors – removing air of doubt by highlighting the improvements made in
the packaging
d. Rabid rejectors – reassurance by taking corrective action and word of mouth from
celebrity and media
1. Employees – To boost the morale of Employees, letters from Managing Director were sent.
Communication was made more transparent and frequent. All the employees were brought
together through frequent townhall meetings.
2. Media – FDA had cleared Cadbury of the accusations. But Cadbury continued to maintain a
communication with the media through conferences and word of mouth by Amitabh
Bachchan where he

3.3 Value Proposition

Value proposition is a statement which convinces the targeted customer how particular product or
service will add more value or better solve a problem than other similar offerings will. Value
proposition is conveyed through communication mediums like advertisement. It consists of three
heads:

3.3.1 Accepted Consumer Belief

The figure highlights the Accepted Consumer Belief of the different sets of Target Audience.
 Disgruntled Customers

• Cadbury chocolate is infested, hence not good to eat

• Risky to buy Cadbury chocolate
• Cadbury is a greedy MNC, cannot be trusted

Discouraged Employees

• Doubt on their own product

• Uncertaininty about the Company's future

Media

• MNCs sells sub-standard products in India

Figure 3: Accepted Customer Belief of different Target Audience groups

3.3.2 Benefit
Cadbury had introduced a new improved packaging for Dairy Milk. It made a huge investment of Rs.
150 million on new imported machines to revamp the packaging of Dairy Milk. The metallic poly-
flow was costlier by 10-15 per cent, but Cadbury didn't hike the pack price.

Purity-Sealed

Figure 4: Dairy Milk with new improved packaging and purity seal
 Disgruntled Customers

• Prevention from infestation

• Improved packaging at the same price
• Response to customer complaints, hence re-building trust
• Education and support to distributors and retailers

Discouraged Employees

• Addressing employee concern, hence maintaining trust

• Transparency in the communication
• Training and education about new product to salesperson

Media

• Constant communication with media, hence re-building trust

Figure 5: Intended benefits of the Vishwas campaign

3.3.3 Reasons to Believe

Cadbury brought in Amitabh Bachchan as a brand ambassador because he embodied the

values of Cadbury as a brand and connected with all of India: mothers, teenagers, children,
media persons and business partners.
In addition to the TV ads, media and press conferences were organized in cities worst
affected by the crisis where media persons were given samples of new Dairy Milk to test
and see the improvement themselves.
 Disgruntled Customers
• Protective metal foil to prevent infestation
• Endorsement by a sincere celebrity, Amitabh Bachchan
• Word of mouth from the media which once condemned Cadbury
• Satisfactory lab reports
Discouraged Employees
• Satisfactory lab reports
• Cadbury chocolate self tested by salesperson
• Transparency in communication, townhalls
• Company taking corrective measures in structured manner

Media
• Celebrity endorsement
• Media and Press conferences
• Positive and honest response from Cadbury's management
• Product testing by media persons
• News release with new packaging and factory shots
• Setting up Corporate Affairs Cell

Figure 6: Reasons to Believe

3.4 Brand Personality

Cadbury altered the theme, functionality and personality of the brand as the time demands through
advertisements. The personality of the brand was changed to depict a person with below
characteristics :
 Youthful
 Exuberance
 Pure
 Children’s superhero
Cadbury also brought in a brand ambassador to reinforce the credibility that the company
had demonstrated through its re-packaging efforts. Amitabh Bachchan, a legendary Indian
film star, was chosen (at a significant cost) because he embodied the values of Cadbury as a
brand and connected with all of India: mothers, teenagers, children, media persons and
business partners.

3.5 Brand Positioning

Cadbury became a synonym with chocolate. After the worm infestation crisis Cadbury placed itself
at the pinnacle of Brand Value pyramid by associating itself with:
 Emotions
 Culture
 Traditions
 Achievements
 Celebrations
 Occasions
They focused on kids, teens, mothers, media persons and business partners depicting it as
everybody’s product. Cadbury was positioned as not just a chocolate but an ultimate experience of
pleasure.

3.6 Creativity /Tone of advertisement

During the repositioning phase Cadbury tried to reinforce the credibility that it is “pure” in two
ways- packaging and bring a credible personality like Amitabh Bachchan. He was used as a medium
to convenience the customers about the values that Cadbury stood for and also because he
connected with all of India.
Advertisements used had a convincing tone managing the consumers opinion. The fence –sitters
needed reassurance , pseudo-rejectors needed tangible action for the doubts to be erased and rabid
rejectors required a combination of reassurance, transparency and tangible actions. The ads
highlighted:

 Anyone and everyone can eat it and no reason is required for consumption
 It is a product with signifies celebrations
 People who believe in good luck and new beginnings

4. PRICING

Pricing Strategy Followed by Cadbury

In, India price matters the most it has always deciding factor for many marketer’s fate in the market.
Cadbury has a very convenient prices for all its products. Cadbury has many varieties of products in
the chocolate segment and the pricing of each chocolate is different based on the type of customer
who is going to buy it. Priced in high as well as low variants, the Cadbury dairy milk has a position of
gifting and hence is selling high volumes even at higher prices. The Cadbury celebrations pack in fact,
sells in millions on any festival or on celebrations. Cadbury divided its product category into three
segments:

 Basic
 Moderate
 Premium

Basic product (perk,5 star)-Low pricing (Price range Rs.5-Rs.20)

Moderate (Dairy Milk, Fuse)-Moderate Pricing (Price range Rs.20-Rs.60)

Premium Product (Roast Almond, Fruit & Nuts)-Premium Pricing (Price Range Rs60-Rs.150).

After Crisis Pricing Strategy

 Cadbury didn’t change its pricing strategy after crisis.

 It spends more than 15 Crores on repackaging, but it took this cost as customer retention cost,
but not as product cost.
 All promotional expenses, Campaigning expenses was also considered as customer retention
Cost , but not as product cost.
 5. DISTRIBUTION CHANNEL
5.1 CHANNEL OF DISTRIBUTION
The production unit supplies the stock to the company depot which is then distributed via C&F
agents to Distributors and Modern trade. The distributors then disperse it to Retailers and
Wholesalers. The final offtake happens to the consumers as shown in the flow chart in Exhibit 1.

Most of the logistics is done through refrigerated vans, shippers, chilling pads, insulators for delivery
vehicles.

The sales officers to allocate PCs to right areas according to their capabilities in order to obtain best
results. It is essential for sales officer to have proper know how of the geographical area for
allocation of PCs to their specific allocated areas.

5.2 DISTRIBUTION EFFECTIVE MATRIX

For the process of measuring service in retail, Cadbury developed Distribution effective Matrix. This
matrix will develop key aspects of selling and servicing in the market.

 Route List Accounts (RLA) : It is number of outlets covered by a Purple Champions(PC) on a

regular basis (usually 210-240 per PC)
 Active Accounts: All outlets that have purchased Cadbury chocolates during the month comes
under this account.
 Effective Coverage (EC) % - EC is calculated by - Active Accounts/ RLAs. EC is the percentage of
outlets that have purchased at least one Cadbury during the month.
 Productivity % - It is Number of Cash Memos/ Number of PC visits.
 Average SKU billed per Order- It is Number of lines billed in a day/ Number of Bills Cut
 Effective Brand Distribution : Number of Active accounts for that brand in a month/ RLAs
 Must Sale SKU- The recommended assortment list of the right SKU for right RE is the Must Sell
SKU. It is assortment of products/SKU which should made available in any retail as per consumer
needs. Shoppers behaviour is different in different RE

5.3 RETAIL ENVIRONMENT

5.3.1 TRADITIONAL TRADE
The retail environment in traditional trade are as follows:

 High End Grocers: Grocers and General Stores which deal in grains, spices, oil and branded
FMCG products can become HEGs.
The only criteria that an outlet has to fulfil so that it comes under HEG category is, they need to
buy Cadbury products worth Rs 8000/- and spaced of 300 square feet & above. It should also
have one helper along with the owner and also presence of MFD with 4 facings of large packs
and above.
 Low End Grocers: Grocers and General Stores who buy Cadbury products less than Rs 8000/-
fall in this category. LEG stores are used for emergency purchases.
 Food Stores: Outlets that earn by selling food products for example sweet marts, icecream
parlours, bakeries etc.
 Chemists: Outlets that sell medicine as a primary source of business.
 Pan kiosks: Pan Kiosks are selling Pan/ Bidi/ Gutkaand also stocking FMCG products like
chocolate, sachets, potato, wafers
5.3.2 MODERN TRADE
 Hyper Markets : Service outlets that satisfy all of below requirements:
 Sell food
 Have >=5 Checkout counters
 Air conditioned
 Area greater than 20000 square feet
 Super Markets ( Small and Large) :
These are self service outlets that have computerized checkout counters
 Large Super Markets are greater than 3000 square feet
 Small Super Markets are less than 3000 square feet.

5.3.3 WHOLESALE
Any outlet that sells greater than 50% of overall business to retailers are known as wholesale stores.
In case of Cadbury; if the wholesaler does comfy whole selling but does retailing mainly for
chocolates still he is considered as a wholesaler.

5.3.4 NEW CHANNEL DEVELOPMENT AND INSTITUTIONAL

NCD will cover stores located in schools, colleges, cinemas, clothing retailers, airports, railway
stations etc.

5.4 THE VOICE OF DISTRIBUTOR

Hari Om Trading Company is a distributor of Cadbury from Dombivili since 5 years. He employs
around 13 sales people with 7 beats. Absenteeism causes the distributor or his brother to carry out
the sales call for the day as it leads to lost sales. Credit of about a week is provided to good retailers
and for backlisted ones need to pay in cash. Mondelez provides a 4.5% margin on Cadbury
chocolates. Out of which 3.5% is expensed due to booking, delivery and collection. The expense has
risen over a period of time. The salaries which was Rs6000 five years back is Rs 11000 today and the
price of chocolates has not grown in same proportion. The 1% profit that it earns becomes a big
amount due to large quantity.

The demand for Cadbury chocolates is estimated as per trends based on 3 months purchase by
retailers. Moreover, there is a software which showcases past sales wrt to each retailer. This can be
used to find correlation to estimate the demand. However there are three major events of the year
for them. For the company it is Diwali. The company tries to push stocks during this season but there
is lot of competition from other segments like sweets. The distributor however considers
Rakshabandhan as a biggest season owing to less competition. The third event which has almost
double the sale is Chocolate day which comes during the Valentine week.

There are P7 outlets which are perfect outlets with windows displaying Cadbury products. Such
retailers are given extra 4-5%.

The company gives 100% damage recovery for expired chocolates. It also gives completely recovery
for chocolates that have melted and again frozen but comes with a whitish texture which is
considered spoilt by consumers but is safe to have. However it does not cover the damage caused
due to rodents and ants.

5.5 THE VOICE OF RETAILER

Sadanand Stores in Kandivili says that he earns a margin of about 7 percent with a credit period of 3-
4 days. The order quantity is approximately 500 and it takes days to realize the stock after order. The
demand is however not very fixed. Whenever there is a celebration like birthdays he gets bulk order
and it is not anticipated.

Similarly, Prabhu Brothers store in Udupi has a weekly sales of 600 Rs. They pay upfront for the
order in cash. The most sold SKU are 5Rs, 10Rs and 20Rs Cadbury chocolates. The demand is
forecasted based on the market and business scenario. They get a margin of about 6%. The policy for
expired chocolate return is very stringent as per them. They usually don’t get high discounts as
compared to other products. This is due to the good marketing that it has. It doesn’t need to give
discounts.

Both the retailers purchase Cadbury chocolates from the distributor.

5.6 END TO END COLD CHAIN DEPLOYMENT

The end to end cold chain deployment is the process of transporting chocolates from manufacturer
to retailer through cold storage to avoid melting. Exhibit 3 shows the process of end to end cold
chain at Cadbury.

The process followed by Cadbury is as follows:

 After manufacturing of chocolates, the Cadbury chocolates has temperature controlled

warehouse.
 The chocolates are then sent to depot by help of refrigerated vans. In the depots chocolates are
stored in AC store rooms
 Chocolates are sent to Re distributor point from depot by help of refrigerated vans which are
also known as ref vans. Once the chocolates reach RD point they are kept in air-conditioned go-
down as per company standards.
 Chocolates are then distributed to different retail stores from RD point by help of insulated
autos. These autos are insulated from inside and also uses shippers and chilling pads in order to
control chocolates temperature before it reaches retail outlets.
 Once the goods reaches different retail points then it becomes vital for the company to check
the storage of goods. Hence, company provides Visibility Coolers to retailers in order to protect
the chocolates from heat and moisture.

5.7 VISIBILITY COOLERS

Visibility Coolers are also known as Visi-Coolers as they help in showcasing the products of Cadbury
due to its transparent door. There are various types of visili coolers with different Capacity.

 33 litres- Counter Top Visi-Cooler

 48 Litres- Small Door Visi-Cooler
 120 Litres- Door Visi-Cooler
 145 Litres- Pastry Visi-Cooler
 190 Litres- Pastry Visi-Cooler
 320 Litres- Sega Visi-Cooler

5.8 NON MONETARY BENEFITS

There are some non-monetary benefits that channel partners could get on good sale of Cadbury
chocolates

 UDAAN – Foreign trips to super stockists based on performance

 SMDs – Given top shops where sale is more than 2000 per week
 Visicoolers – Given in Food stores and chemists where sale is more than 3000 per week
  Barrow Dispensers- Given to small shops and Paan Tapris

EXHIBIT 1

EXHIBIT 2

Goods are
processed at
Goods are then sent
manufacturing
to Retailers in Once goods reach to different retail
plant and are
insulated autos points then it becomes extremely
stored at
temperature Once goods reach RD important for the company to
controlled point it is stored in check the storage of goods
warehouses warehouses
It becomes important in order to
Goods are Goods are kept in protect Cabury’s image, consumer
then sent to warehouse according to safety and delight
RDD points in company standards
 Company provides visi
coolers to retailers in order
to protect the chocolates
from heat and moisture
EXHIBIT 3

Exhibit3: This statistic shows the market share of Indian chocolate confectionaries in 2016, based on company.
With a total market size of over 112.5 million Indian rupees, the leading share of the country's chocolate
confectionary market was accounted for by Mondelez with about 49 percent. Ferrero's share in the market was
about eight percent during the measured time period.