CHAPTER-1

INTRODUCTION

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 INTRODUCTION

Throughout history chocolate has been associated with romance & sharing.

Today the richness & smoothness of Cadbury chocolate is what makes it one of the

world's favorite treats.

Discover everything here that you want to know about Cadbury & chocolate, from

historical facts to delicious recipes.

You’ll also find facts about our exciting new product such as Cadbury snaps &

Cadbury dairy milk wafer.

Think delicious chocolate, think Cadbury.

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Today’s Indian chocolate market, an overview

Chocolate consumption in India is extremely low. Cadbury dominates the chocolate

market with about 70% market share. Nestle has emerged as a significant competitor

with about 20% market share. Key competition in the chocolate segment is from co-

operative owned Amul & Campco, besides a host of unorganized sector players.

There exists a large unorganized market in the confectionery segment too. Leading

national players are Parry's, Ravalgaon, Candico & Nutrine. MNC's like Cadbury,

Nestle, Perfetti, are recent entrants in the sugar confectionery market. Other

competing brands such as GCMMF's Badam bar& Nestlé’s Bar One have minor

market shares

Chocolate consumption in India is extremely low. Per capita consumption is around

160gms in the urban areas, compared to 8-10kg in the developed countries. In rural

areas, it is even lower. Chocolates in India are consumed as indulgence & not as a

snack food. Indian chocolate market grew at the rate of 10% pa in 70's & 80's, driven

mainly by the children segment. In the late 80's, when the market started stagnating,

Cadbury repositioned its Dairy Milk to any time product rather than an occasional

luxury. Its advertisement focused on adults rather than children. Cadbury's Five Star,

the first count chocolate, was launched in 1968. Due to its resistance to temperature,

the chocolate has become one of the most widely distributed chocolate in the country.

In the early 90's, high cocoa prices compelled manufacturers to raise product prices &

reduce their advertisement budget affecting the volumes significantly. The launch of

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wafer chocolates Kit Kat&Perk spurred volume growth in the mid 90's. These

chocolates positioned as snack food rather than on the indulgence platform compete

with biscuits & wafers. A strong volume growth was witnessed in the early 90's when

Cadbury repositioned chocolates from children to adult consumption. The mid 90's

saw the entry of new players like Nestle, which created categories like wafer

chocolate & spurred growth.

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 OBJECTIEVE OF STUDY

1. The study of pricing of Cadbury different products & which techniques

they use to maximize the profit.

2. We study the how Cadbury increase their profit by introducing new

product.

3. We have done a comparison of Cadbury by its competitors.

4. The place Cadbury has in market.

5. We have studied the ongoing battle in the confinery market.

6. What are the difficulties, which Cadbury faces, in past years?

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 SCOPE OF STUDY

Cadbury's holds its price, despite its troubles

Independent, The (London), Nov 17, 2006 by Andrew Dewson

Some traders are convinced that something is going on at Cadbury Schweppes.

Despite a "sell" recommendation from the broker Goldman Sachs on Wednesday &

yesterday's confirmation of an investigation into alleged accounting malpractice at its

50 per cent-owned Nigerian operations, the shares still managed to close in positive

territory.

The Nigerian operation is a tiny part of Cadbury's business, but the market never likes

to get wind of accounting problems. EMI Group shares lost more than 15 per cent

when it discovered accounting fraud at its Brazilian operations three weeks ago - the

shares have still not recovered.

Cadbury's closed 5p firmer at 532p, valuing the group at more than [pound] 15bn,

including debt. The word among traders is that Cadbury's is poised to face a takeover,

most likely from a private equity group, in what would be the largest ever UK buyout.

Traders said a change of management might be the best way for it to move forward &

that could mean an attempt to take it into private hands.

The insurance sector remained in focus following Legal& General's promise to return

[pound]1bn to investors & a round of corporate activity speculation. The Swiss

investment bank UBS raised its target for the shares to 165p as it reiterated its "buy"

advice, sending the shares 3.25p better to 149.75p. Meanwhile, Royal& SunAlliance

firmed another 1.5p to close at 153p as bid talk continued to do the rounds.

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It has been five years since shares in Aggreko traded at 400p; the power supply

group's stock collapsed to 100p in late 2001, but the turnaround looks to be complete.

A bullish trading update yesterday surprised even the most upbeat analysts. ABN

Amro, Citigroup & Evolution Securities published upbeat notes as the shares climbed

19p to close at 404p. Shares in the London Stock Exchange had another bad day on

the back of news that a consortium of investment banks is putting together a rival

exchange. The shares fell through 1,200p for the first time since the beginning of

September before a late afternoon rally saw the stock close 4p worse at 1,230p

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 RESEARCH METHODOLOGY

Meaning of Research

It refers to the method adopted to collect the relevant data & other information, which

forms the basis of the thesis writing. So for the effective writing of the thesis report,

the data must be quality oriented. My research is divided into two stages:

Data Collection Techniques

There are mainly two broad classification of the data collection technique that are as

follows:

Secondary source: the data in the secondary source is already published & is in the

form of government publication, census, personnel record, client history & service

records.

My source of data collection is also through the secondary data available from the site

of sbi & icici banks.

Primary data: the data which is not been published at all & is used by the researcher

the very first time is known as the primary data.

Some part of my project report is based on the primary data which I have collected

through the questionnaires.

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CHAPTER-2

CONCEPTUAL

FRAMEWORK

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 Manufacturing process

Cadbury makes a variety of chocolates for different purposes but the two main types

are Cadbury Dairy Milk, milk chocolate & Cadbury Bourneville plain chocolate.

The taste & texture of Cadbury chocolate are based on long traditions of expertise in

recipe & processing unique to Cadbury. Techniques are improving all the time & new

technology enables the whole process to be finely tuned to match evolving tastes &

preferences.

Production starts at the Chirk cocoa factory, where the highest quality cocoa beans are

processed to produce cocoa mass containing 55% cocoa butter plus extracted cocoa

butter, the basis for all chocolate products.

When plain chocolate is made the 'mass' goes straight to the Bourneville factory in

Birmingham while the 'mass' for milk chocolate production is taken to the Cadbury

milk factory at Marl brook, Herefordshire, in the heart of English dairy country.

At the milk processing factory fresh liquid full cream milk is cooked with sugar &

condensed to a thick liquid. Cocoa mass is added, making a rich creamy chocolate

liquid, which is then evaporated to make milk chocolate crumb. As these ingredients

are cooked together the very special rich creamy taste of Cadbury chocolate is

produced. 95,000 tonnes of crumb a year are produced at Marl brook to be made into

chocolate at the Cadbury chocolate factories at Bourneville, Birmingham &

Somerdale, Bristol.

On arrival at the chocolate factory the crumb is pulverized by heavy rollers & mixed

with additional cocoa butter & special chocolate flavorings. The amount of cocoa

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butter added depends on the consistency of the chocolate required: thick chocolate is

needed for molded bars, while a thinner consistency is used for assortments &

covered bars.

In the UK up to 5% vegetable fat is added to compensate for variations in cocoa

butter, allowing the melting properties of the chocolate to be controlled to a precise

standard, & preserving the full taste & texture of the chocolate. Cadbury use carefully

selected vegetable oils similar in nature to cocoa butter: African Shea, Indian Sal &

Malaysian Palm oils are all part of the recipe.

Both milk & plain chocolate, which has had sugar & cocoa butter added to the mass

before pulverizing, undergo the same final special production stages, producing the

famous smoothness, gloss & snap of Cadbury chocolate

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 Cadbury Products

Cadbury Perk

A pretty teenager; a long line, & hunger! Rings a bell? That was

how Cadbury launched its new offering; Cadbury Perk in 1996.

With its light chocolate & wafer construct, Cadbury Perk

targeted the casual snacking space that was dominated

primarily by chips & wafers. With a catchy jingle & tongue in

cheek advertising, this 'anytime, anywhere' snack zoomed right

into the hearts of teenagers.

Raageshwari started the trend of advertising that featured

mischievous, bubbly teenagers getting out of their 'stuck & hungry' situations by

having a Cadbury Perk. Cadbury Perk became the new mini snack in town & its

proposition "Thodi si pet pooja" went on to define its role in the category.

As the years progressed, so did the messaging, which changed with changes in the

consumers' way of life. To compliment Cadbury Perk's values, the bubbly &

vivacious Preity Zinta became the new face of Perk with the 'hunger strike'

commercial in the mid 90's.

In the new millennium, Cadbury Perk moved beyond just owning 'hunger' to a "Kabhi

bhi kaise bhi" position, because the urge for Cadbury Perk could strike anytime &

anywhere.

With the rise of more value-for-money brands in the wafer chocolate segment,

Cadbury Perk unveiled two new offerings - Perk XL & XXL.

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The temptation to have more of Cadbury Perk was made even greater with the launch

of Cadbury Perk Minis in 2003 for just Rs. 2/-

In 2004, with an added dose of 'Real Cadbury Dairy Milk' & improved wafer', Perk

became even more irresistible. The product was supported in the market with a new

look & a new campaign. The advertisement spoke of the irresistible aspect of the

brand, with 'Baaki sab Bhoola de' becoming the new mantra for Cadbury Perk.

Cadbury Five Star

Chocolate lovers for a quarter of a century have indulged their taste buds with a

Cadbury 5 Star. A leading knight in the Cadbury portfolio & the second largest after

Cadbury Dairy Milk with a market share of 14%, Cadbury 5 Star moves from strength

to strength every year by increasing its user base.

Launched in 1969 as a bar of chocolate that was hard outside with soft caramel nougat

inside, Cadbury 5 Star has re-invented itself over the years to keep satisfying the

consumers taste for a high quality & different chocolate eating experience.

One of the key properties that Cadbury 5 Star was associated with was its classic Gold

color. & through the passage of time, this was one property that both, the brand & the

consumer stuck to as a valuable association.

Cadbury 5 Star was always unique because of its format & any communication

highlighting this uniqueness, went down well with the audiences. From 'deliciously

rich, you'd hate to share it' in the 70's, to the 'lingering taste of togetherness' & 'Soft

&Chewy 5 Star' in the late 80's, the communication always paid homage to the

product format.

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More recently, to give consumers another reason to come into the Cadbury 5 Star

fold, Cadbury 5 Star Crunchy was launched. The same delicious Cadbury 5 Star was

now available with a dash of rice crispies.

Cadbury 5 Star & Cadbury 5 Star Crunchy now aim to continue the upward trend.

This different & delightfully tasty chocolate is well poised to rule the market as an

extremely successful brand.

Cadbury Dairy milk

The story of Cadbury Dairy Milk started way back in 1905 at Bournville, U.K., but

the journey with chocolate lovers in India began in

1948.

The pure taste of Cadbury Dairy Milk is the taste

most Indians crave for when they think of

Cadbury Dairy Milk.

The variants Fruit & Nut, Crackle & Roast

Almond, combine the classic taste of Cadbury Dairy Milk with a variety of

ingredients & 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 has exciting products on offer - Cadbury Dairy Milk Wowie,

chocolate with Disney characters embossed in it, & Cadbury Dairy Milk 2 in 1, a

delightful combination of milk chocolate & white chocolate. Giving consumers an

exciting reason to keep coming back into the fun filled world of Cadbury.

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Cadbury's big Bytes

Kuch meetha ho jaye suggests Cadbury India, its brand ambassador Amitabh

Bachchan smiling down the hoardings lined along Mumbai's Marine Drive right down

to the company's corporate head office at Mahalakshmi. While the chocolate major is

waiting for Diwali to see a turnaround in its business after the worm’s controversy, at

the moment it's all about driving growth for the category, which has seen a decline

since the first quarter of this year.

Being the market leader in chocolates with a 70 per cent share, the company has

attempted to stretch the boundaries within chocolate confectionery. It has also been

adventurous in unleashing a brand new category within chocolate early this year.

Introducing the concept of sweet snacking, it launched Cadbury Bytes in the south

with the positioning `Snacking ka meetha funda.' The product is a crunchy wafer

pillow with a choco-cream centre & is being rolled out nationally.

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Explaining the need to introduce this new category, Bharat Puri, Managing Director,

Cadbury India, says, "While we were sure of our core competencies, there was need

for innovation to deliver double-digit growth. What we found was that we were

under-represented in the area of snacking on the go & that there was a need for a light

crunchy snack." While entry into salted snacks was ruled out, sweet snacks were the

obvious choice, & Bytes is unique to the chocolate major's Indian portfolio.

Getting the right product & packaging was a challenge for the company. It has sub-

contracted the product to get the volumes & is poised for a national launch. Adds

Puri, "After all this was the first category anywhere in the world that Cadbury was

entering & we did not have the expertise. So the best way was to test-market the

product & today we find that it has already bagged five per cent of the chocolate

market."

The company has no apprehensions of cannibalization of its chocolate brands. It

believes that while its chocolates are more of indulgence products, Bytes is about

snacking when one is hungry & can be treated as a snack in between meals.

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In the past when Cadbury tried out a biscuit brand, Chocobix, there was fear about

some amount of cannibalization. After all, it was simply a biscuit coated in chocolate,

& was perceived to be another chocolate brand in Cadbury's portfolio.

Stresses Puri, "Cadbury Bytes is adjacent to chocolates & in the markets that we have

launched it, there has been no cannibalization.Chocolates is largely an indulgence

product while Bytes is about between-meals snacking. A product which is consumed

when one is feeling hungry or peckish."

Another thrust area Cadbury has been re-evaluating is confectionery. While growth

rates in this segment are healthier compared to chocolates, it has always been a

difficult market to crack. Cadbury's own experiences have led it to withdraw certain

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brands but now with Warner's Lambert's international kitty under its fold, there are

chances of reconsidering the segment once again.

"Through the acquisition of Warner Lambert, there is a great set of brands already

available to us. We are still examining which are the right brands for the Indian

market," says Puri. Cadbury has already identified Halls as the strongest brand in

Warner Lambert's portfolio & re-launched the brand early this year. Adds Puri, "Halls

was not doing well for a while so we re-launched it this year. When you have the

existing assets, it is necessary to get them right first. Halls is the first brand that we

have revived & it is now doing well."

In April 2003, Cadbury India's foreign parent acquired Pfizer's interests in the

confectionery business for $4.2 billion. That included the Warner-Lambert product

portfolio, known best for Halls, Clorets & Chiclets. The acquisition is now poised to

become a growth area for Cadbury India, whose confectionery brands include Éclairs

& Googly. But instead of selling confectionery through its existing chocolate

network, Cadbury has set up an entirely new network.

While Halls has been revived with new packaging, there has been no change in the

status of its other brands. Chiclets had been discontinued long before it belonged to

Cadbury & Clorets continues to sell with a small franchise. But now Cadbury is

looking closely at Warner Lambert's gums portfolio (it is one of the world's largest

gum manufacturers) & is considering its viability for the Indian market. Sugarless

gum brands such as Dentyne Ice & Trident White have been known for their

functional benefits worldwide but steep pricing may be a deterrent to their entry into

the country.

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"The gum market has not done well in India. But gum has functional properties & is

not merely a breath freshener. We are now evaluating whether there is a market for

them in India & whether it is going to be worth our while," says Puri.

The confectionery market may be huge in volumes but making money on it remains a

tough task with its low margins. Governed by price points, one can sell at only at a Re

1 or 50 paise unit price. "The issue is not of garnering volumes but making money out

of those volumes. The offer should be one which can get you both top & bottom

lines," states Puri. Having shifted focus from Googly, Cadbury has tasted success with

its age-old Éclairs which continue to bag almost 50 per cent of the market.

"There is scope in the market. Our Éclairs has been growing & this has been evident

in our past numbers," claims Puri. At the same time the sugar confectionery market is

highly competitive & it's all about finding the right consumer proposition & a

business model that can deliver both top line & bottom line growth.

In spite of the new categories being explored by Cadbury, its star brand remains

Cadbury Dairy Milk (CDM), which continues to corner almost 30 per cent of the

chocolate market. It is followed by brands such as 5-star, perk & Gems. Each of these

has been revamped over the years to generate excitement for the category. For

instance, recently Perk was rejuvenated as a crunchier wafer while CDM came up as a

white-&-brown variant in the market.

"The chocolates category thrives on excitement. It's all about giving the consumer a

choice & taste which they enjoy," adds Puri. For instance, in beverages, in spite of its

malted food brand Bournvita, Cadbury decided to introduce a milk additive brand

such as Delite, just to give its consumers the real taste of chocolate. Delite has added

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flavors such as strawberry & mango & is not expected to encroach upon Bournvita’s

shares. According to Puri, "There is still a large section of people who do not add

anything to milk. This will apply to children for whom milk is a problem & having an

additive will make it a pleasurable experience."

Making changes in its distribution network, Cadbury split its sales & marketing team

between its mass (confectionery) & core brands last year. "Chocolates needed to get

retailed at larger & better outlets while all the products below Rs 3 needed a different

distribution network," says Puri. Today Cadbury's distribution network reaches out to

six lakh outlets each for its confectionery & chocolate brands.

With the worm’s episode behind it, there are other issues bothering the company,

especially that of the rising input costs of cocoa, sugar & milk. Although Cadbury has

been able to maintain prices, it is still grappling with the upward trend in prices for its

basic raw materials. But its challenge remains that of growing the chocolate market in

spite of the odds. Posting a turnover of Rs 729 crore last year, Cadbury is waiting for

Diwali to make a turnaround for both itself & the category which has been through

troubled times.

Chocolate Manufacturing

Cocoa, common name for a powder derived from the fruit seeds of the cacao tree &

for the beverage prepared by mixing the powder with milk. When cocoa is prepared,

most of the cocoa butter is removed in the manufacturing process. After the fat is

separated & the residue is ground, small percentages of various substances may be

added, such as starch to prevent caking, or potassium bicarbonate to neutralize the

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natural acids & astringents & make the cocoa easy to dissolve in liquids. Cocoa has a

high food value, containing as much as 20 percent protein, 40 percent carbohydrate, &

40 percent fat. It is also mildly stimulating because of the presence of Theo bromine,

an alkaloid that is closely related to caffeine.

The processing of the cacao seeds, better known as cocoa beans, is complex. The

fruit harvest is cured or fermented in a pulpy state for three to nine days, during

which the heat kills the seeds & turns them brown. The enzymes activated by

fermentation impart the substances that will give the beans their characteristic

chocolate flavor later during roasting. The beans are then dried in the sun & cleaned

in special machines before they are roasted to bring out the chocolate flavor. They

are then shelled in a crushing machine & ground into chocolate. During the

grinding, the fat melts, producing a sticky liquid called chocolate liquor, which is

used to make chocolate candy or is filtered to remove the fat & then cooled &

ground to produce cocoa powder.

The beans are sold in international markets. African countries harvest about two-

thirds of the total world output; Ghana, Côte d'Ivoire, Nigeria, & Cameroon are the

leading African cocoa producers. Most of the remainder comes from South American

countries, chiefly Brazil & Ecuador. The crop is traded on international commodity

futures markets. Attempts by producing countries to stabilize prices through

international agreements have had little success.

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Types of Chocolates

Sweet chocolate, usually dark in colour is made with chocolate liquor, sugar, cocoa

butter, & such flavourings as vanilla beans, vanillin, salt, spices & essential oils.

Sweet chocolate usually contains at least 25-35% chocolate liquor content. The

ingredients are blended, refined (ground to a smooth mass), & conched. Viscosity is

then adjusted by the addition of more cocoa butter, lecithin (an emulsifier), or a

combination of both.

Milk chocolate is formulated by substituting whole milk solids for a portion of the

chocolate liquor used in producing sweet chocolate. It usually contains at least 10%

chocolate liquor & 12% whole milk solids. Manufacturers usually exceed these

values, frequently going upto 12-15% chocolate liquor & 15-20% whole milk solids.

Milk chocolates, usually lighter in colour than sweet chocolate, are milder in taste

because of its lower content of bitter chocolate.

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Products & Segmentation

Chocolate market can be segmented as follows:

Large units bars/ slabs,

 Count lines,

 Panned varieties,

Confectionery products can be categorized as

 Hard boiled sugar candies, lollipops, jellies

 Toffees

 Chewing candies

 Breath freshners, digestives, throat relievers

Gum based products are

 Chewing gum

 Bubble gum

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 Confectionery

Confectionery, processed food based on a sweetener, which may be sugar or honey,

to which are added other ingredients such as flavorings & spices, nuts, fruits, fats &

oils, gelatin, emulsifiers, colorings, eggs, milk products, & chocolate or cocoa.

Confectionery, usually called candy in the United States, or sweets in Great Britain,

can be divided into two kinds according to their preparation & based on the fact that

sugar, when boiled, goes through different stages from soft to hard in the

crystallization process. Typical of soft, or crystalline, candy—smooth, creamy, &

easily chewed—are fondants (the basis of chocolate creams) & fudge; typical hard,

noncrystalline candies are toffees & caramels. Other favorite confections include

nougats, marshmallows, the various forms of chocolate (bars or molded pieces,

sometimes filled), pastes & marzipan, cotton candy (spun sugar), popcorn, licorice,

& chewing gum.

Records show that confectionery was used as an offering to the gods of ancient Egypt.

Honey was used as the sweetener until the introduction of sugar in medieval Europe.

Among the oldest types of candies are licorice & ginger from the Far East & marzipan

from Europe. Candy-making did not begin on a large scale until the early 19th

century, when with the development of special candy-making machinery it became a

British specialty. In the U.S. the candy industry began to grow rapidly during the mid-

19th century with the invention of improved machinery & a cheaper process for

powdering sugar. In 1911 the first candy bars were sold in baseball parks; by 1960

candy bars made up almost half of U.S. confectionery production. By the 1980s

annual world production of confectionery totaled many millions of kilograms.

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 Confectionery Market Share

The confectionery market is highly fragmented with several players with strong

regional presence. Leading national players are Nutrine, Parry's, Parle, Cadbury,

Nestle, Ravalgon, Candico, Perfetti, Wrigleys & Joyco India. The entire market can

be divided into 7 major categories, namely Hard Boiled Candies(HBC), Toffees,

Eclairs, Chewing Gum, Bubble Gum, Mints & Lozenges. While HBCs form 51% of

the entire market, 18% is formed by toffees & 18% by chewing gum & bubble gum

collectively. Eclairs form just 5% of the entire market. Mints & Lozenges form 4% &

3% of the market respectively.

Nutrine with a strong base in southern India has emerged as the reigning number one

player in the sugar confectionery market with 24% share. Over last one year or so it

has launched various products in the sugar confectionery market. It is the market

leader in hard-boiled confectionery as well as toffees. It has share of 37% in eclairs

market & is reigning at second position behind Cadbury's. Nutrine gets around 50%

of its turnover from southern India, 20% from Eastern region & rest equally from

westerns & northern region. Its biggest brand is Mahalacto followed by

Asay&Kokonaka respectively. Total tonnage sold by Nutrine in the confectionery

market is around 36650 tonnes.

The second largest player, Parle has strong presence in orange candies (hard boiled)

supported by its Melody toffees, Mango Bite & Kismi Toffee bar. Besides this the

company also has brands like Rola Cola, Poppins, Peppermint etc. in its portfolio.It

has market share of 16% in the total confectionery market with a tonnage of 16800

tonnes. It is number two in both HBC & Toffee market with 30% & 21% market

share respectively.

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Parry's has emerged as the third largest player in the market with 13% market share &

a tonnage of 14500 tonnes.The company has brands like LactoKing, Coconut Punch,

Madras Cafe, Coffy Bite etc. in its portfolio. Though in the over all confectionery

market it is at number three, it is at par with Parle in toffees market with 21% share.

Cadbury has been one of the leaders with Cadbury eclairs with chocolate inside. It

was the most successful in 1972 when it was launched because of its initial

introductory price of 25 paise & was instant hit. It continues to be one of the biggest

brands. Cadbury made a foray into the sugar confectionery segment with Googly, a

hardboiled sweet in late 1996.Googly the tangy, fizzy candy, Cadbury took the market

by surprise & marked the entry of Trebor into the fast growing Indian market. The

product is sold under license from Trebor Bassett, UK. Googly was extended

nationally in early 1997. Cadbury has a

lso launched Mocka, a coffee based sugar confectionery.

Our Journey

Cadbury Dairy Milk has been the market leader in the chocolate category for years. &

has participated & been a part of every Indian's moments of happiness, joy &

celebration. Today, Cadbury Dairy Milk alone holds 30% value share of the Indian

chocolate market.

In the early 90's, chocolates were seen as 'meant for kids', usually a reward or a bribe

for children. In the Mid 90's the category was re-defined by the very popular `Real

Taste of Life' campaign, shifting the focus from `just for kids' to the `kid in all of us'.

It appealed to the child in every adult. & Cadbury Dairy Milk became the perfect

expression of 'spontaneity' & 'shared good feelings'.

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The 'Real Taste of Life' campaign had many memorable executions, which people still

fondly remember. However, the one with the "girl dancing on the cricket field" has

remained etched in everyone's memory, as the most spontaneous & un-inhibited

expression of happiness.

This campaign went on to be awarded 'The Campaign of the Century', in India at the

Abby (Ad Club, Mumbai) awards.

In the late 90's, to further expand the category, the focus shifted towards widening

chocolate consumption amongst the masses, through the 'Khanewalon Ko Khane Ka

Bahana Chahiye' campaign. This campaign built social acceptance for chocolate

consumption amongst adults, by showcasing collective & shared moments.

More recently, the 'Kuch Meetha Ho Jaaye' campaign associated Cadbury Dairy Milk

with celebratory occasions & the phrase "Pappu Pass Ho Gaya" became part of street

language. It has been adopted by consumers & today is used extensively to express

joy in a moment of achievement / success.

The interactive campaign for "Pappu Pass Ho Gaya" bagged a Bronze Lion at the

prestigious Cannes Advertising Festival 2006 for 'Best use of internet & new media'.

The idea involved a tie-up with Reliance India Mobile service & allowed students to

check their exam results using their mobile service & encouraged those who passed

their examinations to celebrate with Cadbury Dairy Milk.

The 'Pappu Pass Ho Gaya' campaign also went on to win Silver for The Best

Integrated Marketing Campaign & Gold in the Consumer Products category at the

EFFIES 2006 (global benchmark for effective advertising campaigns) awards.

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During the 1st World War, Cadbury Dairy Milk supported the war effort. Over 2,000

male employees joined the armed forces & Cadbury sent books, warm clothes &

chocolates to the front.

Pricing Battle

Cadbury's efforts to exploit untapped potential & reach every pocket have a lot to do

with outwitting Nestle in the war of the wafers.

Its latest annual report states: `Cadbury is all set to satisfy untapped potential. With

brand launches, re-launches & new products, the thrust is on reaching every

individual, satisfying different palates & being within varying budgets. Basing its

operations on this vision, Cadbury is charting a new course of action. With the

product, place, price & promotion synergies working in tandem, it won't be long

before we find a Cadbury in every pocket.'

This may sound like a reiteration of its earlier claims, but in its heart of hearts,

Cadbury India, in spite of being the leader in the chocolate market, is still trying to

settle scores with Nestle in the wafer-coated chocolate market, where it has yet to

grab a dominant share.

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Creating new launches & extensions may be an ongoing exercise for the Rs 511-crore

chocolate multinational, but lately it has set its sights on the Swiss food giant, Nestle,

which is going through a rough patch with its flagship brand, Kit Kat.

In fact, the wafer chocolate war started in 1995 when both Perk (from Cadbury) & Kit

Kat (from Nestle) were launched. It had Cadbury running for cover to protect its

largest brand, Cadbury's Dairy Milk, which it did by extending its positioning on the

adult platform. The power-packed campaign from HTA (`Have a Break') did wonders

for the Kit Kat brand at that point of time, but its premium pricing proved to be the

main hitch, which has seen its volumes dipping from 15 per cent in 1997 to 9.5 per

cent this June, as per ORG-Marg figures.

Despite its share of the volumes coming down, Kit Kat still has a dominant share in

the market while Cadbury's Perk has seen steady shares between 1997 & 2000 with

present volume shares at 8.8 per cent, as per ORG-Marg figures. Perk has also

stretched itself to variants such as Mango, Strawberry & Mint to generate some

excitement around the brand.

So, while Kit Kat has taken a battering with its premium pricing & image, Cadbury

India is taking this chance to put its might behind its wafer category, with Perk & the

newly-launched Milk Treat, to beat Nestle in this category.

But then, the price points in the wafer chocolate category were redefined by Nestle

when it launched Munch at Rs 5 last year. Cadbury had to react to this lowering of

price within the wafer chocolates category & had to stretch Perk-to-Perk Slims at Rs 5

to counter it.

29
Explains Rajat Sabharwal, an analyst with Kotak Securities, ``the growth rates have

come to a standstill in wafer chocolates & the market is not buoyant in this category.

With Nestle coming out with a lesser-priced brand, Cadbury is responding now.'' So,

despite Nestlé’s flagship brand suffering to a certain extent, a flanking brand such as

Munch has taken care of the dipping shares.

Highlights Nirav Sheth, an analyst with SSKI Securities, ``In the first three years

since the launch of Kit Kat, its price rise has been too fast & this has backfired.

Today, its price cuts have been prompted by competitive pressures & the purpose is

obviously to gather volumes.'' But then, the prices of cocoa have also been crashing,

perhaps helping Nestle absorb the price cuts, which, possibly it would not have been

in a position to do otherwise.

Today, Nestle seems content with its strategy & admits that though shares of Kit Kat

have dipped, Munch has succeeded in doing what it was expected to do. Says Sanjay

Sehgal, Executive Vice-President (Marketing), Nestle India, ``Cadbury has reacted to

us. In fact, Munch could also be responsible for eating into the shares of Kit Kat along

with Cadbury's own brand. There has been a redefinition of pricing strategy for

KitKat & we are hoping it will show.''

KitKat continues to sell at a slight premium to Perk though it is now offering a price

discount of nearly 20 per cent, which indicates that Nestle either had great margins on

the brand earlier, or is in trouble.

For Cadbury, Perk is basically a fighter brand being used to flank the mother brand. In

fact, the fight is almost similar to what HLL did with Wheel (though it was not

30
making money on the brand) to counter Nirma in the detergent market while Surf sat

pretty as the mother brand in Lever's portfolio.

However, in the case of wafer chocolates, it is not a very happening category since

consumers have realized that they are not paying for pure chocolate, but for a

chocolate-coated biscuit. For Cadbury, its cash cow will always remain its Cadbury's

Dairy Milk. Both are players fighting with their higher reserves, trying to establish

themselves with a dominant share in the wafer chocolate category.

The new Perk has four wafer layers covered with chocolate & is lighter & crisper. Its

packaging has also undergone a change & has used Cadbury's trademark purple

background with the dark brown wave of chocolate on the wrapper, indicating the

presence of pure dairy milk chocolate, to set it apart from a common biscuit

chocolate.

Cadbury is targeting a 12 per cent volume share for the Perk brand after this relaunch

& expects to overhaul Kit Kat. As Bharat Puri, Director (Sales & Marketing),

Cadbury India, declares: ``our objective is to be the largest wafer-coated brand in the

country.''

A new campaign has been developed for the relaunch of the brand where through

three commercials the differences in the new Perk are highlighted through dialogues

alluding to match fixing -- Khule Aam Khayiye. Kabhi Bhi. Kahin Bhi.

Explains Piyush Pandey, National Creative Director, Ogilvy & Mather, ``Through the

commercials we are trying to bring out various explanations about the changes in

Perk.'' The original campaign of Thodi Si Pet Pooja, Kabhi Bhi, Kahin Bhi will

31
continue through another new commercial, of a lady secretly eating Perk on the

occasion of Karwa Chauth.

Meanwhile, another wafer chocolate brand that has been targeting kids is Milk Treat,

four wafers with butterscotch-flavored cream embedded in milky white chocolate.

Though Cadbury did have a white bar, Creamy Bar, it was never treated as a major

brand. Milk Treat is pitted against Nestlé’s Milky Bar though it is in a moulded form

unlike the former, which is in count form. There are expected to be more variants

under the Milk Treat brand for children. Both Milk Treat & Perk are priced on par at

Rs 10 for 27 gm.

Despite all the action in the chocolate wafer segment, growth for Cadbury has always

come from its mother brand - the Rs 117-crore Cadbury's Dairy Milk which today

straddles all possible price points.

Explains an analyst with Motilal Oswal Securities, ``For Cadbury, its growth has been

coming from Cadbury's Dairy Milk & what it is doing to Perk is just to gather

momentum in the chocolate market which thrives on innovation & excitement.''

In 1999, Cadbury recorded an eight per cent turnover growth in chocolate

confectionery led by its flagship brand Cadbury's Dairy Milk, which registered a

growth of over 40 per cent. The malted food drinks category reported a growth of 14

per cent while the sugar confectionery segment rose a mere three per cent. The Éclairs

brand grew by a healthy 14 per cent.

In fact, Cadbury has consciously stayed away from meddling too much with its

heritage chocolate brands -- Dairy Milk & 5 Star. Explains Puri, ``As a marketer, it is

32
best not to do too much to these heritage brands which already have strong equity.

Not that we will never relaunch them but right now they enjoy a strong equity.''

But, it did relaunch its heritage brand of malted drinks, Bournvita, last year when it

lost share to the white drinks segment. There are plans to extend this strong brand in

the future, about which Cadbury does not want to reveal its plans right now.

Interestingly, there already exists a similar sounding dark chocolate brand for adults,

Bourneville, in its kitty for many years, which has not seen much advertising.

While its chocolate brands are continuing to get broad based, its sugar confectionery

brands will get upgraded to higher price points. For instance, its hard-boiled sweets

such as Googly, Mocka & English Toffee are gradually being phased out, while the

new brands such as Frutus, a chewy sweet (Re 1) & the jelly, Gollups (Rs 2), are

expected to see some healthy growth. Adds Puri, ``It is not possible to build brands at

such low price points. While there are volumes, the margins are thin in this category.''

Besides, the latest Budget has hiked the duties of sugar confectionery products from

eight per cent to 16 per cent, which in any case has led to an increase in prices &

thereby affected brands such as Googly.

But one thing that Cadbury has realized through all this is that it has got cheaper with

more products in the Rs 3-5 category. Its premium brands such as Cadbury Gold,

Truffle & even Picnic have never really been accepted in the chocolate market.

Today, Cadbury is constantly looking at pushing volumes at the lower end of the

market & brands such as Relish, Break, 5 Star & Dairy Milk have Rs 5 variants

catering to this lowest price point. Perk Slims is the latest Rs 5 brand to be added to

this list.

33
As for taking the chocolate wafer war to the enemy camp, it might take a while

because Nestle also has deep pockets & has established itself in the chocolate wafer

category in spite of dipping shares. However, Cadbury will always be the leader with

its heritage brands. As Rajat Sabharwal, an analyst with Kotak Securities states,

``Nestle may be a key player in the Indian chocolate market but there is no possibility

of it emerging as a category leader.''

34
 Cadbury Faces Prosecution

Bureaus in Mumbai

Laboratory tests by the Maharashtra Food & Drug Administration of samples of

Cadbury's products confirmed the presence of two dead & one live organisms. The

unspecified product was manufactured by Cadbury's factory near Pune.

Cadbury India is now liable to be booked under the provisions of the food adulteration

law. Confirming this, FDA Commissioner Uttam Khobargade told Business Standard:

"As per FDA norms this is a clear case of adulteration. We will charge the

manufacturer. We have not found any instance of this adulteration in the Thane unit

of Cadbury India."

Khobargade added that while the company had offered the plea that faulty storage by

a dealer was responsible for the incident, it was the manufacturer's responsibility to

ensure that quality storage conditions were available with the dealers.

In a late night media release, Cadbury said: "We are not aware which samples have

been tested by the Food & Drugs Administration. Neither have we received any

official report from their office. We would therefore not like to comment until we

have had a chance to see the formal report. However, we have checked the relevant

factory control samples & have found them to be of good quality & free of any traces

of infestation."

On October 3, acting on a consumer complaint, the Maharashtra FDA seized stocks of

Dairy Milk chocolates in Maharashtra. A consumer found worms in a Dairy Milk

chocolate bar, bought from a shop in Mumbai's western suburb of Andheri.

35
Cadbury Dairy Milk, the flagship brand, contributed 30 per cent to the company's Rs

687.30 crore (Rs 6.87 billion) turnover in 2002.Ten Cadbury chocolate bars were on

Monday sent to the Maharashtra Food & Drug Administration laboratory in Dadar,

Mumbai, for testing whether they contained worms.

The move came three days after the state government expressed satisfaction at the

'hygienic condition' being maintained at the manufacturing unit of Cadbury.

FDA sources said the chocolates, from a shop in Kurla, central Mumbai, were handed

over to police, who in turn deposited them with the FDA at around 1530 IST.

The chocolates were found to have holes in them, they said. On October 10, Minister

of State for Food & Drug Administration Anil Deshmukh had said that the judiciary

would decide whether to prohibit the sale of the seized stock.

Meanwhile, FDA Commissioner Uttam Khobragade alleged that Cadbury officials

were trying to put political pressure on him.

But "I will not come under any political pressure", he said.

Khobragade said, "Instead of admitting their fault, Cadbury are saying that it's dealer's

fault. Why are they forgetting that those are their dealer so it's their responsibility to

make the product safe?"

He also said he would not visit the Cadbury factory. "I have no business to visit their

factory. What I want is that the products coming into the market should be perfect."

Asked if it was lobbying the government, a Cadbury official told rediff.com: "We

reiterate that we will continue to cooperate with the authorities."

36
She said the company was confident that "our products are of the highest standards".

Asked why Cadbury had not followed the FDA commissioner's suggestion to

withdraw its products from the market & repack them, she said, "As a part of our

standard procedure we regularly take back any damaged or date expired stocks back

from our retailers."

She said the company had not received any intimation about a case being registered

against it. "However, we will continue to extend all cooperation to the authorities

because like the FDA, Cadbury is also conscious of its commitment to society in

general & consumers in particular."

Regarding Deshmukh's visit to the Cadbury plant, she said the minister "inspected the

hygiene standards & manufacturing practices adhered to" by the company.

She admitted the controversy would affect the sales during the festival season.

"However, we would like to reiterate that all through the 55 years of leadership in

India, Cadbury has remained synonymous with chocolates & we have remained

committed to high quality & consumer satisfaction.

37
 Cadbury's Loss is Amul's Gain

As Cadbury India finds itself mired in the worm’s controversy, Gujarat Co-operative

Milk Marketing Federation, which makes Amul chocolates, has witnessed a surge in

sales.

After selling 60 tonnes of chocolate in September, the company was on course to

report sales of 150 tonnes in October & had projected sales of 250 tonnes in

November, a GCMMF executive told Business Standard.

In Mumbai, which accounts for almost 10 per cent of the 4,000 tonne, Rs 650 crore

(Rs 6.50 billion) a year chocolate market in India, the company plans to raise its

market share from 2 per cent in the beginning of October to 15 per cent by the end of

the month.

"We will sell 20 tonnes this month in Mumbai, against only 2 tonnes in October last

year," the GCMMF executive said.

According to the executive, while 20 per cent of the growth in Amul's sales in recent

days has been because of the Cadbury factor, the recent brand launches by the

company & the increased focus of GCMMF on chocolates have contributed 40 per

cent each to the rise in the numbers.

In an attempt to boost sales, the company has launched three new chocolates in

Mumbai under the brands Fundoo, Bindaas & Almond Bar. While the first two have

been priced at Rs 10 for a 30 gm stick, Almond Bar carries a price tag of Rs 10 for a

35 gm chocolate.

38
As a result, the company's festival season pack "Rejoice" now comes with six

chocolates in the city, up from three during the festive season last year.

"A national launch of the three brands is likely to happen in a month's time," the

official added.

Encouraged by the rising numbers, GCMMF has drawn up plans to make its chocolate

business a separate division of the company.

"We think that the business requires a special focus & this is the best way to do it,"

the official added. Cadbury India is the largest player in the Indian chocolate market,

followed by Nestle India & Amul.

Cadbury bids to worm way into public good books with Big B endorsement

The Big B is going to promote the Big C in the chocolate business - Cadbury in India.

Indian cine superstar Amitabh Bachchan has signed on to become the brand

ambassador of the chocolate major for two years.

AB will play a pivotal role in all communication relating to Cadbury's products &

brands, be it in print, on television or the great outdoors, the company's managing

director Bharat Puri has been quoted as saying in media reports

Cadbury India Ltd has announced that mega star Amitabh Bachchan will be the

company's new brand ambassador.

He will endorse & promote Cadbury chocolates for a period of two years. As brand

ambassador, he will play a key role in brand & product communication on television,

in print & outdoor media.

39
Cadbury has launched a strengthened, new 'purity sealed' packaging for Cadbury

Dairy Milk. The new packaging for 13g (Rs 5) is double wrapped for maximum

protection. The chocolate is wrapped in aluminum foil & enclosed in a poly flow

pack, which is completely sealed on all sides. In the second phase, the larger Cadbury

Dairy Milk packs will come in poly-coated aluminium foil, which will be heat-sealed

& then wrapped in the branded outer package. Both these steps are a 'first ever' in

chocolate packaging in India.

Amitabh Bachchan is Cadbury brand ambassador.

Cadbury India Ltd has announced that mega star Amitabh Bachchan will be the

company's new brand ambassador.

He will endorse & promote Cadbury chocolates for a period of two years. As brand

ambassador

"Over the last few months, we have had some cases of infestation due to improper

storage conditions. As a company committed to ensuring that our consumers enjoy a

pristine bar of chocolate each time, we decided to take steps to reduce dependency on

storage conditions to the extent possible," said Bharat Puri, managing director,

Cadbury India Ltd. "Cadbury will do everything it can to ensure that every bar of

chocolate that a consumer buys comes full of goodness & rich taste."

Commenting on Amitabh Bachchan as brand ambassador for Cadbury chocolates,

Puri said, "There is a perfect fit between Amitabh Bachchan & Cadbury chocolates -

their timelessness, & the love & trust they both share with the people across India,

makes this an ideal partnership.

40
Moreover, Mr Bachchan has a universal appeal that extends to everyone from 6 to 60,

just as our chocolates do. We believe his endorsement of Cadbury Dairy Milk will go

a long way towards our objective of increasing chocolate consumption among all ages

of consumers."

Amitabh Bachchan said, "Most of you may not know this, but I have been a brand

ambassador for Cadbury for the last 55 years. Only, now it is official. Bringing

smiles, spreading happiness & joy amongst millions of people in India is what

Cadbury & I shall be continuously working towards."

The new 13g (Rs 5) Cadbury Dairy Milk packaging is currently available only in

Maharashtra & the national rollout will take place over the next three weeks. New

packaging for the larger bars of Cadbury Dairy Milk, Fruit & Nut, Crackle,

Bournville, Caramello, & Double Deck will be completed in six weeks.

41
 Organizational Structure of Cadbury

Hierarchical structure is based on distinct chain of commands from Managing director

to Clerical Support assistants (according to Cadbury). Decisions are made at the top &

pass down. Such organizational are usually based on clearly defined procedures &

roles.

 Cadbury organization is based on more democratic. Decisions are made as a

result of a consultation process involving various members of the organization

(Cadbury). Ideas would be discussed & thought through collectively.

 Within Cadbury organization we can find a Democratic structure, Because

Cadbury tends to be found in situation were it is felt to be important for all

members of the organization to understand what they are doing, were

decisions require individual initiative, & where member of staff need to work

as a team.

 How management style, Culture & Organizational structure interrelate

 Management style, culture & organizational structure interrelate together in

Cadbury because they all work together to help the business to achieve its

objectives; in order to lead a successful business.

 Cadbury has strategies for the organization, continually to motivate members

of staff to support this process, & market change within the organization.

 Management style, culture & organizational structure interrelate together in

Cadbury because they all work together to:

42
 CADBURY’S PRICING

UNDERSTANDING COSTS & PRICING FOR SUCCESS

We have many ways of pricing our products or services. The first thing to understand

is the cost elements that make up our offering. This unbundling of cost must be

known prior to setting prices, however it may have only limited influence in the price

finally set. You may deliberately price an element at a loss, & another at a huge profit

because the market with bear this. The loss leading offering maybe the carrot required

to differentiate you from your competition, make your offering seem fresh & market

leading, & your competitions offering, old hat. But if you haven’t done your forecasts

& understood your cost models properly before going to market, then the end result of

your sales success could be a huge loss.

& in pricing, you need to look clearly at your business goals. Do you want to:

 Sell your products or services?

 Dominate the market?

 Force the market to purchase your product?

 Have fun?

You may try different strategies at different times depending on what result you are

after. If you anew to a market, then you may employ an “early adopter” strategy to

achieve some presence & reference. Later in the lifecycle, you may use a strategy that

achieves greater returns in a more traditional manner.

With our LINC product in 1980, we identified we had only four potential clients –

IBM, Burroughs, NCR, & Digital. So we had to prepare strategies, which would

43
achieve the business goals we wanted – to establish our company as a developer of

good development & deployment environments,& to earn & excellent stream of

profitable revenue for several years. We sold LINC to Burroughs for US$1 plus the

rights to continue manufacturing new feature content for on a predefined costed basis

& to provide product support. Thus profitability was guaranteed so long as product

quality levels were maintained. So knowing your costs is important if you wish to

position your prices for profitability.

But knowing your costs is not enough. You also need to know all about yourselves as

a company & position your business. You need to:

 Know what exactly is your business solution?

 Who exactly are your potential clients?

 What is your unique customer advantage?

 What is your business identity?

 What is your elevator statement?

Without this business knowledge, you do not have a hope of pricing your product to

meet your business goals & to effectively compete in the market place.

In my days in the fishing industry, selling Orange Roughy frozen fish fillets, we were

one of several players in a market place for a variety of fish that was not a household

name but was distinctive. We needed to differentiate ourselves as the product to be

sought after ahead of other fish brands, & competitor products. Our objective was to

44
be the fish fillet provider of choice in the Great Lakes region of the United States of

America. We launched our Fletcher Quality Orange Roughy brand at a 10% premium

price over our competitors. We launched as the top quality product, a USA hygienic

clean white fish meat (some would say “tasteless”), in a special display pack. & in a

market where everyone delivers late, delivery on time. So our differentiators were top

quality, special display pack & delivery on time. Orange Roughy was a distinctive

name. People were amazed that such a good-looking fish fillet could have such a

horrid name, yet if we could get them to try the fish, they would love it & would tell

all their neighbours & friends. The name “Orange Roughy” was a memorable name &

by making the fish look in a class of its own in the shop window display pack, we

captured a strong market. Within a year, Fletcher brand Orange Roughy was

commanding a 30% margin & was selling ahead of any other brands.

So knowing your business, your unique customer advantage, who you are, & what

you are pitching is vital to your success.

45
 WHAT IS ALSO IMPORTANT IS THE DETAIL OF HOW YOU

APPLY YOUR PRICING

In software, the key pricing ingredients we can unbundled are:

 Product licence

 Support

 Training

 Documentation

 Consultancy

& we are not the only industry that unbundled our investment. The best known

unbundled today is the motor vehicle industry where a simple $7995 on the

windscreen represents $10,000 plus when you add registration, bullbars, CDStacker,

leather trim, electric aerial, insurance, 3 year warranty etc.

In our software industry the best unbundlers I have come across are Oracle. I have

never really met anyone who could understand easily what the Oracle purchase

components would add up to for a particular configuration. Just as well Oracle ASAP

arrived as a fixed price deal to reduce the confusion.

But back to the components, each of these ingredients has its own equation, which

sends a message to a prospective purchaser:

PRODUCT LICENCE – could be purchase, lease, & rental, bundled with another

element. You will all no doubt remember when OS2 was it & Windows was the small

player with a lower level of capability. Microsoft’s master stroke was to almost give

46
their Office suite of products away to Windows users to get them to use their

Windows operating system & ensure that it became the international leader.

SUPPORT – in some cases, the cost of a product in insignificant beside the level of

support cost, which shows the ability to have an ongoing relationship with a supplier

when using a product. In a development, a high level of support content may denote a

low quality initial development.

TRAINING – in the case of a development environment such as Jade, VB or C++,

people need to be trained to make effective use of your product. It is the concept of a

“fool with a tool still being a fool” unless he/she has effective training in the skills to

use the tool. The first introduction course is always justifiable by a company so you

can price this well. What businesses struggle with is justifying an “Advanced

Course”. They feel that if they are training a developer in a new product, then the

developer should be able to pick the balance of the product up by themselves. People

such as Microsoft & Cisco have got around this by putting together an Academy

programmed including a tiered hierarchy of courses clearly differentiated in content &

adding to become a package of knowledge. A clever move.

DOCUMENTATION – nobody reads it but without it, no prospective purchaser will

purchase your product. So what is it worth to a purchaser? Certainly not what it

costs.& if you priced it based upon hours of use by a purchaser, it would be a highly

variable commodity. Most treat it as a nominal cost & unbundled it, or pay third party

providers to build documentation for them. One of the better books I have seen

recently is the Python Cookbook, which is a very easy “how to” for their development

environment & published by a third party.

47
CONSULTANCY – you don’t need it, but if you have it you may make progress

much quicker than you would without it. So consultancy should be priced to cover

costs & allow a margin. If you do not charge enough, it is likely not to be valued by

the client enough.

48
 OTHER ISSUES WITH PRICING – THE INTERNATIONAL

PRICE

In Jade, we decided to get too clever. We believed the market could bear a higher

price in some countries than in others. So we established NZ, Australian, UK & US

pricing. Now, how do you put all this on the website & appear international &

professional? The answer is that you can’t. So we didn’t publish a price at all.

We have had thousands of queries for the price of Jade, but we have no idea how

many thousands of hits have just turned away, believing the price was outside their

price range.

This is not the case for all products – let’s look at the Bentley luxury car. The Bentley

Motors website does not list prices. But it is a superb site & if you are looking for the

extravagance of a Bentley, then price is not an issue. The site looks like you pay a

fortune & it would be crass to publish a price – “if you have to ask, then you are

unlikely to be a likely purchaser”. Jade have learned their lesson & from June 15 this

year, Jade comes out at an international price where a development licence is at no

charge & different, clearly defined levels of support can be obtained. From June 15,

the international price for a Jade development licence is zero dollars.

49
 OTHER PRICING OPTIONS

PARTNERING – For Independent Solutions Vendors developing their own

applications, Jade offers clients the option of no end user charges but instead the

option of a royalty on revenue earned from the sale of the application to an end client?

MESSY - Another option is a charge for a server product but no charge for client use?

This means that changing the configuration will result in changes to end user charges.

FIXED - A fixed monthly rental for use of an application?

USAGE BASED - Sale of a library package for schools based upon the usage

calculated on a multiplier on the number of kids in the school?

FIXED FEE PLUS - A support fee for services with a cap over which a premium is

paid?

SUCCESS BASED - A dollar for every successful car rental processed through an

application? Truly sharing in the success of the company

SERVICE LEVEL OPTIONS – Platinum, Gold, Silver, Bronze, pay as you go. It is

probably better to sell a service contract up front than to hit clients credit cards with

charges when they are having a tough time with bugs in your product.

Making a change to your price /market position

Sometimes the strategies to go from where you are now to where you want to be are

very simple.

50
We suggested to the client in Case 1 – the successful one – that he add a zero on the

right hand end of his price, rename the product to sound grand, & take it out to market

as the enterprise release. He told us it would never work. We struck a deal & he now

has a new product, selling extremely well, providing him with good margin which has

enabled him to set up a team of international distributors. He is starting his slide to

retirement by travelling around the world assisting his distributors to install the

application & getting some holidays in nice places on the side. He is 50 years old. He

describes it as a holiday with business, rather than a business holiday.

51
 CHAPTER-3

DATA ANALYSIS

&

INTERPRETATION

52
 Financial Analysis

Cadbury Indian net profit at Rs. 190 million.

Cadbury India Ltd has posted a net profit of Rs 190 million for the quarter ended 16

June 2002 as compared to Rs 93.60 million for the quarter ended 17 June 2001.

The total income has increased from Rs 1,206.80 million for JQ01 to Rs 1,363.40

million for JQ02. The other income for the current quarter is at Rs 127.70 million out

of which Rs 107.70 million is on account of the profit on sale of excess immovable

property at Thane, Maharashtra.

Cadbury had sold the land near its factory at Thane for Rs 11 crore early this year.

The company says it has struck an agreement with Kalpataru Properties, Thane, for

selling the land, which measured about 27,520 square metres. The deal helped

Cadbury unlock the value of its investments & helped it to shore up its bottomline.

Recently Cadbury India also refurbished its old office block in Mumbai & is now

planning to lease out the extra space available after the renovation, with a view of

earning some funds.

Cadbury India has three factories, which it operates on its own, while three other

facilities are run through arrangements with third parties.

To overcome the negative impact of sluggishness in the fast-moving consumer goods

market on its performance, the company undertook cost-cutting exercises over the

past one year, say analysts. “As a future strategy, it plans to reduce manufacturing &

supply-chain costs.” During the past few months, Cadbury India had offered a

53
voluntary retirement scheme to 29 employees in order to bring down costs.

Cadbury Schweppes recently hiked its stake in the Indian company to 90 per cent by

buying out around 39 per cent of the public shareholding. Cadbury India has already

made an application for delisting.

54
 Cadbury India Ltd

Brief Financials (in Rs. Mn.) Detailed Quarterly

31-Dec-2001
Period ending (months) 28-Dec-2003 (12) 29-Dec-2002 (12)
(12)

Net sales 7298.11 6846.58 6258.34

Other Income 93.32 11.45 13.98

Total Income 7391.43 6858.03 6272.32

Cost of goods sold 6293.08 5683.02 5163.55

OPBDIT 1098.34 1175.01 1108.77

PAT 456.50 727.21 595.40

Gross Block 3267.69 2860.47 2690.13

Equity capital 357.10 357.10 357.10

EPS (Rs.) 12.78 20.36 16.67

DPS (Rs.) 2.00 2.00 6.00

BV (Rs.) 99.78 89.71 70.73

P/E range (x) 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0

Debt / Equity (x) 0.03 0.04 0.03

Operating margin (% of
14.9 17.1 17.7
OI)

Net margin (% of OI) 6.2 10.6 9.5

55
 Chocolate Segmentation

Chocolate market can be segmented into moulded chocolates, count chocolates,

panned chocolates, éclairs & assorted chocolates.

Type of chocolates % Share in chocolate market

Moulded 37%

Count 30%

Eclairs 20%

Panned 10%

Others 3%

Others
Panned 3%
10%
Moulded
Moulded Count
Eclairs 37%
20% Eclairs
Panned
Others
Count
30%

56
Moulded chocolates, like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle

Premium, Nestle Milky Bar, is the largest segment accounting for more than 1/3rd of

the market.

Count lines (5 Star, Perk, Kit Kat, & Picnic) are the second largest segment

accounting for 30% of the volumes. The Count Line segment has been growing at a

faster pace during the last three years driven by growth in Perk & Kit Kat volumes.

Panned products include Cadburys' Gems, Nutties, & Nestlé’s Marbles. In panned

segment, Cadbury dominates with over 95% market share.

Éclairs (droplets of hard caramels with soft chocolate fillings) are a low unit priced

product. Cadbury Éclairs was launched in 1972. Parle Products launched Melody in

1991. Nestle is a recent entrant in the segment. Nutrine's Éclairs has done extremely

well in the market.

57
 Chocolates Market Share

Cadbury is the market leader in all categories with over 65% market share. Its main

competitor is Nestle India. Nestle has identified chocolate & confectionery as one of

the thrust areas for growth. It has launched some of its international brands like

Quality Street, After Eight, & 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

& Central Arecanut & Cocoa Manufactures & Processors Co-operative (CAMPCO)

are other two significant players. Both are local manufacturers.

Market Share

Moulded segment Count segment Éclairs

Cadbury 70% Cadbury 76% Cadbury 49%

Nestle 23% Nestle 20% Nutrine 37%

GCMMF 5% Campco 3% Nestle 12%

Others 2% Others 1% Parry's 1%

Others 1%

58
 Market shares in sugar confectionery market

Company Market share

Major brands
(%)

Mahalacto, Kokonaka, HoneyFab, Aam

Ras, Chuma- Chuma, Gulkand, Funda, Gum

Nutrine 24 Yum, Ole, Nutrine Eclairs,SuperStar,

Caramella, Wild Coffy, Dishum,

Aasay,Naturo, Fruit Bar

Melody, Mango bite, Kismi, Poppins, Rola

Parle's 16
cola, LuxDairy, Peppermint, Rosemint

Coffy Bite, Lacto king, Coconut punch,

Caramilk, Madras Cafe, Soft-Spot,

Parry's 13
Flavoured Candy, Mango, Sunshine, Shakti,

Pineapple

Googly, Mocka, English toffee,

Cadbury's 11
Frutus, Gollum, Eclairs, Pops.

Polo, Allen's Splash, Soothers, Toffo Butter,

Nestle 8
Fruit Rings, Fox's

Pan pasand, Mango mood, Coffee break,

Ravalgaon 7
Hi-soft, Supreme, Cherries, Juicy

Anti-cold/OTC brands such as Halls, Vicks, Clorets, etc are increasingly being sold

on the fun positioning rather than for their medicinal properties, competing directly

with other confectionery brands. Halls & Vicks are available in various flavours.

59
 QUESTIONNARIE

Q.1) What method should Cadburyyou follow for marketing of chocolate

products?

(i) Only Direct sales Method--------------------- 28 percent

(ii) Only Indirect Dealership Method----------------- 18 percent

(iii) Both ---------------------------------------------------- 54 percent

60%

50%

40%

30%

only direct sales method

20%
only indirect sales method

10% both

0%
only direct sales method 28%
only indirect sales method 18%
both 54%

As regard to choice of marketingnearly 28% of the persons are preferring direct sales

method, while the18% wants Indirect Dealership Method. And rest of 54% wants both

methods should be followed.

Therefore, Results shows that majority of persons wants that both “Direct & Indirect”

should be used for marketing.

60
Q.2). Do you think Advertisement is an effective method of selling your

chocolate’s products?

(i) Yes------------------------------------------------- 45 percent

(ii) No----------------------------------------------------- 18 percent

(iii) Do not know/ Cannot say-------------------------27 percent

45%

40%

35%

30%

25%

20% yes
no
15%
cant say
10%

5%

0%
yes 45%
no 18%
cant say 27%

In context of whether “Advertising” is effective for selling of chocolate products.

45% of persons says Yes, 18% of persons says No, And 27% of persons said that they

can’t say whether it will be effective or not.

61
Q.3). What type of advertising will be helpful in increasing salability of your

Cadbury products?

(i) Product Specific------------------------------------- 34 percent

(ii) Company Specific---------------------------------- 22 percent

(iii) Personality oriented ------------------------------- 17 percent

(iv) Do not know / Cannot say ------------------------ 27 percent

35%

30%

25%

20%

product specific
15%
company specific
personality specific
10%
cant say

5%

0%
product specific 34%
company specific 22%
personality specific 17%
cant say 27%

34% of persons votes in favor of “Product Specific”. 22% votes in favor of “Company

Specific”. 17% votes in favor of “Personality Specific”. And 27% said that they can’t

say anything about it.

62
Q.4). Do you think that branding helps in the marketing of your Cadbury

products?

(i) Yes------------------------------------------------- 34 percent

(ii) No----------------------------------------------------- 27 percent

(iii) Do not know/ Cannot say-------------------------39 percent

40%

35%

30%

25%

20%
yes
15% no
cant say
10%

5%

0%
yes 34%
no 27%
cant say 39%

Whether “Branding” helps in marketing of product or not. When we asked from

persons “34% said Yes, 27% said No, While 39% didn’t have idea about it.

63
Q.5). Do you think that “Free Samples” are effective methods of sale promotion

for Cadbury?

(i) Yes------------------------------------------------- 55 percent

(ii) No----------------------------------------------------- 12 percent

(iii) Do not know/ Cannot say-------------------------33 percent

60%

50%

40%

30%
yes
no
20%
cant say

10%

0%
yes 55%
no 12%
cant say 33%

When we asked persons whether “Free Samples” are effective or not in Sales

Promotion. 55% of peoples said Yes, 12% of peoples said No. While 33% had no

idea whether it will be effective or not

64
Q.6). Should Cadbury follow branding of products as a Marketing strategy?

(i) Yes ------------------------------------------------------------------------ 74 percent

(ii) No -------------------------------------------------------------------------- 05 percent

(iii) Do not know/Cannot say --------------------------------------------- 21 percent

80%

70%

60%

50%

40%
yes
30% no
cant say
20%

10%

0%
yes 74%
no 5%
cant say 21%

When we asked persons voluntarily whether Cadbury use “Branding” in their

Marketing strategy. 74% said Yes, 5% said No. While 21% of persons said that they

have no idea whether to use it or not.

65
Q.7).What are Major Weakness of Cadbury’s Marketing strategy?

(i). Branding ------------------------------------ 14 per cent

(ii). Publicity ----------------------------------------- 09 percent

(iii). Infrastructure assessment and Development ------------------------ 77 percent

80%

70%

60%

50%

40% branding
30%
publicity
20%

10% infrastructure assessment &

development
0%
branding 14%
publicity 9%
infrastructure assessment &
77%
development

14% of persons votes that “Branding” is major weakness of marketing strategy of

Cadbury. 9% voted for “Publicity”. And 77% voted forInfrastructure assessment

and Development.

66
Q.8). Which is the major factor to increase the sale of Cadbury products?

(i) Only Brand ----------------------17percent

(ii) Demand-Supply factors ------35 percent

(iii) Only Quality ----------------------- 23 percent

(iv) Other factors ---------25 percent

35%

30%

25%

20%

15% only brand

10% demand-supply factor

only quality
5% others

0%
only brand 17%
demand-supply factor 35%
only quality 23%
others 25%

17% of public said that “Brand” is major factor to increase sale of Cadbury

products. 35% of public voted for “Demand & Supply factor”. 23% voted for

“Quality”. And 25% voted for Other factors.

67
Q.9). Do you think Brand Extension is necessary for the Cadbury?

(i) 78 percent --------------------------------- Yes

(ii) 04 percent -------------------------------- No

(iii) 18 percent -------------------------------- Do not know /Cannot say

80%

70%

60%

50%

40%
yes
30% no
cant say
20%

10%

0%
yes 78%
no 4%
cant say 18%

In regard of whether “Cadbury” should extend its “Brand” or not. 78% voted Yes

they should. 4% voted No there is no need for it. While 18% was not able to say

whether “Cadbury” should extend its “Brand” or not.

68
Q.10).Which product of Cadbury you like most?

(i). Dairy Milk

(ii). Cadbury 5-Star

(iii). Perk

(iv). Cadbury Gems

Cadbury

Dairy Milk
Cadbury 5-Star
Perk
Cadbury Gems

When we asked general public which Cadbury’s product they like most. About 50%

of them said “Dairy Milk”. Nearly 25% said “Cadbury 5-Star”. Almost 17-18% said

“Perk”. And 8-9% said “Cadbury Gems”.

69
CHAPTER-4

CONCLUSION

70
 CONCLUSION

Cadbury Schweppes prepares financial statements because:

 As a listed company, it is legally required to do so.

 Cadbury Schweppes wants to communicate a true & fair picture of the

financial state of the company to its shareowners & external analysts.

 The company values transparency & honesty & aims to reflect this is all its

communications, both internally & externally.

Cadbury won the Communication of Corporate Strategy Award at the

PricewaterhouseCoopers 'Building Public Trust' awards in 2005. This publicly

recognized the high standards of the company's reporting: 'a highly accessible

overview of its short-term strategy, major markets & measurable targets.'

71
 FINDINGS

 Price plays an important role in the purchase of a product like dairy milk they

have introduced dairy milk the most popular chocolate in Rs.5 also which is

within the reach of every customer.

 Consumer prefers quality goods at lower price like Cadbury people just

introduced bytes, which is a snack, which is sweet.

 Consumer is loyal to brand so it’s necessary to pay attention to the brand

image. In today’s world most of the people see the image of the product &

then purchase it. So it’s necessary to make an image in market.

 Consumer prefers those goods whose advertisements are shown on television.

 Price should be according to the competitor’s price .i.e the price of Cadbury

should be less or same as the competitors price.

72
 SUGGESTIONS & RECOMMENDATION

 There should be difference in pricing strategy of Cadbury i.e. in term of

rural & urban areas.

 It should show more & more ad of the chocolates that it is offering. For

Example, Cadbury only emphasis on Dairy milk chocolate the most & not

the other products.

 It should introduce different schemes like giving mask to the children with

their product to attract children the most.

 The packaging of the Cadbury product should be made more attractive so that

more & more people attractive towards it. Every customer likes changes if not

they get used to it but they should take risk.

73
 LIMITATIONS

 This study provides the data for only Cadbury pricing.

 The following study does not represent overall idea of any company.

 Two months’ time is not sufficient for study of the topic.

 The data collected is from secondary source hence it is not 100% accurate.

 There can be a chance of biasness in the data selection.

74
 Bibliography

BOOKS
 Marketing Management - “Philip Kotler”
 Human Resource Management - “Ashwathapa”
 Human Resource Management - “T.N. Chhabra

INTERNET

 www.cadburyindia.com

 www.findarticles.com

 www.cadbury.co.uk

 www.economictimes.com

NEWS PAPERS

 Economic Times

 Financial Express

 Times of India

75
 APPENDIX

 Why does the taste of the same product often differ from country to

country?

 Why does the taste of the same product often differ from brand to brand?

 What is the purpose of the Cadbury website?

 Does Cadbury make low fat or diabetic chocolate bars?

 Do we sponsor other sites or take advertising on other sites?

 Where do product names come from?

76